[Congressional Record Volume 140, Number 69 (Tuesday, June 7, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: June 7, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
PRIVILEGE OF THE FLOOR
Mr. LEVIN. Mr. President, at this time I ask unanimous consent that
John Brosnan, Paul Lieberman, and Peter Wade be extended full floor
privileges for the duration of the Senate debate on S. 1587.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. LEVIN. Mr. President, the Senate today begins consideration of S.
1587, the Federal Acquisition Streamlining Act of 1994, which is the
most significant procurement reform legislation to be considered by the
Senate since the Competition in Contracting Act 10 years ago which
Senator Cohen and I and others introduced.
The pending bill before the Senate now was introduced on October 26
last year with Senators Glenn, Bingaman, Nunn, Bumpers, and myself as
original cosponsors. But that was just the beginning of the process.
Over the last 6 months, the Governmental Affairs Committee and the
Armed Services Committee have held three joint hearings on the bill and
have solicited comments from the administration, the contracting
community, and other interested parties. Our staffs have met almost
constantly throughout this period working out modifications to improve
the bill and ensure that it achieves its underlying purpose of
streamlining the Federal acquisition system.
The bill is 300 pages long and would amend roughly 200 separate
procurement-related provisions of the United States Code. With the
exception of a few obsolete provisions, every one of these statutes
serves some valid purpose.
We have competition requirements to ensure that we obtain low prices,
avoid favoritism and conflict of interest, and provide everybody a fair
chance to compete for Government contracts. We have audit requirements
and cost principles to ensure that we get what we pay for under cost-
type contracts. We have socioeconomic requirements to promote desirable
social objectives, like promoting small minority businesses. We have
ethics requirements to ensure that our procurement officials do not
engage in employment discussions with contractors with whom they are
negotiating contracts or show favoritism by giving inside information
to contractors.
However, when all of our contract laws and hundreds more requirements
that are imposed by regulation are added together, the result is an
almost impossibly complex and unwieldy system for people who want to do
business with the Federal Government. There is much that we can do and
should do to streamline this system and make it less expensive and
easier for the Government to buy the products and services we need
without sacrificing the important objectives served by the procurement
laws.
This bill seeks to do that. It would revise, simplify, and harmonize
the hundreds of overlapping and confusing statutes that provide the
basic guidelines for our acquisition system. It would eliminate
outdated law, remove unnecessary statutory impediments to efficient and
expeditious acquisition, and provide much needed consistency with the
Civilian Procurement Code and Defense Procurement Code. This is the
grunt work of reinventing Government.
I am particularly proud of title VIII of the bill, which would make
it easier for the Government to buy commercial products instead of
requiring products to be designed to Government-unique specifications.
I have been fighting for this goal for years--holding three
subcommittee hearings, issuing two committee reports, and I offered two
successful amendments to DOD authorization bills, and introduced two
bills to extend these reforms Government-wide.
I first became interested in the commercial products issue in the
mid-1980's, when the Packard Commission reported that DOD was wasting
billions of dollars by relying on excessively rigid military
specifciations and developing custom-made items when readily available,
off-the-shelf products could meet its needs at a fraction of the price.
At that time, for example, the Packard Commission reported that the
Pentagon was buying specially designed microchips at prices 3 to 10
times the market prices for similar, commercial products.
In response to the Packard report, I pressed the DOD to reduce
paperwork requirements and rely more on commercially available
microchips--with savings to the taxpayer that have been estimated at
$500 million a year. This is just on microchips just by the DOD. At the
same time, I offered a successful amendment to the DOD authorization
bill to implement the broader recommendations of the Packard report by
creating a statutory preference for off-the-shelf items and requiring
the Pentagon to simplify its specifications and make it easier for
commercial contractors to do business with the Government.
Mr. President, unfortunately, changing the procurement culture is
never quite so easy. In 1989, the Governmental Affairs Subcommittee,
which I Chair, revisited the issue with 2 days of hearings on the
progress that the Department of Defense had made in implementing our
previous efforts in commercial products reform. What we found was not a
pretty picture. Although the Pentagon continued to give lip service to
commercial products initiatives, the Department had actually cut its
budget and staffing levels in the commercial products area to the point
where it had only one part-time person even working on the program.
Promised workshops for the training of acquisition personnel were never
conducted. A system for tracking the acquisition of commercial products
was never developed. Necessary regulatory changes were never made. And
a draft manual on commercial acquisitions sat on the shelf for more
than 2 years without ever being issued.
More important, officials at the Pentagon made virtually no headway
in the effort to tailor tens of thousands of detailed military
specifications to the commercial marketplace. In one case identified at
our hearings, the Department reviewed a 37-page military specification
for residential heat pumps and managed to shorten it to 36 pages. That
is all they were able to accomplish--a one-page reduction in 37 pages
of specifications for a heat pump, which is available in the commercial
marketplace.
What we also found was that the Department was discouraging
commercial companies from bidding on its contracts by including
numerous burdensome and unnecessary contract clauses. One witness at
our hearings held up a half-inch thick package of contract terms and
conditions that the Department asked his company to sign in connection
with a $400 purchase of commercial equipment. Naturally, his company
refused to bid on that contract.
In response to these problems, I introduced a 1989 amendment to the
Department of Defense Authorization Act, which required the Pentagon to
simplify its specifications, eliminate unnecessary contract clauses,
take advantage of commercial quality control systems and commercial
warranties, reduce burdensome ``cost or pricing data'' requirements
imposed on commercial contractors, and report to Congress on any
additional steps that needed to be taken to remove impediments to the
increased acquisition of commercial products.
The savings from this initiative have been significant. For example,
a 1991 study by the Logistics Management Institute found that a single
Navy command had been able to save the following amounts of money: $5
million by substituting commercial standards for government-unique
specifications for thermal insulation material; $3.7 million by
purchasing general purpose automobiles with standard commercial paint,
instead of requiring that all vehicles be painted medium Navy gray; $5
million by purchasing commercially-available fire and rescue trucks
instead of custom-designed vehicles; $1 million saved by buying
commercially-available generators and floodlights, instead of
specially-designed, DOD-unique floodlights and generators.
Much more remains to be done, however. Over the last two Congresses,
for example, I have introduced bills to make these reforms
Governmentwide. Each of the bills were approved by both the Senate and
the House; but in each case the House action came in the final hours of
the session when it was too late to conference the measures.
Mr. President, as I explained when I first introduced this
legislation 5 years ago, it only makes sense that commercial items and
other off-the-shelf products are less expensive and easier to purchase
than new, Government-unique items. The acquisition of commercial
products can lower initial purchase costs by reducing or eliminating
the need for research and development. Acquisition lead time can be
reduced since commercial products are readily available and can be
produced on existing production lines. Because the product is already
developed and has been shown to work, the need for detailed design
specifications and extensive testing is also reduced.
I am pleased that title VIII of the bill--the commercial products
title--incorporates these major elements and much of the language of
our earlier commercial products bills.
Title VIII would, like those earlier bills, establish new
Governmentwide definitions of commercial items and other off-the-shelf
products; it would create a preference for the acquisition of such
items; it would require Federal agencies to use simplified procurement
specifications to the maximum extent possible; it would require
agencies to conduct market research to determine whether their needs
could be met by commercial and off-the-shelf products; it would require
the use of uniform, simplified contracts for the purchase of commercial
items; it will authorize the use of market acceptance criteria in
commercial procurement; it will encourage the consideration of
contractors' past performance in decisions to award future contracts;
it will permit commercial contractors to use existing quality assurance
systems instead of extensive Government testing; and it will require
Federal agencies to take advantage of commercial warranties.
In addition to those measures, the bill will take two other very
significant steps--recommended by both the Vice President's National
Performance Review and the Section 800 panel--which will simplify the
acquisition of commercial products.
First, the bill will authorize the executive branch to waive a number
of Government-unique statutory requirements that have no parallel in
the commercial marketplace. These requirements create an impediment to
the purchase of commercial items, because they require commercial
companies to make extensive changes to their business operations if
they choose to sell to the Government.
Second, the bill would modify the Truth in Negotiations Act to permit
contracting officers to waive its applicability to the acquisition of
commercial items in appropriate cases. This means that commercial
companies would not be subject to the requirement to produce extensive
cost or pricing data to justify the prices that they charge for their
commercial products. This data requirement creates an unneeded
paperwork burden in cases where fair prices have already been reached
through competition in the commercial marketplace.
This exception is to be exercised if the contracting officer
determines in his or her discretion, and in accordance with standards
and procedures set forth in the Federal Acquisition Regulation, that he
or she has been able to obtain adequate information to evaluate the
reasonableness of the contract price without the need for cost or
pricing data. Under this provision, the contracting officer is required
to obtain from offeror or contractor, or, where necessary, from other
sources, ``information on prices at which the same or similar items
have been sold in the commercial market that is adequate for evaluating
the reasonableness of the price of the contract or subcontract.''
This provision leaves some discretion to the regulation writers in
the executive branch and the contracting officer as to what types of
information are ``adequate for evaluating the reasonableness'' of
price. The intent of the provision is that contracting officers should
seek out the best information that is available under the
circumstances.
For instance, if information is available on prices at which the same
contractor has previously sold the same item, the contracting officer
should seek appropriate information on such prices. If no such
information is available, the contracting officer may need to seek,
instead, information on prices at which the contractor has previously
sold similar items. If that information is not available either, it may
be appropriate, in some cases, for the contracting officer to rely
instead on information on prices at which other contractors have sold
similar items.
Information requests under this provision should be tailored to
impose the minimum necessary burden on contractors, and need not be as
extensive as the sales data required by current regulations. Wherever
possible, contracting officers should also review available data on
market prices to help judge the reasonableness of the contractor's
price.
However, this provision is not intended to authorize contracting
officers to rely on information about prices charged for different
items by different contractors without also obtaining appropriate and
available information on prices charged for the same item by the same
contractor.
Mr. President, the Federal Acquisition Streamlining Act, the act
which is before us for consideration, is the product of many months of
work. Starting at the beginning of this Congress, the majority and
minority staffs of the Senate Governmental Affairs, Armed Services, and
Small Business Committees met on a weekly basis for more than 6 months
to review the acquisition laws on a line-by-line basis to determine
where these laws could be streamlined, simplified, or reformed.
This bill will implement a number of important reforms. For example:
It will establish a new simplified acquisition threshold of $100,000,
as recommended by the Vice President's National Performance Review and
the Section 800 Panel;
It will raise the threshold on a number of other procurement-related
provisions to $100,000, as recommended by the Vice President's National
Performance Review and the Section 800 Panel;
It will authorize the use of umbrella contracts, subject to time and
dollar limitations and specific competition requirements;
It will streamline and consolidate the procurement ethics laws, while
retaining needed safeguards;
It will amend the Federal Property Act to codify the definitions and
requirements of the Truth in Negotiations Act for civilian agencies;
It will raise the threshold for cost or pricing data to $500,000 on a
permanent basis for the Department of Defense and civilian agencies;
It will amend the Federal Property Act to establish contract cost
principles for civilian agencies identical to those already in effect
for the Department of Defense;
It will establish a new, accelerated schedule for notice of contract
award, contractor debriefings, and bid protests;
It will require contractor debriefings when requested by a
disappointed bidder;
It will authorize the payment of consultant and expert witness fees
in bid protests, in addition to attorney's fees, while limiting all
such fees to the levels established in the Equal Access to Justice Act;
It will amend the provisions applicable to bid protests to the GAO to
address questions that have been raised about the constitutionality of
existing law;
It will address frivolous or bad-faith protests by authorizing the
dismissal of such protests and the use of sanctions in appropriate
cases;
It will clarify GSBCA protest jurisdiction and procedures, as
proposed by Senator Glenn in a series of bills introduced in the last
two Congresses.
Of course, past experience has shown that passing laws is not enough
to change the way the acquisition system works. The executive branch
has to implement fully and effectively not only the letter but also the
spirit of the new law.
Should this bill pass the Senate and the House and be signed by the
President, I sincerely hope that 2 or 3 years from now when we review
its implementation, we will find that the bill has been implemented in
the spirit in which it was written, and that real reform has occurred.
That will be the true test of our success.
Mr. President, this bill is the product of a true collaborative
effort among three Senate committees and between Democrats and
Republicans. It could not have been brought to this point without the
commitment of Senators Glenn, Nunn, and Bumpers, who have
wholeheartedly embraced the goal of acquisition streamlining and made
the staffs of their respective committees available to work on this
project over a period of many months.
It would not have been possible without the efforts of Senator
Bingaman, who initiated the Section 800 review of the defense
acquisition laws and pushed us all to give the panel's report the
attention it deserved.
And it would not have been possible without the support and
cooperation of the ranking Republican members of the Governmental
Affairs and the Armed Services Committees and the subcommittees of
jurisdiction--Senators Roth, Cohen, Thurmond, and Smith.
I also commend the unsung heroes of this effort--The Senate staffers
who have put in the endless hours of work necessary to put this bill
together. Those staffers include Peter Levine, Linda Gustitus, and
Roger Martino of my staff; Tom Sisti, John Brosnan, Mark Foreman, Paul
Lieberman, Paul Brubaker, and Peter Wade of the Governmental Affairs
Committee staff; Andy Effron, Jon Etherton, Don Deline, and John
Douglas of the Armed Services Committee staff; Bill Montalto of the
Small Business Committee staff; and Mike Hammond of Senator Bingaman's
staff. Without their efforts, there would be no acquisition
streamlining bill at all.
The Federal Acquisition Streamlining Act is an important piece of
reinventing government. I hope our colleagues will join us in
supporting this far-reaching measure.
Again, let me say in concluding that this is truly a bipartisan
effort. I know of few bills that have had greater participation by both
Republicans and Democrats on a common cause.
Our good friend from Delaware has been active in trying to streamline
acquisition laws for as long as I have been in the Senate. And he has
had some successes. But this will be one of the crowning achievements
of all our efforts if we are able to pass this law.
I want all to know that the hard work of Senator Roth and others on
both sides of the aisle has gotten us to this point and will get us
over the finish line.
I yield the floor.
The PRESIDING OFFICER (Ms. Moseley-Braun). The Senator from Delaware
[Mr. Roth].
Mr. ROTH. Madam President, first let me thank the distinguished
Senator from Michigan and also congratulate him for his very
significant contributions to what is truly a bipartisan effort to bring
some sense out of this mishmash that now regulates and controls
Government procurement.
As he has so eloquently said, for the last 6 months, members of the
Governmental Affairs Committee as well as the Armed Services Committee
have worked together, both Democrats and Republicans, in an effort to
bring about reform that will bring better procurement for the services,
as well as better purchases for the taxpayers' dollar.
Madam President, today's Federal buying system is not in good
condition. Multi-billion-dollar cost overruns; programs that are years
or even a decade behind schedule; incentives that encourage spending
rather than savings; and top-heavy bureaucratic agencies that rely on
detailed regulations rather than good judgment; these are the features
that come to mind when one thinks of the Federal Government's buying
system. It is disconcerting when, almost weekly, the network news
magazines reveal a new horror story. Ironically, despite these
problems, program managers are promoted to general, admiral, and senior
executive service jobs after the programs they managed experience
billion-dollar cost overruns.
The GAO's 1993 high risk series of reports noted that the Federal
buying system itself perpetuates waste, fraud, and abuse. The
Government has trouble purchasing modern technologies that you and I
can buy at the local Wal-Mart or Kmart. Defense Department studies find
that it takes 16 years and more than 840 steps to bring a technology to
the battlefield. By then the technologies are out of date. Acquisition
costs for Navy major weapon systems are over budget by as much as 179
percent, Air Force systems by as much as 220 percent, even after
accounting for the effects of inflation and changes in quantity. A July
1993 Defense Science Board found that: ``without fundamental reform,
DOD will be unable to afford the weapons, equipment, and services it
needs to provide for our national security.''
The problems arise, Madam President, because the buying system
provides the wrong incentives and is administered by top-heavy
bureaucratic agencies that rely on a complicated web of regulations. As
part of its testimony on the Federal Acquisition Streamlining Act, I
asked the General Accounting Office to give me a report on its recent
investigations of procurement horror stories. The GAO found it had
produced more than 150 such reports and testimonies over the last 5
years.
These include such findings as the $1 billion cost increase that
resulted from management problems in the Army's Javelin antitank
missile. In another audit, the GAO identified NASA contract management
actions that caused a weather satellite to fall 3 years behind schedule
while costs doubled to $1.7 billion.
The GAO report identified problems in the way agencies determine
their needs; poorly administered contracts; cost, schedule, and
performance problems; funding and budgeting problems; and weaknesses in
the acquisition workforce. The GAO report underscores the need for
comprehensive reform.
In today's business terminology, the buying system needs to be re-
engineered to focus on results. Moreover, we must reinstate
accountability.
Some claim that waiving laws for buying commercial items and small
purchases is sufficient. But, as the General Accounting Office
testified, such reforms would affect less than 10 percent of Federal
spending on goods and services, and the Congressional Budget Office
said it would not generate scorable savings. Some proponents say that
they want the Federal Government to be a world class buyer. But, many
of their proposals would make the Government a world-class sucker.
They say that this would be the best Congress could do. I strongly
disagree.
Madam President, you cannot use Tonka Toys to pave a bumpy road.
Congress must be bold if it is to make significant improvements in the
Government's buying system--a system I have worked for more than a
decade to reform. Over the years my conclusion has not changed: without
major cultural and structural change, Americans will not get the
results they deserve.
Cost and schedule overruns will continue, the Government will pay
more than it should for goods and services; and the taxpayer will
pickup the inflated tab.
Real procurement reform must be comprehensive. It must hold
Government employees and contractors accountable for results. It must
remove impediments to efficiency, such as the maze of specifications
and regulations that hinder the purchase of commercial items. It must
reward those who produce and penalize those who do not.
Madam President, the original version of the Federal Acquisition
Streamlining Act was insufficient. Senator Cohen and I fought for
comprehensive legislation. Last October, Senator Cohen and I introduced
a bill to accomplish the needed reforms in the Defense buying system.
Witnesses from the administration, General Accounting Office, Defense
Inspector General, industry and private watch dog groups testified on
the value the Roth-Cohen proposal.
Based on that testimony, Senator Cohen and I introduced the Federal
Acquisition Management Improvement Act of 1994 (S. 1982) which is a
Government-wide, comprehensive reform bill.
I am pleased to report that the procurement reform bill before the
Senate now contains major reforms, largely because of the cooperation
of Senators Glenn, Thurmond, Nunn, Levin, and Bingaman. During the
drafting of the committee substitute, the Federal Acquisition
Management Improvement Act was reviewed and all but two of the Roth-
Cohen proposals were incorporated.
In a nutshell, the bill makes it easier for the Government to rely on
the commercial marketplace to develop and refine items it needs. It
provides a strong financial incentive for Government employees to save
time and money. It makes both the acquisition workforce and contractors
accountable for performing within schedule and budget guidelines.
I want to highlight several key provisions in the bill before the
Senate today. First, the bill establishes a top-level measure of how
well agencies are managing acquisition programs. This will help
Congress determine whether horror stories are unique events or systemic
problems. The Deputy Secretary of Defense testified that he was shocked
to find that no Defense acquisition programs were meeting cost and
schedule goals. The Defense Department's problems are not random
occurrences.
The committee substitute requires agencies to achieve 90 percent of
budget and schedule goals while meeting user requirements; and the
Defense Department is to reduce by 50 percent the time it takes to
field new weapons. If acquisition programs at an agency are
significantly behind schedule or over budget, the agency must terminate
poorly performing programs or justify continued funding. This will
enable Congress to hold agencies accountable for their performance in
managing purchases.
Second, the bill directs Federal agencies to streamline their
acquisition management processes for products developed for the
Government. It requires that the revised processes focus on results. It
requires agencies to quantify what an item will cost, how well it must
perform, and when it will be ready for use. It requires that decisions
to move ahead be based on program results--results based on objective
data. Today, these decisions are based on a consensus among interested
parties.
When the bill is implemented, the decisions will be made on whether
an item meets requirements, is within budget, is available when needed.
Third, the bill reemphasizes the commitment of Congress to a
professional acquisition work force and establishes the incentive
structure toward program performance. It directs Departments and
agencies to tie pay and other incentives to program performance rather
than the size of a manager's budget. For years, the Federal Government
has ignored Congress' attempts to force greater reliance on commercial
items and less reliance on Government unique specifications.
The pay-for-performance provisions are extremely important to the
overall success of the bill because they provide a reward for members
of the acquisition work force who find ways to fulfill needs at lower
prices and shortened time lines associated with buying commercial
items.
Fourth, the legislation reverses the preference for buying
Government-unique items. It requires use of commercial items, unless it
is shown that they do not meet actual Government needs. It streamlines
the regulatory burden associated with buying commercial items. Coupled
with the new incentive system, this bill provides a real opportunity
for overcoming the so-called not-invented-here syndrome that has
prevented Government from buying commercial items to do its work.
Fifth, the bill implements pay for performance for contractors,
including use of contractor's past performance in decisions for future
work, tying profits to results instead of costs, and tying payments to
achievement of measurable results. The Government will be able to
manage its contractors on the basis of how well they perform. The
Defense Inspector General testified in support of tying progress
payments to result.
The Director of the Office of Federal Procurement Policy, as well as
several other witnesses from Government and industry, testified in
support of tying contract award to past performance and the bill sets
forth a structure effectively implementing this concept.
I remain concerned about one aspect of the buying system that the
Congress has not addressed. The organization is a large bureaucracy
with layer upon layer of management and dozens of buying organizations.
Many of the bureaucratic layers exist solely for the purpose of
satisfying the needs of the bureaucracy and provide no value added
toward weapon system development. As a result, the American taxpayer is
now paying for two bureaucracies in each of three military departments.
Quite frankly, I do believe that there should be a reduction in the
layers of the buying bureaucracy. I am confident that the bill will
result in efficiencies that will permit reducing this bureaucracy. But,
the bill before us today does not require a reduction in the roughly 20
layers of management in the Federal buying system.
I am disappointed that my colleagues did not agree to ensure that
this reduction occurs. My colleagues have agreed to have the General
Accounting Office review acquisition work force staffing as part of its
report on implementation required in title 9 of the bill. I expect that
we will be able to return to the staffing issue once the report is
completed.
The bill before us today streamlines procurement processes. The
buying organizations also must be streamlined and changes to these
organizations must flow from streamlining the acquisition process. Past
attempts to streamline have been fought by the bureaucracy. For
example, when the Goldwater-Nichols bill enacted the Packard Commission
proposal to streamline the buying bureaucracy to three layers and a
handful of commands, the Defense Department added a second multilayer
bureaucracy to the old structure.
I can assure the President and others I will make this a top priority
of mine.
According to the Congressional Budget Office, in fiscal year 1994,
the Federal Government will buy about $450 billion of goods and
services. The National Performance Review and Defense Department
studies indicate that as much as $20 billion per year could be saved
through more efficient procurement practices. With this much money at
stake, Congress has a responsibility to ensure that the taxpayer's
money is spent well.
A decade ago, I sponsored the legislation to create a commission to
fix the problems in the Defense buying system. That bill led to the
creation of the Packard Commission. My colleagues may remember that I
also sponsored legislation to implement several Packard Commission
recommendations. Some proposals were enacted, but many were considered
too bold.
Today, the committee substitute to the Federal Acquisition
Streamlining Act contains key Packard Commission recommendations, and I
am happy that, after 9 years, the Senate is acting. The bill reported
by the committee is a significant improvement over the original version
introduced last October. Over the last 6 months, the reforms that we
are making have grown from Tonka toys to a full-blown paving crew that
can pave the way to significant savings.
Again, Madam President, I congratulate Members of the majority,
including our distinguished chairman, Senator Glenn, as well as the
minority Members, who have made this legislation possible. I believe
the enactment of this legislation into law will be a very, very major
step forward. I yield the floor.
The PRESIDING OFFICER. Who yields time? The Senator from Ohio.
Mr. GLENN. Madam President, I appreciate very much the remarks of my
distinguished colleague who has been involved with these efforts for a
long time. This is not something he just took up when we this bill came
up. He has repeatedly proposed legislation through the years on this.
He and I have sat together through, I do not know how many hours,
almost interminable hours, of hearings on subjects like this that we
have referred to in the past and as was referred to by Senator Levin
earlier, and in the Washington Post today by Mr. Barr, as ``the grunt
work of Government.'' That is basically what it is.
I do not know anything that will clear a hearing room out of most
reporters faster than bringing up a subject such as procurement reform.
It is just guaranteed to empty people out. It is not as exciting as
talk about B-1 bombers and B-2 bombers and who is going to go into
Bosnia or who is not going into Bosnia or what scandal there is
someplace else. That is the confrontational role of reporting. I
understand that.
But when you get into something like this where we are talking about
trying to improve Government and make it more efficient--which you
cannot quantify as much as saying each B-2 is going to cost $1 billion
or something like that--you cannot quantify efficiencies in Government,
yet that is one of the main functions of our Governmental Affairs
Committee, to try to oversee Government in a way that brings more
efficiency into Government.
We also have been told that statement in itself is an oxymoron,
bringing efficiency into Government. I do not believe that. We have
worked on this a long time, and those I have mentioned--Senator Levin,
Senator Nunn, Senator Roth and Senator Bingaman--have done yeoman's
work for a long time on this. This is not something just dreamed up in
the last couple of weeks.
I think the staff of the Governmental Affairs Committee started 3,
3\1/2\ years ago putting information together on this. It was probably
2\1/2\ or 3 years ago in the Armed Services Committee that I, along
with Senator Nunn and Senator Bingaman, sponsored putting into our
authorization bill for that year a requirement that the Pentagon do a
study, since they are really the biggest spender in Government. We have
all heard the gory stories of misspending of taxpayer money by the
Defense Department--the $640 toilet seats, et cetera, et cetera. And
those things should never happen. We know that.
Then what do we do after we do an investigation? What do we do after
we have a hearing on a subject like that? We just expect, once this is
pointed out, that those responsible will take corrective action. Yet,
too often they are so mired in their same old ways of doing business,
of putting out specifications--ridiculous, sometimes--and doing things
that do not really make Government more efficient.
That is just a little bit of the background.
Obviously, I rise today to recommend enactment of S. 1587, the
Federal Acquisition Streamlining Act of 1994. It is a comprehensive
procurement reform effort. It is not the end-all and be-all of
procurement reform. This is a good, great big, first starting step, and
we need to keep at this, not only with hearings, but we need to keep at
it with making certain that wha we are proposing in this legislation
will be carried out. Then let us see what is working. Let us come back
a year from now. Let us fine tune this. Let us really get efficient
procurement reform.
We all talk all the time about, if General Motors and Ford and IBM
and GE and the rest of our major corporations in this country did not
do their job better in procurement and efficiency in their operations
than we do in Government, they would be broke inside of a year. We know
that is true. But there is no reason why we cannot have procurement
every bit as efficient as our major corporations.
This is a first step at trying to get to that point. It is aimed at
streamlining the acquisition process and fulfilling many of the
recommendations of the Vice President's National Performance Review for
the procurement system. It represents the collaboration of the
Committee on Governmental Affairs--which I chair--the Armed Services
Committee, and the Small Business Committee.
We introduced S. 1576 with Senators Bingaman, Levin, Nunn, Bumpers,
and Lieberman. I pointed out that a year and a half ago, the staffs of
our respective committees met to review the laws and regulations of the
entire procurement system. I add, in that regard, we quite often use
the Defense Department as the most hideous examples of how we should
not be buying things. But this procurement legislation applies to
everything that the executive branch procures. It applies to the
General Services Administration that does procurement of all the desks
and everything else in Government. It applies all across Government to
everyone, even though the bulk of the budget is spent by the Defense
Department. It applies across the board.
This review is rooted in the report of the Acquisition Advisory
Panel. It was assembled pursuant to Section 800 of the National Defense
Authorization Act for fiscal year 1991 and the other legislation I
mentioned which I introduced in this and other Congresses, notably S.
554, S. 555, and S. 556, Senator Levin's commercial products
legislation and the National Performance Review.
