The Coalition supports the goals of A-76 and would like to see government entities restrained from putting up shops that compete with the private sector. There is a need for better cost comparisons analyses done by these entities which realistically reflect the cost of doing projects in-house as compared to contracting them out. VII. New Federal Procurement System We are anxious to see the final result of the Office of Federal Procurement Policy's (OFPP) New Federal Procurement System. However, we have concerns that all three sections can be achieved simultaneously. We plan on working closely with OFPP during the next few months with recommendations on commercial product policy and will keep the subcommittee informed on any problems we may perceive. We again thank the subcommittee for the opportunity to present our views on the subject and offer any help you may need in resolving problems in the procurement system. CBEMA June 11, 1981 The Honorable John C. Danforth Chairman Subcommittee on Federal Expenditures Research and Rules 44 Capitol Hill Apartments 128 C Street, N.E. Washington, D.C. 20510 Dear Senator Danforth: The Computer and Business Equipment Manufacturers Association (CBEMA) GSA Reform Legislation As you are aware, in the 96th Congress the House passed H.R. 5381, To Although entitled GSA reform, it is primarily aimed at industry. H.R. 2580 would require unreasonable certifications from government contractors and then subject them to major punitive administrative penalties for cases of minor administrative errors or differences due to a lack of clarity in Government RFP's. While we agree that GSA is in need of reform in a number of areas, this Computer and Business Equipment Manufacturers Association 1828 L Street, N.W., Washington, DC. 20036 (202) 466-2288 Service Contract Act CBEMA has been actively involved in the SCA issue for the past three years. During this involvement CBEMA has offered conclusive evidence to the past Administration and to the present that due to the compensation plan of this industry, merit pay, the incentive to "wage bust," does not exist. In our dealings with the present Administration it appears very likely that some form of administrative relief will be forthcoming as a temporary solution. It remains CBEMA's position that as a permanent solution the Congress should adopt the recommendations of the General Accounting Office, and pass legislation to exempt commercial product support services from the Service Contract Act. CBEMA and other interested organizations have drafted such legislation and would be pleased to meet with you or your staff for further discussion. Commercial Products CBEMA has for quite some time been engaged in ongoing negotiations with the General Services Administration and other government procuring entitites regarding the Government's treatment of commercial product acquisition. We support the policy of the Government relying heavily on commercial products in meeting its needs. In addition, it is CBEMA's philosophy that when procuring commercial products, the Government should to the maximum extent possible adhere to standard commercial business practices, accept commercial warranties, commercial prices, terms and conditions, etc. Competitive Negotiation The Government should grant truly equal status to competitive negotiation as a valid and desirable method of procurement. While some past efforts such as S.5 have purported to endorse this policy, the detailed provisions have not been consistant with the policy. Most Favored Customer Many of the problem areas in the Government's procurement of the industry's commercial products are in part a question of the concept of most favored customer. It is essentially the question of how the Government performs as a customer and how it should be treated. The Government may function in many different modes when buying commercial products, e.g., the Government as an end user, as a grouping of end users, as a wholesaler and distributer, and as a systems integrater. These various possible roles of the Government as a commercial products customer must be clearly defined and related to appropriate procurement policies/practices in order to improve the procurement system. Multiple Award Program The industry feels that the Multiple Award Program is a significant mutually beneficial method of acquiring commercial products. If past confusion with regard to Most Favored Customer were clarified and existing federal procurement regulations adequately enforced, the Multiple Award System would be viewed much more favorably as a competitive method of acquisition. A-109 Although the philosophy behind A-109 is a reasonable one for weapons systems, it should not be applicable to the acquisition of standard commercial products. Experience to date has proven the A-109 policy to be too complex, costly and time consuming for acqusition of such items as commercial ADP. Late Payments This industry, as well as many others, has been burdened by the problem of late payments. In this regard industry has been quite pleased with your legislation S.1131 and we would be pleased to assist you in this effort should the need arise. Our industry has experienced equal or perhaps greater financial burden from the continuing problem of late awards of annual GSA Multiple Award Contracts. Member companies with substantial amounts of lease/rental equipment installed in the Government each year find themselves unable to receive payment for periods of months until GSA finally awards new contracts. The Government has the use of the equipment through this entire period but the contractor does not get paid until the award is made. Provisions similar to the interest penalty on late payments as in S.1131 might encourage GSA to rectify this annually recurring late contract award problem. Long Term Fixed Price Contracts The Government's policy of requiring long term fixed price contracts for products and/or services involving extensive personnel costs places an unreasonable burden upon the industry in an era of double digit inflation. The contractor is under pressure to minimize his price in competitive bidding but is then faced with living with a fixed price in the latter years when inflation may have unpredictable impacts on his costs. The Government should consider the possibility of automatic indexing for inflation in such contracts if the current high inflation environment continues. The areas which we have briefly listed are but a few of the problems with the Federal Procurement System. We would be pleased to submit a |