Federal Contract Law: Public database for contracts could spell disaster

Karen D. Powell

Last summer I read about a proposal by the General Services Administration to post copies of all awarded contracts on the Internet. At the time, I wondered why anyone would want to do such a thing.

Reviewing the public comments filed with GSA has clarified my thinking. Now, I wonder why anyone who has ever seen a government contract would want to do such a thing.

In June, GSA solicited comments on how it might construct such a public database as part of its Integrated Acquisition Environment. The IAE is tied in with several other e-government initiatives being spearheaded by GSA.

The majority of comments were from individual citizens applauding the proposal. Many were well-meaning form letters honestly arguing that, as citizens, they had a right to know to whom and for what the government was awarding contracts. Never mind that this basic information is already publicly available, although perhaps not as easily accessible as it could be.

Most also were convinced that the contracts would show backroom deals being cut with powerful defense companies and a general waste of taxpayer dollars.

Would that it were so. Anyone who has read through the standard contract format can vouch that you would learn almost nothing from its terms about how or why a contract was awarded. As procurement practitioners, we know that the decisions about what to buy, how to procure it and from whom, are made well before the contract is issued, sometimes before the solicitation is even written. Contract prices reflect a myriad of budgetary, planning and competitive factors that are often more significant than the item's cost, or the fact that you can get it cheaper at Best Buy.

One of the biggest impediments to the GSA proposal is the notion that the database would also include line-item prices. The comments of several organizations opposed to the proposal argue that the release of such information is problematic, if not prohibited under the Freedom of Information Act. Releasing line-item prices will make future bidding less competitive. A company that knows its competitor's bidding strategy is more likely to either make a no-bid decision or attempt to match prices. This compromises the basic premise of best-value procurement.

Open government is a laudable goal, but this proposal is an opportunity for terrific mischief. Firms with the resources or inclination to mine this data would gain substantial insight into other vendor's marketing strategies as well as agency procurement planning.

This will only increase the behind-the-scenes pressure as more vendors try to influence the acquisition process at earlier and earlier points in the cycle. The likely result will be more backroom deals, not more open government.

Karen D. Powell is a lawyer with the Washington law firm of Petrillo & Powell. E-mail her at kdp@petrillopowell.com.

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