Contractors to benefit from relaxed purchasing rules

Final rules simplifying regulations and relaxing the strict accounting procedures that contractors must follow were published in the Federal Acquisition Regulation last week. Under a series of congressionally mandated changes to the FAR, agencies have the flexibility to exempt contractors from the government's cost accounting standards. Congress also moved to exempt contractors doing less than $50 million in business annually with the government from Uncle Sam's full set of accounting requirements, raising the exemption threshold from $25 million. Required under Section 802 of the National Defense Authorization Act for Fiscal Year 2000, these changes took effect June 9, 2000. In another revision to the FAR, all terms requiring definition will be consolidated into glossaries and the meaning of terms with conflicting or redundant definitions will be clarified. Procurement experts said these changes would make federal regulations more user-friendly and increase competition for government contracts. "This policy change will enhance DoD's ability to take advantage of the technology found in commercial companies and, at the same time, will help to increase competition for the products and services that DoD buys," said Deidre Lee, director of Defense procurement. The government's complex accounting requirements for contractors have long been viewed as an obstacle to luring top technology vendors into the government market. Intended to ensure that firms with sizable federal contracts were following consistent accounting procedures, the government's standards require contractors to submit extensive disclosure statements. "Raising the threshold [from $25 million to $50 million], will have some impact on reducing reporting burdens on a whole range of contractors," said Allan Burman, former administrator of the office of federal procurement policy and current president of Jefferson Solutions, a consulting firm in Washington. The revision to hundreds of definitions in the Federal Acquisition Regulation is part of an effort by the Defense Acquisition Regulations Council and the Civilian Agency Acquisition Council to comply with a June 1998 memorandum from President Clinton directing agencies to write all forms, documents and letters in plain language. The General Services Administration will post both changes in Federal Acquisition Circular 97-22 on the Federal Acquisition Regulation Web site shortly.