[Senate Hearing 108-549]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-549
 
                    NOMINATION OF DAVID H. SAFAVIAN

=======================================================================


                                HEARING

                               before the


                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                                 ON THE

NOMINATION OF DAVID H. SAFAVIAN, TO BE ADMINISTRATOR, OFFICE OF FEDERAL 
                           PROCUREMENT POLICY

                               __________

                             APRIL 29, 2004

                               __________

      Printed for the use of the Committee on Governmental Affairs









                        U.S. GOVERNMENT PRINTING OFFICE

94-485                            WASHINGTON : 2004
_____________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800
Fax: (202) 512-2250  Mail: Stop SSOP, Washington, DC  20402-0001













                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania          RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Deleware
PETER G. FITZGERALD, Illinois        MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire        FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama           MARK PRYOR, Arkansas
           Michael D. Bopp, Staff Director and Chief Counsel
                    Johanna L. Hardy, Senior Counsel
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
           Jennifer E. Hamilton, Minority Research Assistant
                      Amy B. Newhouse, Chief Clerk












                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Collins..............................................     1
    Senator Akaka................................................     2
    Senator Lautenberg...........................................     3
    Senator Pryor................................................    14
    Senator Levin................................................    16

                               WITNESSES
                        Thursday, April 29, 2004

Hon. Chris Cannon, a Representative in Congress from the State of 
  Utah...........................................................     5
Hon. John Conyers, Jr., a Representative in Congress from the 
  State of Michigan..............................................     6
David H. Safavian, of Michigan, to be Administrator for Federal 
  Procurement Policy, Office of Management and Budget............     8

                     Alphabetical List of Witnesses

Cannon, Hon. Chris:
    Testimony....................................................     5
Conyers, Hon. John, Jr.:
    Testimony....................................................     6
Safavian, David H.:
    Testimony....................................................     8
    Prepared statement...........................................    19
    Biographical and professional information requested of 
      nominees...................................................    21
    Pre-hearing questionnaire and responses for the Record.......    38
    Senator Lieberman's additional questions and responses for 
      the Record.................................................   123
    Post-hearing questions and responses for the Record from:
      Senator Collins............................................   147
      Senator Collins on behalf of Senator Bond..................   149
      Senator Akaka..............................................   150
      Senator Levin..............................................   153
      Senator Lautenberg.........................................   154
      Senator Lieberman..........................................   174

                                APPENDIX

Roger F. Cocivera, President/CEO, Textile rental Services 
  Association of America, prepared statement.....................   178















                    NOMINATION OF DAVID H. SAFAVIAN

                              ----------                              


                        THURSDAY, APRIL 29, 2004

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:45 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Susan M. 
Collins, Chairman of the Committee, presiding.
    Present: Senators Collins, Akaka, Levin, Pryor, and 
Lautenberg.

             OPENING STATEMENT OF CHAIRMAN COLLINS

    Chairman Collins. The Committee will come to order.
    Good morning. Today the Committee on Governmental Affairs 
is holding a hearing to consider the nomination of David 
Safavian to be the Administrator for Federal Procurement Policy 
at the Office of Management and Budget. The Office of Federal 
Procurement Policy, known as OFPP, provides overall direction 
of government-wide procurement which exceeded $300 billion last 
year.
    The new Administrator of the Office of Federal Procurement 
Policy will inherit a full range of controversies that reflect 
the dynamic nature of the Federal acquisition process. As the 
Federal Government tries to acquire more goods and services 
with a smaller acquisition workforce than we have had in the 
past, many innovative solutions are being proposed and pursued. 
Although some of them may have been successful in the private 
sector, we need to look carefully at whether or not they are 
appropriate in the public sector, as well. In short, we need to 
continue to integrate new acquisition tools that will maximize 
efficiency without losing sight of other important values that 
the acquisition system serves.
    First, we must look at ways to make Federal contracting 
more accessible to small businesses. It is not merely for the 
sake of small businesses that I mention this. The continued 
growth of that sector is vital to our Nation's future. It is 
also in the Federal Government's best interest to ensure that a 
large pool of contractors exists for any given item or service 
in order to ensure robust competition.
    Greater competition leads to lower prices and higher 
quality for the American taxpayer. Simply choosing the same 
proven contractors over and over again may be a good short-term 
strategy for a beleaguered contract officer but failing to take 
into account the impact of such a practice on the pool of 
businesses willing and capable of doing business with the 
Federal Government can lead to a smaller contractor base 
undisciplined by market forces.
    I know that Mr. Safavian agrees with me that his office 
must also make it a priority to maintain a highly trained and 
motivated Federal acquisition workforce. Those who purchase 
goods and services for the Federal Government have considerable 
power and responsibility. They are on the front lines of 
guarding against waste, fraud, and abuse when it comes to using 
the taxpayers' dollars. If we fail to take the necessary steps 
to ensure that this segment of the Federal workforce is 
properly trained and equipped, it will be the taxpayers who 
will pay the price.
    The new Administrator will also have to wrestle with the 
conflicts that surround competitive sourcing. One such issue is 
whether Federal employees should have the right to protest 
adverse A-76 decisions. I believe that they should and plan 
shortly to introduce bipartisan legislation to grant Federal 
employees bid protest rights. I am very eager to hear the 
nominee's views on this important issue.
    Although competitive sourcing can, when properly 
implemented, lead to greater productivity and considerable 
savings, it can also inflict stress on agencies by creating 
doubts among Federal employees about their future job security. 
At the same time, however, according to a Rand Corporation 
study, a well run contest in which the agency devotes adequate 
resources to competition can be beneficial for both the 
government and its employees.
    Private sector experience indicates that competitions must 
be run in a manner that is clear, transparent, and fair. It is 
my hope that if the nominee is confirmed, he will work closely 
with all interested parties to ensure that agencies conduct 
future competitions in a manner that inspires trust among 
Federal employees.
    We are very pleased today to be joined by two of our House 
colleagues. I am going to turn to my colleagues first for some 
opening statements but then I will call on our colleagues from 
the House to introduce our nominee.
    Senator Akaka.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Thank you very much, Madam Chairman. I also 
would like to add my welcome to our colleagues from the other 
body, one of whom I served with for many years, Congressman 
Conyers, and Congressman Cannon. Welcome.
    I would also like to thank our nominee for being with us 
this morning and also welcome your family and friends that are 
here.
    Mr. Safavian, if confirmed, you will have a difficult task 
before you--and you know this, I am sure. The Administrator for 
Federal Procurement Policy serves as a gatekeeper for the 
government's contracts and is responsible for ensuring 
financial transparency and cost savings in procurement 
policies.
    The position also requires an understanding and 
appreciation for the Federal employees who make up the 
acquisition workforce and their colleagues who compete against 
the private sector to retain work within the government.
    As the Ranking Member of the Financial Management 
Subcommittee and the Armed Services Readiness Subcommittee, I 
know that without adequate management structures, management 
information, systems, and program review structures that 
government contracts will not realize savings for the American 
people.
    The key to achieving success requires strengthening the 
Federal Government's acquisition of the contract management 
workforce. We must recognize that this corps of professionals 
make decisions every day affecting how hundreds of millions of 
Federal dollars are spent.
    For a number of years now the acquisition workforce has 
been drastically downsized and many of those remaining are 
eligible to retire. We cannot afford to lose many of our most 
experienced personnel.
    We must also ensure that when Federal jobs are subjected to 
competition that out-sourcing policies are fair to Federal 
employees who, without adequate training and resources, cannot 
compete effectively. Moreover, to be truly fair, Federal 
workers should be able to protest against agency out-sourcing 
decisions. It is a fundamental fairness issue.
    I was disappointed that a February 2004 report by the 
General Accounting Office on competitive sourcing found that 
agencies have focussed more on following OMB guidelines on the 
number of positions to compete at the expense of achieving 
savings and improving performance. I was hopeful that when the 
administration moved away from contracting-out quotas to 
agency-specific plans, agencies and their employees would have 
a fairer system. Unfortunately, that has not been the case.
    Mr. Safavian, if confirmed I hope you will undertake these 
challenges quickly and without prejudice.
    Thank you very much, Madam Chairman.
    Chairman Collins. Thank you, Senator. Senator Lautenberg.

