Yogi Berra once said, “The future ain’t what it used to be.” Those who have spent a career in federal procurement have seen many cycles of well-intentioned procurement reform instead create a system that is more complex, arcane and inefficient with each iteration.
Any long-serving procurement professional has a bookshelf of Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS) volumes that visibly get thicker with each issue; the current copies are more than twice as thick as the ones from the 1990s. The Grace and Packard Commissions (Reagan), the National Performance Review (Clinton) and the Section 809 Panel (Obama/Trump I) are examples of efforts that were intended to fundamentally transform government procurement but that fell well short of their visions.
However, the Trump Administration’s recent “FAR 2.0” initiative may represent not only a unique opportunity for change, but change that will have winners and losers in the contractor community. Only time will tell whether President Trump’s vision of restoring “common sense” to federal procurement is fully realized.
Trump issued an executive order (EO) to reform the Federal Acquisition Regulation (FAR) – the primary regulation used by executive agencies to acquire goods and services with appropriated funds. Titled “Restoring Common Sense to Federal Procurement,” the EO’s stated aim is to reduce the “self-inflicted” shortcomings of the FAR through comprehensive procurement reform and “create the most agile, effective, and efficient procurement system possible.” The EO requires steps be taken to eliminate FAR provisions deemed unnecessary to carry out statutory requirements or otherwise inessential to “sound procurement.”
This EO is part of a series of recent executive orders meant to overhaul the federal acquisition system from top to bottom. On April 9, the president issued an executive order designed to modernize defense acquisitions. One week later came an executive order seeking to enforce the Federal Acquisition Streamlining Act’s (FASA) mandate to use commercial products and services “to the maximum extent practicable”. But while these other two EOs are more targeted, “Restoring Common Sense to Federal Procurement” represents the most significant proposed change to the federal procurement process since the 1990s, when former president Bill Clinton and Congress worked together to pass FASA and the Federal Acquisition Reform Act, and the FAR Council completed the FAR Part 15 rewrite. Accordingly, now that “FAR 2.0” is underway, contractors of all shapes, sizes and types should track what the EO proposes and how the FAR is eventually amended so that they are not caught off guard by this potential sea change in procurement law.
What the EO Requires
The EO requires the administrator of the Office of Federal Procurement Policy and the FAR Council, working in tandem with a designated senior acquisition official from “each agency exercising procurement authority pursuant to the FAR,” to shave the FAR down substantially by taking the following actions:
- Within 180 days (Oct. 12), the administrator, the FAR Council and agency designees “shall take appropriate actions to amend the FAR to ensure that it contains only provisions that are required by statute or that are otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.” Notably, the EO does not define what “appropriate actions to amend the FAR” should look like. For instance, it is unclear whether the EO’s 180-day timeline sets a deadline for proposing or finalizing FAR revisions, or whether actions less formal than rulemaking may suffice, such as identifying provisions for future elimination or revision. The EO provides that the administrator and FAR Council “shall issue deviation and interim guidance, as appropriate and consistent with applicable law, until final rules reforming the FAR are published.” Again, the EO is unclear as to whether or how many FAR deviations must issue before the 180 days expire to fulfill the mandate to take “appropriate steps to amend the FAR.”
- Perhaps recognizing its lack of clear direction, the EO requires within 20 days (May 6) the director of the Office of Management and Budget (OMB), in consultation with the administrator, to issue a memorandum to agencies providing guidance regarding the implementation of the EO. But other than requiring that it ensure “consistency and alignment of policy objectives and implementation regarding changes to the FAR” and agency supplements, as well as include proposals that “promote expedited and streamlined acquisitions,” the EO provides no indication of what to expect from the forthcoming guidance from OMB. Nor does the EO provide clear guidance on how agencies are to revise their FAR supplements to align with the reforms to the FAR required by the EO. Rather, the EO merely requires agencies to designate senior acquisition or procurement officials to work with the administrator and FAR Council to ensure “agency alignment with FAR reform” and provide “recommendations” regarding agency FAR supplements.
- For those provisions identified as not required by statute, the EO requires the administrator and FAR Council to consider implementing a regulatory “sunset” to their application four years from the promulgation of the final rule amending the FAR, unless these non-statutory provisions are renewed by the FAR Council before the sunset provision kicks in. Additionally, the administrator and FAR Council must consider whether a similar sunset provision should be included in any new, non-statutory FAR provisions “promulgated after the effective date of the final rule promulgated in accordance with” the EO.
- The EO further requires that any new regulations proposed as part of the reforms contemplated by the EO comply with the administration’s “10 for 1” policy, which requires that for every new regulation promulgated, an agency must identify at least 10 existing regulations to repeal. Given this and the EO’s stated policy of eliminating “unnecessary regulations,” FAR 2.0 will not be a rewrite like the reforms of the 1990s. Instead, agencies and contractors should expect a massive calving of the proverbial FAR iceberg should full implementation of the EO’s directives take place before the end of the current administration.
Impacts on Federal Procurement
The EO likely will have wide-ranging impacts on how contractors conduct business with the federal government. On the one hand, the EO could result in the elimination of FAR provisions that serve no useful purpose other than to keep contractors up at night worrying about whether they are complying with them. Consider, for example, what a relief it would be if contractors no longer needed to wrestle with the opaquely worded, non-statutorily required, “Encouraging Contractor Policies to Ban Text Messaging while Driving,” clause at FAR 52.226-8. Indeed, the Section 809 Panel recommended its repeal eight years ago, with no success.
On the other hand, the EO could result in the elimination of FAR provisions so embedded in our procurement system that their sudden demise could sow confusion and doubt. FAR 52.204-7’s requirement for registration on the System for Award Management (SAM), for example, is not necessarily required by statute. But for years, SAM has served as a useful one-stop shop for procuring officials governmentwide to review contractor eligibility. Perhaps the EO’s recognition that provisions “essential to sound procurement” should be preserved will spare such requirements from elimination. And perhaps the EO’s four-year regulatory sunset period for provisions slated for the chopping block will serve as a safeguard to protect against hasty decision making.
While we cannot be certain about what FAR changes will come out of the EO, some early proposals have been leaked. Prior to the EO being published, GSA stood up a task force in early March to do preliminary work to streamline the FAR with the goal of reducing it to below 100 pages – while at the time deliberately shutting out input from the FAR and DAR councils. Some reports have indicated that eliminating the small business Rule of Two was among some of the GSA task force’s early proposals.
For now, however, the only certain result of this EO is uncertainty. Despite the regulation’s imperfections, contractors rely upon the FAR just as much as agencies do for predictability and consistency in government contracting. A change to this system, especially one as potentially grandiose as that required by the EO, will have reverberations throughout the federal procurement marketplace for decades to come. In addition, speed and efficiency may eliminate many safeguards that exist in the FAR to ensure that contractors are treated fairly and that procurements are awarded in a reasonable manner consistent with law.
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