Industry groups oppose FAR panel proposals

Tech alliance says some proposed changes could undo good procurement reforms

A coalition of six industry groups opposes a panel’s recommended changes to federal acquisition rules that the coalition says could reverse a decade of procurement reforms.

The congressionally chartered Acquisition Advisory Panel will send a final report on those proposed changes to Congress and the Office of Federal Procurement Policy this fall.

Industry groups began a comment campaign this month to oppose many of the changes, which the advisory panel says are necessary to enhance competition for federal contracts.

“The focus of the panel’s recommendations is a strengthened competitive process that is more transparent about the government’s requirements,” said Marcia Madsen, the panel’s leader, in a statement released Aug. 11.

The panel’s recommendations include expanding a Defense Department rule on soliciting competitive bids and imposing additional restrictions on time-and-materials contracting.

The industry groups have pledged to oppose the panel’s procurement recommendations unless it modifies some of them. However, Cathy Garman, senior vice president of public policy at the Contract Services Association of America, one of those industry groups, said she does not expect the panel to bend.

“The panel has totally ignored us,” Garman said. “We’ve been disappointed in the lack of ability to have a good interchange with the committee members.”

The panel, commonly referred to as the SARA panel, is authorized under the Services Acquisition Reform Act of 2003 to make recommendations on acquisition regulations.

One recommendation the industry coalition opposes is a new definition of commercial services in the Federal Acquisition Regulation. The panel recommended limiting the FAR’s definition of commercial services to those services offered and sold in substantial quantities in the commercial market. Deleting the words “of a type” from the phrase “of a type offered and sold competitively” would accomplish that, the SARA panel concluded.

But industry members say even small changes in wording could have a large negative effect on the government’s ability to acquire newer, more innovative technologies.

“The point industry made years ago and the reason the words ‘of a type’ are in there is to be able to offer the latest technologies,” said Trey Hodgkins, director of defense programs at the Information Technology Association of America, a member of the coalition.

The coalition also opposes the panel’s recommendation that the General Services Administration establish a new IT schedule for professional services. The panel proposes that prices on the new schedule be set when the government issues a task order rather than before. However, industry members said that would undermine the purpose of the schedules.

“The new schedule would only differ from the existing schedule by allowing offerors to obtain a schedule contract without agreeing to specific pricing that a contracting officer determines is fair and reasonable,” the group states in its written opposition.

Other critics besides the coalition members said they believe the SARA panel is looking too far ahead and not addressing more immediate procurement problems.

Raul Espinosa, president and chief executive officer of the FitNet Purchasing Alliance, said the panel seems to be starting from the premise that the federal procurement system is working fairly well.

The panel has not addressed issues that are important to small businesses, Espinosa added, including how to define small businesses and what should happen when small businesses prevail in contract protests.

“If it’s found that the small business got screwed, then they [should] get future contracts from the agency,” he said.

The coalition said it does not oppose all of the SARA panel’s recommendations. For example, it would not try to block the panel’s proposal to expand Section 803 of the Defense Authorization Act of 2002 beyond defense agencies to include civilian agencies.

Most contractors do not object to the 803 rule, which establishes the number of potential suppliers from which agencies have to solicit bids when using GSA schedule contracts or other governmentwide contracts, Garman said.

The SARA panel indicated that its members are unhappy about a number of federal procurement practices, including the government’s use of time-and-materials contracts.

The panel recommended further restrictions on the use of such contracts, which let the government pay contractors for the time they work and the materials they use rather than paying a fixed price for the contract.

The government should convert time-and-materials contracts to performance-based contracts whenever possible, according to the panel’s recommendations.

The panel also urged the government to enforce existing rules requiring competition in awarding time-and-materials contracts.

Industry groups want the government to lift the rule requiring competition. They argue that after an agency has decided to award a sole-source contract, it should be allowed to consider a time-and-materials arrangement as an option.

“The law is pretty straightforward on the types of circumstances in which you can use time-and-materials contracts, so I don’t think we have to go overboard,” Garman said.

OFPP can enact many of the SARA panel’s recommendations through rulemaking or by policy memos if it approves them, said Andrea Wuebker, an Office of Management and Budget spokeswoman.

Garman, however, said the industry coalition she leads does not anticipate any immediate changes in federal acquisition rules.

“Nothing legislatively is going to happen at all” this year, she said. “They could go through the regulatory process, but even developing rules takes a few months, so nothing’s going to happen this year.”

The SARA panel has 14 members, including prominent industry and government executives such as Louis Addeo, president of AT&T Government Solutions; Frank Anderson, president of the Defense Acquisition University; and David Drabkin, GSA’s chief acquisition officer and senior procurement executive.

Why industry objects to 3 proposed procurement changesInformation technology industry groups object to some of the Acquisition Advisory Panel’s proposed rules for acquiring IT services for the government. Here are a few of the panel’s proposals and the counterarguments from industry groups.

Proposal: Redefine commercial services to include only those widely sold in the commercial market. Remove the words “of a type” from the phrase “of a type offered and sold competitively.”
Objection: By dropping the words “of a type” the proposed rule would exclude new services not yet widely available, such as IT services related to Microsoft’s forthcoming Vista operating system, from the definition of commercial services.

Proposal: Empower the General Services Administration to create a new schedule for IT professional services that would not include published prices. Instead, agencies and industry would negotiate prices for each task order.
Objection: By negotiating prices for each task order, companies would be competing for task orders without having first agreed to pricing that a GSA contracting officer had determined to be fair and reasonable.

Proposal: Permit protests of task and delivery orders of more than $5 million under multiple-award contracts.
Objection: By permitting such protests, the proposed rule would defy the intent of Congress, which in most cases restricts protests under multiple-award contracts for the sake of preserving timely ordering. The current exception to restricting protests is when a protester alleges that a task order alters the scope, period or maximum value of the contract.

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