1 February 2007
31 January 2007 - Mayer, Brown, Rowe & Maw government procurement law expert Marcia Madsen told a U.S. Senate Subcommittee today that more competition, greater use of commercial buying practices and strengthening the federal acquisition workforce are among keys to ensuring that taxpayers and government are better served when the government buys goods and services.
Madsen, a partner in Mayer Brown's Washington office and expert in government procurement law, testified before the Subcommittee on Readiness and Management Support of the Senate Armed Services Committee in her capacity as chair of the Acquisition Advisory Panel (AAP). The Panel was established by Congress in 2003 to review government procurement practices and recommend ways the federal government could improve the way it buys goods and services from the private sector. Its draft final report was issued in December.
Madsen told the Subcommittee that injecting greater competition into government contracting must be a top priority, given that as much as one-third of the government's annual acquisition spending has not been competitively bid in recent years - at a time when government purchases have risen sharply.
"With federal procurement spending approaching $400 billion annually and the serious and competing demands on taxpayer dollars, an accountable and transparent acquisition system that delivers innovative, high-quality goods and services is critical to our national interests," Madsen told the Subcommittee .
During its 18-month review, the Acquisition Advisory Panel tracked major trends in federal procurement, finding that in 2004, 32 percent of the $338 billion in federal government contracts were not competitively bid. Even when there was competition, 20 percent of the dollars were awarded in situations where only one offer was received.More than one-fourth of total contracts were also sole-sourced in 2005.
Madsen urged administrative or congressional action on many of the Panel's 80 recommendations aimed at making the federal government a better consumer and steward of taxpayers' dollars. Chief among those recommendations are ones designed to increase competition among private companies seeking government business.
"The commercial sector relies on competition to obtain fair prices and quality service and government needs to do the same. Competition fuels innovation, drives fair prices, disciplines the responsible, effective use of streamlined acquisition vehicles, and improves opportunities for small business participation," said Madsen.
Madsen also testified that the state of the federal acquisition workforce is troubled. There is a significant mismatch between the demands placed on the acquisition workforce and the personnel and skills available to meet those demands. The acquisition workforce has declined by 50 percent since the mid-1990s. At the same time, the Panel found that since 9/11, annual federal procurement spending shot up 63 percent, from $234 billion to $382 billion in FY2005.
This weakening of the acquisition workforce is even more acute given a huge shift in what the government buys from the private sector: from products to services. Federal procurement spending on services began to exceed spending on goods between 1990 and 1995. Currently, the government spends more than 60 percent of its procurement dollars on services. The Department of Defense alone obligated more than $141 billion on service contracts in FY2005. Describing and pricing services can be far more complex than describing and pricing products, putting an added burden on government purchasing personnel.
To learn more about the Panel or review its draft final report, visit http://acquisition.gov/comp/aap/index.html