research and test new procurement ideas, to transfer innovative procurement policies and procedures among the agencies, and to advise the Congress on legislative reforms when needed.s

The effects of this work could not but help the small business, as well as any new entrants to the procurement program.

Deputy Assistant Secretary of Defense for Procurement John Malloy reserved judgment on the recommendation for creation of a central procurement policy office. Mr. Malloy pointed out that the agencies concerned by the recommendation must study it with care before taking a position. This consideration, at the time of his testimony, had not been completed.9

The General Services Administration, however, did not have the same difficulty in arriving at a position favoring the creation of this Office. Represented by Mr. William W. Thybony, Assistant Commissioner, National Supply Policies and Programs, Federal Supply Service, General Services Administration, the Office was seen as a valuable high-level point for consideration of the views of small business.10

Representatives from the small business contractors, with one exception, supported with enthusiasm the establishment of a central procurement policy office. Mr. Herman B. Director for the National Small Business Association, rejected the recommendation

ground that it merely adds to the bureaucracy. Furthermore, the Office would concentrate on bringing together a small elite corps of experts in a field where expertise of this sort is not needed.11 Role of the OFPP as an Ombudsman

To obtain a clearer understanding of the functioning of the Office, the Subcommittee Chairman asked the witnesses for their opinion on whether the Office should serve as an ombudsman for contractors. While most agreed that an ombudsman is needed to assist contractors and particularly small businesses, many witnesses found this would be an inappropriate task for the Policy Office. Mr. Beamer said that the Office should not become involved in individual contracts.12 Likewise, Mr. Sowle opined that the Commission did not intend that the Office would become involved with the problems of contractors, either large or small.13

Mr. Gutmann of the General Accounting Office similarly found an ombudsman role unsuited for the Procurement Policy Office. He stressed that there are other avenues for the small business contractor to obtain assistance.14 To give the Office the ombudsman duty would force it into procurement operations. Mrs. Dickerman, speaking for the Smaller Business Association of New England, also believed that an ombudsman task would be most inappropriate.15

Ibid., p. 23.

bad., p. 150ff. Ibid., p. 177.

11 Ibid., p. 195ff.

1 bid., p. 5. bid., p. 149.

14 Bid., p. 30. Ibid., p. 213.

Mr. Thybony summed up this aspect of the role of the ombudsman as follows:

GSA supports the Procurement Commission recommendation with respect to the Office of Federal Procurement Policy, and as Mr. Sowle said this morning, it was the intention of the Procurement Commission that this sort of organization be limited to policymaking.

We think the proposed organization should pay attention to the policy aspects of small business programs as related to Government contracts, but not to be the recipient of protests, appeals, or complaints on individual procurement actions. These problems can be handled much better by the organizations and people who are closer to the problem. All Government agencies are organized today to handle these types of problems. However, on matters common to all small business, we feel that the proposed office should become involved, if major policy is involved, which would be developed through coordination with all of the agencies of Government. 16

Mr. Parker of the SBA was the sole witness who clearly emphasized that the Office of Federal Procurement Policy should include the role of ombudsman. This role, though, in his opinion, should not cause the office to have a larger staff or inject it into actual procurement operations. 17

C. CONCLUSIONS AND RECOMMENDATIONS

The committee finds substantial support for the proposed creation of a Federal Procurement Policy Office, so long as the Office is comprised of a small group of highly trained individuals who would confine their operations to procurement policy assessment and formulations.

The committee endorses the recommendation for the creation of an Office of Federal Procurement Policy. We agree with the reference in this statement that the Office should be created by legislation. We have not considered, however, and offer no comment on, the placement of the Office within the organizational framework of the Executive Department.

10 Ibid., p. 182.

17 Ibid., p. 55.

CHAPTER V. CONSOLIDATION OF PROCUREMENT STATUTES

A. COMMISSION RECOMMENDATION NO. 2, PART A

The Statutory Framework

Enact legislation to eliminate inconsistencies in the two primary procurement statutes by consolidating the two statutes and thus provide a common statutory basis for procurement policies and procedures applicable to all executive agencies. Retain in the statutory base those provisions necessary to establish fundamental procurement policies and procedures. Provide in the statutory base for an Office of Federal Procurement Policy in the executive branch to implement basic procurement policies. 1

1

The Commission reported that it found more than 30 inconsistencies between the two Acts. Some examples are cited in the areas of—

truth in negotiations, where the Armed Services Act requires contractors and subcontractors to submit cost or pricing data, and the Federal Property Act does not;

negotiation authority for research and development, where the Acts have different monetary limits for approval authority; negotiation of certain contracts involving high initial investments, which is an exception from the formal advertising requirement in the Armed Services Act, but not the Federal Property Act;

inadequate specifications accompanying invitations for bids is cause for invalidating a procurement under the Armed Services Act, but unmentioned in the Federal Property Act.