            OPENING STATEMENT OF SENATOR LAUTENBERG

    Senator Lautenberg. Thank you very much, Madam Chairman. I 
listened carefully and, as usual, you handled things, I think, 
with a fairness that is essential to any kind of bipartisan 
relationship and that is to talk about the ability to challenge 
whether or not an A-76 is commercially viable, and I appreciate 
that thought of yours.
    We have a very good nominee, I think, Madam Chairman, but 
we may have a challenge on a policy here or there. When the 
nominee comes in with a fortification like John Conyers, you 
know that this is serious business and we are going to pay a 
lot of attention. You, too, Mr. Cannon. You are very welcome, 
but I know John just a smidgen better.
    I am concerned about one thing and that is a blind 
adherence to the administration's procurement policy called 
competitive sourcing. Now, since the President has taken office 
this ideology has moved along almost at a fevered pitch and I 
think without searching enough to find out the real costs and 
benefits of out-sourcing.
    The premise behind competitive sourcing is that work 
currently performed by the Federal Government employees could 
be done more efficiently and more cheaply by contractors and I 
think that misses the point. There is some work that is too 
important to contract out and it has to be done by the Federal 
Government. As people here know, I think, I came with a long 
bit of service in the corporate world, some 30 years, and I can 
appreciate the fact that the Federal Government should operate 
in a more business-like fashion, when possible. There are ways 
to make this happen but simply giving the private contractor a 
blank check is not one of them.
    That is what I think is going on here. The zeal for 
competitive sourcing indicates to me a desire to ensure that 
contractors get the Federal fund opportunity. Whether the 
outcome is the best for the taxpayers or our country is not 
quite as clear. And that is not surprising, given the political 
support from and ties to government contractors. One of those 
that quickly comes to mind is Halliburton. They seem to have a 
special relationship with less surveillance of the diligence 
than we would expect when the work they do is so critical--
saving lives--and they have paid an enormous price and we 
extend our sympathy to those who are working for KBR or 
Halliburton directly. They have paid a terrible price for their 
diligence to duty and we do not want to see anybody's life cut 
short or any injuries, but Halliburton took those contracts.
    Perhaps we should have been better prepared to protect 
those people than we were but they did get a $50 million no-bid 
contract principally; it was signed, to extinguish the Iraqi 
oil fires at the beginning of the war. The contract was not 
publicly disclosed in the beginning and I was one of those who 
wanted to raise a question and I did. Despite congressional and 
public outcry, this no-bid contract grew in scope and size 
until it became something over $2 billion, involving all kinds 
of oilfield repair and support work.
    Then we found out that subsidiary, the Halliburton 
subsidiary, KBR, was overcharging taxpayers some $60 million to 
deliver fuel to Iraq. This is a charge made by the Pentagon. 
This is not something that Frank Lautenberg on his own made. 
KBR employees, the subcontractors who worked for a Kuwaiti 
firm, got kickbacks of several million dollars and then we 
learned that Halliburton was charging taxpayers for thousands 
of meals never served to our troops stationed in the Middle 
East. And again these are allegations made by others, including 
the Pentagon.
    Yesterday the Washington Post reported that the General 
Accounting Office, the auditors there reviewing contracts for 
reconstruction of Iraq have discovered a situation that 
``exposes the Government to cost risks and reduces the chances 
for savings.''
    And I hope that the nominee, Mr. Safavian, understands that 
job, if confirmed, is not simply to rubber-stamp anything and 
he should examine every request and if these are major size 
contracts, try to bring the Congress in, not to audit or review 
every contract that is coming up but those that are major in 
either policy or magnitude.
    So I hope that Mr. Safavian understands the serious 
responsibility that this position entails and I look forward to 
hearing from him and our friendly witnesses.
    Chairman Collins. It is now my great pleasure to call upon 
our two distinguished colleagues from the House side. It does 
speak very well for Mr. Safavian that two such distinguished 
Members of Congress have been willing to come over and vouch 
for him today.
    I know that Representative Conyers is the senior member so 
I am going to call on him first, although my staff keeps 
telling me that I am to call on Representative Cannon first, so 
I will leave it to you to sort it out.
    Mr. Conyers. If it is all right, Madam Chairman, I would 
like my friend Chris Cannon to go first.
    Chairman Collins. Thank you. Representative Cannon.

