House panel blasts proposed procurement regulations

The top leaders of the House Small Business Committee are urging the Clinton administration to fix proposed changes to federal procurement rules, saying the draft could unfairly exclude many businesses from contracting with the federal government.

Committee Chairman James Talent, R-Mo., and Rep. Nydia Velazquez, D-N.Y., the panel's ranking member, sent a letter last week to the General Services Administration about the proposed changes to Federal Acquisition Regulations, which govern the federal procurement process. The proposed changes would require federal procurement officers to take into account whether there is "persuasive evidence" that a company failed to comply with tax laws, or was substantially noncompliant with labor, employment, environment, antitrust and consumer protection laws when deciding if the company can bid on a federal contract.

Administration officials have defended the changes as a "clarification" of current law aimed at ensuring the federal government does not do business with those companies that routinely break the rules.

But the lawmakers said the proposed rules are vague and do not provide enough guidance, leaving too much discretion to contracting officers who may not have the adequate information to make a determination on what constitutes "persuasive evidence."

"The committee concurs with the underlying premise of the proposed rule-proven violators of the laws should not be awarded federal contracts," Talent and Velazquez wrote in the letter to GSA's Laurie Duarte, the Federal Acquisition Regulation secretariat. But "the proposed rule appears to create more questions than it clarifies and potentially could exclude numerous small businesses from obtaining federal government contracts."

The comment period on the proposed changes ended Monday. Among those who submitted comments opposing the rule changes was a coalition of high-tech groups, including the American Electronics Association and the Electronic Industries Alliance. Among the problems the groups cited with the proposed rules: that they cannot be legally implemented as written; they will significantly threaten small business contractors; and they run counter to federal procurement reform and acquisition streamlining efforts.

"The proposed changes to contractor responsibility regulations will impede the ability of our members, large and small, to do business with the federal government and cannot be legally enforced as proposed," the groups said in joint comments filed with GSA. "We urge the administration to reject final implementation of the proposed rule."

Government officials have apparently promised congressional critics that the administration will discuss the final rule changes before formally implementing them.