Competition Benefits Agencies

W hile politics may make strange bedfellows, the same can be said of competition. How else do you explain the Transportation Department Acquisition Services Center's expected new partnering arrangement with the National Institutes of Health?

Anyone working in the private sector recognizes that arch competitors can become best friends overnight, depending on the prospects of winning a contract. You form your team based on who offers the greatest chance of success. Therefore, one day you may be partners, while the next day you are "ghosting" your now-competitor's likely themes, countering their messages and highlighting your strengths.

While such behavior long has been a fact of life in the contracting business, it's always taken place on the contractor side, not the government side. However, new contracting vehicles and practices may be changing that situation. Governmentwide multiple-award contracts (MACs) are the catalyst.

These task and delivery order contracts allow the government to purchase an indefinite quantity of supplies or services from more than one contractor, generally within certain time and dollar limits. Contractors compete to provide the goods or services in response to agency orders. Congress encouraged the use of these vehicles in the 1994 Federal Acquisition Streamlining Act, largely in the hope that they would help foster competition. Through them, agencies have on hand a stable of contractors, offering different technical approaches at competitive prices.

Some of the largest MAC contracts are available to agencies across the government. These include, among others, Transportation's Information Technology Omnibus Procurement (ITOP) contract at more than $1 billion and NIH's Chief Information Officer-Solutions and Partners (CIO-SP) contract. This contract has no set dollar limit, just a constraint on numbers of tasks.

Hundreds of contractors and subcontractors offer information technology services through these vehicles. In fact, the ITOP contract has proven so successful that Transportation is preparing a second, larger solicitation. You can meet a full range of IT needs with these contracts, from help desk services to security to network redesign, all with a minimum of fuss.

Where speed and performance are an issue, existing MACs or General Services Administration schedule contracts are almost always the vehicles of choice, for one reason: Much of the administrative work has already been done. Awardees have been weighed in terms of financial responsibility, responsiveness to the statement of work, and successful past performance. Moreover, for MACs, procurement integrity provisions, for the most part, no longer apply and the standard of competition for tasks is reduced from "full and open" to "a fair opportunity for consideration." The result is an award made in a matter of weeks, not months.

Given these benefits, it is surprising that MACs do not represent a larger piece of the federal procurement pie. Based on the Federal Procurement Data Center's fiscal 1997 federal procurement report, MACs accounted for only $7.6 billion in contract awards in fiscal 1997, out of $190 billion for the government as a whole. Single-award indefinite-quantity/indefinite-delivery awards, at $21 billion, were almost three times as big.

However, this was the first year the Procurement Data Center collected MAC information, and there might be some undercounting. Moreover, with new individual contracts projected in the $10 billion range, the percentage can only go up.

Agencies like Transportation and NIH benefit from conducting these procurements by charging a fee for the administrative services they supply. Generally, the amount is on the order of 1 percent of the value of the task. Here is where the business spirit of the reinvention revolution comes to play. To make its MAC contracts more available to other agencies, NIH is contemplating signing an administrative servicing agreement with Transportation. This would allow NIH to take advantage of Transportation's revolving fund for paying vendors and its contracting office for administrative support.

A draft memorandum of understanding between the two agencies would allow Transportation's reimbursable contracting shop to help other agencies purchase services from NIH's CIO-SP or other MAC contracts. In effect, for certain deals, Transportation would become NIH's agent. But wait. Doesn't Transportation's ITOP vehicle directly compete with NIH's CIO-SP for information technology services? Apparently not when it's in the interest of both agencies to partner.

Are there any downsides to the equation? An April 1998 memorandum to the President's Management Council by G. Edward DeSeve, acting deputy director for management at the Office of Management and Budget, cites one. His complaint, buttressed by concerns raised by the General Accounting Office and the Defense Department inspector general, is that agencies using MACs "too often forego the opportunity to make effective use of competition." He asks agencies to discontinue identifying "preferred vendors" when notifying contractors of upcoming orders.

Let's hope agencies listen. It would be a shame if these kinds of anti-competitive practices resulted in stifling a truly entrepreneurial spirit.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington.

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