So this was a melding of several different efforts. It is what we had
going on in our Governmental Affairs Committee and what we did over in
the Armed Services Committee, which Senator Nunn will also discuss, and
the National Performance Review.
Out of all those recommendations, we then spent the last year putting
these things together, having meeting after meeting after meeting among
all the interested parties to try to put together something we think
will be a major step forward in procurement reform and better
efficiency for every taxpayer dollar that is spent.
A lot has happened in the last year and a half since we began this
process. When we introduced the bill last October, we engaged in long,
long discussions with the administration and all interested parties. In
early 1994, the Governmental Affairs Committee conducted three joint
hearings with the Armed Services Committee on the bill S. 1587. The
committees received testimony on the bill from DOD; GSA; Office of
Federal Procurement Policy, OFPP; General Accounting Office; the IG
from the Defense Department; ABA; Business Executives for National
Security, a coalition of various contractor industry associations,
including the acquisition reform working group; the Information
Technology Association of America; the Computer and Communications
Industry Association; the Small Business Legislative Council; the
Minority Business Enterprise Legal Defense and Education Fund; and the
Computer Business Equipment Manufacturers Association.
To shorten that, we heard from an across-the-board spectrum of
interests in the Federal procurement field. We wanted to get all of
their input so that we could make this legislation as good as it
possibly could be.
Following the hearings, representatives of the bipartisan leadership
of all three committees reviewed each recommendation proposed during
the hearings and in testimony received for the record. Based upon that
review, a substitute bill was prepared.
On April 26 of this year, 1994, the Governmental Affairs Committee
took up S. 1587 and approved the bill, as amended by a complete
substitute offered by myself and Senators Roth, Levin and Cohen, on a
voice vote. Then on the afternoon of April 26, the Armed Services
Committee met and approved the bill, as amended, by a vote of 22-0.
What we have now, Mr. President, is what I believe to be an improved
product that does represent a fine balance of the many interests
affected by our procurement system. Testament to this achievement can
be found in the range of views reflected in the cosponsors of this
amended bill. Indeed, we are pleased to now have support on the
minority side from Senators Thurmond, Smith, and Roth--who I mentioned
earlier--and Cohen.
I think we have come a long way, Madam President. That accomplishment
should be noted by my colleagues as we move forward to consider this
bill. We have wrestled year in and year out with these issues and
failed to enact any meaningful reform. Too often we have our hearings,
point out all the deficiencies that go on in our system, we expect them
to get fixed, and nothing seems to happen. We do this year after year
after year. I do not have any idea how many hearings I have sat
through, have chaired or been part of that pointed out where there has
been monumental waste in Government.
Why has this been the case? Why have we not had more meaningful
reform? I guess anyone working in this field knows that reform is a
tall order. No. 1, no one wants to change who is operating in the
system itself. They have their own way of doing business and do not
want to upset the apple cart. It might mean shifting responsibilities,
or it might mean requiring someone else to do something. Change is
resisted in the system just because it is change.
Then also, the procurement system affects the entire spectrum of
interests in our society. Reconciling all of these interests and policy
concerns is not an easy task. In spite of these difficulties, as we
face serious budgetary constraints, it is imperative that we maximize
the efficiency of our procurement system to assure we can meet the
needs of our citizens at the very least cost.
I cannot tell you today what savings are going to result from this
bill. I wish I could. I wish I could say, ``You pass this bill and
we're going to have $3 billion a year in better efficiency in
Government.''
But I know one thing, I know we are wasting a terribly large amount
of money every year in Government by the inefficiencies in Government.
I know we are going to go a long way toward saving money once we get
something like this started or passed and we start down the track of
procurement reform.
We do face serious budgetary constraints. It is imperative we
maximize the efficiency of our procurement system to assure we can meet
the needs of our citizens, at least cost.
One way to improve the process is to leverage technology to our
overall advantage. It increases our productivity.
Other ways, included in the provisions of S. 1587, involve the
streamlining of some of the traditional audit and oversight mechanisms
Congress set in place to address particular procurement abuses.
When we began drafting this bill, concerns were raised regarding the
administrative burden associated with some of these oversight tools
which resulted in a bifurcation of the Government and commercial
markets. We have sought to minimize this undesirable consequence in an
effort to strike a balance between efficiency and oversight.
In addition, we have all heard stories that it is too difficult to do
business with the Government. There are major manufacturers in this
country who do not want to get involved in business with the
Government, and many small businesses say they cannot afford to get
involved in business with the Government because there is too much
paperwork involved. They have to put on extra people just to fill out
all the paperwork. So it is just too difficult to do business with the
Government. From cost accounting standards to socioeconomic laws, the
Federal marketplace is represented to be a quagmire of laws and
bureaucratic redtape, and we are trying to straighten some of that out.
Another major criticism of our acquisition process is our proclivity
to overspecify our needs to the extent that we tell companies literally
how to manufacture their products. We no longer have the luxury to
specify costly processes. If something has to have specs written that
are so detailed that the item being purchased requires that, then fine,
I would not propose to stop that. But it has gone too far the other way
where we overspecify on too many products, and that just wastes money.
Indeed, the section 800 panel, and others, have called for us to leave
this practice of overspecification and jump into the commercial market
wherever we can, like any other large customer. Therein lie the
benefits of competition and our national productive capacity. That
change is at the core of S. 1587.
But change is not without risk. We have been forced to examine
traditional roles of the Federal procurement system. The Government is
not like any other commercial customer. For one thing, it spends
precious taxpayer dollars and, thus, is in a position of great public
trust. We cannot take chances or risks like a private company can.
In addition, the Government is expected to foster an array of social
policy goals, policies that may not exist in the commercial markets.
That is why I refer to our work as a balance. The three committees, I
believe, have struck the essential balance to move meaningful reform
into the Federal marketplace. S. 1587 seeks to foster and improve the
acquisition of commercial items; the streamlined acquisition procedures
under an elevated small purchase threshold; the competitive acquisition
process; the protest and oversight process, which is an important one;
and the procurement integrity and ethics laws.
In addition, the bill streamlines the procurement code through the
repeal of redundant and obsolete laws, and it simplifies the system by
standardizing governmentwide thresholds for TINA, the Truth in
Negotiations Act, and statutory contract cost principles.
So what we have is a collection of major improvements that will bring
our Federal procurement system into the next century and, hopefully,
just catch it up with what is going on in this century. We are at a
critical point, Madam President. For the first time, we have not only
both Houses of Congress motivated to enact reform but also the
administration, and I think the American people also would go right
along with this. They have looked at their Government as being a
wasteful Government for too long.
I implore my colleagues to seize this moment and quickly enact this
reform measure for the benefit of the system and the Nation as a whole.
I ask unanimous consent to print in the Record, following my remarks,
a summary of the Federal Acquisition Streamlining Act of 1994 as marked
up by the Governmental Affairs and Armed Services Committees and the
Small Business Committee. The Small Business Commitee ran out of time
and were discharged of the bill by the time agreement we had. But all
those committees have had the bill and passed on it.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. GLENN. Madam President, there are two other things I would ask
unanimous consent be printed in the Record. One, there was some
question in the press about whether the Defense Department was really
behind this bill, whether they really were enthusiastically for it.
Now, this letter was written the 25th of May 1994. It was delivered
to us. It is signed by both the Deputy Secretary of Defense and the
Secretary of Defense, Mr. Perry. I would like to read it because I
think it indicates they want to get on with this and they are using
this as a major step toward cleaning up their procurement process also.
This was written to me as chairman of the Governmental Affairs
Commitee. It reads as follows:
Dear Mr. Chairman:
As you go to the floor today to consider S. 1587, we wish
to thank you and the members of the Governmental Affairs
Committee for your assistance in moving this complex piece of
legislation. Passage of acquisition reform legislation will
not only make certain reforms possible but will be the
catalyst for further improvements of DOD in its internal
processes. Although passage of a bill in the Senate is only
one of the many hurdles in the legislative process, it will
signal to all that we are finally truly on the road to
streamlining the acquisition process.
While there are a number of issues we believe must still be
addressed if we are to truly streamline the acquisition
process----
And I agree with them on that.
our hope is that we can address these issues at a future
date. As such, we wholeheartedly support and endorse the
passage of S. 1587 as reported by the Governmental Affairs
and Armed Services Committees, with the addition of any
amendments that will further streamline the process. By the
same token, we ask your support in opposing the adoption of
any amendment that will not streamline the process.
Again, your work sets the stage for acquisition reforms
that are absolutely necessary if the United States is to
maintain its defense capabilities in these critical times.
Thank you for the tremendous support, by both the members and
staff of your committees.
It is signed by the Deputy Secretary of Defense and the Secretary of
Defense.
I ask unanimous consent that it be printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
The Secretary of Defense,
Washington, DC, May 25, 1994.
Hon. John Glenn,
Chairman, Committee on Governmental Affairs, U.S. Senate,
Washington, DC.
Dear Mr. Chairman: As you go to the floor today to consider
S. 1587, we want to thank you and the members of the
Governmental Affairs Committee for your assistance in moving
this complex piece of legislation. Passage of acquisition
reform legislation will not only make certain reforms
possible, but will be the catalyst for further improvements
by DoD in its internal processes. Although passage of a bill
in the Senate is only one of the many hurdles in the
legislative process it will signal to all that we are finally
truly on the road to streamlining the acquisition process.
While there are a number of issues we believe must still be
addressed if we are to truly streamline the acquisition
process, our hope is that we can address these issues at a
future date. As such, we wholeheartedly support and endorse
the passage of S. 1587 as reported by the Governmental
Affairs and Armed Services Committees, with the addition of
any amendments that will further streamline the process. By
the same token, we ask your support in opposing the adoption
of any amendment that will not streamline the process.
Again, your work sets the stage for acquisition reforms
that are absolutely necessary if the United States is to
maintain its defense capabilities in these critical times.
Thank you for the tremendous support, by both the members and
staff of your committee.
Sincerely,
William J. Perry,
John Deutch,
Deputy Secretary of Defense
Mr. GLENN. Madam President, one other statement on this. This is a
statement of administration policy on S. 1587, the Federal Acquisition
Streamlining Act of 1994. It reads as follows:
The administration strongly supports S. 1587. This
essential legislation will help implement one of the most
important recommendations of the Vice President's National
Performance Review--to bring Federal procurement laws up to
date and eliminate overly rigid bureaucratic procedures.
Enactment of this legislation will help achieve substantial
savings to the Federal Government, both by making possible
the downsizing of the procurement work force and by
increasing the Government's ability to buy less expensive
commercial products.
The administration intends to work in conference to address
a number of concerns (e.g., relating to requirements for fast
pay under the simplified acquisition threshold), especially
those developing during the final stage of committee
consideration of S. 1587.
Madam President, that should take away any doubt about the
administration's position or any doubt about the support of the
Secretary of State.
There being no objection, the letter was ordered to be printed in the
Record, as follows:
Executive Office of the President, Office of Management
and Budget,
Washington, DC, June 7, 1994.
Statement of Administration Policy
(This statement has been coordinated by OMB with the
concerned agencies.)
s. 1587--federal acquisition streamlining act of 1994--(glenn (d) oh
and 7 others)
The Administration strongly supports S. 1587. This
essential legislation will help implement one of the most
important recommendations of the Vice President's National
Performance Review--to bring Federal procurement laws up to
date and eliminate overly rigid bureaucratic procedures.
Enactment of this legislation will help achieve substantial
savings to the Federal Government, both by making possible
the downsizing of the procurement workforce and by increasing
the Government's ability to buy less expensive commercial
products.
The Administration intends to work in conference to address
a number of concerns (e.g., relating to requirements for fast
pay under the simplified acquisition threshold), especially
those developing during the final stage of committee
consideration of S. 1587.
Mr. GLENN. For those who are following this, I would commend for
reading a summary of specific provisions of the act, which I have
already placed in the Record. It is quite lengthy, but it will give a
good summary to those who are interested in following this, and I
recommend it for reading by those of my colleagues who will be coming
to the floor tomorrow to debate this particular issue.
Madam President, it has been a long effort of a lot of people and
committees, all those in the Chamber right now, Senators Nunn,
Bingaman, Roth, myself, and others who have been involved with this. We
look forward to getting this passed. As I said starting out, Senator
Levin placed it right. This is one of the those items of grunt work of
Government. It is not a brand new missile system or something like
that. If we are ever going to have this Government work the way it
should, then we are going to not only have to have this but other
legislation that really brings efficiency of Government to the fore
where we should be setting the example for this country, not trying to
catch up with what businesses are already doing in the private sector.
I think we are making a big step in the right direction on this.
Madam President, I yield the floor.
Exhibit 1
Summary S. 1587--The Federal Acquisition Streamlining Act of 1994
commercial items
The bill encourages the use of commercial, and where such
items are not available, other non-development items (NDIs)
and makes it substantially easier for federal agencies to
purchase such items. The purchase of proven products such as
commercial and NDIs can eliminate the need for research and
development, minimize acquisition lead time, and reduce the
need for detailed design specifications or expensive product
testing.
It reduces impediments to the purchase of commercial items
by exempting such purchases from over 30 statutes that are
unique to government purchases, and have no counterpart in
the commercial sector, such as:
Contingent fees certification.
Procedural requirements of the Anti-Kickback Act.
Contract Work Hours and Safety Standards Act.
Drug-Free Workplace Act of 1988.
Prohibition limiting subcontractor direct sales to the U.S.
Requirement to identify suspended or debarred
subcontractors.
Identification of suppliers and sources.
Fly American restrictions.
Procurement integrity certifications.
Federal Water Pollution Control Act certifications.
Clean Air Act certifications.
Inventory accounting requirements.
Prohibition on contracting with persons convicted of
defense-related felonies.
``Flowdown'' of statutory requirements
In addition to the above statutes that are waived by the
bill for all commercial primes and subcontractors, the bill
also addresses the issue of other statutes which apply at the
prime level and which also ``flowdown'' to subcontractors
under current law.
Under the bill, statutory requirements that apply at the
prime level need not be ``flowed down'' to subcontractors
supplying commercial items, if flowdown is waived in the
Federal Acquisition Regulation.
The bill permits waiver of ``flowdown'' of clauses in two
circumstances:
(1) Flowdown may be waived from commercial primes to all
subcontractors (including subcontractors supplying items that
do not meet the bill's definition of commerciality); and
(2) Flowdown may be waived from noncommercial primes to
commercial subcontractors.
Truth in Negotiations Act
Amends the Truth in Negotiations Act for Department of
Defense to make permanent the $500,000 threshold and to
create a new commercial items exception. This would relieve
commercial contractors from their number one complaint--the
burden of collecting cost data for the government.
The bill codifies TINA for civilian agencies with the same
provisions as described above.
simplified acquisition threshold
There is a current ``small purchase threshold'' of $25,000.
Purchases under $25,000 may use simplified procedures
established by regulation in lieu of the detailed ``full and
open competition'' procedures established by statute.
The bill would replace the $25,000 threshold with a new
``Simplified Acquisition Threshold'' of $100,000, as
recommended by both the Vice President's National Performance
Review (NPR) and the Advisory Panel.
The bill would establish a $100,000 threshold for a number
of different statutes that establish paperwork and record-
keeping requirements not applicable in the commercial sector.
Purchases below the small purchase threshold would be exempt
from these requirements, which apply to other government
procurements. These include:
Contingent fees certification.
Contract audit requirements.
Procedural requirements of the Anti-Kickback Act.
The Miller Act.
Contract Work Hours and Safety Standards Act.
Drug-Free Workplace Act of 1988.
Prohibition limiting subcontractor direct sales to the U.S.
Requirement to identify suspended or debarred
subcontractors
identification of suppliers and sources.
Prohibition on contracting with persons convicted of
defense-related felonies.
This threshold would expand the streamlined process of
making small purchases and reduce the amount of staff time
needed for such purchases, resulting in substantial savings
for the government, and would continue the requirement that a
notice of any procurement over $25,000 be published in the
Commerce Business Daily 15 days prior to the issuance of a
solicitation.
After the issuance of this notice, however, simplified
acquisitions could follow any procedures described in the
notice--for example, by shortening the period for the
submission of offers.
The bill would phase out the requirement to publish notice
of purchases below $100,000 when electronic commerce
procedures and systems are in place.
The bill reserves contracts above $2,500 but under the
simplified acquisition threshold for small business, and
specifically authorizes continued set-asides of all contracts
under the threshold for minority small businesses.
The bill would exclude purchases of less than $2,500 from
the small business reservation, to make it possible for
agency officials to make simplified purchases and credit card
purchases.
competition in contracting
Full and open competition
The bill retains the essential features of the Competition
in Contracting Act (CICA)--full and open competition, with
limited exceptions.
Task orders for advisory and assistance services
The bill adds a new section to CICA to specifically address
task order contracts for advisory and assistance services
(e.g., consultants).
Such contracts serve a useful purpose, but must be
structured carefully to ensure that they are not abused to
avoid competition and funnel money to favored contractors.
The new provisions added by the bill would expressly
authorize the use of such contracts, subject to the
following:
The duration of the contract is limited to 5 years.
If the contract is intended to exceed 3 years and the
estimated value is in excess of $10 million, then under most
circumstances the solicitation must provide for multiple
awards--i.e., two or more contractors to have the
opportunity, during the period of the contract, to compete
for specific tasks under the contract.
These restrictions do not apply to the existing authority
to enter into to task or delivery order contracts for other
goods and services (i.e., for matters other than advisory and
assistance services).
Acquisition of expert services
The bill would amend CICA to add a new exception, giving
agencies the flexibility to retain expert witnesses for use
in litigation without going through a competitive process. As
in the case with other CICA exceptions, this provision would
require agencies to obtain a justification and approval under
CICA prior to making a sole source purchase.
Two-phase selection procedures
The bill would authorize use of a ``two-phase'' selection
process for matters that involve substantial design work
before a realistic cost or price proposal can be developed.
In step one, proposals would be evaluated upon technical
approach and qualifications. Those selected in step one would
then proceed, in step two, to submit competitive proposals,
including full cost and price data.
bid protests
Notice and debriefing
There is widespread consensus that the volume of protests
is attributable in part to the fact that disappointed
offerors lack clear information on why their offers were not
accepted.
By requiring contractor debriefings, the bill provisions
should reduce the number of protests that are either
without merit or seek information simply to confirm that
the award process was fair.
The bill:
Requires greater detail to be made available with respect
to evaluation factors and subfactors while establishing an
accelerated notice, debriefing, and protest schedule.
Notice must be given to all offerors as soon as practicable
after the contract is awarded.
Requests by offerors for debriefings must be made within 3
days after notice of the award.
The debriefing must take place promptly, and must contain
basic information about the award decision.
Protest adjudication
Consolidates judicial jurisdiction over bid protests in the
Claims Court, as recommended by the Advisory Panel.
The bill makes it clear that the Court of Claims has
jurisdiction over bid protests to the exclusion of the
district courts, but not to the exclusion of GAO and GSBCA.
The bill authorizes the payment of consultant and expert
witness fees (in addition to attorney's fees) in protests to
the GAO and the GSA Board of Contract Appeals (GSBCA), as
recommended by the Advisory Panel. These provisions would
also limit all such fees to the levels established in the
Equal Access to Justice Act for fees against the United
States generally. This provision should add uniformity and
cost savings to the process.
S. 1587 addresses frivolous or bad faith protests to the
GSBCA, as recommended by the Advisory Panel, by authorizing
the GSBCA to dismiss a protest that it is frivolous, brought
in bad faith, or does not state on its face a valid basis for
protest. In addition, it authorizes the GSBCA to invoke
procedural sanctions where a person brings a frivolous or bad
faith protest, or willfully abuses the board's process.
Generally, the bill would also adopt a number of other
changes to provisions regarding bid protests to the
Comptroller General, the GSBCA, and in the federal courts.
Specifically, the bill would: (1) clarify the GSA's
authority to revoke a delegation of authority after the award
or a contract, where there is a finding of a violation of law
or regulation in connection with the contract award; (2)
clarify the GSBCA's authority to review contracting decisions
that are alleged to have violated a statute, regulation, or
the conditions of any delegation of procurement authority;
(3) provide for the public disclosure or any settlement
agreement that provides for the dismissal of a protest and
involves a direct or indirect expenditure of appropriated
funds.
The bill amends the Comptroller General's authority to
provide that the Comptroller General may recommend the
payment of attorneys' fees in bid protest cases, rather than
directing agencies to pay such fees. The bill would address
questions that have been raised about the constitutionality
of existing law.
The bill authorizes agencies to continue the procurement
process up to the point of award of a contract,
notwithstanding the filing of pre-award protest, if the
agency head determines that the action is in the best
interest of the United States.
Acquisition management
The bill contains a number of management provisions,
including:
A statement of congressional policy that agencies achieve
90% of cost and schedule goals without reducing product
performance or capability.
A requirement that cost and schedule goals be established
for DOD and civilian agencies:
A requirement that agencies identify and review programs
that are significantly behind schedule, over budget, or out
of compliance with performance of capability requirements;
A requirement for annual reports (based on data from
existing management systems) on progress made in implementing
the congressional policy;
A requirement that the executive branch establish a system
of incentives for performance in the acquisition workforce;
A requirement for DOD to define in regulations a simplified
acquisition program cycle that is results-oriented; and the
provision for exceptional performance awards, as
recommended by the Administration.
The bill would add in title V the designation of 6 DOD
programs as pilot programs and authorize the testing of
commercial-type acquisition procedures for these programs.
Procurement ethics
S. 1587 substantially streamlines the procurement ethics
laws. For the past decade Congress has enacted a series of
new procurement ethics provisions. Although these provisions
address specific ethics provisions, together they overlap and
are difficult to implement.
The Senate voted to streamline and consolidate the
procurement ethics laws, while retaining needed safeguards,
in an amendment to the Department of Defense Authorization
drafted in 1991. This amendment was never enacted. The draft
bill reflects the Senate amendment.
The bill would amend the Procurement Integrity section of
the OFPP Act to streamline the recusal provision; consolidate
various revolving door restrictions; harmonize the gratuities
provision with government-wide ethics provisions; revise
certification provisions and eliminate unnecessary
administrative burdens; and clarify several other provisions.
Establishing a uniform procurement system
The bill amends the procurement laws to promote the uniform
treatment of Department of Department of Defense and Civilian
agency procurement.
Amends the Federal Property Act to establish contract cost
principles for civilian agencies. Contract cost principles
provide that certain types of costs--such as entertainment
costs, lobbying expenses, advertising costs, and so-called
``golden parachute'' payments--should not be paid by the
taxpayers and are not ``allowable'' on federal contracts.
Establishes cost certification procedures and penalties
identical to those that have long been applicable in
Department of Defense procurements.
Repeals 10 USC 2410, which establishes Department of
Defense-unique requirements for the certification of contract
claims. The Contract Disputes Act of 1978 establishes
government-wide requirements for the certification of claims.
These requirements would remain in effect and would be
amended to clarify that they govern all claims, including
those at the Department of Defense.
Other recommendations adopted
Adopts several dozen other recommendations of the Advisory
Panel to streamline and improve the acquisition laws. Some
significant examples includes:
Providing flexibility for agencies in approving the use of
non-competitive procedures when there is a valid
justification.
Raising the threshold for application of the contract cost
principles to $500,000.
Repealing the requirement for contractor employees to
travel at government airfares (which are rarely available to
contractors).
Providing consolidated audit provisions for both the
Department of Defense and civilian agencies.
Repealing the requirement for Defense Enterprise Programs
(which has been rendered obsolete by the new pilot program
legislation).
Repealing the mandatory use of competitive prototyping in
major programs.
Repealing the mandatory use of dual sourcing in major
programs.
Repealing and consolidating obsolete and redundant
Department of Defense-unique laws.
Repealing the Walsh-Healey Act (which no longer has any
impact on prevailing minimum wage rates).
Mr. NUNN. Madam President, I am pleased to join my colleagues on the
Armed Services Committee and Governmental Affairs Committee and the
Small Business Committee in supporting S. 1587, the Federal Acquisition
Streamlining Act of 1994. I congratulate Senator Glenn and Senator Roth
for their leadership in the Governmental Affairs Committee. I am also a
member of that committee, and I have watched it up close because I have
been on both the Armed Services Committee and the Governmental Affairs
Committee. They have done a splendid job. I also wish to commend my
colleague, Senator Thurmond, for his excellent work on this bill.
Madam President, over the past decade, the Congress and the executive
branch have struggled to make sense out of the complex process of
supplying our men and women in uniform with the best and the most cost-
effective weapons systems. In the 1980's, the need for reform was
underscored by incidents of fraud, waste, and abuse documented at
congressional hearings, in GAO reports, and IG audits. At the same
time, the graphic success of the equipment used by our Armed Forces in
Operation Desert Storm illustrated the fact--overlooked by many before
the war--that the acquisition system in place in the 1970's also could
produce the finest weapons systems in the world.
Madam President, the key problem however was--and is--that the system
that produced those weapons took too long and cost too much. In the
aftermath of the cold war, with the increasing pressure to reduce the
defense budget, we simply cannot afford the huge costs associated with
an inefficient acquisition system.
During the 1980's, the acquisition laws and regulations proliferated
as Congress and the executive branch attempted to balance the need for
reform with the need to ensure continued effective research and
development. The result was a patchwork quilt of often contradictory
requirements that increasingly encumbered the acquisition process as
illustrated in testimony before the committee from the Department of
Defense, industry witnesses, and such independent observers as the
General Accounting Office.
Our hearings on acquisition reform, as well as our continuing
oversight of the procurement process, have demonstrated that the
current acquisition system is a bureaucratic nightmare. The process of
procuring equipment and services for our military and civilian agencies
takes too long, costs too much, and suffers under a crushing burden of
wasteful overhead.
We need to transform an outmoded system of regulating defense-
dependent industries into a new system that will enable the Government
to buy goods and services cheaper and faster; that will facilitate
commercial and military integration; and that will encourage the
development of dual-use technologies to meet the defense industrial and
technology base requirements of the future.
The bill before us will enhance the ability of the Department of
Defense as well as the other agencies of the Federal Government to
achieve these vital goals in a manner that appropriately balances the
need to eliminate wasteful paperwork with the need to ensure the basic
integrity of the procurement process.
Madam President, acquisition reform is not a particularly glamorous
subject, as Senator Glenn has already observed. The maze of statutes
and regulations that govern the purchase of everything from pencils to
nuclear submarines presents a daunting challenge to any reformer. I
commend the bipartisan leadership of each of the cooperating committees
and the subcommittees for the diligent attention they have brought to
this subject and for the attention that has been brought to the detail,
which is mind boggling to say the least.
I would like to pay particular tribute to Senator Jeff Bingaman,
Chairman of the Subcommittee on Defense Technology, Acquisition and the
Industrial Base of the Committee on Armed Services. Long before
acquisition streamlining became fashionable, he had the vision to
initiate legislation which was enacted as section 800 of the National
Defense Authorization Act for fiscal year 1991, which required DOD to
establish a Government-industry panel to propose comprehensive reform.
Jeff Bingaman had the tenacity to insist the distinguished panel be
appointed after the Department of Defense initially ignored the law,
and Senator Bingaman has played a leading role in developing the
legislation that is before us today.
The Senators who formed the core group that developed this bill
reflect a diverse, bipartisan support for acquisition reform. We have
benefited from the expertise of Senator Strom Thurmond, ranking member
of the Armed Services Committee, Senators John Glenn, Bill Roth, Carl
Levin, Bill Cohen, Bob Smith, and Dale Bumpers as well as Larry
Pressler. Each of them either chair the full Committee on Armed
Services, Governmental Affairs, Small Business, or one of the
subcommittees.
Mr. President, the Republican side of the aisle has been cooperative
and their ranking members, whom I have already named, have done a very
good job of bringing their point of view to bear on this legislation
and also in supporting it in a very constructive way.
Madam President, I would like to review the painstaking process that
has been used to develop this legislation.
It is my hope that we will not be on the floor for several days on
the bill but rather that we will be able to pass it in a day or two.
But that remains to be seen. But I do not think anyone should believe
this bill has been rushed.
The Section 800 Advisory Panel completed a mammoth undertaking,
producing a 1,800 page report in December 1992 that reviewed more than
600 procurement laws and proposed to amend or repeal nearly 300 laws.
