GSA, lawmakers, businesses lash out at new procurement regulations
Officials at the General Services Administration, members of Congress and business groups Tuesday strongly criticized a controversial rule issued by the Office of Management and Budget that requires government contracting officers to review companies' business ethics and integrity before awarding federal contracts.
The new rule is scheduled to be published in the Federal Register Wednesday. It requires that federal contracting officers review a company's compliance with labor, employment, tax, environmental and antitrust laws to determine if it is fit to do business with the federal government. Vice President Al Gore originally suggested the rule at an AFL-CIO meeting in February 1997. Since then, critics have accused the Clinton administration of pushing the regulation to win the political support of labor unions.
Before issuing the final rule, OMB made some changes to address concerns raised by agencies and contractors. According to OMB, the changes clarified what agencies should look at when evaluating potential contractors, simplified the paperwork involved and created protections for contractors who want to protest bid decisions.
A senior GSA official, however, said OMB's last-minute changes did not address agency concerns with the regulation, and, in fact, only made it more difficult to implement. "Industry indicated that they need 90 to 120 days to implement this, but [OMB] made it effective in 30 days, which includes holidays. Implementation will be difficult," said the official, who asked not to be identified.
GSA and the Environmental Protection Agency submitted objections to the rule last fall, when OMB initially proposed it. The GSA official said contracting officers and agency lawyers will need guidance on how to implement the new rule, as well as an understanding of the nature of the violations involved in complex environmental and labor issues. OMB's effort to address that need by telling agencies to focus first on criminal violations and then on civil actions, "doesn't come close to solving the major issues involved," the official said.
The GSA official also questioned the timing of the final rule's release, noting that it has been ready for publication for some time, but was held up pending the outcome of the presidential election. "It is being published specifically for political reasons," the source said, despite the fact that procurement issues have been left out of political battles in years past. "This is clearly a breach of that kind of protocol that's been observed for many, many years," the official said.
David Marin, a spokesman for Rep. Tom Davis, R-Va., called OMB's changes to the rule "laughable." Davis has been among the leaders of congressional opposition to the regulation, which business groups have called a "blacklisting" effort.
"Shame on the administration for betraying its own procurement officials, for catering to the union bosses at the taxpayers' expense, and for causing potentially drastic harm to small businesses and educational institutions across the country," said Marin.
Senator Tim Hutchinson, R-Ark., said the rule is "an egregious example of midnight rulemaking, in clear violation of the will of Congress," and said OMB's last-minute changes were merely "cosmetic."
Last July, Hutchinson introduced a bill (S. 2986), that would prohibit the implementation of the new procurement regulation until the General Accounting Office completes a study of the idea.
The Business Roundtable, an association representing private corporations, announced Tuesday it would challenge the new rule in court.
"This rule would result in inefficient, political decision-making in the critical area of awarding federal contracts, rather than basing these decisions on the ability of a contractor to actually perform the work," said Roundtable President Samuel L. Maury.
The rule will take effect on January 19th, the last full day of the Clinton administration.