. V^ \SIMPUFYING AND STUEAMUNING TOE FEDERAL PROCUREMENT PROCESS 4. G 74/7: P 94/26 plifying and Streanlining the Fe. . HEARING BEFORE THE SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY OF THE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT HOUSE OF REPRESENTATIVES ONE HUNDRED FOURTH CONGRESS FIRST SESSION FEBRUARY 28, 1995 Printed for the use of the Committee on Government Reform and Oversight MAy S 1996 U.S. GOVERNMENT PRINTING OFFICE 22-356CC WASHINGTON 1996 : Forsalebythe U.S.GovernmentPrintingOffice SuperintendentofDocuments,Congressional SalesOffice,Washington,DC 20402 ISBN 0-16-052334-6 . SIMPUFYING AND STUEAMUNING THE FEDERAL PROCUREMENT PROCESS G 74/7: P 94/26 . Lifying and Streanlining the Fe. . HEARING BEFORE THE SUBCOMMITTEE ON GOVERNIMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY OF THE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT HOUSE OP REPRESENTATIVES ONE HUNDRED FOURTH CONGRESS FIRST SESSION FEBRUARY 28, 1995 IMnted for the use of the Conunittee on Government Reform and Oversight '-i'W> MAV 6 1996 'Hft? ,.-»t. U.S. GOVERNMENT PRINTING OFFICE 22-356 CC WASraNGTON 1996 : ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,Congressional SalesOffice,Washington,DC 20402 ISBN 0-16-052334-6 COMMITTEE ON GOVERNfMENT REFORM AND OVERSIGHT WILLIAM F. CLINGER, Jr., Pennsylvania, Chairman BENJAMIN A. OILMAN, New York CARDISS COLLINS, Illinois DAN BURTON, Indiana HENRY A. WAXMAN, California CONSTANCE A. MORELLA, Maryland TOM LANTOS, California CHRISTOPHER SHAYS, Connecticut ROBERT E. WISE, JR., West Virginia STEVEN SCHIFF, New Mexico MAJOR R. OWENS, New York ILEANA ROS-LEHTINEN, Florida EDOLPHUS TOWNS, New York WILLIAM H. ZELIFF, JR., New Hampshire JOHN M. SPRATT, JR., South Carolina JOHN M. MCHUGH, New York LOUISE McINTOSH SLAUGHTER, New STEPHEN HORN, California York JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania PETER BLUTE, Massachusetts GARY A. CONDIT, California THOMAS M. DAVIS, Virginia COLLIN C. PETERSON, Minnesota DAVID M. McINTOSH, Indiana KAREN L. THURMAN, Florida JON D. FOX, Pennsylvania CAROLYN B. MALONEY, New York RANDY TATE, Washington THOMAS M. BARRETT, Wisconsin DICK CHRYSLER, Michigan GENE TAYLOR, Mississippi GIL GUTKNECHT, Minnesota BARBARA-ROSE COLLINS, Michigan MARK E. SOUDER, Indiana ELEANOR HOLMES NORTON, District of WILLIAM J. MARTINI, New Jersey Columbia JOE SCARBOROUGH, Florida JAMES P. MORAN, Virginia JOHN B. SHADEGG, Arizona GENE GREEN, Texas MICHAEL PATRICK FLANAGAN, Illinois CARRIE P. MEEK, Florida CHARLES F. BASS, New Hampshire FRANK MASCARA, Pennsylvania STEVEN C. LaTOURETTE, Ohio CHAKA FATTAH, Pennsylvania MARSHALL "MARK" SANFORD, South Carolina BERNARD SANDERS, Vermont ROBERT L. EHRLICH, Jr., Maryland (Independent) James L. Clarke, StaffDirector Kevin Sabo, General Counsel Ellen B. Brown, Procurement Counsel Judith McCoy, ChiefClerk Bud Myers, Minority StaffDirector Subcommittee on Government Management, Information, and Technology STEPHEN HORN, California, Chairman MICHAEL PATRICK FLANAGAN, Illinois CAROLYN B. MALONEY, New York PETER BLUTE, Massachusetts MAJOR R. OWENS, New York THOMAS M. DAVIS, Viiiginia FRANK MASCARA, Pennsylvania JON D. FOX, Pennsylvania ROBERT E. WISE, JR., West Virginia RANDY TATE, Washington JOHN M. SPRATT, JR., South Carolina JOE SCARBOROUGH, Florida PAUL E. KANJORSKI, Pennsylvania CHARLES F. BASS, New Hampshire Ex Officio WILLIAM F. CLINGER, Jr., Pennsylvania CARDISS COLLINS, Illinois J. Russell George, StaffDirector Susan Marshall, Procurement Specialist Andrew G. Richardson, Clerk Ron Stroman, Minority Deputy StaffDirector (II) CONTENTS Page Hearing held on February 28, 1995 1 Statement of: Clinger, Hon. William F., a Representative in Congress from the State ofPennsylvania 2 Fox, Hon. Jon, a Representative in Congress from the State ofPennsylva- nia 4 Horn, Hon. Stephen, a Representative in Congress from the State of California 4 Kelman, Steven, Administrator for Federal Procurement Policy, Office of Management and Budget; Colleen A. Preston, Deputy Undersecre- tary for Acquisition Reform, Department of Defense; and Robert P. Murphy, general counsel, General Accounting Office 6 Maloney, Hon. Carolyn, a Representative in Congress from the State ofNew York 3 McKay, Bernard F., AT&T, for the computer and communications infor- mation association; Randall I. Cole, HFSI, for the Information Tech- nology Association of America; Bruce E. Leinster, IBM Corp., for the Information Technology Industry Council; and Dennis Cossey, Innotek Corp 72 Miller, John B., Gadsby & Hannah, for the Section of Public Contract Law, American Bar Association; Robert F. Trimble, Procurement Roundtable; and William J. Mielke, Ruekert Mielke Consultants, for the Council on Federal Procurement ofArchitectural/Engineering Serv- ices 109 Turner, Ron, Computing Devices, Inc., for the Acquisition Reform Work- ing Group; John C. Custer, Mason & Hangar, Mason-Silas, Inc., for ARWG; and Carl Guerreri, Electronic Warfare Associates, for ARWG .... 