Acquisition Advisory Panel Recommends More Competition, Transparency In Federal Government Purchasing

Washington, D.C - A panel established to recommend improvements in federal government acquisition reports that approximately one-third of the government's annual acquisition spending is not competitively bid, and urges measures to increase competition and accountability to better serve the interests of government and taxpayers.

The Acquisition Advisory Panel issued a draft of its final report, saying that while there has been greater emphasis in recent years on using commercial practices in government contracting, competition in federal procurement does not measure up to commercial standards.

"With federal procurement spending approaching $400B annually and the serious and competing demands on taxpayer dollars, an accountable and transparent acquisition system that delivers innovative, high-quality goods and services is critical to our national interests," said Marcia Madsen, chair of the Acquisition Advisory Panel.

The Acquisition Advisory Panel (AAP), established by Congress in the Services Acquisition Reform Act of 2003, was charged with reviewing laws, regulations and government policies affecting how the government buys services and products from private vendors. The Panel's final draft report -- posted on its Web site -- provides a framework that balances the needs of government and industry while ensuring taxpayers a more accountable and transparent acquisition system that delivers results. The draft report represents the efforts of a 13-member panel of procurement law and acquisition experts from the public and private sectors as well as academia.

The Panel's authorizing statute tasked it to review laws, regulations and policies governing this spending and make recommendations in several areas -- including use of commercial practices in government acquisition, performance- based contracting, and interagency contracting.

The Acquisition Advisory Panel also tracked major trends in federal procurement, finding that in 2004, 32 percent of the $360B in federal government contracts were not competitively bid, and of those that were bid, nearly 20 percent received only one proposal.

The Panel also reports a major shift in government purchasing from products to services. Federal procurement spending on services began to exceed spending on goods between 1990 and 1995. Currently, the government spends more than 60% of its procurement dollars on services. The Department of Defense alone obligated more than $141 B on service contracts in FY2005 -- a 72 percent increase since FY1999.

The Panel's approach to improving procurement emphasizes the need for greater competition, which was clearly identified as the hallmark of commercial buying practice by the many commercial witnesses who testified before the Panel.

"Competition fuels innovation, drives fair prices, disciplines the responsible effective use of streamlined acquisition vehicles, and improves opportunities for small businesses participation," said Madsen, a partner at the Washington office of the law firm Mayer, Brown, Rowe & Maw.

Another concern that surfaced during the Panel's deliberations was the state of the federal acquisition workforce, which has declined by 50 percent since the mid-1990s. At the same time, the Panel found that in the aftermath of 9/11, Hurricane Katrina, Afghanistan and Iraq, government procurement spending rose a dramatic 63 percent, from $234B to $382B in FY2005.

"Restoring and maintaining capability in the government acquisition workforce and assuring the ethical use of contractor support both play key roles in delivering the results that Congress and the American taxpayer expect," said Panel Member Joshua Schwartz, Co-director of the Government Procurement Law Program at George Washington University.

Consistent with its statutory charter, Madsen said that as the Panel reviewed acquisition laws, regulations and policies regarding commercialpractices, performance-based contracting, and interagency contracts, certain themes began to emerge and then intersect across these three seemingly separate issues.

For example, commercial practice focuses on both competition and performance-based contracting techniques to deliver innovative solutions.And while master contracts known as "interagency contracts" may provide a streamlined acquisition process capable of delivering competitive, performance-based solutions, recent reports by the Government Accountability Office and agency inspectors general cite misuse of these vehicles -- including a failure, in some instances, to comply with competition requirements or to sufficiently define requirements.

"While these streamlined acquisition vehicles provide an essential tool to contracting officers in meeting mission requirements, they were never intended to avoid competition," said Panel Member Ty Hughes, Deputy General Counsel for Acquisition Policy for the U.S. Air Force. "The Panel specifically provided recommendations to enhance the quality of services and goods provided to the government through improved requirements definitions and competition under these streamlined acquisition vehicles," he said.

SOURCE: Acquisition Advisory Panel