[Congressional Record Volume 141, Number 84 (Friday, May 19, 1995)]
[Extensions of Remarks]
[Pages E1077-E1079]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E1077]]

               THE FEDERAL ACQUISITION REFORM ACT OF 1995

                                 ______


                      HON. WILLIAM F. CLINGER, JR.

                            of pennsylvania

                    in the house of representatives

                         Thursday, May 18, 1995
  Mr. CLINGER. Mr. Speaker, today I am introducing legislation, on 
behalf of myself and National Security Committee Chairman Floyd Spence, 
and other members of our committees, to further reform the inefficient 
and Byzantine Federal procurement process. This legislation will 
complement the work we started last year with the enactment of the 
Federal Acquisition Streamlining Act of 1994 [FASA].
  Each year, our Government spends about $200 billion on goods and 
services, ranging from weapons systems to computer systems to everyday 
commodities. The current system costs too much, involves too much 
redtape, and ill-serves both the taxpayer and industry.
  From the time the Second Continental Congress established a 
Commissary General in 1775, the procurement system has commanded the 
attention of both public officials and the American taxpayer. 
Unfortunately and all too often, the attention has focused on 
individual abuses rather than the overall system. Over the years, in 
response to these horror stories, Congress passed many laws--long and 
short, significant and trivial, new and old--which standing alone were 
not overly harmful, but when added together created an increasingly 
overburdened mass of statutory requirements.
  In December 1994, a report prepared for the Secretary of Defense 
found that, on average, the Government pays an additional 18 percent on 
what it buys solely because of the requirements it imposes on its 
contractors. This confirmed the average estimate by major contractors 
surveyed by GAO that the additional costs incurred in selling to the 
Government are about 19 percent. While some of the Government's unique 
requirements certainly are needed, we clearly are paying an enormous 
premium for them--billions of dollars annually.
  And this is only part of the Government's inflated cost of doing 
business--for it includes only what is paid to contractors, not the 
cost of the Government's own administrative system. The Government's 
contracting officials are confronted with numerous mandates of their 
own, often amounting to step-by-step prescriptions that increase staff 
and equipment needs, and leave little room for the exercise of business 
judgment, initiative, and creativity.
  FASA was a direct attack on a procurement system that had gone 
haywire--it applied some common sense approaches to the bureaucracy to 
reduce the inefficiencies of the system, get some
 real cost savings for the taxpayer, and reduce the burdens on both 
Government contracting officials and those who sell to them.

  But FASA only went part of the way. In many respects, we still are 
guided today by the same considerations the Commissary General faced in 
1775: How to provide meaningful competition, obtain quality goods at 
reasonable prices, and ensure accountability of public officials for 
public transactions. And too, as in 1775, we are under great budgetary 
constraints that drive us to look at ways to meet our goals, yet do so 
in a way that is affordable and uses common sense.
  This legislation we are introducing today represents a significant 
shift in the operation of our Federal procurement system to meet the 
needs of the American taxpayer. The proposal would:
  Establish commercial-like procedures by freeing commercial businesses 
from remaining Government data and audit requirements; simplifying the 
sale of commercial items to the Government; promoting the Government's 
use of commercial sources; and eliminating the guess-work from the 
current bid protest and dispute resolution maze by creating a single 
administrative entity to handle such matters with a single set of 
efficient procedures.
  Promote better Government-industry relationships by repealing 
provisions of law that currently impede communication between the 
Government and industry.
  Foster long-term relationships with quality suppliers--much like 
commercial businesses do.
  Maximize competition by permitting the Government to provide for 
meaningful competition--not competition for competition's sake--which 
would allow firms to concentrate their energies and resources on 
government business that they can realistically meet.
  Some may say we should rest on our laurels, and let the system absorb 
the changes made last year by FASA. But we must never hesitate to do 
more or do better. The fundamental changes we are proposing today are 
necessary to move the Federal procurement system into the 21st century.
 The Federal Acquisition Reform Act of 1995 Section-by-Section Analysis

