Those who screamed the loudest finally got paid. The problem with the computer was that it should have been replaced. It was an antiquated item. There is no question that making payments promptly is a difficult task, if it is not done correctly. It is not a very difficult task if it is done correctly. The Government has a rule which you will not hear anyone testify about. In bad times the Treasury Department puts out the statement to the rest of the executive branch: "Do not pay fast." The people who get hurt the most are those with the worst cash flow. This policy of slow pay to contractors should not be permitted. The Government should not be taking advantage of its smallest businesses' credit to support the U.S. Government. Using small businesses' credit is the last thing in the world which should be done. Senator DANFORTH. You would say that the balance of the economic consequences of delayed payments of bills is more severe than the economic consequences of the Government's paying its bills on time? Mr. HIRSCH. Absolutely. Senator DANFORTH. Gentlemen, thank you very much. [Mr. Hiestand's prepared statement with attachments follows:] PREPARED STATEMENT OF 0. S. HIESTAND Mr. Chairman and Members of the Subcommittee, my name is 0. S. Hiestand and I am the Chairman of the Public Contract Law Section of the American Bar Association. Ι also am a partner in the law firm of Morgan, Lewis and Bockius. With me are David L. Hirsch, Chairman-Elect of the Public Contract Law Section, American Bar Association, and Paul G. Dembling, Chairman of the Section's Federal Acquisition Regulation (FAR) Council. Mr. Hirsch is Senior Corporate Counsel, Norris Industries. Mr. Dembling is a partner in the law firm of Schnader, Harrison, Segal and Lewis, and was formerly General Counsel of NASA and GAO, respectively. We are appearing today on behalf of the American Bar Association, and are pleased to have this opportunity to discuss the Federal procurement process. The Public Contract Law Section and the ABA have been active for a number of years in regard to needed reforms in Federal procurement. I might add that Mr. Hirsch, Mr. Dembling and I, as well as other members of the Section, were personally involved in the study of Federal procurement conducted by the Commission on Government Procurement (COGP). Mr. Hirsch was a member of one of the Study Groups; Mr. Dembling was a principal advisor to the 81-896 0-81-2 Comptroller General of the United States, a member of the Commission; and I was General Counsel to the COGP. The COGP was established by the Congress in 1969 to study the Federal procurement process and to make recommendations to Congress for improving procurement by the Executive Branch. P.L. 91-129. The statute provided for a bipartisan twelve member Commission which, in addition to the Comptroller General, included members of the House and Senate, officials of the Executive Branch, and public members selected by the Congress and the President. E. Perkins Mcguire was chairman of the COGP, and then Congressman Chet Holified was vice chairman. Senator Lawton Chiles was a member of the COGP. In December 1972 the COGP submitted a four volume report containing 149 recommendations for improving Federal procurement. The Statutory Framework For Procurement A basic recommendation of the COGP was the need to reform the statutory framework for Federal procurement.That need is as great today as it was in 1972 when the COGP made its report. The existing basic procurement statutes Armed Services Procurement Act (ASPA) and Federal Property and Administrative Services Act (FPASA) are inconsistent - Report of the Commission on Government Procurement in significant areas and place restraints on the methods of procurement that have adverse effects. Some agencies are either exempt or have authority to exempt themselves from requirements of the FPAS Act. In addition, there are many piecemeal statutes that apply to the procurement process and are scattered throughout the U.S. Code. The COGP study indentified some 4,000 statutes relating to procurement by Federal agencies. That was eight years ago. That number is much larger now. Since the COGP report there have been several bills introduced to establish a single, government-wide procurement statute. The principal bills in the Senate were S. 3005 (1976), S. 1264 (1977), and S. 5 (1979). After careful study the Public Contract Law Section sponsored a resolution to the ABA House of Delegates in 1976 endorsing the concepts and goals of S. 3005. We sponsored a similar resolution in 1977 on S. 1264. The ABA House of Delegates adopted both resolutions and we testified on S. 1264. I have copies of these resolutions and the ABA testimony on S. 1264, and respectfully request that they be inserted in the record. Senate bill S. 1264, as well as S. 5, created basic policies and procedures for procurement by all executive agencies, provided guidance on acquisition methods, and endorsed the issuance of a single set of implementing regulations. As a The existing statutes provide that negotiation is an exception to "formal advertising" and do not distinguish between competition and sole source negotiation. result, many procurements are classified as negotiated (with a derogatory implication) when in fact they were awarded after very intense competition. The bills referred to above removed the stigma presently attached to the competitive negotiation method of contracting and authorized both competitive sealed bidding and competitive negotiation in accordance with stated criteria. They also established precise criteria for sole source awards. The competitive negotiation method is a desirable, and even preferable, method of procurement in many cases. It increases the opportunity for businesses to offer different products and services, which provides more opportunity for the government to assess what will adequately fulfill the government's needs. It can provide more assurance that the government and the supplier have a good understanding of what the contractor is to furnish and what the government will pay for. Some of the criticisms of the competitive negotiation method would be dissipated if a more descriptive label were used. This method of procurement involves the |