Intercepts

DREN Continues

Procurement officials overseeing the Defense Department's Defense Research and Engineering Network contract must have wondered if there is a black cloud hanging over them when they picked up the newspaper last week to see that DREN contractor WorldCom Inc. was teetering on the verge of bankruptcy.

WorldCom officials admitted to improperly accounting for billions of dollars in expenses. That news came just days after the General Accounting Office rejected a protest of the DREN contract by Global Crossing Ltd. Global Crossing, of course, had protested because the Defense Information Systems Agency had removed the company from competition because of its financial troubles. Hmm.

And the other losing bidders — AT&T, Sprint and Qwest Communications International Inc. — are all having their own financial problems of varying severity.

Section 803 Watch

Both government and industry officials are anxiously watching the Federal Register in anticipation of the final wording of the Section 803 rule, which seeks to emphasize competition in multiple-award contracts.

Yet, in something of a change, the actual competition provisions have been overshadowed by the Office of Federal Procurement Policy's attempt to mandate that service buys from the General Services Administration's schedule be firm, fixed price contracts.

Despite a massive push to have the provision removed, officials from the Coalition for Government Procurement, a Washington, D.C., industry group, said last week that they expect the provision to be included in the Section 803 rule and that they expect an interim rule to be issued this week.

The goal is to stop a long-standing practice of hiring outside contractors to supply information technology services on a labor-hour basis. Labor, time and material service buys make it difficult to conduct performance-based contracting, which the Bush administration encourages.

Administration officials said that the rule will likely be issued as an interim rule. Therefore, the competition provisions would be in their final form, while the firm, fixed price provision would be a draft and available for public comment.

One hopes that they are prepared for an avalanche of comments.

Feedback Frenzy

Chip Mather, senior vice president of Acquisition Solutions Inc. and a former Air Force procurement executive, said that he had received numerous comments about his criticism of time and material buys. In the June 24 issue of Federal Computer Week, Mather said these time and material buys had become an epidemic and were not a good procurement method.

"We have seen a significant increase in the use of time and material contracts," Mather said June 25. "The increased application of T&M contracts deserves some serious review and analysis. However, the proposed OFPP action attacks the symptom and not the cause. It does not address the underlying issues on why agencies are selecting these vehicles. It will only cause agencies to find other vehicles where they can continue to use these contracts.

"Agencies are using T&M contracts for a variety of reasons, some valid and others that are imposed," he noted.

The rule would also be a disaster for small businesses, he said.

"These are the issues that need to be addressed. Throwing the baby out with the bath water will be a disaster for the agencies and the industry," Mather said.

If Mather's e-mail inbox is any indication, there will be a lot of public comment on this issue. n

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