Panel releases draft acquisition reform proposals

By Jenny Mandel

December 22, 2006

A comprehensive slate of recommendations to overhaul federal services acquisition was published in draft form Thursday by an advisory panel. The suggestions, designed to boost competition, included several that an industry coalition has said will unnecessarily tie the hands of contracting officers.

The Services Acquisition Reform Act Advisory Committee, a group created by the 2004 Defense Authorization Act, released a "working draft" of recommendations developed over almost two years. The committee will accept public comment on the document for two weeks, but warned that substantive changes to its findings and recommendations will not be accepted.

The 421-page report consolidates proposals on common commercial practices, performance-based contracting, interagency contracting, small businesses, the federal acquisition workforce, the role of contractors and federal procurement data collection.

A coalition of industry groups representing contractors have objected to several of the recommendations over the course of their development, and on Friday Troy Hodgkins, director of defense and intelligence for the Information Technology Association of America, reiterated its opposition.

Hodgkins, who said he was speaking only on behalf of ITAA because the 11-group coalition has not yet had a chance to confer on the report, said he was disappointed with several of the recommendations. For example, the panel suggested that acquisition laws be changed to allow protests of individual orders worth more than $5 million under multiple-order contracts. The industry coalition has said allowing such protests would be time-consuming and costly to taxpayers.

Hodgkins also said ITAA is disappointed by a group of recommendations on the use of time and materials contracts, under which the government's requirements are not fully defined and the contractor is paid based on its input. The panel suggested that existing laws limiting the use of such contracts be enforced, and that in cases where they are used, agencies should be required to define the scope and objectives of the purchase.

But Hodgkins said existing regulations limit the use of time and materials contracts to cases in which the government's requirements cannot be clearly defined, or when urgent time constraints limit the opportunity to define them. He said further limiting the use of such contracts would put contracting officers in a situation in which they could not define an agency's needs clearly enough to make any award, and some work simply could not be done.

Panel chairwoman Marcia Madsen, a partner at the law firm Mayer, Brown, Rowe & Maw LLP, has contested that interpretation of the definition change. On Thursday, Federal Computer Week published her rebuttal of the industry position, in which she urged observers not to "waste time" considering what she called an erroneous interpretation of the panel's work.

Finally, Hodgkins said a proposed change to how commercial services are defined, eliminating a loophole that allows consideration of services similar to those commercially available to be treated like off-the-shelf options, would limit the government's ability to buy the latest technologies. The recommendation was developed to let contracting officers use procedures that grant more insight into a company's pricing for items not sold on the general market.

"With federal procurement spending approaching $400 billion annually and the serious and competing demands on taxpayer dollars, an accountable and transparent acquisition system that delivers innovative, high-quality goods and services is critical to our national interests," Madsen said Thursday.

The Project on Government Oversight, an advocacy group that has closely followed the panel's deliberations, criticized aspects of the report's development but urged that several of its recommendations be implemented through congressional action. "Congress has been thrown a contracting softball, and it should hit the ball out of the park," PGP General Counsel Scott Amey said.

He endorsed the panel's suggestions on task order protests, the redefinition of commercial services, increased training for contractors on federal ethics rules, improvements to the federal contract reporting system and strategies to break large contracts into smaller ones.

Many of the panel's recommendations could be implemented either by legislative action, changes to federal acquisition rules or policy determinations by the Office of Management and Budget's Office of Federal Procurement Policy.

Lawmakers including Tom Davis, R-Va., who proposed the legislation that created the panel, his Democratic counterpart on the House Government Reform Committee, Henry Waxman, D-Calif., who will take over as chairman in January, and Sens. Joe Lieberman, D-Conn., and Susan Collins, R-Maine, of the Homeland Security and Governmental Affairs Committee, are expected to look closely at the panel's recommendations. Paul Denett, OMB's procurement policy chief, also has said he will consider the group's proposals.

Public comments on the report will be accepted through Jan. 5, and should be directed to Laura Auletta by e-mail at, by fax to (202) 395-5105, or by postal mail to:

Laura Auletta
Office of Federal Procurement Policy
725 17th Street NW, Room 9013
Washington, DC 20503

By Jenny Mandel

December 22, 2006