Policy Goals

The law establishing this Commission declares it "to be the policy of Congress to promote economy, efficiency, and effectiveness" in the procurement of goods and services by the executive branch. The methods for achieving this policy are spelled out in the law. Essentially, the law calls for (1) the reevaluation and improvement of policies for the Government to acquire goods and services in a timely, economical, and competitive manner; (2) an improvement in procurement organization and personnel; (3) the correction of duplication or gaps in laws, regulations, and directives; (4) uniformity and simplicity when appropriate; (5) fair dealing; and (6) overall coordination of Federal procurement programs.

Recommendations are contained throughout the four volumes of our report. Clearly, not all are of equal importance or of similar impact. Some call for a fundamental recasting of the procurement process; others for alleviating ills that have plagued Government and industry. Taken together, the major recommendations will achieve the policy goals set forth in the congressional mandate establishing the Commission.

An Integrated System with Central Leadership

An important objective of our recommendations is to ensure that the system fully warrants the public trust. The recommendations propose an integrated system for effective management, control, and operation of the Federal procurement process. The focus of this system is the proposed Office of Federal Procurement Policy that, if established, will provide leadership in the determination of Government-wide procurement policies.

The system we advocate will enable the executive branch to ensure that procurement operations are businesslike and orderly and that goods and services are efficiently acquired. To carry out this responsibility, Federal purchasing agencies must be provided with necessary instructions and resources. Another essential

See sec. 1, Public Law 91-129 (Appendix A).

ingredient is timely information on how well procurement needs are being met, so that deficiencies and resources may be adjusted at the appropriate management level. Our system satisfies these criteria and represents the net result of our study. The ten elements of our system are:

• The creation of an Office of Federal Procurement Policy in the executive branch to assure fulfillment of Government-wide statutory and executive branch requirements in performing procurement responsibilities.

• An integrated statutory base for procurement, implemented by a Government-wide regulatory system, to establish sound policies and simplified agency procedures to direct and control the procurement process.

• Latitude for Federal agencies to carry out their responsibilities within the framework of Government-wide statutes, policies, and controls.

• Availability of funds in time to permit improved planning and continuity of needed Federal and contractor operations.

• Government-wide recruitment, training, education, and career development programs to assure professionalism in procurement operations and the availability of competent, trained personnel.

• Carefully planned agency organizations, staffed with qualified people and delegated adequate authority to carry out their responsibilities.

• A coordinated Government-wide contract administration and audit system. The objective is to avoid duplication and deal uniformly, when practical, with the private sector in the administration of contracts at supplier locations.

• Legal and administrative remedies to provide fair treatment of all parties involved in the procurement process.

• An adequate management reporting system to reflect current progress and status so that necessary changes and improvements can be made when the need appears.

• A continuing Government-wide program to develop better statistical information and improved means of procuring goods and services.

The Role of Leadership

As we have examined the management of the procurement process, we have been repeatedly drawn to the conclusion that a process of such central importance demands continuing, thoughtful attention by the leaders in Government. No capable executive in the private sector or in the Government can afford to ignore the significance of his purchasing operation when organizational success depends largely on effective contracting. This is particularly true of the Government's purchasing function because of the broad social, political, and economic implications of Government spending.

All too often we see the ill effects of the lack of an executive branch mechanism that can focus Government-wide attention on the impact of procurement on costs and efficiency. For example, attempts to achieve uniformity in interagency policy often go unheeded and become compounded by management-level neglect or by isolated congressional actions. Similarly, our studies show that social and economic goals attached to the procurement process involve needlessly cumbersome administrative procedures. Controversies over how best to proceed are often relegated to low-level interagency haggling rather than being dealt with expeditiously by top management.

The improvements we recommend in organization, personnel capabilities, policies, and procedures, together with the other elements of the integrated system just described, would considerably improve the procurement process but more is needed. Without strong

leadership, understanding, and effort by top management in both the legislative and executive branches, the procurement process will not be a strong mechanism for accomplishing national goals.

A Concluding Thought

The complexity of procurement is such that mistakes will be made even by people dedicated to doing a quality job. The important thing is to learn from the mistakes and continually improve the process. There are no universal answers to the myriad operating problems of Government procurement and the many goals it supports. However, if the recommendations advanced in this report receive effective and timely implementation, measurable improvement should result in the short term and even greater improvements should result over the long term.

