Buy Lines: For 2006, troubling signs on the horizon

Stan Soloway

Ever hear the nautical adage, "Red sky by morning, sailor take warning?" By that measure, it is morning in the procurement arena, and the red sky is deepening. It could portend a series of challenges to the procurement progress that's been made over the last decade.

Some of those challenges may emerge from the work of the Acquisition Advisory Panel, created by Congress to evaluate ways to improve the government's acquisition and management of services. The panel has done a superb job of making public the testimony it receives, the research it conducts and the proposals it weighs.

However, some of those proposals raise concerns. These include proposals to alter fundamentally the definition of commercial services and to base that definition on whether the price for a service is clearly established in the commercial market. Commerciality no longer would be determined by what the government is buying, but rather by the method at which a price is arrived.

This could have significant, deleterious effects on both government and industry.

Moreover, the panel appears to be seriously questioning the widely accepted premise that competitive bidding is the primary force driving fair and reasonable pricing.

There may be a crumbling of the consensus that the
government should operate in a commercial-like manner.

The panel's Web site includes materials that question whether time-and-materials contracts are truly commercial. On this point, we should be clear: A careful reading of the testimony the panel has received, as well as an informal survey of Professional Services Council member companies, suggests the answer to that question is a resounding yes. That is why Congress passed legislation explicitly authorizing the use of time-and-materials contracts for commercial services.

This all comes amid continuing debate over the proposed Federal Acquisition Regulation rule regarding commercial time-and-materials contracts. Industry is united in its view that the rule is fatally flawed and should be withdrawn, and that new public discussions of the issues should begin.

Meanwhile, a debate is brewing over post-award auditing of commercial contracts. Some companies already have been challenged on profits derived from competitively awarded, fixed-price contracts. The General Services Administration's Inspector General's office has asked the Senate for new authority to do post-award cost audits, speciously arguing that post-award auditing is common in the private sector. Such a statement confuses post-award performance audits with incurred cost audits.

The upshot is that there may be a crumbling of the consensus that the government should operate in a commercial-like manner, particularly when what it seeks to procure is truly commercial. Although these issues were heartily and publicly debated and resolved in a remarkably bipartisan effort by Congress a decade ago, and reiterated just two years ago, the debate appears to be reopening.

Midcourse adjustments are one thing; wholesale reversals are another. If such a reversal does occur, empowerment, judgment and flexibility will be largely supplanted by the rigidity of the old federal procurement system.

The real issue, too often ignored, is whether government activities are fully using available tools, such as market research, dissimilar competition and more, to better manage their mission needs and contracts. The answer is almost certainly no.

As such, we should focus our energies where they belong ? on the training and skills development afforded the acquisition workforce ? rather than unnecessarily dilute otherwise smart and effective policies and processes.

Change is only possible if one is able to deal with issues rather than symptoms.

Stan Soloway is president of the Professional Services Council. His e-mail is

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