DOD forced to change process for services buys

'If we don't self-regulate, we'll get a little help in that arena.'

'Deidre Lee, director of Defense procurement

Defense Department officials are unhappy that Congress wants to force them to open their procurement process to multiple vendors on any service order of $100,000 or more, but they brought the measure on themselves, a senior DOD official says.

Defense procurement director Deidre Lee said too many contracting officers were releasing their requests for proposals on Fridays and expecting to get responses on Mondays.

'If we don't self-regulate, we'll get a little help in that arena,' said Lee, who spoke last month at a breakfast sponsored by Federal Sources Inc. of McLean, Va.

Congress has provided the help in Section 803 of the National Defense Authorization Act of 2002, which called on DOD to develop a rule requiring procurement officials to open competition to three or more contractors before purchasing services valued at $100,000 or greater. The proposed rule was published in the Federal Register April 1.

Lee is working on the final wording of the provision, which will be published June 26.

Comments on the rule have prompted more than 70 responses on the Web, most expressing concern that competitions will take more time.

More competition

The purpose of the rule is to prevent contracting officers from choosing a vendor without competition when they buy services through the General Services Administration's schedule contracts. According to a report by the DOD inspector general, most Defense task orders are awarded on a sole-source basis.

'We must notify a specific number [of vendors] so we can ensure that we receive three proposals,' Lee said.

Steven Kelman, administrator of the Office of Federal Procurement Policy during the Clinton administration, said the provision would help level the playing field among vendors.

'There are many times when the government customer has more or less decided which vendor they want to go with and ends up getting bids from that one vendor,' said Kelman, now a professor at Harvard University's John F. Kennedy School of Government.

The initial draft of Section 803 required full and open competition for products and services. The current draft requires competition for services only.

Kelman said contracting officers have gotten around the requirement by comparing three price lists from schedule contractors without actually soliciting bid proposals from vendors.

'It is against the spirit of the way the GSA schedule is supposed to work,' Kelman said. 'If all they have to do is get three bids, I don't think it's an undue burden. I think this is a reasonable weighing of the needs.'

The problem lies in the hundreds of vendors vying to bid via GSA schedules, Lee said. DOD does not have the time to evaluate dozens of proposals, she said.

But DOD will have to make the time because 'it's the law,' Lee said. 'The goal here is to get real competition.'

Lee said the published rule would include a clause that lets the department re-examine the issue later to see if it is working the way Congress intended.

DOD buys more than $60 billion of goods and services each year, about $2.2 billion from Federal Supply Service schedule vendors. DOD is the largest single user of GSA schedule contracts, Lee said.

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