Lawmakers blast proposed contracting regulation

Proposed changes to federal procurement rules opposed by many private sector companies drew fire from lawmakers from both parties Thursday, who said the changes would introduce additional confusion and subjectivity into the federal contracting process.

The changes, which are open for public comment until Nov. 8, would amend the Federal Acquisition Regulation to require federal procurement officers to take into account whether there is "persuasive evidence" that a company failed to comply with tax laws or was substantially noncompliant with labor, employment, environmental, antitrust or consumer protection laws when deciding if the company can bid on a federal contract.

During a hearing before the House Small Business Committee, Deidre Lee, the Office of Management and Budget's administrator for federal procurement policy, said the rule changes are a clarification aimed at ensuring the federal government does "business with good citizens who comply with the law."

But some lawmakers and companies say current regulations already address this issue, and the changes would introduce too much subjectivity into the process.

"This can really make for mischief," said Rep. Tom Davis, R-Va., who is helping to lead opposition to the proposed changes. "I agree . . . that bad actors ought to be put out of it, (but) we have ways to do this now."

High-tech companies and others have raised concerns that the rule changes would allow procurement officials to arbitrarily keep them from bidding on the $28 billion per-year worth of federal IT contracts because of minor violations or alleged wrongdoing.

Davis said the changes would allow other companies to leak allegations of wrongdoing about their competitors to procurement officers in order to shut them out of a contract.

"Small businesses are very concerned about this," said Rep. Nydia Velazquez of New York, the committee's top Democrat.

When pressed by committee Chairman Jim Talent, R-Mo., about whether a company could be denied from bidding because of one-time or technical violations, Lee said contract officers would have to examine each case individually and the circumstances behind such violations, as well as consider what the company did to address the problem.

Talent, however, was still skeptical, saying "there's an arbitrariness that's introduced into the law that's alien to our jurisprudence."

Reps. Juanita Millender-McDonald, D-Calif., and Sue Kelly, R-N.Y., also voiced concern about who would be responsible for ensuring all the different companies on a big project are complying with the law.

While defending the intent of the rules, Lee acknowledged that there were many questions that need to be answered and noted that the OMB would consider all the comments on the issue before deciding on the final rule changes.