 STATEMENT OF HON. CHRIS CANNON, A REPRESENTATIVE IN CONGRESS 
                     FROM THE STATE OF UTAH

    Mr. Cannon. I appreciate that. I appreciate my friend John 
Conyers and if any distinction can rub off on me today, I would 
be very appreciative of that, as well.
    It is a pleasure to appear with Mr. Conyers, who is one of 
the great people in Congress. He is very clearly philosophical 
and what that means is that we can form right-left coalitions 
to get things done for the American people and that has been 
greatly enhanced by my former chief of staff, David Safavian, 
who I commend to you today for the position of Administrator of 
OMB's Office of Federal Procurement Policy.
    In fact, Mr. Safavian was a remarkably helpful person in 
the process of bringing together my staff and that of Mr. 
Conyers and the minority staff on the Judiciary Committee to 
deal with issues of great importance to the American people, 
including telecom policy and helping to avoid the 
remonopolization of the Baby Bells. I think now with a couple 
of years of experience behind us and some of the really 
interesting things that are going on, including the debate 
today on the Internet Tax Freedom Act, or at least we call it 
that on our side--we hope you get a vote on that soon--I think 
in the context of that debate you see some of the dramatic 
changes that have been happening in telecom, in part because 
Mr. Safavian worked well not only with my staff but with Mr. 
Conyers's staff, as well.
    We are hearing things today like from Qwest that the legacy 
systems are no longer the most important part of their future 
and the transformation that is happening among all of the 
former Baby Bells, the regional Bell operating companies, is 
dramatic and in large part, I think, a result of the work that 
Mr. Conyers and I did in the House to delay that process and 
David played a very important role in doing that.
    I might just say that the term transparency has come up 
several times here in opening statements. This is an issue that 
David and I have talked about many times over the course of his 
service with me. He served as my chief of staff from January 
2001 to June 2002 and we talked a lot about the philosophy of 
government and I can assure you that he believes fundamentally 
that a transparent governing policy is the best policy for the 
long term. It is not a matter of partisan gamesmanship but 
really a matter of how we can govern better in the short and 
the long term.
    Let me just add a couple of comments about his character 
and capabilities. He is a person of forthrightness and honesty. 
We have even disagreed among ourselves and had pretty hard 
discussions. We have been forthright and we have come to 
conclusions that were brought forward.
    Second, David is a person of great mental capacity. He 
understands the technology and the great issues of our time, is 
able to deal with those things in a fluid fashion. He is also a 
great advocate. When he takes a position I think he will do 
that transparently but he will be very clear about what that 
position is and then push for what he believes is right.
    He also understands Congress and our constitutional role 
and I think you will find that he is a person who will work in 
the administration in a way that your side and our side of the 
Capitol will appreciate long-term.
    I want to just tell you that I have the greatest confidence 
in David Safavian and that I think he will do a great job for 
the American people in this job and I urge your support for his 
nomination. Thank you.
    Chairman Collins. Thank you very much, Congressman. 
Congressman Conyers.

