FEDERAL CONTRACT LAW

Competition lives on, but it can't cure all ills

Joseph J. Petrillo

In 1984, competition was so important to federal procurement that it was the first word in the landmark Competition in Contracting Act. But recently, competition's prominence has waned as a fundamental goal of procurement.

Many of the procurement reforms of the 1990s were aimed at limiting competition in the name of efficiency. Streamlining was the word used in the key contracting law of that decade.

In a few extreme cases, Congress went as far as to authorize agencies to do away with competition. For instance, the Federal Aviation Administration was exempted from nearly all procurement laws and given the authority to set up its own system.

FAA did not abandon competition, however. The Acquisition Management System it set up recognized competitive procurement as the norm. FAA also retained bid protests, setting up what it called its Office of Dispute Resolution for Acquisition.

Recently, ODRA issued a bid protest decision that breathes new competitive life into FAA buys. The chairman of the General Services Administration's Board of Contract Appeals, Stephen M. Daniels, authored the proposed decision, and ODRA's director, Anthony Palladino, adopted it.

FAA announced it would award a sole-source contract for modernization of the en-route portion of the air traffic control system to the incumbent contractor, Lockheed Martin Corp. and a team of subcontractors. Raytheon Corp. filed a formal protest with ODRA, which was referred to Daniels for a decision.

Raytheon protested that FAA had justified its announcement on the grounds that only the incumbents knew enough about the system to improve it incrementally, as FAA intended. FAA argued that only the incumbents could design a new, modern system to replace an existing, obsolete one. Under this theory, incumbency would justify an unending series of sole-source awards.

Raytheon asked that FAA conduct a fully competitive procurement, the norm established by its own procedures. But neither Daniels nor ODRA went this far because they found FAA's determination to be premature in the first place. Here's why:

FAA's own procedures require several steps before conducting a procurement. These include an investment analysis, a final requirements statement, an acquisition strategy baseline and paper, and a procurement plan. FAA had done none of this before announcing for Lockheed. Moreover, FAA had not drafted a system architecture, work statement or functional performance specification.

Therefore, the agency was acting prematurely. It had no basis to determine whether sole-source or competition was the appropriate procurement vehicle.

But is it really necessary to go through all these preliminary steps before contracting for improvements to the air traffic control system? Why can't FAA simply mimic commercial practice, in which companies have long-term relationships with their suppliers? For instance: Firestone tires on Ford Explorers? Well, maybe that isn't an example the advocates of commercial practices would want to cite.

The air traffic system is surely in need of improvement, and has been for some time. But it does seem disturbing that FAA wants to rush into a contract before knowing what software it already has in place in a score of air traffic control centers. Competition is a powerful tool, but it can't make up for upstream management failures.

Joseph J. Petrillo is an attorney with the Washington law firm of Petrillo & Powell. E-mail him at jp@petrillopowell.com.

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