The panel presented its report to the Armed Services Committee at a
hearing on March 10, 1993. I would like to express a special
appreciation for the outstanding effort by the members of the panel,
and the panel's staff, in producing this very comprehensive report. I
ask unanimous consent that a list of the panel's membership be included
in the Record at the conclusion of my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. NUNN. Madam President, in the spring of 1993, the bipartisan
leadership of the Armed Services, Governmental Affairs, and Small
Business Committees directed their staffs undertake a joint review of
the Section 800 Report with a view toward developing implementing
legislation. In a parallel effort, Vice President Gore's National
Performance Review examined the acquisition system, and endorsed many
of the procurement streamlining recommendations of the Section 800
Panel.
I would like to commend the Vice President for his leadership in this
overall effort. He has been extremely helpful in facilitating and
ironing out some of the problems that we have had, even in the last 2
weeks. So the Vice President and his staff, I think, deserve a real pat
on the back for their role in pushing this overall process.
The bipartisan/tricommittee effort produced S. 1587, the Federal
Acquisition Streamlining Act, which was introduced on October 26, 1993.
The bill was then available for more than 4 months before hearings
began, which provided the opportunity for review and comment on the
specific legislative proposals. The Armed Services and Governmental
Affairs Committees then held three joint hearings, at which we heard
from the administration, the defense industry, the nondefense industry,
the oversight community, and other interested parties. Following the
hearings, we reviewed each comment and recommendation, and prepared a
complete substitute. The substitute was adopted by the Governmental
Affairs and Armed Services Committees on April 26, 1994.
They had their meeting in the morning. We had ours in the afternoon,
both on April 26, 1994.
Most of the provisions in S. 1587 are repeals or modifications that
reduce, rather than add to, the body of acquisition legislation. The
proposed statutory changes are detailed and complex. The underlying
issues, however, involve the foundations of the acquisition process--
auditing practices, oversight activities, competition in contracting,
paperwork reduction, integration of the government and commercial
sectors, and simplified small purchases, and strengthening the
technology and industrial base.
The bill makes the following key changes in the law.
The following are the key changes viewed from my perspective.
First, the bill revises and consolidates numerous acquisition
statutes to eliminate redundancy, provide consistency, and facilitate
implementation.
Second, the bill encourages the acquisition of commercial end-items
and components--including acquisition of commercial products that are
modified to meet Government needs--by exempting commercial items from
Government-unique certifications and accounting requirements that serve
as a disincentive for commercial companies to participate in Government
acquisitions, and which add to the costs when they choose to
participate. The purchase of proven products such as commercial and
nondevelopmental items can eliminate the need for research and
development, minimize acquisition lead time, and reduce the need for
detailed design specifications or expensive product testing, which
usually takes not only thousands of hours but also thousands of people.
Third, the bill raises the threshold for the use of simplified
acquisition procedures $25,000 to $100,000. Although purchases under
$100,000 account for only 16 percent of the Government's procurement
expenditures, they account for 96 percent of the Government's
procurement actions. This generates huge manpower and paperwork
requirements for relatively small contracts. Use of simplified
procedures will save time, money, and manpower.
Fourth, the bill revises and simplifies the bid protest process.
Fifth, the bill consolidates and simplifies the confusing and often
contradictory rules that govern the relationships between Government
and private sector procurement personnel.
Finally, the bill promotes efficiency by establishing procedures that
will apply on a uniform basis to both the Department of Defense and the
civilian agencies, to the maximum extent practicable. This will greatly
facilitate the ability of suppliers, particularly in the commercial
sector, to meet the needs of the Government without excessive overhead.
Madam President, as we debate this bill, I hope we will bear in mind
that the central purpose of our effort is streamline the massive
bureaucratic structure that is strangling our acquisition system. It is
always tempting to craft a legislative solution to every problem and
that is one of the reasons we need to reform the process so much. In
the past, every time we have had a problem that pops up in the
acquisition system, either the Congress, through legislation, or the
executive branch, through regulation, has designed a whole series of
laws and regulations to meet one problem that may have been valid in
the case of that problem, but the result has been to pile one rule on
top of another, and the final bottom line is that the overall structure
simply does not work effectively or efficiently.
The lesson of the last decade--to which our bipartisan, tricommittee
group subscribes--is that the system has been smothered by good
intentions. We must direct our attention to correcting problems through
oversight, management improvements, and accountability, rather than
simply throwing more statutes at longstanding problems. I strongly urge
that we resist the siren song of reform through legislation, and resist
any amendments which do not clearly streamline the acquisition system.
Madam President, I send to the desk a copy of the task force and the
staff members on the Section 800 Panel. I think all of these people
deserve our thanks and the thanks of the taxpayers of America.
I yield the floor.
Exhibit 1
The Advisory Panel on Streamlining and Codifying the Acquisition Laws,
Established Pursuant to Section 800 of the National Defense
Authorization Act for Fiscal Year 1991
PANEL MEMBERS
Pete Bryan, Director, Contract Policy and Administration,
Office of the Secretary of Defense.
Allen Burman, Administrator for Federal Procurement Policy.
Anthony Gamboa, Deputy General Counsel, Department of the
Army.
Jack Harding, Vice President, Contracts, Raytheon
Corporation.
LeRoy Haugh, Vice President, Procurement and Finance,
Aerospace Industries Association.
Thomas J. Madden, Partner, Venable, Baetjer, Howard and
Civiletti.
Ralph Nash, Jr., Professor of Law, George Washington
University.
F. Whitten Peters, Partner, Williams and Connolly.
Gary Quigley, Deputy General Counsel, Defense Logistics
Agency.
Major General John D. Slinkard, USAF, Deputy Chief of Staff
for Contracting, Headquarters, Air Force Materiel Command.
Rear Admiral W. L. Vincent, USN, Commandant, Defense
Systems Management College.
Robert D. Wallick, Partner, Steptoe & Johnson.
Harvey Wilcox, Deputy General Counsel (Logistics),
Department of the Navy.
Mr. THURMOND addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina [Mr. Thurmond]
is recognized.
Mr. THURMOND. Madam President, I am very pleased to be a cosponsor of
this legislation, and I want to commend all of those who worked so hard
on it.
I especially wish to commend the chairman of the Senate Armed
Services Committee, Senator Nunn; Senator Glenn; Senator Cohen; Senator
Roth; Senator Bingaman; Senator Smith; Senator Levin; Senator Bumpers;
Senator Pressler; Senator Lieberman; and Senator Coats for the great
work they have done on this legislation.
I also wish to commend and thank Jonathan Etherton, who handled this
legislation for the Republicans on the Senate Armed Services Committee.
He has done a fine job in connection with it.
Madam President, on April 26, the Senate Armed Services Committee
marked up S. 1587, the Defense Acquisition Streamlining Act of 1994.
This act is the most significant piece of acquisition legislation since
Congress passed the Competition in Contracting Act in 1984. It
represents the most important bill reported by the Armed Services
Committee since the Goldwater-Nichols Reform Act of 1986.
S. 1587 is the result of a train of events that began over 10 years
ago. Many in this Chamber will recall the stories that began to emerge
in 1983 of outrageous prices the armed services were paying for spare
parts and support equipment. They included the reports of the $450
hammer and $700 pliers. Upon closer examination, one of the legitimate
problems that surfaced was the lack of competitive pressures on prices.
This resulted in the passage of a number of new laws to open the system
to new suppliers. The prices for many of supplies for the Department of
Defense dropped when the laws went into effect.
Unfortunately after the principle of competition was established in
law, Congress continued to legislate the operation of the procurement
process in ever greater detail. Some of these new laws were necessary,
but many added complexity and delay and little else. Rather than taking
a comprehensive view to reforming and streamlining the process, we
passed piecemeal legislation to address the latest media story of
wasteful or questionable spending. By the late 1980's the result was a
procurement system burdened with contradictory requirements, while the
problems of increased costs and delays in fielding new technology were
not addressed.
In 1990, under the leadership of Senators Bingaman and Coats of the
Senate Armed Services' Subcommittee on Defense Industry and Technology,
the Congress passed section 800 of the Defense Authorization Act for
fiscal year 1991. Section 800 established a Government-industry
advisory panel to undertake a comprehensive review all of the
acquisition laws and to propose the repeal or modification of such laws
in order to streamline the process of buying goods and services in the
Federal Government. The Department of Defense was directed to appoint
recognized experts from the defense industry, the legal community, and
the Government to conduct the detailed review and to make specific
recommendations.
Over the years we had had no shortage of reports with suggestions for
improving the Federal acquisition process. The most recent of these was
the Packard Commission Report of 1986. Unfortunately, implementation of
the suggestions from these reports has been at best incomplete. We
drafted the charter for the Section 800 Advisory Panel in a manner to
ensure that their report would not be yet another study to gather dust
on the shelf. We required the focus of review to be the specifics of
the laws, not the regulations or internal agency directives. In
preparing their report, the advisory panel also took the added step of
preparing a detailed legislative history for each of the laws under
review.
The Secretary of Defense submitted the report to Congress in January
1993. The submittal coincided with the recognition that a very
fundamental reform of the acquisition process, especially in the
Department of Defense, has been long overdue because of a number of
factors. The first is the drastic and accelerated reductions in
spending on national security which may continue into the foreseeable
future. I have spoken elsewhere of my grave concerns about this trend
in defense spending, but an immediate outcome is the need to cut the
numbers of administrative personnel to allow us to focus the remaining
funds on military capabilities. The administration has proposed a
reduction of 250,000 in the overall Federal work force and a
significant portion of this reduction will be made up of acquisition
personnel.
The second major factor is the development of very dynamic commercial
high-technology industries. For example, as recently as 10 years ago,
the Department of Defense was in a position to determine the most
demanding performance and reliability standards for the electronics
industry. Now it is the commercial marketplace which sets standards
that often exceed to a significant degree those developed by the
Federal Government.
Madam President, over the years we have built a wall between those
businesses selling to the Federal Government and those selling to
commercial customers. The accounting rules are very different. Defense
contractors must conform to a number of special contract requirements
that deviate from standard commercial practices and must be willing to
submit reams of information as the price of doing business with the
Federal Government. As defense resources shrink and commercial markets
grow, companies with the best technology are less willing to seek
Government contracts. The major theme emerging from the section 800
advisory panel report is the need to allow the Federal Government to
meet purchasing requirements using commercial terms and conditions to
the maximum extent practicable. The panel specifically recommended that
the definition of a commercial product be expanded to cover a broader
range of items; that the requirements for the supply of certified cost
and pricing data be waived in a greater number of cases, and that
transactions for the purchase of commercial items be exempt from many
Government-unique socioeconomic requirements.
Greater reliance on commercial items and practices will save the
taxpayers billions of dollars per year. Some recent studies suggest
that products developed for commercial sale cost 30 to 50 percent less
than similar products developed for Government use. The costs of
research and development for commercial products are paid by commercial
customers, not the Federal Government. Finally, we need fewer people to
oversee commercial product contracts because the prices are set by the
marketplace, not by Government cost regulations.
S. 1587, the legislation we are debating today, embodies most of the
section panel's recommendations with respect to the purchase of
commercial products. If this legislation provided for no other change
to current practice, it would merit the strong support of the full
Senate. This legislation will do much more, however. For example, it
will raise to $10,000 the threshold for the use of more streamlined and
simplified award procedures on contracts. This will allow the use of
simplified procedures for 98 percent of all procurement actions. This
change will benefit all businesses, especially small businesses,
selling to the Government by exempting them from some of the expenses
associated with complying with unique Government requirements. The
increase in the simplified acquisition threshold will also reduce
significantly the workload for Federal agencies on these smaller value
contracts.
With the proposed cuts in defense spending, we have reached a point
where it is no longer feasible to maintain the status quo in Federal
procurement policy. We must simplify the procurement process to allow
us to reduce the number of Government contracting personnel while
improving the level of professional competence of those who remain in
Government service. We must begin to tap more fully into the commercial
sector to meet the needs of the Department of Defense and the other
agencies.
This legislation will be the catalyst for a thorough reform of the
Defense Department acquisition process. It will help us shrink the size
of the Government bureaucracy and foster greater reliance on the
marketplace for meeting taxpayers needs. It will reduce administrative
costs and allow our Government procurement personnel greater exercise
of business judgment. I urge my colleagues to support the Federal
Acquisition Streamlining Act of 1994.
Madam President, I yield the floor.
Mr. McCAIN. Mr. President, the Government procurement process through
the slow accretion of rules and regulations over the years has become
overly complex and cumbersome. Reform is needed. In no area is this
reform more urgent than with respect to the defense acquisition system.
That urgency stems from a number of factors.
The drive to combat the mounting Federal deficit has placed
extraordinary pressure on the defense budget. Since 1985, the defense
budget has been reduced by 35 percent. Yet despite this massive and, I
believe, ill-advised cut in defense spending, the Pentagon's budget
continues to suffer attacks. The austere budget climate makes it
absolutely imperative that we stretch every defense dollar as far as
possible.
A second factor prompting action is the fundamental change taking
place in our military-industrial base resulting from defense
downsizing. Diminished Government out of business and forced others to
dramatically scale back their work forces and operations. While some
contraction in our defense industrial base was inevitable with the end
of the cold war, the uncertain national security environment which the
United States faces today requires that we have a robust, flexible, and
highly responsive defense industrial base.
Regrettably, the cumbersome Federal acquisition process discourages
many companies from competing for Government contracts. This reduces
participation, and thus diminishes competition, raising Government
procurement costs. Further, the current process places substantial
restrictions and burdens on defense contractors which are unnecessary,
the added cost of which lessens the buying power of our defense
dollars. Finally, it has fostered a separation of commercial and
military production which impedes cross fertilization between these two
sectors of the economy, hindering the full utilization of technological
innovation.
If enacted into law, S. 1587 would institute reforms in three areas
for both general Government and defense procurement. First, the
simplified acquisition procedures previously applicable to Government
contracts under $25,000 are expanded to include contracts of up to
$100,000. Since over 90 percent of the total number of Government
contracts each year fall under this higher threshold, the benefits of
simplification will be widespread and dramatic. Second, S. 1587 revamps
the acquisition rules to encourage and facilitate procurement of
commercially available items whenever feasible, allowing the Government
to reap the benefits of low-cost, mass-produced commercial items,
rather than commissioning expensive custom-made products. Finally, S.
1587 streamlines the entire process of contract formation,
administration, and award protests.
More work stills need to be done to improve Federal acquisition. The
acquisition process to multimillion dollar contracts, particularly
procurement of major defense systems, needs to be reformed to enhance
competition, cut costs, and best serve the public interest. But that is
work for another day. The Federal Acquisition Streamlining Act of 1994
is an important first step in reforming Federal procurement, and I urge
my colleagues to support it.
Mr. COHEN. Madam President I rise today in support of S. 1587 as
amended by the Governmental Affairs Committee.
The Federal procurement system is enormous. According to figures
published by the Vice President's National Performance Review, the
Federal Government currently employs approximately 142,000 employees to
manage its procurement bureaucracy. This workforce is responsible for
enforcing 42,000 pages of procurement regulations and spending $200
billion for the goods and services the Federal Government consumes
every year.
The overly complex and cumbersome requirements of the Federal
procurement system often intimidate potential vendors to the point of
discouraging their participation in the procurement process. These
cumbersome requirements discourage commonsense purchasing decisions,
resulting in purchasing decisions that are penny-wise but pound
foolish. The current procurement process has a chilling effect on
competition that ultimately translates into higher costs to the
taxpayers.
Undoubtedly, eliminating excessive paperwork requirements will result
in the reduction of wasteful expenditures. To illustrate the ridiculous
and excessive cost of paperwork, I would like to offer a recent example
at the Department of Defense which I have asked the General Accounting
Office to investigate. DOD annually spends about $2.3 billion to
process the roughly $2 billion it spends on travel. In other words, it
costs more to process the vouchers than it does to travel. If the
procurement bureaucracy suffers from the same processing costs as the
Pentagon's travel system, then reducing paperwork requirements should
produce significant savings.
We need to reform the procrument system not only to save money, but
to help the Government overcome its image of incompetence. The Federal
Acquisition Streamlining Act is major reform, reform which must occur
if the Federal Government hopes to regain its ability to perform in the
best interest of its citizens.
For the past 17 months, members of the Governmental Affairs, Armed
Services and Small Business Committees have worked in a bipartisan
effort to reform the procurement process to better serve the interest
of the American taxpayers. These reforms include increasing the
benefits of competition, easing the burden to business and ensuring
that Government vendors are treated fairly and reasonably. Although
there have been some disagreements during our working group and
committee deliberations, the legislation before us today represents the
result of compromises that overall, represent constructive steps to
reform the procurement process.
As a result of its efforts, a bipartisan working group of Senators,
made up of myself and Senators Glenn, Roth, Nunn, Thurmond, Levin,
Bingaman, Smith, and Bumpers successfully crafted a compromise that
will sustain competition and significantly simplify the procurement
process. The bill eliminates much of the bureaucratic encumbrances to
vendor participation while ensuring adequate oversight and protection
of taxpayer dollars. It also creates many of the same incentives that
private citizens use when making buying decisions and will speed
delivery of goods and services to Government. To achieve these
objectives, Government contracting offices will be permitted to buy
commercial products directly from commercial sources, rather than
waiting months and in some cases, years, to write complex, Government-
specific specifications that would require specialized manufacturing of
items, like ashtrays and chocolate chip cookies, that are commonly
found in the marketplace.
This legislation provides a solid foundation for the fundamental
change necessary to reform the way the Federal Government spends more
than $200 billion in taxpayer dollars every year. This measure marks a
significant step toward improving how the Government gets what it needs
in a timely manner, especially when making purchases under $100,000.
Specifically, this legislation increases the current small purchase
threshold from $25,000 to $100,000 and changes the name of the small
purchase threshold to the ``simplified acquisition threshold.'' This
provision allows the Government to buy goods and services under
$100,000 through a simplified process which, in large part, mimics the
process most individuals and businesses go through when making
decisions on behalf of themselves and their businesses. In essence,
Government purchases made under the simplified acquisition process
require the contracting officers to shop for goods and services,
compare prices and base purchases on best value.
We anticipate that much of the Government's shopping under the
simplified acquisition threshold will also be done through the use of
electronic bulletin boards.
Consequently, Government purchases under $100,000 will no longer be
required to go through time-consuming requirements such as publishing
procurement notices in the Commerce Business Daily and awaiting
responses through the mail. Instead, purchase and sale notices under
$100,000 can be transacted through the use of computer messages.
This implementation of the simplified acquisition threshold provision
alone will significantly reduce the paperwork required to meet the
requirements of the current Federal regulations which resulted in the
National Performance Review's, now famous, ashtray example.
The number of transactions under the $100,000 threshold represent the
vast majority of contracting actions by the Federal Government. At the
Department of Defense alone, purchases under $100,000 represent about
98 percent of the procurement actions. Yet those large number of
actions represent only about 5 percent of DOD's total procurement
dollars. Obviously, by raising the simplified acquisition level to
$100,000 we will succeed in eliminating significant paperwork while
capturing the vast majority of procurement actions.
The committees have also developed a number of improvements which
will encourage the purchase of commercial products rather than the
development of lengthy specifications, cumbersome bidding and
evaluation procedures, and other inefficiencies. In 1989, the
Subcommittee on Oversight of Government Management, on which I serve as
ranking Republican, held a hearing to examine the Department of
Defense's need to encourage the Government's purchases of commercially
available products rather than relying on requiring suppliers to
provide goods and services based on Government-unique specifications in
cases where there was an equally comparable product readily available
on commercial markets. During this hearing I cited the case of a 15-
page oatmeal chocolate-chip cookie specification when the Department of
the Army could have easily purchased a comparable cookie at less
overall cost from the local grocery store. Although Senator Levin and I
introduced legislation that was ultimately passed which encouraged
DOD's purchase of commercial items, I am pleased that this legislation
will extend this idea throughout Government.
Madam President, I am proud to be a cosponsor on this legislation and
would like to thank the chairman and ranking minority members of the
Governmental Affairs Committee and the Armed Services Committee, and
Members of those committees who worked tirelessly to navigate this
legislation through the legislative process in an expedious way. This
bipartisan effort is a landmark step toward making our Government work
better for the taxpayers and I encourage my colleagues to support its
passage.
Mr. BUMPERS. Madam President, this afternoon, as the Senate begins
consideration of S. 1587, the Federal Acquisition Streamlining Act of
1994, I would like to share with my colleagues my perspectives on this
important legislation as chairman of the Committee on Small Business.
I consented to have the Small Business Committee discharged from
further consideration of the bill for a number of reasons.
First, S. 1587 was initially drafted and has been revised as a
collaborative effort among the Committees on Governmental Affairs,
Armed Services, and Small Business. Our committee's staff
representative was included throughout the process. Small business
views were always considered, and in many cases are included in the
package before the Senate today.
Second, many of the key players in shaping and moving forward this
legislation are also members of the Committee on Small Business. My
friend from Georgia Senator Nunn, chairs our Subcommittee on Government
Contracting and Paperwork Reduction. Similarly, Senator Levin and
Senator Lieberman are both active members of the Small Business
Committee and the Governmental Affairs Committees.
And, third, the Vice President has made clear that Senate action on
this legislation is an administration priority. The administration sees
S. 1587 as the legislative implementation of the National Performance
Reviews' recommendations regarding the reinventing of Federal buying
practices. Senator Bingaman and many of the other cosponsors will
recognize S. 1587 as the embodiment of many of the recommendations
contained in the 1,400-page report of the Advisory Panel on
Streamlining and Codifying Defense Acquisition Laws, established by
section 800 of the National Defense Authorization Act for fiscal year
1991.
What is clear is that S. 1587 will make significant changes to the
way Government buys and those changes will be felt most profoundly by
the tens of thousands of small businesses that constitute the vast
majority of firms doing business with the Government. What remains
unclear is how many of the bill's changes will be felt by small
business contractors. Whether some changes will foster their
participation or, in some cases, actually inhibit their participation,
is difficult to predict with certainty at this point.
It has been frequently said today that S. 1587 is a procurement
streamlining bill, one designed to make the process less complex, and
that all amendments should be required to measure up against a
streamlining standard. I cannot agree that streamlining or simplifying
acquisition is the sole criteria for success.
Streamlining from whose perspective? Procurement streamlining cannot
simply mean making it easier for the Government's buyers to go to work
each day, by granting them virtually unlimited discretion and hoping
that they will do right. Small business owners have long called for
simplification of the buying process. Better information about
contracting opportunities, solicitations that clearly and accurately
describe the Government's needs, adequate time to prepare an offer,
timely responses from contracting officers during performance, and
prompt payment for services and products have been consistently
advocated by small business as their key elements for improving
Government contracting.
Most often, however, simplification for the convenience of the
procurement bureaucracy is at odds with the practical business needs of
the small business community. S. 1587 tries to balance those competing
views of procurement simplification, but we have received thoughtful
analyses on behalf of the small business community suggesting that more
work needed to be done on the version of the bill considered by the
Governmental Affairs Committee and Armed Services Committee on April
26.
The small business community has been diligently working on the issue
of procurement reform. An informal working group was formed by a broad
array of small business associations. The Small Business Working Group
on Acquisition Reform includes the three major small business
associations, the National Federation of Independent Business [NFIB],
the Small Business Legislative Council [SBLC], itself an association of
100 small business associations, and National Small Business United
[NSBU]. It also includes the National Association of Women Business
Owners [NAWBO] and a diverse group of associations representing
minority business enterprise. Among these groups are the Minority
Business Enterprise Legal Defense and Education Fund [MBELDEF], the
Latin American Management Association [LAMA], the National Minority
Supplier Development Council, the National Association of Minority
Contractors [NAMC], and the National Center for American Indian
Enterprise Development. The Small Business Working Group also includes
such different groups as the Independent Defense Contractors
Association and the American Gear Manufacturers Association.
They have testified at various hearings on procurement reform
conducted by the House Small Business Committee and the House Committee
on Government Operations. Representatives of three working group
members appeared at one of the hearings jointly conducted by the
Committees on Armed Services and Governmental Affairs.
On April 22, our committee staff furnished them the text of the
proposed substitute amendment for S. 1587. In 3 days the working group
provided to the Committee on Governmental Affairs and the Committee on
Armed Services a comprehensive 17-page analysis of the bill expressing
serious concerns. When S. 1587 was favorably reported without
substantial amendments by the Governmental Affairs Committee on the
morning of April 26 and by the Committee on Armed Services that same
afternoon, the small business community asked our committee to address
their concerns. Although ordered reported on April 26 by the Armed
Services and Governmental Affairs Committees, the bill was not actually
reported--and thereby referred to the Small Business Committee--until
Thursday, May 12. The bill's original referral order provided for our
committee to have 20 session days for consideration of the bill.
On Monday, May 23, the new Chief Counsel for Advocacy at the Small
Business Administration, Jere Glover, submitted directly to the
committee a special report on this proposal. During the formulation of
the administration's positions regarding modifications to S. 1587,
which spanned the 5 months of discussions that led to the substitute
bill before us today, SBA views appear to have been given little weight
in the headlong rush to streamlining. Staff informs me that SBA
representatives were not included in the discussion sessions, even when
the topic of discussion was being ballyhooed as a benefit for small
business government contractors. Given the special confidence that
President Clinton reposes in SBA Administrator Erskine Bowles, small
business generally has a strong voice at table when the administration
formulates its broad economic policies. Small business must also be
given a more prominent voice in the fashioning of regulatory policies
directly impacting small firms. The Government's approximately $200
billion annual procurement budget is certainly one of those topics
where small business deserves to be present and heard at the table. I
hope that SBA's Office of Advocacy and its Office of Government
Contracting will be more involved.
Madam President, I would ask unanimous consent that the comments by
the Small Business Working Group and the special report by the Chief
Counsel for Advocacy be printed in the Record following my remarks.
Madam President, while we have consented to be discharged before the
expiration of our period of referral, I want to assure my colleagues
that the concerns raised in the comments of the Small Business Working
Group have been carefully reviewed by staff. Many of those concerns are
being addressed in the managers' amendments that will be adopted
shortly. Others will be addressed in amendments to be offered by
members of the committee, including Senator Wellstone. To the extent
that the bill as passed does not address their concerns, they have my
pledge to continue to improve the bill for the benefit of small
business during the subsequent conference with the House.
Finally, Madam President, I would like to thank Senator Pressler, our
ranking Republican member, for his cooperation and assistance in moving
this legislation forward.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Small Business Working Group on Procurement Reform
June 6, 1994.
Hon. Dale Bumpers,
U.S. Senate,
Washington, DC.
Dear Senator Bumpers: The Small Business Working Group on
Procurement Reform wants to take this opportunity to share
with you our observations and positions concerning S. 1587,
the ``Federal Acquisition Streamlining Act of 1994.'' The
Senate is scheduled to consider this bill at 3:30 p.m. on
Tuesday, June 7.
Although S. 1587 as reported by the Committees on
Governmental Affairs and Armed Services reflects
recommendations made by the Working Group in testimony, and
there are several additional important improvements in a
proposed Managers' Amendment, it is our judgment that we
should not endorse this legislation, given that a shift of
but a few provisions would tilt it into the category of being
a ``net loss'' for small business. Instead, we would seek to
work cooperatively with those who have sought to accommodate
small business concerns to fashion further improvements
during consideration by the Senate and during the subsequent
conference with the House of Representatives.
We do not withhold our endorsement lightly. Procurement
streamlining is and has consistently been an objective of the
small business community. As we have said previously, true
procurement streamlining must simply not make it easier for
the Government's buyers to go to work each day, but for
private sector business concerns and, especially small
business concerns, to be treated fairly in their efforts to
sell to their Government. This remains our goal and S. 1587
has been modified to reflect a greater recognition of its
legitimacy.
