Biden administration could mean several new federal procurement rules

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If you buy for, or sell to the federal government, you can expect substantial change from the Biden administration. If past is prologue, the Democratic administration will impose a reimpose lots of procurement rules coming from people with some experience. For what to expect federal sales and marketing consultant, Larry Allen spoke to Federal Drive with Tom Temin.

Interview transcript:

Tom Temin: And what do you think we can expect, Larry?

Larry Allen: Tom, I think right away, we’re going to be looking at some small business rules. The incoming administration has already telegraphed their ability to look at bundling and to impose perhaps new executive orders that would limit any perceived contract bundling. We could also be looking at increased scrutiny for contractors in the conduct of their nongovernment-related business. We’ve seen this before, again, mostly from Democratic administrations, contractors’ fitness not solely judged on its performance on government contracts, but on its scorecard in terms of meeting federal employment, environmental and other laws. So those are a couple of things that I think we should be looking at. The bottom line for contractors is that the regulatory framework of how you conduct your business today is going to change and it’s probably going to change somewhat in the next six months and even more after that.

Tom Temin: I guess the underlying assumption on that mindset is that there are – it’s allowable, I guess, or OK to have special rules for companies that do business with the federal government, that may not apply to every other company.

Larry Allen: Well, you hit the nail on the head there, Tom. Government contractors, and government contracting generally, has been a venue in which social policies, socioeconomic policy is imposed, where it cannot politically be imposed on a broader commercial market. So in one way to look at that as a testbed, government markets testbed, but really, it’s also the market over which people who would seek to have certain behaviors, regulatory behavior, socioeconomic behaviors, this is the laboratory for doing that. They know that they have the maximum opportunity to shape this market segment. And that’s what they’ll do.

Tom Temin: So these will likely originate with the Office of Management and Budget, but maybe come through the Office of Federal Procurement Policy in the office of federal contract compliance programs through the Labor Department.

Larry Allen: I think both. We have on deck someone as a designee from the Department of Labor who has been labeled as a labor activist. So that’s going to have a very broad agenda. Not all of that’s going to be government contract related, Tom, but we can certainly foresee that some of it will make its way into government contracting, that activism. The other part is that good news, bad news story – traditionally, Democratic administrations actually will put experienced people with an acquisition background in key positions. You mentioned the Office of Federal Procurement Policy. These are people who will go in probably earlier on than their Republican counterparts did so particularly under this past administration. And while that’s good in that they usually have a broad background and are willing to talk to industry and can speak the same language, it’s also going to be a little bit of a challenge because those are people who either themselves or working internally, with their higher ups in OMB will have some policies that they definitely want to promulgate that industry might find questionable.

Tom Temin: Alright, so be braced. And don’t say we didn’t warn you. We’re speaking with Larry Allen, who’s president of Allen Federal Business Partners. And down at the ground level here, GSA has issued a new rule clarifying lowest price technically acceptable (LPTA) – a term we haven’t heard in the last year or so – for non-DoD contracts. What’s going on there?

Larry Allen: Tom, this is the continuation of regulatory changes to rein in the use of low price technically acceptable contracts. The most recent GSA civilian FAR rule that was issued just last week, more or less mirrors one that the Department of Defense issued back in the fall. Both of them are designed to provide guidance, read as limitation on the use of LPTA contracting. This is good news I think for anyone who promotes common sense acquisition. Whether you’re in industry or government, LPTA is a contract method that has its place in government. Like any tool, though, it can become the tool of the day and then it tends to get used in situations where it’s maybe not the best tool, and we certainly have seen that happen over the last six to 10 years in government acquisition, where this tool was used in lots of places. And sometimes that tool just to follow the example, Tom, ended up getting dropped on the big toe of government and causing them some real pain. So this guidance that’s come out from GSA and earlier from DoD says no, we’re only going to use LPTA in specific circumstances. And it shouldn’t be used as a substitute for situations that call for subjective determinations.

Tom Temin: Yes, when the agency can comprehensively and clearly describe the minimum requirements in terms of performance objectives. So I think they don’t say products and commodities only. But I think that’s probably what they want, that is as opposed to professional services-type contracts.

Larry Allen: Well, it is really where they’re going with that, Tom. And they even further go on and talk about a slew of services, like IT services – that’s just one example – that are actually in the publication accompanying the rule that talks about now, with LPTA as a solution for these types of services, may not always be the best approach. There are going to be some times when you really want to do that best value trade off, do that analysis. There’s an acknowledgement that that’s more difficult and will take more time, but in the end, it should drive a better result for government.

Tom Temin: And we should also point out the distinction between lowest price technically acceptable and requiring firm fixed price for a given service deal.

Larry Allen: Right, they’re not always the same. You can have a firm fixed price contract, Tom, that has a best value component to it. Firm fixed price is just the method of quotation for how the contract is going to be let. So it’s not the same as low price technically acceptable. You can have a low price technically acceptable on a firm fixed price, but you can also have best value. You can also have low price technically acceptable on a time and material contract.

Tom Temin: And I think both of these topics, the LPTA and the activist role in operations of contractors that the new administration is going to have that we can expect. There is also a dynamic where as a group contractors can influence the government. It’s not only coming from the government, which way these kinds of things get resolved, for example, LPTA, a lot of industry got up on its hind legs for a couple of years to beat that thing down to where even it was mentioned in one of the National Defense Authorization Acts. So industry shouldn’t simply assume it’s a passive recipient of whatever an administration policy might be, but they can have an active role in helping shape it if they’re smart.

Larry Allen: Tom, anybody who’s listened to my comments over the last 30 years knows that I’m a firm believer in what you just said. Industry has an important role to play in shaping government acquisition policy, whether it’s something like LPTA or objecting to things, rules that really have no place in government, business that don’t impact the quality of government contracting. Yet, we’ll add cost and oversight to that contracting. Industry has been a great partner with government historically, when it has been active. If you look back to the landmark procurement reforms that were done in the 1990s, industry was an active participant. They testified in multiple congressional hearings for that. Today, you can do that both as an individual company or through any number of associations out there. The bottom line is this is your market too, industry. You have a voice, you should use that voice. And hey, you’re about to get a whole new group of players in, most of whom are going to want to hear from you. So it’s a great opportunity to get in on the bottom floor, and to engage and start that dialogue. And if you don’t do it, you’re going to be missing a real opportunity.

Tom Temin: Larry Allen is president of Allen Federal Business Partners. As always, thanks so much.

Larry Allen: Tom, thank you and I wish your listeners happy selling.

Tom Temin: We’ll post this interview at Hear the Federal Drive on your schedule. Subscribe at Apple Podcasts or wherever you get your shows.

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