                          Title I--Competition

     Section 101--Improvement of competition requirements
       Subsection (a) would amend 10 U.S.C. 2304(A) governing 
     armed services acquisitions to establish a new standard of 
     competition for the acquisition of goods and services--
     ``maximum practicable'' competition. This would replace the 
     current requirement that all sources be given the ``right'' 
     to be considered for government contracts whether or not the 
     source has a realistic chance of supplying goods or services 
     of the requisite quality at a reasonable price. The new 
     standard would permit the government to focus on a meaningful 
     competition among sources who can meet or exceed the 
     government's requirements. In order to parallel the new 
     competition standard the subsection would also amend 10 
     U.S.C. 2304(g)(3) which sets forth the standard for the use 
     of competition in the simplified procedures for acquisitions 
     under the simplified acquisition threshold to provide that 
     agencies obtain competition to the ``extent practicable'' 
     consistent with the particular requirement solicited.
       The subsection would eliminate the archaic ``preference'' 
     accorded the use of sealed bidding in 10 U.S.C. 2304(a)(2).
       The subsection would further streamline and modernize the 
     current competition requirements by amending 10 U.S.C. 
     2304(b)(1) to eliminate from statute the long list of 
     circumstances under which an agency may exclude a particular 
     firm in order to maintain an alternate source for goods or 
     services and would place the discretion for the use of this 
     authority in the contracting agencies.
       Similarly, the subsection would eliminate the maze of 
     rules, paperwork-generating approval requirements, and 
     detailed instructions in 10 U.S.C. 2304 (c), (d) and (e) that 
     currently govern the use of ``other than competitive 
     procedures'' and substitute a simple provision stating that 
     competitive procedures must be used unless such procedures 
     are not feasible or appropriate. The use of ``other than 
     competitive procedures'' must be justified and approved in 
     accordance with simplified standards to be set forth in the 
     FAR.
       Subsection (b) would replicat the above changes in title 41 
     governing the acquisitions of civilian agencies.
       Subsection (c) would amend the Office of Federal 
     Procurement Policy Act (OFPP Act) at section 18 (41 U.S.C. 
     416) to establish a uniform notice requirement for 
     acquisitions between $10,000 and $25,000 and make other 
     conforming changes. Subsection (d) would amend 18 U.S.C. 637 
     to remove duplicative provisions concerning notice and 
     obsolete provisions regarding the use of other than 
     competitive procedures.
       Subsection (e) would amend the OFPP Act at 41 USC 414 to 
     integrate the new competition standard into the enumerated 
     executive agency procurement responsibilities and at 41 USC 
     418 to remove obsolete language regarding competition 
     advocates.
     Section 102--Definition relating to competition requirements
       The section would amend the OFPP Act at 41 USC 403 to 
     define the new standard of ``maximum practicable 
     competition.'' According to the definition, the standard is 
     achieved when a maximum number of responsible or verified 
     sources (consistent with the particular government 
     requirement) are permitted to submit offers on the 
     procurement. The section would also provide for other 
     amendments to the OFPP Act, title 10, the Federal Property 
     Act, and other laws to conform them to the new competition 
     standard.
     Section 103--Contract solicitation amendments
       The section would amend 10 USC 2305 (a) and (b) governing 
     armed services acquisition to eliminate a provision 
     concerning solicitation specifications that is inconsistent 
     with the new competition standard and to further conform the 
     provision regarding the competitive range. The section would 
     provide for amending the Federal Property Act at 41 USC 253a 
     and 253b in the same manner.
     Section 104--Preaward debriefings
       The section would amend 10 USC 2305(b) and the Federal 
     Property Act at 41 USC 253b to augment the new debriefing 
     requirements added by the Federal Acquisition Streamlining 
     Act of 1994 (FASA) to permit a firm removed from the 
     competitive range to request a debriefing after receiving 
     notice of the removal, but before award. The agency may deny 
     the request if it is not in the government's best interest to 
     hold a preaward debriefing when requested, but the request 
     [[Page E1078]] must be made by the firm or it will lose the 
     right to obtain a post award debriefing.
     Section 105-Contract types
       The section would amend 10 USC 2306 and 41 USC 254 to 
     provide that the selection of contract type is to be governed 
     by market conditions, established commercial practice and 
     sound business judgement. To further the commercialization of 
     the government's acquisition process, existing fee limits on 
     specified contract types are to be eliminated. The section 
     would also eliminate from title 10 service-specific 
     provisions that set forth a 6 percent fee limit on architect-
     engineering services contracts. It would add a new section 
     2332 to title 10 to provide the authority to procure such 
     services for civil works.
     Section 106--Contractor performance
       The section would add a new provision to the OFPP Act to 
     establish in the FAR an alternative quality-based competition 
     system for meeting the government's repetitive needs. Firms 
     would be included as ``verified'' contractors after passing a 
     competitive scrutiny based on an assessment of the firm's 
     business practices, level of quality, and demonstrated 
     contract performance. Once in the system, firms would become 
     eligible to compete with other ``verified'' firms in 
     acquisitions conducted within the system. The 
     ``verification'' could be revoked for failure to maintain the 
     requisite performance quality. The existing qualification 
     requirements in 10 USC 2319 and 41 USC 253c would be 
     repealed.

