OMB tags ITOP contract for special treatment

The Office of Management and Budget has singled out the Transportation Department's $10 billion Information Technology Omnibus Procurement program for the way the contract handles competition, task orders and other sometimes controversial principles of governmentwide acquisition contracts.

In January, OMB designated the secretary of Transportation as an executive agent for the ITOP program. The designation carries with it a set of principles for GWACs and an order that the agency report specific information about activity on ITOP-II, the follow-on to the ITOP contract, to OMB every six months.

The principles cover a range of conditions, including the creation of the underlying multiple-award contract, the structuring of orders, small-business participation and past performance.

The message OMB is sending with the designation is aimed not just at other government agencies that might seek the executive-agent designation but at industry and academia as well, said Deidre Lee, administrator of the Office of Federal Procurement Policy.

Acquisition reform has changed the landscape significantly, making faster and more technically in-touch acquisition possible, Lee said. "What we want to do now is find out how [new contract vehicles] are working," she said. "Just because it is a new type of contract that brings with it some efficiency, it doesn't mean we are walking away from sound business and competition and a good buy."

Rich Lieber, the ITOP program manager, said ITOP officials were pleased to receive the designation, which DOT had sought, because it showed that OMB thought the program was doing well.

"We will work with OFPP to test out new ideas and new thoughts on how GWACs can be operated," Lieber said. "We are very confident that we can really show them we can satisfy the goals."

But while some procurement officials view the executive-agent designation as an endorsement, others see it as a sign of OMB exercising closer scrutiny on the contract, which the General Accounting Office last year said was one of several GWACs that may be using multiple-award contracts to circumvent competition and funnel business to preferred vendors.

"To me it appears OMB is trying to reimpose what I call 'adult supervision' on some of the stuff that seems to be getting out of hand," said Bob Dornan, senior vice president at Federal Sources Inc., a federal marketing firm in McLean, Va.

Vendors will have problems with several of the principles, including one that dictates that teams within government must be permitted to compete along with private bidders, Dornan said.

Dornan called that principle an admonition to follow already published OFPP guidelines on comparing in-house bids with those from outside. But he said these requirements often result in vendors choosing not to bid on a contract for which they may have to compete with an agency.

Another principle requires performance-based work statements to be used to define tasks so that orders can be awarded on a fixed-price basis whenever possible. Dornan said the principle is another warning against practices such as hiring programmers for a specific period of time and deciding what work to assign when they arrive.

A so-called "off-ramp" principle may also concern vendors, Dornan said. It requires ensuring that the ordering process for long-term contracts includes off ramps, which give agencies an easy cancellation clause.

OMB's letter to DOT said it will advise all agencies that it intends to consider additional executive-agent designations, but agencies would be subject to the GWAC principles and would be required to submit the semiannual activity report.

The report must include numerous accountings, such as:

* The number and total amount of all task orders and a breakdown of those figures to show the number and total dollar amount subject to fair opportunity.

* Total revenue and costs for managing the ITOP-II program, including the number of full-time employees.

* Progress toward using performance measures to assess customer satisfaction with ITOP and advancement using performance-based contracting methods set forth by the OFPP.

* The total number and dollar value of task-order awards to small businesses, small and disadvantaged businesses, and woman-owned businesses.

Lee and Lieber, however, disagreed whether the conditions indicated more scrutiny.

Steven Kelman, Weatherhead Professor at Harvard University's Kennedy School of Government, said the designation is like a good-driver insurance discount. "In asking for the [report], they are saying, 'We want to keep account of your accidents over the year to see if you remain eligible for this discount,' " he said.