Justify time-and-materials contracts, OFPP says

Agencies use time-and-materials contracts for large, risky IT integration or development projects.

'GSA's David Drabkin

J. Adam Fenster

Agencies will have to justify using time-and-materials contracts for commercial services, a senior administration procurement official has said.

Matthew Blum, a staff attorney for the Office of Federal Procurement Policy, said the office soon will propose a rule requiring agencies to explain their use of time-and-materials contracts, which put the burden of cost overruns on the government.

'We want to make sure agencies understand the reasonable steps to take,' Blum said at this month's Government Solutions Forum Conference in Washington sponsored by the E-Gov Institute. 'We need to make sure you don't just jump right to time and materials, but you go through the hoops of figuring out why' a firm, fixed-price contract will not do.

Nearly a year ago, the administration tried to ban time-and-materials contracts for commercial items. That prompted Rep. Tom Davis (R-Va.), chairman of the Government Reform Committee, to add a provision to the 2004 Defense Authorization Act ensuring that agencies could still use the approach for commercial buys.

Former OFPP administrator Angela Styles said she tried to stop the use of time-and-materials contracts because vendors were charging too much.

'My concern was that agencies don't have the staff or capability to know what they need and buy that on a firm, fixed-price basis,' Styles said.

Agencies use time-and-materials contracts for large, risky IT integration or development projects, said David Drabkin, the General Services Administration's deputy associate administrator for acquisition policy.

'The key to these contracts is to understand the risk and associate it with a price,' he said.
Drabkin and other procurement executives agreed that the issue is not so much the contracting method as the work agencies do at the front end of a procurement.

One agency procurement official, who requested anonymity, said contracting officers overuse time-and-materials work.

'With time and materials, we are buying best effort,' the executive said. 'The government pays more up front for a fixed-price contract. But with time and materials, we need to track whether the government gets what it paid for or if the costs increased because there were issues we didn't know about when we were planning.

'My preference would be cost-reimbursement contracts,' the official said. 'There are more controls for the government.'

Another proposal OFPP is working on would distinguish rules for agencies that order from governmentwide acquisition contracts and those that run their own vehicles, Blum said.

The proposed rule will emphasize that an agency must make sure the work falls within the scope of the GWAC on orders of more than $100,000, Blum said.

PostNewsweek Tech Media staff writer Gail Repsher Emery contributed to this article.

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