[Senate Hearing 108-549]
[From the U.S. Government Publishing Office]
S. Hrg. 108-549
NOMINATION OF DAVID H. SAFAVIAN
=======================================================================
HEARING
before the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
ON THE
NOMINATION OF DAVID H. SAFAVIAN, TO BE ADMINISTRATOR, OFFICE OF FEDERAL
PROCUREMENT POLICY
__________
APRIL 29, 2004
__________
Printed for the use of the Committee on Governmental Affairs
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COMMITTEE ON GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah THOMAS R. CARPER, Deleware
PETER G. FITZGERALD, Illinois MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama MARK PRYOR, Arkansas
Michael D. Bopp, Staff Director and Chief Counsel
Johanna L. Hardy, Senior Counsel
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Jennifer E. Hamilton, Minority Research Assistant
Amy B. Newhouse, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Collins.............................................. 1
Senator Akaka................................................ 2
Senator Lautenberg........................................... 3
Senator Pryor................................................ 14
Senator Levin................................................ 16
WITNESSES
Thursday, April 29, 2004
Hon. Chris Cannon, a Representative in Congress from the State of
Utah........................................................... 5
Hon. John Conyers, Jr., a Representative in Congress from the
State of Michigan.............................................. 6
David H. Safavian, of Michigan, to be Administrator for Federal
Procurement Policy, Office of Management and Budget............ 8
Alphabetical List of Witnesses
Cannon, Hon. Chris:
Testimony.................................................... 5
Conyers, Hon. John, Jr.:
Testimony.................................................... 6
Safavian, David H.:
Testimony.................................................... 8
Prepared statement........................................... 19
Biographical and professional information requested of
nominees................................................... 21
Pre-hearing questionnaire and responses for the Record....... 38
Senator Lieberman's additional questions and responses for
the Record................................................. 123
Post-hearing questions and responses for the Record from:
Senator Collins............................................ 147
Senator Collins on behalf of Senator Bond.................. 149
Senator Akaka.............................................. 150
Senator Levin.............................................. 153
Senator Lautenberg......................................... 154
Senator Lieberman.......................................... 174
APPENDIX
Roger F. Cocivera, President/CEO, Textile rental Services
Association of America, prepared statement..................... 178
NOMINATION OF DAVID H. SAFAVIAN
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THURSDAY, APRIL 29, 2004
U.S. Senate,
Committee on Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10:45 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Susan M.
Collins, Chairman of the Committee, presiding.
Present: Senators Collins, Akaka, Levin, Pryor, and
Lautenberg.
OPENING STATEMENT OF CHAIRMAN COLLINS
Chairman Collins. The Committee will come to order.
Good morning. Today the Committee on Governmental Affairs
is holding a hearing to consider the nomination of David
Safavian to be the Administrator for Federal Procurement Policy
at the Office of Management and Budget. The Office of Federal
Procurement Policy, known as OFPP, provides overall direction
of government-wide procurement which exceeded $300 billion last
year.
The new Administrator of the Office of Federal Procurement
Policy will inherit a full range of controversies that reflect
the dynamic nature of the Federal acquisition process. As the
Federal Government tries to acquire more goods and services
with a smaller acquisition workforce than we have had in the
past, many innovative solutions are being proposed and pursued.
Although some of them may have been successful in the private
sector, we need to look carefully at whether or not they are
appropriate in the public sector, as well. In short, we need to
continue to integrate new acquisition tools that will maximize
efficiency without losing sight of other important values that
the acquisition system serves.
First, we must look at ways to make Federal contracting
more accessible to small businesses. It is not merely for the
sake of small businesses that I mention this. The continued
growth of that sector is vital to our Nation's future. It is
also in the Federal Government's best interest to ensure that a
large pool of contractors exists for any given item or service
in order to ensure robust competition.
Greater competition leads to lower prices and higher
quality for the American taxpayer. Simply choosing the same
proven contractors over and over again may be a good short-term
strategy for a beleaguered contract officer but failing to take
into account the impact of such a practice on the pool of
businesses willing and capable of doing business with the
Federal Government can lead to a smaller contractor base
undisciplined by market forces.
I know that Mr. Safavian agrees with me that his office
must also make it a priority to maintain a highly trained and
motivated Federal acquisition workforce. Those who purchase
goods and services for the Federal Government have considerable
power and responsibility. They are on the front lines of
guarding against waste, fraud, and abuse when it comes to using
the taxpayers' dollars. If we fail to take the necessary steps
to ensure that this segment of the Federal workforce is
properly trained and equipped, it will be the taxpayers who
will pay the price.
The new Administrator will also have to wrestle with the
conflicts that surround competitive sourcing. One such issue is
whether Federal employees should have the right to protest
adverse A-76 decisions. I believe that they should and plan
shortly to introduce bipartisan legislation to grant Federal
employees bid protest rights. I am very eager to hear the
nominee's views on this important issue.
Although competitive sourcing can, when properly
implemented, lead to greater productivity and considerable
savings, it can also inflict stress on agencies by creating
doubts among Federal employees about their future job security.
At the same time, however, according to a Rand Corporation
study, a well run contest in which the agency devotes adequate
resources to competition can be beneficial for both the
government and its employees.
Private sector experience indicates that competitions must
be run in a manner that is clear, transparent, and fair. It is
my hope that if the nominee is confirmed, he will work closely
with all interested parties to ensure that agencies conduct
future competitions in a manner that inspires trust among
Federal employees.
We are very pleased today to be joined by two of our House
colleagues. I am going to turn to my colleagues first for some
opening statements but then I will call on our colleagues from
the House to introduce our nominee.
Senator Akaka.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. Thank you very much, Madam Chairman. I also
would like to add my welcome to our colleagues from the other
body, one of whom I served with for many years, Congressman
Conyers, and Congressman Cannon. Welcome.
