For decades Congress has demonstrated its deep interest in simplifying the federal government’s ability to buy commercial products and services. It recognized that to solve government’s most difficult problems, the government must have ready access to the innovative and rapidly evolving commercial marketplace. But the government’s transactions in the commercial marketplace, which should be quick and easy, have gotten more complicated over the years, not less so. This is due in large part to the volume and complexity of government-unique contract terms and conditions.
Volume 1 of the Section 809 Panel report includes several recommendations for Congress’ consideration that will truly simplify contracts for commercial products and services. Among other strategies, Recommendation 2 makes the case for Congress retaining the authority to determine the applicability of new government-unique requirements that are well-intended but burdensome, rather than delegating that authority to the Federal Acquisition Regulatory Council or the Department of Defense.
In 1994, the Federal Acquisition Streamlining Act took important steps to make the government more commercial-like in its dealings in the commercial marketplace. FASA limited the applicability of many, but not all, procurement-related statutes in two ways. First, many statutes in effect at the time FASA was enacted were made inapplicable to commercial buying, significantly simplifying federal contract compliance and administrative burdens.
Second, FASA created a unique statutory prohibition on applying new statutes to commercial buying. The statute states that no provision of law enacted after Oct. 13, 1994, will be applicable to commercial products or services unless one of two criteria is met: the law provides for criminal or civil penalties; or the law explicitly states that it applies to contracts for the procurement of commercial items despite the general statutory prohibition.
More recently Congress added a third criterion: a provision of law that requires certain articles or strategic materials critical to national security be bought from American sources (codified at 10 U.S.C. §2375).
Congress established these criteria to tightly control which procurement-related statutes would apply to commercial buying to reduce the barrier that such statutes might create for companies seeking to do business with the government. However, Congress also gave the FAR Council and DoD authority to determine that a provision of law should apply to commercial procurements even though the provision of law met none of the three criteria.
This combination of very tight control by Congress and limited discretion given to the FAR Council and DoD should have been sufficient to limit the applicability of procurement-related statutes to commercial buying. However, it has proven insufficient, and the number of laws applicable to commercial products and services has increased substantially.
The panel reviewed the basis for applicability for each of the 165 FAR and Defense Federal Acquisition Regulation Supplement clauses currently applicable to procurements of commercial products and services. The results were startling:
- Zero clauses implement statutes that provide for criminal or civil penalty.
- Six DFARS clauses implement statutes that make specific mention of 41 U.S.C. §1906.
- 22 clauses implement statutes that make no mention of 41 U.S.C. §1906, but the FAR Council or DoD has prepared a determination that it was not in the best interests of the government to exempt contracts for commercial products or services.
- 137 clauses implement a statute, policy, regulation or executive order that meet none of the criteria in 41 U.S.C. §1906 or 10 U.S.C. §2375 and have no FAR Council or DoD determination.
Congress’ framework for limiting government-unique terms and conditions is sound. However, overuse of the flexibility provided to the FAR Council and the DoD has undermined the expansion of the DoD’s access to the commercial marketplace. The dilemma is obvious. All 122 statutes serve some useful public purpose determined by Congress, acting as the sovereign. It’s unreasonable to place the FAR Council and the DoD in the position of determining which of those government-unique public purposes should apply to procurement transactions for commercial products and services, and which should not.
To regain control of the process and return commercial buying to the simplicity and commerciality envisioned by FASA, the panel recommended Congress take two actions:
Enforce the existing statutory requirement that no statute, regardless of when it was enacted, should apply to procurements of commercial products or services unless the statute specifically refers to 41 U.S.C. §1906 or 10 U.S.C. §2375 and states it shall be applicable. The panel noted that since 1994, only six statutes applicable to commercial products or services meet one of the three statutory criteria. The same mechanism should be applied to the 20 executive orders and 23 DoD regulations also currently applied to commercial buying.
Remove from statute the authority for the FAR Council and the DoD to apply procurement-related statutes to commercial buying that Congress has not approved. The panel concluded this authority gives the FAR Council and the DoD too much latitude to apply statutes where Congress itself has chosen not to do so. This recommendation places the authority and responsibility solely in the hands of Congress for determining which statutes serve such an important public purpose that they should be included in what would otherwise be a commercial transaction.
Congress must take the lead if it wants the government to take a “light touch” in its dealings in the commercial marketplace. The panel’s recommended changes will improve relationships with firms that currently sell commercial products and services to the federal government, and they will encourage companies that have consciously avoided the administrative and compliance complexities of government business. Congress and the DoD can demonstrate that after 24 years of experimentation with FASA’s commercial-like practices that the government is ready to participate fully in the commercial marketplace.
Col. Larry Trowel (ret.) serves as a commissioner on the Section 809 Panel. Trowel has served as the Air Force policy representative on the Defense Acquisition Regulations Council, the general manager of the General Electric Government Business Practices and Processes Center of Excellence, and as a team leader for the interagency team responsible for the FAR implementation of FASA.