DOD rule raises contracting fears

DOD proposed rule

The proposed rule that seeks to encourage competition among multiple-award contract bids has the potential of undermining procurement reform if the rules implementing the law are not carefully crafted, vendors and government contracting officials said.

The comments were made during an April 29 public hearing on the Defense Department's proposed rule for implementing Section 803 of the fiscal 2002 Defense authorization bill. Section 803 requires DOD buyers compete task orders of $50,000 or more among at least three eligible vendors or document why they were not able to find three vendors.

The rule, published in the Federal Register earlier this month, was criticized as overly bureaucratic. Officials said that it could drive government purchases away from the General Services Administration schedule contracts but not increase competition.

Ed Nara, Northrop Grumman Corp.'s director of information technology-related GSA and indefinite-delivery, indefinite-quantity programs, recommended that DOD use a rule that mirrored a performance-based contract -- list the desired result at the top and then detail the rules later on.

The rule, as published, focuses on what cannot be done.

One issue that has confronted rulemakers is how to craft wording that encourages competition -- GSA rules require agencies to open competition among three vendors. Deidre Lee, director of Defense procurement, stressed that the perception is that agencies find the vendor that they want to hire and then just find two other vendors so they can "make it look good."

Except for a token number of vendors, most argued that perception is not the reality.

Bruce Leinster, director of contracts and negotiation for IBM Global Services Inc., argued that Section 803 is based on the supposition that agencies don't want competition and that vendors get most of their business from sole-source contracts, neither of which is true, he argued.

The underlying concern about the rule is how it would work in the real word in a way that would still enable streamlined buying procedures to continue.

David Drabkin, GSA deputy associate administrator at the Office of Acquisition Policy, said it is important that the rule not make the process any more complex then it has to be.

Agencies have several options, he said. If they document that they have competed the tasks among eligible vendors, they have then taken the actions necessary. The other option is to send a notice to every eligible schedule contract vendor, he said.

Meanwhile, DOD is testing a new process where public comments can be posted online just about in real time.

Public comments are due May 6.

DOD is required by law to have the rule in place by the end of June.