Defense procurement rule confounds contractors

An interim services acquisition rule recently issued by the Defense Department has caused confusion among contractors and warrants clarification, according to two industry groups.

The temporary regulation, published in the Federal Register on Oct. 1, requires contracting employees at Defense to seek approval from designated officials before procuring services "through any contract or task order awarded by an agency other than DoD." Specific procedures for obtaining approval will vary among the Army, Navy and Air Force departments, and are still being finalized.

Industry groups say the provision has worried contractors, many of whom interpreted it to mean that Defense employees would need to seek approval for procurements made off General Services Administration schedules-lists of pre-negotiated contracts on which agencies are free to bid. Extra administrative hoops could provide a disincentive for Defense to use the schedules.

In fact, the provision does not apply to services acquired from GSA schedules, according to Steven Cohen, a case manager at the Defense Acquisition Regulations Directorate. GSA's schedule is similar to a catalogue where Defense employees can shop around for service providers.

While GSA administers the schedule, Defense employees choose contractors off the list and place orders, Cohen explained. The approval procedures in the Oct. 1 regulations apply only when Defense wishes to procure services using a contract that has been awarded by an external agency.

"There was a lot of angst when the [interim] rule came out," said Alan Chvotkin, senior vice president and counsel at the Professional Services Council, an Arlington, Va.-based contractors association.

The Professional Services Council and the Coalition for Government Procurement have asked Defense to clarify the final version of the regulation to alleviate any further misinterpretation. Defense officials have been receptive to the request, according to Chvotkin and Larry Allen, executive vice president of the procurement coalition.

Cohen said Friday that his office is still soliciting comments on the interim regulation. Depending on the feedback received, Defense may consider changing the wording, he said. The GSA schedule issue "has come up," he added. "There were people who were concerned."

The Professional Services Council has no overall quibbles with the regulation, Chvotkin said, since it is required under Section 801(b) of the Fiscal 2002 Defense Authorization Act. Defense must establish rules for managing services procurement, according to the law.

A separate provision in the Oct. 1 interim rule requires senior procurement executives at Defense to approve all nonperformance-based services contracts or task orders worth more than $50 million.