Tuning up procurement reform

The Services Acquisition Reform Act (SARA), the most sweeping set of acquisition reforms since the mid-1990s, survived the congressional conference process largely intact, moving it a step closer to becoming law.

The act, which would create a new high-level acquisition position in agencies, enhance workforce training and elevate performance-based contracting, is part of the Defense Authorization bill.

"This is a huge win for fans of good government," said Rep. Tom Davis (R-Va.), the bill's main sponsor and chairman of the Government Reform Committee.

"While procurement reform may not be the sexiest issue before Congress, improving the way we acquire goods and services can help make the government leaner, meaner, more responsible and more accountable to taxpayers," he said after the bill was passed.

Davis previously tried to pass similar legislation, but it faltered.

Federal spending on services continues to rise. Agencies spent 60 percent of their acquisition dollars, or about $140 billion, on services in fiscal 2001, according to General Accounting Office officials. Agencies spent $81 billion on products. Both figures refer to contracts valued at more than $25,000. No data is available for smaller contracts, according to a GAO report, but spending on services grew 11 percent from 1997 to 2001.

Although the bill's supporters cheered the advance, others called it a bittersweet victory. Members of the Project on Government Oversight (POGO), for example, regarded some of the bill's provisions as a free ticket for contractors to overcharge for services and skirt oversight.

"The vast majority of really bad provisions were stripped out," said Scott Amey, senior investigator at POGO. "But it's death by a thousand paper cuts, because every year they get a couple of loopholes [into the overall acquisition system]. The contracting framework is starting to look like a patchwork quilt. There are holes all over the place."

Supporters of the legislation say it brings federal procurement up to date, and elevates the profile of acquisition officials in government.

"It's a good, solid step forward, especially in an environment where attention has been moving away from the important issue of how...we structure business relationships between government and contractors," said Steve Kelman, professor of public management at Harvard University's Kennedy School of Government and former administrator of the Office of Federal Procurement Policy.

Alan Chvotkin, senior vice president of and counsel at the Professional Services Council, said the legislation would improve federal procurement. One provision creates the position of chief acquisition officer in each agency to oversee acquisition policy, which Chvotkin said is a significant change.

"The creation of the chief acquisition officer and the new [governmentwide] acquisition officers council — all of those will go a long way toward elevating the role of acquisition policy in the federal marketplace," he said. "That's very important."

However, the bill also retains the position of senior procurement executive to handle the day-to-day management of procurement. As originally proposed, the appointed chief acquisition officer would have supplanted the procurement executive — a move that some congressional opponents of the bill said was an insult to loyal career officials.

"This is an area of sensitivity and concern," Kelman said. "I like what [Davis] is trying to do to increase the visibility of the acquisition function. I think we need to be careful to be sure the senior career officials don't become flunkies."

Some important provisions of the original SARA legislation were stripped out along the way, including those for share-in-savings contracts, in which contractors' pay depends on how much money they can save for an agency. The E-Government Act of 2002 extends some share-in-savings authority, but it expires in 2005.

"What SARA would have done is make the provision permanent and governmentwide," Chvotkin said.

The final bill also excludes some proposed changes that would have allowed contractors to duck oversight provisions in some cases, including the Truth in Negotiations Act and Cost Accounting Standards, POGO's Amey said.

Contractors "want a complete lack of accountability over the system," he said.

The bill's progress also points to Davis' increasing power. He introduced similar legislation last year that went nowhere. Now, as chairman of the Government Reform Committee, his influence is growing, Kelman said.

"Davis is [chairman] of this committee and he's a very respected guy," he said. "He's a guy who gets listened to. There was a big emphasis on [procurement reform] in the '90s, and the encouragement from political leaders has disappeared. Since, unfortunately, the leaders in the White House don't seem to be doing anything, I think the responsibility falls to Tom Davis."

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SARA: The next generation of acquisition reform

Among the provisions in the Services Acquisition Reform Act are:

* Establishing a civilian acquisition workforce training fund within the General Services Administration.

* Providing for the appointment of a noncareer chief acquisition officer in each agency who would serve as a high-level point person for acquisition activities.

* Providing for the establishment of a Chief Acquisition Officers Council to monitor and improve the federal acquisition system.

* Establishing a governmentwide preference for the use of performance-based service contracts by treating certain service contracts worth less than $25,000 as contracts for commercial items.

* Providing for special streamlined procedures based on flexibilities in current law for the procurement of property or services when the head of the agency determines the property or services support a contingency operation, or to facilitate defense against or recovery from nuclear, biological, chemical or radiological attacks.

Source: The office of Rep. Tom Davis (R-Va.)