OFFICE
OF MANAGEMENT AND BUDGET
OFFICE
OF FEDERAL PROCUREMENT POLICY
AGENCY:
Executive Office of the President, Office of Management and Budget
(OMB), Office of Federal Procurement Policy (OFPP).
ACTION:
Notice of solicitation of public interest.
SUMMARY:
OFPP is developing a new initiative to fundamentally examine the
manner by which the Government develops and applies incentives to
its contractual vehicles, and is seeking information and advice
that would advance this effort.
COMMENTS
DUE DATE: Comments and information regarding the proposed
initiative must be received on or before December 26, 2000.
FOR
FURTHER INFORMATION CONTACT: Comments and information should
be sent to Stanley Kaufman, Deputy Associate Administrator, OMB,
OFPP, 725 17th Street NW, Washington, DC 20503. He can
be reached electronically at skaufman@omb.eop.gov
or by phone at 202-395-6810.
SUPPLEMENTARY
INFORMATION:
I.
Background. Procurement reform initiatives such as the
Federal Acquisition Streamlining Act of 1994, the Federal Acquisition
Reform Act of 1996, the Information Technology Management Reform
Act of 1996, and Performance-Based Service Contracting are significantly
changing the way the Government acquires supplies and services,
moving from a process-oriented, rules-based, risk avoidance culture
to one emphasizing performance outcomes, business judgment, streamlined
procedures, and risk management.
The
rules-based culture constrained contracting officials' flexibility
to serve as business advisors focusing on the overall business
arrangements. While the cited acquisition reforms provided contracting
officers increased flexibilities in negotiations and communication
with contractors, research by the Army and studies by OFPP and
industry found that innovative contracting methods are being used
insufficiently, and effective incentives exist which are not being
considered.
Consideration
of incentives typically was limited to the fee portion of contracts
to the detriment of other incentives that contractors would find
more appropriate and meaningful, such as a consistent revenue
flow and the promise of future business. In addition, incentives
too often focused on the process of the work to be performed vs.
the outcomes, thereby rewarding unnecessary and/or even counterproductive
behavior. Furthermore, profit is not an effective incentive for
non-profit entities such as universities and research laboratories.
As a result, contractors often did not provide their best solutions
and Government requirements were not fulfilled in as timely, quality-related,
and cost-effective manner as possible.
II.
The Project. OFPP is looking to develop a new contracting
paradigm that will encourage acquisition officials to develop
joint objectives with contractors and effectively incentivize
both parties to create "win/win" business arrangements.
In
pursuing this project, OFPP would like to pull together any experiences
and literature regarding non-fee type incentives. Consultation
with the private, non-profit, and public sectors is hereby sought.
A review of current policy, regulatory and statutory guidance
will be conducted to determine any barriers to achieving the project's
objective and the need for any additional guidance to facilitate
compliance.
Accordingly,
OFPP is seeking ideas, recommendations, practices, lessons learned,
etc. on what works in industry, the non-profit environment, and
state and local governments. Such information tailored to specific
industries (e.g., manufacturing, services, construction), subsets
of industries (e.g., information technology, advisory and assistance
services, environmental remediation), types of contractors (e.g.,
universities, small businesses) and types of endeavors (e.g.,
research and development) would be welcomed. We also would welcome
any studies or literature that analyzes, assesses, or validates
these practices, as well as information on relevant training courses
and materials.
In
examining this information and developing any policy initiative,
we will consider approaches that would fundamentally restructure
our contractual relationships to accommodate improving our business
arrangements, and so would welcome any appropriate recommendations
as well as the identification of any impediments (legal, regulatory
or policy). OFPP welcomes written comments and materials, and
is willing to meet with individual companies, associations, and
other organizations to hear their views and recommendations. OFPP
is concurrently surveying Federal agencies to ascertain any ongoing
innovative practices that could be used in this initiative.
We
are also considering a public meeting to facilitate the exchange
of information between the Government and general public to explore
this issue if sufficient interest exists. Topics could include:
developing alternative incentive strategies; providing recommendations;
sharing best practices and lessons learned; reviewing existing
literature; and identifying barriers and potential benefits and
disadvantages for both agencies and contractors. Expressions of
interest in such a meeting would be appreciated.
Kenneth
J. Oscar
Deputy Administrator (Acting)
Office of Federal Procurement Policy
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