Contractors aim at Defense bill's acquisition changes

While debate over the Senate's defense authorization bill will focus largely on Iraq, government contractors are quietly opposing acquisition reforms included in the measure.

The defense bill, which the Senate took up Monday, contains a series of provisions aimed at curbing an increase in noncompetitive contract awards. Separate House and Senate procurement reform bills contain similar provisions.

While organizations representing contractors appear ready to accept some of those provisions, they believe the Senate will approve several proposed changes they consider onerous. They hope to defeat those changes when the bill goes to conference with the House.

Contractor groups are taking particular aim at provisions in the bill that would push the department to pay more contractors on a fixed-price basis rather than for work hours or materials used. The bill would prohibit the Pentagon from applying special rules for buying commercial services when awarding these so-called time-and-materials contracts.

Some procurement experts advising Congress have said the provision will help restrict overuse of the contracts, which have in some cases have resulted in skyrocketing costs.

The bill would require the Pentagon to create a list of all active time-and-materials contracts for services in the department and to develop plans to switch them to performance-based contracts, transfer the job to federal civilian employees or eliminate the requirement.

Stan Soloway, president of the Professional Services Council and a former deputy undersecretary of Defense for acquisition reform, argued that requirement would put an "inappropriate burden on DoD."

Soloway said time and materials contracts are useful when a desired outcome is hard to define. "The legislation goes too far," he said. "They're foreclosing appropriate contracting options."

Larry Allen, president of the Coalition for Government Procurement, which represents contractors who sell products and services to the government, said the Defense Department can control time-and-materials contracts through better planning and by enforcing its regulations.

"Adequate oversight already exists," Allen said.

The groups are opposing a provision in the bill that allows contractors to appeal awards of task orders worth more than $5 million. Such task orders, which have increased in size and value in recent years, are made from schedules of services designed to streamline purchasing.

Currently, contractors can protest only their exclusion from the schedule. Contractor groups said allowing protests on task orders will create legal costs that could drive some small businesses from the federal market.

Trey Hodgkins, senior director for defense programs for the Information Technology Association of America, which represents IT contractors, said he is lobbying lawmakers to eliminate the bid-protest and time-and-materials provisions when the Senate bill is conferenced with the House version, which is less restrictive.

Hodgkins said House Oversight and Government Reform ranking member Tom Davis, R-Va., and lawmakers and staff on the House Armed Services Committee may be receptive to industry arguments about the provisions.