Lawmakers Grapple With IT Issues

Anthrax Scare Brings Confusing Finale to the Budget Cycle<@VM>Hot on Capitol Hill

Olga Grkavac

As U.S. lawmakers take up a raft of bills affecting the information technology industry, anthrax scares and the temporary closing of congressional offices have exacerbated the normal confusion that accompanies the legislative process.

The IT community has much at stake in the bills now before Congress, where lawmakers are finalizing legislation that could curtail outsourcing, make it more difficult for the Defense Department to buy products and services, give tax breaks to the IT industry and expand access to foreign markets.

But executives and lobbyists who track legislation said current conditions make it especially hard to predict when some bills will get passed or what form they will take.

"You can't send [members of Congress] mail, many don't have offices to call, and some members are not proficient with
e-mail," said Olga Grkavac, executive vice president of the Information Technology Association of America in Arlington, Va.

Of major concern to industry officials is an amendment in the House Defense authorization bill, H.R. 2586, that would limit until May the number of outsourcing studies to half the amount the Defense Department has approved. The studies are required by Office of Management and Budget Circular A-76, which mandates public-private competition.

The amendment also would require the winning contractor in a public-private job competition to submit a bid at least 10 percent lower than its federal competition. Contractors currently can win if they offer $10 million or 10 percent more savings than their federal competition.

Industry officials also said federal unions are pushing for Congress to add an amendment to the bill that would let Defense Department workers compete for thousands of jobs held by contractors. The amendment, initially proposed by Rep. Neil Abercrombie, D-Hawaii, has already been defeated once after a fierce House debate.

If the Abercrombie amendment is reinstated, it would freeze outsourcing at the Defense Department, said Booth Jameson, director of global government affairs for the federal unit of Electronic Data Systems Corp., Plano, Texas.

David Marin, spokesman for Rep. Tom Davis, R-Va., said the amendment would be counterproductive and halt the work of government.

"We recognize that federal employees deserve a chance to compete for some of the work, but we [the government] don't have the in-house capability to do this work right now," he said.

The Senate Defense authorization bill, S. 1438, contains two provisions that industry officials said would make it more difficult for defense procurement officials to buy products and services off the General Services Administration schedule, a list of thousands of pre-approved government vendors.

One provision, Sec. 801, would require creating a services acquisition czar who would have to pre-approve some ? or perhaps all purchases off the GSA schedule.

The other provision, Sec. 803, would require that all companies named to governmentwide acquisition contracts or the GSA schedule be given the opportunity to compete for task orders under those contracts. For example, if 30 companies were named to a GWAC contract, all 30 would have to be given an equal opportunity to win the job out for bid.

The implications for the GSA schedule would be even greater, because contracting officers might receive hundreds of bids for a job, Grkavac said.

Opponents of the Senate provisions said they would slow the procurement process and discourage defense buyers from using the GSA schedule, a vehicle that was created to make purchasing easier. Industry executives hope a compromise can be reached, one that might require contracting officers to document bids more thoroughly to ensure fair competition, but require far fewer bids.

"These provisions do not make it easier for [the Defense Department] to acquire needed goods and services," Grkavac said. "While they are at war, the last thing we want to do is slow them down."

On the positive side, IT industry officials are anticipating tax breaks from an economic stimulus bill, and are pushing for increased trade negotiating authority for President Bush. However, they said the trade bill will face stiff opposition from Democrats. It's also uncertain whether the House and Senate will come to a compromise on an economic stimulus package. Republicans favor tax breaks to stimulate the economy; Democrats favor increased spending.

The House economic stimulus bill, H.R. 3090, the Economic Security and Recovery Act of 2001, would increase business expensing and repeal the alternative minimum tax on corporations, efforts the administration has said would create jobs and encourage capital investment. At press time the Senate had not finalized its bill.

Accelerated depreciation of IT assets is an important part of the stimulus package, industry representatives said. The current schedule allows for most depreciation over five years ? two to three years too long, they said, because it forces business owners to choose between retaining outdated equipment or forgoing full cost recovery to keep up with advances in technology.

"It would be a significant benefit to the economy to allow companies to write off equipment on an accelerated schedule," said ITAA spokesman Bob Cohen.

The so-called "fast-track" trade promotion legislation, H.R. 3005 and S. 1104, would give the president authority to negotiate trade agreements that are subject only to a congressional vote without amendments.

"Sixty percent of [IT industry] revenues come from outside the United States. Keeping trade moving is like keeping the bicycle moving forward. We want to keep riding the bicycle," said Rhett Dawson, president of the Information Technology Industry Council in Washington and a proponent of the measure.

Without the fast-track trade promotion authority, many potential trading partners are hesitant to begin negotiations, because they are wary of negotiating with the president and then with Congress, Marin said.

Industry executives said they're confident accelerated depreciation of IT assets will be included in a final economic stimulus bill. Trade promotion authority promises to travel a tougher road, as some Democratic legislators want a strong role in trade negotiations.

Jameson predicted the trade measure has a "better than 50 percent chance" of passing.

"The Republican leadership doesn't have the votes right now, but they are working very hard to ensure passage and so is the president. It's a huge fight," he said.

IT industry executives still hope to see full funding for interagency e-government projects. The president had requested $20 million for his Electronic Government Fund, but the Treasury, Postal
Service and General Government Appropriations bill, H.R. 2590, contains just $5 million in e-government money.

More money is unlikely, but still a possibility, said Grkavac, who indicated the recent administration announcement of 22 e-government projects might spur funding from another source.Defense Authorization

Provisions being considered for the National Defense Authorization Bill would cut the number of outsourcing studies and make it more difficult for defense agencies to buy off governmentwide acquisition contracts and the General Services Administration schedule.

Economic Stimulus

The Economic Security and Recovery Act of 2001 would repeal the alternative minimum tax on corporations and accelerate the depreciation of IT assets, which would encourage new investment, boosting the economy, according to proponents.

E-Government Funding

The Treasury and General Government Appropriations Act for 2002 includes $5 million for President Bush's e-government fund for interagency projects that would expand government functions via the Internet and other electronic means. The Bush administration requested $20 million.

Trade Promotion

The Trade Promotion Authority Act of 2001 would give the president "fast track" trade negotiating authority, which proponents say would expand foreign markets. Stiff opposition from Democrats is expected.

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