                       Title II--Commercial Items

     Section 201--Commercial item exception to requirement for 
         cost or pricing data and information limitations
       The section would amend 10 USC 2306a and 41 USC 254b--the 
     so-called ``Truth in Negotiations Act'' (TINA) provisions--to 
     exempt all acquisitions for commercial items which fit within 
     the definition of commercial item in the OFPP Act at 41 USC 
     403 from the requirement to submit certified cost or pricing 
     data.
       The section would also eliminate the data and audit 
     requirements applicable to some commercial items under the 
     current TINA provisions. The section would conform the TINA 
     provisions regarding the submission of information to be 
     considered in determining price reasonableness when certified 
     cost and pricing data are not required either because a TINA 
     exemption applies or the acquisition is not expected to 
     exceed the $500,000 TINA threshold. The amended provisions 
     would state that the FAR shall provide appropriate 
     limitations on information that should be considered in 
     determining price reasonableness, including specific limits 
     on information requests relating to commercial items. Finally 
     the section would strike subsections (h) in titles 10 and 41 
     as no longer needed.
     Section 202--Application of simplified procedures to 
         commercial items
       The section would amend 10 USC 2304(e), as added by section 
     101(a) and 41 USC 253, as added by section 101(b), to provide 
     that all acquisitions for a commercial item, no matter what 
     its dollar value, can be conducted pursuant to special 
     simplified commercial-type procedures that currently are 
     authorized for acquisitions below the simplified acquisition 
     threshold. The section would also amend the OFPP Act to 
     conform the notice provisions for commercial items to the use 
     of simplified procedures.
     Section 203--Amendment to definition of commercial items
       The section would amend the OFPP Act at 41 USC 403(12)(F) 
     to remove the requirement in the definition of commercial 
     services added by FASA that they be sold based on established 
     ``catalog'' prices. To be considered ``commercial'' services 
     under this section they would have to offered and sold at 
     ``established prices'' rather than at established ``catalog'' 
     prices. Since commercial services are often offered at prices 
     that may not fit the strict definition of a catalog (e.g., 
     commercial price lists, advertisements, etc.), the section is 
     intended to more accurately reflect the commercial market, 
     yet ensure that the services are clearly defined and actually 
     available commercially.
     Section 204--Inapplicability of cost account standards to 
         contracts and subcontracts for commercial items
       The section would amend the OFPP Act at 41 USC 422(f)(2) to 
     make it clear that all contracts for commercial items are 
     exempt from the burdens of the cost accounting standards. 
     This provision would complement sections 201 which exempt all 
     acquisitions for commercial items from the requirement to 
     submit certified cost or pricing data as well as from the 
     accompanying audit requirements.

