The Coalition for Government Procurement

Wow, what a day!  Nice weather, beautiful course, exceptional cause, and great camaraderie all accurately sum up Wednesday’s Joseph P. Caggiano Memorial tournament.  It was a very special day in honor of Joe Caggiano and veterans, a cause he was extremely passionate about.  We were fortunate to have Joe’s wife Kathleen, along with his parents Sue and Paul, and brother Michael, join us in the morning to personally present the donation to The George Washington University.  As you are hopefully aware, in honor of our 35th anniversary, and in conjunction with The George Washington University, we have made it a priority to fund and endow a scholarship to provide financial support to a deserving veteran who is concentrating their studies in the field of US Government procurement and pursuing the JD or LLM degree in Government Procurement Law or the Masters of Science in Government Contracting degree (MSGC) at GWU.

golf

Due to our generous sponsors and participants in Joe’s tournament, I am proud to announce we will be able to contribute more than $25,000 to the scholarship fund from this event alone!  I would especially like to thank our Title Sponsor, The Gormley Group; our Lunch Sponsor, CohnReznick; our Reception Sponsors, AvKARE and CACI; and our Beverage Cart Sponsors, EY and Integrity Consulting.

Additionally, I would like to thank our Driving Range Sponsor, Baker Tilly; our Putting Green Sponsor, Brocade; our bag sponsor, Senoda; and all our Hole Sponsors: 3MAllen Federal Business PartnersBerkeley Research GroupBooz Allen HamiltonCGICoalition for Government ProcurementDeltekGeneral Dynamics Information Technology (x2), George Washington UniversityHONJudge GroupKoniagL-3MarkitectureRendely FamilySAP, and TORO.  We look forward to your participation again next year!

Thank you to Steve Schooner from George Washington University for making opening remarks at the reception and coming out to witness firsthand how we, as the government contracting community, can come together and raise awareness and funds for charitable and educational causes such as this one.  On that note, a big thank you to the team at the Coalition, as well as the staff at Whiskey Creek Golf Club, for running a smooth and efficient tournament.

Thanks again and congratulations to all the players and companies involved.  We look forward to seeing you again at next year’s tournament!

Roger Waldron

President

golf gw

Last week the General Services Administration (GSA) announced the award of 21 Federal Strategic Sourcing Initiative (FSSI) Office Supply 3 (OS3) Indefinite-Delivery-Indefinite-Quantity (IDIQ) contracts.  The awards went to 20 small businesses and one other than small business. The number of awardees raises significant questions regarding the long term supply chain for office supplies.  The small number of contract awards reflects a GSA goal of reducing the number of office supply contractors in the federal marketplace.  Indeed, GSA’s Federal Acquisition Service (FAS) has described FSSI OS3 as a form of “supplier suppression.”  It is an approach that detaches customer agencies from contractors, limits choice and value for customer agencies; and reduces competition over the long term.

On January 31, 2014, GSA issued a separate OS3 solicitation seeking to award a set of IDIQ contracts covering four different CLINs:

CLIN 0001: General Office Supplies Full Catalog;

CLIN 0002:  Office Paper;

CLIN 0003: Toner/Ink; and

CLIN 0004: GSA On the Go

Unlike OS2, GSA chose not to use the GSA’s Schedule 75 as the platform for establishing a set of FSSI Office Supply Blanket Purchase Agreements (BPAs).  GSA cited the prior closure of the schedule to new offers as a primary reason for not using Schedule 75.  GSA explained that those firms who were precluded from submitting an offer as a result of the Schedule 75 closure would be precluded from a schedule based OS3 FSSI solution.  Therefore, to allow those firms an opportunity to compete, GSA chose to establish a new IDIQ contract.  In essence, GSA closed Schedule 75 because it believed it had too many contractors on schedule (remember Demand Management).  It then chose to conduct an acquisition to create a new set of contracts duplicating Schedule 75 because it did not have enough Schedule 75 contractors.  The irony is that the result is another set of contracts that severely limits the office supply market—thereby increasing barriers to entry, limiting opportunities for small businesses and reducing long term competition.

GSA’s press release announcing OS3 states in part that “[t]his initiative builds upon the success of OS2, which generated more than $370 million in savings and achieved a small business utilization rate of 75 percent.”  To the extent GSA is measuring savings based on discounts off the schedule contract price, it is an unremarkable claim.  The GSA schedules program is designed to foster competition at the task order level and for BPAs—competition that leverages agency specific requirements and seeks price reductions.  That is why individual agencies can and have competed task orders and/or established BPAs for their specific requirements at pricing better than FSSI pricing.  More fundamentally, where is the data on savings??  To the extent information on savings has been shared publicly, it reflects a methodology largely based on measuring the discounts off the schedule contract price.  It is a methodology that fails to address the ability of customer agencies to achieve as good or better savings when competing specific requirements via task orders or BPAs under the schedules program—an approach that would also provide greater opportunities for small business across the federal enterprise.

