GSA's interim rule positions are 'unwise and flawed'

On Feb. 16, the General Services Administration issued an interim rule amending the General Services Acquisition Regulation. Ostensibly, the rule implemented the portions of the Federal Acquisition Streamlining Act (FASA) of 1994 that dealt with truth in negotiations and the acquisition of commercial items.

For those hoping for meaningful improvements in the government's acquisition of information technology and other commercial items, the rule was a very loud shot across the bow. Its substantive provisions range from disappointing to alarming - a repackaging of many of the same old burdensome requirements of the past, camouflaged as reform.

The interim rule departs unacceptably from statutory intent. For example, FASA requires that prices for commercial items be fair and reasonable. The interim rule would instead reimpose the most-favored-customer test, which has proved to be an impossible bureaucratic nightmare. In addition, Congress sought to minimize the data that a contractor must develop and submit during negotiations. The interim rule, however, leaves the door wide open to unreasonable demands during or subsequent to negotiations. Thus, the unwise, unfair and counterproductive risk of auditors and investigators second-guessing the parties on their price negotiations long after the fact has not been reduced to responsible levels, as Congress clearly intended.

Its issuance as an interim rule without public comment is ominous. Many will recall that GSA's 1982 policy statement on multiple-award schedules (MAS) contracting, also issued without the benefit of public comment, survived for 13-plus years.

Recently there has been a spectacular blossoming of procurement reform initiatives focused on commercial items. These include the National Performance Review, FASA, final Federal Acquisition Regulation provisions implementing FASA, exciting changes within GSA's Federal Supply Service, the Federal Acquisition Reform Act and the Information Technology Management Reform Act. They represent an unusual confluence of congressional, executive branch and private-sector objectives.

Behind them are a number of forces, including:

* The government's need to take advantage of technical advancements IT.

* Budgetary pressures.

* Heightened willingness to accept commercial practices.

* A growing awareness that the web of rules and requirements imposed in the past is not only burdensome, stifling and counterproductive but also a snare for the unsophisticated.

Under two successive administrators, GSA and FSS have responded creatively and soundly to the need for reform. MAS has been consolidated into FSS and is being expanded and made more user-friendly. A credit card system is in place. Superstores for desktop delivery of office supplies are coming on-line. An electronic system called GSA Advantage! for reporting and ordering through MAS and other GSA programs is progressing.

However, never underestimate the appeal and power of the status quo. Procurement reform is no exception. Clearly, a number of people believe the current web of rules and requirements is needed to avoid fraud and waste and to hold prices down.

Not surprisingly, they are persons involved in contracting with, auditing or investigating those who must try to comply with those rules and requirements. It is also clear that they had a dominant role in fashioning the interim rule.

The positions taken by, and the underlying approach in, the interim rule are unwise and flawed. The objectives of fair pricing and compliance could be realized far better - as FSS is proposing - through simplicity, price visibility and broadened contractor participation in MAS. Positions in the interim rule also are counterproductive. They drive GSA toward the earlier system with its shortfalls, burdens and unfairness. Finally, the positions are not best commercial practices, and they are contrary to congressional intent and executive branch initiatives.

Several organizations are requesting that the interim rule be withdrawn and reconsidered. Hopefully, management at GSA will listen. The rule should be rewritten, simplified, matched to best commercial practices and conformed to the letter and intent of the law. Opportunity for public comment should then be provided. These are essential if, as we enter the 21st century, the government is to have modern, useful IT systems and sound processes for acquiring commercial items.


Wallick is a partner of Steptoe & Johnson, a member of the Section 800 Panel, a past chairman of the American Bar Association's Section of Public Contract Law, a past president of the Federal Circuit Bar Association, counsel to the Coalition on Government Procurement and a member of the Information Technology Forum.


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