We ask you to give greater recognition to our objectives in
procurement streamlining as the bill and proposed amendments
are debated by the Senate. Our more specific comments on
possible amendments to S. 1587 follow:
(1) Class Waiver of the Applicability of Certain Laws to
Subcontractors. S. 1587, as reported, would authorize
procurement bureaucrats to waive the application of laws with
regard to subcontractors of prime contractors furnishing
commercial products. The Small Business Working Group is
opposed in principal to the concept of allowing unelected
career officials to waive statutes enacted by Congress. If
such waivers are truly necessary, Congress, not the
bureaucracy, should specify the waivers.
One candidate for application of this waiver authority is
of special interest to the Working Group--the requirement for
certain subcontractors to have goals for the participation of
small business concerns and small business concerns owned and
controlled by socially and economically disadvantaged
individuals. As written, the bill prohibits the regulatory
waiver of the subcontracting requirements of Section 8(d) of
the Small Business Act. We urge you to support Senator Carol
Moseley-Braun in her efforts to block any amendment that
would change current practice regarding the use of small
business concerns as subcontractors and suppliers.
(2) Market Acceptance Criteria. S. 1587 would permit
procurement regulation writers to prescribe market acceptance
criteria which an offeror would have to meet in order to sell
commercial items to the Government. Such market acceptance
criteria could be written to foreclose the participation of
fully commercial small firms with other than national
markets. We do not believe that the proposed change contained
in the Managers' Amendment precludes such an abuse. The
Working Group believes the bill should prescribe standards
for such market acceptance criteria that will not permit the
elimination of a firm solely on the basis of its volume of
sales. We urge you to support any floor amendment which would
specify statutory standards and prohibit the use of volume of
sales as a criteria. We also urge you to support any
amendment that would make a determination that a small firm
had failed to meet a market acceptance criteria a matter
subject to review by the Small Business Administration under
its Certificate of Competency Program.
(3) Response Times Left to Regulators. S. 1587 would leave
to the regulation writers the establishment of the time made
available for an offeror to submit a response to a
solicitation for a commercial item, a small purchase under
the new $100,000 Simplified Acquisition Threshold, or any
solicitation made through electronic commerce. The Small
Business Working Group is concerned that the regulation
writers will allow such response times to be set on a
contract-by-contract basis. We urge you to support any floor
amendment which would either Congressionally-prescribe, or
require that the Federal Acquisition Regulation prescribe,
minimum response times.
(4) Simplified Acquisition Procedures and ``Micro-
Purchases.'' S. 1587 exempts purchase of $2500 or less from
the so-called ``Small Business Small Purchase Reserve.'' This
purportedly was done to facilitate broader use of a
government credit card to permit non-procurement personnel to
make more purchases of commercial items from major retailers,
most of which are not small businesses. However, as written,
the provision exempts all purchases under $2500. The Small
Business Working Group believes that two amendments are
appropriate. First, there should be a linkage between the
actual use of the government credit card as a precondition to
the waiver of the Small Business Small Purchase Reserve.
Second, even when the government credit card is used,
Congress should require the Federal Acquisition Regulation
to admonish government purchasers to try to make use of
small businesses ``to the maximum extent practicable.'' We
urge you to support any floor amendment that would achieve
these two goals.
(5) Procurement Protests: Limitations on Attorneys' Fees.
The Small Business Working Group strongly opposes the
provisions in S. 1587 which would limit the amounts to which
a small business owner would be entitled to recoup for
attorneys' fees and expert witness fees upon winning a
successful bid protest. Under current law, which has worked
since 1984, a successful protestant may be reimbursed for
legal costs actually incurred, if the General Accounting
Office or the General Services Board of Contract Appeals
finds them to be reasonable. The provision would artificially
limit the legal fees that could be recouped to the maximum
hourly rate allowable under the Equal Access to Justice Act,
$75.00 per hour, which has remained unchanged since 1980.
such a limitation would have a chilling effect on the bid
protest protections afforded by the competition in
Contracting Act of 1984, falling especially hard on small
firms. We urge you to support an amendment to be offered by
Senator Paul Wellstone that would either strike this unfair
limitation completely or eliminate small firms from its
chilling effects.
(6) Alternative Disputes Resolution. S. 1587 misses the
opportunity to streamline the contracts disputes resolution
process by eliminating the government's ability to avoid the
use of alternative disputes resolution procedures when such
procedures are appropriate. We urge you to support an
amendment to be offered by Senator Paul Wellstone which would
require that a small business concern be allowed access to
ADR procedures unless the contracting officer could cite and
justify one of the statutorily-specified circumstances under
which current law deems ADR procedures to be inappropriate.
(7) Fast Pay for Small Purchases. S. 1587, as reported,
contains a provision which assures that small firms will
receive accelerated payment for performance of contracts
awarded under the accelerated procedures to be used for
contracts under the new $100,000 Simplified Acquisition
Threshold. This provision merely makes mandatory an
essentially identical fast pay provision for $25,000 small
purchases which Congress adopted on a non-mandatory basis as
part of the 1988 amendments to the Prompt Payment Act, but
which was never fully implemented. It is the understanding of
the Small Business Working Group that the Administrator for
Procurement Policy is advocating the elimination or
substantial weakening of this provision. We urge you to
oppose any effort to do so.
(8) Measuring the Effects of the $100,000 threshold. S.
1587, as reported, also assures the Congress, as well as the
small business community, will have concrete and comparable
data to permit a valid assessment of the impact on small
business concerns, including small business concerns owned
and controlled by economically and socially disadvantaged
individuals and women, of increasing the small purchase
threshold from $25,000 to $100,000. It is the
understanding of the Working Group that the Administrator
for Federal Procurement Policy is seeking modifications to
this provision that essentially will make it impossible to
analyze the effect of this dramatic four-fold increase in
the small purchase threshold. We urge you to oppose any
such amendment.
Enclosed is a copy of our April 25, 1994 Commentary of the
bill as it was considered by the Committees on Government
Affairs and Armed Services. There were virtually no
amendments made at the committee level. Also enclosed is a
``Special Report'' from The Honorable Jere W. Glover, the
recently-confirmed Chief Counsel for Advocacy at the Small
Business Administration, whose assessments in many ways
mirror the concerns that have been consistently expressed by
the Small Business Working Group.
We urge you to review and seriously consider the
recommendations by our coalition of associations serving as
advocates for small businesses, including those owned and
controlled by socially and economically disadvantaged
individuals or women.
Please help us to make acquisition streamlining a benefit,
rather than a source of new burdens for them.
If you have any questions about this statement, please
contact me at 703-684-3450.
Sincerely yours,
E. Colette Nelson,
Chair, Small Business Working Group
on Procurement Reform.
____
Small Business Working Group on Procurement Reform
Small Business Legislative Council.
Minority Business Legal Defense and Education Fund.
Latin American Management Association.
National Center for American Indian Enterprise Development.
National Association of Minority Business.
National Association of Women Business Owners.
National Minority Supplier Development Council.
Women Construction Owners & Executives, Inc.
Independent Defense Contractors Association.
Independent Gear Manufacturers Association.
Interamerican Travel Agents Society.
National Small Business United.
National Federation of Independent Business.
____
Small Business Administration,
Washington, DC, May 23, 1994.
Hon. Dale Bumpers,
Chairman, Committee on Small Business, U.S. Senate, Russell
Senate Office Building, Washington, DC.
Subject: Report on Procurement Reform.
Dear Mr. Chairman: This is a report outlining the views of
the Office of Advocacy on procurement reform.\1\ It is
prepared under the authority of 15 USC Sec. 634(f) and is
intended to echo the concerns of the small business
community. The Small Business Legislative Council, the
National Small Business United, and the National Association
for the Self-Employed agree with the opinions expressed
herein.
---------------------------------------------------------------------------
\1\The views expressed in this document are solely those of
the Chief Counsel for Advocacy and may not necessarily
reflect the views of the U.S. Small Business Administration
or the Administration.
---------------------------------------------------------------------------
Currently, Congress has before it a number of reform
measures, including S. 1587, H.R. 2238, H.R. 3586, H.R. 4263
and H.R. 4328. Small firms are the engine supporting economic
growth as well as the driving force behind job creation and
innovation in America. Congressional due diligence in
considering these proposals must therefore acknowledge and
support the needs of the small business community.
The Office of Advocacy strongly endorses acquisition
reform. Few would disagree that our procurement system is too
complex, absurdly slow and frequently ineffective. However,
the zeal to reform must be tempered with adequate
consideration for the concerns of the small business
community. It took many years to instill sufficient checks
and balances within the federal procurement process to
encourage competition and increase opportunities for small,
minority and women-owned firms. Some of these checks and
balances are now seen as impediments to streamlining the
procurement process.
It is important to note that many of the proposed
legislative changes come from recommendations made by
the Acquisition Law Advisory Panel (Section 800 panel).
This panel was established by the 1991 National Defense
Authorization Act (Public Law 101-510, Section 800) to
review acquisition laws, with a goal of streamlining the
Department of Defense acquisition process. Unfortunately,
the small business community had minimal representation
and input to the panel.
For reform to be meaningful and effective, it must be
balanced equitably on all stakeholders. It would be a costly
injustice, as well as an exercise in regression, if the small
business community were to be sacrificed at the expense of
less competition, higher government costs and fewer
procurement opportunities for small firms.
We ask that you consider the following concerns in
deliberations.
simplified acquisition threshold
A critical component of the reform legislation focuses on
increasing the small purchase threshold from $25,000 to
$100,000. We support increasing the threshold if, and only
if, specific measures are implemented to protect the small
business community and enhance its ability to participate in
federal procurement opportunities. These measures include:
Linking any increase in the small purchase threshold with a
concurrent obligation to implement a coordinated government-
wide electronic equivalent of the Commerce Business Daily.
While increasing the threshold will simplify the
procurement process, it will hurt small firms if acquisition
opportunities are not adequately publicized. If the threshold
is increased without directly linking it to the
implementation of an electronic commerce system, competition
most likely would be minimized and many small firms would be
precluded from participating in procurement opportunities.
Reduced competition would increase the government's
procurement costs.
We support the implementation of the federal acquisition
computer network (FACNET) or similar government-wide
electronic commerce system.
Maintaining the small business small purchase reserve for
purchases of less than $2,500.
Awards to small businesses, especially emerging firms, will
be reduced if purchases of less than $2,500 are not reserved.
We agree that very small purchases should be easy to make and
require minimal paperwork. Small firms can accommodate this
need for greater simplicity.
For many small firms, very small purchases are the bread
and butter of their operations. These same firms are often
not able to compete for large federal acquisitions.
Requiring detailed reporting under the Federal Procurement
Data System for any purchase of $10,000 or more.
This requirement is necessary to measure and evaluate the
results of increasing the threshold.
Requiring the implementation of fast pay procedures in
contracts awarded to small firms under the small purchase
threshold.
The Prompt Payment Act Amendments of 1988 give executive
agencies authority to implement fast pay procedures for
contracts under the small purchase threshold. However,
implementing regulations have basically neutered this
provision, allowing agencies to avoid compliance.
Fast pay provisions in contracts below the threshold would
require small firms to be paid by agencies within 15 days
from the receipt of an invoice and require the availability
of payment through electonic transfer upon contractor
performance. Fast pay procedures, enacted in the Amendments
of 1988, should be mandated.
Linking the threshold for small claims procedures to the
simplified acquisition threshold.
This would raise the current small claims threshold from
$10,000 to $100,000, allowing access to simplified and more
efficient claims procedures.
Amending the Davis-Bacon Act, the Services Contract Act and
the Miller Act.
The Davis-Bacon Act requires contractors for federal and
public works projects to pay workers the local prevailing
wage rate, usually union wages. The act was intended to
prevent construction companies offering substandard wages
from underbidding local companies. The threshold for coverage
under the act was set at $2,000 in 1931 and remains the same
today.
The Service Contract Act of 1965 has purposes for service
contracts similar to those of the Davis-Bacon Act for
construction. It applies to contracts in excess of $2,500. It
requires contractors to pay the minimum prevailing wage and
specified fringe benefits.
The Miller Act requires that for any federal construction
contract worth $25,000 or more, the contractor must be
bonded.
We urge that the threshold for these laws be increased to
$100,000 or the established level for Simplified Acquisition
Threshold. Further, we urge that the Federal Acquisition
Regulations be modified, with respect to the Miller Act, to
provide alternative payment protections for small business
subcontractors and suppliers.
commercial items
We support efforts to make a easier for firms to sell, and
the government to buy, commercial products for government
use. Reliance on commercial items is one of the identified
purposes of the Competition in Contracting Act of 1984. We
support a clear preference for the use of commercial items
and performance specifications. However, aspects of the
proposed legislation could be very damaging to small firms.
Broad Definitions for Commercial Items
Proposed definitions for commercial items are excessively
broad. Not only do they include items that have been sold
commercially, but they also include those which might (or
might not) be sold commercially in the future. We are
concerned that a firm could use its purported offer of a
product to the general public, whether or not there is a
commercial market, as a means of avoiding various statutory
requirements. Further, some proposals would modify the
definition of commercial items to include all forms of
commercial services.
If the definition of commercial items were made excessively
broad and specific statutory requirements eliminated as
proposed, procurement opportunities for small firms would be
significantly reduced.
Preserve Subcontracting Plans for Subcontractors
Proposed legislation would free subcontractors supplying
commercial items or commercial components for government-
designed products from any requirement to utilize small or
small disadvantaged concerns as ``second-tier''
subcontractors and suppliers. We strongly oppose any effort
to eliminate subcontracting plan requirements. Such changes
in the law would have a significantly adverse effect on the
ability of small firms to participate in contract
opportunities.
The current law requiring the flow-down of subcontracts to
small firms has helped many small, minority and women-owned
businesses.
We endorse recommendations of the small business community
to make small business and small disadvantaged business
participation at the subcontract level a criterion for the
award of prime contracts.
Market Acceptance
It is proposed that new procedures for the acquisition of
commercial items be developed. We support the development of
procedures that provide consistent, government-wide
implementation, as opposed to allowing individual agencies to
establish their own definition for market acceptance.
Further, implementing regulations that will ultimately
define ``market acceptance criteria'' must be sensitive to
the needs and especially the limitations of the small
business community. We are concerned that such criteria could
be used to set standards beyond the reach of many small
firms. For instance, if market acceptance criteria were used
as a test for ``responsiveness,'' some firms would be
eliminated from competing, before having any recourse to
SBA's Certificate of Competency (CoC) program.
The CoC program is a very successful government initiative
that has helped many small firms. It would be counter
productive to allow the development of procedures that could
cancel the intended purpose of the CoC program.
pilot programs
We acknowledge the need for and the advantages of testing
and implementing alternative procurement methods. However, we
oppose efforts that would grant sweeping authority to
specific federal agencies and eliminate long-standing
statutory protections for small businesses.
Test Authority
It has been proposed that the Administrator for the Office
of Federal Procurement policy (OFPP), in considering
procurement pilot programs, be given authority to waive not
only regulations, but also laws, by simply giving notice to
the Congress. Waivers of statutes should not be so lightly
undertaken, and we oppose such blanket authority granted to
the Administrator of the OFPP.
If statutory waivers are deemed necessary to conduct a
pilot program, specific Congressional approval should be
obtained and OFPP should be required to obtain the
concurrence of the agency or agencies responsible for the
statutes to be waived or suspended.
Defense Acquisition Pilot Program
Proposals would give the Secretary of Defense authority to
waive or limit the applicability of specific statutory
requirements in implementing the Defense Acquisition Pilot
Program. The proposed waivers include eliminating small
business set-asides, the small business small purchase
reserve, and small and small disadvantaged business
subcontracting plans. We oppose these proposals.
The small business programs cited have been established as
an integral part of the protections for small businesses.
These programs assure those new to the federal procurement
environment that opportunities will be made available to
them. The gradual elimination of these protections not only
removes specific opportunities from the table, but also sends
a message that efficiency of administration and convenience
of established relationships are more important than helping
small firms to grow and participate in the federal
procurement process.
Extension of the DoD Minority Enterprise Development Program
Proposals would extend to civilian agencies the minority
enterprise development program currently authorized for DoD
under 10 U.S.C. 2323 (formerly Section 1207 of Public Law 97-
661, the National Defense Authorization Act for 1987). We
recommend that the SBA play an integral role in the
development and oversight of an extended Minority Enterprise
Development Program.
Contract Goals
We support increasing the government-wide goal for
participation by small business concerns for 20 percent to 25
percent of the total value of all prime contract awards for
each fiscal year. Further, we support establishing a goal for
the participation of women-owned businesses at 5 percent of
the aggregate value of all prime contracts.
Best-value contracting
Best-value practices are intended to help government
agencies receive the best overall value in contracts it
awards. Under such practices, contracts are awarded by
considering a combination of price and technical factors,
with technical factors taking precedence. The concept removes
the super preference for low-bid proposals and puts best-
value negotiated solicitations on equal footing with
sealed bid solicitations.
We support the intended purpose of best-value practices,
but are concerned with the level of subjectivity such
practices provide to contract officers in weighing individual
evaluation factors. We recommend that any effort to broadly
incorporate the use of best value practices include specific
provisions that would clarify evaluation factors, specify
weighing procedures and minimize subjectivity.
Truth in Negotiations Act
The Truth in Negotiations Act (TINA) requires contractors
to submit cost or pricing data before the award of a contract
or a contract modification that is expected to exceed
$500,000. Similar requirements are imposed on subcontractors,
who must submit such data to the prime contractor. Current
law stipulates that the $500,000 threshold be reduced back to
the 1984 level of $100,000 after December 31, 1995. We
support proposals to keep the TINA threshold at $500,000.
past performance practices
Proposals would alter regulations that require federal
agencies to consider a contractor's past performance in
awarding future contracts. We are concerned that such
practices could impede the ability of small firms, especially
minority and women-owned businesses, to obtain federal
contracts. This is because most small firms have limited
experience in the government market place.
We recommend that any provisions to consider past
performance in the evaluation process include specific
measures to consider both commercial and federal past
performance; include recognition of a firm's compliance with
its subcontracting obligations under Section 8(d) of the
Small Business Act and clearly acknowledge that a company
would not be penalized if no information regarding past
experience was available.
technical data rights
In addition to pending procurement reform legislation,
Congress is considering recommendations prepared by the DoD/
Industry Technical Data Advisory Committee (Section 807
committee).
The 807 committee is charged with preparing recommendations
that will lead to the development of technical data
regulations that are equitable to all federal contract
participants in the creation and use of technical data. This
is a powerful issue, charged with controversy and fueled by
different agendas. Although the committee sought consensus
among divergent groups, its recommendations appear to side
with the interest of predominantly large firms.
A key recommendation made by the committee is that data
rights be determined based upon whether development is
charged to DoD as a direct or indirect charge, rather than
whether it is paid for by the DoD. In the interests of small
business, greater competition and reduced government costs,
we urge that all data paid for by the taxpayer be available
for competitive purposes, irrespective of whether it is
charged to the government as a direct or indirect cost.
Further, we urge that careful consideration, as well as a
comprehensive analysis of the projected impact on small
manufacturers, be undertaken before technical data
regulations are changed.
Procurement reform is desperately needed and should be
vigorously pursued. We strongly endorse efforts to simplify
and streamline the procurement process. However, reform must
be equitable and not carried on the back of the small
business community.
The Office of Advocacy shares the commitment of the
Congress to make meaningful reform a reality and stands ready
to work with it in that endeavor.
Sincerely,
Jere W. Glover,
Chief Counsel,
Office of Advocacy.
____
Small Business Working Group on Procurement Reform
April 25, 1994.
Hon. John Glenn,
Chairman, Committee on Governmental Affairs, U.S. Senate,
Washington, DC.
Hon. William V. Roth, Jr.,
Ranking Republican, Committee on Governmental Affairs, U.S.
Senate, Washington, DC.
Dear Chairman Glenn and Senator Roth: The undersigned
members of the Small Business Working Group would like to
take this opportunity to offer comments regarding the April
21, 1994 proposed Amendment in the Nature of a Substitute to
S. 1587, the ``Federal Acquisition Streamlining Act of
1993.''
In reviewing your proposal, we have sought to measure it
against several broad criteria and to determine the extent to
which it reflects the specific recommendations contained in
testimony that members of the Small Business Working Group
presented at the joint hearings conducted by the Committees
on Armed Services and Governmental Affairs.
Small business firms, including those owned and controlled
by socially and economically disadvantaged individuals or
women, have substantial demonstrated capabilities to
participate in the federal acquisition process as prime
contractors, subcontractors and suppliers. Their
participation not only benefits the government and other
government prime contractors, but the Nation's economy at
large. It is our view that any proposal for streamlining
federal acquisition concurrently must avoid creating any new
impediments and eliminate identified existing impediments to
small business participation in the government marketplace.
Streamlining must not simply be from the perspective of the
Government buyer; it also must emphasize the business
realities and the right to fair treatment of those selling to
the Government, especially small business concerns.
Our review of the proposed Committee Amendment led us to
conclude that it does not yet strike this balance. Thus, we
cannot yet express support.
The attached document summarizes many of our concerns. We
would have liked to have provided more comprehensive comments
on the 311-page proposal, acknowledging more of its positive
features, but did not obtain a copy until late Friday, April
22. Nonetheless, we wanted to provide some comments prior to
the mark-ups scheduled for 10:00 a.m. on Tuesday, April
26, before the Committee on Governmental Affairs, and
before the Committee on Armed Services at 2:30 p.m. on the
same day.
This letter highlights several of our more critical
concerns.
First, we are particularly concerned with those provisions
of the Committee Substitute which would statutorily authorize
the Federal Acquisition Regulatory Council to waive the
application of any law with respect to subcontractors to
firms furnishing commercial items to the Government or to
subcontractors furnishing commercial components to non-
commercial products. Clearly, this is a back-door way of
eliminating the current statutory requirements under Section
8(d) of the Small Business Act, for subcontracting with small
businesses and small business concerns owned and controlled
by socially and economically disadvantaged individuals. This
same waiver authority could be applied with regard to a broad
range of otherwise applicable statutory requirements to the
detriment of the public interest as defined by Congress.
Our concern is compounded by the broad definition of
``commercial items'' which includes not only items actually
being sold in the commercial marketplace, but still unbuilt
items that are ``not yet available in the commercial
marketplace'' but need only be intended for commercial sales
``within a reasonable period.'' Our concern about the broad
effect of a sweeping waiver authority tied to such a broad
definition only is compounded further by our understanding
that the House Armed Services Committee substitute for H.R.
2238 defines ``commercial items'' to include ``commercial
services,'' which essentially are all services under the
expansive standards in both bills.
Such radical, and likely limitations on subcontracting
opportunities look even more egregious in light of the other
provisions of the proposed Committee Substitute which
encourage contract bundling. Such contract bundling creates
contracting opportunities beyond the capabilities of even the
most developed small business concern.
Essentially, these provisions relegate most small business
concerns, and small business concerns owned and controlled by
socially and economically disadvantaged individuals or women
to the so-called ``simplified acquisition'' market (i.e.,
contracts below $100,000).
But the Committee Amendment even endangers their potential
for success in the $100,000 and less small purchase market.
Far too many of the key details of what will constitute
acceptable ``simplified acquisition procedures'' are left to
the not-so-tender mercies of the procurement regulation
writers. Past experiences have demonstrated repeatedly that
the regulation writers are all too willing to sacrifice our
business needs, and even our rights, for the convenience of
the Governments buyers, whenever given the opportunity by
imprecise statutory direction. We urge you to keep in mind
that approximately 98 percent of the Government's contracting
opportunities will be governed by these ``simplified
acquisition procedures.''
In essence, the legislation embodied in the proposed
Committee Amendment, if maliciously implemented by the
regulation writers, could mean that small business concerns
will get to observe the government market rather than
participate in it, except to the extent that their tax
dollars make a substantial contribution to funding government
purchases.
We urge you to review and seriously consider the
recommendations by our coalition of associations serving as
advocates for small businesses, including those owned and
controlled by socially and economically disadvantaged
individuals or women. Many of us have worked with you for
years and frequently have heard you discuss the contributions
made by all small businesses.
Please help us to make acquisition streamlining a benefit,
rather than a source of new burdens for them.
If you have any questions about this statement, please
contact Colette Nelson at 703-684-3450.
Sincerely yours,
Small Business Legislative Council; Minority Business
Enterprise Legal Defense and Education Fund; Latin
American Management Association; National Center for
American Indian Enterprise Development; National
Association of Minority Business; National Association
of Women Business Owners; National Minority Supplier
Development Council; National Association of Minority
Contractors; Independent Defense Contractors
Association; American Gear Manufacturers Association;
Interamerican Travel Agents Society; National Small
Business United; National Federation of Independent
Business.
____
Small Business Working Group Commentary on Proposed Amendment in the
Nature of a Substitute to S. 1587, the Federal Acquisition Streamlining
Act of 1994
acquisition of commercial items (title viii)
Title VIII of the proposed Committee Substitute focuses on
the acquisition of commercial items, a core element of the
acquisition streamlining proposal. As we stated in our
testimony at the joint hearings of the Committees on Armed
Services and Governmental Affairs, the Small Business Working
Group supports substantially in creasing the government's
acquisition of commercial products. However, the provisions
of the proposed Substitute raise a number of very serious
concerns.
Class Waiver of the Applicability of Certain Laws to Subcontractors
Section 8004 of the proposed Substitute adds a new section
35 to the Office of Federal Procurement Policy (OFPP) Act
that would permit the career regulation writers to waive
existing law with respect to a subcontractor (at any tier)
for a commercial item or a subcontractor furnishing a
commercial component for a government-designed product.
This provision, in our opinion would invite the elimination
of any requirements that subcontractors make use of small
business concerns and small business concerns owned and
controlled by socially and economically disadvantaged
individuals as lower-tier subcontractors or suppliers. We
believe it is designed to eliminate current statutory
requirements for the use of such subcontractors as specified
by section 8(d) of the Small Business Act. Foreclosing small
business concerns and disadvantaged small business concerns
from the subcontract market is especially unacceptable in
light of other provisions of the bill which would explicitly
encourage the acquisition of products through so-called
bundled contracts unsuitable for award to even the most
developed and accomplished small business.
Private sector proponents of this provision maintain that
vendors of commercial products or those furnishing commercial
components should not be required by government action to
disturb their existing subcontractor or supplier base. This
argument is inadequate for a number of reasons.
First, the core Congressional purpose in enacting
requirements for the use of small business concerns and
especially disadvantaged small business concerns at the
subcontractor and supplier level was precisely to encourage
the disruption of existing supplier relationships. Such
existing relationships all too frequently exclude the
participation of small businesses and disadvantaged small
businesses.
Second, the assertion that such a waiver is necessary to
permit the government's acquisition of commercial products
flies in the face of substantial experience. During the 15
years since the enactment of these subcontract participation
provisions as part of Public Law 95-507, the government
successfully has acquired a broad range of items that
unquestionably are commercial in nature. One merely needs to
cite the fact that civilian and military agencies acquire
commercial copying equipment, commercial vehicles, commercial
audiovisual equipment, commercial food service equipment,
commercial construction equipment, commercial computer
equipment, commercial communications equipment, to name but a
few types of truly commercial products that today can be
found in use throughout the government. We would submit that
it is those who would seek to bring in other items that fit
within the extremely broad definition of commercial items
included in this legislation that are the principal advocates
of this effort to exclude small business participation at the
subcontract level.
We find it ironic that the very same companies that are
urging upon Congress the elimination of any requirement to
use American small businesses as subcontractors and suppliers
because such would be incompatible with commercial buying
practices, frequently fiercely outbid each other in the
amount of offsets being offered in overseas sales to foreign
governments, government-controlled corporations or major
foreign commercial customers. These offsets essentially
require these U.S. multinational corporations to make
countervailing purchases from the entity to which they are
seeking to make the sale of the U.S product. Frequently,
these offset requirements will compel the U.S. manufacturer
to incorporate components manufactured by small business
concerns in the nation in which the U.S. firm is making the
sale or to purchase other products from small firms in that
country. With increasing frequency, these offset requirements
result in the exporting of manufacturing opportunities
currently held by small U.S. firms.
The Small Business Working Group urges the Congress to
respond by establishing requirements that make the use of
small business as subcontractors and suppliers a major factor
in the award of prime contracts for commercial items as well
as other items. Such a requirement would overcome the
diminished impact of existing subcontract requirements which
are negotiated with the successful offeror after contract
award. By making the use of American small businesses an
important element in the award of the contract, such a
provision would harness the fierce competition for the award
of U.S. government contracts to the benefit of U.S. small
business concerns and disadvantaged small business concerns.
