Buy Lines: SARA -- Now's the right time for acquisition reform

Stan Soloway

The House Government Reform Committee has taken another important step in improving the government's acquisition system and practices: It approved May 7 the Services Acquisition Reform Act of 2003, sponsored by Rep. Tom Davis, R-Va.

Among other things, SARA would strengthen acquisition work-force training and development, rationalize the government's ability to procure services under commercial terms and conditions, and provide incentive to use performance-based contracting.

The debate on the bill has focused on a handful of issues and, at times, has been marked by some startling misstatements of fact. As SARA moves to the next phase of the legislative process, it is important to cut through the rhetoric and have an informed discussion of these important issues.

SARA would allow the procurement of services on a time-and-materials and labor-hour basis under Part 12 (commercial items) of the Federal Acquisition Regulation. Despite claims to the contrary, time-and-materials contracting is often the best way to buy services and is a common commercial practice.

A recent survey of Professional Services Council members found they use time and materials extensively in their commercial operations, both as buyer and seller. An informal poll of major commercial technology companies by members of the American Bar Association's Public Contracts Law Section had similar results.

As is the case with most government time-and-materials contracts, both surveys showed that commercial firms typically control any risks associated with these contracts through fixed labor rates and firm cost ceilings.

SARA also authorizes expanded use of share-in-savings contracts, under which contractors share with the government a portion of the savings generated over those required under the base contract. It is simply wrong , as some critics contend, that these contracts are backdoor appropriations or opportunities for companies to gouge the government.

They do require extensive base lining and clear performance metrics, but as the General Accounting Office reported, share-in-savings contracts can be a win-win for the government and have been used successfully on federal energy initiatives and elsewhere. That's why the concept has been promoted by several congressional leaders, including Sen. Joe Lieberman, D-Conn.

SARA exempts from the unique government cost accounting standards those commercial firms that have less than 10 percent of total sales from the federal side. Moreover, the government contracts with these companies must be firm fixed price. It is absurd to suggest, as some have, that the exemption will benefit traditional major government contractors.

The provision is designed to help the government access commercial capabilities from companies that do not do business with the government, except perhaps for selected off-the-shelf products. The provision could be strengthened by adding a ceiling of total government business done by the company, but it is certainly not a license for abuse.

SARA places important emphasis on the status and training of the acquisition work force. Creating an acquisition-training fund is a long-overdue recognition that budgeted training funds never compete well in a resource-constrained environment.

Establishing a chief acquisition officer position in each agency and promoting an exchange program to enable acquisition professionals to gain insight into contemporary business practices sends a clear message, backed by substantive action, about the growing importance of acquisition to the proper functioning of government. A chief acquisition officer structure is in place at the Defense Department, and it makes an enormous difference. The same needs to be done across civilian agencies.

In the mid-1990s, Congress led the charge for an improved, quality-driven acquisition system. SARA is an important and appropriate next step. It's time. *

Stan Soloway is president of the Professional Services Counci. He previously served as deputy undersecretary of defense. His e-mail is

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