Industry Weighs in on Obama Contracting Plans As the Obama administration begins an overhaul of contracting policies, industry groups urged officials not to go too far too fast. At a June 18 public meeting, several industry representatives said rules are already in place to reach one administration goal, greater use of fixed-price contracts. The Federal Acquisition Regulation already establishes a preference for fixed-price, while recognizing that they are not appropriate in all circumstances. Alan Chvotkin, executive vice president of the Professional Services Council, said agencies should be required to publicly justify their use of cost-reimbursement and other contract types. “The forced use of fixed-price development has not controlled cost growth and transfers risk to contractors,” said Eleanor Spector, vice president for contracts at Lockheed Martin Corp. In a March 4 memo President Obama wrote, “Cost-reimbursement contracts shall be used only when circumstances do not allow the agency to define its requirements sufficiently to allow for a fixed-price type contract.” The president has ordered the Office of Management and Budget to present proposals by Sept. 30 to change what he called a “broken system of government contracting.” In addition to a preference for fixed-price contracts, the president said new policies will be developed to maximize competition and provide opportunities for small businesses. (SAA, 3/6) In his memo Obama said, “It is the policy of the Federal Government that executive agencies shall not engage in noncompetitive contracts except in those circumstances where their use can be fully justified and where appropriate safeguards have been put in place to protect the taxpayer.” About two-thirds of federal contract dollars have been awarded competitively in recent years, but industry representatives said sole-source contracts are necessary in emergencies, such as natural disasters. “There are a number of situations in which single award contracts are beneficial to the government,” said Chris Braddock, senior director of procurement policy at the U.S. Chamber of Commerce. The industry representatives said many of the problems in federal procurement trace to a shortage of well-trained acquisition personnel. They endorsed the administration’s plans to beef up the acquisition workforce. “The fundamental starting point for selecting the right contract type begins with a clear statement of the agency’s requirements,” Chvotkin said. The administration plans to write a new definition of “inherently governmental functions” that must be performed by government employees. A coalition of industry groups said rigorous analysis is needed to determine whether a particular function can be contracted out. “The threshold issue is whether an activity is so ‘intimately related to the public interest’ that a public employee must perform it, and thus it becomes an ‘inherently governmental’ function,” the industry groups said. They said a broad range of factors should be considered in determining whether federal employees or contractors should perform certain work. Each agency should have flexibility to identify its own mission-critical functions, the industry representatives added.