Another suggestion for better contracts

Good ideas for improving government contracting need effective oversight to succeed

Richard D. Lieberman is a shareholder of McCarthy, Sweeney and Harkaway. He practices government contract law and is a former deputy inspector general at the Defense Department. He has written six books on government contracting, including the forthcoming “The Government Contract Forms Book” (Thomson Reuters West).

Steve Kelman’s comments in “The Way to Better Contracts” [Federal Computer Week, May 10] are intriguing, and I commend him for his 20-year quest to improve federal procurement. But I wonder if Kelman fully examines the results of his handiwork, in either his present job or his previous one as administrator of the Office of Federal Procurement Policy.

Unfortunately, good ideas are sometimes undermined when there’s no effective oversight of their implementation.

For example, Kelman touts performance-based contracting as a significant innovation that improves contracting. I don’t really disagree. However, as the approach is frequently implemented, contracting officials often undermine the purpose of performance-based contracting. For example, if you tell a contractor that his or her job is to train 30 students per week in a certain procedure, then why do you have to stipulate the number of instructors the contractor must use? If you require a certain number of contractor personnel, you have just mixed a performance specification with a design specification and effectively undermined the basis of performance-based contracting.

Why isn’t someone from OFPP overseeing either the actual solicitations or the people who train contracting officials in how to write them to ensure the solicitations are true performance-based contracts and not something that is impossible to administer and will result in plenty of litigation when performed?

Without that oversight, the following conversation could occur:

Contractor: “I gave you the performance you asked for in the solicitation — I trained the number of people you requested.”

Government agency: “You didn’t give me the five instructors I specified. You only gave me four. Therefore, I will deduct 20 percent from your invoice, even though all 30 students were properly trained.”

As is the case with so many contracting issues, training the officials is the key to success, and we know that Kelman has tried hard, and Dan Gordon, the current OFPP administrator, is also trying. But are the contracting officials learning the necessary lessons?

Let me give one more example of something that Kelman tried hard to fix but hasn’t quite accomplished. He pushed for the federal government to buy commercial items to increase competition and succeeded in codifying that approach in the Federal Acquisition Regulation and Federal Acquisition Streamlining Act. The FAR was rewritten to include a self-contained commercial-items clause that covers nearly every contract term, and it has been somewhat successful. But there was one thing missing in the implementation: Neither Kelman nor the FAR writers prohibited the addition of special FAR clauses in commercial-item contracts.

As a result, many commercial-item contracts issued include the special FAR commercial clause and 30, 40 or 50 special FAR clauses that are normally used only for noncommercial items. That practice undermines the idea of buying a commercial item as a commercial item, with commercial quality control and the normal tooling, training and personnel used for commercial items. I would ask Kelman why the commercial-items clause alone isn’t enough for a commercial-item contract if the government is serious about buying commercial items whenever possible.

I commend the past and current administrators of OFPP for trying to improve procurement. Their focus has generally been on the front end of the process. But someone should be responsible for the second phase to ensure that all that good work is not wasted.

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Reader comments

Wed, May 19, 2010 Peter G. Tuttle, CPCM

What a great comment about commercial item contracts sometimes containing "...30, 40 or 50 special FAR clauses that are normally used for noncommercial items." The "poster child" I like to use in conversation was a Task Order off of a GSA Schedule contract for mature COTS software that included 148 additional clauses. Unfortunately, this happens more times than does not - for whatever the reason. It's an incredibly poor business practice since vendors will simply add to the cost to cover the additional risks imposed by unnecessary clauses, if they can't convince the contracting officer to remove them. Once again, the taxpayer suffers and absolutely nothing is gained.

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