In touting OS3 savings, the critical questions are: (1) What prices were paid prior to the FSSI vehicles? (2) How do the FSSI prices compare?  and (3) What are the administrative costs to the taxpayer of establishing and administering these duplicative contract vehicles? Moreover, a true item price comparison for OS3 involves GSA comparing OS3 pricing against OS2 competitive pricing (task orders) not the GSA schedule contract pricing! That is the most accurate comparison.

Finally, it is important to note that on February 3, 2014 a Freedom of Information Act (FOIA) request was submitted to GSA seeking among other documents, all documents relating to all public statements by GSA regarding savings resulting from the FSSI. It should be noted that this FOIA request was initiated as a single request with the objective of reducing GSA workload and strain on resources by having to respond once versus multiple FOIA requests from GSA schedule contractors.  To date, there has been no responsive documents provided other than information on GSA’s FSSI websites.  In June of this year, the FOIA request was narrowed in response to a GSA request.  Since then there has been no further communication or response from GSA.  This delay in responding raises significant questions:  What analysis was done, or not done, to ascertain any savings?  How was it done?  Do we have all the results?  What has FSSI cost GSA operations?  What has it cost Government?  Where is the analysis of the data FSSI contractors have been mandated to report?  What are the fees collected to date by GSA for the OS2 BPAs?

In the name of transparency and accountability, we look forward to the release of all documents relating to the FSSI program.

Roger Waldron

President

 

Legal Corner

By Michelle E. Litteken, Associate, Mayer Brown LLP and Luke Levasseur, Counsel, Mayer Brown LLP 

Originally Posted in Claims and Disputes (Mayer Brown Meaningful Discussions Blog) on August 19, 2014

Editor’s note: This is the first post in a series of posts focused on protest allegations related to discussions with offerors. Planned future posts will cover what qualifies as meaningful discussions, what constitutes unequal discussions, and a round up of recent protests involving discussions.

In a bid protest, the disappointed offeror often alleges that the agency failed to conduct meaningful discussions or engaged in unequal discussions. A threshold inquiry is whether the agency engaged in discussions. The CFC and GAO approach the question of whether agency communications constitute discussions differently, and a protester may want to consider that difference when selecting a protest forum.

FAR 15.306 defines clarifications as “limited exchanges, between the Government and offerors, that may occur when award without discussions is contemplated.” The FAR does not expressly define “discussions,” but it explains that “discussions” include negotiations that “are undertaken with the intent of allowing the offeror to revise its proposal.” The FAR used to limit clarifications to communications about relatively small matters, such as eliminating clerical mistakes or minor irregularities. However, the rules were revised in 1997 to allow a free exchange of information without requiring discussions. Decisions from the GAO and CFC reveal that the two protest forums apply the FAR provisions differently, with the CFC appearing to embrace a more substantial exchange of information that can still be characterized as clarifications.

Both GAO and the CFC recognize that, if an offeror is given an opportunity to revise its proposal, the agency has engaged in discussions. Several GAO and CFC cases refer to this as the “acid test.” The tough cases come when either (i) questions (often called “clarifications” by the agency) seek information that is necessary to determine technical acceptability of the proposal, or (2) the agency seeks a substantial amount of “clarify[ing]” information and an offeror’s response approaches (or crosses) the line of changing the proposal.

GAO has ruled that, when an agency uses information received from an offeror after submission of a proposal to determine the technical acceptability of a proposal, “discussions” occurred. For example, in Evergreen Helicopters of Alaska, Inc., GAO analyzed the “acquisition of fixed-wing aircraft services in the central region of Africa,” and considered an EN requesting information about the aircraft type and tail numbers. Such a request could be seen as soliciting information inadvertently omitted from the proposal, but GAO ruled that the communications constituted discussions because the information was necessary to determine technical acceptability. In contrast, in Tetra Tech, Inc., GAO held that the agency’s email to the awardee asking the awardee to confirm that it was accepting the end-state performance objective (as opposed to the technical approach) qualified as a clarification because the awardee was confirming information already in the proposal, not providing information that constituted a modification or revision of its proposal in response to the email.

Importantly, GAO doesn’t necessarily accept the agency’s characterization of the communications—but, instead, analyzes the parties’ actions. This lack of deference is illustrated in Evergreen Helicopters, in which GAO rejected the agency’s characterization and argument that the evaluation notices were clarifications because the offerors were not allowed to revise their proposals. Similarly, in Kardex Remstar, LLC, the agency sent an offeror a spreadsheet with spaces for the offeror to explain how its proposal satisfied the agency’s requirements. The agency characterized the communications as “clarifications” and expressly prohibited the offeror from changing its proposal. GAO rejected the agency’s characterization because the information was used to determine technical acceptability–even though the offeror could not revise its proposal.