   STATEMENT OF HON. JOHN CONYERS, JR., A REPRESENTATIVE IN 
              CONGRESS, FROM THE STATE OF MICHIGAN

    Mr. Conyers. Thank you and good morning to this very 
distinguished Committee. To see you here, Madam Chairman, and 
my two good friends, Senator Akaka and, of course, Senator 
Lautenberg, is a real privilege. I was not sure which part of 
the Committee I would be meeting with today and I am happy that 
I am before all of you.
    I would like to make it clear that we think that the 
nomination of David Safavian for Administrator of the Office of 
Federal Procurement Policy at the Office of Management and 
Budget would be an excellent one under any administration. We 
come to that conclusion because he has been on the Judiciary 
Committee staff and we had a chance to work together and I 
would like to second what Chris Cannon has said about the 
cooperation that not only exists between him and myself but 
between our staffs.
    I am very pleased that I was able to bring over my chief of 
staff, Perry Apelbaum, and two other lawyers, Ted Kalo and 
Kanya Bennett. We are joined with his wife and his mom, as well 
as his family and friends, to underscore how fine a decision 
has been made for this appointment. We hope that the Senate 
will agree and get him to work as quickly as possible.
    First of all, he has a lot of experience in the government. 
He worked on the same subject, Federal procurement policy, as a 
lawyer. He worked on this same subject with the Army Aviation 
Systems Command. And he is the person that I am willing to 
assure you will take into cognizance the understanding of how 
important small businesses are to the contracting system of the 
one place in America where there is more of it that goes on 
than anywhere else, our government. The Chairman lifted that 
subject up, and, to me it is very important.
    First of all, there is the issue of fairness. It is so 
easy--I speak now from my experience as Chairman of the 
Government Operations Committee in the House of 
Representatives, in which we oversaw the entire government and 
frequently got into procurement issues probably more than any 
thing else. They were not all small, either. There were plenty 
of large ones and Senator Lautenberg referred to one of the 
more recent problems we have had. We know in our States and 
districts a small business with a good service or product 
trying to get before the Federal Government is a very difficult 
undertaking.
    And I can say that I believe that David is going to bring a 
perspective to that position that will not let any of us down. 
We want to make contracts with the Federal Government more 
available. We want to make the procedure more simple. And no, 
we are not just giving away business contracts to every small 
businessman that can fill out a form. We want quality and 
service. We want something for the Federal tax dollar that will 
be spent.
    But the important thing, and I have been working on this 
for a few years now, is trying to make the system as fair and 
apolitical as it can be. We want people coming in to do 
business with the Federal Government to run into the people 
that work under Mr. Safavian, if this goes through, who will be 
open and welcoming to what is really the crux of our economic 
systems; namely, small businesses. Small businesses are the 
ones that create more jobs now than anybody else. Small 
businesses are the ones that our communities and towns and 
cities depend on for the economic sustenance that is required.
    And I see in this man, by the way that he has handled 
himself in the Judiciary Committee, a person that I would be 
happy to recommend here and any time that it is necessary. He 
has a lot of Michigan roots and we are proud of that. That does 
not hurt him a bit in our book. The Michigan delegation is 
strongly behind him in this regard.
    So it seems to me that this is probably a very great 
morning, a very great day for our country, for his family. I am 
aware that he is from a background that makes him a small 
number of people that will be going into government service at 
this high level and I am proud of that. We are happy that this 
has come to pass and that I was invited with Congressman Cannon 
to join in this testimony in support of this very fine nominee.
    I want to thank you very much for allowing me to be with 
you today.
    Chairman Collins. Thank you.
    Senator Lautenberg. Madam Chairman, if I might, I have to 
go but I do want to say that I think that David Safavian can be 
a good candidate in a tough job and hope that he will remember 
my admonition.
    Mr. Safavian. Absolutely, sir.
    Senator Lautenberg. Thank you very much.
    Chairman Collins. I do not think there is any chance he 
will forget it, Senator.
    I want to thank both of the Congressmen for being here. 
Congressman Cannon.
    Mr. Cannon. Would you allow me just to associate myself 
with the comments from Mr. Conyers?
    Chairman Collins. Certainly.
    Mr. Cannon. Especially the point he was making about the 
fact that small businesses create most of the jobs in America 
and that the role that Mr. Safavian will be taking will be 
critical in the government's support of those small businesses 
and the creation of jobs that come from that.
    So while there are a lot of judgments that are going to 
have to go into how we do out-sourcing, the fact is this could 
be a great job engine for America, not just a loss of jobs in 
the Federal Government. Thank you.
    Chairman Collins. Thank you.
    Senator Levin. Madam Chairman, can I just thank Congressman 
Conyers for his remarks? I regret I missed them. I just caught 
the end of them on the monitor as I was coming in but they mean 
a great deal to me personally and I am sure to Mr. Safavian, as 
well.
    Chairman Collins. I want to thank both of the Congressmen 
for taking the time to come over here today to introduce our 
nominee. It certainly speaks well of him to have such 
bipartisan support and I would be happy to excuse the two 
Congressmen now. I know they have very busy schedules. Thank 
you.
    Mr. Conyers. Thank you so much.
    Chairman Collins. Mr. Safavian has filed the responses to a 
biographical and financial questionnaire, answered prehearing 
questions, and has had his financial statements reviewed by the 
Office of Government Ethics. Without objection, this 
information will be made part of the hearing record, with the 
exception of the financial data, which are on file and 
available for public inspection in the Committee offices.\1\
---------------------------------------------------------------------------
    \1\ The biographical information appears in the Appendix on page 
21.
---------------------------------------------------------------------------
    Our Committee rules require that all witnesses at 
nomination hearings give their testimony under oath, so Mr. 
Safavian, I would ask that you please stand and raise your 
right hand.
    [Oath administered.]
    Chairman Collins. Mr. Safavian, I understand that you do 
have some family members present and I would invite you to 
introduce them at this time.
    Mr. Safavian. Thank you, Chairman. I have my mother, Karen 
Safavian, and my wife, Jennifer Safavian, here with me. My 10-
month-old daughter--we decided we would spare the Committee the 
babble. I also have a lot of friends in the audience, too. 
Thank you.
    Chairman Collins. We are very pleased to welcome your 
family members. Public service involves sacrifices at times by 
the entire family and we are pleased that they could join us 
today.
    I would now call upon you to make any statement that you 
would like to present to the Committee.

      TESTIMONY OF DAVID SAFAVIAN,\2\ OF MICHIGAN, TO BE 
    ADMINISTRATOR FOR FEDERAL PROCUREMENT POLICY, OFFICE OF 
                     MANAGEMENT AND BUDGET

