Senator introduces contracting reform legislation

A newly introduced Senate bill would boost the transparency of sole-source federal contracts, allow companies to protest orders placed under large contracts, and limit subcontracting.

The Accountability in Government Contracting Act (S. 680) was introduced by Sen. Susan Collins, R-Maine. It would make a wide range of changes, extending even to the qualifications of inspectors general and the acquisition strategy in Afghanistan assistance programs, according to a summary of the lengthy bill released by Collins' office.

"Too often, the problem of waste, fraud and abuse stimulates floods of outrage and magic-bullet proposals that lean more toward symbolic gestures than practical reforms," Collins said in introducing the measure. "This bill promotes more open competition for government contracts -- a positive step for both contractors and taxpayers."

Several of the provisions closely resemble recommendations made by the Services Acquisition Reform Act Advisory Committee, a panel convened under the 2004 Defense Authorization Act. That group published a series of recommendations in December that resulted from more than a year of public debate among top federal acquisition officials, representatives of the private sector and academics.

A provision requiring agencies to publicly announce large sole source contracts shortly after they are awarded closely mirrored panel suggestions, as did provisions to expand and improve the training of the federal acquisition workforce.

Collins also included a panel recommendation that would expand contract award protest rights to allow challenges of large task and delivery awards under umbrella contracts. Currently, protests are only permitted at the higher, contract level.

The bill also takes up a panel recommendation that the Office of Management and Budget study the use of interagency contracts, an area that the Government Accountability Office has designated as a high risk to the government.

Marcia Madsen, who chaired the advisory panel, welcomed Collins' adoption of several of the recommendations. "They read the report. Hooray!" she said, referring to the panel's 400-page discussion of its findings and recommendations.

Madsen said some of the measures Collins proposed on competition took a slightly different approach than that suggested by the panel. For example, the lawmaker included a provision limiting the value of task and delivery orders for services under larger contracts to $100 million. The panel focused more on ensuring that strong competition was in place for large orders, Madsen said.

Other measures in the Senate bill include a requirement that prime contractors subcontract no more than 65 percent of the work on any given contract. A Defense acquisition official, speaking on condition of anonymity, said the department would likely oppose the provision, preferring to treat subcontracting decisions as a business choice left to the prime contractor.

The official said the proposed limit of $100 million on task orders for services was arbitrary, and could cause difficulty with some operations in Iraq and Afghanistan. But he said the provisions requiring competition and the one regarding notification on sole source awards were already in effect at the Pentagon.

In another provision regarding the use of so-called "letter contracts," in which urgent work is started before some contract terms such as price, scope or schedule can be worked out, the bill says that if terms are not set before 180 days have passed or 40 percent of the work is completed, the government would have the power to unilaterally set the missing terms.

The Defense official said contracting officers effectively operate under those rules already, through a combination of department policy and federal acquisition regulations. An upcoming Defense inspector general report is expected to recommend throwing out the 40 percent threshold as too confusing, the official said, citing difficulties in gauging when that point has been reached. But the official indicated the department has already reduced its use of letter contracts significantly over the past five years, going from about 4 percent of contract spending down to 2 percent.

Alan Chvotkin, senior vice president of the Professional Services Council, an Arlington, Va.-based industry association, said his group worked with Collins' office in developing the bill.

He welcomed the idea of OMB taking a closer look at interagency contracting, but said he strongly opposes the language that would allow task and delivery order protests. He commended a provision calling for an analysis of the use of "lead systems integrators" on federal contracts, which a Collins press release described as "the de facto outsourcing of program management responsibility" through the use of a large contractor in a coordinating role.

Chvotkin said calling for development of a common definition of the term and study of the phenomenon represented a measured approach to the issue.

The group would oppose setting an arbitrary limit on the amount of a contract that can be parceled out. Chvotkin said that in general, setting arbitrary ceilings encourages agencies to do "dumb" things like forgo good contracting opportunities.

Other measures in Collins' bill include requiring the head of the U.S. Agency for International Development to revise the Afghanistan aid strategy to include more measurable goals and outcomes, clarifying the rules under which inspectors general operate, and requiring greater analysis of government purchase card use to weed out fraud and identify savings.

Rep. Henry Waxman, D-Calif., is also expected to present contracting legislation during this session. Last year, he introduced the Clean Contracting Act, which did not reach a vote in any of the four committees to which it was referred.