SARA supporters gird for battle

New industry-backed legislation designed to streamline the way federal agencies purchase services faces opposition to some of its key provisions, including objections from the White House about the source of proposed work-force training funds.The Services Acquisition Reform Act, H.R. 3832, introduced March 4 by Rep. Tom Davis, R-Va., would make it easier for agencies to buy information technology services, an area the Clinger-Cohen Act of 1996 stopped short of considering. The legislation, known as SARA, has been described as providing soup-to-nuts reform for the services industry. Many of the issues raised in SARA are complex, and some haven't been addressed for years, so they are meeting with some questions and skepticism.SARA, for example, would establish an acquisition work-force training fund generated through fees paid by agencies using governmentwide acquisition contracts, multi-agency contracts and multiple-award schedules. But Angela Styles, administrator of the Office of Federal Procurement Policy, said the fund should be established through the budget and appropriation process. "Funding training through fees ... could create a hardship on small agencies that may rely more heavily on these vehicles to meet their needs," Styles said at a March 7 hearing before the House Government Reform subcommittee on technology and procurement policy, which Davis chairs.The General Accounting Office also questioned whether the bill, which would establish a chief acquisition officer position in each agency, would give the new CAOs enough authority to coordinate purchases across their agencies. At private-sector firms studied by the GAO, the CAOs could influence purchasing decisions, implement organizational and process changes and garner employee buy-in. "Under SARA, it is not clear that the chief acquisition officer would have comparable responsibility and authority," said Bill Woods, GAO acting director of acquisition and sourcing management.David Marin, legislative director for Davis, said SARA should adequately empower the CAOs, however. "Under SARA, agency CAOs would be statutory positions and would report directly to the head of the agency and be directly involved in the agency's strategic planning and performance evaluation process. That, to be sure, is authority," he said.Woods said the GAO is studying the acquisition work force, performance-based contracting and share-in-savings contracting ? all addressed in SARA ? at the request of congressional bodies, including Davis' subcommittee and the Senate Governmental Affairs Committee. The GAO's reports, to be issued this year, will provide additional information for Congress to consider, he said.Davis appeared open to compromise on the bill, saying that with the participants' wisdom and assistance, "we will further refine the legislation and achieve true reform."Marin said Davis' subcommittee staff has had preliminary conversations with Senate Governmental Affairs Committee staff about the bill, and that all strategies for moving the bill, in whole or in part, will be considered. Moving forward, Davis could hold additional hearings, seek to add provisions of the bill to another piece of legislation, such as the Defense Department authorization bill, spin off parts of the bill into separate bills or rewrite SARA, said Olga Grkavac, executive vice president of the Information Technology Association of America in Arlington, Va.Already one SARA provision, which would remove barriers to telecommuting for government contractors, became a separate bill, H.R. 3924, and was passed by the House.The chief goal of SARA, Davis said, is to streamline procurement cycles and integrate agency goals with acquisition goals, enabling federal agencies to also get better results from their purchases.In fiscal 2000, the federal government contracted for about $87 billion in services, including professional consulting and IT services, up 24 percent since fiscal 1990, Davis said. Private-sector purchases have grown at a similarly steep rate, and as a result, firms have changed how they contract for services to get better results and cost savings. Bruce Leinster, chairman of ITAA's procurement policy committee, said the most rapidly growing segment of the IT industry is the delivery of services. "The ability to provide those services rapidly ? and, therefore, the need to simplify the regulations regarding the provision of services ? has never been more important than it is now, given the focus on homeland security," he said.Services procurement will take too long, or agencies won't be able to buy the services they need at all, if companies continue to grapple with burdensome federal rules governing services procurement, said Leinster, director of contract negotiations and acquisition policy for the government systems group of IBM Corp., Armonk, N.Y. SARA provisions that are especially important to the IT industry would change the definition of commercial services to the same as that for commercial products and exempt IT products from the Trade Agreements Act. Having a product or service identified as a commercial item by regulation exempts the provider from government cost accounting standards and requirements to provide detailed cost and pricing data, Leinster said. The Clinger-Cohen Act changed the definition of a commercial item so vendors could simply demonstrate that the product, such as a desktop computer, is sold to the general public for other than government purposes. "That was a major breakthrough," Leinster said. "Prior to that, a commercial item was something sold in substantial quantities to the general public at a catalog or market price, and you had to fill out enormous amounts of sales information: general public vs. government sales, discounts, how many you sold at the catalog price vs. the standard price."Most IT companies have a small percentage of government sales, and they don't have accounting systems that meet those rigid requirements. IT industry executives thought they had been successful in convincing legislators working on Clinger-Cohen that the same definition should apply to services, but the language was changed. Selling services under the current definition is very difficult and can prevent agencies from purchasing IT firms' services, Leinster said. Opponents of changing the services definition argue that federal agencies won't know if they are getting a fair price, he said. But "these services are widely sold in commercial marketplace, and there is lots of detail available. The government ought to be able to look at their own databases to determine if these prices are fair," Leinster said. Exemption from the Trade Agreements Act would lead more firms to bid on government contracts and allow agencies to adopt new technologies faster, said Jim Serafin, vice president of marketing and government relations for the Government Electronics & Information Technology Association in Arlington, Va.Under the act, without a waiver from the U.S. trade representative, agencies cannot buy products that are "substantially transformed" ? assembled ? in a country that hasn't signed the General Agreement on Tariff and Trade. "Keeping track of [assembly] is just an amazing amount of bookkeeping. Commercial companies aren't set up to do that, or there is an additional expense to the government to track all that information," Serafin said.Because so little of most IT firms' revenue comes from U.S. government sales, the Trade Agreements Act doesn't change the firms' manufacturing decisions. Those decisions are made to maintain maximum cost effectiveness in the global marketplace, Leinster said. As a result, the act prevents government agencies from buying the same state-of-the-art IT products that commercial companies buy, or they end up paying more for them, he said.