I would also like to thank our nominee for being with us
this morning and also welcome your family and friends that are
here.
Mr. Safavian, if confirmed, you will have a difficult task
before you--and you know this, I am sure. The Administrator for
Federal Procurement Policy serves as a gatekeeper for the
government's contracts and is responsible for ensuring
financial transparency and cost savings in procurement
policies.
The position also requires an understanding and
appreciation for the Federal employees who make up the
acquisition workforce and their colleagues who compete against
the private sector to retain work within the government.
As the Ranking Member of the Financial Management
Subcommittee and the Armed Services Readiness Subcommittee, I
know that without adequate management structures, management
information, systems, and program review structures that
government contracts will not realize savings for the American
people.
The key to achieving success requires strengthening the
Federal Government's acquisition of the contract management
workforce. We must recognize that this corps of professionals
make decisions every day affecting how hundreds of millions of
Federal dollars are spent.
For a number of years now the acquisition workforce has
been drastically downsized and many of those remaining are
eligible to retire. We cannot afford to lose many of our most
experienced personnel.
We must also ensure that when Federal jobs are subjected to
competition that out-sourcing policies are fair to Federal
employees who, without adequate training and resources, cannot
compete effectively. Moreover, to be truly fair, Federal
workers should be able to protest against agency out-sourcing
decisions. It is a fundamental fairness issue.
I was disappointed that a February 2004 report by the
General Accounting Office on competitive sourcing found that
agencies have focussed more on following OMB guidelines on the
number of positions to compete at the expense of achieving
savings and improving performance. I was hopeful that when the
administration moved away from contracting-out quotas to
agency-specific plans, agencies and their employees would have
a fairer system. Unfortunately, that has not been the case.
Mr. Safavian, if confirmed I hope you will undertake these
challenges quickly and without prejudice.
Thank you very much, Madam Chairman.
Chairman Collins. Thank you, Senator. Senator Lautenberg.
OPENING STATEMENT OF SENATOR LAUTENBERG
Senator Lautenberg. Thank you very much, Madam Chairman. I
listened carefully and, as usual, you handled things, I think,
with a fairness that is essential to any kind of bipartisan
relationship and that is to talk about the ability to challenge
whether or not an A-76 is commercially viable, and I appreciate
that thought of yours.
We have a very good nominee, I think, Madam Chairman, but
we may have a challenge on a policy here or there. When the
nominee comes in with a fortification like John Conyers, you
know that this is serious business and we are going to pay a
lot of attention. You, too, Mr. Cannon. You are very welcome,
but I know John just a smidgen better.
I am concerned about one thing and that is a blind
adherence to the administration's procurement policy called
competitive sourcing. Now, since the President has taken office
this ideology has moved along almost at a fevered pitch and I
think without searching enough to find out the real costs and
benefits of out-sourcing.
The premise behind competitive sourcing is that work
currently performed by the Federal Government employees could
be done more efficiently and more cheaply by contractors and I
think that misses the point. There is some work that is too
important to contract out and it has to be done by the Federal
Government. As people here know, I think, I came with a long
bit of service in the corporate world, some 30 years, and I can
appreciate the fact that the Federal Government should operate
in a more business-like fashion, when possible. There are ways
to make this happen but simply giving the private contractor a
blank check is not one of them.
That is what I think is going on here. The zeal for
competitive sourcing indicates to me a desire to ensure that
contractors get the Federal fund opportunity. Whether the
outcome is the best for the taxpayers or our country is not
quite as clear. And that is not surprising, given the political
support from and ties to government contractors. One of those
that quickly comes to mind is Halliburton. They seem to have a
special relationship with less surveillance of the diligence
than we would expect when the work they do is so critical--
saving lives--and they have paid an enormous price and we
extend our sympathy to those who are working for KBR or
Halliburton directly. They have paid a terrible price for their
diligence to duty and we do not want to see anybody's life cut
short or any injuries, but Halliburton took those contracts.
Perhaps we should have been better prepared to protect
those people than we were but they did get a $50 million no-bid
contract principally; it was signed, to extinguish the Iraqi
oil fires at the beginning of the war. The contract was not
publicly disclosed in the beginning and I was one of those who
wanted to raise a question and I did. Despite congressional and
public outcry, this no-bid contract grew in scope and size
until it became something over $2 billion, involving all kinds
of oilfield repair and support work.
Then we found out that subsidiary, the Halliburton
subsidiary, KBR, was overcharging taxpayers some $60 million to
deliver fuel to Iraq. This is a charge made by the Pentagon.
This is not something that Frank Lautenberg on his own made.
KBR employees, the subcontractors who worked for a Kuwaiti
firm, got kickbacks of several million dollars and then we
learned that Halliburton was charging taxpayers for thousands
of meals never served to our troops stationed in the Middle
East. And again these are allegations made by others, including
the Pentagon.
Yesterday the Washington Post reported that the General
Accounting Office, the auditors there reviewing contracts for
reconstruction of Iraq have discovered a situation that
``exposes the Government to cost risks and reduces the chances
for savings.''
And I hope that the nominee, Mr. Safavian, understands that
job, if confirmed, is not simply to rubber-stamp anything and
he should examine every request and if these are major size
contracts, try to bring the Congress in, not to audit or review
every contract that is coming up but those that are major in
either policy or magnitude.
So I hope that Mr. Safavian understands the serious
responsibility that this position entails and I look forward to
hearing from him and our friendly witnesses.
Chairman Collins. It is now my great pleasure to call upon
our two distinguished colleagues from the House side. It does
speak very well for Mr. Safavian that two such distinguished
Members of Congress have been willing to come over and vouch
for him today.
