House Passes Contract Bundling Legislation.

In the last hours of the 106th Congress, the House of Representatives passed and sent to the White House legislation that contained several vital small business programs. The Labor/HHS Appropriations bill included the reauthorization of the Small Business Innovation Research Program (SBIR) and a new study to assess the negative impact of contract bundling on small businesses.

The reauthorized SBIR program assists small businesses in obtaining federal research and development funding. This measure amends the general business loan program at the Small Business Administration to encourage the making of smaller loans. The Small Business Competition Preservation Act of 2000 also was enrolled in the package. This measure commissions a study to analyze the effect of contract bundling on small businesses by requiring the administrator to maintain a database of bundled contracts.

The administrator must use this database to analyze the number of small businesses that have been displaced as prime contractors as a result of bundled contracts. The administrator is required to determine the amount of savings and benefits that were actually achieved by the bundled contract, and whether such savings and benefits will continue to be achieved by maintaining the contract requirements as a bundle.

Blacklisting Final Rule

In one of the Clinton administration's last major policy actions, the Federal Acquisition Regulatory Council (FAR Council) issued a final rule on federal contractor responsibility, better known as blacklisting.

The rule requires a "satisfactory record of integrity and business ethics" in making contractor responsibility determinations under FAR Part 9, and revises several cost principles under FAR, Part 31, related to labor relations and legal proceedings.

This is a very controversial action. CODSIA (the Council of Defense and Space Industry Associations) -- an organization comprised of eight associations that represent member firms employing the preponderance of the two million men and women in the defense industry -- is strongly opposed to the rule.

CODSIA argued against the release of the final rule, asserting that the regulation's standard of eligibility for awarding a federal contract covers an enormously complex matrix of laws, making it so broad and vague that it is actually meaningless. CODSIA charges that the rule is "an attempt to circumvent the legislative process by adding a major, new, draconian penalty -- disqualification from government contracts -- to employment, tax, environmental, antitrust, and other laws of the land."

CODSIA has urged the Bush administration to impose a moratorium on implementation, so that the new administration has the opportunity to review the rule and the new Congress can conduct the necessary oversight, rather than have it be adopted through the "back door" of the administrative agencies.

Joshua Gotbaum, controller of the Office of Management and Budget, argued in favor of the rule. "We have proposed this regulation and installed it because it will reduce the risk of contracting fraud and abuse," he said. "It will save taxpayers money.

Acquisition Reform

The Acquisition Reform Working Group (ARWG) was established formally in 1993 to address the various proposals being considered to streamline the federal acquisition process. This included passage of the 1994 Federal Acquisition Streamlining Act (FASA), the 1996 Clinger-Cohen Act, and the comprehensive rewrite of Part 15 of the Federal Acquisition Regulations.

ARWG has released new initiatives for action in 2001, aimed at bringing government procurement practices into the 21st century, sustaining national technology and the industrial base, and improving government access to commercial technologies. These new proposals have recently been sent to President Bush for consideration.

Included in this year's package are initiatives affecting commercial acquisition practices, government procurement and business process streamlining. ARWG also is actively supporting programs that encourage and assist small businesses, including small disadvantaged and women-owned businesses in obtaining a "fair share" of federal procurement opportunities.

Industry Logistics Coalition

NDIA is a member of the Industry Logistics Coalition (ILC), a multi-industry, multi-association group representing the majority of the U.S. defense manufacturers and services involved with logistics, depot maintenance and life-cycle support for the Defense Department. The ILC believes that there are a number of organizational and other structural problems within the department's logistics system for which corrective measures are long overdue. The coalition urges the president to make defense logistics reform a major initiative for the new secretary of defense and suggests that a new post be created -- secretary of defense for logistics and materiel readiness.

Australia Defense Ministry

The Australian government has released a white paper entitled "Defense 2000 -- Our Future Defense Force," which is an appraisal and description of future plans for Australian defense capabilities. Announced by Australian Prime Minister John Moore, the white paper is "the most comprehensive review of Australia's defense policy since the mid-1980s." The report takes into consideration that the Australian Defense Forces (ADF), in recent years, have faced new and increasing demands for operations such as humanitarian relief, evacuations, peacekeeping, and peace enforcement.

Australian Minister of Defense John Howard said that the ADF plans on being "a more effective, better trained and equipped force, available for a range of operations at short notice, and one that can be sustained on deployment over extended periods." The report is available at http://202.59.33.56/.

On February 8, NDIA's International Committee will hold a luncheon featuring the Australian Defense Attache staff. See the International Committee's Web site at http://www.ndia.org/committees/international/default.htm for more information.