In contrast, CFC decisions generally find that discussions occur only when an offeror is given the opportunity to revise its proposal, and the court is less likely to characterize the provision of information related to a technical acceptability determination as “discussions.” For example, in Mil-Mar Century Corp. v. U.S., the protester argued that an email asking the awardee to substantiate its proposed price, clarify its costs for an item, address a discrepancy in its labor hours, and clarify the adequacy of its proposed labor hours qualified as discussions. Although the agency included a disclaimer on the emails that the communications did not constitute discussions, the protester argued that the exchanges were discussions because the information the awardee provided was required by the RFP and essential to determine acceptability. The court deferred to the agency’s characterization and found the information was not a material requirement. The court also noted that “an exchange can constitute a clarification, and not a discussion, even whe[n] the information provided was ‘essential to evaluation criteria.’”Evergreen Helicopters and Kardex suggest that GAO would have agreed with the protester because the agency used the information to determine technical acceptability. 

With respect to the amount of deference the CFC should give to an agency’s characterization of the communications, the Federal Circuit has held that the court should defer to the agency’s interpretation of the FAR’s definition if the agency’s interpretation is permissible. In Davis Boat Works, Inc., the CFC applied that reasoning to hold that a 7-page letter with a 25-page “process guide” the awardee submitted during the first round of evaluation constituted clarifications because neither the letter nor the guide substantially revised the offeror’s proposal. Instead, the court found that the Process Guide explained how the offeror would satisfy the RFP’s management approach requirements. The court was not concerned with the amount of information that the offeror provided, observing “any clarification must necessarily convey new information to the agency.” The court further stated: “in close cases, it is well-established that the government’s classification of a particular communication as a clarification or a discussion ‘is entitled to deference from the court,’ as long as that classification is permissible and reasonable.”  In contrast, GAO has stated: “the agency’s characterization of the exchange is not controlling, as it is the actions of the parties that determine whether discussions have been held.”

Although there are many issues to consider when deciding where to file a bid protest, contractors might not sufficiently consider the different approaches that GAO and CFC take to determining whether discussions occurred. If a contractor anticipates that a discussions-related issue may become important in a protest being considered, subtle differences between the way the CFC and GAO evaluate these issues should be analyzed carefully.

 

For this week’s comment I wanted to share with you a blog post first published on the Federal Times’ Acquisition Blog (www.federaltimes.com). The post highlights GSA’s current cloud RFI. The Coalition appreciates GSA’s decision to extend the comment period to next Thursday, August 21 and will be submitting a response.

Price Reduction Clause could slow cloud on Schedule 70

Last week GSA’s Federal Acquisition Service (FAS) Office of Schedule Programs issued a Request for Information (RFI) seeking feedback on the “GSA Proposed Change to Add a Cloud Computing Special Item Number (SIN) on IT Schedule 70.”

The RFI indicates that the purpose of the new Cloud Computing SIN “would be to improve the way GSA offers cloud computing services through IT Schedule 70, increase visibility and access of cloud computing services to customer agencies, and to provide industry partners the opportunity to differentiate their cloud computing services from other IT related products and services. “ The RFI notes that the proposed change “would support OMB’s ‘Cloud First’ policy by enabling agencies to take advantage of cloud computing benefits to maximize capacity utilization, improve IT flexibility and responsiveness and minimize cost.”

The goals of the RFI are to:

(1)   Gain feedback from industry and any other relevant stakeholders on a proposed new Cloud Computing Services SIN; and

(2)   Better understand how industry partners are selling cloud computing services today on IT Schedule 70, to support a decision on creating a Cloud Computing Services SIN.

The RFI seeks feedback from both customer agencies and industry partners. The due date for submission of comments is August 6th. The RFI can be found here.

The RFI is a positive step on the part of FAS in seeking innovative solutions to customer agency requirements. However, in order to seed the cloud via IT Schedule 70, FAS should address the applicability of the Price Reduction Clause to the proposed Cloud Computing SIN. The PRC is an outdated (from the 1980s) pricing compliance scheme that increases contract administrative costs while restricting the ability of contractors to maximize service solutions with their latest technologies at best value—including best price for agency requirements. Simply put, the PRC is an anti-competitive, anti-innovation contract term.

The origins of the PRC date from a 1982 Multiple Award Schedule policy statement addressing the pricing negotiation and terms of schedule contracts. Under the PRC, a customer or category of customers is identified as the tracking customer for purposes of price reductions. Generally, under the terms of the PRC, if a MAS contractor offers the tracking customer(s) a price reduction during the life of the MAS contract, a corresponding reduction must be provided to the government. Failure to do so results in a breach of contract, and potentially severe consequences, including possible Civil False Claims Act liability. The PRC reflects a time when the MAS program was product-based. It also reflects a time when the MAS program was a mandatory program and when competition was not required at the order level. At the time, given the structure of the program, the PRC was intended to provide price protection for the government. Times have changed!!