I know that Representative Conyers is the senior member so
I am going to call on him first, although my staff keeps
telling me that I am to call on Representative Cannon first, so
I will leave it to you to sort it out.
Mr. Conyers. If it is all right, Madam Chairman, I would
like my friend Chris Cannon to go first.
Chairman Collins. Thank you. Representative Cannon.
STATEMENT OF HON. CHRIS CANNON, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF UTAH
Mr. Cannon. I appreciate that. I appreciate my friend John
Conyers and if any distinction can rub off on me today, I would
be very appreciative of that, as well.
It is a pleasure to appear with Mr. Conyers, who is one of
the great people in Congress. He is very clearly philosophical
and what that means is that we can form right-left coalitions
to get things done for the American people and that has been
greatly enhanced by my former chief of staff, David Safavian,
who I commend to you today for the position of Administrator of
OMB's Office of Federal Procurement Policy.
In fact, Mr. Safavian was a remarkably helpful person in
the process of bringing together my staff and that of Mr.
Conyers and the minority staff on the Judiciary Committee to
deal with issues of great importance to the American people,
including telecom policy and helping to avoid the
remonopolization of the Baby Bells. I think now with a couple
of years of experience behind us and some of the really
interesting things that are going on, including the debate
today on the Internet Tax Freedom Act, or at least we call it
that on our side--we hope you get a vote on that soon--I think
in the context of that debate you see some of the dramatic
changes that have been happening in telecom, in part because
Mr. Safavian worked well not only with my staff but with Mr.
Conyers's staff, as well.
We are hearing things today like from Qwest that the legacy
systems are no longer the most important part of their future
and the transformation that is happening among all of the
former Baby Bells, the regional Bell operating companies, is
dramatic and in large part, I think, a result of the work that
Mr. Conyers and I did in the House to delay that process and
David played a very important role in doing that.
I might just say that the term transparency has come up
several times here in opening statements. This is an issue that
David and I have talked about many times over the course of his
service with me. He served as my chief of staff from January
2001 to June 2002 and we talked a lot about the philosophy of
government and I can assure you that he believes fundamentally
that a transparent governing policy is the best policy for the
long term. It is not a matter of partisan gamesmanship but
really a matter of how we can govern better in the short and
the long term.
Let me just add a couple of comments about his character
and capabilities. He is a person of forthrightness and honesty.
We have even disagreed among ourselves and had pretty hard
discussions. We have been forthright and we have come to
conclusions that were brought forward.
Second, David is a person of great mental capacity. He
understands the technology and the great issues of our time, is
able to deal with those things in a fluid fashion. He is also a
great advocate. When he takes a position I think he will do
that transparently but he will be very clear about what that
position is and then push for what he believes is right.
He also understands Congress and our constitutional role
and I think you will find that he is a person who will work in
the administration in a way that your side and our side of the
Capitol will appreciate long-term.
I want to just tell you that I have the greatest confidence
in David Safavian and that I think he will do a great job for
the American people in this job and I urge your support for his
nomination. Thank you.
Chairman Collins. Thank you very much, Congressman.
Congressman Conyers.
STATEMENT OF HON. JOHN CONYERS, JR., A REPRESENTATIVE IN
CONGRESS, FROM THE STATE OF MICHIGAN
Mr. Conyers. Thank you and good morning to this very
distinguished Committee. To see you here, Madam Chairman, and
my two good friends, Senator Akaka and, of course, Senator
Lautenberg, is a real privilege. I was not sure which part of
the Committee I would be meeting with today and I am happy that
I am before all of you.
I would like to make it clear that we think that the
nomination of David Safavian for Administrator of the Office of
Federal Procurement Policy at the Office of Management and
Budget would be an excellent one under any administration. We
come to that conclusion because he has been on the Judiciary
Committee staff and we had a chance to work together and I
would like to second what Chris Cannon has said about the
cooperation that not only exists between him and myself but
between our staffs.
I am very pleased that I was able to bring over my chief of
staff, Perry Apelbaum, and two other lawyers, Ted Kalo and
Kanya Bennett. We are joined with his wife and his mom, as well
as his family and friends, to underscore how fine a decision
has been made for this appointment. We hope that the Senate
will agree and get him to work as quickly as possible.
First of all, he has a lot of experience in the government.
He worked on the same subject, Federal procurement policy, as a
lawyer. He worked on this same subject with the Army Aviation
Systems Command. And he is the person that I am willing to
assure you will take into cognizance the understanding of how
important small businesses are to the contracting system of the
one place in America where there is more of it that goes on
than anywhere else, our government. The Chairman lifted that
subject up, and, to me it is very important.
First of all, there is the issue of fairness. It is so
easy--I speak now from my experience as Chairman of the
Government Operations Committee in the House of
Representatives, in which we oversaw the entire government and
frequently got into procurement issues probably more than any
thing else. They were not all small, either. There were plenty
of large ones and Senator Lautenberg referred to one of the
more recent problems we have had. We know in our States and
districts a small business with a good service or product
trying to get before the Federal Government is a very difficult
undertaking.
And I can say that I believe that David is going to bring a
perspective to that position that will not let any of us down.
We want to make contracts with the Federal Government more
available. We want to make the procedure more simple. And no,
we are not just giving away business contracts to every small
businessman that can fill out a form. We want quality and
service. We want something for the Federal tax dollar that will
be spent.
But the important thing, and I have been working on this
for a few years now, is trying to make the system as fair and
apolitical as it can be. We want people coming in to do
business with the Federal Government to run into the people
that work under Mr. Safavian, if this goes through, who will be
open and welcoming to what is really the crux of our economic
systems; namely, small businesses. Small businesses are the
ones that create more jobs now than anybody else. Small
businesses are the ones that our communities and towns and
cities depend on for the economic sustenance that is required.
