The Last Shall be First: THe Use of Localized Socioeconomic Policies in Contingency Contracting Operations

• Author: Major Bradley A. Cleveland
• Pages: 07

2008] CONTINGENCY CONTRACTING OPERATIONS 103

THE LAST SHALL BE FIRST: THE USE OF LOCALIZED SOCIO-ECONOMIC POLICIES IN CONTINGENCY

CONTRACTING OPERATIONS

MAJOR BRADLEY A. CLEVELAND*

Goodwill is the only asset that competition cannot undersell or destroy.

― Marshall Field1

Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off.

― Franklin D. Roosevelt2

We have conducted a thorough assessment of our military and reconstruction needs in Iraq, and also in Afghanistan . . . [To] support our commitment to helping the Iraqi and Afghan people rebuild their own nations, after decades of oppression and mismanagement. We will provide funds to help them improve security. And we will help them to restore basic services, such as electricity and water, and to build new schools, roads, and medical clinics. This effort is essential to the

stability of those nations, and therefore, to our own security.

― President George W. Bush3

1. Introduction

   The current rebuilding effort in Afghanistan and Iraq is similar in many ways to the massive rebuilding effort conducted in post World War II Europe under the Marshall Plan.4 Like the Marshall Plan, an important aspect of the rebuilding effort in Afghanistan and Iraq is the goal to stabilize and stimulate their economies, as well as to build their capacity for future sustainability, by utilizing local goods, services, labor, and companies.5 In addition, like in Europe at the end of the World War II, the United States is striving to build goodwill in the geographically and resource important countries of Afghanistan and Iraq for the benefit and long-term security of the United States.6 The United States' desire to foster goodwill and rebuild Afghanistan's economy led to a dynamic and innovative new contracting program called "Afghan First."7 Under the

   Afghan First program, local nationals and companies generally receive favorable consideration in contract solicitation evaluations (evaluative preferences) when the United States procures goods and services in Afghanistan.8 The Afghan First program enjoyed immediate success and soon led to a similar program in Iraq called the "Iraqi First" program.9

   The Iraqi First program is identical in purpose, scope, and practice to the Afghan First program.10 Each evaluates how well an offeror proposes to use local national labor and businesses.11 Both programs achieved the same immediate success.12 The programs provide a valuable and productive method of achieving local contracting needs while simultaneously helping the United States to achieve its short and long term strategic goals in Afghanistan and Iraq.13

   Apart from the benefits of the programs, the intersection of policy and law that arises because of the Afghan First and Iraqi First programs

   is worthy of critical examination. The United States must balance the policy to use programs like Afghan First and Iraqi First to rebuild Afghanistan and Iraq with government procurement law that mandates the use of full and open competition for government contracts.14

   Procurement policy and government procurement law are at loggerheads with each other because it is unlawful to provide evaluative preferences to local workers and businesses in Department of Defense (DOD) contracts without a lawful exception.15 Consequently, the use of localized socio-economic programs, like Afghan First and Iraqi First, in contingency contracting environments, without a lawful exception, infringe upon the law that all government agencies, including DOD, shall use full and open competition when it contracts for goods and services.16

   Nevertheless, the Afghan First and Iraqi First programs use of local businesses and workers is an important and necessary strategic tool in the current rebuilding efforts in Afghanistan and Iraq.17 The use of the programs also contributes to the overall stability of Afghanistan and Iraq and the short and long-term strategic needs of the United States.18

   Congress recognized and acknowledged the benefits of the programs and legitimized them in the National Defense Authorization Act for Fiscal Year 2008 (NDAA 2008);19 however, this was approximately two years after the programs first use. The NDAA 2008 creates the lawful exception required for the continued use of the Afghan First and Iraqi First programs.20 The NDAA 2008 is a good short-term measure, but

