Letter to the Editor

• Jan 22, 2001

I write to take issue with some of the assertions made in your Jan. 8 editorial, "Make vendors accountable," which concludes that the "blacklist" rule published by the Clinton administration late in December 2000 will improve the credibility of the procurement process.

Your editorial — which astutely warns of the potential for contracting officers to abuse their newfound powers — nonetheless includes several questionable statements. For starters, I dispute the contention that these regulations will bring "fairness" to government contracting. I don't think they will — but I do fear the changes will have a disastrous impact on small businesses, colleges and universities that contract with the government and, indeed, will mark a severe step backward in the area of procurement reform.

Second, your piece rhetorically asks, "Who wants their tax money going to a company that shows disregard for federal laws?" The answer, of course, is nobody. No one disputes that the federal government should do business only with ethical companies that adhere to federal laws. But let's be clear: Existing acquisition rules already provide a strong remedy of debarment for errant contractors and the administration has not made the case that these changes are needed. In that sense, this is a solution to a nonexistent problem.

An amendment I introduced with Rep. Jim Moran (D-Va.) — which easily passed the House of Representatives before being stripped in a conference committee — simply would have delayed implementation of the new rules until the General Accounting Office could examine whether they're needed. Such data has never been produced.

Third, your editorial asserts that "If properly administered, the rule will bring fairness and integrity to government contracting." The first three words are key, as I am not at all optimistic that these regulations will or can be administered in an unbiased, fair and informed way. The changes make it easier for contracting officers to deny federal contracts to businesses by altering the criteria used to determine whether a potential contractor is responsible. The new rule, in a nutshell, gives contracting officers much greater authority to disqualify a contractor from doing business with the federal government.

How? Current law states that contractors must have a satisfactory record of integrity and business ethics and the ability to perform the contract. The changes would have allowed a contracting officer to require a contractor to show "satisfactory compliance" with federal laws — including tax, labor, employment, environmental and consumer protection laws. The regulations would effectively blacklist companies from eligibility if they do not follow arbitrary standards defined as "satisfactory compliance" with federal laws. Inevitably, "satisfactory compliance" will be determined subjectively, unfairly politicizing the contracting process.

Finally, your editorial claims that "For federal vendors that run clean operations...the revised rule should not be a concern." I could not disagree more strongly. Even some of the administration's top procurement officials have questioned the wisdom of the changes. Among others, the General Services Administration has said it will find implementation of the rule "extremely difficult," citing "inconsistent application of the language in the rule" and "additional time and effort expended on the acquisition process." GSA concluded that the "proposed rule appears punitive, rather than designed to protect the government."

Would-be vendors, in fact, have great cause to worry about the new regulations. First, "non-responsibility" is too easily triggered. For example, an initial finding from an administrative law judge or a mere complaint from a federal agency could constitute the "credible information" cited in the new regulation.

The new regulations also present due process concerns. Firms could be denied the chance to compete for a contract based on a decision by an administrative law judge, without a hearing.

And the administration's proposal also invites mischief and abuse by third parties seeking a business advantage. Allegations could be made frivolously to place a competitor at a disadvantage.

I can't put it any better than the plaintiffs did in the first lawsuit filed against the government after the regulations were released. They said the administration "has acted arbitrarily by failing to articulate any rational basis or need for this significant change in the responsibility standards; ignoring the concerns raised by the government's own procurement professionals that the government lacks the expertise and resources needed to implement the rule; failing to demonstrate that any benefits of this change offset its enormous costs; and irrationally removing the requirement of a nexus between responsibility and a contractor's ability to perform a particular contract."

In other words, this is a bad rule. Period.

Why else would the administration publish the controversial regulation during its waning days, making them go into effect on Jan. 18, 2001 — two days before president-elect Bush takes office? The administration's strategy was clear: Publish these wrongheaded rules before Bush takes office and at a time of year when Congress will not be able to intervene.

This was midnight-hour, back-room policy-making at its worst. The vote in the House last year made it clear that a majority of my colleagues understand that the changes impose vague new standards for contracting officers and do not provide them with guidance in making "responsibility" determinations. They see that this rule could substantially raise the bar over which small businesses will have to hurdle in order to get federal contracts.

Rep. Tom Davis (R-Va.)