And I see in this man, by the way that he has handled
himself in the Judiciary Committee, a person that I would be
happy to recommend here and any time that it is necessary. He
has a lot of Michigan roots and we are proud of that. That does
not hurt him a bit in our book. The Michigan delegation is
strongly behind him in this regard.
So it seems to me that this is probably a very great
morning, a very great day for our country, for his family. I am
aware that he is from a background that makes him a small
number of people that will be going into government service at
this high level and I am proud of that. We are happy that this
has come to pass and that I was invited with Congressman Cannon
to join in this testimony in support of this very fine nominee.
I want to thank you very much for allowing me to be with
you today.
Chairman Collins. Thank you.
Senator Lautenberg. Madam Chairman, if I might, I have to
go but I do want to say that I think that David Safavian can be
a good candidate in a tough job and hope that he will remember
my admonition.
Mr. Safavian. Absolutely, sir.
Senator Lautenberg. Thank you very much.
Chairman Collins. I do not think there is any chance he
will forget it, Senator.
I want to thank both of the Congressmen for being here.
Congressman Cannon.
Mr. Cannon. Would you allow me just to associate myself
with the comments from Mr. Conyers?
Chairman Collins. Certainly.
Mr. Cannon. Especially the point he was making about the
fact that small businesses create most of the jobs in America
and that the role that Mr. Safavian will be taking will be
critical in the government's support of those small businesses
and the creation of jobs that come from that.
So while there are a lot of judgments that are going to
have to go into how we do out-sourcing, the fact is this could
be a great job engine for America, not just a loss of jobs in
the Federal Government. Thank you.
Chairman Collins. Thank you.
Senator Levin. Madam Chairman, can I just thank Congressman
Conyers for his remarks? I regret I missed them. I just caught
the end of them on the monitor as I was coming in but they mean
a great deal to me personally and I am sure to Mr. Safavian, as
well.
Chairman Collins. I want to thank both of the Congressmen
for taking the time to come over here today to introduce our
nominee. It certainly speaks well of him to have such
bipartisan support and I would be happy to excuse the two
Congressmen now. I know they have very busy schedules. Thank
you.
Mr. Conyers. Thank you so much.
Chairman Collins. Mr. Safavian has filed the responses to a
biographical and financial questionnaire, answered prehearing
questions, and has had his financial statements reviewed by the
Office of Government Ethics. Without objection, this
information will be made part of the hearing record, with the
exception of the financial data, which are on file and
available for public inspection in the Committee offices.\1\
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\1\ The biographical information appears in the Appendix on page
21.
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Our Committee rules require that all witnesses at
nomination hearings give their testimony under oath, so Mr.
Safavian, I would ask that you please stand and raise your
right hand.
[Oath administered.]
Chairman Collins. Mr. Safavian, I understand that you do
have some family members present and I would invite you to
introduce them at this time.
Mr. Safavian. Thank you, Chairman. I have my mother, Karen
Safavian, and my wife, Jennifer Safavian, here with me. My 10-
month-old daughter--we decided we would spare the Committee the
babble. I also have a lot of friends in the audience, too.
Thank you.
Chairman Collins. We are very pleased to welcome your
family members. Public service involves sacrifices at times by
the entire family and we are pleased that they could join us
today.
I would now call upon you to make any statement that you
would like to present to the Committee.
TESTIMONY OF DAVID SAFAVIAN,\2\ OF MICHIGAN, TO BE
ADMINISTRATOR FOR FEDERAL PROCUREMENT POLICY, OFFICE OF
MANAGEMENT AND BUDGET
Mr. Safavian. Thank you, Chairman Collins. Members of the
Committee, good morning. I am honored to sit here this morning
as President Bush's nominee to head the Office of Federal
Procurement Policy at OMB. I sit here before you this morning
only because of the grace of God, the endless support of my
family, the guidance of mentors and friends, such as
Administrator Steve Perry, and without a doubt, the love of my
wife, Jennifer, and my 10-month-old daughter Kathleen. I am
truly blessed to be here today, and thank you for being here.
---------------------------------------------------------------------------
\2\ The prepared statement of Mr. Safavian appears in the Appendix
on page 19.
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Madam Chairman, I would also like to express my gratitude
to you and other Members of the Committee for the consideration
you have shown me during the nomination process. In particular,
I would like to thank the Committee staff for their help and
patience and I look forward to working with them on policy
matters if I am fortunate enough to be confirmed for the
position I am nominated for.
Finally, I would like to thank Congressmen Cannon and
Conyers for their gracious introductions. I have greatly
enjoyed working with both men and I hope to continue those
relationships long into the future.
Chairman Collins, I believe procurement issues go to the
heart of government and to the citizens' confidence in us to
execute the laws. We all know that acquisition issues are not
terribly sexy. When a contracting officer does her job well,
government contracts that result are all but invisible to the
general public. But when a contracting officer makes an error
and orders a $1,200 hammer or a $900 toilet seat, the taxpayers
lose confidence in our ability to deliver results. In short,
ineffective contracting does long-term damage to the
government's credibility with the governed and thus to our
collective ability to lead.
Our acquisition workforce is actually very good at buying
things from the private sector, and they should be. Every year
we buy $230 billion worth of goods and services that are
consumed by the Federal Government. However, there is always
room for improvement and with it, better results for the
country. We must not only buy the right goods and services but
we must buy them well, and that means getting the best value
possible for the taxpayers and the money they entrust us with.
My hope is that if I am confirmed I can work with each of
you and your staffs to develop policies that improve our
acquisition system. By doing so, we can ensure that taxpayers
continue to have confidence in the ways we spend their money.
