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Jul 29, 2009


Michael Lent

We were interested to see the Professional Services Council leap to praise OMB for its new procurement guidance yesterday as “precisely what taxpayers should demand: transparency and performance in federal acquisition and none require significant new laws or major policy changes.”

Of particular note, OMB adopted employee union proposals that broadens the definition of “inherently governmental” and allow more capricious decisions to in-source. Further, there is no evidence that the analytical rigor PSC calls for will be delivered when it comes to comparative costs of federal and contractor employees. That familiar, disingenous battle is not going to be renewed—the Administration clearly has its mind made up and lets the carcass of Circular A-76 rest in peace.

Further, the Administration is whistling in the dark when it calls for generating and gathering the needed reports on contractor performance. Only about a third that should be are generated now. “Accountability” is vaguely promised by OMB for agencies that don’t comply. It will be a cold day before enough reliable data populate the database to make it fair and safe to use.
And this will require overcoming the built-in—you might say “inherently governmental”—conflict of interest that government preparers of contractor performace evaluations have, as they will necessary disclose defective requirements and other government-side actions or omissions that impinge on contractor performance.

Finally, the policies to bolster competition are not much developed in the new OMB guidance. Maybe that is because the regs to achieve more competition are actually on the books now, but unused and not much policed.
This issue, along with others like vigorous enforcement of conflict-of-interest regs, are the the elephants in the room . If resolved, they will re-shape how the market is shared. We remain skeptical that the Administration will be able to compel companies to play a zero-sum game that firms (now getting 2/3 of prime contract dollars as contract mods alone) will resist to the last.

Actually, it’s worse than zero-sum for the comfortable players, because the contractor pie is supposed to shrink. Nonetheless, the OMB thrust in procuremen is uniquely strong compared with past Administrations. The OMB push should give heart to the customers, taxpayers, and, yes, firms that have no problems with a level playing field because they consistently deliver good value.

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