New bill introduced to fix federal contracting problems

The latest attempt to legislate good contracting practices was recently introduced. Senate bill S-680 has quite a few changes in store for our profession, many of which are outlined in the GovExec article. See the article for such new twists as:

Requiring agencies to publicly announce large sole source contracts shortly after they are awarded

Expand and improve the training of the federal acquisition workforce.

Expand contract award protest rights to allow challenges of large task and delivery awards under multiple award IDIQ contracts.

Have the Office of Management and Budget study the use of interagency contracts

Limit the value of task and delivery orders for services under larger contracts to $100 million.

Include a requirement that prime contractors
subcontract no more than 65 percent of the work on any given contract.

Includes some provisions that resemble recommendations made by the Services Acquisition Reform Act Advisory Committee (see these)

One provision of that bill that would impact our world the most, in my opinion, is the requirement to publish all Justifications and Approvals (J&As) on FEDBIZOPPS and the agency's internal website (such as the Army's Single Face to Industry website).

I am of two minds on this one.

Based on comments from procurement analysts that I know, the quality of J&As may increase exponentially if they were to be published and subject to the same scrutiny of everything else that is published in the contracting world.

Initially, there would be a firestorm of comments and concerns. However, contracting officers would get better at crafting J&As that meet both the federal procurement requirements and the public's requirements. This could be a good thing, long term.

Secondly, though, anything that is published creates an opportunity to be second-guessed by those outside the process and by those trying to influence the process. Soon, there would be a protest procedure for J&As, including some time period for public comments, and there may never be an award made for other than full competition. This would certainly tie the hands (and feet?) of contracting officers simply trying to provide our soldiers, sailors, airmen, marines and other government agencies with what they need to accomplish this monumental task that is running the federal government.

The resulting glacial pace of procurement (if it isn't already)would be due to adding another layer of public hysteria-induced confusion and CYA-induced oversight. I am sure that is not the intent of this proposed legislation.

DFAR keeps up with T&M and Labor Hour changes

This Defense Federal Acquisition Regulation Supplement (DFARS) case is an update to payment options brought on by the the new FAR change (see below) to allow Time and Material (T&M) and Labor Hour contracts for commercial services.

There were three payment options specified in the FAR rule. The Defense Department narrows them to one. Here is how the DFAR case explained it:

DoD believes it is in the best interests of the Department to select, and make mandatory... requiring separate fixed hourly rates that include profit for each category of labor performed by the contractor and each subcontractor, and for each category of labor transferred between divisions, subsidiaries, or affiliates of the contractor under a common control.

That is the way DoD hopes to keep the final outcome of T&M and Labor Hour contracts to be as predictable and controllable (manageable???) as possible.

The DoD head of procurement has a good overview of this change on their DFARS site. There is even a chart comparing before and after use of T&M and labor hour contracts. Just scroll down the page a little to the heading, "Labor Reimbursement on DoD Non-Commercial Time-and-Materials and Labor-Hour Contracts (DFARS Case 2006-D030)."

Rules expand Time and Materials (T&M) plus Labor Hour contracts to commercial services

[This post includes an addition of information regarding T&M and Labor Hour contract D&Fs for contracts over 3 years]
Perhaps you noticed that the FAR got a revision (FAC 2005-15 dated Dec. 12, 2006) to allow T&M and Labor Hour contracts for commercial services. In their deliberations, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council worked to implement the Services Acquisition Report Act of 2003 (SARA). One of the provisions of SARA was to allow using T&M and Labor Hour contracts to purchase services that are commercial in nature.

This new change to the FAR keeps a decided preference for fixed price contacts for services.

Briefly, here is how to use these contract types to buy services (new FAR Part 12.207):

First, the contracting officer needs a determination and finding (D&F) that states a T&M or Labor Hour contract is the only type of contract appropriate for this requirement. Also, for IDIQ contracts, a similar D&F is needed for each task order. [The D&F has some specific requirements that need to be included, so be certain to check them out (FAR 12.207(b)(2)). Also, the D&F authority is HCA for contracts longer than 3 years (FAR 16.601(d)(1)(ii))]

Next, there must be a ceiling price beyond which another determination must be made.

