Relaxed Rules Won't Fix FAA's Problems

P> The Federal Aviation Administration is to become a reinvention laboratory.
The agency recently unveiled the final version of its sweeping procurement reforms. The reforms -- which became official April 1 -- will have a profound effect on those doing business with the FAA.
In fact, these reforms may reach beyond the FAA. As Vice President Gore noted, the FAA's reforms "can serve as models for reforms throughout government." The FAA's procurement reforms, therefore, offer a glimpse of the promise -- and pitfalls -- of future reforms.
The FAA reforms were launched by last year's Department of Transportation appropriations bill, which gave the FAA new powers to write its own acquisition policies. The goal was simple: Free the FAA from the procurement laws that it claimed were choking the agency.
The FAA has had several failures in its procurement of high-technology equipment, and it argued that it could solve those problems if only it could break clear of the federal procurement system.
The legislation allows the FAA to establish a completely new acquisition management system. The law exempts the FAA from a broad array of federal procurement laws, including:
  • Federal Acquisition Streamlining Act of 1994

  • Small Business Act (though "all reasonable opportunities" must still be given to small and disadvantaged businesses)

  • Competition in Contracting Act

  • Bid protests before the General Accounting Office

  • Federal Acquisition Regulation

Because the FAR is the unifying bible for federal procurement, exempting the FAA from the FAR means the agency can write all of its procurement regulations from scratch. The resulting FAA procurement rules are included in the FAA's new Acquisition Management System manual (available at http://www.faa.gov/asu/asu100/acq-reform/acquis.htm).
The FAA manual boils 5,000 pages of the FAR down to 40 pages. Unfortunately, much was lost in abridgment.
Following the lead of the Clinton administration "re-engineers," the FAA's new manual dwells largely on "governing principles," and offers little guidance as to how, precisely, its new system will work.
It is not clear, for example, how procurements will be announced under the new system. The FAA manual states that procurements over $50,000 "must be publicly announced on the Internet or through other means."
How should contractors interpret that provision? Will the FAA publish all its acquisitions on the World Wide Web, an electronic mailing list or publication in a local newspaper?
This is a radical departure from the traditional requirement that all major federal procurements be centrally advertised. Nor is it clear how the FAA will select its contractors.
Although the new rules state a preference for competition, contracting "with a single source is permitted when it is determined to be in the best interest of the FAA."
In practice, this will give contracting officials enormous discretion to use sole-source contracting. One way of discouraging sole-source contracting would be to make contracting officials completely accountable for their costs. That is unlikely to happen, however.
Although the FAA is revamping its personnel policies along with its procurement system (the new personnel policies are at http://www.faa.gov/asu/asu100/acq-reform/personel.htm), the FAA's internal changes appear unlikely to bring full accountability to the line contracting officials. Those contractors frustrated with the new FAA processes will find it more difficult to protest.
The enabling legislation exempts the FAA from bid protests before the General Accounting Office. To replace GAO protests, the FAA has set up an internal bid protest system. The arbiters in that system, however, will be FAA lawyers. Moreover, the FAA administrator will have final say over any decisions made in this internal system.
Contractors troubled by the closed FAA system may have alternatives, however. The reform legislation does not exempt the FAA from bid protests in the federal courts; nor does the law shield the FAA from court review under the Administrative Procedure Act. Judicial review may prove more deferential, though, in light of the discretion given contracting officials under the FAA's new rules.
Controversy is likely to arise over contract disputes. The FAA system seems to assume all contract claims will be reviewed internally, with a final decision by the administrator appealable only to the circuit courts.
The FAA's system apparently would bypass the boards and courts established by the Contract Disputes Act of 1978. Because the FAA's reform legislation does not explicitly exempt the FAA from the Contract Disputes Act, however, contractors may well argue that the FAA should handle contract claims through the traditional disputes process.
The FAA will discuss its new system at an industry meeting April 17; the notice appears at http://www.faa.gov/asu/asu100/acq-reform.

Christopher Yukins is an attorney in the Government Contracts Group at the law firm Wiley, Rein & Fielding in Washington, D.C. He can be reached at cyukins@wrf.com

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