The Commission has not attempted to make an estimate of the savings which could be achieved through the adoption of its recommendations. Indeed, it would have been impossible since many of them are in the nature of policy changes for which estimates could not be made with any degree of precision. At the same time, the Commission is certain that substantial savings can be made and has so indicated at many points in its report. For example, one recommendation alone-increasing from $2,500 to $10,000 the limit on exemptions from using advertised procurement procedures for small purchases-would save approximately $100 million.

CHAPTER 2

1

Federal agencies contract within a framework of ground rules set by all three branches of Government. These policies establish the overall environment of procurement, and control millions of individual decisions. Therefore, in reviewing the procurement process we concentrated on the manner in which basic policies are developed and implemented.

There is a void in policy leadership and responsibility, and a fragmented and outmoded statutory base. These shortcomings in basic law and policy are root causes of many problems that beset the procurement process. Virtually every Commission study group recommended, in one form or another, enhanced central policy direction.

Effective management of the procurement process requires a high degree of direction and control of basic policy. However, except for isolated and sporadic cases, the executive branch has not seen fit to fill this need. This is not to say that there should be centralized Federal buying for all agencies, or a central group involved in agency business decisions. Nor do we suggest a huge policymaking bureaucracy to issue all procurement regulations.

What we urge, instead, is an Office of Federal Procurement Policy, high in competence and small in size, established by law and responsive to Congress, and placed in the executive branch at a level where it can provide leadership and oversee the development and application of procurement policy. The contracting agencies should continue to be re

1 For example, policies governing methods of procurement, contract clauses, solicitation of bids and proposals, administration of contracts, termination of contracts, cost allowability, quality control, contract types, contract forms, warranties, contract options, and small purchase procedures.

sponsible for individual procurement actions and agency procurement operations.

We have placed creation of a central policy office first among our recommendations because of its overall importance in achieving the improvements we propose in the procurement process.

Recommendation 1. Establish by law a central Office of Federal Procurement Policy in the Executive Office of the President, preferably in the Office of Management and Budget, with specialized competence to take the leadership in procurement policy and related matters. If not organizationally placed in OMB, the office should be established in a manner to enable it to testify before committees of Congress. It should develop and persistently endeavor to improve ways and means through which executive agencies can cooperate with and be responsive to Congress.

SOURCES OF PROCUREMENT POLICY

Many segments of Government make or strongly influence procurement policy. Table 1 lists the major policymakers by branch. The next few paragraphs outline the nature of these influences.

Legislative Branch

Congress establishes fundamental procurement policies through legislation and through

less formal actions ranging from committee reports and investigations to individual attention to constituent complaints or suggestions. These actions may shape Government-wide policy or affect only individual agencies, groups of agencies, or units or programs within an agency. Our studies identified more than 4,000 provisions of Federal law related to procurement. Most important among these are the Armed Services Procurement Act of 1947 2 and title III of the Federal Property and Administrative Services Act of 1949.3 Improvements needed in these laws are discussed in Chapter 3 and in Part J (Other Statutory Considerations).

The General Accounting Office (GAO) serves as an arm of the Congress. With its responsibility for auditing and certifying to Congress the legality of specific contractual disbursements, and its continuing responsibility for closely following procurement trends, GAO exerts profound influence on procurement policy. This influence is exerted through decisions on individual matters, overall reports, audits, legislative advice to Congress, and review of proposed agency policies. Its actions

210 U.S.C. 2301-14 (1970). 41 U.S.C. 251-60 (1970).

may affect Government-wide patterns of practice or policy, or may relate only to particular agencies or situations.

Judicial Branch

Interpretations of statutes, regulations, and contract provisions by the Federal courts in suits involving procurement have a direct effect on the evolution of policy.

Executive Branch

Although Congress and the courts play a basic role, most procurement policy is developed in the executive branch. Much of this development consists of translating the basic policies and requirements established by the other branches into a body of rules and regulations governing procurement; keeping Congress informed as to the effects of legislation and recommending changes to make the process more effective; interpreting the requirements in specific cases for contractors, grantees, and