    Mr. Safavian. Thank you, Chairman Collins. Members of the 
Committee, good morning. I am honored to sit here this morning 
as President Bush's nominee to head the Office of Federal 
Procurement Policy at OMB. I sit here before you this morning 
only because of the grace of God, the endless support of my 
family, the guidance of mentors and friends, such as 
Administrator Steve Perry, and without a doubt, the love of my 
wife, Jennifer, and my 10-month-old daughter Kathleen. I am 
truly blessed to be here today, and thank you for being here.
---------------------------------------------------------------------------
    \2\ The prepared statement of Mr. Safavian appears in the Appendix 
on page 19.
---------------------------------------------------------------------------
    Madam Chairman, I would also like to express my gratitude 
to you and other Members of the Committee for the consideration 
you have shown me during the nomination process. In particular, 
I would like to thank the Committee staff for their help and 
patience and I look forward to working with them on policy 
matters if I am fortunate enough to be confirmed for the 
position I am nominated for.
    Finally, I would like to thank Congressmen Cannon and 
Conyers for their gracious introductions. I have greatly 
enjoyed working with both men and I hope to continue those 
relationships long into the future.
    Chairman Collins, I believe procurement issues go to the 
heart of government and to the citizens' confidence in us to 
execute the laws. We all know that acquisition issues are not 
terribly sexy. When a contracting officer does her job well, 
government contracts that result are all but invisible to the 
general public. But when a contracting officer makes an error 
and orders a $1,200 hammer or a $900 toilet seat, the taxpayers 
lose confidence in our ability to deliver results. In short, 
ineffective contracting does long-term damage to the 
government's credibility with the governed and thus to our 
collective ability to lead.
    Our acquisition workforce is actually very good at buying 
things from the private sector, and they should be. Every year 
we buy $230 billion worth of goods and services that are 
consumed by the Federal Government. However, there is always 
room for improvement and with it, better results for the 
country. We must not only buy the right goods and services but 
we must buy them well, and that means getting the best value 
possible for the taxpayers and the money they entrust us with.
    My hope is that if I am confirmed I can work with each of 
you and your staffs to develop policies that improve our 
acquisition system. By doing so, we can ensure that taxpayers 
continue to have confidence in the ways we spend their money. 
And it is in that light that I would like to very briefly 
outline the priorities that I would undertake if I am fortunate 
enough to be confirmed for your consideration.
    First and foremost, the strategic management of human 
capital that makes up our acquisition workforce has to be the 
No. 1 priority. With 40 percent of our procurement 
professionals eligible to retire in the next 5 years, the 
acquisition corps faces a potential human capital crisis. 
Unfortunately, these positions are scattered around the 
agencies and as a result, the scope and dangers of the 
situation are easily overlooked by Federal managers. Training 
must be enhanced, recruiting and retention must be addressed, 
and a career development path for acquisition professionals in 
the civilian workforce must be established.
    As you know, the Defense Acquisition University and the 
Federal Acquisition Institute are responsible for the 
respective training of DOD and civilian agency procurement 
personnel. If I am confirmed I intend to strengthen the 
alliance between these two organizations and to leverage the 
knowledge and lessons learned by DAU on behalf of the civilian 
agencies.
    Second, I hope to make competitive sourcing policy even 
more open and transparent and effective. If confirmed, I intend 
to put into place an operational database for competitive 
sourcing data so that we can get past anecdotes and understand 
the real impact of competitive sourcing on agencies, employees, 
Congress, and the taxpayers. I hope this database will be a 
useful tool for Federal managers and for you all to use, as 
well, to assess the performance of this initiative.
    My third area of emphasis if I am confirmed will be to 
continue the progress made under President Bush's Small 
Business Agenda. Having worked for many a summer at my 
grandfather's small auto parts manufacturing business, Trenton 
Forging, I can tell you I understand how important small 
business is and I can tell you that if I am confirmed, there 
will be no stronger advocate for small business interests than 
me.
    I intend to work hard to open Federal contracting for more 
disadvantaged businesses and I also intend to pay closer 
attention to opportunities for the service-disabled vets. Those 
who have made such a sacrifice deserve to have that, at the 
very least.
    And tied to this effort will be the full deployment of the 
Federal procurement data system so that we have timely and 
accurate information. We need to know what we buy and from whom 
we buy it.
    Finally, I believe we need to review the rules, regulations 
and policies, quite frankly, concerning suspension and 
debarment. I know that has been an issue of interest to you, 
Chairman Collins. We must ensure that the government only deals 
with presently responsible contractors and that agencies do so 
in a fair, open, transparent and consistent manner.
    I believe these improvements would result in enhanced 
public confidence in our ability to manage government. Again 
they are not the sexiest of issues but they are of significant 
consequence nonetheless. If I am fortunate enough to earn your 
trust and get confirmed, I intend to make progress and generate 
results from our focus on each of these areas, as well as in 
the overall operation of the Office of Federal Procurement 
Policy.
    With that broad overview, Madam Chairman, I would be happy 
to take the Committee's questions.
    Chairman Collins. Thank you very much.
    I am going to start my questioning with the standard 
questions we ask of all nominees and then we will go into 6-
minute rounds.
    Is there anything you are aware of in your background which 
might present a conflict of interest with the duties of the 
office to which you have been nominated?
    Mr. Safavian. No, ma'am.
    Chairman Collins. Second, do you know of anything personal 
or otherwise that would in any way prevent you from fulling and 
honorably discharging the responsibilities of the office to 
which you have been nominated?
    Mr. Safavian. No, ma'am.
    Chairman Collins. And third, do you agree without 
reservation to respond to any reasonable summons to appear and 
testify before any duly constituted committee of Congress if 
you are confirmed?
    Mr. Safavian. Absolutely.
    Chairman Collins. Mr. Safavian, I was very pleased to hear 
you in your opening statement emphasize the need for greater 
involvement by small businesses in the contracting process. 
Right now many small companies just give up on the idea of 
doing business with the Federal Government, despite having 
quality goods and services to offer, because they find the 
procurement system too daunting and too complex for them.
    Another problem is, to simplify their workloads, agency 
procurement officers often bundle contract requirements into 
one large contract that is too big for a small business to bid 
on, yet if that contract were broken into separate contracts 
there would be opportunities for smaller companies. To address 
the problem of bundling, Senator Talent of Missouri and I last 
year authored legislation that was included in the Defense 
Department authorization bill to try to put some restrictions 
on bundling.
    The Small Business Administration's Office of Advocacy has 
noted that the share of smaller contracts, those under $25,000, 
that small businesses are winning, has actually fallen from 51 
percent in 1995 to around 42 percent in 2001 and the SBA 
speculated in its report that some of the changes to our 
Federal procurement laws in the 1990's may have contributed to 
a decline in contracting for small businesses.