And it is in that light that I would like to very briefly
outline the priorities that I would undertake if I am fortunate
enough to be confirmed for your consideration.
First and foremost, the strategic management of human
capital that makes up our acquisition workforce has to be the
No. 1 priority. With 40 percent of our procurement
professionals eligible to retire in the next 5 years, the
acquisition corps faces a potential human capital crisis.
Unfortunately, these positions are scattered around the
agencies and as a result, the scope and dangers of the
situation are easily overlooked by Federal managers. Training
must be enhanced, recruiting and retention must be addressed,
and a career development path for acquisition professionals in
the civilian workforce must be established.
As you know, the Defense Acquisition University and the
Federal Acquisition Institute are responsible for the
respective training of DOD and civilian agency procurement
personnel. If I am confirmed I intend to strengthen the
alliance between these two organizations and to leverage the
knowledge and lessons learned by DAU on behalf of the civilian
agencies.
Second, I hope to make competitive sourcing policy even
more open and transparent and effective. If confirmed, I intend
to put into place an operational database for competitive
sourcing data so that we can get past anecdotes and understand
the real impact of competitive sourcing on agencies, employees,
Congress, and the taxpayers. I hope this database will be a
useful tool for Federal managers and for you all to use, as
well, to assess the performance of this initiative.
My third area of emphasis if I am confirmed will be to
continue the progress made under President Bush's Small
Business Agenda. Having worked for many a summer at my
grandfather's small auto parts manufacturing business, Trenton
Forging, I can tell you I understand how important small
business is and I can tell you that if I am confirmed, there
will be no stronger advocate for small business interests than
me.
I intend to work hard to open Federal contracting for more
disadvantaged businesses and I also intend to pay closer
attention to opportunities for the service-disabled vets. Those
who have made such a sacrifice deserve to have that, at the
very least.
And tied to this effort will be the full deployment of the
Federal procurement data system so that we have timely and
accurate information. We need to know what we buy and from whom
we buy it.
Finally, I believe we need to review the rules, regulations
and policies, quite frankly, concerning suspension and
debarment. I know that has been an issue of interest to you,
Chairman Collins. We must ensure that the government only deals
with presently responsible contractors and that agencies do so
in a fair, open, transparent and consistent manner.
I believe these improvements would result in enhanced
public confidence in our ability to manage government. Again
they are not the sexiest of issues but they are of significant
consequence nonetheless. If I am fortunate enough to earn your
trust and get confirmed, I intend to make progress and generate
results from our focus on each of these areas, as well as in
the overall operation of the Office of Federal Procurement
Policy.
With that broad overview, Madam Chairman, I would be happy
to take the Committee's questions.
Chairman Collins. Thank you very much.
I am going to start my questioning with the standard
questions we ask of all nominees and then we will go into 6-
minute rounds.
Is there anything you are aware of in your background which
might present a conflict of interest with the duties of the
office to which you have been nominated?
Mr. Safavian. No, ma'am.
Chairman Collins. Second, do you know of anything personal
or otherwise that would in any way prevent you from fulling and
honorably discharging the responsibilities of the office to
which you have been nominated?
Mr. Safavian. No, ma'am.
Chairman Collins. And third, do you agree without
reservation to respond to any reasonable summons to appear and
testify before any duly constituted committee of Congress if
you are confirmed?
Mr. Safavian. Absolutely.
Chairman Collins. Mr. Safavian, I was very pleased to hear
you in your opening statement emphasize the need for greater
involvement by small businesses in the contracting process.
Right now many small companies just give up on the idea of
doing business with the Federal Government, despite having
quality goods and services to offer, because they find the
procurement system too daunting and too complex for them.
Another problem is, to simplify their workloads, agency
procurement officers often bundle contract requirements into
one large contract that is too big for a small business to bid
on, yet if that contract were broken into separate contracts
there would be opportunities for smaller companies. To address
the problem of bundling, Senator Talent of Missouri and I last
year authored legislation that was included in the Defense
Department authorization bill to try to put some restrictions
on bundling.
The Small Business Administration's Office of Advocacy has
noted that the share of smaller contracts, those under $25,000,
that small businesses are winning, has actually fallen from 51
percent in 1995 to around 42 percent in 2001 and the SBA
speculated in its report that some of the changes to our
Federal procurement laws in the 1990's may have contributed to
a decline in contracting for small businesses.
I have touched on a lot of different issues in that first
topic but I would like to know from you what steps you would
take as the head of OFPP to expand access to Federal
contracting opportunities by small businesses.
Mr. Safavian. Sure. I think you raise an absolutely
critical issue, Chairman. My experience, having worked at GSA
and in my current job as Counsel to the Deputy Director of
Management at OMB, I see small businesses throwing their hands
up in the air going, ``How do we get through this paperwork?''
Procurement tends to be viewed as a black box where small
business applications go in and sometimes they come out and
sometimes they do not and our No. 1 task, after the training of
acquisition workforce, needs to be to address those issues.
Let me give you just a quick snapshot of what we did at GSA
to help address some of those issues. Under the administrator's
leadership and following the President's Small Business
Initiative, GSA upgraded its website so that there was more
information in a more readily understandable packet for small
businesses to review. GSA then held monthly training seminars
in Washington, DC, for small and disadvantaged businesses so
that the actual companies could come in and learn how to do
this, rather than hire what I would call a beltway bandit to
charge abhorrent rates in order to do what should be done as a
matter of process.
We held seminars all over the country and invited small
businesses and disadvantaged businesses to participate and
learn how to do business with GSA and the Department of
Homeland Security. We joined forces with local Chambers of
Commerce to create somewhat of a national town hall. We had
satellite uplinks with about 50 or so Chambers of Commerce all
around the country where we held basically a Q&A seminar for
folks to learn how to do business with us.
