Reframe Acquisition Policy

Reframe Acquisition Policy

Background

Congress directed that the Administrator, Office of Federal Procurement
Policy (OFPP), within the Office of Management and Budget, be
responsible for providing overall direction of procurement policy and
leadership in the development of procurement systems of federal
agencies.1 In meeting these responsibilities, the Administrator issues
policy letters that are incorporated in the Federal Acquisition
Regulation (FAR). The FAR is a massive document exceeding 1,600 pages.
In addition to the FAR, the regulatory system includes supplements by
federal agencies totaling an additional 2,900 pages, almost twice as
large as the FAR.

As described in the basic OFPP legislation, Congress intended the FAR
to:

-- provide federal procurement officials with a set of uniform,
governmentwide acquisition policies, regulations, procedures, contract
clauses, and forms;

-- be wellwritten, easy to read, and logically organized;

-- reduce excessive paperwork;

-- ease doing business with the federal government;

-- facilitate agency, industry, and public participation in the process
of developing and maintaining the FAR and its supplements;

-- limit individual agency regulations to those that are essential to
implementing governmentwide policies and procedures within the agency;
and

-- represent policies and procedures required to satisfy the agency's
unique needs.

The FAR is issued and maintained jointly by the Department of Defense
(DOD), General Services Administration (GSA), and National Aeronautics
and Space Administration (NASA), known as the regulatory agencies.2 The
Federal Acquisition Regulatory Council (FARC) is composed of the
regulatory agencies and OFPP to direct and coordinate governmentwide
procurement policy and procurement regulatory activities.3 The
regulations are developed by two subcouncilsthe Civilian Agency
Acquisition Council (CAAC), chaired by GSA and composed of
representatives of 12 other civilian agencies, and the Defense
Acquisition Regulation Council (DARC), chaired by DOD and composed of
DOD and NASA representatives.4

Need for Change

     The FAR is complex and prescriptive. This complexity and
specificity primarily results from hundreds of processoriented
legislative requirements affecting the acquisition process, as well as
additional administrative requirements imposed by executive branch
regulators. Fundamental reform of the acquisition system requires basic
changes in the statutory underpinnings and cumulative administrative
burdens.

The Section 800 Panel. The Acquisition Law Advisory Panel to the United
States Congress on Streamlining Defense Acquisition Law (Section 800
Panel) recognized in its recent report to Congress that the FAR system
has grown increasingly complex due to requirements mandated by statute.5
The panel identified 889 provisions of law related to DOD acquisition.
Many of these are also applicable to civilian agencies. The acquisition
system is burdened with so many diverse statutory requirements and
competing goals that the procurement system's efficiency has been
significantly reduced.

The MSPB Survey. A survey conducted by the Merit Systems Protection
Board (MSPB) indicates that line managers widely believe that there are
too many procurement regulations that are changed too often and are so
processoriented that they minimize contracting officer discretion and
stifle innovation.6 When asked in a followup survey whether they felt
the procurement process appropriately balances the use of public funds
with the material needs and requirements of customers, only 26 percent
of the line managers surveyed agreed. The survey comments indicate that
there are numerous other objectives that receive priority over the line
managers. One manager expressed confusion over the ultimate objective of
the entire procurement process by stating, "The FAR system does not make
it clear what the principal goal of the federal procurement system is.
Is it to avoid waste, fraud, and abuse? Is it to implement a social
economic agenda? Is it to procure the government's requirements at a
fair and reasonable cost?" To be sure, the FAR itself does not state its
principal goal.

The CSIS Study. A recent study by the Center for Strategic and
International Studies (CSIS) concludes that government procurement laws
and regulations add cost without value, impede government access to
commercial stateoftheart technology, and adversely affect U.S.
competitiveness by fracturing the nation's hightechnology enterprise.
The CSIS study finds that companies alter their standard business
procedures when the federal government is the customer, leading to
higher prices for the government.7 From industry's perspective,
policymakers do not allow industry to participate in the development of
policy and regulations early enough in the process to have meaningful
input.

The GSA Survey. Efforts have been undertaken to reform the system. In
1990, GSA initiated a survey of FAR users to obtain feedback on the
document and how it could be improved. Over 2,400 responses were
received. Ninetyfive percent of respondents suggested one or more ways
in which the FAR could be improved.  The most common suggestions are to
provide greater flexibility for exercising business judgment, consult
users in developing regulations, and provide more guidance but less
regulation. Based on survey results and additional input from focus
groups of government and industry users, a report and recommendations
were developed. The FARC also approved a FAR Improvement Project Report
and established 19 implementation projects scheduled for completion by
1995.8 Although these changes will help, they do not involve fundamental
reform.

Examples of Success. In October 1988, the U.S. Postal Service (USPS)
issued a new procurement manual containing innovative procurement
regulations. This was made possible by the relatively permissive statute
for USPS procurement.9 These regulations incorporated the best of
federal and commercial purchasing policies and practices to ensure
fairness to offerors and contractors. These regulations permitted more
efficient contracting with greater discretion to use good business
judgment to obtain the best possible deal for the USPS.

Efforts to reform national procurement systems have also succeeded in
other countries. An example is Australia, which several years ago
transformed its procurement regulations into a set of guiding
principles. Australia's equivalent of the FAR is contained in 13
pamphlets totaling 93 pages. These pamphlets state the goals of the
procurement system and general operating principles for government
officials on all aspects of procurement such as competition, getting
best value for the government, specification development, and ethics.
They are graphically attractive, written in plain English to maximize
understanding by government employees and contractors, and leave no
doubts as to expected results.

The other examples cited above reflect simplified procurement policies,
rules, and regulations without adversely affecting product quality and
costs, system integrity, or public policy goals that the federal
government should emulate. The federal government needs to reclaim its
procurement policy framework to recognize it as an administrative
process governed by clear and simply stated guiding principles while
holding line managers and procurement professionals accountable for
results.

Cross References to Other NPR Accompanying Reports

Streamlining Management Control, SMC07: Reduce Internal Regulations by
More Than 50 Percent.

Endnotes

1. See Office of Federal Procurement Policy Act, 6 (41 U.S.C.  405).

2. 48 CFR 1.102.

3. See Office of Federal Procurement Policy Act, 25 (41 U.S.C.  421).

4. 48 CFR 1.201.

5. Acquisition Law Advisory Panel to the United States Congress,
Streamlining Defense Acquisition Law, Executive Summary (March 1993), p.
1.

6. U.S. Merit Systems Protection Board, "Workforce Quality and Federal
ProcurementAn Assessment," July 1992, p. 21.

7. Center for Strategic and International Studies, Integrating Civilian
and Military Technologies: An Industry Survey (Washington, D.C., April
1993), p. 16.

8. Federal Acquisition Regulation (FAR) Improvement Executive Committee,
FAR Improvement Project Report (Washington, D.C., October 1992).

9. P.L. 91375, Section 410.