To be truly effective, the provision should not only make the
consideration of small business and disadvantaged small
business participation an evaluation factor in the contract
award process, it also should establish minimum percentages
of small business and disadvantaged business participation in
order for an offer from a major firm to be considered as
responsive to the government's solicitation. Our foreign
trading partners do no less for their small businesses in
their acquisition of commercial and other government-unique
products. The Small Business Working Group believes it is
time for the United States Government to adopt similar
requirements for the benefit of U.S. small business
concerns.
In addition to this obvious objection to section 8004, the
Small Business Working Group is very concerned about
statutorily according to the Federal Acquisition Regulation
(FAR) writers authority concerning the applicability of an
unknown list of statutes. As we have previously testified
before the Congress on many occasions, the small business
community has been ill-treated by federal procurement
bureaucrats whenever excessive flexibility has been granted
in the statutes. This would be one of the broadest grants of
statutory waiver authority afforded to the Executive by the
Congress without any certitude regarding what laws would be
affected. We strongly urge the Committees to demand a
comprehensive list of the statutes that could potentially be
affected before even considering the grant of such authority.
Second, with such a list in hand, we would urge the
Congress to adopt an alternative approach of enacting
appropriate waivers of subcontractor flow-down requirements
for commercial items, as it has done with respect to the
application of other laws to prime contract award for
commercial items and with respect to laws applicable to the
award of contracts below the Simplified Acquisition
Threshold.
Market Acceptance Criteria
Section 8003 of the proposed Substitute calls for the
implementation of the new procedures for the acquisition of
commercial items through the government-wide Federal
Acquisition Regulation. The Small Business Working Group
applauds such consistent government-wide implementation, as
opposed to the fragmented implementation being proposed in
the House Armed Services Committee substitute to H.R. 2238.
One of the key topics to be addressed in the regulations
would be the establishment of ``market acceptance criteria'',
with which an offeror would have to demonstrate compliance in
order to have its offer considered responsive. This is a
grave concern for at least three reasons.
First the proposed Substitute provides no constraints on
how the regulations shall define ``market acceptance
criteria.'' Our concern is that the regulations could confer
on a contracting officer the authority to establish an amount
of previous commercial market sales that would be so large as
to exclude small commercial suppliers with fully commercial,
but limited markets, thus reserving the awards for only the
very largest multi-national suppliers.
Second, market acceptance criteria adopted by regulation
could eliminate participation by so-called contract
manufacturers who manufacture products to the specifications
of their customers, whether government agencies or private
enterprises. Such contract manufacturers would be unable to
demonstrate substantial sales to the general public, if that
were adopted as the applicable market acceptance criteria.
Third, the Small Business Working Group is concerned that
market acceptance criteria could be made a condition
precedent for an offer to be considered ``responsive.'' This
is the approach taken by the House Armed Services Committee
Substitute to H.R. 2238. Such an approach would be
detrimental because recognizing market acceptance criteria as
a matter of responsiveness would exclude any small firm from
seeking from the Small Business Administration (SBA) an
impartial evaluation of its status as a commercial supplier.
This approach seems designed to eliminate recourse to the
Certificate of Competency Program authorized by the Small
Business Act. We believe that the SBA would be no less well-
suited than the procuring agency to determine whether a small
business concern meets specified market acceptance criteria.
The Small Business Working Group is pleased to note that
the proposed Committee Substitute would protect the
participation by firms currently furnishing products
exclusively to the government in response to detailed design
specifications.
Inapplicability of Certain Provisions of Law to the Acquisition of
Commercial Items
Section 8005 of the proposed Committee Substitute would
restrict the application of certain existing laws with regard
to the award of contracts for the procurement of commercial
items. Specifically, Section 8005(a)(4) would limit the
application of the existing statutory prohibition on a
government prime contractor limiting the right of one of its
subcontractors to make sales directly to the government. The
language in the proposed Substitute would not restrict the
prime contractor from limiting the right of a subcontractor
to sell to the government if such prime contractor limited
the right of direct sales by subcontractors with respect to
commercial customers. The Small Business Working Group is
opposed to any weakening of the sound Congressional intent
regarding prohibiting prime contractors from inhibiting
subcontractors' sales to the government.
Response Times for Solicitations for Commercial Items Left to
Regulators
Section 8006 of the proposed Substitute would leave to the
Federal Acquisition Regulation the establishment of the time
made available for an offeror to submit a response to a
solicitation for the procurement of a commercial item. Under
current law, an offeror must be accorded at least 30 days to
fashion an offer in response to a government solicitation for
the acquisition of a product.
While the Small Business Working Group recognizes that less
time might routinely be needed to fashion an offer for
furnishing a commercial item, it steadfastly is opposed to a
blanket grant of authority to the regulation writers. The
1984 statute, which prescribed minimum response times for the
submission of offers, was necessitated by the fact that
government buyers were specifying unreasonably short response
times to the extreme detriment of small business offerors.
The Small Business Working Group can think of no reason why
the natural propensities of the acquisition workforce would
have changed. Therefore, some statutory minimums are
necessary to avoid a reoccurrence of the abuses that
necessitated Congressional action in 1984.
simplified acquisition threshold (title iv)
Section 4001 of the proposed Substitute would replace the
small purchase threshold with a new Simplified Acquisition
Threshold and increase it from $25,000 to $100,000. The Small
Business Working Group notes that the Substitute does not
adopt the Administration's recommendation that the Simplified
Acquisition Threshold be indexed for inflation.
Simplified acquisition procedures and ``Micro-Purchases''
Section 4011 of the proposed Substitute would add a new
Section 29 to the OFPP Act. This provision directs the
issuance of regulations specifying appropriate ``simplified
acquisition procedures.'' In addition, this provision would
call for the regulatory establishment of a new class of
purchases referred to by the Clinton Administration as
``Micro-Purchases.''
Under such Micro-Purchases, the requirement of Section
15(j) of the Small Business Act would be waived. Under
current law, purchases below the small purchase threshold
initially are reserved for competition exclusively among
small business concerns, if certain conditions are met. Under
the proposed Committee Amendment, this ``Small Business Small
Purchase Reserve'' would be eliminated with respect to
purchases below $2,500.
The Micro-Purchase threshold is being strongly advocated by
the Clinton Administration to facilitate the use of
government credit cards for the making of low dollar-value
purchases. In its view, the Small Business Small Purchase
Reserve makes this ``reinvention'' initiative impossible.
The Small Business Working Group believes that the waiver
of the Small Business Small Purchase Reserve only should
apply if a purchase actually is to be made through the use of
the government credit card. Further, it does not seem
incompatible to require the individuals making such Mirco-
Purchases be required to use small business concerns ``to the
maximum extent practicable.'' Such a statutory admonition
would make clear that the Micro-Purchase Threshold is not an
invitation to avoid small business participation when such
firms are available and can meet the government's needs in a
timely and cost effective manner.
Acceptance of timely offers
The Small Business Working Group also urges that the new
Section 29 of the OFPP Act relating to Simplified Acquisition
Procedures be amended to include a specific provision making
explicit that a timely offer for a contracting opportunity in
excess of $2,500 but less than $100,000, timely received from
a small business must be considered for award. This
recommendation is made with the understanding that the
Committee Substitute includes a similar provision in Section
4012, amending Section 15(j) of the Small Business Act.
Statutory redundancy in the favor of small business is not
a fault, given the propensities of the regulation writers.
Small Business Reservation
Section 4012 of the proposed Substitute would increase to
the Small Business Reserve to the $100,000 Simplified
Acquisition Threshold. The Small Business Working Group
commends the Committees for this action and reiterates that
such linkage in a principal condition for the Working Group
to support any increase in the current $25,000 small purchase
threshold, which was only last increased from $10,000 in
1986.
Fast Pay Procedures Under Simplified Acquisitions
Section 4013 of the proposed Substitute would require fast
pay procedures as part of the Simplified Acquisition
Procedures to be developed pursuant to the new Section 29 of
the OFPP Act. The Small Business Working Group commends the
Committees for making mandatory the fast pay procedures
enacted in a permissive format as part of the 1988 Amendments
to the Prompt Payment Act. We note that the procedures only
call for accelerated payment for products delivered or
services performed. Representatives of the Department of
Defense have sought to undermine the adoption of fast pay
procedures by linking them to former practices that called
for payment prior to contractor performance.
Electronic Commerce
Section 4015 of the proposed Substitute addresses the
development and implementation of an electronic commerce
system for the federal government. The text of the provision
essentially paraphrases the presidential memorandum of
October 1993, relating to the establishment of an electronic
commerce system.
The Small Business Working Group commends the Committees
for including in the Committee Substitute the provision that
addresses what the Working Group considers to be essential
elements of an acceptable system of electronic commerce.
First, the provision recognizes that the system should cover
the entire procurement process from solicitation of offers to
payment of the contractor for work performed. Second, it
makes clear that the system must be designed around the
objective of making it ``user friendly'' to small business
concerns, including small business concerns owned and
controlled by socially and economically disadvantaged
individuals or women. Finally, it recognizes that a
successful system will have to present a ``single face'' to
all industry.
The Substitute, however, does include some very serious
deficiencies which the Small Business Working Group maintains
must be addressed. First, the Committee Substitute continues
the common problem of according excessive discretion to the
regulation writers to fashion the details of the standards
regarding advanced notice of contracting opportunities,
the content of such notices, and response times for
solicitations under electronic commerce. As drafted, the
provision essentially is devoid of any Congressional
standards upon which to measure whether the resulting
regulations in fact accord a ``reasonable opportunity to
respond.''
The Small Business Working Group strongly urges that the
provision be amended in a number of key respects. First,
minimum advance notice periods with respect to contracting
opportunities should be included. A time period less than the
currently-mandated 15-day advance notice period prior to the
release of a solicitation would seem warranted in an
electronic commerce environment. However, an advance notice
period of less than five days would seem to demand greater
practical experience than that derived from the ongoing
experiments with electronic commerce within the Department of
Defense.
Second, the Small Business Working Group believes that the
contents of a notice announcing a contracting opportunity
essentially should be comparable to those required by Section
8(f) of the Small Business Act for a notice to be published
in the Commerce Business Daily. Currently, the Committee
Substitute reflects no statutory standard.
Third, the Small Business Working Group believes that the
statute should specify a minimum time in which competing
offerors may develop their offers. Under current law, for
procurements in excess of the $25,000 small purchase
threshold, an offeror is assured 45 days to fashion a
response to a solicitation for a research and development
contract, and 30 days for a solicitation for a contract for
products and non-R&D services. These minimum response times
were put in place to assure small firms adequate time to
respond to solicitations. They were enacted because the
contracting community routinely was utilizing response times
that effectively foreclosed the participation of small firms.
While the Small Business Working Group recognizes that 30- or
45-day response times may be excessive in an electronic
environment, we would urge that minimum response times of not
less than 15 and 10 days be specified in the statute.
Adjustments can be made based upon experience, but Congress
should not be excluded, given the past performance of the
procurement bureaucracy.
Enhanced Data Collection Regarding Purchases Below $100,000
Section 4001(b) of the proposed Substitute adopts a form of
enhanced reporting requirements recommended in our testimony.
This will assure that Congress and the small business
community will have hard data to measure the actual effects
of simplified acquisition procedures and whether they result
in more small business participation as is being touted by
the Clinton Administration.
Unfortunately, the provision did not adopt our specific
recommendation that detailed reporting should apply with
respect to awards of at least $10,000 rather than the $25,000
floor reflected in the provision. In 1986, when the small
purchase threshold was increased from $10,000 to $25,000, we
lost sight of these hundreds of thousands of business
opportunities. Apparently, the procurement bureaucracy
thus far has made a convincing case that such information
isn't needed. We don't agree.
Statutory Waivers under SAT
The proposed Committee Substitute sets forth a list of
statutes which shall not be applicable to acquisitions below
the Simplified Acquisition Threshold. We recognize this as an
important step in decreasing the burdens on small business
concerns to win these contracting opportunities.
In particular, we note that the proposed Substitute adopts
our recommendation that the Miller Act threshold be increased
to the Simplified Acquisition Threshold and that the FAR be
modified to provide alternative payment protections for the
benefit of subcontractors and suppliers, who most frequently
are small business concerns.
We would note that the proposed Substitute does not propose
any increase in the existing $2,000 threshold for the Davis-
Bacon Act of 1933 or the $2,500 threshold for the Service
Contract Act of 1965. A simple increase to $100,000 is
warranted even if one simply considers an adjustment for
inflation. The Small Business Working Group believes that
increases in these thresholds are essential if the full
benefits of simplified acquisition procedures are to accrue
equally to the small business seller as to the government
buyer. At the same time, we strongly oppose any effort to
expand the coverage of the Davis-Bacon Act or the Service
Contract, as proposed by the Clinton Administration and
others.
We further note that the Davis-Bacon Act carries with it
not only obligations concerning prevailing wages, but the
collateral requirements of the Copeland Act regarding the
submission of weekly payroll data. We believe this burdensome
and unnecessary paperwork requirement properly should be
replaced with a certification requirement. At an absolute
minimum, this reporting threshold should be increased to
$100,000. Otherwise, we have another example of the
Simplified Acquisition Threshold being principally a benefit
for government contracting officers.
Walsh-Healey Act Repealer
Section 4012(c) of the proposed Committee Substitute would
amend the Walsh-Healey Public Contracts Act, effectively
repealing all provisions except those which authorize the
Secretary of Labor to prescribe regulations for determining
whether a contractor is a manufacturer of, or a regular
dealer in, the items of supply to be used in the performance
of a government contract. The Small Business Working Group
suggests that consideration be given to limiting the
application of any regulations regarding a vendor's status as
a manufacturer or regular dealer to contracts in excess of
the Simplified Acquisition Threshold.
Extension of DoD Section 1207 Program to Civilian Agencies
Section 4104 of the proposed Committee Substitute would
amend section 8(c) of the Small Business Act to extend to the
civilian agencies the minority enterprise development program
currently authorized for DoD under 10 U.S.C. 2323 (formerly
Section 1207 of Public Law 97-661, the ``National Defense
Authorization Act for Fiscal year 1987''). Section 801 of
Public Law 102-484, the ``National Defense Authorization Act
for Fiscal Year 1993'' codified the former Section 1207 and
extended it to the year 2000. Given this strong expression of
Congressional support, this action would extend it to the
remaining 35 percent of the Government's procurement activity
conducted by the civilian agencies.
The provision includes the directions found in 10 U.S.C.
2323(g) calling for the issuance of appropriate guidance to
assure that the application of the preferential procurement
tools does not foreclose the participation of small business
concerns generally in any industry category.
We would observe that, unlike the House Armed Services
Committee Substitute for H.R. 2238,the proposed Substitute to
S. 1587 would avoid duplicating the existing goal-setting and
reporting requirements of section 15(g) of the Small Business
Act. Further, we would observe that, unlike the House Armed
Services Committee Substitute for H.R. 2238, the proposed
Substitute to S. 1587 ensures consistent government-wide
implementation through the FAR.
contract formation (title i)
Limitations on Competition
At the request of the Clinton Administration, Sections 1002
and 1052 of the proposed Committee Substitute would add a new
justification for limiting competition. The provision would
allow the exclusion of otherwise eligible sources if it would
``ensure a continuous and reliable source; satisfy a critical
need for health, safety or other emergency supplies; or
satisfy projected needs resulting from a history of high
demand for the supply or service''. It is our opinion that
the majority of these circumstances could be justified under
the existing statutory exceptions to full and open
competition provided in the 1984 Competition in Contracting
Act. The open-ended standard sets forth in the proposed new
exception, absent definition of key terms, essentially would
convey upon a contracting activity the right to restrict
competition in almost any circumstance. The Small Business
Working Group is opposed to this provision.
Expansion of the Use of Task Order Contracts for Advisory and
Assistance Services
Section 1004 and 1054 of the proposed Substitute would add
a new Section 2304a to Title 10 and a new Section 303H to the
Federal Property and Administrative Services Act of 1949
encouraging the use of task order contracts for the
acquisition of advisory and assistance services. The Small
business Working Group is concerned that this provision would
only further encourage the bundling of contract requirements
so that small business concerns would effectively be unable
to compete. To overcome the adverse effects of such
contract bundling, the Small Business Working Group
encourages the Committees to make subcontract
participation by small business concerns and small
business concerns owned and controlled by socially and
economically disadvantaged individuals a substantial
factor in the award of such contracts.
The Small Business Working Group also notes that the
provisions would eliminate the notice required by Section
8(e)(1)(c) of the Small Business Act which requires the
publication of the Commerce Business Daily notice if the
award of an order would result in subcontracting
opportunities for small firms. The waiver of this notice
requirements only exacerbates our concerns with the expanded
use of task and delivery order contracts.
Two-Phase Selection Procedures
Section 1017 of the proposed Committee Substitute would
amend chapter 137 of Title 10, United States Code, which sets
forth the procurement procedures generally applicable to the
Department of Defense, the Coast Guard, and NASA, by adding a
new section 2305 specifying Two-Phase Selection Procedures.
Section 1067 would establish parallel procedures applicable
to the other civilian agencies under the new Section 303I of
the Federal Property and Administrative Services Act of 1949.
The procedures would be used in instances in which a
contractor was being selected to both design and produce (or
construct, in the case of construction) an item or property.
The statutory provision sets forth broad standards for the
use of the procedures, as well as very broad procedures
regarding the solicitation and award of the resulting
contracts.
We are concerned about the new two-phase procedures for a
number of reasons.
First, it authorizes the procuring agency to initially
screen the proposal of any interested offeror on the basis of
evaluation criteria that specifically exclude either cost or
price information. It is reasonable to assume that
procurement agencies will make use of evaluation criteria
focusing on the extent of prior experience and past
government performance. Such evaluation criteria will work to
the detriment of new entrants, likely to be small business
concerns and especially small businesses owned and controlled
by socially and economically disadvantaged individuals or
women.
Further, it is unclear whether the non-price/cost
evaluation criteria must comply with the more specific
evaluation criteria added by section 1101 (pertaining to
Title 10) or 1061 (pertaining to title 41, governing the
civilian agencies, except NASA). If the new Two-Phase
Selection Procedures were free of such requirements, it would
only compound the concerns of the Small Business Working
Group.
Finally, the relationship of the proposed Two-Phase
Selection Procedures on the acquisition of construction and
the existing statutory preference for the use of the sealed-
bid method of source selection remains unclear. Similarly, it
is unclear what its effect is on the acquisition of
architect-engineer services pursuant to the qualifications-
based source selection procedures pursuant to Title IX of the
Federal Property and Administrative Procedures Act of 1949,
despite the savings clause in Section 8008(2) of the proposed
Substitute.
Considering Contractor Past Performance in Contract Awards
Section 1091 of the Committee Substitute would amend the
OFPP Act by including requirements for the consideration of a
contractor's past performance in the award of future
government contracts.
The Small Business Working Group is concerned that the
implementation of past performance criteria easily could be
structured to become an additional obstacle for the
participation of small business concerns and small business
concerns owned and controlled by socially and economically
disadvantaged individuals or women. Such firms frequently
have a limited track record in the government marketplace.
While the provision as drafted does recognize that the
consideration of past performance should not work to the
detriment of a firm for which there is no information
regarding past performance, we believe this simple admonition
may be inadequate.
Further, the provision, as drafted, seems to provide no
opportunity for consideration of successful (or unsuccessful)
past performance in the commercial marketplace. Given the
bill's central theme of increasing the participation of
commercial products vendors, this deficiency should be
remedied.
In addition, we recommend that the measures of past
performance include recognition of a firm's compliance with
its subcontracting obligations under Section 8(d) of the
Small Business Act.
Finally, the equity of any effective system for the use of
past performance in source selection decisions is totally
dependent upon the accuracy of the processes to collect
accurate information on past performance. The Small Business
Working Group believes that these concerns must be addressed
if past performance evaluation criteria are not to become
another substantial obstacle to the participation of small
firms in federal government opportunities.
Cooperative Agreements to Procure R&D
Section 1301 of the proposed Substitute would modify
existing law regarding the use of grants, cooperative
agreements, and ``other transactions'' for the acquisition of
research projects in the field of basic and applied research
development relating to weapons systems and other military
needs. The Small Business Working Group especially is
pleased that the proposed Committee Substitute did not
extend these authorities to the civilian agencies, and
note their questionable effects when used by DoD.
Section 1301 of the House Armed Services Committee
Substitute for H.R. 2238 would add a new section 311 to the
Federal Property and Administrative Services Act of 1949,
regarding the use of cooperative agreements and ``other
transactions'' for the acquisition of ``basic applied and
advanced research.'' Under current law, only the Advanced
Research Projects Agency (ARPA) (formerly the Defense
Research Projects Agency) and other designated activities of
the Department of Defense have authority to use cooperative
agreements and ``other transactions'' to obtain what often is
called ``precompetitive research'' to meet critical national
defense needs. Such grants-type authority puts award and
administration of such agreements outside of the normal
procedures and protections applicable to procurement
contracts. The subject provision would extend this sweeping
and potentially dangerous new authority to all of the
executive agencies. The Small Business Working Group is
strenuously opposed to the general extension of such
authority for anything falling within the very broad (and
undefined) categories of ``basic, applied, and advanced
research projects.''
Our opposition is founded upon the basis that if such so-
called ``advanced research'' were awarded through a
cooperative agreement, none of the following statutes, among
others, would apply: the competition and bid protest
procedures under the Competition in Contracting Act 1984; the
disputes resolution procedures of the Contracts Disputes Act
of 1978; the participation of small businesses as prime
contractors or subcontractors under the Small Business Act;
the payment protections accorded by the Prompt Payment Act;
and the various integrity statutes designed to deter
unacceptable behavior on the part of government officials and
private sector individuals. Even ARPA has been unable to
specify what ``other transactions'' are, no less point to any
body of regulatory procedure for their award and
administration.
Procurement Protests
Sections 1403 and 1435 of the proposed Committee Substitute
would limit the rate of compensation for attorneys and expert
witnesses in the bid protest arena. One of the hallmarks of
the 1984 Competition in Contracting Act was the strengthening
of the rights of an aggrieved vendor to challenge actions by
procurement officials that were perceived to be contrary to
law or regulation. The bid protest system at the General
Accounting Office was made into a forum that could provide a
real remedy to today's abuse as opposed to merely an
admonition to the agency that an improper action should not
be repeated in a future procurement. Even more potent was the
vesting of bid protest authority in the GSA Board of Contract
Appeals for a range of procurements relating to the
acquisition of automatic data processing equipment. Since
that enactment, the procurement bureaucracy has worked
steadily to fashion means, direct or indirect, to strip the
public of these protections.
Unfortunately, the proposed Committee Substitute retains a
provision of S. 1587 that would reduce the effectiveness of
the bid protest remedies accorded to the contractor community
by the Competition in Contracting Act. Section 1403 would
limit the rate of compensation of attorneys' fees and expert
witnesses in GAO bid protest proceedings to the rates
available under the Equal Access to Justice Act (EAJA).
Section 1435 would make a parallel limitation to the
attorneys' fees and exert witnesses cost that could be
awarded to the protester winning at the GSA Board of Contract
Appeals.
The EAJA has been weakened by judicial interpretations
regarding the standard under which the government is liable
for attorneys' fees, as well as by the low fees authorized
under the Act. In the opinion of the Small Business Working
Group, Congress should be focusing on revitalizing the EAJA
and not be about the business of exporting to the bid protest
systems one of the limitations that has rendered the EAJA
essentially impotent. We urge in the strongest possible terms
that Sections 1403 and 1435 be eliminated prior to the
enactment of this legislation.
Cooperative Purchasing
At the request of the Clinton Administration, the proposed
Committee Substitute includes Section 1554 relating to
cooperative purchasing. Under this provision, states, units
of local government and special purpose governmental agencies
would be able to avail themselves of the Federal Supply
Schedules and other indefinite quantity/indefinite delivery
contracts negotiated by the Administrator of General
Services.
Unfortunately, the provision permits qualified nonprofit
agencies for the blind and other severely handicapped
operating under the authority of the Javits-Wagner-O'Day Act
to avail themselves of these same sources of supply to obtain
materials needed for the performance of their contracts with
the federal government. The small business community
consistently has expressed its concern with the unfair
competition provided by these not-for-profit entities. This
section 1554 only would make these not-for-profit entities a
more substantial threat to small firms with whom they compete
in the federal procurement market. The Small Business Working
Group urges deletion of this element of the new provision
relating to cooperative purchasing.
Contract Administration (Title II)
Contract Financing
Section 2001 would add a new Section 2307 to Title 10 of
the United States Code relating to contract financing.
Section 2051 makes a parallel amendment to the Federal
Property and Administrative Services Act of 1949 by amending
Section 305 of that Act. Section 2051 contains an explicit
provision relating to the Congressional intent that the
revised section not impair or modify the payment procedures
or protections accorded by the Prompt Payment Act, as
codified at Chapter 39 of Title 31. Unfortunately, Section
2001 does not contain a similar provision. The Small
Business Working Group strongly urges that during markup,
Section 2001 be amended to correct this very serious
deficiency.
Acceptance of Audits by Other Agencies
Sections 2201 and 2251 would partially adopt the
recommendation by the Small Business Working Group that a
contracting officer accept a pre-award audit conducted by
another federal agency, if such audit were conducted within
the last year.
Prequalification Requirements
Section 2401 of the proposed Substitute would repeal
Section 2383 of Title 10 of the United States Code. The Small
Business Working Group commends the Committees for this
action, as this provision could operate as an unfair
prequalification requirement for the participation of small
firms in the market for spare parts at the Department of
Defense.
Contract Disputes Act Improvements
Section 2552 of the proposed Committee Substitute would
make a number of amendments to the Contract Disputes Act of
1978 that would substantially improve its utility and
fairness as a disputes resolution mechanism beneficial to
small contractors. First, the provision would increase the
current $10,000 threshold for the availability of small
claims procedures to $50,000. Second, it would increase the
Act's current $50,000 threshold for the availability of
accelerated procedures before the Boards of Contract Appeals
to $150,000. Third, it would increase the Act's current
$50,000 threshold for certification of claims to $100,000.
Fourth, it would establish a six-year period for the filing
of claims unless there were an allegation of fraud on the
part of the contractor. The Small Business Working Group
commends the Committees for the adoption of these amendments,
many of which were recommended in our testimony.
However, the Small Business Working Group is concerned that
Section 2552(e) would reduce the current one-year period for
filing appeals of adverse Board of Contract Appeals decisions
to the courts to 90 days. Such a severe reduction could have
a chilling effect on the contractor's right to appeal an
adverse Board decision.
Alternative Disputes Resolution
Section 2553 of the proposed Committee Substitute would
amend the Contract Disputes Act to extend for an additional
four years the authority to use alternative disputes
resolution techniques for the resolution of contract
disputes. While the Small Business Working Group commends the
Committees for extending the expiration date until October 1,
1999, we strongly urge the Committees to actually adopt
statutory procedures to strongly encourage the procuring
agencies to make use of ADR techniques. it is no secret that
to date the procuring agencies have resisted ADR techniques
and only affirmative steps will overcome this resistance.
Expedited Resolution of Contract Administration Matters
Section 2554 of the proposed Committee Substitute would
require the issuance of FAR regulations that would contribute
to more prompt resolution of contract administration matters.
Under the provision, a contracting officer would be required
to respond to the inquiries of a small business contractor
within 30 days. If a contracting officer were unable to issue
a response with regard to an inquiry made by a small business
contractor within such 30-day period, the provision requires
a response within such period that includes a date certain by
which a response can be expected.
