PSC calls contracting provisions into question

Thursday - 7/14/2011, 7:09am EDT

By Peter Buxbaum
Special to Federal News Radio

At a time of inevitable federal budget cutbacks, it is not surprising that Congress would want to grab a chunk out of the billions received by defense contractors.

It is not the principle of the cuts which contractors object to; rather what's objectionable is some of the ways in which the House and the Senate, in their separate versions of the fiscal 2012 National Defense Authorization Act, go about implementing those cuts, said the Professional Services Council in a briefing call with reporters Wednesday.

Stan Soloway, president and CEO of the Professional Services Council, a trade association, characterized the approach as a hodge-podge of disparate provisions that lacked coherence.

"Cuts in service contracting will come as a matter of course as budgets and programs are reduced," he said. "The key issue is that these are disconnected initiatives. Contractors don't understand what will really happen and what they are expected to do."

Last month, both the House and the Senate Armed Services Committee passed separate versions of the bill.

PSC is concerned about similar provisions in the Senate and House versions of the authorization bill which would extend the current cap on allowable executive compensation costs to all management employees, in the case of the Senate bill, and to any individual working on a federal contract, in the case of the House bill.

PSC also opposes the Senate provision which would cap DoD spending for contract services in 2012 and 2013 at the level of the President's budget request for 2010. The provision includes a 10 percent reduction in funding for staff augmentation contracts and contracts for functions closely associated with inherently governmental functions. The provision also directs DoD to adopt a negotiation objective that holds contractor labor and overhead rates at 2010 levels.

"PSC opposes arbitrary cuts in defense spending as well as arbitrary caps and pay freezes for DoD civilian personnel," said Soloway. "If you can reduce costs that is terrific. But when you pick arbitrary numbers, the number often becomes the objective rather than better outcomes."

The White House is following suit of Congressional action when it required agencies last week to cut management support service contracts by 15 percent over the next 15 months.

PSC also has a problem with the House provision that would let the Pentagon void a contract or task order that has been awarded if it determines that a foreign entity or foreign individual performing on the contract is engaged in hostilities.

"The language is unclear about how work on existing contracts that violate this section would be treated," Soloway said.

Another provision PSC is unhappy with would require the posting of past performance evaluations in databases without first providing contractors the opportunity to rebut the government's evaluation.

On the other hand, PSC is pleased with provisions in both bills which would prohibit the administration from moving forward with a draft Executive Order requiring contractors to disclose political spending.

"It was not the intent of the executive order to politicize procurement but it is its outcome," said PSC vice president of government relations Roger Jordan. "We believe procurement should be non-partisan. With the atmosphere in Washington today, there is a danger that procurement could become just another area where divisions and partisanship play out."

Peter Buxbaum is a freelance writer.

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