Today, services account for approximately two-thirds of annual purchases under the MAS program. The MAS is open to all commercial sources (with the exception of Schedule 75, Office Supplies, which is closed to new offers) and the statutory and regulatory framework governing the MAS program require competition for all orders exceeding the simplified acquisition threshold. Simply put, unlike the MAS program of the ‘80s, task and delivery order competitions for agency specific requirements are driving pricing under the program.

Moreover, task and delivery order competition for agency specific requirements is sound procurement practice when acquiring IT/professional service solutions like cloud computing. With the cloud, each service requirement is unique, reflecting the customer agency’s IT infrastructure, security requirements, mission, workforce, and organizational structure.

The PRC ignores the unique quality of service solutions in the market. Variations in service solutions for each customer mean that an apples-to-apples comparison for purposes of the PRC is problematic at best, if not impossible. Each time an MAS contractor provides a commercial customer with a solution, the contractor must address whether that solution impacts the PRC. The result is an unhealthy restriction on the contractor’s ability to compete in the commercial marketplace. Due to the competitive and administrative challenges in tracking commercial transactions for PRC compliance many contractors will not offer their newest products, services and technologies via IT Schedule 70. As a result, access to the latest commercial innovations is restricted under the MAS program.

Cloud computing solutions are typically tailored to meet customer needs. As with many other complex services, each requirement stands on its own. Applying a costly administrative pricing oversight mechanism like the PRC in such a dynamic, innovative environment makes no business or procurement sense. Waiving the applicability of the PRC to the Cloud Computing SIN is the best way to accelerate best value “cloud computing” solutions and increase access to commercial innovation via IT Schedule 70. Eliminating the PRC and relying on task order competitions for agency specific requirements will drive competition, innovation, value and pricing for cloud services across the MAS program.

Interestingly, there is precedent for such an approach, a little over a year ago FAS waived applicability of the PRC for MAS furniture contractors in order to allow the MAS contractors to fully compete for a series of furniture procurements. Alternatively, FAS could issue a class deviation eliminating the PRC for the Cloud Computing SIN.

Over the longer term, given the growing convergence of IT and services, the time is right for GSA to reform the MAS pricing policies (and eliminate the PRC) to reflect the 21st century marketplace. Such an approach will be a win for customer agencies, the American people, and contractors.

The next step in accelerating cloud computing solutions via IT Schedule 70 is the activation of “Other Direct Costs” through the current FAR Clause that is already in the IT Schedule 70 contracts. But more on that in my next blog.

The Coalition notes that this week GSA recently extended the Cloud RFI Proposal for IT 70 deadline to 4:00pm on August 21, 2014. The Coalition and its memberhsip applaud GSA for allowing more time for companies to respond on this important issue.  Members interested in contributing to the Coalition’s response, please contact Roy Dicharry at rdicharry@thecgp.org.  For more details, see GSA’s RFI posted on FedBizOpps.

Roger Waldron

President

This week’s topic is the “Unintended Consequences of the FAR 8.4 Rewrite.”  Simply put, the rewrite removed a strategic acquisition tool, single award Blanket Purchase Agreements (BPAs), from customer agency procurement tool boxes when using the GSA schedule program.    Here is more on the background, result and unintended consequences of the rule.

In 2011 Federal Acquisition Regulation (FAR) subpart 8.4 was rewritten to implement Section 863 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (Section 863).   As you recall, Section 863 mandated new competitive ordering procedures for the GSA schedule program.  Specifically, for orders exceeding the simplified acquisition threshold ($150,000), Section 863 requires agencies to provide notice and an opportunity to compete to all schedule contractors capable of meeting the requirements.  If notice is not provided to all, then the ordering agency must provide notice and an opportunity to compete to as many schedule contractors as practicable to reasonably ensure receipt of at least three quotes.  Ordering activities must also document their files as to the efforts to achieve competition for an order where notice was not provided to all.

Not only did the 2011 rewrite address task order competitions, it also addressed the documentation, planning and competition requirements for BPAs established under the GSA schedule program.   In an effort to promote competition the new rule created significant procedural barriers to the establishment of single award BPAs.  FAR 8.405-3 establishes a strong policy, procedural and documentary preference for multiple award BPAs in lieu of single award BPAs.  As a result, competitively established single award BPAs containing clear, consistent and firm commitments have been largely taken out of the schedule landscape.

The current procedures for establishing BPAs are counterproductive.  They increase complexity, costs and acquisition lead time for agencies seeking to establish single award BPAs for specific requirements.  As a result, agencies look for alternative acquisition strategies that often lead to contract duplication (a problem that, to date has not been effectively addressed).  Indeed, when a major ordering activity cites the administrative and procedural difficulties in establishing a single award BPA as a prime consideration for creating a duplicative contract for items already on the GSA schedule—something is amiss.  We predicted this would happen.