The small business community consistently has testified
before various committees of the Congress that steps are
needed to motivate contracting officers to promptly respond
to inquiries which are essential to contract performance by
small business contractors. All too frequently, small
business government contractors are put behind schedule or in
jeopardy of contract default due to a refusal of a
contracting officer to make a timely response to a legitimate
inquiry regarding contact specifications, terms or
conditions. The Small Business Working Group commends the
Committees for including Section 2554 as a substantial step
in the right direction.
acquisition management (title v)
Performance-Based Management Systems
Section 5001 and 5051 would require the establishment of
performance-based contract management systems within the
Department of Defense and the civilian agencies. Subsection
(b) of each section would call for the identification of
enhanced incentives for acquisition workforce personnel. The
Small Business Working Group believes that any such system of
contracting officer performance incentives should identify as
an important factor the participation as contractors,
subcontractor or suppliers of small business concerns and
small business concerns owned and controlled by socially and
economically disadvantaged individuals or women.
Defense Acquisition Pilot Programs
Section 5003 of the proposed Committee Substitute relates
to the designation of various DoD programs under the
authority of the Defense Acquisition Pilot Program
authorizing legislation. The provision would add a new
Section 840 to the authorization legislation, Subtitle D of
Title VIII of Public Law 103-160, the ``National Defense
Authorization Act for Fiscal Year 1994.'' Section 840(a)
would designate as a DoD Pilot Program the acquisition
activities of the Defense Logistics Agency's (DLA) Defense
Personnel Supply Center (DPSC) for a broad array of medical,
clothing and textile, and substance items. Given the
dramatic adverse impacts on the small business and small
disadvantaged business vendor community under DPSC's
ongoing Prime Vendor Program for certain types of medical
supplies and equipment, the Small Business Working Group
must express its strongest opposition to the inclusion of
DPSC among the proposed DOD Pilot Programs.
Further, the Department of Defense is strongly advocating
the expansion of the statutory waivers currently applicable
to the DPSC Pilot Program to include the waiver of Section
15(a) and Section 8(d) of the Small Business Act. The
recommended waiver of these statutory requirements makes
clear DPSC's ultimate objective: the elimination of small
business concerns as prime contractors or subcontractor
within the broad range of items covered by this DOD Pilot
Program. Such action would be in keeping with past adverse
experience reported by many small business firms regarding
other DLA centers.
Standards of Conduct (Title VI)
Public Comment Period on Proposed Procurement Regulations
Section 6054 of the proposed Committee Substitute would
amend Section 22 of the OFPP Act to regularly accord at least
60 days for public comments on proposed regulations. Having
adequate time to learn of, and comment on, proposed changes
to procurement regulations has been a serious problem
consistently identified by the small business community. The
Small Business Working Group commends the Committees for this
provision.
However, the Small Business Working Group recommends that
Section 6054(2) be dropped as this amendment to Section 22 of
the OFPP Act would create an immense loophole that could be
used to negate the protections for public participation
afforded by this entire existing provision of law.
Effective Dates and Implementation (Title IX)
Implementation Through the FAR
Section 9002 of the proposed Committee Substitute would
specify a precise timetable for the issuance of proposed
modifications to the FAR for the implementation of the
``Federal Acquisition Streamlining Act of 1994.'' This
timetable includes not less than 60 days for public comment
on the proposed regulations. The Small Business Working Group
would note that Section 6054(2), if improperly used, could
negate the explicit protections of this section and Section
22 of the OFPP Act.
Review of Regulations by GAO
Section 9003 of the proposed Substitute would charge GAO
with evaluating compliance by the Executive Branch with the
requirements of Section 9002 relating to the issuance of
implementing FAR coverage. The Small Business Working Group
commends the Committees for including the Committees on Small
Business of the Senate and House of Representatives as
recipients of this GAO report. As noted in testimony before
many committees of the Congress, the small business community
has had a long standing concern, and a long standing history
with ``malicious implementation'' of statutes by the
regulation writers.
Enhanced Data Collection by the FPDS
Section 9004 of the proposed Committee Substitute calls for
enhancements to the Federal Procurement Data System (FPDS) to
capture additional data elements. The Small Business Working
Group commends the Committees for the addition to this
provision. Prior to enactment of the legislation, we plan to
offer for the consideration of the Senate additional items of
information to be collected.
Ms. MOSELEY-BRAUN addressed the Chair.
The PRESIDING OFFICER (Mr. Wellstone). The Senator from Illinois is
recognized.
Ms. MOSELEY-BRAUN. Mr. President, I am a member of the Small Business
Committee, which has a real interest in this bill, because of its
impact on small and small, disadvantaged businesses. I rise today in
support of this legislation, but also in the hope that it can be
improved upon in conference.
Mr. President, S. 1587, the Federal Acquisition Streamlining Act of
1994, is a very important bill. It will have a powerful effect on small
businesses and small, disadvantaged businesses. What I want to do is to
be sure that the impact on small businesses and small, disadvantaged
businesses will be a positive and not a negative one.
The Federal Acquisition Streamlining Act of 1994 modernizes and
streamlines the existing Federal procurement process, making it easier
to obtain commercial products rather than requiring the Government to
unnecessarily design and build Government-unique products. Work on
modernizing our procurement process has been in progress since the 102d
Congress and S. 1578 is the culmination of this effort. I commend this
administration and the National Performance Review team in their
efforts to reinvent Government by cutting unnecessary time and
paperwork from the procurement process. It will save the American
taxpayers' money.
S. 1587 is a compilation of recommendations from the Section 800
Panel and the National Performance Review, along with input from other
Members of Congress, Federal agencies, and advocacy groups representing
a wide range of interests and concerns. This bill puts into law those
recommendations in an effort to establish a new, more efficient system
for American companies to do business with the Federal Government. Its
intent is straightforward, to simplify and rationalize the way the
Federal Government spends money on goods and services. It is the
cornerstone of reinventing Government. While simple, this bill is also
a part of a grand objective that requires completely changing the way
that we do business.
I applaud those objectives, Mr. President, but I want to make sure
that when we eliminate the laws that tie up the Federal Government's
ability to get goods and services cheaply and quickly, we do not at the
same time eliminate the laws that ensure that small businesses and
small disadvantaged businesses have a real opportunity to supply those
goods and services to the Federal Government on a level playing field.
As I have mentioned, many of the provisions in this bill come from
recommendations made by the Section 800 Panel, the Acquisition Law
Advisory Panel. This panel was established to review acquisition laws,
with the goal of streamlining the Federal procurement process.
Unfortunately, Mr. President, the small business community had minimal
representation on this panel. As a result, many of the small business
concerns were not a part of the panel's recommendations that are now a
part of this bill.
I want the administration and businesses, big and small, to know that
I support reforming our acquisition process, and I support this
legislation. However, we need to be judicious in how that reform is
done. And I would like, Mr. President, to quote the Small Business
Administration's Chief Counsel for Advocacy's concerns regarding this
bill:
The zeal to reform must be tempered with adequate
consideration for the concerns of the small business
community. It took many years to instill sufficient checks
and balances within the Federal procurement process to
encourage competition and increase opportunities for small,
minority, and women-owned firms. Some of these checks and
balances are now seen as impediments to streamlining the
procurement process. For reform to be meaningful and
effective, it must be balanced equitably on all stakeholders.
I think it is important to stress that the role of the SBA Chief
Counsel for Advocacy is to evaluate the impact of legislative proposals
on small businesses specifically. The Chief Counsel for Advocacy does
not represent the position of the administration, or even the SBA. The
Chief Counsel for Advocacy represents the small business community and
speaks for those interests, and that is why I quoted the statement
from a letter that I would like to have submitted into the Record at
the end of my comments, because it is so important to raise the issue
and the concerns of the small business community as we pursue this
grand design.
The Small Business Group Working on Procurement Reform, which
represents a broad range of small business groups such as the Small
Business Legislative Council, the Minority Business Enterprise Legal
Defense and Education Fund, the National Association of Women Business
Owners, the National Association of Minority Business Owners, the
National Small Business United, and the National Federation of
Independent Business does not endorse this bill in its current form.
However, these small and small, disadvantaged business groups do
recognize the need for reform in general and so have not actively
opposed this legislation at this time.
Mr. President, I would like to submit the full text of the Chief
Counsel for Advocacy's comments and those of the Small Business Working
Group on Procurement Reform into the Record at the end of my statement.
Any effort to weaken the Small Business Act in regards to
participation by small and small, disadvantaged businesses would undo
20 years of legislation designed to open up the small business
community's opportunity to do business with the Federal Government.
The laws that took 20 years to refine to help develop small and
small, disadvantaged businesses need to be kept in place because of
their importance in promoting small business and diversity in the
Federal procurement process. There are 100 major corporations in the
Federal procurement system that receive more than 60 percent of all
Government contracts. Let me reiterate that, Mr. President: 100 major
corporations receive more than 60 percent of all Government contracts.
These prime contractors, because they are paid by the taxpayers, have
an obligation, I believe, to diversify their pool of small Federal
contractors to include small businesses and small, disadvantaged
businesses. The large subcontractors of prime contractors should also
equally share in the goal of using small and small, disadvantaged
businesses.
Allowing regulatory waivers of the subcontracting requirements for
contractors and subcontractors would defeat the intent of that 20 years
of legislative effort. Reform, Mr. President, should not result in
exclusion.
While the bill as amended places greater emphasis on the use of small
and small, disadvantaged businesses by making their use a significant
factor in the award of a Federal contract--and I want to applaud the
sponsors for that initiative--the waiver provisions of this legislation
may seriously undermine much of that objective.
I am also very concerned about the bill's broad definition of
commercial items and commercial components and how this affects small
businesses and small, disadvantaged businesses. This is a critical
issue, and this very broad definition needs to be refined in order to
protect the interests of small business persons.
Under current law, there are adequate provisions for contractors who
offer truly commercial items. Current practice at GSA and other
agencies allow for companywide certification of manufacturers who
provide truly commercial products. Expanding this practice to all
agencies for the procurement of commercial items is a good idea, it
seems to me.
However, the definition of commercial items in the legislation
currently is so broad that it applies to items that may or may not be
sold commercially in the future. This broad definition could allow
firms to use an offer of a product to sell to the general public as a
means of avoiding the subcontracting requirements, and particularly
subcontracting requirements that protect and promote and help small and
small, disadvantaged businesses.
Based on the Vice President's assurance that these concerns will be
addressed in conference, I believe it is appropriate to move forward
with this bill. It is my understanding that the administration will
work with the Senate and House conferees on these important matters. I
am confident with the bipartisan leadership on this issue along with
Senators Bumpers, Glenn, and Nunn that they will work to resolve this
issue in conference in the interests of the small business community.
With that, Mr. President, I have to tell you that in my conversations
with the leadership there has been demonstrated a real sensitivity to
the concerns of the small business community. So I really am optimistic
that these issues can be resolved. However, I wanted to make the point
now with regard to the legislation in its current form, because this is
a matter that is entirely too grave and too important to let go without
comment.
Mr. President, I want to thank former Congressman Parren J. Mitchell
for his assistance throughout this process. The Minority Business
Enterprise and Legal Defense Fund, chaired by former Congressman
Mitchell, was an instrumental participant in the small business
community's effort to make this a balanced bill that will open rather
than foreclose opportunities for small and small, disadvantaged
businesses to market their products and services to the Government and
to major Government prime contractors and subcontractors.
Finally, I want to applaud the efforts of Vice President Gore and
Senator Glenn and Senator Nunn and again the bipartisan leadership for
taking us one important step closer to the goal of reinventing
Government. I think the sensitivity that has been shown to small and
small, disadvantaged business concerns has been impressive, and I am
confident that we will address the concerns of the small business
community in conference.
Again, Mr. President, I just wanted to rise to add my voice of
support and congratulations for this initiative for the direction in
which it is headed, but again in the process of reform I am hopeful
that we will remember the interests and concerns of the small business
community--a community that has struggled for so long to get into the
Federal procurement process. I hope that our rush to reform will not
close them out of procurement opportunities.
Mr. President, I ask unanimous consent to print in the Record the
June 6 letter from the Small Business Working Group on Procurement
Reform and the May 23 letter from the SBA Chief Counsel for Advocacy to
the chairman of the Small Business Committee.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Small Business Working Group on Procurement Reform
June 6, 1994.
Hon. Dale Bumpers,
U.S. Senate,
Washington, DC.
Dear Senator Bumpers: The Small Business Working Group on
Procurement Reform wants to take this opportunity to share
with you our observations and positions concerning S. 1587,
the ``Federal Acquisition Streamlining Act of 1994.'' The
Senate is scheduled to consider this bill at 3:30 p.m. on
Tuesday, June 7.
Although S. 1587 as reported by the Committees on
Governmental Affairs and Armed Services reflects
recommendations made by the Working Group in testimony, and
there are several additional important improvements in a
proposed Managers' Amendment, it is our judgment that we
should not endorse this legislation, given that a shift of
but a few provisions would tilt it into the category of being
a ``net loss'' for small business. Instead, we would seek to
work cooperatively with those who have sought to accommodate
small business concerns to fashion further improvements
during consideration by the Senate and during the subsequent
conference with the House of Representatives.
We do not withhold our endorsement lightly. Procurement
streamlining is and has consistently been an objective of the
small business community. As we have said previously, true
procurement streamlining must simply not make it easier for
the Government's buyers to go to work each day, but for
private sector business concerns and, especially small
business concerns, to be treated fairly in their efforts to
sell to their Government. This remains our goal and S. 1587
has been modified to reflect a greater recognition of its
legitimacy.
We ask you to give greater recognition to our objectives in
procurement streamlining as the bill and proposed amendments
are debated by the Senate. Our more specific comments on
possible amendments to S. 1587 follow:
(1) Class Waiver of the Applicability of Certain Laws to
Subcontractors. S. 1587, as reported, would authorize
procurement bureaucrats to waive the application of laws with
regard to subcontractors of prime contractors furnishing
commercial products. The Small Business Working Group is
opposed in principal to the concept of allowing unelected
career officials to waive statutes enacted by Congress. If
such waivers are truly necessary, Congress, not the
bureaucracy, should specify the waivers.
One candidate for application of this waiver authority is
of special interest to the Working Group--the requirement for
certain subcontractors to have goals for the participation of
small business concerns and small business concerns owned and
controlled by socially and economically disadvantaged
individuals. As written, the bill prohibits the regulatory
waiver of the subcontracting requirements of Section 8(d) of
the Small Business Act. We urge you to support Senator Carol
Moseley-Braun in her efforts to block any amendment that
would change current practice regarding the use of small
business concerns as subcontractors and suppliers.
(2) Market Acceptance Criteria. S. 1587 would permit
procurement regulation writers to prescribe market acceptance
criteria which an offeror would have to meet in order to sell
commercial items to the Government. Such market acceptance
criteria could be written to foreclose the participation of
fully commercial small firms with other than national
markets. We do not believe that the proposed change contained
in the Managers' Amendment precludes such an abuse. The
Working Group believes the bill should prescribe standards
for such market acceptance criteria that will not permit the
elimination of a firm solely on the basis of its volume of
sales. We urge you to support any floor amendment which would
specify statutory standards and prohibit the use of volume of
sales as a criteria. We also urge you to support any
amendment that would make a determination that a small firm
had failed to meet a market acceptance criteria a matter
subject to review by the Small Business Administration under
its Certificate of Competency Program.
(3) Response Times Left to Regulators. S. 1587 would leave
to the regulation writers the establishment of the time made
available for an offeror to submit a response to a
solicitation for a commercial item, a small purchase under
the new $100,000 Simplified Acquisition Threshold, or any
solicitation made through electronic commerce. The Small
Business Working Group is concerned that the regulation
writers will allow such response times to be set on a
contract-by-contract basis. We urge you to support any floor
amendment which would either Congressionally-prescribe, or
require that the Federal Acquisition Regulation prescribe,
minimum response times.
(4) Simplified Acquisition Procedures and ``Micro-
Purchases.'' S. 1587 exempts purchase of $2500 or less from
the so-called ``Small Business Small Purchase Reserve.'' This
purportedly was done to facilitate broader use of a
government credit card to permit non-procurement personnel to
make more purchases of commercial items from major retailers,
most of which are not small businesses. However, as written,
the provision exempts all purchases under $2500. The Small
Business Working Group believes that two amendments are
appropriate. First, there should be a linkage between the
actual use of the government credit card as a precondition to
the waiver of the Small Business Small Purchase Reserve.
Second, even when the government credit card is used,
Congress should require the Federal Acquisition Regulation
to admonish government purchasers to try to make use of
small businesses ``to the maximum extent practicable.'' We
urge you to support any floor amendment that would achieve
these two goals.
(5) Procurement Protests: Limitations on Attorneys' Fees.
The Small Business Working Group strongly opposes the
provisions in S. 1587 which would limit the amounts to which
a small business owner would be entitled to recoup for
attorneys' fees and expert witness fees upon winning a
successful bid protest. Under current law, which has worked
since 1984, a successful protestant may be reimbursed for
legal costs actually incurred, if the General Accounting
Office or the General Services Board of Contract Appeals
finds them to be reasonable. The provision would artificially
limit the legal fees that could be recouped to the maximum
hourly rate allowable under the Equal Access to Justice Act,
$75.00 per hour, which has remained unchanged since 1980.
such a limitation would have a chilling effect on the bid
protest protections afforded by the competition in
Contracting Act of 1984, falling especially hard on small
firms. We urge you to support an amendment to be offered by
Senator Paul Wellstone that would either strike this unfair
limitation completely or eliminate small firms from its
chilling effects.
(6) Alternative Disputes Resolution. S. 1587 misses the
opportunity to streamline the contracts disputes resolution
process by eliminating the government's ability to avoid the
use of alternative disputes resolution procedures when such
procedures are appropriate. We urge you to support an
amendment to be offered by Senator Paul Wellstone which would
require that a small business concern be allowed access to
ADR procedures unless the contracting officer could cite and
justify one of the statutorily-specified circumstances under
which current law deems ADR procedures to be inappropriate.
(7) Fast Pay for Small Purchases. S. 1587, as reported,
contains a provision which assures that small firms will
receive accelerated payment for performance of contracts
awarded under the accelerated procedures to be used for
contracts under the new $100,000 Simplified Acquisition
Threshold. This provision merely makes mandatory an
essentially identical fast pay provision for $25,000 small
purchases which Congress adopted on a non-mandatory basis as
part of the 1988 amendments to the Prompt Payment Act, but
which was never fully implemented. It is the understanding of
the Small Business Working Group that the Administrator for
Procurement Policy is advocating the elimination or
substantial weakening of this provision. We urge you to
oppose any effort to do so.
(8) Measuring the Effects of the $100,000 threshold. S.
1587, as reported, also assures the Congress, as well as the
small business community, will have concrete and comparable
data to permit a valid assessment of the impact on small
business concerns, including small business concerns owned
and controlled by economically and socially disadvantaged
individuals and women, of increasing the small purchase
threshold from $25,000 to $100,000. It is the
understanding of the Working Group that the Administrator
for Federal Procurement Policy is seeking modifications to
this provision that essentially will make it impossible to
analyze the effect of this dramatic four-fold increase in
the small purchase threshold. We urge you to oppose any
such amendment.
Enclosed is a copy of our April 25, 1994 Commentary of the
bill as it was considered by the Committees on Government
Affairs and Armed Services. There were virtually no
amendments made at the committee level. Also enclosed is a
``Special Report'' from The Honorable Jere W. Glover, the
recently-confirmed Chief Counsel for Advocacy at the Small
Business Administration, whose assessments in many ways
mirror the concerns that have been consistently expressed by
the Small Business Working Group.
We urge you to review and seriously consider the
recommendations by our coalition of associations serving as
advocates for small businesses, including those owned and
controlled by socially and economically disadvantaged
individuals or women.
Please help us to make acquisition streamlining a benefit,
rather than a source of new burdens for them.
If you have any questions about this statement, please
contact me at 703-684-3450.
Sincerely yours,
E. Colette Nelson,
Chair, Small Business Working Group
on Procurement Reform.
____
Small Business Working Group on Procurement Reform
Small Business Legislative Council.
Minority Business Legal Defense and Education Fund.
Latin American Management Association.
National Center for American Indian Enterprise Development.
National Association of Minority Business.
National Association of Women Business Owners.
National Minority Supplier Development Council.
Women Construction Owners & Executives, Inc.
Independent Defense Contractors Association.
Independent Gear Manufacturers Association.
Interamerican Travel Agents Society.
National Small Business United.
National Federation of Independent Business.
____
Small Business Administration,
Washington, DC, May 23, 1994.
Hon. Dale Bumpers,
Chairman, Committee on Small Business, U.S. Senate, Russell
Senate Office Building, Washington, DC.
Subject: Report on Procurement Reform.
Dear Mr. Chairman: This is a report outlining the views of
the Office of Advocacy on procurement reform.\1\ It is
prepared under the authority of 15 USC Sec. 634(f) and is
intended to echo the concerns of the small business
community. The Small Business Legislative Council, the
National Small Business United, and the National Association
for the Self-Employed agree with the opinions expressed
herein.
---------------------------------------------------------------------------
\1\The views expressed in this document are solely those of
the Chief Counsel for Advocacy and may not necessarily
reflect the views of the U.S. Small Business Administration
or the Administration.
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Currently, Congress has before it a number of reform
measures, including S. 1587, H.R. 2238, H.R. 3586, H.R. 4263
and H.R. 4328. Small firms are the engine supporting economic
growth as well as the driving force behind job creation and
innovation in America. Congressional due diligence in
considering these proposals must therefore acknowledge and
support the needs of the small business community.
The Office of Advocacy strongly endorses acquisition
reform. Few would disagree that our procurement system is too
complex, absurdly slow and frequently ineffective. However,
the zeal to reform must be tempered with adequate
consideration for the concerns of the small business
community. It took many years to instill sufficient checks
and balances within the federal procurement process to
encourage competition and increase opportunities for small,
minority and women-owned firms. Some of these checks and
balances are now seen as impediments to streamlining the
procurement process.
It is important to note that many of the proposed
legislative changes come from recommendations made by
the Acquisition Law Advisory Panel (Section 800 panel).
This panel was established by the 1991 National Defense
Authorization Act (Public Law 101-510, Section 800) to
review acquisition laws, with a goal of streamlining the
Department of Defense acquisition process. Unfortunately,
the small business community had minimal representation
and input to the panel.
For reform to be meaningful and effective, it must be
balanced equitably on all stakeholders. It would be a costly
injustice, as well as an exercise in regression, if the small
business community were to be sacrificed at the expense of
less competition, higher government costs and fewer
procurement opportunities for small firms.
We ask that you consider the following concerns in
deliberations.
simplified acquisition threshold
A critical component of the reform legislation focuses on
increasing the small purchase threshold from $25,000 to
$100,000. We support increasing the threshold if, and only
if, specific measures are implemented to protect the small
business community and enhance its ability to participate in
federal procurement opportunities. These measures include:
Linking any increase in the small purchase threshold with a
concurrent obligation to implement a coordinated government-
wide electronic equivalent of the Commerce Business Daily.
While increasing the threshold will simplify the
procurement process, it will hurt small firms if acquisition
opportunities are not adequately publicized. If the threshold
is increased without directly linking it to the
implementation of an electronic commerce system, competition
most likely would be minimized and many small firms would be
precluded from participating in procurement opportunities.
Reduced competition would increase the government's
procurement costs.
We support the implementation of the federal acquisition
computer network (FACNET) or similar government-wide
electronic commerce system.
Maintaining the small business small purchase reserve for
purchases of less than $2,500.
Awards to small businesses, especially emerging firms, will
be reduced if purchases of less than $2,500 are not reserved.
We agree that very small purchases should be easy to make and
require minimal paperwork. Small firms can accommodate this
need for greater simplicity.
For many small firms, very small purchases are the bread
and butter of their operations. These same firms are often
not able to compete for large federal acquisitions.
Requiring detailed reporting under the Federal Procurement
Data System for any purchase of $10,000 or more.
This requirement is necessary to measure and evaluate the
results of increasing the threshold.
Requiring the implementation of fast pay procedures in
contracts awarded to small firms under the small purchase
threshold.
The Prompt Payment Act Amendments of 1988 give executive
agencies authority to implement fast pay procedures for
contracts under the small purchase threshold. However,
implementing regulations have basically neutered this
provision, allowing agencies to avoid compliance.
Fast pay provisions in contracts below the threshold would
require small firms to be paid by agencies within 15 days
from the receipt of an invoice and require the availability
of payment through electonic transfer upon contractor
performance. Fast pay procedures, enacted in the Amendments
of 1988, should be mandated.
Linking the threshold for small claims procedures to the
simplified acquisition threshold.
This would raise the current small claims threshold from
$10,000 to $100,000, allowing access to simplified and more
efficient claims procedures.
Amending the Davis-Bacon Act, the Services Contract Act and
the Miller Act.
The Davis-Bacon Act requires contractors for federal and
public works projects to pay workers the local prevailing
wage rate, usually union wages. The act was intended to
prevent construction companies offering substandard wages
from underbidding local companies. The threshold for coverage
under the act was set at $2,000 in 1931 and remains the same
today.
The Service Contract Act of 1965 has purposes for service
contracts similar to those of the Davis-Bacon Act for
construction. It applies to contracts in excess of $2,500. It
requires contractors to pay the minimum prevailing wage and
specified fringe benefits.
The Miller Act requires that for any federal construction
contract worth $25,000 or more, the contractor must be
bonded.
We urge that the threshold for these laws be increased to
$100,000 or the established level for Simplified Acquisition
Threshold. Further, we urge that the Federal Acquisition
Regulations be modified, with respect to the Miller Act, to
provide alternative payment protections for small business
subcontractors and suppliers.
commercial items
We support efforts to make a easier for firms to sell, and
the government to buy, commercial products for government
use. Reliance on commercial items is one of the identified
purposes of the Competition in Contracting Act of 1984. We
support a clear preference for the use of commercial items
and performance specifications. However, aspects of the
proposed legislation could be very damaging to small firms.
Broad Definitions for Commercial Items
Proposed definitions for commercial items are excessively
broad. Not only do they include items that have been sold
commercially, but they also include those which might (or
might not) be sold commercially in the future. We are
concerned that a firm could use its purported offer of a
product to the general public, whether or not there is a
commercial market, as a means of avoiding various statutory
requirements. Further, some proposals would modify the
definition of commercial items to include all forms of
commercial services.
If the definition of commercial items were made excessively
broad and specific statutory requirements eliminated as
proposed, procurement opportunities for small firms would be
significantly reduced.
Preserve Subcontracting Plans for Subcontractors
Proposed legislation would free subcontractors supplying
commercial items or commercial components for government-
designed products from any requirement to utilize small or
small disadvantaged concerns as ``second-tier''
subcontractors and suppliers. We strongly oppose any effort
to eliminate subcontracting plan requirements. Such changes
in the law would have a significantly adverse effect on the
ability of small firms to participate in contract
opportunities.
The current law requiring the flow-down of subcontracts to
small firms has helped many small, minority and women-owned
businesses.
We endorse recommendations of the small business community
to make small business and small disadvantaged business
participation at the subcontract level a criterion for the
award of prime contracts.
Market Acceptance
It is proposed that new procedures for the acquisition of
commercial items be developed. We support the development of
procedures that provide consistent, government-wide
implementation, as opposed to allowing individual agencies to
establish their own definition for market acceptance.
Further, implementing regulations that will ultimately
define ``market acceptance criteria'' must be sensitive to
the needs and especially the limitations of the small
business community. We are concerned that such criteria could
be used to set standards beyond the reach of many small
firms. For instance, if market acceptance criteria were used
as a test for ``responsiveness,'' some firms would be
eliminated from competing, before having any recourse to
SBA's Certificate of Competency (CoC) program.
The CoC program is a very successful government initiative
that has helped many small firms. It would be counter
productive to allow the development of procedures that could
cancel the intended purpose of the CoC program.
pilot programs
We acknowledge the need for and the advantages of testing
and implementing alternative procurement methods. However, we
oppose efforts that would grant sweeping authority to
specific federal agencies and eliminate long-standing
statutory protections for small businesses.
Test Authority
It has been proposed that the Administrator for the Office
of Federal Procurement policy (OFPP), in considering
procurement pilot programs, be given authority to waive not
only regulations, but also laws, by simply giving notice to
the Congress. Waivers of statutes should not be so lightly
undertaken, and we oppose such blanket authority granted to
the Administrator of the OFPP.
