It seemed as if Congress was handing small business a crowbar of
sorts to wrench away services performed by federal employees. But
FAIR, the Federal Activities Inventory Reform Act (S.314), which
was passed very quietly by Congress last October, was really a
toothpick of a tool compared to the earlier, all-steel version
introduced in March 1997.
"The final version wasn't as hard-hitting as the first
draft," acknowledges Bob Scott, a director and vice chair of
the Procurement Round Table, a Washington, DC, nonprofit consulting
firm. "But it is a worthwhile first step."
The act essentially put into law what was already administration
policy: Agencies are supposed to perform cost analyses to show that
government workers are doing the work as cheaply and as well as a
private-sector company could.
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But the policy had no legal force. There were no penalties for
agencies that failed to submit lists, performed skewed analyses or
failed to contract out services on that list. "Unfortunately,
that policy was fundamentally flawed and routinely ignored,"
says Sen. Craig Thomas (R-WY).
Pushed through Congress by Thomas and Sen. Sam Brownback (R-KS),
FAIR changes these policy suggestions into law. Now, agencies must
file lists annually beginning on June 30. Moreover, the law adds a
new provision: Companies can challenge agency decisions not to
contract out inherently nongovernmental services. However, the
agency head, a hardly neutral party, makes the final decision on
whether a disputed contract gets kicked outside the agency.
It was federal opposition to earlier versions of the bill that
influenced modification of the legislation. In the process, some of
the teeth in the earliest versions of the bill were pulled.
The U.S. Chamber of Commerce had pushed hard for a provision
requiring a federal agency, when bidding out "inherently
commercial" contracts, to use a standard cost-accounting
methodology. That was contained in the House version of the bill
but not Thomas' version. "Historically, agencies have had
the option to adjust numbers to arrive at a desired outcome by
using a different accounting system than the one the private-sector
organization competing [for the work] is forced to use," says
Doug Stevens, who is head of management consulting at Grant
Thornton LLP in Washington, DC.
Although that provision was dropped, the new law will serve at
least a minimal purpose. Small companies can, for the first time,
see which contracts they could perform that are being kept in-house
by the feds; they can protest those decisions; and if those
protests are reasonable but nonetheless ignored by agency heads,
Congress will have cause to inject a new dose of fairness into the
FAIR Act.
Stephen Barlas is a freelance business reporter who covers
the Washington beat for 15 magazines.
Contact Sources
Procurement Round Table, (703) 583-0332