November 11, 1996
General Services Administration
FAR Secretariat (MVRS)
18th & F Streets, N.W.
Room 4037
Washington, DC 20405
Subject: Federal Acquisition Regulations; Competitive Range
Determinations [FAR Case 96-303] and Part 15 Rewrite -
Phase I [FAR Case 96-029]
Dear FAR Secretariat:
This concerns the proposed rules Competitive Range Determinations and FAR
Part 15 Rewrite - Phase I, published in the Federal Register on July 31,
1996 and September 12, 1996, respectively.
The Office of Advocacy has previously expressed its views on the subject
proposals in letters to the FAR Secretariat, the Honorable Steve Kelman,
the Honorable Sally Katzen and at public meetings this month in
Washington, DC and in Kansas City. This discussion will serve as a
follow-up to our previous comments.
These are controversial rules that will alter the process of "full and
open competition" in government contracting. Many small business groups
feel the proposals will adversely affect the ability of small firms to win
federal contracts. The FAR Council, on the other hand, believes the
proposals will benefit all businesses.
The polarization on this issue has been caused by several factors. The
initial regulatory flexibility analyses on both rules suggest the
proposals will benefit small firms, yet provide no supporting information
or quantitative data measuring impact. Why historical data on contracting
with small businesses was not analyzed and included in the analysis is a
mystery, if indeed the Council based its conclusions on factual data
indicating a problem will be solved. As a result, Advocacy and numerous
small business groups believe the requirements of the Regulatory
Flexibility Act have been skirted, with insufficient analyses provided to
support speculative conclusions.
We also know the Small Business Administration (SBA) was excluded from
participating on the FAR Part 15 drafting team, even though SBA's
Administrator urged the Agency's inclusion (see enclosed letter from Phil
Lader). Many small businesses feel they have been forced to "react" to
proposals they should have helped to develop.
Advocacy supports the streamlining both rules suggest, but is very
concerned that the proposals will limit competition by giving the
contracting officer significant authority to eliminate offerors
prematurely -- for reasons of "convenience." In theory, limiting the
competitive range to promote government and offeror efficiency sounds
great. But, in the real world -- where contracting officers have
concurrent buying actions on- going and are under significant pressure to
do more with less -- we believe the rules will give government contracting
officials license and incentive to focus on the fewest number of offerors
that are the best known or who represent the most recognized brand name.
We are concerned that new government vendors, emerging firms and other
small businesses, less polished in marketing or proposal writing skills,
will be quickly eliminated from a competition. Advocacy believes
competition will be limited because provisions in the proposed rules:
- Do not define what is meant by "efficient competition,"
giving the contracting officer significant latitude to
interpret "efficiency" as "convenience;"
- Allow a contracting officer to determine the number of
offerors to be considered in a competitive range before
the submission of offers;
- Do not require a minimum number of offerors to be
considered in the competitive range;
- Leave open to the judgement of the contracting officer
the method or reasons for eliminating a potential
offeror from the competitive range; and,
- Provide no protections for small firms in mandatory or
advisory "down-selects."
The need for open competition in federal procurement markets is
significant. Advocacy contends that some recent acquisition reforms,
including those articulated in the proposed rules, will have the immediate
effect of reducing procurement opportunities for small firms. In the long
term, these changes may alter the number of firms available, willing and
able to participate in federal procurement markets.
Advocacy believes all branches of the federal government have an
obligation to be consistent in advancing the Nation's policy of preserving
competition. This means directing public contracting monies in such a way
that competition is vigorously encouraged. As such, certain allowances
for small firms should exist to level the playing field so that open
competition is preserved and that all sectors of the economy, including
women and minority business owners, have an equal opportunity to
participate in federal markets. It would be myopic to sacrifice
competition at the expense of creating false efficiencies and short-term
savings. Only market- based competition can prevent monopoly practices
and the concentration of federal dollars in the hands of a few large
industry giants. It is easy -- and arguably more efficient in the short
term -- for the government to contract with a cadre of mostly large firms.
In the process, however, the fate of many small firms, the entrepreneurial
base of the economy and the future of competition are jeopardized.
Advocacy urges the FAR Council to consider the following alternatives:
1. Define what is meant by "efficient competition" in the
rules;
2. Require contracting officers to disclose the market research
and/or historical data used for limiting a competitive
range. The factor, "resources available," should be
eliminated from the proposals;
3. Establish FAR guidelines for determining the minimum number
of offerors in a competitive range;
4. Require that at least one small firm (highest ranked), with
at least a "reasonable chance" of winning a particular
contract, be included in the competitive range; and,
5. Re-affirm in Part 15 of the FAR the government's commitment
to utilizing small firms in federal procurement.
Further, Advocacy believes the competitive range rule and the rewrite of
FAR Part 15 should be considered as major/significant rules, subject to
Office of Management and Budget (OMB) review and analysis under Executive
Order 12866.
The Office of Advocacy is committed to regulatory reform and stands ready
to work with the FAR Council and the promulgating agencies in that
endeavor.
Sincerely,
Jere W. Glover James M. O'Connor
Chief Counsel Procurement Policy Advocate
Office of Advocacy Office of Advocacy
cc: The Honorable Sally Katzen, OMB, OIRA
enclosure: