Policy changes 'clean house'

The changes to federal procurement policy that the Bush administration plans to release in the next month could significantly affect how agencies acquire information technology products and services and must be carefully examined, experts say.

The long-awaited draft revisions to the Office of Management and Budget's Circular A-76, which sets the rules for comparing the cost of government services with those of the private sector, should be issued any day now, Angela Styles, administrator of the Office of Federal Procurement Policy, said Sept. 19.

The revisions come from an interagency task force and are expected to support many of the recommendations from the Commercial Activities Panel, a group of public- and private-sector representatives. Those recommendations, published earlier this year, include basing the competition process more on the Federal Acquisition Regulation (FAR), which is used to ensure best-value procurement of commercial products and services.

"I think we've cleaned house," Styles said at the Homeland Security Tech Expo in Washington, D.C. The changes will "ensure that public/private-sector competition in the government is vigorous."

Government officials have been tight-lipped about the revisions, so the October release in the Federal Register will likely be the first time people outside government will get to see the changes.

But certain basic tests can determine whether the revisions will be what the panel called for, said Stan Soloway, a panel member and president of the Professional Services Council.

These include whether all bidders for a service — from industry and the government — are evaluated on the same criteria and granted the same protest rights, said Soloway, also former deputy undersecretary for acquisition reform at the Defense Department.

In the end, the changes should not prescribe an overly detailed process, or the FAR's value will be lost, he said. "The key here is not to be prescriptive, because the FAR provides you with the general process in regard to best value."

The A-76 process is the easiest way for agencies to comply with the competitive sourcing goals defined in the President's Management Agenda. By the end of fiscal 2003, each agency must put out for bid at least 15 percent of the government functions deemed to be commercial-like activities.

OFPP working groups also have been focusing on other issues, including competition for small businesses under the contract-bundling process and new guidelines for developing and managing performance-based service contracts.

Some lawmakers and many in the small-business community are concerned that contract bundling could hinder the ability of small businesses to compete for contracts they otherwise would be more likely to win.

OFPP has been developing recommendations for President Bush about potentially unbundling existing contracts, and those recommendations are "close to ready," Styles said. One of the last steps is to have final talks with DOD to ensure agreement across the board, she added.

However, DOD, which does the most bundling, released its internal guidance in this area less than a year ago, Soloway pointed out. Officials may do more harm than good if they try to change the basics of contract bundling now, he said.

"It's no surprise that you've seen no behavioral change in the community," he said. "They've only gotten the rules in the last few months."

Performance-based service contracting is on the rise, as agencies move toward awarding more service contracts and outsourcing more back-office functions.

The performance-based service contracting recommendations are in the final review stage within OFPP. It's unclear whether agencies will see them before their release for public comment.

The revisions can only help, because the current recommendations are almost 10 years old, said Chip Mather, senior vice president of Acquisition Solutions Inc. and a former Air Force procurement executive. "I see only good coming out of it," he said.

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Rethinking policy

Bush administration officials are considering three changes to federal procurement policy:

* Revisions to Circular A-76 — Expected to include many of the changes recommended by the Commercial Activities Panel earlier this year, including basing the competition process more closely on the Federal Acquisition Regulation.

* Guidelines for contract bundling — Will seek to increase the chances for small businesses to win contracts, possibly by limiting contract bundling or unbundling existing contracts.

* Recommendations for performance-based service contracting — Will direct agencies in how to use this increasingly important contracting method, which focuses on solutions provided by the private sector.

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