Assessing federal procurement reform: has the procurement pendulum stopped swinging?
| Pages | 145-175 |
| Date | 01 March 2003 |
| Published date | 01 March 2003 |
| DOI | https://doi.org/10.1108/JOPP-03-02-2003-B001 |
| Author | Joseph A. Pegnato |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue |
JOURNAL OF PUBLIC PROCUREMENT, VOLUME 3, ISSUE 2, 145-175 2003
ASSESSING FEDERAL PROCUREMENT REFORM: HAS THE
PROCUREMENT PENDULUM STOPPED SWINGING?
Joseph A. Pegnato*
ABSTRACT. Nearly $200 billion a year is funneled through the federal
procurement system to buy everything from paper clips to stealth
fighters. This procurement system can be thought of as an oscillating
pendulum as it swings from one extreme of unresponsiveness to mission
needs to the other extreme of hypersensitivity to mission. Out of a sense
that the procurement pendulum had swung too far towards over-
regulation, two major procurement reform laws were passed: the Federal
Acquisition Streamlining Act of 1994 and the Clinger-Cohen Act of
1996. Many observers suggest that these two laws have led to a
revolution in the way the government buys. Are these reforms
permanent? The view here is they are not because of various political
forces.
INTRODUCTION
About $200 billion a year is funneled through the federal
procurement system to buy everything from stealth fighters to paper
clips. The federal procurement system more or less consists of hundreds
of thousands of contracting officials in thousands of contracting
organizations in every federal agency. An incessantly changing body of
procurement regulations guides the work of these officials. Of all the
federal government reforms attempted during the 1990s either by
reinventing government initiatives, reform laws, or other administrative
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* Joseph A. Pegnato, D.P.A., is Director, Office of Acquisition
Management, U. S. General Accounting Office. His research interests
include organization theory, federal procurement and the applicability of
entrepreneurial models in the public sector.
Copyright © 2003 by PrAcademics Press
146 PEGNATO
action, procurement reform of defense and civilian agency contracting
has been widely praised as the most successful. These procurement
reforms are viewed by many as permanent positive changes. In the
manner of tilting at windmills, it is being argued here that political forces
inherent in the American democratic system will undermine the
permanence of these reforms. If the history of federal procurement is a
guide, then no procurement reform is permanent.
THE PROCUREMENT PENDULUM
Since the Revolutionary War, the federal procurement system has
oscillated between two extremes. At one extreme the system can be
characterized as consisting of very tight and burdensome controls. At the
other extreme the system is in a relaxed regulatory condition. Forces
such as the nation’s wartime arms needs would lead to relaxed
procurement rules so the nation could arm quickly. Opposite forces such
as contractor profiteering and waste would lead to a tightening of
procurement rules and controls. This pattern of oscillation is easily
discerned throughout the history of federal procurement. For example, at
the outset of the Civil War, a loophole was created in the law requiring
advertising on all government contracts to speed up the time to award
contracts (Culver, 1984a, p. 7). But because of wartime profiteering, a
joint Senate House commission, after the war, established a board to
review every proposed contract award (House of Representatives, 1895,
p. 30).
World War I reveals another example of oscillation. Three months
after the United States entered World War I, advertising on all contracts
was eliminated. Cost plus a percentage of cost contracts (now deemed
illegal because they give contractors no incentive to control costs) were
widely used (Culver, 1984b, p. 8). But because of contractor profiteering
and influence peddling scandals, Congress passed an excess profits tax
(p. 9). After the war normal procurement regulations were reapplied.
Yet another example of oscillation took place during World War II.
The President signed the War Powers Act on December 18, 1941, just a
few days after the attack on Pearl Harbor (Culver, 1984c, p. 11). This act
authorized the President to allow any agency engaged in the war effort to
enter into contracts without regard to public advertising or
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