                Title III--Additional Reform Provisions

     Section 301--Government reliance on the private sector
       The section would amend the OFPP Act by adding a new 
     section 17 providing that it is the policy of the government 
     to rely on commercial sources to supply its needs. The policy 
     that would be set forth in this section has been the policy 
     underpinning the government's acquisition system since 1955 
     and reflects the language currently in Office of Management 
     and Budget Circular A-76.
     Section 302--Elimination of certain certification 
         requirements
       The section would provide for the elimination of specified 
     certification requirements currently in statute and would 
     require the removal of current regulatory certifications 
     unless retention is supported by a written justification. The 
     section would also amend the OFPP Act to prohibit the 
     inclusion in the FAR or agency procurement regulations of new 
     certification requirements unless mandated by statute or 
     justified in writing. The provision would retain the 
     underlying prohibitions but eliminate what, in many cases, 
     are non-value added certification requirements which often do 
     more to deter participation in the government market rather 
     than the prohibited conduct.
     Section 303--Amendment to commencement and expiration of 
         authority to conduct certain tests of procurement 
         procedures
       The section would amend section 5061 of FASA, 41 USC 413 
     note, to permit the OFPP Administrator to exercise the 
     authority granted in FASA to test ``innovative'' procurement 
     procedures without having to wait for the implementation of 
     other FASA provisions.
     Section 304--International competitiveness
       The section would amend 22 USC 2761(e) to eliminate the 
     requirement for recoupment of non-recurring research and 
     development charges for products sold through the foreign 
     military sales program. This fee or tax to be paid the 
     government for products developed under government contracts 
     disadvantages U.S. companies when selling American products 
     in international markets.
     Section 305--Procurement integrity
       The section would amend the OFPP Act at 41 USC 423 to 
     repeal the current so called ``Procurement Integrity'' 
     provisions and its complex system of certifications and 
     substitute a direct prohibition against the unauthorized 
     disclosure and receipt of procurement-sensitive information. 
     One who would violate the prohibitions of the section would 
     be subject to criminal and civil penalties and appropriate 
     administrative actions. The section would contain 
     prohibitions and remedies which would be similar to those 
     regarding the disclosure of procurement-sensitive information 
     contained in the current ``Procurement Integrity'' 
     provisions. Finally, the section would eliminate the 
     remaining agency-specific post-employment restrictions which 
     became redundant with the passage of the Ethics Reform Act of 
     1989.
     Section 306--Further acquisition streamlining provisions
       The section would amend several provisions of the OFPP Act 
     to update and clarify the statement in 41 USC 404 of OFPP's 
     purpose and to repeal unneeded or obsolete provisions at 41 
     USC 401, 402, 407, 409 and 410.

              Title IV--Streamlining of Dispute Resolution

                     Subtitle A--General Provisions

     Section 401--Definitions
       The section would set forth the definitions of the terms
        needed to create and operate the new consolidated United 
     States Board of Contract Appeals for the resolution of the 
     government's contract disputes and review of bid protests. 
     The new Board would replace the current agency boards of 
     contract appeals and the General Accounting Office (GAO) 
     bid protest section. The definitions of ``protest,'' 
     ``interested party,'' and ``prevailing party'' would 
     parallel those set forth in FASA in connection with the 
     General Services Board of Contract Appeals (GSBCA).

   Subtitle B--Establishment of the United States Board of Contract 
                                Appeals

     Section 411--Establishment
       The section would establish the Board in the executive 
     branch as an independent establishment.
     Section 412--Membership
       The section would provide that the Board consist of judges 
     appointed by the chairman. New judges would be selected and 
     appointed in the same manner as administrative law judges 
     pursuant to 5 USC 3105 with the additional requirement that 
     they have at least 5 years public contract law experience. 
     Current board judges and certain GAO employees would be 
     considered qualified to be Board judges.
     Section 413--Chairman
       The section would provide for the designation of the 
     Chairman by the President and for the Chairman's executive 
     and administrative responsibilities as well as for the 
     designation of Vice Chairmen by the Chairman.
     Section 414--Rulemaking authority
       The section would provide that the board may establish 
     necessary procedural rules and regulations and would prohibit 
     the review of such rules and regulations by any other agency 
     or person.
     Section 415--Litigation authority
       The section would provide that attorneys designated by the 
     board may represent the board in civil actions.
     Section 416--Seal of the board
       The section would provide for a seal of office.
     Section 417--Authorization of appropriations
       The section would provide for the authorization of sums to 
     be appropriated for fiscal year 1997 and beyond.

