DoD Buying Rule Will Cripple Contracting

Federal Times | May 20, 2002

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Federal Times May 20, 2002 Pg. 1

DoD Buying Rule ‘Will Cripple’ Contracting

Many Defense Department contracting officers are warning that a proposed procurement rule will bog down the depart-ment’s $60 billion-a-year-plus procurement operation.

"I believe the [proposed rule] will cripple the contracting process in our organization," wrote Leticia Walton, a contract-ing official at Brooks Air Force Base, Texas, in comments posted on a DoD Web site. "Requiring our organization to primarily compete most of our orders will hamper us from meeting our milestones of obligation."

The proposed rule would require Defense Department procurement officials to take extra steps when buying services ex-ceeding $100,000 from the federal supply schedules. Specifically, the rule would require them to get at least three bids from vendors before making a purchase. It implements a provision — Section 803 — of the fiscal 2002 Defense Authori-zation Act.

Congress passed the law because of concerns that Defense contracting officers are failing to hold competitions among vendors when they buy services from the federal supply schedules. The supply schedules, administered by the General Services Administration’s Federal Supply Service, are catalogs of prenegotiated contracts of products and services that are available to federal agencies.

The proposed rule was published in the Federal Register on April 1, and it has generated scores of publicly posted re-sponses — largely negative -- from Defense contracting officers, vendors and others. Public comments on the proposed rule were due to the department May 6.

Contracting officers complain the new proposed rule will slow down their purchases of services, hurting their respon-siveness to federal programs and units that rely on them.

Of the 67 responses received, only two favored the proposed rule.

Of the 30 government officials who responded, 28 voiced serious concerns about the proposed rule.

The department plans to review the comments and issue a final rule that will take effect June 26.

Of the more than $60 billion of goods and services the department buys each year, about $2.2 billion are bought from the federal supply schedules, a DoD spokeswoman said.

GSA declined to comment to Federal Times on how the rule might affect federal supply schedules sales.

Mark Werfel, an Army procurement analyst, questions whether competition will be achieved when rules — old or new — are being ignored.

Lack of competition "has been the case for many years, the subject of many an audit report and discussed at many levels of government," Werfel wrote. Werfel said he was speaking personally and not for the Army.

Thomas Meyer, associate deputy of contracting for Army Tank-Automotive and Armaments Command in Warren, Mich., said the final rule should be sure to emphasize that contracting officers notify only "as many contractors as practicable" when buying services from the federal supply schedules.

"What is not practicable is to evaluate dozens of proposals," he said.

In her comments on the proposed rule, Deidre Lee, director of Defense procurement, appeared to agree.

"The guidance needs to clarify that the intent is to receive three offers, not for the contracting officers to perform an ex-haustive search that wastes industry and government resources," Lee wrote.

Vicky Anderson, a contracting officer at Kirtland Air Force Base, N.M., cited the possible conflict the rule might spark with Small Business Administration regulations requiring that a certain number of contracts be awarded to smaller firms.

If the firms holding the contracts on a particular schedule "are not all small businesses, will we have license — without haasle from SBA — to go to a large business?" Anderson wrote.

Others, such as Larry Crane, a procurement official at the Army’s Pine Bluff Arsenal, Ark., argue that the rule would un-dermine the schedules.

"The contractor prices are provided in the schedule," Crane wrote. "By virtue of the schedule, we know who the contrac-tors are. I don’t understand the necessity of informing all of the contractors on the schedule."

Large and small companies doing business with Defense also expressed reservations about the wisdom of adding more steps to the purchase of services from the federal supply schedules where the prices are already negotiated.

"DoD multiple-award service contracts are awarded on a competitive basis taking both qualifications and rates into con-sideration," wrote Linda Ashe of Environmenital Research Group, a company based in Loveland, Colo.

"The labor cost to the government to go through the solicitation, evaluation and award process is approximately $25,000 for each solicitation."

Dennis Longo of the Army's Robert Morris Acquisition Center at Aberdeen Proving Ground, Md., also expressed concern over the possible cost.

"The threshold for competition for multiple-awarded contracts should be raised from exceeding $100,000 to exceeding $500,000," Longo wrote.

Not everyone is complaining about the rule or its wording.

For example, David Steensma, Defense's acting assistant inspector general, said the proposed rule was much needed.

"Contracting officers will frequently rely upon the negotiated labor rates in the multiple-award schedule contracts, and will not further analyze, in considering proposals, the mix of skills and services and prices to perform a task," Steensma wrote.

In his comment on the draft rule, Al Matera, GSA's director of acquisition policy, suggests the rule should be rewritten to stress "the importance of acquisition planning and market research."

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