Army revises rules for performance-based contracts

The Army last week eased restrictions on services contracts that were put into place just three months ago.

In October, the service had revised the Army Federal Acquisition Regulation to require that all services purchases of more than $10 million use performance-based, fixed-price contracts. To use any other type of vehicle, an organization had to obtain a waiver from Claude Bolton, assistant secretary of the Army for acquisition, logistics and technology.

Now the service has raised the threshold to $50 million, said Capt. Amy Hannah, public affairs officer. The rule excludes five areas: research and development, architects and engineers, emergency, OMB Circular A-76 and environmental remediation services.

It's unclear what prompted the latest revision or how the change will affect programs, but not everyone is pleased. Bruce Leinster, director of contract negotiations and acquisitions policy for IBM Corp.'s public sector group, called the Army regulation alarming.

"Our question is why. This has no standing either statutorily or regulatory," he said. Leinster, who is chairman of the Procurement Policy Committee of the Information Technology Association of America, said the regulation throws out years of procurement reform giving best value precedence in service contracts.