Congress Watches Contract Vehicles

Congress Watches Contract Vehicles

By Neil Munro
Staff Writer

Members of Congress will propose heavy-handed legislation to restrict procurement rules if industry can't persuade government procurement officials to refrain from creating new, wide-open contract vehicles, industry officials are warning.

"We do need to be careful" to ensure that Congress does not overreact, said Steve Kelman, who recently left the post of director of the White House's Office of Federal Procurement Policy to return to teach at Harvard University in Cambridge, Mass.

"Sooner or later, the authority will be taken away" by Congress if the agencies do not restrain the number of contracts and contract winners, said Kelman.

In the last year, government agencies have awarded governmentwide acquisition contracts promising to buy up to $66 billion worth of equipment and services, said Bob Dornan, senior vice president at Federal Sources Inc., a research firm based in McLean, Va. That $66 billion of promised sales is far greater than what the government will actually buy, he said.

Moreover, agencies also are awarding many blanket purchase agreements and indefinite-delivery, indefinite-quantity contracts, which have largely the same effect as the GWACs, said Dornan.

To win a share of these contracts, contractors first are forced to spend money trying to become one of the many winners of each GWAC, said John Howard, president of Wordpro Inc., Rockville, Md. Contractors must then spend more money persuading government officials to allocate some of the contract work to their companies, he said.

This pressure to invest in marketing will hurt the medium-sized firms first, Howard said. Large firms with revenues of more than $350 million can absorb the marketing costs, and small firms with revenues of less than $70 million can find niches safe from the large firms' marketing teams, he said.

Kelman, Dornan, Howard and others spoke about the impact of sweeping procurement reform month at a meeting Oct. 5-7 in Richmond, Va., of the Industry Advisory Council, a government-industry group formed to improve procurement policies.

The extra marketing costs for companies selected to compete for contracts under GWACs and other vehicles are tacked onto the price of equipment and services delivered to the government, Howard said. "We have to get control of the system" before Congress passes an expensive, burdensome regulatory response, he said.

Government officials argued that they are already taking steps. Valerie Wallick, director of the Navy's Naval Information Systems Center, said the Navy would direct Navy procurement officials to rely on existing contracts before establishing new contracts, she said

"We don't want to invest government resources where they should not be spent," she said.

Industry should work with the government to come up with a reasonable solution, argued Howard. If not, Congress will try to impose regulations on procurement officers more burdensome than those legislated in the 1980s by then-Rep. Jack Brooks, D-Texas, he said.

"Jack Brooks will look tame because the pendulum does not stop in the middle," Howard said.

Some officials defended the new procurement environment. "The benefits of competition and the free-market system outweigh the duplicative marketing expenses," Kelman said.

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