Industry Groups Propose Acquisition Changes An industry coalition is recommending broad changes in laws and regulations governing the acquisition of services. The Services Contracting Task Force presented its proposals May 17 to the Federal Acquisition Advisory Panel, which is reviewing acquisition policies. The report calls for expanded use of time-and-material and labor hour contracts in services acquisition and broadening the definition of commercial services. The Task Force said time-and-material and labor hour contracts are now permitted only in competitive procurements. It recommended that those contract types be allowed in sole-source procurements, where prices can be determined through market research. “Competition should not be viewed as the only method to secure price reasonableness,” the report said. That runs counter to the prevailing view among government acquisition professionals and watchdogs, who advocate competition as the best way to ensure that the government gets the lowest price. The Task Force said time-and-material and labor hour contracts are “a common commercial practice” and “an industry norm” in commercial transactions. Critics contend that such contracts give the contractor no incentive to hold down costs. The Task Force said an effective check on runaway costs is the fact that “both parties know that the services may be extended or terminated at the customer’s discretion.” The Task Force said commercial services should be treated the same as commercial items. It said agencies should be able to purchase services using the streamlined commercial-item procedures as long as the service is “of a type offered and sold in the commercial marketplace.” The report was prepared by the Contract Services Association, the Professional Services Council, the Information Technology Association of America and the National Defense Industrial Association. The Task Force said, “To date, service contracting has been a lowly stepchild compared to its ‘sexier’ counterpart in hardware procurements, and reforming the way services are acquired has lagged behind improvements in hardware and weapons system acquisition.” The report says services now account for more than half of defense procurement and as much as 75% of some civilian agencies’ purchases. “However, even though the service provider business area is becoming one of the fastest growing segments within the Federal government, the ability to successfully compete in the Federal marketplace for services is more difficult than it should be,” the report says. “This difficulty results from the myriad of unique Federal rules and regulations, the uncertainties associated with performance-based processes and procedures used in the Federal arena, and the impact of various special Federal labor laws, (e.g., Service Contract Act, etc.) that may apply.” The report said GSA schedules and other multiple award contracts “increasingly are the contract vehicles of choice for services.” It urged increased training of agency buyers on how to use the schedules and improvements to the electronic e-Buy procurement system to make it friendlier to buyers. It also recommended that Part 37 of the Federal Acquisition Regulation, which governs service contracting, be amended to make it clear that services contracts must be set aside for small businesses under the “rule of two” and “to ensure that service contracts are awarded to small businesses to the maximum extent possible.” The Acquisition Advisory Panel was created by Congress and its members were appointed by OMB’s Office of Federal Procurement Policy. Half the members are government officials and half represent the private sector. It is due to issue a report next February.