Industry wants agencies in control, not mandates

A conglomeration of industry groups urged Congress to leave many contracting decisions to the discretion of the agency by avoiding blanket mandates.

“The government should have the discretion and the authority to manage its acquisition process in a way that best meets the needs of the taxpayer,” the Acquisition Reform Working Group wrote in a report April 10, regarding its legislative priorities for the year. Whether its a decision on what type of contract to offer or to suspend a contractor, the decision needs to be left to agencies, the organization believes.

For instance, the group has concerns about limiting agencies use of cost-type, or cost-reimbursement, contracts while placing an emphasis on fixed-price contracts. Sen. John McCain’s (R-Ariz.) Defense Cost-Type Contracting Reform Act (S. 1694) would prohibit the Defense Department from entering into cost-type contracts for the production of certain major defense acquisition programs.

Agencies can use cost-type contracts when there are enough uncertainties involved in contract performance to preclude setting a fixed price.

The industry group wrote that the Federal Acquisition Regulation (FAR) gives the acquisition officials enough information to make decisions on their own about which type of contract works best.

The reform group also wrote that the bill’s underlying premise—that DOD should be prohibited from using cost-type contracts for any stage of production under a major defense acquisition program—would establish a preference for fixed-price development contracts in MDAP programs, even during low-rate initial production.

To take away discretion, contractors may have to raise prices since they would be taking on more risk. Experienced, qualified contractors would not be able to undertake these programs, according to working group. “This legislation would likely have a negative impact on the industrial base.”

The group brought up concerns about suspensions and debarments too. It wrote that lawmakers should shy away from automatic suspensions and debarments. Instead, agencies’ suspension and debarment officials should choose how the agency will respond to accusations of wrongdoing or bad behavior.

Congress should “allow them to exercise their professional judgment to make a final decision whether to suspend or debar based on the relevant facts,” the group wrote.

The Comprehensive Contingency Contracting Reform Act (S. 2139), a follow-up to a report by the Commission on Wartime Contracting in Iraq and Afghanistan, would require companies to be suspended from their government work for criminal charges, accusations of fraud or if a federal official determines that the contractor failed to pay the government what’s due in connection specifically with an operation overseas.

The automatic suspension requirement is a bad idea in the eyes of many experts. The Wartime Contracting Commission backed off its support for the automatic action. It removed the recommendation from its final report, after including it in previous interim reports.

The working group also made recommendations to avoid caps on contractor compensation. The government raised the annual compensation April 23. Members of Congress have introduced bills and the Office of Management and Budget has urged lawmakers to cap how much the government will compensate contractors.

It also wants Congress to prohibit agencies from requiring political contribution information in contract bids. The House Oversight and Government Reform Committee approved a bill to ban it.

The working group is comprised of the Aerospace Industries Association, American Council of Engineering Companies, American Council of Independent Laboratories, National Defense Industrial Association, Professional Services Council, TechAmerica, The Associated General Contractors of America, The Coalition for Government Procurement and the U.S. Chamber of Commerce.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.


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