If statutory waivers are deemed necessary to conduct a
pilot program, specific Congressional approval should be
obtained and OFPP should be required to obtain the
concurrence of the agency or agencies responsible for the
statutes to be waived or suspended.
Defense Acquisition Pilot Program
Proposals would give the Secretary of Defense authority to
waive or limit the applicability of specific statutory
requirements in implementing the Defense Acquisition Pilot
Program. The proposed waivers include eliminating small
business set-asides, the small business small purchase
reserve, and small and small disadvantaged business
subcontracting plans. We oppose these proposals.
The small business programs cited have been established as
an integral part of the protections for small businesses.
These programs assure those new to the federal procurement
environment that opportunities will be made available to
them. The gradual elimination of these protections not only
removes specific opportunities from the table, but also sends
a message that efficiency of administration and convenience
of established relationships are more important than helping
small firms to grow and participate in the federal
procurement process.
Extension of the DoD Minority Enterprise Development Program
Proposals would extend to civilian agencies the minority
enterprise development program currently authorized for DoD
under 10 U.S.C. 2323 (formerly Section 1207 of Public Law 97-
661, the National Defense Authorization Act for 1987). We
recommend that the SBA play an integral role in the
development and oversight of an extended Minority Enterprise
Development Program.
Contract Goals
We support increasing the government-wide goal for
participation by small business concerns for 20 percent to 25
percent of the total value of all prime contract awards for
each fiscal year. Further, we support establishing a goal for
the participation of women-owned businesses at 5 percent of
the aggregate value of all prime contracts.
Best-value contracting
Best-value practices are intended to help government
agencies receive the best overall value in contracts it
awards. Under such practices, contracts are awarded by
considering a combination of price and technical factors,
with technical factors taking precedence. The concept removes
the super- preference for low-bid proposals and puts best-
value negotiated solicitations on equal footing with
sealed bid solicitations.
We support the intended purpose of best-value practices,
but are concerned with the level of subjectivity such
practices provide to contract officers in weighing individual
evaluation factors. We recommend that any effort to broadly
incorporate the use of best value practices include specific
provisions that would clarify evaluation factors, specify
weighing procedures and minimize subjectivity.
Truth in Negotiations Act
The Truth in Negotiations Act (TINA) requires contractors
to submit cost or pricing data before the award of a contract
or a contract modification that is expected to exceed
$500,000. Similar requirements are imposed on subcontractors,
who must submit such data to the prime contractor. Current
law stipulates that the $500,000 threshold be reduced back to
the 1984 level of $100,000 after December 31, 1995. We
support proposals to keep the TINA threshold at $500,000.
past performance practices
Proposals would alter regulations that require federal
agencies to consider a contractor's past performance in
awarding future contracts. We are concerned that such
practices could impede the ability of small firms, especially
minority and women-owned businesses, to obtain federal
contracts. This is because most small firms have limited
experience in the government market place.
We recommend that any provisions to consider past
performance in the evaluation process include specific
measures to consider both commercial and federal past
performance; include recognition of a firm's compliance with
its subcontracting obligations under Section 8(d) of the
Small Business Act and clearly acknowledge that a company
would not be penalized if no information regarding past
experience was available.
technical data rights
In addition to pending procurement reform legislation,
Congress is considering recommendations prepared by the DoD/
Industry Technical Data Advisory Committee (Section 807
committee).
The 807 committee is charged with preparing recommendations
that will lead to the development of technical data
regulations that are equitable to all federal contract
participants in the creation and use of technical data. This
is a powerful issue, charged with controversy and fueled by
different agendas. Although the committee sought consensus
among divergent groups, its recommendations appear to side
with the interest of predominantly large firms.
A key recommendation made by the committee is that data
rights be determined based upon whether development is
charged to DoD as a direct or indirect charge, rather than
whether it is paid for by the DoD. In the interests of small
business, greater competition and reduced government costs,
we urge that all data paid for by the taxpayer be available
for competitive purposes, irrespective of whether it is
charged to the government as a direct or indirect cost.
Further, we urge that careful consideration, as well as a
comprehensive analysis of the projected impact on small
manufacturers, be undertaken before technical data
regulations are changed.
Procurement reform is desperately needed and should be
vigorously pursued. We strongly endorse efforts to simplify
and streamline the procurement process. However, reform must
be equitable and not carried on the back of the small
business community.
The Office of Advocacy shares the commitment of the
Congress to make meaningful reform a reality and stands ready
to work with it in that endeavor.
Sincerely,
Jere W. Glover,
Chief Counsel,
Office of Advocacy.
Ms. MOSELEY-BRAUN. I thank you very much, and I yield the floor.
The PRESIDING OFFICER. The Senator from New Mexico is recognized.
Mr. BINGAMAN. Mr. President, first, I ask unanimous consent that
Michael Hammon, a legislative fellow serving in my office, be granted
floor privileges during the consideration of this bill.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BINGAMAN. Mr. President, this day has been a long time coming.
The bill before us today, the Federal Acquisition Streamlining Act of
1994, is the product of long hours of hard work on the part of
Government and industry. As I said at the time of our markup in the
Armed Services Committee, this bill is not the cure-all to all the
problems besetting the Federal acquisition system. But it is the most
comprehensive approach to streamlining Federal acquisition in almost a
generation. It provides an essential foundation on which further
regulatory reform can proceed in the executive branch, for the majority
of the impediments in the acquisition system arise from the
encyclopedic regulations implementing statues.
Mr. President, in this bill we strip away statutory impediments--or
at least many of the statutory impediments--to efficient acquisition
which cost Government and business precious dollars. It has been said
by me and by others that today in the present system we are spending
millions to save thousands. This bill tries to correct that problem.
This bill tries to improve the ability of small business to compete,
and foster the establishment of an electronic notification system to
let everyone know what the Government wants to buy.
This effort has evolved over 8 years and several forums, starting
with the Packard Commission of 1986. Over those years a bipartisan
consensus developed that the acquisition system was broken, in large
part as the result of statutes and regulations, perhaps each well
intended taken separately, but which together resulted in an unworkable
and expensive system that drove many commercially oriented firms from
wanting to do business with the Government. Those 8 years also saw a
sharp drop in Government purchases from the economy, as defense budgets
declined, and a growing need for the Department of Defense and the
civilian agencies to make the best possible use of their limited
resources by buying commercial products wherever possible. The
acquisition system was clearly impeding such commercial-Government
integration, or commercial-military integration as Secretary Perry
calls it in the defense sphere.
Unfortunately, it proved very difficult for the acquisition system
itself to generate the sort of detailed roadmap both the executive
branch and the Congress needed to streamline the acquisition system.
Under Secretary for Acquisition Bob Costello during the Reagan
administration and the late Don Atwood, Deputy Secretary during the
Bush administration, did pursue reforms. But ultimately, they were not
on the scale required.
So in 1990, the Armed Services and Governmental Affairs Committees
tried a new approach, which I had suggested based on my experience with
the very constructive role the American Bar Association had played in
developing a uniform procurement code at the State level. We inserted
language in section 800 of the fiscal year 1991 National Defense
Authorization Act directing DOD to establish a joint Government
industry panel to carry out a detailed examination of the entire
procurement code statute by statute, with an eye toward streamlining it
significantly, and to make their recommendations in December 1992 to
whomever had just been elected President as a detailed prescription for
reform.
To their great credit under the leadership of Rear Adm. Bill Vincent,
the Section 800 Panel carried out their charter admirably, and after
over 15 months made their recommendations on time to the incoming
Clinton administration. The panel took the broadest possible
perspective of the reform task. Their report laid out a plan for reform
of the DOD acquisition system. As has been noted, they reviewed over
600 laws and recommended repeal or substantial revision of nearly 300.
It was a remarkable effort with implications for Governmentwide reform.
The panel's report and its recommendations formed a starting point
both for the Congress and for the President to consider and ultimately
laid the foundation for this bill. Last year, the staffs of the Armed
Services, Government Affairs, and Small Business Committees carried out
a detailed review of the entire report and added to it several
proposals made earlier by members, particularly Senators Glenn, Levin,
Cohen, and Roth. When the administration completed the National
Performance Review last September, we also incorporated several ideas
which had come up in that process. The product of that effort was the
bill introduced last fall.
Mr. President, since introducing the bill, the committees have had
the benefit of testimony from leaders in the DOD, OFPP, GSA, the IG
community, and, most importantly, representatives from industry
associations, dual-use contractors, small business, and professional
organizations. Prior to our markup of the bill last month, I also
sought suggestions for improvement from a wide range of people who will
put this bill into practice and who will to do business using the new
streamlined practices. Their suggestions made an important contribution
to the process. In my State of New Mexico I would like to recognize the
efforts of National Contract Management Association members in Las
Cruces, Santa Fe, and Albuquerque, Mr. Ted Asbury and Mr. Jim Gibbs of
the Associated General Contractors in Albuquerque were particularly
helpful in discussions here and in the State.
I recommend Senators Glenn and Roth for their leadership on the
Governmental Affairs Committee and Senators Nunn and Thurmond for their
leadership on the Armed Services Committee, all of which was vital and
instrumental in getting to where we are now. Also, Senators Bumpers and
Pressler and their staff on the Small Business Committee were essential
to the success of this process. Lastly, the Clinton administration has
been very cooperative in suggesting areas for improvement. The whole
effort would have stopped may times, if it hadn't been for the
dedicated and professional, bipartisan effort of many members and staff
who believed that this was a unique opportunity to substantially reform
a broken procurement system.
Mr. President, let me just allude to the staff people on the three
committees who did the most work on this. On the Armed Services
Committee, it was Andy Effron and Jon Etherton; from Governmental
Affairs, Tom Sisti, John Brosnan, Peter Levine, Mark Forman, and Paul
Brubaker; from the Small Business Committee, it was Bill Montalto; in
my own office, it was Ed McGaffigan, John Gerhart, and Mike Hammon.
The concept for all to remember in this bill ``streamlining.'' This
bill strips away statutory impediments, which have made the Government
procurement system impossible to administer, inefficient and wasteful
of tax dollars, and a system whose complexity, intrusiveness, and
paperwork deter large and small businesses who want to contract with
the Government. We change and improve that system for all participants.
Mr. President, I want to describe some of the major reforms in this
bill. First and most important, it encourages the purchase of more
commercial goods and services. Too often, we have developed new,
sometimes very risky items that were over specified or gold plated,
simply because the system directed the use of layers of Government
specifications and boilerplate. No one was incentivized to ask at the
outset of the process whether such specifications were needed, if they
added value to the item, or if a commercial product or nondevelopmental
item would do the job adequately.
This bill changes that process by directing the contracting agency to
look at commercial or nondevelopmental products first. An important
benefit of using commercial and off-the-shelf items is to eliminate
duplication, save money, and speed up the acquisition process. When
that happens, we also are able to take better advantage of emerging
technology, which is generally today driven by the enormously larger
commercial marketplace, not by Government.
As an example, right now it takes years to buy desktop computers. As
we all know, things change pretty rapidly in the computer field, and by
the time the contract is awarded and the computers arrive, they are
often obsolete. The same principle applies to large procurements, too.
Some major development programs are taking up to 10 years, while the
commercial sector develops the same or similar items in a fraction of
that. In the time it has taken the Air Force to buy the C-17, Boeing
has designed, tested, and produced the 747-400, 757, and 767. And they
recently rolled out the new 777. Current procedures don't serve the
taxpayer well and must be streamlined. This bill authorized the Defense
Department to test six pilot programs to see if similar streamlining
can reap dividends on those major acquisitions, as well.
You've heard, Mr. President, about the provisions for buying fewer
over-specified Government unique items, especially when commercial
products versions would do the job cheaper and faster. What I want to
talk about now is the how this bill reduces the intrusion Government
has made into the workplace.
For commercial products, we no longer require the contractor to
submit volumes of cost and pricing data to prove the Government is
getting a fair price or to set up Government-unique cost accounting
systems. Time and again, we have been told that such practices have no
counterpart in the business world and are the biggest burden we put on
companies doing business with the Government. With the emphasis on
using more commercial practices, the contracting officer will use the
same market information a commercial firm would. He or she can verify
the fairness of the price by doing market research using catalogs,
prices negotiated in previous competitions, or prices set by law. To
determine if it is a commercial item, this bill defines very general
criteria about products that are customarily available in the
commercial marketplace or could readily be modified for Government use,
without changing its inherent commercial nature. Finally, we encourage
use of commercial products by relieving both commercial and
noncommercial contractors of many regulatory requirements when they are
producing commercial products for the Government.
Another major streamlining vehicle in this bill is the simplified
acquisition threshold. Current law has shown that simple procedures can
save time and money for purchases under the ``small purchase
threshold'' of $25,000. This bill expands application of streamlined
procedures, which will be developed by the administration, to a new
simplified acquisition threshold of $100,000, as recommended by both
the Vice President's National Performance Review and the Section 800
Panel.
Though such procurements comprise only 16 percent of all funds
expended, they constitute 96 percent of all contracts. You can see, Mr.
President, that if we can streamline those procurements, reform will
happen on a broad scale. Purchases below that $100,000 simplified
acquisition threshold will be exempt from the paperwork and
certifications for numerous acts such as the contingent fees
certification, identification of suppliers and sources, and many others
difficult to certify and requiring the contractor to submit huge
amounts of paperwork and comply with procedures that have no commercial
counterpart.
This bill sets a course toward eliminating a myriad of procedures and
rules that are costly, burdensome, and wasteful for application of
streamlined procedures, which will be developed by the administration,
to a new simplified acquisition threshold of $100,000, as recommended
by both the Vice President's National Performance Review and the
Section 800 Panel.
Though such procurements comprise only 16 percent of all funds
expended, they constitute 96 percent of all contracts. You can see, Mr.
President, that if we can streamline those procurements, reform will
happen on a broad scale. Purchases below that $100,000 simplified
acquisition threshold will be exempt from the paperwork and
certifications for numerous acts such as the contingent fees
certification, identification of suppliers and sources, and many others
difficult to certify and requiring the contractor to submit huge
amounts of paperwork and comply with procedures that have no commercial
counterpart.
This bill sets a course toward eliminating a myriad of procedures and
rules that are costly, burdensome, and wasteful for Government and
business alike. In fact, these wasteful procedures are costing the
taxpayers more money. Too often we are spending millions of dollars in
paperwork and time of Federal employees to ``save'' thousands on a
contract. Repeatedly, we have heard testimony that such procedures
drive the cost of goods and services up as much as 30 percent over the
same or similar items in the commercial marketplace. In a time of
defense drawdown and declining budgets, we simply cannot tolerate that
kind of waste, if we ever could. We must assure our constituents that
every tax dollar buys as much as possible and we spend only what is
necessary to do the job.
We don't recommend that the Government's interests go unprotected,
however. For the first time, the agency must consider contractor past
performance in the source selection. The agency may ask the offeror to
submit information on past contracting actions at the Federal, State,
local, and commercial levels. With reports on hand, the Government will
be able to choose, not just the best proposal, but the contractor with
the best performance record, as well.
Innovative acquisition management provisions recommended by Senator
Roth are incorporated. They reward acquisition personnel based upon
performance. They will be measured against cost, schedule, and how well
the item performs. The bill sets a goal of 90 percent of all programs
to meet those goals, in accordance with the recommendations of the
National Performance Review. Further, the public's interest will be
addressed when the Comptroller General reports on the progress the
executive branch makes in implementing these procedures 1 year after
the regulations go into practice. If there are areas to be tightened up
or new problems to address, we will do it. This is a sweeping step
we're taking in this bill, but it's the first, not the last step on the
journey.
Finally, Mr. President, we broaden small business' access to the
Federal acquisition system. Small business is the engine of the economy
and the sector that provides the greatest opportunity for job creation.
We have traditionally reserved a large segment of contracts for small
business, and this bill continues that process. All procurements below
the $100,000 simplified acquisition threshold are reserved for small
business. Recall, that was 96 percent of all contracts the Government
makes. Further, we speed up the notification process when the
Government wants to buy from small business, and we bring the
notification process into the electronic age.
A system of electronic commerce will be established by the Office of
Federal Procurement Policy. That will be an electronic bulletin board
that any businessman with a computer and modem can get procurement
information from instantaneously. That will do away with the current
system of physically going to the contracting office to read
procurement notices on the bulletin board. It will be particularly
helpful in rural States like New Mexico where we have many qualified
small businesses, but not conveniently located near the Government
agency doing the procurement. This bill also speeds up the protest
system to provide for quick notification and resolution to business in
the event of a dispute. And finally, and perhaps most importantly, the
bill speeds the payment process on Federal contracts, a significant
contribution from our colleagues on the Small Business Committee.
Mr. President, we all have heard loud and clear from our constituents
that they don't think the Government works any more. Polls indicate
that this concern is higher than ever; nearly 70 percent don't trust
Government to do the right thing. We in Congress are held to a
particularly high standard, as the people's representatives. This bill
sends a clear signal that we have gotten the message and are making the
drastic changes the people want. We must seize this opportunity to
reform the broken Federal acquisition system and make Government more
efficient, more responsive, and more business-like.
Privilege Of The Floor--S. 1587
Mr. GLENN. Mr. President, I ask unanimous consent that Marie Muller,
who is a fellow working with Senator Wellstone's office, be granted the
privilege of the floor during the consideration of S. 1587.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GLENN. Mr. President, I think just the very number and varied
committee assignments of the people who have spoken on the floor today
in their opening statements indicate how this bill falls across a
number of jurisdictions and why it has been a major effort to get this
all worked out. It has been a major effort and we are very proud of
this. I hope we can get this legislation through without having it
bogged down with too many amendments. I hope we keep amendments off of
it unless we have the type that can be approved.
But I also want to give credit to some other people: Roger Johnson
over at the General Services Administration has indicated support for
this piece of legislation; Steve Kelman of the Office of Federal
Procurement Policy has worked on this a great deal and we had many
meetings back and forth with him; Colleen Preston over at DOD, Deputy
Under Secretary for Acquisition Reform, has worked with us on this
also, and has been in many meetings on this subject.
I think Colleen Preston, and the fact there is a Deputy Under
Secretary for Acquisition Reform, indicates the new seriousness with
which DOD is approaching acquisition reform. Secretary Perry and Deputy
Secretary Deutch both indicated full support, as I indicated, in a
letter, a little while ago. They also, in private conversations, have
indicated there is nothing they place much higher priority on over at
DOD than getting this kind of acquisition reform legislation through,
as I said before, as a very major, big, first step, a starting point
toward moving toward better efficiency, not only in DOD but across the
length and breadth of Government.
Mr. ROTH. Will the Senator yield for a short comment?
Mr. GLENN. Surely.
Mr. ROTH. I would like to add to the list of people who have
contributed so much to this effort Paul Lieberman, who is a member of
the General Accounting Office, who has been on loan to my office. He
has not only devoted long hours, but his expertise has been a
significant factor.
Mr. GLENN. I am glad Senator Roth brings that up. And also the
Congressional Budget Office has worked on this with us, too. There are
many estimates back and forth. CBO, GAO, all the acronyms, the alphabet
soup of letters we have involved in Government, all were involved with
us.
Amendment No. 1748
(Purpose: To make various amendments of a technical nature)
Mr. GLENN. Mr. President, I send to the desk a technical amendment
cleared on both sides containing various technical corrections to S.
1587. We had different versions of the bill originally, and we need
this legislation to correct it. It does not make substantive policy
changes in the legislation. I ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Ohio [Mr. Glenn] proposes an amendment
numbered 1748.
Mr. GLENN. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
On page 24, line 10, strike out ``that incorporates'' and
all that follows through ``incorporated in'' on line 12, and
insert in lieu thereof ``for a commercial item other than a
commercial component, the make and model of the item being
provided in accordance with''.
On page 25, strike out lines 20 and 21, and insert in lieu
thereof the following:
``(ii) the same information that would have been provided
to the original offerors.
On page 28, between lines 22 and 23, insert the following:
``(c) Solicitation To State Number of Offerors To Be
Selected for Phase Two Requests for Competitive Proposals.--A
solicitation issued pursuant to subsection (b)(1) shall state
the maximum number of offerors that are to be selected to
submit competitive proposals pursuant to subsection (b)(3).
On page 28, line 23, strike out ``(c)'' and insert in lieu
thereof ``(d)''.
On page 29, line 3, insert end quotation marks and a period
at the end.
On page 29, strike out lines 4 through 15.
On page 50, line 21, strike out ``that incorporates'' and
all that follows through ``incorporated in'' on line 23, and
insert in lieu thereof ``for a commercial item other than a
commercial component, the make and model of the item being
provided in accordance with''.
On page 52, strike out lines 6 and 7, and insert in lieu
thereof the following:
``(B) the same information that would have been provided to
the original offerors.
On page 55, between lines 11 and 12, insert the following:
``(c) Solicitation To State Number of Offerors To Be
Selected for Phase Two Requests for Competitive Proposals.--A
solicitation issued pursuant to subsection (b)(1) shall state
the maximum number of offerors that are to be selected to
submit competitive proposals pursuant to subsection (b)(3).
On page 55, line 12, strike out ``(c)'' and insert in lieu
thereof ``(d)''.
On page 55, line 17, insert end quotation marks and a
period at the end.
On page 55, strike out line 18 and all that follows through
page 56, line 2.
On page 58, line 12, strike out ``severable contract'' and
all that follows through ``services'' on line 13, and insert
in lieu thereof ``contract for procurement of severable
services''.
On page 58, strike out line 17 and all that follows through
page 59, line 2, and insert in lieu thereof the following:
``(b) Obligation of Funds.--Funds made available for a
fiscal year may be obligated for the total amount of a
contract entered into under the authority of subsection
(a).''.
On page 63, strike out lines 11 through 14, and insert in
lieu thereof the following:
``(C) policies for ensuring that--
``(i) offerors are afforded an opportunity to submit
relevant information on past contract performance, including
performance under contracts entered into by the executive
agency concerned, contracts entered into by other departments
and agencies of the Federal Government, contracts entered
into by agencies of State and local governments, and
contracts entered into by commercial customers; and
``(ii) such information submitted by offerors is
considered.
On page 63, on line 16, strike out ``the policy'' and
insert in lieu thereof ``guidance''.
On page 63, on line 17, strike out ``may'' and insert in
lieu thereof ``should''.
On page 68, line 9, strike out ``contracting officer'' and
all that follows through line 17, and insert in lieu thereof
``contracting officer obtains, in accordance with standards
and procedures set forth in the Federal Acquisition
Regulation, information on prices at which the same or
similar items have been sold in the commercial market that is
adequate for evaluating the reasonableness of the price of
the contract or subcontract for a commercial item, or the
contract or subcontract modification, as the case may be. The
contracting officer may obtain such information from the
offeror or contractor or, when such information is not
available from that source, from another source or
sources.''.
On page 70, strike out lines 7 and 8, and insert in lieu
thereof the following:
prices at which the same or similar items have previously
been sold that is adequate for evaluating the reasonableness
of the price of the proposed contract or subcontract for the
procurement.
On page 78, line 25, strike out ``contracting officer'' and
all that follows through page 79, line 8, and insert in lieu
thereof ``contracting officer obtains, in accordance with
standards and procedures set forth in the Federal Acquisition
Regulation, information on prices at which the same or
similar items have been sold in the commercial market that is
adequate for evaluating the reasonableness of the price of
the contract or subcontract for a commercial item, or the
contract or subcontract modification, as the case may be. The
contracting officer may obtain such information from the
offeror or contractor or, when such information is not
available from that source, from another source or
sources.''.
On page 84, line 22, strike out ``such offeror'' and all
that follows through line 23, and insert in lieu thereof
``the same or similar items have previously been sold that is
adequate for evaluating the reasonableness of the price of a
proposed contract or subcontract for the procurement.''.
On page 110, line 20, insert ```commercial component',''
after ```commercial item',''.
On page 116, line 15, insert ```commercial component',''
after ```commercial item',''.
On page 125, between lines 18 and 19, insert the following:
(h) Relationship to Prompt Payment Requirements.--Section
2307(f) of title 10, United States Code, as amended by
subsection (f), is not intended to impair or modify
procedures required by the provisions of chapter 39 of title
31, United States Code, and the regulations issued pursuant
to such provisions of law, that relate to progress payment
requests, as such procedures are in effect on the date of the
enactment of this Act.
On page 125, line 19, strike out ``(h)'' and insert in lieu
thereof ``(i)''.
On page 126, line 4, strike out ``(i)'' and insert in lieu
thereof ``(j)''.
On page 133, line 2, strike out ``amendments'' and insert
in lieu thereof ``amendment''.
On page 133, line 3, strike out ``are'' and insert in lieu
thereof ``is''.
On page 159, strike out lines 6 through 20 and insert in
lieu thereof the following:
not required--
``(A) where the contractor or subcontractor is a foreign
government or agency thereof or is precluded by the laws of
the country involved from making its records available for
examination; and
``(B) where the agency head determines, after taking into
account the price and availability of the property and
services from United States sources, that the public interest
would be best served by not applying paragraph (1).
``(3) Paragraph (1) may not be construed to require a
contractor or subcontractor to create or maintain any record
that the contractor or subcontractor does not maintain in the
ordinary course of business or pursuant to another provision
of law.
On page 175, line 12, strike out ``for a'' and all that
follows through ``officer's decision'' on line 13, and insert
in lieu thereof ``made to a contracting officer''.
On page 175, line 17, strike out ``render a decision'' and
insert in lieu thereof ``reply''.
On page 175, line 20, strike out ``reach a decision'' and
insert in lieu thereof ``respond''.
On page 175, between lines 20 and 21, insert the following:
The provisions shall not apply to a request for a contracting
officer's decision under the Contract Disputes Act of 1978
(41 U.S.C. 601 et seq.).
On page 196, line 12, strike out ``(as defined'' and all
that follows through ``Administrator of General Services)''
on line 14.
On page 203, between lines 3 and 4, insert the following:
``(5) A requirement that a contracting officer consider
each responsive offer timely received from an eligible
offeror.
On page 204, line 7, strike out ``section 8(a)'' and insert
in lieu thereof ``subsection (a) or (c) of section 8''.
On page 205, line 2, strike out ``will vest'' and insert in
lieu thereof ``vests''.
On page 205, line 4, strike out ``and''.
On page 205, line 10, strike out the period at the end and
insert in lieu thereof ``; and''.
On page 205, between lines 10 and 11, insert the following:
(3) funds are available for making the payment.
On page 206, between lines 13 and 14, insert the following:
(c) Notice Not Required in Electronic Commerce.--Subsection
(c)(1) of such section, as amended by section 1055(b), is
further amended--
(1) by redesignating subparagraphs (A), (B), (C), (D), (E)
and (F) as subparagraphs (B), (C), (D), (E), (F), and (G),
respectively; and
(2) by inserting above subparagraph (B), as so
redesignated, the following new subparagraph (A):
``(A) the proposed procurement is conducted by means of
electronic commerce pursuant to a system that, as determined
by the Administrator for Federal Procurement Policy, has the
capabilities described in subsections (a) and (b) of section
4015 of the Federal Acquisition Streamlining Act of 1994;''.
On page 206, line 14, strike out ``(c)'' and insert in lieu
thereof ``(d)''.
On page 209, beginning on line 7, strike out ``and
solicitations.'' and all that follows through line 11, and
insert in lieu thereof ``of solicitations and for deadlines
for the submission of offers under solicitations. Each
minimum period specified for a notification of solicitation
and each deadline for the submission of offers under a
solicitation shall afford potential offerors a reasonable
opportunity to respond.''.
On page 209, line 20, insert ``the Federal Acquisition
Regulation contains the provisions specifically required by
subsection (c) and'' after ``if''
On page 213, line 8, strike out ``(B)'' and insert in lieu
thereof ``(C)''.
On page 220, strike out line 11 and all that follows
through page 221, line 15, and insert in lieu thereof the
following:
(C) in paragraph (3)--
(i) by striking out ``small purchase threshold'' and
inserting in lieu thereof ``simplified acquisition
threshold''; and
(ii) by striking out ``small purchase procedures'' and
inserting in lieu thereof ``simplified procedures'';
(E) in paragraph (4), by striking out ``small purchase
procedures'' and inserting in lieu thereof ``the simplified
procedures''; and
(F) by inserting after paragraph (1) the following new
paragraph (2):
``(2)(A) The Administrator of General Services shall
prescribe regulations that provide special simplified
procedures for acquisitions of leasehold interests in real
property at rental rates that do not exceed the simplified
acquisition threshold.
