Defense bill's contracting rules rankle Bush team

Provisions that would govern contracting are contentious points in a defense authorization bill the Senate is debating today.

Bush administration officials objected to the Senate's fiscal 2009 National Defense Authorization Act (S. 3001), partly because of provisions that would restrict the relationship between contractors and the Defense Department.

The president's advisers would recommend he veto the bill if it would restrict the use of contractors for personnel security and stop competitive sourcing.

The measure would require the defense secretary to revise regulations to make personnel security an inherently governmental function. Inherently governmental functions are so intimately related to the public interest that only a government employee can do the work, according to regulations.

"This provision would significantly increase the reliance on already-stretched military forces," administration officials wrote in a statement. They said it would also reduce DOD's options for providing security for non-military personnel. It "could impede the ability to provide humanitarian and reconstruction relief in combat zones," they wrote.

Officials wrote that the State and Defense departments have improved policies and guidelines regarding private security contractors, placing them under strict rules for when they may use force.

The Senate Armed Services Committee wrote in a report accompanying the legislation that it appears private security contractors in Iraq have frequently engaged in activities forbidden by the DOD guidance.

The administration also said it opposes the end of competitive sourcing. Competitive sourcing pits the public and private sectors against each other for government work. The public/private competitions are based on the Office of Management and Budget Circular A-76.

"DOD is actively working to address workforce performance, and it is inappropriate and unnecessary to tie these efforts to the use of public/private competition," administration officials wrote. "A moratorium?would interfere with DOD's ability to manage its resources in the most effective and efficient manner."

The administration said DOD has saved more than $7 billion between fiscal 2001 and 2007, and it expects those savings to grow to more than $10 billion after completing all of the planned competitions DOD initiated in fiscal 2008.

The Office of Federal Procurement Policy reported in May that the government has saved an estimated $397 million, or $75 million annually, from 132 competitions completed in fiscal 2007. It also said federal employees won 73 percent of those competitions.

In the bill, the Senate would deny DOD from turning to competitive sourcing until it addresses its civilian workforce issues. Department officials would have to address the shortcomings in its workforce's skills and competencies and the shortage in the number of employees.

The armed services committee wrote that the civilian workforce is one of DOD's cornerstones of its national security mission. But "the department's continued failure to conduct adequate planning for this workforce could undermine its ability to perform some aspects of this critical mission," the committee wrote.

The administration in May opposed the similar competitive sourcing prohibition in the House's version of the defense authorization bill (H.R. 5658). The House passed the legislation that month.

If lawmakers would erase the ban on competitive sourcing, the competition that has stirred much opposition in Congress for years may be prohibited for at least another year in numerous departments, because Congress has provisions in several fiscal 2009 appropriations bills.

The administration also opposes language in the Senate's defense bill that would create a new database for information on improper conduct and questionable behavior by contractors.

The database, which is based on a bill by Sen. Claire McCaskill (D-Mo.), would require DOD to post information on fines, defaults on contracts, and suspensions and debarments. The database would be available to federal officials.

The administration wrote that DOD already collects much of the information, rendering the new database unnecessary. And by collecting information on civil proceedings and work with state and local governments, the database "will increase the likelihood that contractors will be improperly excluded from federal business opportunities without due process of law."

If the Senate passes its defense authorization bill, conferees from both chambers would have to settle the differences between the bills before sending it to the president.