45 Letters, statements, etc., submitted for the record by: Clinger, Hon. William F., a Representative in Congress from the State ofPennsylvania, prepared statement of 3 Cole, Randall I., HFSI, for the Information Technology Association of America, prepared statement of 84 Collins, Hon. Cardiss, a Representative in Congress from the State of Illinois, prepared statement of 125 Cossey, Denms, Innotek Corp., prepared statement of 96 Custer, John C., Mason & Hangar, Mason-Silas, Inc., for ARWG, pre- pared statement of 54 Fox, Hon. Jon, a Representative in Congress from the State ofPennsylva- nia, prepared statement of 4 Guerreri, Carl, Electronic Warfare Associates, for ARWG: Answers to follow-up questions 71 Prepared statement of 58 Horn, Hon. Stephen, a Representative in Congress from the State of California, prepared statement of 5 Kelman, Steven, Administrator for Federal Procurement Policy, Office ofManagement and Budget: Answers to follow-up questions 40 Prepared statement of 8 Leinster, Bruce E., IBM Corp., for the Information Technology Industiy Council, prepared statement of 90 Mascara, Hon. Frank, a Representative in Congress from the State of Pennsylvania, prepared statement of 5 McKay, Bernard F., AT&T, for the Computer and Communications Infor- mation Association, prepared statement of 73 (III) IV Page — Letters, statements, etc., submitted for the record by Continued Mielke, William J., Ruekert Mielke Consultants, for the Council on Fed- eral Procurement ofArchitectural/Engineering Services, prepared state- ment of 118 Miller, John B., Gadsby & Hannah, for the Section of Public Contract Law, American Bar Association, prepared statement of 110 Murphy, Robert P., general counsel. General Accounting Office, prepared statement of 23 Pharmaceutical Research and Manufacturers of America, prepared state- ment of 131 Preston, Colleen A., Deputy Undersecrettuy for Acquisition Reform, De- Eartment ofDefense, prepared statement of 15 weizer, Paul H., Schweizer Aircraft Corp., prepared statement of 127 Trimble, Robert F., Procurement Roundtable: Answers to follow-up questions 126 Prepared statement of 113 Turner, Ron, Computing Devices, Inc., for the Acquisition Reform Work- ing Group: Answers to follow-up questions 70 Preptired statement oi 47 SIMPLIFYING AND STREAMLINING THE FEDERAL PROCUREMENT PROCESS TUESDAY, FEBRUARY 28, 1995 House of REPRESE^^^ATIVES, Subcommittee on Government Management, Information, and Technology, Committee on GtOvernment Reform and Oversight, Washington, DC. The subcommittee met, pursuant to notice, at 2:35 p.m., in room 2154, Rayburn House Office Building, Hon. Stephen Horn (chair- mam ofthe subcommittee) presiding. Present: Representatives Flanagan, Davis, Fox, Bass, dinger, Maloney, and Spratt. Staff present: J. Russell George, staff director; Ellen B. Brown, procurement counsel; Susan Marshall, procurement specialist; and Andrew G. Richardson, clerk. Mr. Horn. Ladies and gentlemen, the Subcommittee on Govern- ment Management, Information, and Technology will come to order. We have some excellent witnesses this afternoon, and we are going to try to keep on schedule. Let me remind the witnesses that your entire statement will be automatically entered into the record. We ask you to then summa- rize your statement in 5 minutes. We will abide by the 5-minute rule. Each member of the panel alternating between Republicans and Democrats will then have 5 minutes to question the panel. Well have all witnesses speak first, then open it up to the Mem- bers. We will have a second roimd of questions. Now, we won't be able to meet everybody's needs in terms of the Members on ques- tions, so bear with us if we ask you to respond to some written questions to follow up. We will print your answers in the record as submitted. And you should also know at the beginning of this hearing that it is the practice of the Committee on Government Reform and Oversight to swear in witnesses. And unless the witnesses agree to the oath, they are not permitted to testify. That has been our con- sistent rule over the last few years, regardless of the witness, and regardless of his position. We will swear in each panel as a panel. I would like the first panel to come forward, and then I will have an opening statement, and the chairman of the full committee, Mr. Bill dinger, who I'm delighted has joined us, will give an opening statement. And Mrs. Maloney, Representative from New York, will give an opening statement. We