    I have touched on a lot of different issues in that first 
topic but I would like to know from you what steps you would 
take as the head of OFPP to expand access to Federal 
contracting opportunities by small businesses.
    Mr. Safavian. Sure. I think you raise an absolutely 
critical issue, Chairman. My experience, having worked at GSA 
and in my current job as Counsel to the Deputy Director of 
Management at OMB, I see small businesses throwing their hands 
up in the air going, ``How do we get through this paperwork?'' 
Procurement tends to be viewed as a black box where small 
business applications go in and sometimes they come out and 
sometimes they do not and our No. 1 task, after the training of 
acquisition workforce, needs to be to address those issues.
    Let me give you just a quick snapshot of what we did at GSA 
to help address some of those issues. Under the administrator's 
leadership and following the President's Small Business 
Initiative, GSA upgraded its website so that there was more 
information in a more readily understandable packet for small 
businesses to review. GSA then held monthly training seminars 
in Washington, DC, for small and disadvantaged businesses so 
that the actual companies could come in and learn how to do 
this, rather than hire what I would call a beltway bandit to 
charge abhorrent rates in order to do what should be done as a 
matter of process.
    We held seminars all over the country and invited small 
businesses and disadvantaged businesses to participate and 
learn how to do business with GSA and the Department of 
Homeland Security. We joined forces with local Chambers of 
Commerce to create somewhat of a national town hall. We had 
satellite uplinks with about 50 or so Chambers of Commerce all 
around the country where we held basically a Q&A seminar for 
folks to learn how to do business with us.
    These are great first steps but at the end of the day if 
the acquisition officer is not sensitive to small business 
targets and goals, we are not going to see the government meet 
those targets and goals.
    I thought it was interesting when I first moved to GSA that 
one of the things that Administrator Steve Perry did was 
mandate quarterly performance reviews. Part of the process 
actually had a performance metric for how the regional 
administrators were doing in small business purchasing.
    I know we are short on time. What I would say just as a 
broad response, Chairman, is that we must make sure that the 
contracting officers are sensitive to the small business needs 
and that the line managers are sensitive to how their 
contracting officers are functioning in making their source 
selections.
    Chairman Collins. A second important issue that I want to 
bring up with you this morning is the General Accounting 
Office's recent interpretation of the Federal procurement law, 
the Competition in Contracting Act. The GAO has concluded that 
the law prohibits Federal employees from protesting adverse 
contracting-out decisions under OMB Circular A-76. I am 
concerned that that interpretation leads to an unfair situation 
where one side can protest the decision but the other side 
cannot.
    What is your position on allowing Federal employees or some 
entity representing Federal employees to protest an adverse A-
76 decision?
    Mr. Safavian. I think we need to have parallel mechanisms 
for appeal. If the private sector has the ability to protest 
GAO, so should the affected employees. How we implement that is 
difficult. The devil is always in the details. We want to be 
careful to not encourage multiple appeals of the same issue.
    There was an issue, I believe, in last year's Treasury 
appropriations language that was raised in terms of who gets to 
select the actual appellant. Is it the GAO selecting between 
the agency tender official or the employee representative or 
what is the prioritization?
    But I think broadly speaking, if I am confirmed I would be 
supportive of some sort of mechanism of appeal rights.
    Chairman Collins. Thank you. Senator Akaka.
    Senator Akaka. Thank you very much, Madam Chairman.
    Mr. Safavian, OMB Director Bolten said in response to a 
question I raised at his nomination hearing, ``If confirmed, I 
will ask the administrator for Federal procurement policy to 
recommend ways to improve opportunities for Federal employees 
to compete for new work and for work currently performed by 
contractors.''
    I was delighted to hear in your statement that your No. 1 
priority is strategic management of the human capital and the 
acquisition workforce. I want to bear down on the workforce 
part of this. Chairman Collins and our Committee really has 
been bearing down on human capital.
    What steps will you take to ensure that Federal employees 
have the training and resources necessary to compete with the 
private contractors?
    Mr. Safavian. Senator Akaka, I think it is critical that 
where the rubber meets the road, if we are going to match our 
rhetoric with reality in these competitions, that the Federal 
workers, the MEOs, have the necessary skill sets and access to 
experts in order to help them craft their positions in the 
competitions.
    I know that was strongly encouraged by my hopefully future 
past predecessor of the Office of Federal Procurement, Angela 
Stiles. It is absolutely incumbent upon good, strong managers 
that they empower their workers to be able to compete in that 
regard. It will take some dollars, quite frankly, but it is 
money that is also spent on the management side when they start 
their competitions, as well. Again going back to Senator 
Collins's question, you have to have parallel rights and 
parallel responsibilities there.
    Senator Akaka. Also I want to say that I was glad to see 
your emphasis on training, recruitment and retention.
    Over the past several years the Armed Services Committee 
has adopted a series of legislative provisions designed to 
address problems in DOD's services contracting in several 
ways--by requiring the Department to design an improved 
management structure for service contracting, also to improve 
the collection and use of data on services contracts, also to 
increase its use of performance-based services contracting and 
ensure that its procurement officials comply with existing 
competition requirements.
    It is important to remember that the problems this 
legislation is designed to address are not unique to the 
Department of Defense and we here who also serve on the Armed 
Services Committee have been looking at this part of the 
Department.
    My question to you is do you think that it would be 
advisable to implement a new management structure and improve 
the internal controls for services contracting on a government-
wide basis, rather than limiting these reforms to the 
Department of Defense?
    I would also appreciate your review of Sections 801 and 803 
of the National Defense Authorization Act for fiscal year 2002 
to determine whether they can and should be applied to 
governmentwide.
    Mr. Safavian. Sure. I think your first question, Senator, 
was should we apply some of these requirements on an 
enterprise-wide basis. While I have not dove deep into that 
issue as of yet and I promise I will if I am fortunate enough 
to be confirmed, my knee-jerk, my gut reaction is that I do not 
think we can apply these standards on an enterprise-wide basis 
because I think many of our agencies have unique missions and 
have different sets of responsibilities.
    Now granted, we all have a fiduciary responsibility to the 
taxpayer to make sure that we are generating the best value in 
our acquisitions, but I am not so sure that we can craft a one-
size-fits-all solution that does not sacrifice some of the 
efficiencies that have been put into place that while some will 
argue that the pendulum has gone a little bit too far in that 
regard, but I think we can more narrowly address some of the 
issues that we have seen to date, rather than apply an 
enterprise-wide solution.
    And as for applying Section 801 or 803, before I give you a 
bad response I would rather give you a good response and 
respond back to you a little bit later, if I may.
    Senator Akaka. Thank you very much for your responses.
    My time has expired, Madam Chairman.
    Chairman Collins. Thank you. Senator Pryor.