These are great first steps but at the end of the day if
the acquisition officer is not sensitive to small business
targets and goals, we are not going to see the government meet
those targets and goals.
I thought it was interesting when I first moved to GSA that
one of the things that Administrator Steve Perry did was
mandate quarterly performance reviews. Part of the process
actually had a performance metric for how the regional
administrators were doing in small business purchasing.
I know we are short on time. What I would say just as a
broad response, Chairman, is that we must make sure that the
contracting officers are sensitive to the small business needs
and that the line managers are sensitive to how their
contracting officers are functioning in making their source
selections.
Chairman Collins. A second important issue that I want to
bring up with you this morning is the General Accounting
Office's recent interpretation of the Federal procurement law,
the Competition in Contracting Act. The GAO has concluded that
the law prohibits Federal employees from protesting adverse
contracting-out decisions under OMB Circular A-76. I am
concerned that that interpretation leads to an unfair situation
where one side can protest the decision but the other side
cannot.
What is your position on allowing Federal employees or some
entity representing Federal employees to protest an adverse A-
76 decision?
Mr. Safavian. I think we need to have parallel mechanisms
for appeal. If the private sector has the ability to protest
GAO, so should the affected employees. How we implement that is
difficult. The devil is always in the details. We want to be
careful to not encourage multiple appeals of the same issue.
There was an issue, I believe, in last year's Treasury
appropriations language that was raised in terms of who gets to
select the actual appellant. Is it the GAO selecting between
the agency tender official or the employee representative or
what is the prioritization?
But I think broadly speaking, if I am confirmed I would be
supportive of some sort of mechanism of appeal rights.
Chairman Collins. Thank you. Senator Akaka.
Senator Akaka. Thank you very much, Madam Chairman.
Mr. Safavian, OMB Director Bolten said in response to a
question I raised at his nomination hearing, ``If confirmed, I
will ask the administrator for Federal procurement policy to
recommend ways to improve opportunities for Federal employees
to compete for new work and for work currently performed by
contractors.''
I was delighted to hear in your statement that your No. 1
priority is strategic management of the human capital and the
acquisition workforce. I want to bear down on the workforce
part of this. Chairman Collins and our Committee really has
been bearing down on human capital.
What steps will you take to ensure that Federal employees
have the training and resources necessary to compete with the
private contractors?
Mr. Safavian. Senator Akaka, I think it is critical that
where the rubber meets the road, if we are going to match our
rhetoric with reality in these competitions, that the Federal
workers, the MEOs, have the necessary skill sets and access to
experts in order to help them craft their positions in the
competitions.
I know that was strongly encouraged by my hopefully future
past predecessor of the Office of Federal Procurement, Angela
Stiles. It is absolutely incumbent upon good, strong managers
that they empower their workers to be able to compete in that
regard. It will take some dollars, quite frankly, but it is
money that is also spent on the management side when they start
their competitions, as well. Again going back to Senator
Collins's question, you have to have parallel rights and
parallel responsibilities there.
Senator Akaka. Also I want to say that I was glad to see
your emphasis on training, recruitment and retention.
Over the past several years the Armed Services Committee
has adopted a series of legislative provisions designed to
address problems in DOD's services contracting in several
ways--by requiring the Department to design an improved
management structure for service contracting, also to improve
the collection and use of data on services contracts, also to
increase its use of performance-based services contracting and
ensure that its procurement officials comply with existing
competition requirements.
It is important to remember that the problems this
legislation is designed to address are not unique to the
Department of Defense and we here who also serve on the Armed
Services Committee have been looking at this part of the
Department.
My question to you is do you think that it would be
advisable to implement a new management structure and improve
the internal controls for services contracting on a government-
wide basis, rather than limiting these reforms to the
Department of Defense?
I would also appreciate your review of Sections 801 and 803
of the National Defense Authorization Act for fiscal year 2002
to determine whether they can and should be applied to
governmentwide.
Mr. Safavian. Sure. I think your first question, Senator,
was should we apply some of these requirements on an
enterprise-wide basis. While I have not dove deep into that
issue as of yet and I promise I will if I am fortunate enough
to be confirmed, my knee-jerk, my gut reaction is that I do not
think we can apply these standards on an enterprise-wide basis
because I think many of our agencies have unique missions and
have different sets of responsibilities.
Now granted, we all have a fiduciary responsibility to the
taxpayer to make sure that we are generating the best value in
our acquisitions, but I am not so sure that we can craft a one-
size-fits-all solution that does not sacrifice some of the
efficiencies that have been put into place that while some will
argue that the pendulum has gone a little bit too far in that
regard, but I think we can more narrowly address some of the
issues that we have seen to date, rather than apply an
enterprise-wide solution.
And as for applying Section 801 or 803, before I give you a
bad response I would rather give you a good response and
respond back to you a little bit later, if I may.
Senator Akaka. Thank you very much for your responses.
My time has expired, Madam Chairman.
Chairman Collins. Thank you. Senator Pryor.
OPENING STATEMENT OF SENATOR PRYOR
Senator Pryor. Thank you, Madam Chairman.
I wanted to ask, if I may, in your written questions you
said one of your highest priorities will be to address the
human capital needs to the government acquisition
professionals. Could you elaborate on this further?
Mr. Safavian. Senator, right now some of the internal
numbers that I have read indicate that about 40 percent, if not
more, of our senior-level acquisition workforce--not our senior
managers but the contracting officers--are eligible to retire
in the next 5 years. And it is a difficult area for recruiting.
It is also a difficult area for retention, particularly with
the demands from the private sector.
Senator Pryor. Why is it difficult?
Mr. Safavian. On the recruiting or the retention?
Senator Pryor. Either one.
