Reverse Auctions Once Again Questioned by Lawmakers’

Lawmakers are once again marshaling arguments to restrict the contracting tool called a reverse auction, criticizing agency reliance on a practice dominated by a single private firm at a Thursday hearing of the House Small Business subcommittee.

Rep. Richard Hanna, R-N.Y., who has introduced H.R. 1444 to limit reverse auctions, said that allowing contractors to bid electronically with increasingly lower prices to provide goods and services creates “a race to the bottom” that neither assures quality nor helps channel work to small businesses. “When reverse auctions are used properly, they can save taxpayer dollars,” Hanna said. “Unfortunately, some agencies have used reverse auctions in a manner that evades vigorous competition and contractor protections.” (Credit AP).

Use of the tool at agencies such as the Veterans Affairs Department is dominated by a single Vienna, Va.-based firm called FedBid, which has become controversial for its lobbying practices. The Office of Federal Procurement Policy has been collecting data on the practice, but has yet to issue guidance, noted the panel’s ranking member, Rep. Nydia Velazquez, D-N.Y. (Credit AP).

Dan Gordon, the former administrator of the White House procurement shop now teaching law at  George Washington University, said the best study on the subject—a December 2013 Government Accountability Office report—showed uncertainty as to whether reverse auctions save money or steer work to smaller businesses. “If all you care about is prices, then reverse auctions are for you,” Gordon said.  “But there is also past performance and quality” to consider.  (Credit AP).

He noted that FedBid conducts more than 99 percent of the auctions announced on the government’s FedBizOpps website, “so it’s pretty darn close to a monopoly” in performing a function that, Gordon added, “is closely associated with inherently governmental functions.” (Credit AP).

Because FedBid controls the data — a conflict of interest, he said — agencies often don’t know what fees they’re paying. Sometimes it’s nothing because FedBid waives it. “FedBid does an excellent job,” Gordon said. “So good that agencies say, ‘Let’s go for it,’ which means federal officials are abdicating their responsibility.” (Credit AP).

Private sector witnesses representing veterans and women’s groups promoting small business opportunities were also skeptical, with Davy Leghorn from the American Legion calling reverse auctions “a short cut used because there aren’t enough contracting officers.” (Credit AP).

Hanna’s bill, which he hopes to move out of committee soon, assumes that reverse auctions are “best suited to buying well-defined commodities, but not skilled services with a high degree of variability,” according to a summary. It would ban their use for the procurement of “subjective services like construction and design, as well as products that prevent bodily harm, such as body armor. This would force agencies to use one of the other approved contracting processes, such as a sealed bid procurement or a negotiated procurement when a contract is suitable for award to a small business, or when the procurement is made using a small business program.” (Credit AP). The bill would also require more training of contracting officers in the use of reverse auctions.

FedBid, which did not testify, said in a statement to Government Executive that its leaders were disappointed that no one from the company or industry was invited to the hearing.

”FedBid feels strongly that reverse auctions, when used appropriately, do in fact increase access and opportunity for small business contractors, allowing them to compete on a level playing field,” the statement said. “FedBid does not believe that reverse auctions in any way ‘abdicate’ a contracting officer’s responsibility; rather, they are a tool that they can use as part of their process, rather than a replacement for that process.” (Credit AP).

The firm, which is headed by former Office of Federal Procurement Policy Administrator Joe Jordan, said it supports language from the 2015 Defense authorization bill requiring more training and clarity around the use of reverse auctions.

Senate Unveils New Bipartisan Fast-Track Bill

The leaders of the Senate Finance Committee on Thursday introduced long-awaited legislation that will enable the White House to submit trade agreements for swift approval but also give lawmakers a larger role in the negotiating process, setting the stage for a high-stakes debate over the nation’s trade policy.

Sen. Orrin Hatch, R-Utah, speaks Thursday at a Senate Finance Committee hearing on trade policy. (Credit Senate Finance)

Finance Chairman Orrin Hatch, R-Utah, and Ranking Member Ron Wyden, D-Ore., came forward with the bill to renew the administration’s Trade Promotion Authority after weeks of closely watched deliberations over language that would allow Congress to strip an accord of its fast-track protection if certain conditions are not met and subsequent discussions over a federal program to provide relief for workers displaced by trade.

