Industry Insight: New Disclosure Rule Could Drive Away Commercial IT

Once again the good intentions of government are giving rise to red tape and misguided regulations that could tie the hands of officials looking for the most innovative IT solutions. This time, the Federal Acquisition Reform Councils are considering a rule that would require companies to disclose cost and pricing data to government agencies when bidding for contracts to provide commercial goods and services.

Cost and pricing data is sensitive information that companies would never disclose in the commercial marketplace. Firms providing commercial goods and services rightfully fear that such disclosure would expose business practices that can provide ammunition to their competitors.

The proposed rule would represent a significant departure from today's regulations. Contracting officers (COs) can require such information today, but only as it relates to non-commercial goods and services, i.e., solutions that are specific to the government market. They also have limited authority to ask for some pricing-related information for commercial bids when necessary.

The councils say they are proposing the new regulations in an attempt to clarify what information acquisitions officials can ask for in making an award. At ITAA, we believe that is already clear and that their authority gives them access to all the information they need to make an award. Unfortunately, it appears as though many COs don't understand or use the latitude that they already have.

Today's acquisition workforce is under considerable strain. They are under-staffed, under-trained and accountable for meeting a dizzying array of requirements. It should not be surprising that they may unintentionally overlook some nuances of procurement regulations. But the answer lies in making them aware of the tools at their disposal, not in rewriting the regulations.

Worse, the proposed rule obfuscates, rather than clarifies the circumstances under which contracting officers may require cost and pricing information. We believe any final rule should make it extremely clear that cost information is to be required in commercial item acquisitions only as a last resort. Most importantly, commercial companies must be free to walk away if the company decides it does not want to provide such information.

The fact is, many commercial contractors may not even maintain cost data in the course of their commercial business and would likely be unwilling to disclose such information to the government. Companies should not be forced to disclose competitively sensitive information.

As written, this regulation is a de facto requirement for commercial companies to maintain non-commercial accounting practices in order to provide goods and services to the government. It would drive some companies out of the government market entirely while raising costs for those that stay. Ultimately, regulations like these invariably limit the government's access to the best IT solutions used by private companies every day. And for the taxpayer, that means less service for more money " a heavy price to pay in lieu of investing in our government's acquisitions workforce.

Phil Bond is president and CEO of Information Technology Association of America.

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