Agencies may face competition

Federal Register notice: Performance of Commercial Activities

Companies would have the opportunity to compete for support services contracts among agencies under a notice published by the Office of Management and Budget this week.

The Federal Register notice published July 2 from OMB's Office of Federal Procurement Policy proposes making the contracts, known formally as interservice support agreements, subject to competition.

Currently, such agreements created before 1997 are not subject to competition under OMB's Circular A-76, which lays out the process for conducting such competitions. The OFPP proposal would lift the grandfather clause so that all interservice support agreements would have to be subject to competition every three to five years.

Such interagency agreements have been a thorn for vendors who question whether it is appropriate for federal agencies to be providing commercially available information technology services to other agencies. Industry groups were incensed in 1997 when the Federal Aviation Administration selected the Agriculture Department for its Integrated Computing Environment-Mainframe and Networking outsourcing contract. The USDA beat out other agencies and large integrators for the contract.

Charles Cantus, vice president of government relations for the Professional Services Council, an Arlington, Va.-based industry group, said that the rule falls short in addressing the issue of whether the government should be competing with the private sector.

"That being said, I would characterize the proposed revision as a clear step in the right direction for which the administration should be commended, and I remain optimistic that this proposal is only the first step and that future proposals will address the overarching issues," Cantus said.

OFPP administrator Angela Styles, testifying before a House subcommittee June 28, had announced that the rule change would be published this week. The rule is available for comment until Aug. 16.

The proposal would change the Supplemental Handbook to OMB Circular A-76, last revised in 1998, to require competition for all interagency agreements.

The rule change will also require agencies to make changes to the way A-76 assesses cost comparisons. Typically in the interagency agreements, the customer agency must pay a reimbursable fee. Vendors have argued that this makes for an unfair comparison because a part of the costs are subsidized by taxpayers.

The rule change seeks to create a more level playing field, officials said.