Stronger Contractor Oversight Ahead?

Recent actions by the government councils responsible for federal contracting rules give hope that stronger efforts to identify and curtail contractors' conflicts of interest may be just over the horizon.  The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council, which are responsible for the content of federal contracting regulations, have requested public comment on changes in regulations regarding contractor employees' personal conflicts of interest (PCIs) as well as contracting firms' organizational conflicts of interest (OCIs).

POGO recently submitted comments on both OCIs and PCIs to encourage stronger and more effective measures to discourage, detect, and neutralize both types of conflicts of interest.  Current regulations of PCIs are sometimes put in place at low levels of government agencies but are otherwise absent, while OCI regulations provide contracting officers with only vague guidelines and procedures for detecting and mitigating OCIs.

Effective regulations to address contractor employees' PCIs have never been more necessary, as the government is now often heavily reliant on contractors for significant assistance in essential decision-making and contracting processes.  In recent reports, both the Government Accountability Office (GAO) and the Acquisition Advisory Panel (The Panel) took note of the increasingly complicated relationship between contractors and the federal government.  The GAO found that 15 out of the 21 Department of Defense offices it reviewed employed more contractors than federal employees, while The Panel noted that "in some cases, contractors are solely or predominantly responsible for the performance of mission-critical functions that were traditionally performed by civil servants."

The risk of OCIs has also increased as a result of various factors.  The Panel attributes the "increasing probability of--and [an] increasing need to protect against--OCIs" to the fact that "the government is buying more services that involve the exercise of judgment," "industry consolidation has resulted in fewer and larger firms," and "indefinite-delivery, indefinite-quantity ("IDIQ") umbrella contracts result in awards of tasks to a limited pool of contractors."

In its comments, POGO encouraged the application of federal employee conflict of interest laws to contractors involved in government decision-making processes in order to curtail PCIs.  POGO also recommended various new procedures to facilitate contracting officers' identification and mitigation of OCIs.

Interestingly, even the Professional Services Council, "the national trade association of the government professional and technical services industry," submitted a comment supporting improved measures for OCI oversight.  If even the organization representing government service contractors supports better conflict of interest regulations, the government seems to have nothing to lose and much to gain by strengthening them.

-- John Cappel

Comments

[Scott Amey]

Chris,

IDIQs might have been good idea in theory, but, in reality, they have been prone to abuse. First, IDIQ award are not contracts for specific work. Rather, they are agreements by the government to award an unspecified amount of future work to approved contractors - the federal acquisition equivalent of a hunting license. These used to be called qualified products lists, which were always frowned upon prior to “acquisition reform” because they necessarily limited competition for work to approved vendors. Requirements for competition on such awards are extremely weak, effectively allowing billions of dollars worth of noncompetitive contracting. Section 803 of the National Defense Authorization Act for Fiscal Year 2002 (Pub. L. 107-107) has tried to make the process more competitive, but the civilian agencies (and even DOD) have been slow to follow. Second, the process allows agencies to steer contracts to any favorites on the approved list and therefore the best deals might be missed. Third, the IDIQ contract vehicle has exploded through the years and less risky contracting types should be looked at to better protect the public and provide greater transparency. We should urge Congress and the White House to post all contracts, task/delivery orders, grants and other financial assistance, and federal lease agreements online so that the public has a real sense of federal spending.

[Chris]

I always viewed IDIQ contracts as being good for contractor competition and giving the government more options. Can you explain your view of IDIQs as being negative please?

IDIQs enable the government to select a limited pool of contractors (following an open competition) who will further bid on each task order. The pool is typically picked based on a mixture of ability and price, and then best bids in the final task order tend to be based on price (as all contractors *should* be equally capable).

Thanks