As the Coalition noted in its comments on the rule back in 2011, the ordering procedures should provide parity for single award and multiple BPAs.  It makes sound business and procurement sense to allow flexibility in acquisition strategies (use of schedule BPAs) to meet agency mission requirements.  Competitively established single award BPAs allow agencies to leverage known, firm requirements increasing value and return when using the GSA schedule program.

GSA schedule single award BPAs for agency specific requirements should be returned to the procurement toolbox—it is the strategic thing to do for the American people.

Roger Waldron

President

Last week’s blog focused on the Federal Acquisition Service’s (FAS’s) notice seeking UPC codes and Manufacturer Part Numbers (MPNs) from all Multiple Award Schedule contractors.  This initiative raises several questions:

  1. Has FAS complied with the Paperwork Reduction Act with regard to this new data reporting requirement?
  2. Can GSA Advantage handle the tsunami of data that will have to be uploaded to the site?
  3. Will there be a schedule by schedule dialogue with industry partners regarding the new requirement?
  4. Does FAS understand commercial practice regarding UPCs and MPNs?
  5. Will there be any corresponding reform to legacy reporting requirements currently in MAS contracts?

As I noted last week, FAS Commissioner Tom Sharpe reached out to the Coalition regarding this initiative seeking a dialogue.  On August 12th we will be hosting Commissioner Sharpe for a discussion focusing on the UPC/MPN requirement.  The meeting will be from 10 to 11 am—the location is to be determined.  The Coalition will update our members as to the location as soon as it is finalized.   This is a great opportunity for our members to share their thoughts, concerns and comments regarding yet another new data reporting requirement!

Now let’s turn to the Coalition Calendar for the Fall!!

Joseph P Caggiano Memorial Golf Tournament | 35th Anniversary Black Tie Gala | 15th Annual Excellence in Partnership Awards | 2014 Fall Training Conference

Mark your calendars and get ready to hit the links at Whiskey Creek on August 27th at our 2nd Annual Joseph P. Caggiano Memorial Golf Tournament.  This charity tournament is to honor our good friend and colleague, Joe Caggiano, who was not only a 23-year veteran of the federal contracting marketplace but a naval veteran as well.  We believe Joe would be proud of the fact that 100% of this year’s tournament proceeds are going to a brand new cause that will continue to support our nation’s veterans by way of our Coalition for Government Procurement Endowed Government Procurement Scholarship/Fellowship Fund.  

In honor of our 35th Anniversary, and in conjunction with The George Washington University, we have made it a priority to fund and endow a scholarship or fellowship to provide financial support to a deserving veteran.  Qualified veterans concentrating their studies in the field of US Government procurement and pursuing the JD or LLM degree in Government Procurement Law or the interdisciplinary Masters of Science in Government Contracting degree (MSGC) at GWU will benefit from the fund.  We take our goal of common sense acquisition seriously and that starts with education – students enrolled in these programs will become the next generation of skilled professionals leading this critically important sector of the US economy.  There are player slots still available for foursomes and single golfers and we have a variety of sponsorship opportunities remaining, including hole sponsors.  Please consider getting a team together to support this worthy cause and enjoy a fun day golfing with your peers in Joe’s honor.  Registration and sponsorship information can be found on our website here.

Moving on from summer events, it is with great excitement that I share with you important details of our much talked about 35th Anniversary Black Tie Gala and Excellence in Partnership (EIP) Awards banquet in conjunction with our 2014 Fall Training Conference.  These events will be taking place on the evening of November 5th and all day on November 6th.

Our Anniversary Gala and EIP Awards will be held at the Ronald Reagan Building and International Trade Center at 1300 Pennsylvania Ave NW, Washington, DC.  This seemed to be a natural fit for us as the Reagan Building is of course owned by the U.S. General Services Administration.  It is the first and only federal building designated for public and private use and is mandated by Congress to bring together the country’s best public and private resources to create a national forum for the advancement of trade.   The evening’s events will include a reception, silent auction, keynote speaker, and our 15th Annual Excellence in Partnership (EIP) Awards.

The EIP Awards honor acquisition officials who have made significant strides in promoting and utilizing multiple award contracting vehicles.  Awards will be given to individuals, organizations and contractors involved in procurement with GSA, VA, DHS, DoD and other government agencies.  We urge you to take this opportunity to recognize an individual or organization that is deserving of an EIP Award.  Nominations are officially open for the following prestigious award categories:

1.  Lifetime Acquisition Excellence Award
2.  Contractor Savings Award
3.  Government Savings Award (Civilian)
4.  Government Savings Award (DoD)
5.  Myth-Busters Award
6.  Best Veteran Hiring Program
7.  Green Excellence in Partnership Award

Please see additional details and category descriptions, as well as make your nominations, on the EIP section of our website located at http://thecgp.org/eip-awards.

