The Honorable James Talent
Chairman Committee on Small Business
United States House of Representatives
Rayburn Office Building Room 2361
Washington, DC 20515-6315
Dear Chairman Talent:
This is a follow-up to your April 10, 1997 hearing on FAR Part 15. The Office of Advocacy and the small business community appreciate the committee's interest in this important issue.
The regulatory changes proposed in FAR Part 15 will have a sweeping impact on how the government negotiates contracts. It is our belief the proposed changes will restrict competition and adversely impact many small firms. As I said in my testimony, small firms thrive on competition, winning 21 percent of all competed federal contract dollars versus only 12 percent of non-competed contract dollars. Simply put, if competition is eroded because of the proposed changes, so are the chances of small firms being awarded government contracts.
Specifically, you asked for my input regarding how the proposed rule could be improved so that small businesses would not be adversely impacted. I thank you for the opportunity and offer the following suggestions.
Competitive Range Determinations
The recently enacted Federal Acquisition Reform Act (FARA), authorizes contracting officers to restrict the competitive range, "if the contracting officer determines that the number of offerors that would otherwise be included in the competitive range...exceeds the number at which an efficient competition can be conducted..." However, FARA specifically subordinates efficiency to the requirement for full and open competition stating, "…the Federal Acquisition Regulation (FAR ) shall ensure that the requirement to obtain full and open competition is implemented…" In addition, FARA does not permit contracting officers to limit the competitive range on the basis of efficiency in every procurement.
The proposal, we believe, expands this limited authority beyond the intent of the statute. First, and most important, the proposal, in qualifying the competitive range, omits key words that appear in the law. The proposal states, "the competitive range shall include proposals having the greatest likelihood of award..." The statute says that in limited circumstances, the contracting officer can limit "the number of proposals in the competitive range, in accordance with the criteria specified in the solicitation, to the greatest number that will permit an efficient competition among the offerors rated most highly in accordance with such criteria." Thus, the FAR Part 15 proposal omits the requirement to include the "greatest number" of proposals. As proposed, the competitive range could be consistently reduced to the top two or three proposals in every procurement.
The proposal also adopts a competitive range test for all procurements that is only supposed to apply when the contracting officer concludes that a restrictive competitive range is required for reasons of efficiency. The rule over-looks this distinction and imposes a single, restrictive standard, regardless of whether efficiency requires a significant limitation of the competitive range.
The changes also permit a contracting officer to limit the number of proposals that will be included in the competitive range before the first proposal is received. This is contrary to the intent of FARA, which upholds the application of "full and open competition."
Improvements to the proposal can be made by:
Analysis of Small Business Impact
The revised proposal should include a complete initial regulatory flexibility analysis that measures impact of the changes on small firms and considers regulatory alternatives.
The Office of Advocacy shares the commitment of the Congress to increase procurement opportunities for small businesses. I hope these suggestions are helpful. Ensuring the free and continuous access of small and new firms to federal procurement opportunities is a sine que non of a dynamic and competitive market place.
Sincerely,
Jere W. Glover
Chief Counsel
Office of Advocacy
cc: The Honorable John LaFalace