“This is a smart, bipartisan compromise that will help move America forward,” Hatch said in a statement. “The renewal of TPA will help American workers and job creators unlock new opportunities for growth and promote better, higher-paying jobs here at home. If we want to maintain our nation’s economic leadership and promote American values around the world, we must reach beyond our borders, and this bill is a strong first step.” (Credit AP)

House Ways and Means Committee Chairman Paul Ryan, R-Wis., also joined the effort with the lower chamber’s version of the legislation, which he said will strengthen the country’s economic standing both at home and abroad.

“The bill makes sure that Congress will set the priorities in our trade agreements, and it includes unprecedented accountability, transparency and enforceability measures,” Ryan said.(Credit AP).

Work to strike a bipartisan deal on the bill was apparently underway up to and including Thursday morning, when Hatch said at a Finance Committee hearing that he was aiming to hold a markup of the legislation on April 23 once the details were ironed out.

Formally known as the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, the bill reinstates TPA, under which Congress lays out objectives and standards for the administration to meet in its trade talks. In exchange, the agreements are assured an amendment-free vote in each chamber of Congress once they are finalized.

TPA has been expired since 2007 and Congress has not passed a TPA bill since 2002. In the intervening years, the advancement of technology and the global economy have created new, pressing areas for trade policymakers to address.

Among those are rules regarding cross-border data flows, currency manipulation and competition disciplines for state-owned enterprises, all of which are tackled in the TPA bill unveiled Thursday.

The bill is seen as crucial not only for shaping U.S. trade negotiating priorities for the next several years, but also in the near term for easing passage of the 12-nation Trans-Pacific Partnership deal, which negotiators are aiming to wrap up as soon as possible.

While the introduction of the bill and the bipartisan handshake deal between Hatch and Wyden is significant, the bill’s most fractious days still lie ahead, as trade skeptics in both parties have criticized the fast-track process as an affront to the principles of good governance.

The new legislation looks to tackle those concerns head-on by increasing the administration’s consultations with both Congress and the public, creating a new “transparency officer” in the U.S. trade representative’s office and establishing House and Senate advisory groups to oversee ongoing negotiations.

Under the new bill, the administration would also be required to make finalized trade deals available to the public for 60 days before being inked by the president and up to four months before a congressional vote. If the deal does not pass muster with the congressional objectives, a 60-vote majority in the Senate would strip the deal of fast-track protection and allow amendments.

Senate Panel Reaches Deal On Iran Sanctions Bill

The chairman of the U.S. Senate Foreign Relations Committee on Tuesday announced a bipartisan agreement allowing Congress to review any nuclear agreement with Iran, rejecting pleas from the White House that congressional action could derail ongoing international negotiations.

Under the compromise Iran Nuclear Agreement Review Act, Congress would have 30 days to review the nuclear deal, and President Barack Obama would have 12 days to sign off — or more likely veto the proposal — with Congress granted an additional 10 days to consider an override vote. The measure would also require the administration offer regular reports on Iran’s support of terrorist groups and other activities.

“This puts in place a process — the administration is still fully free to go ahead and complete its negotiations — but as it relates to the sanctions, that again Congress put in place, it has to lay before us; we have the ability to look at every detail,” Corker told Bloomberg TV. “Those congressional sanctions cannot be waived until Congress completes its work.” (Credit: AP).

However, despite bipartisan support for the agreement, the White House has repeatedly promised to veto any attempt to rein in Iran’s nuclear program, arguing that it could undermine a still-unfinished agreement announced by the U.S., Iran and other world powers in early April.

“The sanctions that we put in place helped make this opportunity possible. But let me be clear: If this Congress sends me a new sanctions bill now that threatens to derail these talks, I will veto it,” Obama said in January. “For the sake of our national security, we must give diplomacy a chance to succeed.” (Credit: AP).

Under the current Iran deal framework, the country would reduce the number of centrifuges in operation by at least two-thirds and convert the centrifuges at its Fordow facility to research and other applications, according to the White House.

In exchange, the European Union would lift its nuclear-related sanctions in a phase-out period, with the framework of the separate U.S. sanctions remaining in place for a possible snapback, according to the statement.

In order to ensure Iran’s compliance with the deal, International Atomic Energy Agency inspectors will have access to Iranian nuclear facilities, its supply chain and mining facilities. The deal faces a June 30 deadline.

House Passes Two Dodd-Frank Loan Rules Bills

The U.S. House of Representatives on Tuesday passed a pair of bills designed to loosen Dodd-Frank Act, rules that had purportedly discouraged lending for manufactured homes and exempt certain insurance and other fees from the limits imposed by the “qualified mortgage” rule.

