Industry defends re-competition provision in OMB rules

Industry representatives on Tuesday defended Office of Management and Budget rules that require in-house teams winning government contracts to re-compete for projects at regular intervals. Unions and lawmakers have recently questioned the rules.

Under the revisions to OMB Circular A-76, in-house teams that successfully bid on federal projects generally have to defend their contracts after five years. Some agency "most efficient organizations" that perform exceptionally well are eligible for a three-year extension. Most efficient organizations are in-house agency teams that submit bids for contracts.

Re-competition is healthy for contract holders because it forces them to continually strive toward "new and better ways" of performing their work, said Mark Wagner, vice president of government relations for Johnson Controls Inc., a Florida-based contractor. "As an incumbent, you're always on your toes," he said.

Companies re-compete for contracts on a fairly regular basis, and most efficient organizations should be subject to similar standards, said Alan Chvotkin, senior vice president and counsel at the Professional Services Council, an Arlington, Va.-based contractors association. "Nobody should be automatically insulated from competitive rigors," he said.

Contractors are forced to re-compete when the terms of an agreement run out, Chvotkin said. On average, federal contracts last from three to five years, Wagner added. Unlike most efficient organizations, contractors do not have the benefit of receiving a three-year extension for good performance when their initial contract is up, he noted.

But John Threlkeld, a lobbyist with the American Federation of Government Employees, argued that while contractors may re-compete for federal work, the Federal Acquisition Regulation does not require them to do so. The revised A-76 regulations therefore place an unfair burden on in-house teams, he said.

By regularly requiring most efficient organizations to defend their work, OMB might inadvertently harm morale in the federal workforce, Sen. George Voinovich, R-Ohio, said last week at a Senate Governmental Affairs Committee hearing on competitive sourcing. Federal workers should not labor under the perception that "there is always another job competition just around the corner," he said.

OMB federal procurement chief Angela Styles told concerned lawmakers at the hearing that the new policy on re-competition was difficult to write. Private companies wanted to see re-competitions required as frequently as every three years, she explained, but a time frame of five to eight years is probably more appropriate for in-house teams.

In reality, it will be "quite a while" before agencies need to think about running re-competitions, Styles added.

Comptroller General David Walker, who also testified at the Senate hearing, said he believes re-competitions are appropriate as a response to significant changes in the circumstances surrounding a contract, and should not necessarily be required on a regular timetable. Most efficient organizations need to realize that they cannot hold onto a contract indefinitely, he said, but should not automatically have to defend their contracts every five years.