The Procurement Reform Pendulum

ometimes, events in Washington can be predicted with all the certainty of physics.

People like to use the metaphor of a pendulum to explain the nature of power and change in the capital city. The pendulum swings one way, favoring looser rules under a new regime, and then inevitably it swings back, reining in excess.

Such is the case with one of the mainstays of former Vice President Al Gore's plan to reinvent government. In the mid-1990s, a series of regulatory changes and laws passed under the auspices of reinvention dramatically changed the way the federal government bought goods and services from the private sector, and the technology industry in particular has reaped the benefits. The new rules eased restrictions on how contracting officers, who award billions of dollars of work every year, can interact with vendors; gave more discretion to agency managers to choose the companies they wanted to buy from; and ultimately gave firms unprecedented access to the government market with the creation of a new breed of contract that let businesses sell not just to one agency, but to any of them.

Proponents of the 1990s reforms remember the bad old days when buying a simple desktop computer could take two years, making it obsolete by the time it arrived. They abhor any prospect of being bound again by such archaic rules. But sure enough, the pendulum is swinging, and today, procurement reformers of the 1990s are fighting it out with a new crowd that believes today's laws are too lax, waste the taxpayers' money and repeatedly result in contract awards to the same large companies.

Ironically, the toughest critic-who fears reform has gone awry and has meant more money for large corporations-comes from the business-friendly Bush administration. Since her confirmation last year, Angela Styles, the administrator of the Office of Federal Procurement Policy, has made it her mission to bring government contracting officers back to what she calls "the acquisition basics." During her Senate vetting, Styles said she worried that the office she now heads hadn't examined whether the procurement system has "compromised competition, fairness, integrity and transparency, including the promotion of small and disadvantaged businesses."

Some of Style's supporters, including the Project on Government Oversight, a Washington watchdog group, and such consumer advocates as Ralph Nader, go much further, saying the system is in desperate need of repair.

But companies and many government procurement executives take issue with those charges. In August, their anger boiled over when Styles sponsored a speech by the chairman of a procurement oversight board that had its authority stripped by the reforms of the Clinton administration. As part of an official lecture series, Judge Stephen Daniels, who heads the General Services Board of Contract Appeals, ridiculed procurement changes made in the 1990s. In protest of Daniels' well-known opposition to the reforms, all but one of the federal procurement executives who were the intended audience of the speech refused to attend.

In the wake of Daniels' speech, a leading industry coalition lodged its own protest. The Information Technology Association of America, a voice for technology contractors that have made billions of dollars in government sales, drafted a letter intended for senior officials at the Office of Management and Budget. The letter took issue with Daniels' speech and argued that the administration had failed to give the defenders of the reforms a public forum to make their case.

Larry Allen, the executive vice president of the Coalition for Government Procurement, a major association of contractors in Washington, says Styles is trying to "completely dismantle the hard-fought reforms that make government acquisition the great management success story it currently is." Allen says that Styles "consistently takes a very narrow legal view" on procurement regulations, and that her dearth of experience as a government manager-she had held no major office in the government until now-hinders her ability to grasp the benefits of reform.

But Styles isn't the only one calling for closer inspection of the results that reforms have produced. The battle over reform rages throughout the government. The Defense Department faces new restrictions on how it can award work on certain contracts valued at more than $100,000. The General Services Administration, the government's main purchasing arm, is studying how to consolidate numerous contracts that are open for governmentwide purchasing. Agencies pay a fee to use those contracts, and critics complain that oversight of the contracts is so loose that agencies can make awards with practically no competition at all. (GSA manages a set of contracts, known as the schedules, to which the new Defense purchasing rules would apply.)

In the wake of corporate accounting scandals and bankruptcies, the administration also is looking into ethical issues that have grown out of the close relationships that contractors and agencies developed during the reform years. In August, the Office of Government Ethics sent a letter, obtained by Government Executive, to attorneys and ethics specialists at 19 agencies and departments, asking them whether new guidelines governing contractor conduct should be developed and implemented. The ethics office asked whether an increase in contracting out federal services "may cause the lines between the public and private sectors to blur."

So what's at the root of this divisive conflict? The answer depends on your definition of "reform." In a recent interview, a senior OMB official argued that the policies Styles is pushing-getting contracting back to the basics-are reformist, because they seek to correct and improve the regulations now in place. The architects of the 1990s policies call themselves reformers, too, but their mission is to push those policies even further, not to curtail them.

Styles and her supporters believe that by reining in the procurement process, more light will be shed on it. They also believe the taxpayers and companies that have had a tough time gaining entree to the inner circles of government contracting would benefit. Even Styles' most vitriolic critics agree that she's ideologically committed to her position.

Supporters of the 1990s reforms also are firmly rooted in ideology. They believe the procurement process was burdensome and restrictive before it was reinvented, and that it impaired agencies' ability to operate at the pace of modern life and therefore serve the public.

But both sides have their own interests. Few, if any, contractors would like to see current laws changed, because that would limit their sales opportunities. Procurement executives and contracting officers say they enjoy unprecedented freedom from confining regulations, and now have the chance to operate like savvy business people instead of rule-bound bureaucrats. And many of the former federal officials who were instrumental in passing reforms seven years ago now are owners and board members of companies that do a great deal of business with the government.

Some reform critics would certainly benefit from more regulation. The General Services Board of Contract Appeals, for instance, once had the authority to rule on protests from companies that lost competitions for contracts. In the early 1990s, when it was almost standard practice for losing companies to file such protests, the attorneys who worked on them made millions of dollars. Some charged fees exceeding $100,000 per case, according to some estimates. Before taking her post in government, Styles was an attorney for the Washington law firm Miller & Chevalier, which specialized in contract litigation.

Everyone in the battle over reform stands to win or lose, depending on how the pendulum swings. Ultimately, most observers feel the supporters of the current system will prevail, although some constraints on the freedoms enacted during the reinvention era may be put in place. Rep. Tom Davis, R-Va., the chairman of the House subcommittee that oversees procurement policy, may have the last word in the battle. Davis not only counts among his constituents many of the technology contractors of Northern Virginia that benefited from Clinton-era reforms, but he also heads the Republican Congressional Campaign Committee. He thus has an attentive audience in the administration. Davis has told OMB Director Mitch Daniels that he wants to see reforms expanded, not curtailed.

But the power of the critics of the 1990s reforms should not be discounted. After all, Styles controls the procurement policy agenda at OMB, and a backlash against loosened purchasing regulations is building at the agency level. The criticism comes at a time when concerns about corporate accountability and fair play are running high.

For now, the debate has risen to such a vitriolic level that conflicts of personality are obscuring the arguments over policy. As the pendulum swings back, it will probably settle somewhere in the middle. But not without a fight.