Lawmakers voted 286-140 to pass H.R. 685, the Mortgage Choice Act, and 263-162 on H.R. 650, the Preserving Access to Manufactured Housing Act, amid opposition to both bills from a number of Democratic lawmakers. The Mortgage Choice Act would roll back important Dodd-Frank protections and undermine the work of the U.S. Consumer Financial Protection Bureau by driving up the cost of mortgages, helping to “fatten the pockets of those who would gouge our constituents,” argued House Financial Services Committee ranking member Rep. Maxine Waters, D-Calif.

But Financial Services Committee Chairman Jeb Hensarling, R-Texas, said it would help cut through unintended consequences of Dodd-Frank as well as subsequent “bad and dumb” regulatory overreaches that have harmed access to credit.

“We’ve got to quit protecting consumers right out of their homes,” Hensarling said.

The Mortgage Choice Act would ament the Truth in Lending Act to exclude charges levied by a title insurance provider affiliated with a lender from the fee caps included under the CFPB’s qualified mortgage, or QM, definition, bringing them in line with the current treatment of third-party title insurers. Fees and taxes held in escrow to be passed on to the government or other third parties would also be excluded from the fee cap.

For a loan to qualify as a QM, lenders must meet certain criteria, such as keeping the loan within certain debt-to-income ratios for borrowers and capping the points and fees that are charged at 3 percent of loan principal.

In return, lenders receive “safe harbor” or “rebuttable presumption” protections, giving them defenses in legal actions brought by borrowers over certain issues with their mortgages.

Under PAMHA, the fee and interest rate thresholds under which loans for manufactured homes are considered “high cost” under the Home Ownership and Equity Protection Act would be raised, with that exemption extended to apply to homes worth up to $75,000, up from a ceiling of $50,000.

This is because the cost, and thus fees, associated with originating and servicing a low-value loan are typically higher in percentage terms than for a larger loan, meaning that under HOEPA they are wrongly considered “high-cost” loans that come with a range of drawbacks for lenders, according to the bill’s sponsors, who argue that these small-value loans are not the sort of predatory loans HOEPA is intended to protect against.

The White House has made clear it will veto both bills if they come to the president’s desk, saying in statements Monday that it believed each would “weaken key consumer protections and provisions” included in Dodd-Frank.

In addition to the two bills passed Tuesday, lawmakers also easily passed a group of six bills from the House Financial Services Committee on Monday, including several other changes to lending law.

The legislation passed included the Capital Access for Small Community Financial Institutions Act, which would allow private credit unions to become part of the Federal Home Loan Bank System, giving them broader access to low-cost credit for lending, and the Helping Expand Lending Practices in Rural Communities Act.

Under that bill, individuals would be able to apply for a rural area designation if they are outside the official U.S. Department of Agriculture rural area definitions now used by the CFPB to possibly take advantage of the looser QM standards that apply for rural loans.

Lawmakers also agreed to the passage of the SAFE Act Confidentiality and Privilege Enhancement Act, which would enable public officials overseeing the financial services industry to share information submitted to the Nationwide Mortgage Licensing System and Registry — which keeps track of certain financial services licensing and registration information — without losing privilege or confidentiality protections.

House- and Senate-the first order of business.

When they return after the Easter-Passover recess, the first order of business in the US Congress  is likely to be the reconciliation of differences between House- and Senate-passed Fiscal Year 2016 budget resolutions.

While both chambers have passed largely similar proposals, differences exists between both chambers over how deeply to cut domestic spending. In addition, Republican defense and deficit hawks continue to disagree over how much money to provide the Department of Defense.

The 2011 budget agreement and deficit reduction sequester established spending caps on defense funding, which many Republican defense hawks argue do not provide adequate defense spending, especially given the current perilous global security situation. Fiscal conservatives argue that any increase in spending for DOD should be offset. The military funding issue and the scope of domestic funding cuts are expected to consume much of the debate as House and Senate conference committee members work out a path toward a joint budget resolution, which must be enacted by both chambers in order to permit them to take up a reconciliation bill. A reconciliation bill can carry lots of unrelated provisions, but lurking in the background is the proposed repeal of the Affordable Care Act (Obamacare) in both chambers’ budgets, a provision that will prompt a veto of any likely reconciliation bill.