B. FINDINGS OF SUBCOMMITTEE

The Government Procurement Subcommittee, in looking at this recommendation, was chiefly interested in identifying the effect of the present state of the law on small business and what benefits would be derived from the consolidation of these statutes.

Of basic concern was the fact that small businesses may be contracting with military or civilian agencies either under the Armed Services Procurement Act or the Federal Property and Administrative Services Act. Inconsistencies in these Acts would lead to differences in procurement procedures and contractors rights, ultimately producing confusion and disinterest in government contracting in general.

Witnesses in the Subcommittee hearings generally agreed that a consolidation of the Armed Services Procurement Act and the Federal Property and Administrative Services Act would be beneficial to the small business contracting community. Mr. Parker, speaking for the

1 Report of the Commission on Government Procurement, Vol. 1, Part A, Chap. 3, p. 55:

29-941-74

SBA, advocated that, not only the principal procurement statutes, but all laws bearing on procurement, should be considered for consolidation into a new statute. This would lead toward the goal of simplification and clarification of the law. He stated that:

The very first obstacle to be overcome is the puzzling labyrinth of procurement regulations. They are extremely detailed and complex, even for the experienced contractor. This complexity is multiplied by the number of individual agencies with which the contractor wishes to do business. One small firm, for example, might find itself seeking contracts with the Defense Department, the National Aeronautics and Space Administration, and the National Institutes of Health. The procurements will be governed respectively by the Armed Services Procurement Regulation, the NASA Procurement Regulations, and the Federal Procurement Regulations, with varying implementing directives.2

Mr. Gutmann, representing the GAO, also pointed out, in endorsing the recommendation, that procurement costs should be reduced in both the public and private sectors. Consolidation and codification, he said, of all of the procurement-related statutes and establishment of a single procurement regulatory system should give small business a better position from which to compete and remove one of the barriers to small business entry into the government contracting arena.3 Adding still more emphasis to the importance of the recommendation to the small business community, Mr. Sowle, formerly of the Commission on Government Procurement, stated:

There is probably no group of suppliers more concerned about consistency and simplification than the small business community. When the average small business decides to submit a bid or make a proposal on a particular job, the firm must be fully aware of the conditions surrounding the performance of work under the contract. The average small business cannot afford to retain staff experts whose sole function is to be knowledgeable of all the peculiarities of contracting with various potential Government customers. On the other hand, neither can the average small business afford to submit bids to a particular Government customer on the assumption that the condition under which the work will be performed will be the same as he has experienced with other Government customers.*

As an example of this, Mr. Sowle cited the Buy American provisions as applied by the Department of Defense or the General Services Administration for the purchase of the same product. Under the Department of Defense regulations, the small business bid would be more competitively evaluated against a foreign bid with a greater preference over the foreign bid than under the GSA regulations. Also, Mr. Sowle noted the example where the Federal Property and Administrative Services Act was amended in 1972 changing procedures for procuring architectural and engineering services. The Armed

2 Hearings before the Subcommittee on Government Procurement, Senate Small Business Committee, on Selected Recommendations of the Commission on Government Procurement and Procurement from Small Business in Labor Surplus Areas, 93d Cong., 1st Sess., May 17 and 18, 1973, p. 9.

3 Ibid., p. 23.

4 Ibid., p. 143.

Services Procurement Act was not similarly amended, although approximately 50 percent of all contracts for architect-engineer services placed by the Government are subject to the Armed Services Procurement Act.

Representatives of small businesses added their support for implementation of the recommendation. They generally agreed that the present state of the law is unnecessarily confusing. This confusion proves a real hardship to the small businessman with a small staff and limited resources.

C. CONCLUSIONS AND RECOMMENDATIONS

The duality in the present framework of major procurement statutes creates a system from which flows multiple and diverse regulations. This substantially contributes to the complexity of the procurement process to the detriment of small business contractors. Consolidation of the Armed Services Procurement Act of 1947 and the Federal Property and Administrative Services Act of 1949 into a single procurement statute applicable to all procuring agencies would particularly benefit the small business segment of the contracting community.

Your committee supports the recommendation of the Commission on Government Procurement for the enactment of a single procurement statute.

In supporting this recommendation, your committee is not unmindful of the ramifications this would have both on the procuring agencies, as well as the interests and jurisdiction of the legislative committees of the Congress responsible for the present legislation. Some realignments and possible inconveniences may result from the adoption of the recommendation; nevertheless, your committee feels the ensuing benefits would outweigh these costs.