Congress should consider further acquisition reform.
Commercial acquisition practices. The proliferation of government-unique requirements imposed on companies wanting to sell commercial products directly to the government undermines the congressional objectives aimed at enabling the use of commercial items. NDIA recommends that Congress limit, for commercial acquisitions, the imposition of unique government clauses except those required to implement law or executive orders, unless the contracting officer justifies in writing the need for the additional clauses.
Section 211 of the 2002 E-Government Act authorizes the Government Services Administration to provide state and local governments with access to the GSA schedule 70 for purchasing information technology. NDIA recommends allowing state and local governments to use all the GSA schedules (not just schedule 70). That authority, however, would be limited to the purchase of goods and services that are designed to facilitate defense against terrorism or chemical, biological, radiological or nuclear attack or in cases where the president has declared a disaster.
The federal government relies upon research and development performed by the private sector. NDIA recommends amending technical data rights laws to address the government's right to commercial intellectual property. We also recommend that Congress direct the federal acquisition regulations council to address issues related to third party access to a contractor's proprietary data.
The 1996 Clinger-Cohen Act established a test program for the use of simplified acquisition procedures when acquiring commercial items up to $5 million. This authority has been extended five times. NDIA recommends making this authority permanent.
By imposing trade restrictions on government contractors providing commercially available off-the-shelf items, the government denies itself access to state-of-the-art items. NDIA recommends that a class waiver be granted for the Trade Agreements Act, as well as for the Buy American Act, for all COTS products.
NDIA believes that the definition of commercial services should not be conceptually different from that of commercial items in the 1994 Federal Acquisition Streamlining Act. NDIA recommends that the Office of Federal Procurement Policy Act revise that definition.
The use of time and material, and labor-hour contracts and subcontracts for the acquisition of services is a common commercial practice. The 2003 Services Acquisition Reform Act provided statutory authority for the limited use of T&M contracts to acquire commercial services where an award is based on competition. NDIA recommends that the legislative authority be amended so that justified sole source is permitted in awarding such contracts.
Business process streamlining. In the 2005 quadrennial defense review, the Pentagon calls for greater consideration of the combatant commanders' needs in fielding capabilities. Therefore, NDIA recommends amending current law relating to "operational test and evaluation of defense acquisition programs" to require this.
The Truth in Negotiations Act (TINA) has been valuable in assuring that the government pays reasonable prices for goods and services. However, the fiscal 2003 National Defense Authorization Act imposed limits on the Defense Department's ability to exercise certain TINA waiver authority. NDIA recommends revising the criteria under which the exceptional waiver may be granted.
Under the Prompt Payment Act, federal agencies that fall to make timely payment on proper invoices submitted for payment are required to automatically pay interest on those late payments--but only for the first 12 months. NDIA recommends eliminating this cap.
NDIA recommends that Congress establish a requirement that all federal agencies deploy electronic invoicing systems for contractor billings by the end of fiscal 2006. Also, Congress should establish a requirement for contractors to utilize the electronic invoicing system for contracts awarded after October 1, 2007.
For decades, direct commercial sales to foreign governments, and state and local government sales, were considered sales to the general public. Such sales were defined as "non-governmental," and covered most non-developmental contracts. But changes in the commercial items definition inadvertently resulted in confusion. NDIA recommends legislation to correct this problem.
Section 210 of the E-Government Act authorizes government-wide use of share-in-savings (SIS) contracts for information technology. Such contracts encourage industry to share creative technology solutions with the government. Currently, the authority for SIS contracts has expired. In a report to Congress dated December 17, 2004, the Office of Management and Budget recommended that SIS authority be extended for another three years. NDIA supports the extension.
The current export control system and its processes need to be streamlined and aligned with current objectives. NDIA recommends that Congress establish higher monetary thresholds for congressional notifications of defense exports, and create a more predictable process for notifications of export licenses.
Section 808 of the fiscal 1998 National Defense Authorization Act made unallowable the costs of compensation of certain executives in excess of a level established annually by the Office of Management and Budget. The formula replaced a series of arbitrary caps imposed by Congress on executive compensation since 1996. Since that time, there has been much confusion over the application of the caps. NDIA recommends legislative language that would address this problem.
The requirement for small disadvantaged business re-certification is eroding industry's ability to award contracts to small businesses. NDIA proposes a legislative clarification that would relieve contractors of the requirement to count only certified SDBs in their subcontracting reports. Also, ARWG proposes that the Congress revise the rules for calculating the net worth of economically disadvantaged individuals.
Peter M. Steffes
Vice President, Government Policy
Ruth W. Franklin
Director, International Trade Policy and Programs
Analyst, Government Policy