Rule seeks to jump-start share-in-savings buys
By Michael Hardy
Published on July 12, 2004
Advocates of share-in-savings contracting are pleased that a proposed rule published this month would place statutory authority for this still-novel contracting method into the Federal Acquisition Regulation (FAR).
The proposal, coming from civilian and Defense acquisition councils, brings the controversial contracting style to the forefront, said Tom Sisti, vice president for consulting at Input, a market research company.
"By engaging in this exercise, you're getting the minds of a lot of acquisition professionals around this issue," Sisti said. "They're making the right steps."
The authority was originally granted in the E-Government Act of 2002. Although some observers believe progress is slow, Sisti said it is unfolding as it needs to for a concept so new to the government.
In a share-in-savings contract, the contractor bears the cost of a project and then is paid out of the money that the project saves for the agency. The act's authority applies only to information technology.
The authority ends next year, but the published guidelines will be helpful despite the narrow window of time, said Chip Mather, senior vice president of Acquisition Solutions Inc., a consulting company specializing in government contracting.
"You have about 75 percent of the contracting and acquisition personnel out there who say, 'If it's not in the FAR, we can't do it,' " he said. "Anything that's really new, I have found, if it's not in the FAR, it just won't happen."
Acquisition officials' reluctance is pervasive, even though the FAR states that any contracting technique not prohibited by law is allowable, he said.
If no other legislation extends the authority when it expires, federal acquisition managers will balk at using share-in-savings contracts, Mather said. However, he said, no special statutory authorization is needed for share-in-savings contracting.
"All the authority you need is in the FAR," he said.
In the Acquisition System Improvement Act, introduced earlier this year, Rep. Tom Davis (R-Va.) proposed additional share-in-savings authority extending beyond IT.
Scott Orbach, president of the consulting firm EZGSA, concurred with Mather. "There's been a lot of confusion within the government and among vendors on how to formalize a relationship because it's something that hasn't been clearly defined" in the FAR, he said.
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