July 11, 1977. A copy of the resolution approved by the Board of Governors is attached to this statement.

Before launching on a discussion of changes we suggest,

I would like to take this opportunity to state that the American Bar Association endorses the concepts and the goals expressed in S.1264. On behalf of the American Bar Association we would like to thank Senator Chiles and his staff for the fine effort which resulted in S.1264.

The following is a summary of the principal areas of

S.1264 in which changes are recommended.

The Section's report,

which was the basis for Board of Governors action, is attached to these prepared remarks. The report covers the points stressed in my oral statement and also includes additional drafting revisions that we believe will further improve the bill. The bill as now drafted represents a major step forward in the improvement of the procurement process. The American Bar Association believes that the expected improvement in the procurement process reflected in S. 1264 should apply to all branches of government. As currently drafted, only the executive branch is included under the bill. If good procurement practices must be followed by the executive branch then surely Congress must require that good procurement practices must be followed by the legislative and judicial branches. We recommend that S.1264 be modified to include the legislative branch and the judicial branch. In order to avoid any potential argument that the Office

of Federal Procurement Policy would be establishing regulations for the legislative and judicial barnches, it is recommended that the statute provide that all regulations issued by the Office of Federal Procurement Policy be endorsed by the Comptroller General of the United States, or his designee, when its regulations are applicable to the legislative branch and by the Chief Justice of the Supreme Court, or his designee, when its regulations are applicable to the judicial branch. We also recommend that all non-appropriated fund activities and wholly-owned government corporations be included in those activities which are subject to the requirements of S.1264. If the procurement practices required by the Federal Acquisition Act of 1977 protect the United States taxpayer when appropriated funds are expended, then those practices should protect the taxpayer who contributes to non-appropriated funds and who is impacted by the activities of wholly-owned government corporations.

Members of the American Bar Association recognize that the federal government leases considerable office space to house its employees. Leasing by the federal government of improvements to real property should also come within the requirements of S.1264. As currently drafted, the leasing of office space by the federal government has been excluded. We can find no legitimate purpose for excluding such activities from the dictates of this fine legislation, and, therefore, recommend that the leasing of improvements by the federal government be made subject to the requirements of the legislation.

At present, the bill (Section 101(a)) provides that property and services will be acquired in accordance with the policies of Section 2 and will utilize one of the procurement methods authorized in Section 101(a). We endorse the policies contained in Section 2. However, we believe it is unwise to commingle these policy statements with the description of procurement methods. The legislation places severe restrictions on the use of single source procurement. These restrictions were included in

The

the bill in order to reduce the amount of single source procurement which occurs each year. We are concerned that the so-called "cure" included in the bill is worse than the "sickness". legislation requires the procuring activity to solicit the marketplace even though it is known in advance that an award will be made to only one contractor. This approach will require potential contractors to prepare proposals at their own expense even though there is no possilibity that an award will be made to any contractor other than the one the procuring agency knows will obtain the award prior to the time the procuring agency solicited the other proposals. As an illustration, if it is determined by the procuring activity that it must retain a specific contractor's production capability during peacetime in order that the contractor's capability will be available during wartime, seeking proposals from other contractors who do not have this capability would be an expense the other contractors would be required to endure without any possibility of reward.

Furthermore, it is likely that these other contractors will object to this procedure and will hold up the award to the chosen contractor whose mobilization base the government seeks to protect. We believe that by publicly advertising the name of the sole source contractor and the amount of the award prior to making the award other potential contractors can object and be heard and that testing the marketplace at the expense of all potential contractors is a serious mistake. We recommend that the Office of Federal Procurement Policy be instructed by the legislation to establish regulations which will indicate the specific reasons for single source procurement. These reasons should include national emergency, where time will not permit competition, protection of the mobilization base, research and development, just to name a few. We believe that sole source procurement is not bad per se and that properly implemented regulations issued by OFPP will reduce the amount of sole source procurement and achieve the objectives of the legislation.

The use of competitive negotiating as an alternative method of procurement is recognized in S.1264. We strongly support this change in the existing procurement statutes. Competitive negotiation is an important procurement tool for many types of sophisticated and complex purchases. This method of procurement strengthens competition and is cost effective by providing

full opportunity for bidders to know what the govern

ment wants and for the government to better understand exactly what a supplier is proposing.

However, as presently drafted, S.1264 does not permit

لم

negotiations on price of technical proposals. Written or oral discussions are permitted only for the purpose of obtaining needed clarification on extension of offers.

These limitations were imposed in order to prevent auctioneering and technical transfusion. The limitations prevent the contracting officer from obtaining any information from the other offerors and limits actual negotiation to discussions with the low offeror. There are many times when offerors should be permitted to discuss their proposal prior to making their best and final offer. A good technical proposal might be rejected because a slight modification could not be made. We recommend that technical transfusion and auctioneering be forbidden by the statute and that negotiations be permitted with all offerors when the procuring officials believe that negotiations are warranted. Both auctioneering and technical transfusion can be severely limited if not stopped by detailed regulations issued by OFPP.

We also recommend a revision to provide more flexibility in the use of "total cost" evaluations and functional specifications. The present mandatory requirements, we believe, are impractical, would be too costly, and could prohibit contracting based on a single approach in situations where it is the best interest of the government.

We recommend two additions to the legislation which we believe will be in the public interest. One addition deals with the need for a statute of limitations for claims by the government against