               OPENING STATEMENT OF SENATOR PRYOR

    Senator Pryor. Thank you, Madam Chairman.
    I wanted to ask, if I may, in your written questions you 
said one of your highest priorities will be to address the 
human capital needs to the government acquisition 
professionals. Could you elaborate on this further?
    Mr. Safavian. Senator, right now some of the internal 
numbers that I have read indicate that about 40 percent, if not 
more, of our senior-level acquisition workforce--not our senior 
managers but the contracting officers--are eligible to retire 
in the next 5 years. And it is a difficult area for recruiting. 
It is also a difficult area for retention, particularly with 
the demands from the private sector.
    Senator Pryor. Why is it difficult?
    Mr. Safavian. On the recruiting or the retention?
    Senator Pryor. Either one.
    Mr. Safavian. I will start with the recruiting. Imagine a 
job where you are reviewing a lot of fine print and a lot of 
very technical information, having to make a fundamental 
decision at the end of the day, and regardless of the decision 
you make, somebody is going to yell at you. One of the losing 
parties is going to file a protest.
    Senator Pryor. That sounds like our job, does it not?
    Chairman Collins. It does.
    Mr. Safavian. It is a difficult task. It is one that 
requires technical expertise, as well as the patience of Job. 
And we have a good, solid, hard-core cadre of acquisition 
professionals. Unfortunately, those folks are approaching 
retirement and I am not sure we have a succession plan in place 
government-wide.
    That goes to the retention issue, as well. We seem to be 
losing more folks than we are bringing in right now and that is 
a grave concern.
    Senator Pryor. In fact, the Comptroller General back in 
June of last year testified to the House. I am not going to 
read you his entire testimony on the subject but basically what 
he says is in his view, the agencies currently lack the 
capacity, the human capital, to perform some of this oversight 
that may be very important. Is that your thought? Do you agree 
with that?
    Mr. Safavian. Oversight over the acquisition workforce?
    Senator Pryor. Yes.
    Mr. Safavian. I think that is going to vary on an agency-
by-agency basis. The General Accounting Office named a couple 
of agencies that they consider high risk with regard to----
    Senator Pryor. That is the context of his comment, right?
    Mr. Safavian. I am not sure that you can say that across 
the government. We have some very good senior procurement 
executives, outstanding professionals.
    Senator Pryor. But here again, are they going to retire 
soon? Are there people in the pipeline that can step up and 
help them long-term?
    Mr. Safavian. I cannot say that I know that in every 
instance but what I can tell you is whether it is fair or not, 
replacement planning or succession planning tends to take place 
far more actively at the senior management level than it does 
at your GS-12 or GS-13 level. So when there is a senior 
procurement individual ready to retire, people are already 
thinking in advance about who to replace that person with. I am 
not sure that takes place at the line level.
    Senator Pryor. You know, one thing that we have discussed 
in this Committee and in the Senate generally is competitive 
sourcing criteria and obviously OMB is very involved in that. I 
would like to hear your thoughts on competitive sourcing.
    Mr. Safavian. Let me start with a very brief anecdote. I 
can remember growing up and working for my grandfather at 
Trenton Forging, as I mentioned earlier, and it was during the 
time that U.S. automakers were really taking a beating from the 
Japanese. If you guys can recall, people were saying if you 
have a foreign car, you cannot park here and all that.
    Senator Pryor. Yes.
    Mr. Safavian. I can remember my grandfather talking about 
how this competition was tough on the business, but I can also 
remember him talking about how the competition ultimately will 
make the business stronger. And my grandfather's prediction has 
panned out. They are stronger than ever. They employ 65 people 
right in downtown Trenton.
    I really do believe that competition improves the way 
operations are run in the government. I think the system we 
have in place is a good, solid foundational system. I think we 
will need to continue to make tweaks along the way, as Senator 
Collins pointed out, with appeal rights. I think that is an 
important issue.
    But I think at the end of the day, using competition as a 
tool to determine how the taxpayers can get the best quality 
services and the best value makes great sense. It is a 
Presidential initiative that if I am fortunate enough to be 
confirmed I will pursue with zeal.
    Senator Pryor. I love the concept of it. But I just want to 
make sure that we set it up the right way and that it is done 
fairly and evenhandedly.
    A few moments ago, Senator Akaka mentioned the armed 
services. We have seen in that context, from time to time, 
where out-sourcing or the competitive process seems to make a 
lot of sense on the front end but after you get into something 
a few years, it can be much more expensive and you start to 
create dynamics that actually, in the end, you did not 
anticipate creating and may not be healthy.
    So I guess I just want to add a word of caution there to 
think about long-term, not just the immediate consequences. I 
know, for example, some of the things that the government does, 
we may emphasize something like diversity. Just true dollars 
and cents, that may not make a lot of sense but for our society 
we have made the decision that that does make sense and it is a 
good thing.
    So I hope you will look at this from a broader perspective 
than just purely a philosophical agenda.
    Mr. Safavian. Absolutely, sir.
    Senator Pryor. That is all I have. Thank you.
    Chairman Collins. Thank you. Senator Levin.
    Senator Levin. Thank you, Madam Chairman. And let me add my 
welcome to you, Mr. Safavian.
    Mr. Safavian. Thank you.

