Look beyond the brand, OMB reminds contracting offices

Agencies often specify brand names in contract solicitations despite regulations restricting their use, in a practice some industry critics say is costly and limits full competition.

Robert Burton, associate administrator of the Office of Management and Budget's procurement policy shop, recently sent a memorandum to agencies updating and expanding the requirements for justifying the use of brand specifications in solicitations.

"Agencies should encourage their acquisition professionals to limit the use of brand name specifications and maximize competition," Burton wrote in the memo, noting that the Federal Acquisition Regulation requires agencies to prepare a justification document on acquisitions of more than $25,000 any time a brand is specified.

The FAR requirements are designed to force agencies to define their needs and allow bidders to meet them in the most economical way possible. Exceptions are allowed where the agency determines that a "particular brand name, product or feature is essential to the government's requirements," or market research indicates that no other companies' products can meet the agency's need.

OMB first commented on the practice formally last year, calling on agencies to publicize their long-required justifications by posting them in solicitations on the FedBizOpps Web site.

In its update, OMB said as an alternative, agencies could post the notification through the e-Buy system for purchases using the Federal Supply Schedules. This addresses an omission whereby agencies using the popular supply schedules did not previously need to post the documentation. An upcoming FAR change will reflect the new posting requirements, Burton said.

An OMB official who requested anonymity said the office has not collected data on the extent to which agencies specify brands unnecessarily, but has received complaints from industry on the subject. Both small and large companies are affected by the practice, she said, and OMB's direction that agencies post their justifications is aimed at increasing transparency and ensuring that agencies fill out the paperwork -- and, in the process, consider whether specifying a brand is really necessary or appropriate.

Advanced Micro Devices, an Austin, Texas-based seller of computer processors, praised OMB's action. AMD competes with Santa Calif.-based Intel, which is frequently specified by agencies in their solicitations, to supply the computing power for printers, laptops, desktop computers and other hardware devices.

"Competition promotes consumer choice, lowers prices and encourages innovation," said Sue Snyder, AMD's vice president of international policy and relations and executive legal counsel. "This change will help government agencies choose from the best products at the fairest prices for American taxpayers."

In February, AMD-sponsored research by R. Preston McAfee, a professor of business, economics and management at the California Institute of Technology, noted that in 2004, 69 percent of applicable technology solicitations specified a particular microprocessor either by brand or "brand name or better" guidance. Until 2005, the Air Force specified Intel in all computer purchases, McAfee noted, calculating that changing the practice could save about $2.2 million annually.

"You can imagine that if you go into a grocery store and you say. 'I'd like a box of Kleenex tissue paper,' they're going to come back with a box of Kleenex tissue paper," said Steve Kester, manager of AMD government relations.

By not specifying a brand and allowing the marketplace to choose the best solution, Kester said, "Ultimately the government consumer wins, and the taxpayer wins."