In keeping with prior FAR & Beyond blogs on ways to improve the efficiency of the federal procurement process, this blog will focus on regulatory burdens that impose costs on government contractors and impede entry into the federal market by commercial entities. After all, the current Administration recently issued an executive order calling for the elimination of ten regulations for every new regulation. Regulatory burdens come in varied forms. Overlapping, duplicative rules across the Federal Acquisition Regulation (FAR) and agency supplemental regulations increase administrative costs for government, industry, and the American people. Some regulations impose compliance or administrative costs/burdens that have no relation to the work to be performed under a government contract. In other cases, contract clauses impose significant requirements that are inconsistent with commercial practice. The Government Procurement Efficiency List (GPEL) provides an opportunity to reduce regulations and administrative burdens for all.
The cybersecurity regulatory framework provides a prime example of overlapping yet differing requirements that will unnecessarily increase administrative and compliance costs for all. The Coalition has recently pointed out that if recent proposed rules are finalized there may be different definitions of cyber incidents and cyber incident reporting timelines, depending on the contracting agency. Differing requirements across the federal enterprise increases compliance complexity, thereby increasing performance risk for contractors and the government customers they serve. It also has the knock-on effect of increasing barriers to entry for commercial firms seeking access to the federal market. Less competition from the commercial market means less access to best value, innovative solutions to meet customer agency mission requirements.
Do we really need a FAR clause that requires contractors to report on Executive Compensation and First-Tier Subcontract Awards (52.204-10)? Who uses this information, does a customer agency really care if a contractor does not report it? Do we really need FAR clauses Encouraging Contractor Policies to Ban Text Messaging While Driving (52.223-18) or directing contractors to Print or Copy on Doubled-Sided Postconsumer Fiber Content Paper (52.204-4)? How do these clauses address performance required by the government customer’s statement of work?
Further, exempting commercial providers from new clauses unless required by statute, consistent with the Federal Acquisition Streamlining Act (FASA), would attract new entrants and commercial providers. Consistent with FASA, the Section 809 Panel report identified approximately 100 FAR and Defense Federal Acquisition Regulation Supplement (DFARS) clauses that the government should determine are not applicable to commercial item contracts. This is a good place to start.
Finally, some clauses or provisions just reflect bad economic and procurement policy. The Price Reduction Clause (PRC), which applies to Federal Supply Schedule (FSS) contracting, is not based on statute, and is a price control mechanism. Simply, it requires contractors to monitor commercial pricing to ensure that if a commercial customer(s) gets a lower price than the agreed to price the government has negotiated, the government is entitled to that price. This outdated, anti-competitive, administratively burdensome requirement is counterproductive. It increases prices for government and commercial customers. Think about it, the General Services Administration (GSA) has a policy requirement in the PRC that, as a condition of the FSS contract, the contractor is restricted from fully and fairly competing in the commercial market. The PRC is not a commercial practice and exposes prospective contractors to burdensome record-keeping requirements and potential criminal and civil liability. Importantly, the PRC reflects a 1980’s policy FSS framework when continuous competition was not part of the FSS program. Today, the FSS is governed by competitive ordering procedures that empower customer agencies to leverage requirements.
Finally, there are thousands and thousands of pages of internal operating guidance that directly and significantly impact the public. Yet, this guidance has not been subject to the transparent rulemaking process. GSA’s Federal Acquisition Service (FAS) Policy and Procedure (PAP) 2021-05, Evaluation of FSS Program Pricing, is not a regulation and was not subject to public review and comment. Yet, it directly and significantly impacts current FSS contractors and potential offerors from the commercial market. The PAP provides FSS contracting officers with direction regarding the analysis and negotiation of contract level pricing. The PAP is inconsistent with the FAR and the General Services Administration Regulation (GSAR). It imposes significant potential data submission requirements on contractors. It also defies common sense, directing contracting officers to ‘leverage the collective buying power of the federal government” through price negotiations when the contract only provides a $2500 guaranteed minimum and the opportunity to compete for customer requirements at the order level.
These are just a few examples of unnecessary regulatory burdens. There are many more regulations that apply to specific industries and types of acquisition that serve as a barrier to entry or burden on existing contractors without providing the government, and ultimately the American taxpayer, with any real value. Please send your GPEL suggestions for removing regulatory burdens to Greg Waldron at [email protected] by Feb. 12.
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