Mr. Safavian. I will start with the recruiting. Imagine a
job where you are reviewing a lot of fine print and a lot of
very technical information, having to make a fundamental
decision at the end of the day, and regardless of the decision
you make, somebody is going to yell at you. One of the losing
parties is going to file a protest.
Senator Pryor. That sounds like our job, does it not?
Chairman Collins. It does.
Mr. Safavian. It is a difficult task. It is one that
requires technical expertise, as well as the patience of Job.
And we have a good, solid, hard-core cadre of acquisition
professionals. Unfortunately, those folks are approaching
retirement and I am not sure we have a succession plan in place
government-wide.
That goes to the retention issue, as well. We seem to be
losing more folks than we are bringing in right now and that is
a grave concern.
Senator Pryor. In fact, the Comptroller General back in
June of last year testified to the House. I am not going to
read you his entire testimony on the subject but basically what
he says is in his view, the agencies currently lack the
capacity, the human capital, to perform some of this oversight
that may be very important. Is that your thought? Do you agree
with that?
Mr. Safavian. Oversight over the acquisition workforce?
Senator Pryor. Yes.
Mr. Safavian. I think that is going to vary on an agency-
by-agency basis. The General Accounting Office named a couple
of agencies that they consider high risk with regard to----
Senator Pryor. That is the context of his comment, right?
Mr. Safavian. I am not sure that you can say that across
the government. We have some very good senior procurement
executives, outstanding professionals.
Senator Pryor. But here again, are they going to retire
soon? Are there people in the pipeline that can step up and
help them long-term?
Mr. Safavian. I cannot say that I know that in every
instance but what I can tell you is whether it is fair or not,
replacement planning or succession planning tends to take place
far more actively at the senior management level than it does
at your GS-12 or GS-13 level. So when there is a senior
procurement individual ready to retire, people are already
thinking in advance about who to replace that person with. I am
not sure that takes place at the line level.
Senator Pryor. You know, one thing that we have discussed
in this Committee and in the Senate generally is competitive
sourcing criteria and obviously OMB is very involved in that. I
would like to hear your thoughts on competitive sourcing.
Mr. Safavian. Let me start with a very brief anecdote. I
can remember growing up and working for my grandfather at
Trenton Forging, as I mentioned earlier, and it was during the
time that U.S. automakers were really taking a beating from the
Japanese. If you guys can recall, people were saying if you
have a foreign car, you cannot park here and all that.
Senator Pryor. Yes.
Mr. Safavian. I can remember my grandfather talking about
how this competition was tough on the business, but I can also
remember him talking about how the competition ultimately will
make the business stronger. And my grandfather's prediction has
panned out. They are stronger than ever. They employ 65 people
right in downtown Trenton.
I really do believe that competition improves the way
operations are run in the government. I think the system we
have in place is a good, solid foundational system. I think we
will need to continue to make tweaks along the way, as Senator
Collins pointed out, with appeal rights. I think that is an
important issue.
But I think at the end of the day, using competition as a
tool to determine how the taxpayers can get the best quality
services and the best value makes great sense. It is a
Presidential initiative that if I am fortunate enough to be
confirmed I will pursue with zeal.
Senator Pryor. I love the concept of it. But I just want to
make sure that we set it up the right way and that it is done
fairly and evenhandedly.
A few moments ago, Senator Akaka mentioned the armed
services. We have seen in that context, from time to time,
where out-sourcing or the competitive process seems to make a
lot of sense on the front end but after you get into something
a few years, it can be much more expensive and you start to
create dynamics that actually, in the end, you did not
anticipate creating and may not be healthy.
So I guess I just want to add a word of caution there to
think about long-term, not just the immediate consequences. I
know, for example, some of the things that the government does,
we may emphasize something like diversity. Just true dollars
and cents, that may not make a lot of sense but for our society
we have made the decision that that does make sense and it is a
good thing.
So I hope you will look at this from a broader perspective
than just purely a philosophical agenda.
Mr. Safavian. Absolutely, sir.
Senator Pryor. That is all I have. Thank you.
Chairman Collins. Thank you. Senator Levin.
Senator Levin. Thank you, Madam Chairman. And let me add my
welcome to you, Mr. Safavian.
Mr. Safavian. Thank you.
OPENING STATEMENT OF SENATOR LEVIN
Senator Levin. There is a pending bill called the Bioshield
Bill which would exempt a wide range of contracts from the
Competition in Contracting Act. One section of this bill would
exempt from competition any procurement up to $25 million for
performing, administering or supporting research and
development activities that respond to what is called pressing
needs. A second provision would exempt from competition without
dollar limitation any procurement of a specific countermeasure
for which there is a pressing need.
We have a lot of pressing needs in the Federal Government
and we have a lot of pressing needs in the Department of
Defense. We have pressing needs for new fighter aircraft, body
armor for our soldiers and a lot of other items and yet we
require the Department of Defense to live within the
requirements of the Competition in Contracting Act and they do
so effectively.
Now there are obviously exemptions, emergency exemptions.
You can designate certain items that do not have to be
purchased competitively if there is an emergency or an
essential need for it, to somehow or other omit the competition
delay, but basically my question of you is this--do you support
the Competition in Contracting Act and the principles that lie
beneath it?
Mr. Safavian. As a broad measure, absolutely.
Senator Levin. Do you believe that the bioshield
requirement--are you familiar at all with the bioshield
requirements?
Mr. Safavian. No, sir.
Senator Levin. I would ask that you take a look at the
requirements in that bill and give us an answer for the record
and tell us whether or not you believe that the requirements
for a bioshield against a biological attack are more pressing
than the other Defense Department needs.
Are you familiar with the urgent and compelling exemption
to the Competition in Contracting Act? There is an exemption
for----
Mr. Safavian. Emergencies.
