2006 was a year of policy debates. Are federal procurement policies fair to small businesses? Are the government’s information security policies misguided? How far should the government go in outsourcing the work of federal employees? Those issues were debated but not resolved in 2006. Procurement politics heated up A congressionally chartered advisory panel on federal procurement shook the information technology community with its recommendations for making federal contracting more competitive. Companies responded quickly to oppose many of the proposals. Critics said the proposals would push back a decade of innovation that has made federal procurement more efficient and effective.
The panel, known as the SARA panel, is authorized under the Services Acquisition Reform Act of 2003 to propose changes to federal acquisition regulations.
“The focus of the panel’s recommendations is a strengthened competitive process that is more transparent about the government’s requirements,” said Marcia Madsen, a partner at law firm Mayer Brown Rowe and Maw and the panel’s leader.
The panel’s recommendations included expanding a Defense Department rule on soliciting competitive bids and imposing additional restrictions on time-and-materials contracts, which tend to be more expensive for the government than fixed-price contracts.
In a separate but related action, a procurement innovation known as share-in-savings suffered a setback this year when lawmakers failed to renew its authorization under the E-Government Act of 2002. Under share-in-savings contracts, the government pays companies an amount relative to how much their work helps the government reduce future spending. Those contracts differ from traditional ones in which the government guarantees companies a fixed profit margin and reimbursement for the companies’ cost of doing work.
By letting the authorization lapse, the government showed its growing aversion to risk, said Larry Allen, executive vice president of the Coalition for Government Procurement, a group representing companies that sell commercial products and services on multiple-award schedule contracts.
But some people who favor procurement innovation said they have not given up hope for share-in-savings. Rep. Tom Davis (R-Va.), a supporter, introduced new legislation to reinstate the concept.
“I remain convinced that [share-in-savings contracting] can be a valuable tool in helping modernize our government in this era of tight budgets,” Davis said.
Share-in-savings took a hit, but strategic sourcing gained some ground in 2006. With its federal strategic sourcing initiative, the Office of Management and Budget wants to consolidate the separate procurement activities of various agencies so the government can demand greater volume discounts and premium service from suppliers.
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