Our 2014 Fall Training Conference will take place the following day, November 6th, at the renowned JW Marriott.  The JW Marriott is conveniently located at 1331 Pennsylvania Ave NW, Washington, DC, directly across the street from the Ronald Reagan Building.  As a note, we will have a limited room block available on a first come first serve basis for the night of November 5th.  Our  conference agenda will consist of  Mythbuster’s discussions on current topics and opportunities in Federal acquisition, training and networking, a keynote speaker, a town hall with Q&A, panel discussions, and of course our very popular breakout sessions in the afternoon.

Thank you for your continued support of The Coalition.  We are thrilled to celebrate our 35th anniversary milestone with you in November and look forward to our biggest and best conference yet!

Roger Waldron

President

 

Yesterday GSA issued a notice to its Multiple Award Schedule (MAS) contractors entitled “Improving Product Number Data Quality on GSA Schedules.” The notice states the GSA is seeking “to improve product data quality on MAS through submission of all awarded base products and associated descriptive data on GSA Advantage.” According to the notice, GSA is asking MAS contractors “to improve the integrity of your schedule offerings by submitting Universal Product Codes (UPC) and Manufacturer Part Number (MPN) for each awarded contract item.”

The notice further directs MAS contractors to upload all base product contract line items with UPCs and MPNs to GSA Advantage via SIP within 90 days.  The notice also includes a set of frequently asked questions (FAQs).  The FAQs confirm the requirement to upload to GSA Advantage all base products with the corresponding UPC or MPN.

Interestingly, the notice cites compliance with clause I-FSS-600 Contract Price Lists (Oct 2013) and clause 552.238-71 Submission and Distribution of Authorized FSS Schedule Price Lists as one of the goals of this initiative.  However, neither of the clauses requires submission of a UPC or MPN.  For example, subparagraph (b)(3) of Clause I-FSS-600 lists over  26 data elements that MAS contractors must include in their price lists.  UPC and MPN are not among those specific data elements.  Clause 552.238-71 sets forth the requirement for submission and distribution of the price list but does not specifically identify/list the data elements to be included in the price list.  That these clauses are silent regarding the submission of the UPC and MPN raises questions whether the notice is consistent with the requirements of the Paperwork Reduction Act.

Generally, the Paperwork Reduction Act requires that where the government is seeking to collect data from the public, it must provide the public with notice and an opportunity to comment on the paperwork burden associated with the proposed new data reporting requirement.   The notice and opportunity to comment for procurement data collection requirements is done through the Federal Register.  The Paperwork Reduction Act ensures that the costs/burdens on the public of any proposed data reporting requirement are appropriately and transparently considered by the government.   It is an important tool to ensure accountability when the government seeks to impose new reporting burdens.

In this case GSA should address why it is not following the process called for by the Paperwork Reduction Act, as the burden on the public (MAS contractors) will be significant.  Indeed, given the millions of potential variations in models, parts, specifications and products, many MAS contractors will find compliance with the notice impossible, or at the very least cost prohibitive.  The Coalition has already heard from MAS contractors indicating that the notice will require significant changes to their electronic systems.  Here again is a situation where GSA is adding additional contract reporting requirements that increase operational costs for contractors without any real assessment of the burdens.

Moreover, although FAS has sought some feedback regarding the notice, to date there has been no real direct, fulsome dialogue with MAS contractors regarding the new requirements.  Perhaps the notice is intended to begin that dialogue.  However, the notice does not make that clear.  Rather it directs submission of the information to the extent it is available.   At the same time, FAS Commissioner Tom Sharpe has reached out to the Coalition seeking a dialogue regarding the notice.  To that end, the Coalition will be hosting a meeting with the FAS Commissioner and our members focusing on the notice and its impact.

As soon as we have worked out the logistics we will let you know the time and place of the meeting.

Roger Waldron

President

Last week GSA’s Federal Acquisition Service (FAS) Office of Schedule Programs issued a Request for Information (RFI) seeking feedback on “GSA Proposed Change to Add a Cloud Computing Special Item Number (SIN) on IT Schedule 70.”  The RFI indicates that the purpose of the new Cloud Computing SIN “would be to improve the way GSA offers cloud computing services through IT Schedule 70, increase visibility and access of cloud computing services to customer agencies, and to provide industry partners the opportunity to differentiate their cloud computing services from other IT related products and services. “ The RFI notes that the proposed change supports “OMB’s “Cloud First” policy by enabling agencies to take advantage of cloud computing benefits to maximize capacity utilization, improve IT flexibility and responsiveness and minimize cost.”

The goals of the RFI are to:

(1) Gain feedback from industry and any other relevant stakeholders on a proposed new Cloud Computing Services SIN; and

(2) Better understand how industry partners are selling cloud computing services today on IT Schedule 70, to support a decision on creating a Cloud Computing Services SIN.

Importantly the RFI seeks feedback from both customer agencies and industry partners.