Further:

• The contract must be a competitive award (or small business set aside)
• If using an "other than full and open competition" Justification and Approval (J&A), must have 2 or more offers/proposals or are placing an order under the fair opportunity procedures of a multiple award delivery order contract.

Keep this type of contract arrangement in mind and remember to properly justify its use and make the proper determinations.

More from the Acquisition Advisory Panel draft report

Two more articles provide more information about the SARA panel's decisions. First, the panel believes that by using commercial business practices, competition will increase. Here how the article puts it

...move away from time-and-materials contracts because they take too much effort to oversee. Instead, the panel favors performance-based acquisitions. But other significant recommendations include setting up a new General Services Administration schedule for professional services, redefining stand-alone commercial services, applying the three-bid minimum requirement for Defense Department services over the simplified acquisition threshold governmentwide, and amending the Federal Acquisition Regulation (FAR) to improve transparency in government contracting.

The second article says the panel believes that the acquisition workforce doesn't know who it is and that they are not being sufficiently trained. In addition, they will conduct a study to see, among other things, whether there should be a government-wide version of DAU.

Of course, since DAU has an organic "systems acquisition" leaning (notice who their Defense AT&L Magazine is aimed at), they are missing helping those of us who spend the other 60% of federal procurement dollars!

From their writer's guidelines at the end of the magazine:

The purpose of Defense AT&L magazine is to instruct members of the DoD acquisition, technology & logistics (AT&L) workforce and defense industry on policies, trends, legislation, senior leadership changes, events, and current thinking affecting program management and defense systems acquisition [my italics], and to disseminate other information pertinent to the professional development and education of the DoD Acquisition Workforce.

Perhaps a services acquisition university might be a good thing. Let's see what they propose.

New Acquisition Advisory Panel Report is drafted.

The Acquisition Advisory Panel, formed as a result of the Services Acquisition Reform Act of 2003 (SARA) has put together its draft report. Youmay have seen discussions of it in various places. One such place is Steven Kelman's column in FCW.com. He is starting a series of discussions about the report. This report drew the opposition of panel member Marshall J. Doke.

FYI, other board members are:

• Louis M. Addeo, President, AT&T Government Solutions;
• Frank J. Anderson, Jr., President, Defense Acquisition University;
• Allan V. Burman, President, Jefferson Solutions and former Administrator for Federal Procurement Policy;
• Carl DeMaio, President and Founder of the Performance Institute;
• David Drabkin, Deputy Associate Administrator for Acquisition Policy, General Services Administration;
• Jonathan Etherton, Vice President, Legislative Affairs, Aerospace Industries Association of America, Inc., and former staff member of the Senate Armed Services Committee;
• James A. Hughes, Jr., Deputy General Counsel for Acquisition, Department of the Air Force;
• Deidre A. Lee, Director of Management and Chief Acquisition Officer for the Federal Emergency Management Agency;
• Tom Luedtke, Assistant Administrator for Procurement, National Aeronautics and Space Administration;
• Marcia G. Madsen, Partner, Mayer, Brown, Rowe and Maw, and past Chair of the ABA Section of Public Contract Law;
• Melanie R. Sabelhaus, Deputy Administrator, Small Business Administration;
• Joshua I. Schwartz, Professor of Law and Co-Director of the Government Procurement Law Program, George Washington University Law School;
• Roger D. Waldron, Director, Acquisition Management Center, General Services Administration.
• Laura Auletta, Chairperson of the Civilian Agency Acquisition Council, will serve as the Panel’s Designated Federal Officer (Executive Director).

You are welcome to read the draft and the two columns that pick at the decisions. I think that services acquisition is so important that it rates it's own Aquisition University (DAU is for systems acquisition). Since DoD spends as much on services as systems, it is that important!