would ask the other Members to file their opening statements so we can then proceed with the panel. (1) If the first panel would come forward, we will swear you in. We have Dr. Kelman, Ms. Preston, and Mr. Murphy. And I will intro- duce each ofyou just before you testify, rather than all at once. Be- cause nobody will ever remember who you are if we do it all at once. We thank you all for coming. You're well-known experts on this subject. [Witnesses sworn.] Mr. Horn. The witnesses all affirmed. Thank you. Please be seated. Mr. Chairman, why don't you go first, and I'll follow you. STATEMENT OF HON. WILLIAM CLINGER, A REPRESENTA- F. TIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA Mr. Clinger. I thank you very much, Mr. Chairman. And I'm pleased to be here today to hear testimony from the knowledgeable procurement community on their proposals for further streamlining and simplifying the Federal procurement system. Mr. Chairman, the Federal Acquisition Streamlining Act of 1994 was enacted last year to reform the Federal procurement system. Despite the fact that the U.S. Government spends approximately $200 billion a year on the procurement of needed goods and serv- ices, the procurement system has operated in an inefficient and, I might say, Byzantine way in recent decades. It has been burdened with an outmoded and fragmented statu- tory foundation and regulatory and procedural proliferation beyond comprehension. FASA certainly was a direct attack on a system that had gone haywire. But we must go further. The bill that I introduced last Friday, along with Chairman Spence and Chairman Oilman, is just the beginning for this next phase of streamlining and simplifying the Federal procurement process. Although we do not intend a new procurement reform ef- fort to be as comprehensive as FASA, we must continue to push for reforms which will make the Federal procurement system work better and cost less. And I might say that we are looking forward with great anticipa- tion to working with the administration. I know that the adminis- tration has a bill forthcoming which I think we can work in har- mony with in cooperation to achieve our joint goals, our mutual goals, which are to make the procurement system work better, cost less, and be more competitive. So I look forward to that effort. And I had a chance to talk with Dr. Kelman and Ms. Preston about this matter. And we are looking forward to that cooperative effort. I look forward to hearing from our witnesses today and to working with them and our colleagues from the other side of the aisle on further simplification of the streamlining processes. I would also like to make note of the fact that my predecessor and mentor in my present capacity, Mr. Frank Horton, who I learned a great deal about this job from, is in the audience. And we're delighted to have him with us. [The prepared statement of Hon. William F. Clinger follows:] Prepared Statement of Hon. William F. Clinger, a Representative in Congress From the State of Pennsylvanl\ Mr. Chairman, I am pleased to be here today to hear testimony from the knowl- edgeable procurement community on their proposals for further streamlining and simplifying the Federal procurement system. As you noted, Mr. Chairman, the Federal Acquisition Streamlining Act of 1994 was enacted last year to reform the Federal procurement system. Despite the fact that the \JJS. government spends approximately $200 billion a year on the procure- ment of needed goods and services, the procurement system has operated in an inef- ficient and Byzantine way. It has been burdened with an outmoded and fragmented statutory foundation, and regulatory and procedural proliferation beyond com- Srehension. FASA certainly was a direct attack on a system that had gone haywire, ut we must go ftirther. The bill that I introduced last Friday along with Chairman Spence and Chairman Oilman is just the beginning for this next phase of streamlining and simplifying the Federal procurement process. Althou^ we do not intend a new procurement reform effort to De as comprenensive as FASA, we must continue to pusn for reforms which wiU maJce the Federal procurement system work better and cost less. I look forward to hearing from our witnesses today and to working with them and our colleagues from the other side of the aisle on further simplification and stream- lining proposals. Mr. Horn. Thank you very much, Mr. Chairman. Representative Maloney. STATEMENT OF HON. CAROLYN MALONEY, A REPRESENTA- TIVE IN CONGRESS FROM THE STATE OF NEW YORK Mrs. Maloney. Thank you, Mr. Chairman. Last year, this committee reached a bipartisan consensus that the Federal acquisition svstem was fundamentally flawed and needed to be