``(B) For purposes of subparagraph (A), the rental rate or
rates under a multiyear lease do not exceed the simplified
acquisition threshold if the average annual amount of the
rent payable for the period of the lease does not exceed the
simplified acquisition threshold.''.
On page 224, strike out line 15 and all that follows
through page 225, line 18, and insert in lieu thereof the
following:
SEC. 4101. ACQUISITIONS GENERALLY.
On page 225, line 19, strike out ``(b)'' and insert in lieu
thereof ``(a)``.
On page 225, line 22, strike out ``(c)'' and insert in lieu
thereof ``(b)``.
On page 227, line 5, strike out ``(d)'' and insert in lieu
thereof ``(c)``.
On page 227, strike out line 10, and insert in lieu thereof
the following:
SEC. 4102. ACQUISITIONS FROM SMALL BUSINESSES.
On page 227, strike out lines 17 and 18, and insert in lieu
thereof the following:
SEC. 4103. CONTRACTING PROGRAM FOR CERTAIN SMALL BUSINESS
CONCERNS.
On page 268, line 7, insert ``(a) Increased Period.--''
before ``Section''.
On page 268, between lines 17 and 18, insert the following:
(b) Technical Amendment.--Section 22(d) of such Act is
amended by designating the second sentence as paragraph (3).
On page 285, line 3, strike out the end quotation marks and
the period following the end quotation marks.
On page 285, between lines 3 and 4, insert the following:
``(3) In conducting market research, the head of an
executive agency should not require potential sources to
submit more than the minimum information that is necessary to
make the determinations required in paragraph (2).''.
On page 286, line 4, insert ``or executive orders'' after
``law''.
On page 287, line 13, insert ``(1)'' after ``Acceptance.--
''.
On page 287, line 17, strike out ```(1)'' and insert in
lieu thereof ```(A)''.
On page 287, line 18, strike out ```(A)'' and insert in
lieu thereof ```(i)''.
On page 287, line 20, strike out ```(B)'' and insert in
lieu thereof ```(ii)''.
On page 287, line 23, strike out ```(2)'' and insert in
lieu thereof ```(B)''.
On page 287, after line 25, insert the following:
``(2) The Federal Acquisition Regulation shall provide
guidance to ensure that the criteria for determining
commercial market acceptance include the consideration of--
``(A) the minimum needs of the executive agency concerned;
and
``(B) the entire relevant commercial market, including
small businesses.
On page 288, line 23, strike out the end quotation marks
and the period following the end quotation marks.
On page 295, line 7, insert a comma after ``section
4023(a)''.
On page 295, line 9, strike out ``section 4041'' and insert
in lieu thereof ``section 4023(a)''.
On page 298, line 19, insert ``(a) Office of Federal
Procurement Policy Act Amendment.--'' before ``Section''.
On page 299, lines 1 and 2, strike out ``subsection
(a)(1).'' and insert in lieu thereof ``paragraph (1).''.
On page 299, at the end of line 3 add the following: ``The
Federal Acquisition Regulation shall specify a minimum period
for submission of a response to a solicitation of offers for
a contract for the acquisition of commercial items.''.
On page 299, between line 3 and 4, insert the following:
(b) Savings Provision.--The deadlines for submission of
offers that are in effect in accordance with section 18(a) of
the Office of Federal Procurement Policy Act (41 U.S.C.
416(a)) and section 8(e) of the Small Business Act (15 U.S.C.
637(e)) shall continue to apply to contracts for the purchase
of commercial items until the limits prescribed pursuant to
paragraph (4) of section 18(a) of the Office of Federal
Procurement Policy Act (as added by subsection (a)) are
incorporated in the Federal Acquisition Regulation, as
required by such paragraph.
On page 300, strike out lines 7 and 8, and insert in lieu
thereof the following:
(3) subsections (a) and (d) of section 8 of the Small
Business Act (15 U.S.C. 637); or
On page 303, between lines 1 and 2, insert the following:
(e) Requirement for Clarity.--Officers and employees of the
Federal Government who prescribe regulations to implement
this Act and the amendments made by this Act shall make every
effort practicable to ensure that the regulations are concise
and are easily understandable by potential offerors as well
as by Government officials.
On page 303, line 2, strike out ``(e)'' and insert in lieu
thereof ``(f)``.
On page 303, line 19, insert at the end the following:
``The report shall include the Comptroller General's
evaluation of the extent to which the departments and
agencies of the Federal Government, in implementing this Act
and the amendments made by this Act, are reducing acquisition
management layers and associated costs.''.
Mr. GLENN. Mr. President, I ask unanimous consent that an analysis of
the manager's amendment be printed in the Record.
I do not think there is any further debate. I urge adoption of the
amendment.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Manager's Amendment Analysis
Sec. 1014, p24 concerning agency debriefings for DOD would
be clarified so that information concerning the make and
model of a commercial item incorporated into a proposal need
not include commercial components and on p25 so that it is
clear that information provided all offerors under a
resolicitation or new round of best and final offers would be
the same as that which was offered to the original offers in
the debriefing. Sec. 1064 regarding civilian agencies is
clarified in the same manner.
Sec. 1017, p28 establishing a new two-phase selection
process for DOD would be clarified to provide that the
maximum number of offerors that are to be selected to
participate in step two of the procedure is to be set forth
in the solicitation and the definition of the two-phase
procedures is removed as redundant. The same changes are made
in sec. 1067 regarding two-phase procedures for civilian
agencies.
Sec. 1073, p58 concerning contracts for severable services
would be clarified by specifically referring to ``contracts
for severable services'' and by providing that funds made
available for a fiscal year may be obligated for the total
amount of the contract.
Sec. 1091, p63 concerning OFPP Act amendments regarding
consideration of past performance would be clarified to
specify the type of information that may be submitted by
offerors and that the OFPP Administrator shall prescribe
policy regarding the retention of such information.
Sec. 1204, p68 creating a new TINA exception in title 10
for commercial items would be amended to make clear that
information concerning price reasonableness may be obtained
from the offeror when it is not available from other sources.
The same change would be made in sec. 1251 for civilian
agencies.
Sec. 1206, p70 providing for regulations regarding types of
information needed to determine price reasonableness when
TINA does not apply would be clarified to ensure that such
information is only that which is needed for a price
reasonableness determination. The same clarification would be
made in sec. 1251 for civilian agencies.
Sec. 1501, p110 and sec. 1151, p116 listing items defined
in the OFPP ACT referred to in titles 10 and 41 would both be
amended to add ``commercial component.''
Sec. 2001, p125 regarding contract financing provisions for
DOD would be amended by adding subparagraph (h) concerning
the relationship to prompt payment requirements which was
inadvertently omitted.
Sec. 1051, p133 regarding contract financing for civilian
agencies would be corrected by substituting ``amendment'' for
``amendments'' and substituting ``is'' for ``are.''
Sec. 2251, p159 concerning audit authorities for civilian
agencies would be amended by relocating paragraph (3) of
subsection (d).
Sec. 2554, p175 requiring contracting officer responses to
inquiries from small businesses would be clarified to ensure
that the provision not impact the contract disputes process.
Sec. 3052, p196 concerning definition of advisory and
assistance services would be clarified by removing reference
to Federal Information Management Regulation.
Sec. 4011, p203 regarding new simplified acquisition
threshold would be clarified by providing that regulations
implementing simplified procedures provide that contracting
officers consider each timely responsive offer from an
eligible offeror.
Sec. 4012, p204 concerning small business reservation under
the simplified acquisition threshold would be clarified to
state that nothing in the section is to preclude an award
pursuant to subsection (c) of section 8 of the Small Business
Act.
Sec. 4013, p205 concerning prompt payment for procurements
under the simplified acquisition threshold would be corrected
by substituting ``vests'' for ``will vest'' and making other
minor corrections.
Sec. 4014, p206 concerning procurement notice under the
simplified acquisition threshold would be clarified by
including a reference to the waiver of notice requirements
under electronic commerce pursuant to sec. 4015.
Sec. 4015, p209 concerning electronic commerce under the
simplified acquisition threshold would be clarified to
provide that the FAR must specify minimum periods for
notification of solicitations and deadlines for submission of
offers prior to the OFPP Administrator's certification that
electronic commerce has been implemented so that existing
notice requirements may be waived.
Sec. 4022, p213 concerning applicability of DOD laws under
the simplified acquisition threshold would be corrected by
removing a typographical error.
Sec. 4072, p220 and p221 regarding simplified procedures
for leases below the simplified acquisition threshold would
be relocated to be under section 303g of Federal Property
Act.
Sec. 4101, p224 and sec. 4102, p225 regarding the
applicability of certain labor laws to the construction of
vessels for DOD and civilian agencies would be removed as it
was erroneously included in the bill.
Sec. 6054, p268 regarding notice period for significant
changes to acquisition regulations would be clarified.
Sec. 8002, p285 concerning preference for commercial items
would be clarified to ensure that agencies in conducting
market research not require the submission of more than the
minimum information necessary.
Sec. 8003, p286 concerning, among other things, contract
clauses to be used in commercial acquisitions would be
clarified to ensure that clauses required by executive orders
are included in commercial solicitations.
Sec. 8003, p287 concerning, among other things, market
acceptance provisions would be clarified to ensure that the
FAR implementation of market acceptance include consideration
of agency minimum needs and the entire relevant commercial
market, including small business.
Sec. 8005, p295 and 298 concerning the applicability of
certain provisions of law to contracts and subcontracts for
commercial items would receive misc. technical corrections.
Sec. 8006, p299 concerning the prescription of flexible
deadlines for the submission of offers for commercial items
would be clarified to ensure the FAR specify a minimum period
for the submission of a response to a commercial solicitation
that the deadlines in current law continue to apply until the
new deadlines are implemented.
Sec. 8008, p300 concerning provisions not intended to be
affected by title VIII would be clarified by adding a
reference to subsection (d) of section 8 of the Small
Business Act and by removing an erroneous reference to ``any
other provision of that Act.''
Sec. 9002, p303 concerning the implementation of the Act
would be clarified to provide that the implementing
regulations be concise and easily understandable.
Sec. 9003, p303 concerning Comptroller General evaluation
and reports on the implementation of the Act would be
clarified to provide that the report include GAO's evaluation
of the agencies' reduction of acquisition management layers
and associated costs.
The PRESIDING OFFICER. If there be no further debate, the question is
on agreeing to the amendment.
The amendment. (No. 1748) was agreed to.
Mr. GLENN. Mr. President, I move to reconsider the vote.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. BOND. Mr. President, I have had for some time a considerable
interest in the procurement practices of the Department of Veterans
Affairs. I am seeking assurance from my colleagues, the chairman,
Senator Glenn, and the ranking minority member, Senator Roth, that the
provisions of this legislation do apply to that agency and its
subordinate elements, including the Veterans Health Administration.
It is my understanding the title V of S. 1587 creates management
incentives for the Federal bureaucracy to use commercial products when
these products are found to be more cost effective.
It is my further understanding that title VIII of S. 1587 establishes
a process for promoting the acquisition of commercial products. In
particular, section 8002 requires commercial items be considered to
fulfill agency needs. Will these provisions apply to the management
practices of the Veterans Health Administration and provide incentives
for them to use commercial software to meet the automation requirements
for support of the VA health system including administrative, financial
and clinical functions? These products are readily available and in use
throughout the private sector.
Mr. ROTH. Let me assure my colleague from Missouri, Senator Bond,
that it is my understanding of the provisions of S. 1587 that the
Senator describes will most certainly apply to the Veterans Affairs
Department and its subordinate elements including the Veterans Health
Administration. It was the clear intent of the committee that the
Federal bureaucracy be given incentives to use commercial products to
fulfill their acquisition needs. The language of section 5051, in
conjunction with the provisions of title VIII, will provide a direct
financial incentive for the acquisition work force at the Department of
Veterans Affairs to use commercial items to save time and money, while
meeting agency requirements.
Mr. GLENN. I concur in the statements of my colleagues from Missouri
and from Delaware about the intent of S. 1587.
Mr. GORTON. Mr. President, I compliment the chairman, Senator Glenn,
and the ranking member, Senator Roth, for bringing before the Senate an
important piece of legislation designed to simplify and streamline our
overwhelming complex Federal procurement laws. I applaud their efforts
and tireless work in crafting this bill.
There is one particular provision contained in S. 1587 that I would
like to clarify. It is section 4102(c), which repeals the Walsh-Healey
Public Contracts Act of 1936. Recently, I learned of a small,
disadvantaged business owner in my home State of Washington who was
disqualified from an unrestricted procurement contract based solely on
noncompliance with the Walsh-Healey Act. The businessman, Mr. Larry
Ramirez, was the lowest bidder. However, because he did not meet the
definition of a ``regular dealer'' as required by the Walsh-Healey Act,
he was disqualified. Consequently, the Government had to buy from
another source and ended up paying approximately $68,000 more for the
products.
Numerous studies have advocated the repeal of Walsh-Healey--most
recently, the report of the DOD Acquisition Law Advisory Panel and Vice
President Gore's report of the National Performance Review. They
concluded that Walsh-Healey was redundant because most of its
provisions have been superseded by other Federal legislation.
Section 4102(c) of this bill follows that advice by repealing the
Walsh-Healey Act, except for the purpose of authorizing the Secretary
of Labor to define the terms ``regular dealer'' and ``manufacturer.'' I
learned that the committee chose this course of action because these
definitions authorized in Walsh-Healey are used in a number of other
laws, including the Small Business Act. Instead of amending each and
every one of those statutes, the committee has instead left the
definitions in place.
It is my understanding that the intent of section 4102(c) is to
eliminate the requirement that a contractor meet the Walsh-Healey
definitions of ``regular dealer'' or ``manufacturer'' in order to
qualify for unrestricted procurement. This means that a business
bidding on an unrestricted procurement contract would not be
disqualified solely because it does not meet these Walsh-Healey
definitions.
For restricted procurement, such as some small business set-asides,
meeting those definitions may still be a requirement. Depending on the
specific law governing the situation, a business may still have to
adhere to the definitions of ``regular dealer'' or ``manufacturer'' in
order to secure a contract. I understand that the committee did not
want to dismantle the protections afforded by small business
procurement laws, because these definitions help protect the Government
from shady businesses or fly-by-night operations.
For specific laws where these Walsh-Healey definitions are
maintained, the Secretary is authorized to issue new definitions of
``regular dealer'' and ``manufacturer.'' This is because many people
think the original definitions may be antiquated. With the rise of new
and important business practices, such as Just-In-Time inventory, the
committee felt it was desirable to allow the Secretary of Labor to
issue new definitions that may take into consideration these changing
business practices and climates.
I ask the distinguished chairman of the committee, Senator Glenn, and
the distinguished ranking member, Senator Roth, if my understanding of
the intent of section 4102(c) is correct.
Mr. GLENN. I am happy to answer the Senator's question. This Senator
from Washington [Mr. Gorton] is correct in his understanding of the
intent of the provision. S. 1587 repeals the Walsh-Healey Act, except
for authorizing the Secretary of Labor to define the terms ``regular
dealer'' and ``manufacturer.''
Meeting the definitions of ``regular dealer'' and ``manufacturer''
found in Walsh-Healey will no longer apply to unrestricted procurement
contracts, but may still apply to restricted procurement, as the
Senator from Washington pointed out.
Mr. ROTH. I concur with the chairman. The Senator from Washington's
understanding of section 4102(c) is correct.
Mr. GORTON. I thank both the chairman and the ranking member.
Mr. COCHRAN addressed the Chair.
The PRESIDING OFFICER. The Senator from Mississippi is recognized.
Amendment No. 1749
(Purpose: To require boards of contract appeals to provide district
courts of the United States with advisory opinions when requested in
certain cases)
Mr. COCHRAN. Mr. President, I send an amendment to the desk and ask
for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Mississippi [Mr. Cochran] proposes an
amendment numbered 1749.
Mr. COCHRAN. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
On page 176, between lines 2 and 3, insert the following
sections:
SEC. 2555. AUTHORITY FOR DISTRICT COURTS TO OBTAIN ADVISORY
OPINIONS FROM BOARDS OF CONTRACT APPEALS IN
CERTAIN CASES.
Section 10 of the Contract Disputes Act of 1978 (41 U.S.C.
609) is amended by adding at the end the following new
paragraph:
``(f)(1) Whenever an action involving an issue described in
paragraph (2) is pending in a district court of the United
States, the district court may request a board of contract
appeals to provide the court with an advisory opinion on the
matters of contract interpretation at issue.
``(2) An issue referred to in paragraph (1) is any issue
that could be the proper subject of a final decision of a
contracting officer appealable under this Act.
``(3) A district court shall direct any request under
paragraph (1) to the board of contract appeals having
jurisdiction under this Act to adjudicate appeals of contract
claims under the contract or contracts being interpreted by
the court.
``(4) Within ninety days after receiving a request for an
advisory opinion under paragraph (1), a board of contract
appeals shall provide the advisory opinion to the district
court making the request.''.
Mr. COCHRAN. Mr. President, I originally offered an amendment on this
subject at the markup of this bill. The chairman, the distinguished
chairman of the committee, Mr. Glenn, and the chairman of the Armed
Services Committee, Mr. Nunn, asked that I withdraw it and work with
their staffs prior to floor action. Both staffs were very helpful and
the product of our efforts is the pending amendment.
The original amendment was offered to resolve an issue that occurs
when a contract dispute involves an allegation of fraud. A contract
claim is resolved through a process established by the Contract
Disputes Act, whereby the dispute is adjudicated first by the
contracting officer, and if appealed, by the Board of Contract Appeals
or Court of Federal Claims. This process was designed to permit
contract issues to be settled by experts in those areas.
If, however, there is an allegation of fraud, the entire case is
turned over to the U.S. district court, which resolves the fraud and
contract disagreement, under the False Claims Act. My original
amendment would have permitted the contract issues to be resolved by
the contracting chain, while the fraud allegations were simultaneously
handled by the district court. This revised amendment continues the
practice of sending the entire matter to the district courts, but
permits the district court to obtain advisory opinions on specific
contract issues from the board of contract appeals.
While this approach does not guarantee that the experts will decide
contract matters, I believe that, in practice, the district courts will
avail themselves of the assistance of the boards of contract appeals,
and the process will be improved.
I appreciate very much the efforts of the majority and minority
staffs of not only the Governmental Affairs and Armed Services
Committees, but also of the Small Business Committee. A great deal of
effort has gone into this amendment, and I feel that it represents a
step in the right direction. I ask for the support of all Senators for
this amendment.
The PRESIDING OFFICER. Is there further debate on the amendment?
The Senator from Ohio is recognized.
Mr. GLENN. Mr. President, Before we vote on this, let me say we have
gone through this. I appreciate very much that the Senator from
Mississippi was willing to withdraw his proposed amendment that day in
committee.
It would have delayed the bill in committee. We would not have been
able to get it out on the floor. As everybody knows, we are beginning
to get short on legislative time already this year. It would have
delayed the markup on the bill. We probably would not have had it out
yet. The Senator very graciously agreed to withdraw it and try to work
that out in the committee with his staff and our staff. They were able
to do that.
I wish to thank him for that. It is great he was willing to do that.
We have worked it out, and we are happy to accept this. It has been
accepted on both sides now, if we wish to proceed to a vote.
The PRESIDING OFFICER. If there is no further debate on the
amendment, the question is on agreeing to the amendment.
The amendment (No. 1749) was agreed to.
Mr. ROTH. Mr. President, I move to reconsider the vote by which the
amendment was agreed to.
Mr. GLENN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. GLENN. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. GLENN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
Amendment No. 1750
Mr. GLENN. Mr. President, I send to the desk an amendment for my
colleague, Senator Simon, and Senator D'Amato. It strikes section 3051
of the bill. That section consolidates and revises the statutory
authority governing Government-owned factories and arsenals.
In striking this provision, there is not a rejection of the proposal
in the bill on the merits. As I understand it, there is a feeling that
the merits on this issue should be considered in the context of the
overall review of depot matters and not on the streamlining bill.
This amendment has been cleared on both sides.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Ohio [Mr. Glenn] for Mr. Simon, for
himself, Ms. Moseley-Braun, and Mr. D'Amato, proposes an
amendment numbered 1750.
The amendment is as follows:
In S. 1587 strike out on page 194 line 7 through page 195
line 14 (Section 3051).
Mr. SIMON. Mr. President, Senator Moseley-Braun, Senator D'Amato, and
I are submitting this amendment on military arsenals because we
question the permissiveness of the language in section 3051 of S. 1587.
While we understand the Section 800 Panel looked at the arsenal laws
for the Army, Navy, and Air Force and decided to consolidate the
language, there is a valid reason why the regulations evolved
differently over the years.
The Navy and the Air Force do not rely as heavily on arsenals as the
Army does. The Army is the biggest user of our country's arsenals and
owns most of them. Therefore, Congress should support the full
utilization of these taxpayer-owned assets. By eliminating the language
of section 3051, we wish to ensure that the military services maintain
our arsenal infrastructure while at the same time giving them the
flexibility to shop around for the best value.
The PRESIDING OFFICER. Is there any further debate on the amendment?
If not, the question is on agreeing to the amendment.
The amendment (No. 1750) was agreed to.
Mr. GLENN. Mr. President, I move to reconsider the vote by which the
amendment was agreed to.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. FORD addressed the Chair.
The PRESIDING OFFICER. The Senator from Kentucky is recognized.
Amendment No. 1751
(Purpose: To make unallowable certain costs to influence legislative
action by legislative bodies of political subdivisions of States)
Mr. FORD. Mr. President, I send an amendment to the desk and ask for
its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Kentucky [Mr. Ford] proposes an amendment
numbered 1751.
Mr. FORD. Mr. President, I ask unanimous consent that the reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
On page 133, strike out line 22 and all that follows
through page 134, line 3, and insert in lieu thereof the
following:
(a) Unallowability of Costs To Influence Local Legislative
Bodies.--Subsection (e)(1)(B) of section 2324 of title 10,
United States Code, is amended by striking out ``or a State
legislature'' and inserting in lieu thereof ``, a State
legislature, or a legislative body of a political subdivision
of a State''.
(b) Comptroller General Evaluation.--Section 2324 of such
title is amended by striking out subsection (l)
(c) Covered Contract Defined.--Subsection (m) of such
section is amended to read as follows:
On page 138, line 8, strike out ``or a State legislature''
and insert in lieu thereof ``, a State legislature, or a
legislative body of a political subdivision of a State''.
Mr. FORD. Mr. President, I rise today in support of the Hatch/Ford
amendment to the Federal Acquisition Streamlining Act, S. 1587. Our
amendment is short and sweet and to the point. It prohibits the use of
Federal funds to lobby State and local governments.
Currently, there is a prohibition against using these funds to lobby
the Congress and this amendment extends this worthwhile provision down
the ladder to State and local governments. What is good for us will
also be good for them. As a former Governor of the great Commonwealth
of Kentucky, I have seen what can happen in this area. More and more,
it is important to ensure that the money we send out isn't used to
improperly influence a General Assembly or a city council. Not one
penny from the Federal Government should be used in this way. It is not
right and this amendment will stop it.
This is good government plain and simple and I am proud to join my
colleague from Utah in a bipartisan approach to preventing this type of
behavior from escalating out of hand.
Mr. President, it is my understanding this amendment has been cleared
on both sides. I appreciate that, and I am grateful.
We now have a prohibition of States using funds that we have
appropriated for certain projects to be used to send people up here to
lobby us for various and sundry programs. What this does is the
reverse. It prevents the Federal bureaucrats from going down to the
local communities or States and lobbying them to take on these major
programs so that those who are in charge of that project will be able
to spend the money.
I think if the project is good, they will get applications. They do
not need to be lobbied either way. This just prohibits the lobbying of
the local communities from Washington to the community.
I yield the floor.
The PRESIDING OFFICER. Is there any further debate?
Mr. GLENN. Mr. President, this has been cleared by both staff and the
committees. We support the amendment as recommended by the Senator from
Kentucky.
The PRESIDING OFFICER. If there is no further debate, the question is
on agreeing to the amendment.
The amendment (No. 1751) was agreed to.
Mr. GLENN. Mr. President, I move to reconsider the vote by which the
amendment was agreed to.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. GLENN. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. GRASSLEY. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 1752
(Purpose: To ensure accountability for payments under simplified
acquisition procedures)
Mr. GRASSLEY. Mr. President, I send an amendment to the desk and ask
for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:
The Senator from Iowa [Mr. Grassley] proposes an amendment
numbered 1752.
On page 205, between lines 10 and 11, insert the following:
(a) Disbursements To Be Matched With Obligations.--The
simplified acquisition procedures shall include procedures
that ensure that each request for a disbursement is matched
with a particular obligation before the disbursement is made
under the payment terms provided for under subsection (a).
Mr. GRASSLEY. Mr. President, the amendment has been read in its
entirety. I hope that it is recognized as what I consider to be a
friendly and a clarifying amendment to the committee's amendment to
section 4013 of the bill pertaining to fast payment procedures.
I ask unanimous consent that Senator Roth be added as a cosponsor to
the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GRASSLEY. Mr. President, I understand the committee will add
language to section 4013 that certain payments can only be written
against accounts with positive balances. My amendment would provide
even more specific direction. It would address the committee's concerns
and then some.
My amendment specifies that disbursing officials must match payments
with obligations before these accelerated payments are made.
My concern about the need to match disbursements with obligations
stems from a recent case of James E. McGill in Norfolk, VA. And I have
spoken about this case on many occasions in morning business throughout
this spring.
Using a very simple but clever scheme, Mr. McGill was able to steal
$3,025,670.99 from the Military Sealift Command. He did it by
submitting 114 fraudulent claims between 1989 and 1993. Mr. McGill
delivered no goods and he did absolutely no work, and he had no trouble
getting paid by the Military Sealift Command.
Mr. McGill operated undetected for almost 4 years. This went on for
almost 4 years because the Military Sealift Command had no functioning
internal controls to block the flow of money into the hands of crooked
contractors like McGill. The Military Sealift Command has a standing
policy of not matching disbursement with obligations. This policy
leaves the Military Sealift Command's financial resources vulnerable to
theft and abuse.
The payments to McGill broke every rule in the books, including the
$25,000 limit for small, open purchases. Mr. McGill was caught. He
pleaded guilty and was sentenced to 7 years and 3 months in prison on
May 12 of this year.
My amendment would require that disbursements covered by Section 4013
be matched with obligations before those payments are made. I
understand the need for making prompt payment on work performed in
accordance with the terms of a contract. That is very good. But
disbursing officials must always check first to determine that payments
are legitimate. This matching procedure is the purpose of my amendment
and it will accomplish that purpose.
I yield the floor.
Mr. GLENN. Mr. President, I compliment Senator Grassley for bringing
this up. One of the things that came out of some of our committee
hearings was the fact that these disbursements were being made
sometimes in very, very large amounts of money; up in the billions were
being made on occasion where no bills had even been sent in by the
contractors--one example in addition to the ones that Senator Grassley
just mentioned.
So I think this is good. Before we go to a vote on this, one area I
wanted to have checked--and staff is checking on that right now--is
what this might prompt as far as administrative requirements not in
place right now. Obviously, we are in favor of having the kind of
matching that Senator Grassley wants, but I would propose we wait just
a few moments before we vote on this amendment so we can perhaps get an
answer to some questions I and my staff had.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. GLENN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GLENN. Mr. President, we are prepared to vote on the amendment
now and recommend its acceptance. It has been accepted on both sides.
The PRESIDING OFFICER. Is there any further debate on the amendment?
If not, the question is on agreeing to the amendment.
So the amendment (No. 1752) was agreed to.
Mr. GLENN. Mr. President, I move to reconsider the vote.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. GLENN. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. FORD. Madam President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mrs. Boxer). Without objection, it is so
ordered.
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