I am relatively new to the Government contracting world (contractor side). I read the SARA bill and had a few questions:
1. Why is there such a push for commercial buys by the Government? Isn't the Government already doing this? I must have missed something.
2. According to the bill, the definition of a commercial vendor is one where 85% of sales is commercial (non-government). Isn't it true, especially with a small firm, that a Government buy could change the firm's ratio of commercial to Government sales? What would happen then?
3. The worker exchange program appears to be interesting, but the administration of that program would be a difficult task.

By anon45 on Friday, March 08, 2002 - 09:30 am:

Number two is interesting - a Catch 22?

By Dave Barnett on Friday, March 08, 2002 - 09:33 am:

What goes around comes around, Anon, for those who worked for DoD long, long, long ago in an office far, far away. Offerors could submit a DD form 633-7, claim for exemption from submission of certified cost or pricing data based upon an established catalog or market price. I forget the actual ratios but there were catagory A, B, and C sales and there were percentage ratios beween the sales catagory (one being sales at a catalog price, another being sales at other than catalog price, and the third, sales to the Gov't(?)). And now a percentage test on the ratio of types of sales may be resurrected. I wonder what genius in the ivory towers of the Capitol Dome is casting him/herself in the mold of boy/girl genius with an original idea.

By Anonymous on Friday, March 08, 2002 - 11:20 am:

I believe they are using ivory bunkers these days

By Kennedy How on Friday, March 08, 2002 - 12:15 pm:

Yeah, I vaguely remember there was a form that could be submitted. And, I remember there were three categories. But, I don't think I ever saw a form submitted to me, as I mainly bought parts for combat equipment, and none of that stuff was even remotely commercial.

Kennedy

By Dave Barnett on Friday, March 08, 2002 - 01:00 pm:

I used it in as I was buying industrial machine tools for the Navy's Plant Equipment Support Office (most likely contracted out by now) back in the early 80's. We would get the occasional sole source acquisitions and that form came in handy at the time, remember the threshold was $100,000 at the time.

Incidently pulled out my old ASPM Vol II (1987). Cat A was sales to the Feds, Cat B was sales to the general public at catalog prices, Cat C was sales to the general public at other than catalog prices. The percentage formula used was Cat B + C sales were greater than or equal to 55% of the total of all Cat A + B + C sales and Cat B sales were greater than or equal to 75% of the sum of Cat B and C sales. A grey area was permitted if the percentages were not met but further investigation supported granting the exemption.

Just a bit of history folks!

By AL on Friday, March 08, 2002 - 03:51 pm:

I believe the 85% ratio mentioned is 85% including non-government sales plus government sales under Part 12 (i.e., commercial item procurement). In other words, if you sell to the government a lot, but under the Part 12 commercial procurement procedures, you're still o.k. as a commercial vendor.

Did I read that right?

By Vern Edwards on Saturday, March 09, 2002 - 11:52 am:

I read through SARA last night. The bill is a typical Congressional production when it comes to federal acquisition. However, given the marketing buildup for this bill, I'm surprised at how unambitious it is and how little it seeks to accomplish. Just a few observations:

Sec. 102 would establish an acquisition workforce training fund. Subparagraph (b)(2) would require the GSA to establish a workforce training fund "in support of acquisition workforce training across executive agencies other than the Department of Defense." The fund would be "managed by the Federal Acquisition Institute." The subparagraph goes on to say that the money would come from "5 percent of the fees collected by executive agencies" under task and delivery order contracts, GWACs, MAACs and GSA FSS contracts. A reference to Title 10 suggests that DOD would be one of the "executive agencies" that must contribute to the fund, although it would receive no benefit. If that's true, then the new law might affect DOD's behavior with regard to such contracts. DOD is almost certain to oppose this provision. Nor will it want to have any part of its training funds controlled by the Federal Acquisition Institute. This bill would do nothing to improve training for the biggest acquisition workforce of all.

I doubt that the Government-industry exchange program that would be created by Sec. 103 would be of much overall benefit to the taxpayer, although it would certainly benefit some individuals. Such ideas almost invariably sound better than they turn out to be. This one would almost certainly result in the loss of some of the government's better GS-11s, 12s, and 13s to industry. (The new employer would simply pay the amount that the civil servant would owe upon early departure from the government. That amount would be less than the cost of recruiting, training and developing someone with similar expertise in government acquistion practices.) I can only imagine how chiefs of contracting offices will react to the prospect of losing one of their best employees to a one-year detail, with no guarantee of being able to get them back. I doubt that most such managers will consider the program to be beneficial to their own organizations, except in the most theoretical and altruistic sense.

Sec. 211 would apparently permit all "service contractors" to submit monthly or biweekly invoices. But what about short-term (e.g., two or three-month), firm-fixed-price contracts for one-time services? Would SARA require the government to make monthly or even bi-weekly progress or partial payments instead of paying the contractor upon project completion? How would this provision improve services?

Sec. 224(d), about "professional engineering services," is unclear in intent, at least to me. Moreover, the parenthetical reference to 40 U.S.C. 541 is strange, since that section of the so-called "Brooks Act" architect-engineer selection statute does not include any "selection procedures," only definitions and the reference is not followed by "et. seq." The procedures are in 40 U.S.C. 544. Careless writing, no doubt.

