Firms say 'blacklisting' regs still onerous

Proposed rule

Companies seeking federal contracts are cautiously — and unhappily — awaiting

word on a change to contracting regulations they say could lead to protests

and delays.

The change to the Federal Acquisition Regulation would lay out stiffer

ground rules for a vendor's business ethics when agency contracting officers

are determining awards. Vendor concerns have resulted in several changes

since the rule was proposed in July 1999, including a more specific definition

of what makes up a "satisfactory record of integrity and business ethics."

But vendors are no happier with the revised version of what they are

calling the "blacklisting regulations." The final rule is due for release

before the end of the month, but some industry leaders said they would not

be surprised if the proposal is weakened with the exit of the Clinton administration.

"Rumor has it that there could be some delayed implementation of this...and

[the Republicans] don't like it at all," said Larry Allen, executive director

of the Coalition for Government Procurement, an organization of more than

300 federal contractors.

Industry officials say the rule poses several problems for vendors and

agencies. In an August letter to the FAR secretariat, the Technology Coalition

for Responsible Procurement (TechCorp) said new commercial vendors might

steer clear of the federal market over the fear of losing business because

of ethics accusations.

TechCorp — whose members include organizations such as the Information

Technology Association of America and the Professional Services Council — supports bills proposed by House and Senate GOP members that would require

the General Accounting Office to study the rule's impact before it goes

into effect.

One fear is that the rule could slow the contracting process to a point

where all the positive impact of procurement reform is negated, said Olga

Grkavac, executive vice president of ITAA's Enterprise Solutions Division.

"To give contracting officers this extra responsibility when they are

so over-burdened is ridiculous," she said. "It's such an onerous way to

get at the few companies that may have fallen through the cracks."

But the point of procurement reform is to help the government function

more like the commercial sector, "and there is no one in the private sector

that has to do business with someone they don't trust, but the federal government

does," said Joshua Gotbaum, executive associate director of the Office of

Management and Budget.

According to OMB, the proposed rule simply clarifies requirements already

in place. The FAR already requires contracting officers to consider business

ethics and integrity, but "because there is literally no guidance on what

that means, contracting officers don't feel free to exercise their judgment,"

Gotbaum said.

The proposed rule has been changed to say contracting officers should

look only at cases where the company was found to have violated the law,

not complaints brought against the company, Gotbaum said. But anything the

FAR council releases will be open to protest and legal challenges, Allen

said.