The Coalition applauds FAS for issuing the RFI.  It is a thoughtful, positive step towards implementing efficient, effective and best value delivery of commercial cloud computing services for agency customers and the American people.  The due date for submission of comments is 4 pm, August 6th.  The RFI can be found here.

The Coalition will be submitting comments.  As a first step we are working with our IT Committee members to identify and develop consensus comments.  Over the longer term, as I previously mentioned in my June 27, 2014 FAR& Beyond Blog, the Coalition is on track to launch our Coalition Innovation Task Force (CITF).  The task force is charged with building on our earlier work setting forth a vision for transforming IT Schedule 70 into the IT Commercial Innovation Schedule.  In addition to the transformation of IT Schedule 70, the CITF will be identifying innovation opportunities across the federal enterprise.  For example, share-in-savings contracting mechanisms remain an opportunity to more cost-effective, flexible contractor support to meet mission needs.  The CITF will identify procurement practices and procedures that reduce barriers to innovation and solutions based contracting that leverages the growing convergence between information technology and services—like cloud services.  The Coalition and the CITF look forward to a robust dialogue with FAS on bringing best value innovation and solutions based contracting to customer agencies.

 

Roger Waldron

President

Utilization of small business concerns is a top priority of the current administration. A plethora of new laws, policies, and changing strategies impact this important aspect of federal contracting. The Coalition is fortunate to have a membership that includes innovative businesses of all sizes.  Important objectives of the Coalition include being an information conduit regarding matters affecting small business policies and providing a voice for our vibrant small business members.  Two years ago the Coalition launched a Small Business Committee that  serves as an open forum for members to discuss acquisition policy and compliance issues, as well as Federal contracting opportunities that are unique to small businesses. The committee creates opportunities for members to have access to federal and industry experts and to work together to understand and succeed in the federal market.   We have also sought to provide opportunities for small and large businesses to jointly leverage their capabilities to foster success in the federal market.

Continuing these important objectives, on July 23, 2014 the Coalition will host a Small Business ForumHot Topics Impacting Small Businesses and their Large Business Partners. Presenters include outstanding representatives from the Hill, government agencies, and industry.  The Keynote speaker is Emily Murphy, Senior Counsel, House Committee on Small Business.  The forum will feature a panel on Contractor Teaming Arrangements and Joint Ventures.These tools are important to all businesses, but particularly allow small businesses to develop new strategies for tackling the federal market.  Despite the potential, there are many questions about the risks and rewards of these new strategies.  From formation to payment, the Small Business Forum will provide a venue to have your questions answered by an outstanding panel with real world experience.  The panelists include:

  • Kenneth Dodds,  Director, SBA
  • Joseph Hornyak,  Partner, Holland and Knight, LLP
  • Mark Lee, Deputy Director, GSA, Office of Government-wide Policy
  • Marian Morley, Vice President Government Sales and Operations, Allsteel

Chairmen of the Coalition’s Small Business Committee will moderate this session.

  • Jim Connal, Vice President, Contracts and Compliance, Red River Computing
  • Tom Walker, Government Manager, Nucraft, Furniture

The Small Business Forum will also be a great opportunity to:

  • Catch up on initiatives such as strategic sourcing, and find out what to expect next for small businesses in the federal acquisition arena, and
  • Network with companies that offer opportunities for teaming and subcontracting relationships.  Companies already registered include some of the most successful contractors on the professional services, furniture GSA IT schedules and GWACs.

We hope that you will be able to join us for this engaging small business discussion.  For additional information, click here.

Correction:  Last week’s Flash stated that Vicksburg surrendered to the Army of the Potomac.  Actually, Vicksburg surrendered to the Army of the Tennessee.   Thanks to all those who pointed this out to me. 

Roger Waldron

President

Legal Corner

By: Jack Horan, Partner, McKenna Long & Aldridge LLP, Jason Workmaster, Partner, McKenna Long & Aldridge LLP and Sandeep Nandivada, Associate, McKenna Long & Aldridge LLP

On June 27, 2014, the U.S. Court of Appeals for the D.C. Circuit granted Kellogg Brown & Root’s (KBR) petition for a writ of mandamus and vacated the District Court’s order in United States ex rel. Barko v. Halliburton Co., No. 05-cv-1276, 2014 WL 1016784 (D.D.C Mar. 5, 2014) compelling KBR to produce internal investigation documents.  In Re: Kellogg Brown & Root, Inc., No. 1:05-cv-1276 (D.C. Cir. June 27, 2014).  The D.C. Circuit’s ruling has upheld important protections for companies conducting internal investigations pursuant to statute or regulation, and affirmed the continued vitality of the Supreme Court’s decision in Upjohn Co. v. United States, 449 U.S. 383, 389 (1981) for companies claiming the attorney-client privilege.

