Some Federal Agencies Delay Blacklisting Regulations

Some Federal Agencies Delay Blacklisting Regulations

John Sweeny

Several major federal agencies are delaying the so-called blacklisting rules that give contracting officers broad power to decide whether contractors are qualified to bid on government contracts.

After the Civilian Agency Acquisition Council told agency heads they could postpone putting the rules into effect until July 19, the General Services Administration and the departments of Transportation, Interior and Health and Human Services announced they will continue awarding contracts under regular procedures. This will give them more time to review the new rule and train procurement officials.

"We're concerned about the ability of our contracting officers to implement the rule. ... No training has been provided," said David Litman, senior procurement executive in the Transportation Department. "We're trying to figure out what needs to be done."

While some agencies are reviewing the rule, other agencies, including the State Department, have decided to move forward with implementation. And others still are weighing their options.

The Defense Department, according to spokesman Glenn Flood, is mulling over whether to delay enforcing the rules. Michael Sade, director of acquisition management at the Commerce Department, said the agency was leaning toward a delay.

"We'll probably follow the lead of the GSA," Sade said. "To implement [the rules] in a reasonable way, we would need more time. We're still trying to figure out what it means."

This inconsistent approach by the agencies, critics said, could create havoc with industry. Government contractors are placed "in the awkward position of having to adhere to different rules with different agencies," said David Marin, spokesman for Rep. Tom Davis, R-Va., who has strongly opposed the rules.

"Confusion reigns," said Chip Mather, a principal in the Chantilly, Va., firm Acquisition Solutions Inc. Mather, who advises government agencies, said: "I haven't seen a whole lot of action being taken to implement [the rules]. Every agency I know of is waiting for guidance."

The rules require contracting officers to take into account bidders' compliance with labor, tax, employment, antitrust, environmental and consumer protection laws when determining if a company is a responsible business and therefore eligible to win contracts. The officers are directed to look for evidence of repeated, pervasive or significant violations before disqualifying a company.

Officers already must make sure contractors are not debarred or suspended from federal work, have sufficient resources to perform the work and do not have a record of unsatisfactory performance for reasons within their control.

The new rules are changes to the Federal Acquisition Regulation, which sets the standards for government procurement. The rules became enforceable Jan. 19, one day before President Bush took office, and were not affected by Bush's temporary stay on putting new regulations into effect.

But the Civilian Agency Acquisition Council stepped in Jan. 31 and granted the delay, called a class deviation, to "allow the federal government and federal contractors sufficient time to meet the new obligations and new responsibilities imposed by the final rule," Al Matera, council chairman, said in a memo to the agencies.

The delay could be a first step toward overturning the rules altogether, said industry and government officials.

"We expect that while the class deviation is in effect, the Bush administration will issue and request public comments on overturning the rule," Marin said.

The delay provoked a sharp rebuke from AFL-CIO President John Sweeney, who called it "a secret and outrageous assault." Labor, civil rights and environmental groups have supported the rules, which Sweeney has said are "a common-sense regulation that simply says the government should look at a company's track record of complying with the law before entrusting it with a valuable government contract."

Opponents say creating a new contracting process runs counter to efforts to streamline federal operations. They also say the rules are unworkable because they do not create a standard review process or provide training to help contracting officers deal with their new responsibilities.

"All of the issues that come up within the intent of the regulation are already covered by other bodies of law. You're asking contracting officers to make very subjective decisions without giving them the tools or the training to make those decisions," said Charles Cantus, vice president of government relations at the Professional Services Council. The Arlington, Va., association represents the technical and professional services industry.

Washington attorney Rand Allen said the rules are "completely inconsistent with the whole movement toward procurement reform over the last decade or so, and in particular to make it easier for high-tech companies to do business with the government."

Allen, a partner in the firm Wiley, Rein and Fielding, which represents government agencies on contracting issues, is also lead counsel on a lawsuit filed Dec. 22 against the rules by several business groups.

Some opponents also say the rules are rooted in the politics of the previous administration. Former Vice President Al Gore first promoted the responsible contracting regulation in a speech to the AFL-CIO in 1997. The initiative made its way through the regulatory process despite opposition from officials at several agencies.

"This was a political regulation forced upon [agencies]," said Thom Stohler, director of human resources policy for Santa Clara, Calif.-based AeA, the nation's largest high-tech trade association. "The high-tech industry is very pleased to see the federal government is taking steps to overturn this regulation. Removing it is going to make it that much easier for the government to purchase IT products."

The contracting rules are among several controversial initiatives that went into effect in the latter days of the Clinton administration and are now being challenged. While executive orders ? including several pro-labor initiatives under review ? can be undone with the stroke of President Bush's pen, undoing federal rules isn't so easy.

The most likely route, government and industry sources said, is through a new rule-making process whereby interested parties would first be asked for comments on revoking the rules.

Until definitive, governmentwide action is taken, contractors and contracting officers are coping with an unstable playing field.

For contractors, "there's a lot of uncertainty about ... the degree to which the company has to examine its activities," Allen said. "The government people are equally uncertain about how this is supposed to work."

Jonathan Cain, an attorney in the Reston, Va., office of Mintz, Levin, Cohn, said he's telling clients to vigilantly review their government past performance records and correct any errors immediately.

Like most contractors, Electronic Data Systems Corp. is just trying to follow the rules, whatever they are, said Randy Dove, executive director of government regulations for the Plano, Texas, systems integrator.

"We're following the contracting processes and procedures we've always followed and complying with whatever we need to," Dove said.

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