    Subtitle C--Functions of United States Board of Contract Appeals

     Section 421--Alternate dispute resolution service
       The section would provide offer alternate dispute 
     resolution services for any contract-related disagreement.
     Section 422--Alternative dispute resolution of disputes and 
         protests submitted to board
       The section would provide that a Board judge or attorney 
     shall meet with the parties [[Page E1079]] to the protest or 
     dispute to attempt to resolve the matter through use of an 
     alternate method of dispute resolution.
     Section 423--Contract disputes
       The section would provide that the Board have jurisdiction 
     over contract disputes as provided by section 8(a) of the 
     Contract Disputes Act.
     Section 424--Protests
       The section would provide that the Board shall review 
     contracting officer decisions alleged by an interested party 
     to violate statute or regulation and that in deciding 
     protests the Board may consider all relevant evidence. The 
     section would also provide that facts found by contracting 
     officers and determinations made by them be presumed correct 
     and that the Board may find that a contracting officer 
     decision violates a statute or regulation for the reasons 
     stated in 5 USC 706(2).
       Further the section would provide procedures for the 
     suspension by the Board of the agency's authority to conduct 
     a procurement in protests filed before award and for the 
     suspension of performance in protests filed after award. The 
     section would set forth procedures for discovery of relevant 
     material and for Board proceedings, including the use 
     simplified rules for protests
      of procurements below $1,000,000 and the dismissal and 
     payment of costs for frivolous protests. Finally, among 
     other things, the section would provide for the corrective 
     actions to be ordered by the Board and for the Board's 
     authority to declare the entitlement of a prevailing party 
     to its protest costs.
     Section 425--Applicability to contracts for commercial items
       The section would provide that the authority conferred on 
     the Board by this Title is applicable to procurements for 
     commercial items.

    Subtitle D--Repeal of Other Statutes Authorizing Administrative 
                                Protests

     Section 431--Repeals
       The section would provide repeal the current statutory 
     authority for the GSBCA and for the GAO bid protest function.

    Subtitle E--Transfers and Transitional, Savings, and Conforming 
                               Provisions

     Section 441--Transfer and allocation of appropriations and 
         personnel
       The section would provide for the transfer of assets, etc. 
     and the rules for the transfer of agency boards of contract 
     appeal and relevant GAO personnel to the Board.
     Section 442--Terminations and savings provisions
       The section would provide the rules for affect on 
     proceedings before the agency boards and GAO.
     Section 443--Contract disputes authority of board
       The section would provide conforming amendments needed by 
     the establishment of the Board regarding the contract 
     disputes.
     Section 444--References to agency boards of contract appeals
       The section would provide that any reference to an agency 
     board of contract appeals shall be treated as to the Board.
     Section 445--Conforming amendments
       The section would provide for the necessary conforming 
     amendments.

       Subtitle F--Effective Date; Interim Appointment and Rules

     Section 451--Effective date
       The section would provide for an effective date of October 
     1, 1996 for this Title.
     Section 452--Interim appointment
       The section would provide for the current chairman of the 
     GSBCA to serve as the Chairman of the Board for 2 years.
     Section 453--Interim rules
       The section would provide for the rules of procedure of the 
     GSBCA to apply to the Board until the Board promulgates its 
     procedural rules and that the rules of the Armed Services 
     Board of Contract Appeals regarding Board judges apply until 
     relevant Board rules are promulgated.

              Title V--Effective Dates and Implementation

     Section 501--Effective Date and Applicability
       The section would provide that the Act would take effect on 
     the date of enactment, except as otherwise provided in Act 
     and that the amendments made by the Act would take effect on 
     the date provided in the final implementing regulations or 
     October 1, 1996, whichever is earlier.
     Section 502--Implementing regulations
       The section would provide a schedule for the promulgation 
     of the implementing regulations.
     

                          ____________________