[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.
---------------------------------------------------------------------------
       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.

                          ____________________