Federal Contract Law: Three trends to watch for in federal procurement

Joseph J. Petrillo

Although it is tough to predict the direction of procurement policy, there are some trends with interesting possibilities. Three areas in particular hold promise.

Performance-based contracting takes off? One of the most promising developments of the 1990s was performance-based contracting, starting with a 1991 OFPP policy letter and the Government Performance and Results Act of 1993.

In theory, government could get the result it wanted without intrusive and burdensome contract administration. Performance-based pacts also would empower contractors to use innovative solutions, and spur them to invest in better methods for the prospect of greater returns.

But Little actually happened. Many in the government were reluctant to give up the control they had over contractor performance. Contractors were concerned that receiving additional revenue from a contract would be based on a discretionary system.

Then the Bush administration's Office of Management and Budget discovered the power it had in GPRA, and in the capital planning requirements of the Clinger-Cohen amendments. OMB began to insist on good business cases before funding new IT projects. Not long ago, IT czar Mark Forman told Congress that half of all new projects were on hold pending proper justification.

Making a good business case means measurable goals and objectives. But these can be the same metrics needed to power performance-based contracts. OMB's new emphasis on numbers could kick-start this dormant program.

Ordering vehicles revisited again? No recent change in procurement has been as widespread or as pervasive as the move from definite-quantity contracts to order-driven vehicles. These include GSA's Federal Supply Schedules and task and delivery order contracts, some of which are governmentwide in scope. In spite of their added fees, ordering vehicles are popular because they are cheaper and faster than awarding a competitive contract. The government can place an order with no competition at all or with very limited competition, as opposed to the 'everyone's invited' model of full-and-open competition.

This lack of competition, which makes ordering fast and easy, troubles policy-makers. Every independent study concludes that most orders lack effective competition. Assuming that bureaucrats alone can find the right price for things led to the fall of centrally planned economies. Our government isn't using the power of the marketplace.

But ordering vehicles remain popular. According to one recent estimate, more than half of all new IT contracting actions exceeding $5 million in amount are orders, not contracts.

Look for Congress to make competitive buys easier. One idea is to have a quick initial round that winnows competitors down to a manageable few. After all, that's the basic appeal of ordering vehicles.

Contracts as the spoils of war? The arms industry has long been an international one, but other types of government buying are less so. This may be the decade when that changes.

Part of the debate over who controls postwar Iraq concerns the contracts to rebuild the country and its oil infrastructure. There has already been controversy about awarding the first reconstruction contracts to two U.S. companies with close ties to the administration.

Competition in contracting may be on the wane here, but it seems to be growing in popularity abroad.

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

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