Letter to the Defense Acquisition Regulations Council Defense Federal Acquisition Regulation Supplement; Competition Requirements for Purchases from a Required Source

Ms. Susan Schneider
Defense Acquisition Regulations Council
Office of the Undersecretary of Defense

Re: DFARS Case 2002-D003
Defense Federal Acquisition Regulation Supplement; Competition Requirements for Purchases from a Required Source

Dear Ms. Schneider:

The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector and region, appreciates the opportunity to comment on the interim DFARS rule implementing Section 811 of the Fiscal Year 2002 Defense Authorization Act, as published in the Federal Register on April 26, 2002 (67 Fed. Reg. 20687).

The U.S. Chamber has long advocated a fair and efficient federal procurement process, which benefits both the private and public sectors. Federal agencies should be afforded the opportunity through competition to purchase quality goods and services at the lowest price and best availability. Eliminating FPI's mandatory source status is fundamental to meeting this standard for our government and the American taxpayer. The recently enacted FPI reform provision, which became effective October 1, 2001, is a significant step in the right direction.

Section 811 requires the Department of Defense (DoD) to conduct market research before purchasing a product listed in the Federal Prison Industries (FPI) catalog, to determine whether the FPI product is comparable in price, quality, and time of delivery to products available from the private sector. If the FPI product is not comparable, DoD must use competitive procedures to acquire the product. We are pleased the interim rule adequately reflects Congressional intent by including this language and ask that the final rule include clarification of particular concerns.

The final rule should clarify that DoD contracting officers are afforded maximum flexibility to decide how to best meet the agency's procurement needs by examining existing marketplace opportunities and purchasing products on a competitive basis. Contracting officers throughout the Defense Department make significant purchasing decisions daily based on the varying needs of their individual departments and our nation's military. The final rule should not hinder their ability to do so and should clarify that the contracting officers themselves determine the most appropriate manner of which to procure the best products based on market research.

We also urge that the final rule contain language explicitly stating that DoD contracting officers are not required to obtain a clearance or waiver from FPI, pursuant to Section 8.605 (Clearances) of the Federal Acquisition Regulation Subpart 8.6, should market research reflect that the FPI product is not comparable in price, quality and time of delivery. Congressional intent is stated unequivocally in the Conference Report on the FY02 Defense Authorization Bill that "DoD, not FPI, will be responsible for determining whether FPI can best meet the Defense Department's needs," therefore a waiver should not required.

Furthermore, the comparability determination is based on whether FPI can provide the product on the basis of price, quality and time of delivery. To avoid misinterpretation, the final rule should reinforce that all three criteria must be met by FPI to be considered comparable.

The Chamber agrees with the assessment in the rule that the infusion of competition in purchasing practices within DoD will have a significant economic impact on a substantial number of small businesses. This assessment, made pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), notes that the rule could benefit small businesses that offer products comparable to those listed in the FPI catalog, by permitting those businesses to compete for DoD contract awards that would have previously been unobtainable because of FPI's mandatory source status.

On behalf of U.S. Chamber members of all sizes, we appreciate the opportunity to comment on the interim rule and recommend that it be made final with the consideration of our concerns as outlined above.

Sincerely,

R. Bruce Josten
Executive Vice President, Government Affairs
U.S. Chamber of Commerce