[Federal Register Volume 65, Number 206 (Tuesday, October 24, 2000)]
[Notices]
[Page 63628]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-27117]


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OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy


Notice of Solicitation of Public Interest

AGENCY: Executive Office of the President, Office of Management and 
Budget (OMB), Office of Federal Procurement Policy (OFPP).

ACTION: Notice of solicitation of public interest.

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SUMMARY: OFPP is developing a new initiative to fundamentally examine 
the manner by which the Government develops and applies incentives to 
its contractual vehicles, and is seeking information and advice that 
would advance this effort.

COMMENTS DUE DATE: Comments and information regarding the proposed 
initiative must be received on or before December 26, 2000.

FOR FURTHER INFORMATION CONTACT: Comments and information should be 
sent to Stanley Kaufman, Deputy Associate Administrator, OMB, OFPP, 725 
17th Street NW., Washington, DC 20503. He can be reached electronically 
at [email protected] or by phone at 202-395-6810.

SUPPLEMENTARY INFORMATION:

I. Background

    Procurement reform initiatives such as the Federal Acquisition 
Streamlining Act of 1994, the Federal Acquisition Reform Act of 1996, 
the Information Technology Management Reform Act of 1996, and 
Performance-Based Service Contracting are significantly changing the 
way the Government acquires supplies and services, moving from a 
process-oriented, rules-based, risk avoidance culture to one 
emphasizing performance outcomes, business judgment, streamlined 
procedures, and risk management.
    The rules-based culture constrained contracting officials' 
flexibility to serve as business advisors focusing on the overall 
business arrangements. While the cited acquisition reforms provided 
contracting officers increased flexibilities in negotiations and 
communication with contractors, research by the Army and studies by 
OFPP and industry found that innovative contracting methods are being 
used insufficiently, and effective incentives exist which are not being 
considered.
    Consideration of incentives typically was limited to the fee 
portion of contracts to the detriment of other incentives that 
contractors would find more appropriate and meaningful, such as a 
consistent revenue flow and the promise of future business. In 
addition, incentives too often focused on the process of the work to be 
performed vs. the outcomes, thereby rewarding unnecessary and/or even 
counterproductive behavior. Furthermore, profit is not an effective 
incentive for non-profit entities such as universities and research 
laboratories. As a result, contractors often did not provide their best 
solutions and Government requirements were not fulfilled in as timely, 
quality-related, and cost-effective manner as possible.

II. The Project

    OFPP is looking to develop a new contracting paradigm that will 
encourage acquisition officials to develop joint objectives with 
contractors and effectively incentivize both parties to create ``win/
win'' business arrangements.
    In pursuing this project, OFPP would like to pull together any 
experiences and literature regarding non-fee type incentives. 
Consultation with the private, non-profit, and public sectors is hereby 
sought. A review of current policy, regulatory and statutory guidance 
will be conducted to determine any barriers to achieving the project's 
objective and the need for any additional guidance to facilitate 
compliance.
    Accordingly, OFPP is seeking ideas, recommendations, practices, 
lessons learned, etc. on what works in industry, the non-profit 
environment, and state and local governments. Such information tailored 
to specific industries (e.g., manufacturing, services, construction), 
subsets of industries (e.g., information technology, advisory and 
assistance services, environmental remediation), types of contractors 
(e.g., universities, small businesses) and types of endeavors (e.g., 
research and development) would be welcomed. We also would welcome any 
studies or literature that analyzes, assesses, or validates these 
practices, as well as information on relevant training courses and 
materials.
    In examining this information and developing any policy initiative, 
we will consider approaches that would fundamentally restructure our 
contractual relationships to accommodate improving our business 
arrangements, and so would welcome any appropriate recommendations as 
well as the identification of any impediments (legal, regulatory or 
policy). OFPP welcomes written comments and materials, and is willing 
to meet with individual companies, associations, and other 
organizations to hear their views and recommendations. OFPP is 
concurrently surveying Federal agencies to ascertain any ongoing 
innovative practices that could be used in this initiative.
    We are also considering a public meeting to facilitate the exchange 
of information between the Government and general public to explore 
this issue if sufficient interest exists. Topics could include: 
developing alternative incentive strategies; providing recommendations; 
sharing best practices and lessons learned; reviewing existing 
literature; and identifying barriers and potential benefits and 
disadvantages for both agencies and contractors. Expressions of 
interest in such a meeting would be appreciated.

Kenneth J. Oscar,
Acting Deputy Administrator.
[FR Doc. 00-27117 Filed 10-23-00; 8:45 am]
BILLING CODE 3110-01-P