OFPP relents on 803

'This is a confusing state of affairs,' OFPP administrator Angela Styles says.

It drops language barring time and materials buys via MAS

The Defense Department can continue to use time and materials contracts when buying commercial items from Multiple-Award Schedule contracts'at least for now.

The Office of Federal Procurement Policy will strip all references to pricing from the final rule it will issue in the coming weeks on Section 803 of the Federal Acquisition Regulation, OFPP administrator Angela Styles said.

'This is a confusing state of affairs for contracting offices and vendors,' Styles said. 'Our primary concern is not to allow us to reach this state where practice is different than the rules.'

Under the draft version of the rule, DOD would have been allowed to use only firm-fixed price contracts when buying commercial items through schedule contracts, instead of preferred time and materials contracts.

OFPP sought to limit time and materials contracts because many Defense acquisitions conducted through such mechanisms were awarded on a sole-source basis. The administration hoped to increase competition by tightening the rule.

Looking for options

Instead, OFPP officials will have to find another way to address their concerns. David Marin, a spokesman for Rep. Tom Davis (R-Va.), said OFPP should review the time and materials issue through a separate rule. Davis, chairman of the Government Reform Subcommittee on Technology and Procurement Policy, fought the language.

Styles declined to comment on whether a separate rule is in the works but said the issue needs to be resolved quickly.

'Congressman Davis will strongly oppose the separate rule as well'but agrees that this is the way this should be pursued'through separate rule-making,' Marin said. 'In a nutshell, Davis is pleased OFPP conceded to his request.'

OFPP had added the language late in the process, prompting complaints from industry, congressional and Defense officials.

Larry Allen, executive vice president for the Coalition for Government Procurement in Washington, said he too was pleased by OFPP's decision. Allen learned of the change late last month in a two-hour meeting with Office of Management and Budget officials.

'The amendment had no business being in there in the first place, and we are gratified it has been removed,' he said. 'This is a significant win for DOD.'

The final Section 803 rule will require DOD to obtain at least three bids when making schedule purchases of more than $100,000. Congress included the requirement in the National Defense Authorization Act of 2002 after the DOD inspector general found that most schedule contracts were awarded on a sole-source basis.

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