By Emelie Rutherford
The White House issued federal-contracting guidance yesterday regarding using fixed-price contracts over cost-plus arrangements.
A congressional contracting-oversight panel plans to hold a hearing today to scrutinizing the new guidelines from the Office of Management and Budget (OMB).
The “Guidelines for Increasing Competition and Structuring Contracts for the Best Results” were issued yesterday to acquisition officers and procurement executives in the Department of Defense and throughout the federal government.
OMB documents point to a May 4 memo from President Obama in which he said agencies must strive for a process that is “open and competitive” when awarding contracts.
Obama wrote at the time that the contracts should be structured to “minimize risk and maximize value” for taxpayers.
“In most cases, fixed-price contracts will be best suited for achieving this goal because they provide the contractor with the greatest incentive for efficient and economical performance,” the new OMB guidelines say. “In circumstances where there is considerable uncertainty regarding the requirements, however, cost-reimbursement contracts or, in more limited circumstances, time-and-materials or labor-hour (T&M/LH) contracts may provide for a more effective allocation of risk between the government and the contractor.”
The Office of Federal Procurement Policy crafted the “initial guidelines” to help chief acquisition officers and senior procurement executives “evaluate the effectiveness of their competition practices and processes for selecting contract types,” and thus reduce the use of “high risk contracting authorities,” the OMB documents issued yesterday say.
Previous OMB guidance issued in July calls for federal agencies to reduce the use of contract types including cost-reimbursement ones.
Sen. Claire McCaskill (D-Mo.), chairwoman of the new Contracting Oversight subpanel of the Senate Homeland Security and Governmental Affairs Committee holding today’s hearing, has said she will “continue to look over” the shoulder of administration officials as they work to improve defense contracting. She wants to see fewer cost-plus defense contracts.
Jeffrey Zients, the deputy director for management and chief performance officer at OMB, is slated to testify today.