DATE: March 27, 2000

FROM: Barry McVay, CPCM

SUBJECT: OFPP Administrator Lee's Testimony on Challenges and Priorities in Federal Acquisition

AGENCIES: Office of Federal Procurement Policy (OFPP), Office of Management and Budget (OMB)

SYNOPSIS: On March 16, 2000, OFPP Administrator Deidre Lee provided testimony before the House Committee on Government Reform, Subcommittee on Government Management, Information, and Technology, on current priorities in federal acquisition reform and suggested legislative changes.

EDITOR'S NOTE: For more on testimony provided by Henry L. Hinton, Jr., Assistant Comptroller General, before the same subcommittee on the same subject on the same date, see the March 22, 2000, FEDERAL CONTRACT DISPATCH "General Accounting Office; Trends, Reforms, and Challenges in Federal Acquisition."

SUPPLEMENTAL INFORMATION: Deidre Lee started her testimony by stating that "leading highly successful corporations frequently cite the importance of focusing the workforce on a few key initiatives when seeking to change direction." She then listed OFPP's priorities, which she grouped into three areas:

  1. Make federal acquisition more closely resemble commercial practices by:
  2. 2. Use electronic commerce to improve acquisition ("agencies are progressing along three tracks: (1) agencies have developed cross-functional implementation plans for managing the transition from paper-based to electronic processes; (2) agencies are moving fast to facilitate low dollar, high volume purchasing...through the use of purchase cards and catalogs that accommodate electronic payment through the commercial card system; (and) (3) agencies are reengineering key aspects of the acquisition process -- they are working, for example, to enhance access to contract opportunities by making synopses, solicitations, and related documents available electronically").
  3. 3. Develop a capable and knowledgeable acquisition workforce ("the administration has been working to ensure the acquisition workforce has the knowledge and capabilities necessary to provide sound business advice" by requiring contracting officials meet specific educational standards and take a minimum number of continuous education hours each year, by defining competencies, by changing the training delivery system to emphasize commercial training sources and on-line training, updating workforce policies, and investigating several initiatives targeted at attracting and retaining highly capable individuals for acquisition positions.

Ms. Lee then said that OFPP has been reviewing the "statutory framework to ensure it allows our acquisition workforce to pursue innovation and implement new commercial practices as they develop." She listed the two statutory changes OFPP would like to see:

  1. A permanent authorization to the test program in FAR Subpart 13.5, Test Program for Certain Commercial Items, which authorizes the use of simplified procedures for purchases of commercial items up to $5 million. (EDITOR'S NOTE: Section 806 of the National Defense Authorization Act for Fiscal Year 2000 (Public Law 106-65), extended the program expiration date from January 1, 2000, to January 1, 2002, and Federal Acquisition Circular (FAC) 97-15, published December 27, 1999, revised paragraph (d) of FAR 13.500, General, to reflect this change.)
  2. The authorization to substitute electronic notices of contracting opportunities in place of the notice now required to be published in the Commerce Business Daily, and to use the electronic publication date as the starting point for counting the number of days provided to submit bids and proposals.

In conclusion, she called upon the subcommittee to "help us discourage legislative proposals that would reverse the progress we have made to increase the government's use of commercial practices and contracting officials' discretion to exercise business judgment. As implementation of acquisition reform proceeds and changes begin to dislodge those that have become comfortable with the status quo, we can expect to see proposals to turn back the clock and reinstate the barriers that we have worked so hard to take down. As we who promoted acquisition reform recognized early on, contracting officials will have to be willing to take prudent risks if they are to succeed in making the fundamental business practice changes that are necessary to improve government acquisition. Our contracting officials have achieved much success in doing so. But, sometimes they will make mistakes or events considered to be low risk will occur. I urge you and the other members of the subcommittee to work with the administration to resist efforts to repeal acquisition reform before we have had the opportunity to work with the newly authorized acquisition practices and demonstrate the benefits to be realized from full implementation of the most promising ones."

EDITOR'S NOTE: While Ms. Lee asks Congress to be tolerant of "mistakes" made by federal contracting officials as they take "prudent risks," a recent General Accounting Office (GAO) report and a recent Department of Defense Inspector General (DODIG) report indicate that more than "prudent risks" are behind many of these "mistakes." In the GAO report, GAO said it reviewed 22 task orders and delivery orders over $5 million and found that 16 orders were awarded without competitive proposals -- frequently a small initial order would be placed, followed by significantly larger orders placed with the original order recipient "as a logical follow-on" (in one instance, the original $300,000 order was followed by a two orders totalling $13.7 million). The DODIG investigated 105 contract actions and found that every one of the 105 contract actions had problems or violations, and the 15 contracting activities and program offices "did not adequately manage the award and administration of the 105 contract actions."

These can't all be "mistakes"! Many of these contracting officials are "gaming" the acquisition process to obtain the desired results in violation of statutes such as the Competition in Contracting Act and the Clinger-Cohen Act. Others are woefully untrained and receive no supervisory guidance. While no one argues that the federal acquisition system as it existed in the early 1990s needed streamlining, or that the government should not avail itself of the benefits provided by electronic commerce. But there is no overall theme to all the changes -- it is a cacophony of unrelated "streamlining initiatives" that frequently conflict with other "initiatives"! Unfortunately, there doesn't appear to be any adults supervising the playground, and until there are, we will continue to have these "mistakes."

For more on the GAO and DODIG reports, see the March 22, 2000, FEDERAL CONTRACTS DISPATCH "General Accounting Office; Few Competing Proposals for Large Department of Defense (DOD) Information Technology (IT) Orders", and the March 15, 2000, FEDERAL CONTRACTS DISPATCH "Department of Defense; Contracts for Professional, Administrative, and Management Support Services."

Also of note, Deidre Lee is leaving OFPP to become the Director of Defense Procurement (see the March 3, 2000, FEDERAL CONTRACTS DISPATCH "Deidre Lee to Leave OFPP, Become Director of Defense Procurement"). It will be interesting to see whether the priorities of Ms. Lee's successor will be the same.

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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