A compromise has been reached on a controversial set of provisions in the Senate version of the 2002 National Defense Authorization Act that many feared would undo years of acquisition reform in the Defense Department, Government Executive has learned. In its original form, Section 803 of the act (S. 1438) would have required Defense contracting officers to allow hundreds, if not thousands of vendors to compete for every order made through the General Services Administration's Federal Supply Schedules, a set of pre-negotiated contracts awarded to numerous companies from which all agencies can purchase goods and services for a fee. Currently, contracting officers are only required to compete orders among at least three vendors. A Senate Armed Services Committee staffer, frustrated by reports that Defense contracting officers were failing to conduct proper competitions on Federal Supply Service schedules and other multiple-award contract orders, wrote the provision, according to sources close to the negotiations. Speaking anonymously, one person who read the revised language of Section 803 of the act Monday, said an agreement brokered in conference committee acknowledges the concerns involving improper contracting practices without crippling the Defense acquisition process. The compromise eliminates the full-competition requirement and directs Defense contracting officers to obtain bids from at least three schedule-holders. If they don't obtain the required number of bids, they must document why and demonstrate that they made a reasonable effort to do so, the source said. The original language would have caused a logistical nightmare that would have effectively destroyed Defense's ability to make use of the streamlined contracts to quickly buy goods and services, experts said. Defense is the biggest user of the schedules, so the provision would likely have undermined GSA's customer base in one of its most important business lines. The revision will likely be a boon for GSA and other agencies that provide fee-based acquisition services for Defense and depend on the schedules for rapid turnaround. David Sutfin, chief of GovWorks, the fee-for-service arm of the Interior Department's Minerals Management Service, said the compromise removed what would have been a serious impediment in the acquisition process. "This is clearly keeping [acquisition] reform alive," he said. Frequently, contracting officers don't receive multiple bids from vendors because many companies are rarely interested in competing for every job. However, last November the General Accounting Office documented frequent Defense abuses of the GSA schedules and other multiple-award contracts. GAO said those abuses stemmed largely from a fundamental misunderstanding by contracting officers about how to conduct fair competitions. In its report, "Contract Management: Not Following ProceduresUndermines Best Pricing Under GSA's Schedule," (GAO-01-125), GAO found that, in several cases, Defense contracting officers were unaware of the need to get competitive bids on schedule orders. Rep. Tom Davis, R-Va., chairman of the House Government Reform Subcommittee on Technology and Procurement Policy, had pushed for a compromise on Section 803 with staffers on the Senate Armed Services Committee. Spokesman David Marin said Davis was pleased with the compromise language. "It will achieve competition within DoD on multiple award contracts without shutting down the process through unrealistic requirements that contracting officers cannot meet-which the original provisions threatened to do," Marin said. Steven Kelman, former administrator of the Office of Federal Procurement Policy during the Clinton administration, called the compromise a reasonable action. "This should not be seen as telling the agencies to 'take your medicine,'" Kelman said. "This is in the interest of the agencies and their missions." Kelman agreed with the Bush administration that all agencies need to refocus their attention on effectively competing orders on multiple-award contracts. "GSA and the agencies really need to get the message that streamlined competition means both 'streamlined' and 'competition,' not just one, not just the other," Kelman said. Section 801 of the act, which would have established an extensive oversight process for contracting Defense services, has also been squelched, the source said. Defense will be required to set up a management system for purchasing services, but the agency will be free to decide on its own how that system should be built. Section 802, which requires Defense to achieve specific savings goals on services contracts, remains intact, according to the source.
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