Reducing the costs of procurement regulation – A step in the right direction

Roger Waldron, president of the Coalition for Government Procurement, says President Donald Trump's Jan. 30 executive order is a step in the right direction in ...

This column was originally published on Roger Waldron’s blog at The Coalition for Government Procurement and was republished here with permission from the author.

The Code of Federal Regulations is around 180,000 pages and is growing at about 2,000 pages a year.  In 2008, the Office of Management and Budget (OMB) and the Small Business Administration estimated the regulatory compliance costs to be approximately $1.752 trillion.

These figures were cited in 2015 testimony before the Senate Armed Services Committee by the Honorable Jacque S. Gansler, Ph.D., currently professor emeritus at the University of Maryland’s School of Public Policy. He cited these figures in making the case for reducing regulations, policies, and procedures to reduce barriers to entry to the federal market and to increase the Defense  Department’s access to commercial innovation, which is needed desperately to ensure technological superiority on the battlefield.

That is why the Jan. 30, 2017 executive order Reducing Regulation and Controlling Regulatory Costs, is a step in the right direction in reducing regulatory burdens.  The EO provides, in part, that for fiscal year 2017, the heads of agencies are directed that the total incremental cost of all new regulations to be finalized this year, including repealed regulations, shall be no greater than zero.  The EO further provides that any new incremental costs associated with the new regulations shall be offset by the elimination of existing costs of at least two prior regulations.

Significantly, the EO’s definition of the term “regulation” or “rule” is broad.  It means “an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency…”  As such, it would appear to include agency-specific acquisition guidance/process requirements that increase costs for contractors, but have not been codified in the Federal Acquisition Regulation.  An example of this definition would include any new reporting/pricing requirement under a multiple award contract, GWAC, or Multiple Award Schedule solicitation.  Moreover, the ongoing implementation of category management, to the extent it manifests directives/requirements for contractors, like the Transactional Data Reporting Rule, would fall within the scope of the EO.

The thousands and thousands of pages of the FAR, agency supplements to the FAR, acquisition guidance, reporting requirements, and directives are especially ripe for streamlining consistent with the EO.  Moreover, the EO, in concert with the Federal Acquisition Streamlining Act’s commercial item authority, as implemented at FAR Part 12, provides a powerful policy framework for reducing regulations, streamlining procurement processes, and increasing access to innovative, best value solutions via the commercial marketplace.

FAR 12.301(a) provides, in part, that “contracts for the acquisition of commercial items shall, to the maximum extent practicable, include only those clauses required by law or “[d]etermined to be consistent with customary commercial practice.”  Similarly, FAR 12.302(c) precludes contracting officers from tailoring any clause or including “any additional terms or conditions in a solicitation or contract for commercial items in a manner that is inconsistent with customary commercial practice for the item being acquired unless a waiver is approved in accordance with agency procedures.”  The United States Court of Appeals for the Federal Circuit has affirmed the aforementioned statutory proscriptions regarding the use of customary commercial practices for commercial item acquisitions, even striking down solicitation terms that are inconsistent with such practices.  See, e.g., CGI Federal Inc. v. United States, Case No. 1:14-cv-00355-MCW (Mar. 10, 2015). 

Across the procurement landscape, there is no better opportunity to reduce regulatory costs in accordance with the EO than GSA’s portfolio of governmentwide contract vehicles, including the Multiple Award Schedule program.  GSA has an opportunity to reduce regulatory costs, streamline processes, and increase access to the commercial marketplace.  Immediately, GSA should engage in a wholesale review of its procurement processes, focusing on commercial item contracting, including the GSA Multiple Award Schedules program, to identify and eliminate costly and unnecessary government unique terms, conditions, policies, procedures, and requirements.

GSA has a strategic, timely opportunity to create a dynamic, market-driven MAS program that delivers best value mission support for customer agencies and the American people.  The Coalition stands ready to work with GSA, OMB and customer agencies on this vital effort.

Roger Waldron is the president of the Coalition for Government Procurement, and host of Off the Shelf on Federal News Radio.

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