Infotech and the Law: Procurement relaxes more under Homeland Security act

Jonathan Cain

Further easing of competitive procurement requirements were contained in the Homeland Security Act passed in November 2002. Those provisions were implemented by changes to the Federal Acquisition Regulation issued as an immediately effective interim rule Jan. 27.

The new rules apply to agencies that are trying to defend against or recover from terrorism or a nuclear, biological, chemical or radiological attack. The rules increase the micropurchase threshold and the simplified acquisition threshold and streamline procedures for procurements of supplies or services.

Some of the relaxed requirements are permanent. Others cover only solicitations issued from Jan. 24 through Nov. 25, or in the case of the Defense Department, funds appropriated or committed before Sept. 30.

Reports last summer about mismanagement of the greater freedoms granted contracting officers in the past decade and calls by government procurement experts for Congress to go slow in granting more flexibility to government buyers did not chill enthusiasm for fewer constraints for homeland security procurements. The Homeland Security Act mandated several changes to the FAR that were contained in the recent rule.

Among the most significant change is an additional category, called commercial items. Under the new rule, contracting officers may treat as commercial items any acquisition of supplies or services that are to be used to defend against or recover from terrorism or an attack.

Also included are acquisition of biotechnology supplies or services by the Defense Department to fight terrorism or biological attack against the United States. Terrorism, as defined in the act, broadly covers almost any dangerous, illegal action designed to intimidate the public or affect public policy. It is certainly broad enough to cover any information systems acquisition for law enforcement, foreign or domestic surveillance, intelligence or emergency management purposes.

In addition to the amendment to the FAR's definition of commercial items accomplished by this rule, the Homeland Security Act gives the secretary of homeland security authority to designate any item as commercial for the purposes of the federal procurement laws.

The micropurchase threshold for civilian agencies has been increased to $7,500 for equipment or services to defend against or recover from terrorism or attacks. At the Defense Department, notwithstanding its problems in controlling its purchase cards, the micropurchase limit has been raised to $15,000 for anti-terrorism products and services.

Simplified acquisition thresholds have been increased for civilian agencies and the Defense Department. If the acquisition is to defend against or recover from terrorism or attack, the threshold is $200,000 for civilian agency domestic purchases and $250,000 for defense domestic purchases. The limits are doubled for purchases outside the United States.

Agencies were also granted much greater freedom to make purchases under the so-called commercial-item test program. This program allows contracting officers to use simplified procedures, including award of sole-source procurements of commercial items, merely by providing a written justification of the need for the exemption from competitive procedures.

The commercial-item test program had a limit of $5 million. That ceiling has been dropped for procurements of commercial items needed to defend against terrorism or biological attack. Any government employee at a GS-16 salary level can approve such an acquisition up to $50 million.

In the meantime, procurement freedom means little without procurement dollars. The administration has stated it is looking for a $6.5 billion increase in 2004 IT spending, to $59 billion. Congress is more restrained, with various Capitol Hill sources indicating that 2004 IT spending will look much like that of 2003. *

Jonathan Cain is a member of the law firm Mintz Levin Cohn Ferris Glovsky & Popeo PC in Reston, Va. The opinions expressed in this article are his. He can be reached by e-mail at jcain@mintz.com.

About the Author

Jonathan Cain is a member of law firm Mintz Levin.

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