OMB, Rep. Davis clash over defense buying rule

Rep. Tom Davis, R-Va., chairman of the House Government Reform Subcommittee on Technology and Procurement Policy, and Mitchell Daniels Jr., director of the Office of Management and Budget, are clashing over a proposed procurement rule. Davis has asked Daniels to change course on the new Defense Department rule.

OFPP has delayed implementing the rule.

The regulation in question is known as Section 803 of the 2002 Defense Authorization Act. It requires the Defense Department to obtain three bids for service buys from General Services Administration Multiple Award Schedule contractors. OMB, through the Office of Federal Procurement Policy, is expanding that requirement by requiring the Defense Department to also use only firm, fixed-price contracts for schedule buys, and to stop using time-and-material contracts.

In a June 25 letter to Daniels, Davis asked OMB to reconsider the latter part of the proposal. Davis said he was deeply concerned to learn of the proposed change, which he said would "arbitrarily [eliminate] a long-standing and successful commercial practice" of the MAS program.

Section 803 was originally inserted into the authorization bill because of how many non-competitive awards the Defense Department was reportedly making on schedule buys. The administration wants to increase use of firm, fixed-price contracts, which it contends are required anyhow under the Federal Acquisition Regulation Part 12. Plus, fixed-price contracts are easier to judge on performance, and they spur greater competition, administration officials have argued.

Davis also objected to the fixed-price provision being considered after the public comment period closed on the rule change. He said there would be "no opportunity for input from government or industry stakeholders on this substantive change in procurement policy."