               OPENING STATEMENT OF SENATOR LEVIN

    Senator Levin. There is a pending bill called the Bioshield 
Bill which would exempt a wide range of contracts from the 
Competition in Contracting Act. One section of this bill would 
exempt from competition any procurement up to $25 million for 
performing, administering or supporting research and 
development activities that respond to what is called pressing 
needs. A second provision would exempt from competition without 
dollar limitation any procurement of a specific countermeasure 
for which there is a pressing need.
    We have a lot of pressing needs in the Federal Government 
and we have a lot of pressing needs in the Department of 
Defense. We have pressing needs for new fighter aircraft, body 
armor for our soldiers and a lot of other items and yet we 
require the Department of Defense to live within the 
requirements of the Competition in Contracting Act and they do 
so effectively.
    Now there are obviously exemptions, emergency exemptions. 
You can designate certain items that do not have to be 
purchased competitively if there is an emergency or an 
essential need for it, to somehow or other omit the competition 
delay, but basically my question of you is this--do you support 
the Competition in Contracting Act and the principles that lie 
beneath it?
    Mr. Safavian. As a broad measure, absolutely.
    Senator Levin. Do you believe that the bioshield 
requirement--are you familiar at all with the bioshield 
requirements?
    Mr. Safavian. No, sir.
    Senator Levin. I would ask that you take a look at the 
requirements in that bill and give us an answer for the record 
and tell us whether or not you believe that the requirements 
for a bioshield against a biological attack are more pressing 
than the other Defense Department needs.
    Are you familiar with the urgent and compelling exemption 
to the Competition in Contracting Act? There is an exemption 
for----
    Mr. Safavian. Emergencies.
    Senator Levin. Yes. Are you familiar with that exemption? 
Have you had any dealings with it?
    Mr. Safavian. I will not paint myself as an expert on it.
    Senator Levin. Have you had any dealings with it at all?
    Mr. Safavian. Some.
    Senator Levin. Has it worked, as far as you know, for the 
various Federal agencies? Has that provided enough flexibility 
where there is some real reason why you cannot compete 
something?
    Mr. Safavian. From my workings with it, and I will say it 
has been very superficial so far, that it has been fully and 
well used by many----
    Senator Levin. Excessively used?
    Mr. Safavian. No. I think that sometimes that exception can 
be used for the sake of facility rather than exigency. I would 
rather see more checks and balances.
    Senator Levin. So you would be leery about expanding that 
definition or its use. You feel it ought to be used perhaps 
with greater caution?
    Mr. Safavian. From my framework and how I look at 
contracting, I would be leery.
    Senator Levin. OK. When we met in my office last month we 
discussed a number of issues and I want to just revisit a few 
of them with you very briefly now.
    I raised an issue with you about Federal Prison Industries. 
This is an issue which goes right to the heart of the question 
of both small businesses and competition, whether we are going 
to allow small businesses to compete for Federal contracts or 
whether we are going to allow the Federal Prison Industries to 
designate contracts as ones which can only be filled by the 
prison work and prohibiting competition from the private sector 
for those contracts.
    It sounds bizarre when I tell some of my colleagues that 
Prison Industries is able to designate contracts for which 
small businesses or other businesses cannot even compete. They 
are not allowed to bid, enough though they might be able to 
provide an item cheaper or a better item at the same price.
    We actually allow the Federal Prison Industries to put off-
limits items so that they have the exclusive right to supply it 
to agencies and prohibit bids from the private sector. Some of 
my colleagues are absolutely--they feel that it cannot be. How 
can possibly a small business compete, given the differential 
in the cost of labor, with an item which is produced by Prison 
Industries? The answer is OK, then let competition sort that 
out but at least let small businesses bid if they want to. That 
has been my position.
    We were able to succeed after a very heated debate on the 
Senate floor to make that possible for the Department of 
Defense and the issue is now whether or not we are going to 
allow contracts that other agencies want to let for items be 
bid upon by businesses in this country or whether we are going 
to continue to allow that monopoly by Federal Prison 
Industries.
    Will you work with us to ensure that private companies have 
an opportunity to compete against Federal Prison Industries for 
Federal agency contracts?
    Mr. Safavian. Senator, my understanding of the 
administration's position is that they are firmly neutral on 
the role of Federal Prison Industries. As we had discussed, my 
own personal view is that it is difficult to say competition 
works in one segment of Federal operations and not in another 
and I would be happy to work with you to try to address Federal 
Prison Industries.
    Senator Levin. Thank you.
    We also discussed the proliferation of Government-wide 
contracts and multi-agency contracts. You indicated that you 
share the concern about the need to rationalize those contracts 
and to ensure that they are not used as a method of avoiding 
competition requirements and performance-based contracting 
requirements. Do you have a comment on that issue?
    Mr. Safavian. I think as the executive designations come up 
for agencies with regard to their government-wide contracts, we 
should make sure that they have a game plan for how they intend 
to use those contracts. I think that there continue to be 
concerns about abuse of certain types of schedules, again 
merely for the sake of facility rather than for some strategic 
reason.
    Senator Levin. You have been asked this morning about the 
fact that Government now spends more money on contracts for 
services than we do on contracts for products, and yet when it 
comes to managing those contracts, we spend less on service 
contracts than we do on contracts for products.
    In your response to the Committee's prehearing policy 
questions you said that spend analyses can be a useful tool for 
agencies to determine how to most effectively spend their 
procurement dollars. And your response to Senator Lieberman's 
prehearing question, however, you said that you are ``not 
convinced that the benefit of developing a comprehensive 
inventory of work performed by contractors would be worth the 
significant cost.''
    My question is this. Is not a spend analysis the same thing 
as a comprehensive inventory of the work performed by 
contractors?
    Mr. Safavian. I guess the way I view it, Senator Levin, is 
that you need to have the inventory in order to conduct the 
spend analysis. I see the point you are making.
    I guess I struggle with putting together the comprehensive 
inventory because I am not sure how you build it, or with what 
dollars you build it. And what I have seen, having worked in 
one of the agencies, is how many hoops the agency managers are 
jumping through for verifiable and right reasons. I am very 
sensitive to overloading some of the agency managers with those 
types of activities.
    Senator Levin. Well, should not the government, like 
private sector companies, look at all of the services that it 
acquires, whether they are performed in-house or contracted 
out, as the basis for decisions as to how to acquire them in 
the future? Do you not have to make that assessment?
    Mr. Safavian. Yes, but I question why we would not do that 
on an agency-by-agency basis, since agencies have individual 
and unique core missions.
    Senator Levin. So that each agency should be doing that 
instead of----
    Mr. Safavian. Each agency should know where----
    Senator Levin. But Government-wide you do not see a need to 
do that?
    Mr. Safavian. If we are starting from scratch I would have 
questions about it. If we could amalgamate the spending 
patterns of agencies on a component basis, sure.
    Senator Levin. Thank you. Thank you, Madam Chairman.
    Chairman Collins. Thank you.
    Mr. Safavian, I have a few additional questions but in the 
interest of time I am going to submit them for the record.
    I would like to thank you for your appearance before the 
Committee today. Without objection, the record will be kept 
open until 5 p.m. tomorrow for the submission of any additional 
written questions, the answers to the questions that you 
promised to Senator Levin, and any other statements for the 
record.
    Senator Levin. I wonder, also, if you would tell your 
daughter when she is old enough to know that we missed her 
being here this morning.
    Mr. Safavian. Thank you, sir. I will do so.
    Chairman Collins. With that, this hearing is now adjourned.
    [Whereupon, at 11:52 a.m., the Committee was adjourned.]



                            A P P E N D I X

                              ----------                              





                                 