District Court Proceedings

In Barko, the relator sought documents created by KBR during its internal investigation of the allegations that are the basis for the relator’s qui tam case.  KBR’s legal department oversaw the investigation, which was conducted pursuant to KBR’s Code of Business Conduct.  KBR asserted the attorney-client privilege over the investigation, arguing that KBR created the documents so that KBR’s internal lawyers could provide legal advice to the company.  The relator argued that the documents were not privileged because they were ordinary business records.  The District Court applied a “but for” test for determining whether the purpose of the documents was to obtain legal advice – analyzing whether the documents would have been created “but for” the need for legal advice.  The District Court reasoned that because regulations and KBR’s own corporate policy required KBR to conduct the investigation, KBR had not created the documents solely to obtain legal advice.  The Court concluded that the documents were not privileged because KBR created them to satisfy regulatory and corporate requirements.

KBR immediately requested that the District Court certify the privilege question for interlocutory appeal and to stay its order compelling production pending a petition for a writ of mandamus from the D.C. Circuit.  The District Court denied those requests.  Left with no other choice, KBR took the extraordinary action of filing a petition for writ of mandamus with the D.C. Circuit.  The D.C. Circuit stayed the District Court’s order pending a ruling on the mandamus petition.

D.C. Circuit’s Analysis

KBR had two difficult hurdles to clear to prevail on mandamus – it had to show legal error and that the error justified the extraordinary writ of mandamus.  It cleared both of them.

The Circuit found two fundamental legal errors.  First, the District Court improperly used a “but for” causation analysis when applying the “primary purpose test.”  The correct formulation of the “primary purpose” test requires legal advice to be a significant purpose of the communication.  The significant purpose of legal advice is not undermined simply because the internal investigation is also required by statute, regulation or a company’s compliance program.

Second, the District Court misinterpreted Upjohn.  The D.C. Circuit noted that Upjohn does not require any of the following for the privilege to apply: (1) the involvement of outside counsel to claim the attorney-client privilege; (2) that attorneys personally conduct employee interviews when the investigation is conducted at the direction of counsel; or (3) the use “magic words” informing employees of the purpose of the interview.

The D.C. Circuit noted that KBR’s assertion of the privilege was “materially indistinguishable” from the basis upheld in Upjohn.  As in Upjohn, KBR initiated an internal investigation in response to reports of potential misconduct and as part of a concerted effort to gather facts and ensure compliance with applicable laws and regulations.  As in Upjohn, KBR’s in-house legal counsel coordinated the investigation.  In short, the Circuit confirmed the continuing validity of Upjohn procedures in establishing the attorney-client privilege.

After finding clear legal error, the D.C Circuit applied the three factors required for mandamus as set forth in Cheney v. U.S. District Court for the District of Columbia, 542, U.S. 367, 380 (2004): (1) no other adequate means to secure the desired relief; (2) the right to relief must be clear and indisputable; and (3) the writ is appropriate under the circumstances.  KBR easily met the first two factors.  Mandamus provided KBR with the only meaningful remedy.  The District Court had denied KBR’s motion for interlocutory appeal, and an interlocutory appeal under the collateral order doctrine is not available for attorney-client privilege orders.  An appeal after final judgment would be too late to protect the documents that KBR was ordered to produce.  The DC Circuit’s finding of clear legal error itself made KBR’s right to relief clear and indisputable.

The third factor, “a relatively broad and amorphous totality of the circumstances consideration”, also favored KBR.  The potential for grave harm to the attorney-client privilege if the District Court’s decision remained in effect made mandamus “appropriate under the circumstances.”  Left in place, the District Court’s decision could “work a sea change in the well-settled rules governing internal corporate investigations”:

Because defense contractors are subject to regulatory requirements of the sort cited by the District Court, the logic of the ruling would seemingly prevent any defense contractor from invoking the attorney-client privilege to protect internal investigations undertaken as part of a mandatory compliance program.  See 48 C.F.R. § 52.203-13 (2010).  And because a variety of other federal laws require similar internal controls or compliance programs, many other companies likewise would not be able to assert the privilege to protect the records of their internal investigations.  See, e.g., 15 U.S.C. §§ 78m(b)(2), 7262; 41 U.S.C. § 8703.  As KBR explained, the District Court’s decision “would disable most public companies from undertaking confidential internal investigations.”  KBR Pet. 19.

Id. at 15.  Thus, although not binding, the incorrect “but for” analysis could gain traction in other district courts.  To protect against these harms to both KBR and the attorney-client privilege more broadly, the D.C. Circuit granted KBR’s petition for a writ of mandamus.

Government contractors (and the many other companies subject to statutory and regulatory requirements to conduct internal investigations) can now breathe a sigh of relief – the application of the attorney-client privilege to corporate internal investigations required by law or regulation has been vindicated and upheld.  Companies following Upjohn procedures can conduct their internal investigations with the assurance that the attorney-client privilege will protect candid and full communications.

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