OMB tightens reins on technology contracts

The Office of Management and Budget is tightening the reins on governmentwide information technology contracts.

In a Jan. 25 letter, OMB Director Jacob Lew revealed that OMB has begun a two-year evaluation of the need for government-wide acquisition contracts (GWACs). GWACs allow agencies to issue task and delivery orders against other agencies' multiple-award IT services and equipment contracts, usually for a fee, instead of initiating new contracts. GWACs offer agencies a way to avoid the complicated and lengthy process of open competition and negotiation for contracts.

GWACs have stirred outcry in recent years because some sponsoring agencies have allowed customers to direct task orders to preferred vendors, effectively limiting or eliminating competition. Acquisition law requires that the multiple vendors in GWACs be given a fair opportunity to compete for task orders under most conditions.

In a Jan. 11 memorandum to government procurement chiefs, Deidre Lee, administrator of OMB's Office of Federal Procurement Policy, underscored OMB's opposition to preferred sourcing. "This practice deprives the government of the benefits and efficiencies of continuous, streamlined, commercial-style competition made possible by the fair opportunity process because it discourages other multiple award contract holders from competing," Lee wrote.

In September, OMB issued a proposed amendment to acquisition regulations that would prohibit "methods such as allocation, or designation in any way of any preferred awardees, that would result in less than fair consideration being given to all awardees prior to placing each order." The proposed rule is expected to become final this month.

Meanwhile, Lew took a stab at setting official rules for GWACs, at least those seeking special designation from OMB. In his letter designating the Transportation Department as executive agent for the follow-on to its successful Information Technology Omnibus Procurement GWAC, Lew listed operating principles to which executive agent GWACs must adhere, including:

  • The multiple award contract underlying a GWAC must include a statement of work that reasonably describes the scope, nature and purpose of work to be performed so vendors can decide whether or not to bid on it.
  • Agencies as well as private companies must be able to bid.
  • The contract should include caps on prices for defined tasks, caps on hourly rates and other provisions reflecting the government's buying power.
  • Orders should be for fixed prices and should be performance-based whenever possible.
  • Orders should be based on best value and vendors' past performance.
  • To ensure competition, orders should be for specifically defined, narrow and brief projects aimed at solving part of an overall mission problem and should deliver benefits independent of future tasks or orders.
  • Long-term orders should contain "off ramps" to avoid dependence on a single contractor.
  • The scope of competition for orders should quickly be narrowed to leading contenders so they will be motivated to invest resources in coming up with superior proposals.
  • The ordering process should not make it difficult for agencies to convert work from in-house to vendor performance via OMB Circular A-76 contracting rules.

Agencies can operate GWACs without executive agent designations, but the budget agency clearly hopes the principles will be widely adopted. OMB also intends to issue further GWAC policy guidance as well as a framework for executive agency designations in an effort to more effectively carve up the federal IT market.

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