fixed. Federal procurement was complicated and con- fUsing, wasting billions of scarce taxpayers' dollars. The 200 billion a year spent by the Federal Government purchas- ing goods and services oflen went to pay for unnecessary paper- work and duplicative requirements, the committee's consensus crystallized into the Federal Acquisition Streamlining Act of 1994, FASA. In broad terms, FASA stands for the proposition that the Federal Government should, whenever possible, purchase commercial items, reduce the need for cost or pricing data, encourage the use of commercial financing practices, establish an electronic method for Federal purchasing, and reduce the number of meritless bid protests through the process of agency debriefings. FASA was passed by this committee with strong bipartisan sup- port only after extensive consultation with most of the witnesses who will be testifying here today, including the Office of Federal Procurement Policy, the Department of Defense, and representa- tives from large and small defense, aerospace, and other commer- cial sector companies. Now, FASA must be implemented. Last week, OFPP adminis- trator Steven Kelman testified that while the administration is ahead of schedule on drafting the FASA regulations, several of the We most important regulations still have not been proposed. can all anticipate that it may be many more months before all of the final FASA regulations are issued. The Deputy Undersecretary for Acquisition Reform at the De- partment of Defense, Ms. Preston, testified that agency officials are now being educated about the requirements of FASA. However, it is difficult to see how agency officials can be adequately trained on FASA FASA's requirements until the regulations are finalized. My point is that much work remains to be done by the adminis- tration and this committee on FASA. I also want to note that the chairman of the full committee introduced a procurement bill last Friday, and I look forward to subcommittee hearings on that par- ticular bill. Mr. Chairman, we need a procurement system that is driven by full and open competition, a system that encourages creativity and innovation, and a system that carefully balances the cost and the value of the goods and services purchased by the Federal Grovem- ment. I want to applaud the chairman of the subcommittee, Mr. Horn, for calling this hearing and for putting together a fair and balanced list of witnesses. I look forward to hearing their testimony. Thank you very much. Mr. Horn. Thank you very much for your thoughtful statement. I believe Mr. Fox wants to insert a statement in the record. STATEMENT OF HON. JON FOX, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA Mr. Fox. Thank you, Mr. Chairman. Indeed, the Federal procurement purchases from the private sec- tor provide the opportunity for participating businesses to expand and new service-oriented companies be created. Procurement expenditures generate secondary and related consumer spending, and I'm loolung forward to working with sub- committee Chairman Horn and Chairman dinger, along with the other members of the committee, to evaluate the priorities and to address these issues. And I'll submit, if I may, Mr. Chairman, with your permission, my the rest of statement for the record. [The prepared statement of Hon. Jon Fox follows:] Prepared Statement of Hon. Jon Fox, a Representative in Congress From THE State of Pennsylvania Mr. Chairman, federal procurement has become a prominent issue of debate. Therefore, I am glad we are holding this hearing today. Indeed, the federal procurement purchases from the private sector provide the op- portunity for participating businesses to expand and new service-oriented companies to be created. Procurement expenditures generate secondary and related consumer spending. However, the growth of federal procurement during the past decade has resulted in a proliferation of complex and overlapping federal regulations that often hinders an agency's ability to procure the best goods and services at the lowest cost. The Federal Streamlining Act, signed into law last year, was a step in the right direction. Nevertheless, the measure does not reach far enough. We need to move ahead with the fundamental objective of improving the effectiveness and efficiency ofthe procurement ofproperty and services by government agencies. Procurement reform is one of Chairman dinger's priorities and I look forward to working with him on this issue. STATEMENT OF HON. STEPHEN HORN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. Horn. Thank you very much. Representative Fox. I will put my own statement in the record, and just make one comment that last Friday, Chairman dinger, along with the chair-