Federal Contract Law: Judge Daniels takes a 20-year view of reform

Joseph J. Petrillo

Judge Stephen Daniels, chairman of the General Services Administration Board of Contract Appeals, recently offered his views of the state of the procurement system. His talk was sponsored by the Office of Federal Procurement Policy, which has provided a forum for the deep thinkers of our field to speak out.

Judge Daniels has a valuable perspective on the process. He was a staff member of the House Committee on Government Reform for 15 years. He has been an administrative judge for about an equal period. And for more than half his time on the bench, he adjudicated both contract disputes and bid protests under the old Brooks Act.

He has had a terrific vantage point to observe the massive changes of the 1990s in procurement. His position gives him insight, but no obvious ax to grind.

In Daniels' view, the system rests on four guiding principles. First, it must be democratic'everyone deserves the chance to sell to Uncle Sam. Second, the government must evaluate offers fairly. Third, agencies must select the offers that are in the best overall interest of the taxpayer. Fourth, the system must be transparent; participants and taxpayers must understand how procurement decisions are made.

Daniels notes that these are not business precepts, but rather political principles. He cautions that what's good for business doesn't necessarily translate to government. For one thing, 'the missions of federal agencies cannot be measured by profit-and-loss statements,' he said. An obvious point, but one too often overlooked.

Still, he said, 'real competition in the government marketplace should bring about the same kind of benefits for the government that it provides throughout the general marketplace to each of us as consumers.'

By no means is Judge Daniels anti-business. He sees in these four principles a 'triumph of capitalism at its best,' with the full innovative force of the private sector available to government.

But, he says, lack of competitive conditions is precisely where many of the changes to the procurement system have gone wrong. According to Daniels, 'The guts have been ripped out' of the Competition in Contracting Act. Much of the blame goes to three popular procurement vehicles: umbrella task and delivery order contracts, multiple-award schedule contracts and governmentwide acquisition contracts.

These vehicles provide little visibility, even to participating contractors. Taxpayers get not the best deals available, but rather 'the results of secret competitions among a limited in-crowd of companies.' Daniels probably underestimates the problem. In many cases, there is no competition at all.

The final problem with the new system is its international ramifications. The United States has tried to open foreign markets for American companies. But when it tries to persuade a country to improve its public procurement practices, our government may be faced with a powerful counterargument: that the other country's exclusionary practices are no worse than those of the American procurement process. Indeed, they may be identical. The result will be to undermine efforts 'to open large markets for American capital and labor abroad.'

If you want to read Judge Daniels' remarks in full, they are available on the Commerce Department Web site run by Jerry Walz, at www.contracts.ogc.doc.gov/cld/othernews. By the way, Jerry Walz is retiring, and we will all miss him, and his listserv, enormously.

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

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