Services acquisition bill gets greater Bush support

In the last six months, the Bush administration has warmed up to many of the provisions in Rep. Tom Davis' Services Acquisition Reform Act, and Davis is moving the bill quickly through the legislative process.

H.R. 1837 was introduced April 29 and is scheduled for markup in the Virginia Republican's Government Reform Committee May 6. The bill was considered in the 107th Congress, but Davis was not able to move it out of committee.

"The new service-oriented, high-technology environment has simply overwhelmed the current system," Davis said at a Government Reform Committee hearing April 30. "SARA will put the tools needed to access the commercial service and technology market in the hands of a trained work force that will have the discretion necessary to choose the best value for the government and be held accountable for their choices."

Angela Styles, administrator of the Office of Federal Procurement Policy, testified before the committee that she supports creating a chief acquisition officer in each agency, a position that would oversee acquisitions agencywide and have access to top agency leaders, and a CAO council. She also said she supports the bill's provisions meant to encourage good contract performance.

The provisions include permission to use simplified acquisition procedures for commercial items on performance-based services contracts or task orders worth $5 million or less. The bill also would allow agencies to extend the length of services contracts if vendors exhibit exceptional performance based on standards set in the contracts.

"Re-competition is very important to get best prices, but you want some flexibility to award the contractor for meeting your needs at low cost," Styles said.

Rep. Dutch Ruppersberger, D-Md., said he's concerned, however, that there would be no limit to the length of time a contract could be extended. At recompetition, "my thought is that if you're performing well, you have an advantage," over other vendors anyway, he said.

At a congressional hearing last October, Styles said the administration did not support the idea of a chief acquisition officer or the creation of a centralized fund for training of acquisition staff.

The bill would require the General Services Administration to create the fund with 5 percent of the fees collected by agencies under their governmentwide contracts. Davis' staff negotiated with administration officials to gain their support, a committee aide said.

"I believe we can reach agreement on a significant number of provisions," Styles told the committee. "There still are some serious and unresolved problems with the time-and-materials provision, but we share many of the committees' desires for better acquisition management."

Currently, commercial services can only be bought using streamlined acquisition procedures if fixed-price contracts are used. Styles said she was pleased that the new SARA bill limits the use of time-and-material and labor-hour contracts under streamlined acquisition procedures to services that are commonly sold to the public through such contracts. The previous SARA bill did not have such a limitation.

However, Styles said the administration would like the contract types also to be limited to services "sold in substantial quantities," so that agency buyers could find adequate data in the commercial marketplace to determine whether they were getting a good price.

Opponents of time-and-materials and labor-hour contracts say they provide little incentive to contractors to control their costs, but IT contractors say the contract types are very important to their businesses. In fact, the time-and-materials provision is one of the most important to the IT industry.

Sometimes, the government's IT needs are so large or complicated that the procuring agency cannot adequately define its requirements in advance, making it too risky to bid in a fixed-price atmosphere. Contractors either decline to bid on the jobs or raise their prices significantly to compensate for the risk, said Bruce Leinster, director of contracts and negotiations IBM's Global Government Industry unit in Armonk, N.Y.

Time-and-materials and labor-hour contracts "play an appropriate role in the commercial marketplace, and this provision would provide badly needed clarification of [their] role ? in the federal sector.

This relief cannot come soon enough," said Leinster, who testified on behalf of the Information Technology Association of America, an Arlington, Va., trade group.