   Congress can do more. Congress should go further and create permanent legislation to allow Combatant commanders and procurement officials to utilize localized socio-economic programs in future wars, conflicts, and international emergencies. This article critically examines the Federal Acquisition Regulation's competition rules and the Competition in Contracting Act (CICA), including the act's legislative history.21 Next, the article will discuss the current rebuilding efforts in Afghanistan and Iraq and compare them to the United States' rebuilding efforts in post World War II Europe. The article will then explore the history, goals, application, and impacts of the Afghan First and Iraqi First programs and explain why the programs violated the full and open competition requirement. The article will then discuss why, despite their shortcomings, the programs are vitally important to the United States' efforts in the regions of Afghanistan and Iraq. Finally, the article will explain why congressionally authorized "enhanced contingency contracting authority"22 is vitally important for both today's contingency efforts and those that may arise in the future.

2. Competition in Federal Procurements

   A. Contracting Commandments: The Federal Acquisition Regulation

   1. The Golden Rule in Government Contracting: Thou Shalt Conduct Full and Open Competitions

   The Federal Acquisition Regulation (FAR) both encourages and allows maximum flexibility in the procurement of goods and services.23

   In the FAR Part 1.102-4(e), procurement officials are given wide latitude for innovation for procuring goods and services.24 However, within the

   realm of contract competition, the FAR makes clear that competition is a priority.25 In fact, all of FAR Part 6 is dedicated to the full and open competition and the exclusions and exceptions to the full and open competition requirements.26 The import of FAR Part 6 is clear: DOD awards contracts based on full and open competition27 and any competition that is not full and open is unlawful unless Congress explicitly allows a specific exception.28

   The FAR provides limited exceptions to the full and open competition requirement, but admonishes that "[c]ontracting without providing for full and open competition or full and open competition after exclusion of sources is a violation of statute, unless permitted by one of the [enumerated] exceptions."29 The exceptions to full and open competition include full and open competition after exclusion of sources,30 and, in limited cases, other than full and open competition.31 The use of an exception requires the contracting officer to cite to the specific exception and prepare a written document to justify the exception.32 "Full and open competition after exclusion of sources" is the first legal exception to full and open competition the FAR addresses.33 Full and open competition after exclusion of sources generally consists of exceptions designed to carry out Congress's domestic socio-economic policies.34

   2. An Exception to Golden Rule: Domestic Socio-Economic Policies that Allow Full and Open Competition after Exclusion of Sources

   Socio-economic programs are not novel in government contracting. Congress recognized that certain businesses and groups deserve different treatment in contract competitions and created specific exceptions to full and open competition requirements for them.35 Specifically, Congress recognized the need to favor small business concerns,36 Section 8(a) businesses37 and historically underutilized business zone (HUBZone)38 small business concerns.39 The FAR also allows an exception to accommodate the socio-economic concerns of certain members of society.40 Apart from individual businesses and certain members of society, Congress also created an exception to full and open competition based solely on the location of businesses in relation to major disasters or emergencies under the Stafford Act.41 These examples emphasize that Congress decides who qualifies for a preference in government

   contracting, not procurement officials. The bottom line for government contracting is simple: use full and open competition unless Congress says otherwise. Put another way, any contracting practice that limits competition to local contractors requires Congress to authorize a statutory exception to the full and open competition.42 The strict competition rules of today are a direct result of DOD's wasteful past practice of using non-competitive procurement methods to procure goods.43

   B. It Is Good to Compete: The CICA

   1. Know Thy Past to Know Thy Future: History of the CICA

   The FAR's competition requirements promulgate federal law found in the CICA.44 Congress designed the CICA to address the widespread, expensive practices of government procurement officials, especially DOD procurement officials, of limiting competition or awarding government contracts with no competition at all.45 The CICA's legislative history records Congress's concerns over limited or no competition in government contracting.46 Specifically, Senator Quayle commented on two newspaper articles (one appearing in the Washington Post and the other in the New York Times) that discussed the use of sole-source contracts in the military's procurement of spare engine parts for aircraft.47 In the Washington Post article, the author discussed a DOD inspector general report that found "in 1982 the Air Force paid $17.59

   for a bolt that costs $0.67 in 1980."48 The article noted that the "Pentagon virtually...