The love affair with contractual incentives continues with Sec. 301's provision to expand the use of the share-in-savings incentive. What can I say? I know that some people are in love with the idea of incentives, despite abundant evidence that actual incentives often needlessly and uselessly complicate contract planning, negotiation and administration, and that government contracting personnel are not especially skilled at designing them. Here we are having all kinds of trouble doing something as simple as A-76 cost comparisons and now we want to evaluate competitive share-in-savings proposals. And the bill includes no audit or other formal savings measurement requirements. We've already heard from Formerfed about what an excellent idea this is. Formerfed, do you have or can you cite any trustworthy, audited, documented evidence that a share-in-savings arrangement has actually saved a significant amount of money in the acquisition of services? (Not the energy programs.) If so, I'd like to see it. I've got an open mind.

SARA would do a couple of good things. Sec. 402 would allow agencies to use time-and-material and labor-hour contracts to buy commercial items under FAR Part 12. And Sec. 403 would change the term commercial items to commercial items and services, which would be appropriate and helpful. However, Sec. 404 would create the needless, useless, and potentially troublesome category of commercial entity, which, as other Wifconers have pointed out above, harkens back to the old and troublesome "catalog or market price" TINA exemption formula.

SARA does not reflect any deep thinking about the nature of services or the various types of services, nor does it address the real challenges of services acquisition. Thus, SARA will not do much to improve the quality of the services that the government receives. Although good intentions are in evidence, the bill is not going to accomplish much of real value, unless you think that writing legislation is an accomplishment.

By Benthere Donit on Saturday, March 09, 2002 - 02:21 pm:

Most does seem to be more of the endless tinkering about with little real effect. Isn't it interesting how in these political things we get solution after solution that so rarely really solves much of anything.

In my opinion this does not mean there is no solution, only that there isn't the will to craft an effective solution.

By formerfed on Monday, March 11, 2002 - 08:24 am:

Vern,

I only know of one agency that did share-in-savings where audited and documented savings occurred. The Office of Student Financial Asssitance within the Department of Education has done several. The first was awarded a little over a year ago and actual savings are coming in. Government Executive magazine did a article a few months back on it. I know GAO looked at their numbers very closely because of some skepticism from the hill. Anderson Consulting was the contractor who replaced an old process/system with new technology to process student loans and produced annual savings of several million.

By Anon47 on Monday, March 11, 2002 - 10:28 am:

Anderson, huh? That explains it all. I've dealt with them - Some firms tell the client what they want to hear...

By Vern Edwards on Monday, March 11, 2002 - 11:34 am:

Formerfed:

Do you know what kind of service the Dept. of Education contract was for? Was it for debt collection?

By Vern Edwards on Monday, March 11, 2002 - 12:04 pm:

Formerfed:

Never mind, I found the Government Executive stories, which were published on July 27, 2000; April 1, 2001, and August 1, 2001. The contract was for data processing services. The stories reported the award of the contract, but did not report any audited and documented savings. Here is a quote from the August article:

"In March 2000, SFA formed a partnership with Accenture [formerly Anderson Consulting] to facilitate the modernization of the dated and redundant loan servicing computer system. Under the contract, Accenture helped SFA integrate and simplify its central data system, which is used to process 1.8 million direct student loans each year. Operating costs for the system were $20.3 million in fiscal 1999. By getting rid of duplicative functions and integrating other functions into a streamlined central data system, SFA officials hope to bring the annual operating costs down to $9.1 million by 2005. Accenture gets a decreasing percentage of the savings each year."

Underlining added. I did not find any Government Executive article that reported audited and documented savings. Did I miss it, or some other report?

What is most interesting about the stories is that they all tout the success of the contracts before there is any verified evidence of actual savings.

By the way, I don't doubt that share-in-savings incentives can work; the questions are whether or not they do work, whether or not government folks can make them work, and how to measure their effectiveness. I don't mind doing experiments; but I do mind claiming success before success is in evidence. All too often, the government's management philosophy is to claim success before the event.

By Anonymous on Monday, March 11, 2002 - 12:58 pm:

Sounds like change for changes sake

By Vern Edwards on Wednesday, March 13, 2002 - 09:27 am:

Prof. Steven Schooner testified at the subcommittee hearing on SARA and his comments are well worth reading. Bob posted a link to the hearing testimony yesterday. Here is a link to Prof. Schooner's comments (you'll need Adobe Acrobat):

{http://www.house.gov/reform/tapps/hearings/3-7-02/SARAschooner.pdf,
http://www.house.gov/reform/tapps/hearings/3-7-02/SARAschooner.pdf}

Whether you agree with him or not, I think his comments reflect thoughtful consideration of many issues.

By Anonymous on Wednesday, March 13, 2002 - 10:58 am:

The link does not work...is there another?

By Anonymous on Wednesday, March 13, 2002 - 12:34 pm:

This one should: Steven Schooner SARA comments. Note that it is a .pdf file of about 1,062 kb.

By joel hoffman on Tuesday, March 26, 2002 - 04:14 pm:

The DOD IG has provided comments on the proposed SARA legislation.

Available at the United States Department of Commerce Office of General Counsel
Division Website at:

http://www.contracts.ogc.doc.gov/cld/legreg.html#leg
happy sails! joel hoffman

By Anonymous on Tuesday, March 26, 2002 - 04:44 pm:

Poor Tom Davis! Nobody seems to like his bill.

By Anonymous on Wednesday, March 27, 2002 - 01:23 pm:

Regarding shared savings provisions:

It seems to me that, while it's sexy to draft buzzword compliant, acquisition reform award-winning incentive provisions .. that formula incentive (CPIF, FPIF) contracts can in essence have the same effect - particularly with respect to cost control. Riding the shareline is a powerful, tangible incentive to profit-seeking firms. As to "audited and documented savings" .. one example can be found in a set of shipbuilding contracts (Sealift) at NASSCO (a General Dynamics company), where the Navy incentivized them to ride the shareline, NASSCO did, resulting in savings to the Government and increased profit (and production capability) to the contractor.