Senator Levin. Yes. Are you familiar with that exemption?
Have you had any dealings with it?
Mr. Safavian. I will not paint myself as an expert on it.
Senator Levin. Have you had any dealings with it at all?
Mr. Safavian. Some.
Senator Levin. Has it worked, as far as you know, for the
various Federal agencies? Has that provided enough flexibility
where there is some real reason why you cannot compete
something?
Mr. Safavian. From my workings with it, and I will say it
has been very superficial so far, that it has been fully and
well used by many----
Senator Levin. Excessively used?
Mr. Safavian. No. I think that sometimes that exception can
be used for the sake of facility rather than exigency. I would
rather see more checks and balances.
Senator Levin. So you would be leery about expanding that
definition or its use. You feel it ought to be used perhaps
with greater caution?
Mr. Safavian. From my framework and how I look at
contracting, I would be leery.
Senator Levin. OK. When we met in my office last month we
discussed a number of issues and I want to just revisit a few
of them with you very briefly now.
I raised an issue with you about Federal Prison Industries.
This is an issue which goes right to the heart of the question
of both small businesses and competition, whether we are going
to allow small businesses to compete for Federal contracts or
whether we are going to allow the Federal Prison Industries to
designate contracts as ones which can only be filled by the
prison work and prohibiting competition from the private sector
for those contracts.
It sounds bizarre when I tell some of my colleagues that
Prison Industries is able to designate contracts for which
small businesses or other businesses cannot even compete. They
are not allowed to bid, enough though they might be able to
provide an item cheaper or a better item at the same price.
We actually allow the Federal Prison Industries to put off-
limits items so that they have the exclusive right to supply it
to agencies and prohibit bids from the private sector. Some of
my colleagues are absolutely--they feel that it cannot be. How
can possibly a small business compete, given the differential
in the cost of labor, with an item which is produced by Prison
Industries? The answer is OK, then let competition sort that
out but at least let small businesses bid if they want to. That
has been my position.
We were able to succeed after a very heated debate on the
Senate floor to make that possible for the Department of
Defense and the issue is now whether or not we are going to
allow contracts that other agencies want to let for items be
bid upon by businesses in this country or whether we are going
to continue to allow that monopoly by Federal Prison
Industries.
Will you work with us to ensure that private companies have
an opportunity to compete against Federal Prison Industries for
Federal agency contracts?
Mr. Safavian. Senator, my understanding of the
administration's position is that they are firmly neutral on
the role of Federal Prison Industries. As we had discussed, my
own personal view is that it is difficult to say competition
works in one segment of Federal operations and not in another
and I would be happy to work with you to try to address Federal
Prison Industries.
Senator Levin. Thank you.
We also discussed the proliferation of Government-wide
contracts and multi-agency contracts. You indicated that you
share the concern about the need to rationalize those contracts
and to ensure that they are not used as a method of avoiding
competition requirements and performance-based contracting
requirements. Do you have a comment on that issue?
Mr. Safavian. I think as the executive designations come up
for agencies with regard to their government-wide contracts, we
should make sure that they have a game plan for how they intend
to use those contracts. I think that there continue to be
concerns about abuse of certain types of schedules, again
merely for the sake of facility rather than for some strategic
reason.
Senator Levin. You have been asked this morning about the
fact that Government now spends more money on contracts for
services than we do on contracts for products, and yet when it
comes to managing those contracts, we spend less on service
contracts than we do on contracts for products.
In your response to the Committee's prehearing policy
questions you said that spend analyses can be a useful tool for
agencies to determine how to most effectively spend their
procurement dollars. And your response to Senator Lieberman's
prehearing question, however, you said that you are ``not
convinced that the benefit of developing a comprehensive
inventory of work performed by contractors would be worth the
significant cost.''
My question is this. Is not a spend analysis the same thing
as a comprehensive inventory of the work performed by
contractors?
Mr. Safavian. I guess the way I view it, Senator Levin, is
that you need to have the inventory in order to conduct the
spend analysis. I see the point you are making.
I guess I struggle with putting together the comprehensive
inventory because I am not sure how you build it, or with what
dollars you build it. And what I have seen, having worked in
one of the agencies, is how many hoops the agency managers are
jumping through for verifiable and right reasons. I am very
sensitive to overloading some of the agency managers with those
types of activities.
Senator Levin. Well, should not the government, like
private sector companies, look at all of the services that it
acquires, whether they are performed in-house or contracted
out, as the basis for decisions as to how to acquire them in
the future? Do you not have to make that assessment?
Mr. Safavian. Yes, but I question why we would not do that
on an agency-by-agency basis, since agencies have individual
and unique core missions.
Senator Levin. So that each agency should be doing that
instead of----
Mr. Safavian. Each agency should know where----
Senator Levin. But Government-wide you do not see a need to
do that?
Mr. Safavian. If we are starting from scratch I would have
questions about it. If we could amalgamate the spending
patterns of agencies on a component basis, sure.
Senator Levin. Thank you. Thank you, Madam Chairman.
Chairman Collins. Thank you.
Mr. Safavian, I have a few additional questions but in the
interest of time I am going to submit them for the record.
I would like to thank you for your appearance before the
Committee today. Without objection, the record will be kept
open until 5 p.m. tomorrow for the submission of any additional
written questions, the answers to the questions that you
promised to Senator Levin, and any other statements for the
record.
Senator Levin. I wonder, also, if you would tell your
daughter when she is old enough to know that we missed her
being here this morning.
Mr. Safavian. Thank you, sir. I will do so.
Chairman Collins. With that, this hearing is now adjourned.
[Whereupon, at 11:52 a.m., the Committee was adjourned.]
A P P E N D I X
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