FAR and Beyond Blog

For this week’s comment I wanted to share with you another blog post that was first published on the Federal Times’ Acquisition Blog (www.federaltimes.com):

The multiple-award double standard

On March 13,2014, Defense Procurement and Acquisition Policy (DPAP) issued a class deviation “clarifying” (i.e. establishing) that DoD ordering activities are responsible for determining prices fair and reasonable for Blanket Purchase Agreements (BPAs), task orders and delivery orders issued under GSA’s multiple award schedule program. This deviation has generated significant discussion, analysis and debate in the procurement community regarding the balance between procedures and outcomes when using the GSA’s Schedules streamlined ordering processes. The language of the deviation is as follows:

Supplies offered on the schedule are listed at fixed prices. Services offered on the schedule are priced either at hourly rates, or at a fixed price for the performance of a specific task (e.g. installation, maintenance, and repair). GSA has determined the prices of supplies and fixed-price services, and rates for services offered at hourly rates, to be fair and reasonable for the purpose of establishing the schedule contract. GSA’s determination does not relieve the ordering activity contracting officer from the responsibility of making a determination of fair and reasonable pricing for individual orders, BPAs, and orders under BPAs, using the proposal analysis techniques at 15.404-1. The complexity and circumstances of each acquisition should determine the level of detail of the analysis required.

The impetus behind the DPAP deviation is a growing concern that when using the GSA Schedules program, DoD contracting officers are not doing any analysis of proposed prices at the BPA and task order level. Specifically, DPAP is concerned that rather than doing any analysis DoD contracting officers are merely relying on the language in FAR 8.4 (the regulations governing the GSA Schedules program) that states GSA has already determined Schedule prices fair and reasonable and, therefore, ordering activities are not required to make a separate determination of fair and reasonable pricing. See FAR 8.404(d). In essence, the concern is that the FAR 8.4 language promotes a lack of due diligence on the part of DoD contacting officers in evaluating task order and BPA pricing under the GSA schedules program. (For the record, it should be noted that FAR 8.4 actually includes additional price analysis requirements for orders and BPAs requiring a statement of work, but I digress.)

DPAP’s concern is understandable. Some due diligence by the contracting officer is appropriate to ensure that the government is getting a fair deal at the task order level under multiple award contracts, including the GSA Schedules. At the same time, a balance should be struck recognizing that one of the important benefits of multiple award contracts is the streamlined task order competition process—a process mandated by statute and regulation. Perhaps some compromise, simplified language addressing evaluation of orders could be coordinated between DoD, GSA, OMB and NASA; a compromise that strikes the right balance and addresses multiple award contracts across the spectrum.

More importantly, such an approach would address the inconsistency in the treatment of orders under multiple award contracts that results from the deviation. A review and comparison of FAR 16.505(b)(3) and FAR 8.404(d) reveals guidance that is essentially the same regarding the determination of fair and reasonable pricing at the order level. In both cases, the regulatory guidance informs contracting officers that if the prices are established at the contract level, the pricing policies and procedures of FAR 15.4 do not apply. FAR 8.404(d) states that since GSA has determined contract prices for supplies and service fair and reasonable; the ordering activity does not have to do a separate determination of fair and reasonable pricing at the order level. FAR 16.505(b)(3) states that “[i]f the contract 
did not 
establish the price for the supply or service, the contracting officer must establish prices for each order using the policies and methods in subpart 15.4.” [Emphasis added.] As such, FAR 16.505(b)(3) also makes clear that if the prices have been established at the contract level under a multiple award contract, then the contracting officer does not have to make a fair and reasonable price determination pursuant to FAR 15.4.

So one must ask, why the double standard for GSA schedules versus other multiple award contracts?

Roger Waldron

President

2014 Spring Conference Recap

April 11th, 2014

As you know, yesterday The Coalition for Government Procurement held its 2014 Spring Training Conference, “Opportunities for Success in the Federal Market.”  I was overwhelmed by the positive feedback we received from attendees regarding the quality of the event and was pleased so many were able to stay and enjoy the networking reception at the conclusion of the day.  The positive and informative conversations among the procurement community at the Spring Training Conference validate the importance of these types of events regarding procurement policies, procedures, and opportunities across the federal enterprise.  Communication between and among government and industry professionals is vital to ensuring our procurement system delivers best value outcomes for customer agencies, the taxpayers and the private sector.

The Coalition would like to thank our Keynote Speaker, Steve Schooner, Nash & Cibinic Professor of Government Procurement Law and Co-Director of the Government Procurement Law School, The George Washington University Law School, and extend our thanks to all speakers who participated and are listed below:

Cameron Leuthy, Senior Budget Analyst at Bloomberg Government

Richard Levi, Counsel to the Inspector General, GSA

Maureen Regan, Counsel to the Inspector General, VA

Jason Workmaster, McKenna Long & Aldridge

David Dowd, Mayer Brown

Harry Hallock, Deputy Assistant Secretary for the US Army

Dr. Angela Billups, Senior Procurement Executive, Associate Deputy Assistant Secretary for Acquisition, HHS

Richard Ginman, Director, Defense Acquisition and Procurement Policy

Jeffrey Koses, Senior Procurement Executive, GSA

Shaloy Castle-Higgins, Director, Greater Southwest Acquisition Center

Janet Haynes, Schedules Acquisition Acting Director, Center for Facilities Maintenance and Hardware

Peter Han, Director, National Administrative Service and Office Supplies Acquisition Center

Brian Knapp, Director, Integrated Workplace Acquisition Center

Tiffany Hixson, Regional Commissioner, Federal Acquisition Service

Geri Watson, Director, Services Acquisition Center

Bruce Spainhour, Director, Center for Innovation Acquisition Development

Jim Ghiloni, Acting Director, Acquisition Operations

David Grant, Head of Contracting Activity, FEMA

Michael Smith, Director, Strategic Sourcing Program Office

Christopher Fornecker, Acting Deputy Assistant Commissioner, Integrated Technology Service GSA

Darlene Coen, Deputy Program Manager, NASA SEWP

Robert Coen, Acting Director, NIH Information Technology Acquisition and Assessment Center (NITAAC)

Kay Ely, Director, IT Schedule Acquisition Center, GSA

Judith Roussel, Director, Office of Government Contracting, Small Business Administration

Magdy Bastawrous, Director, Socio-Economic Programs Branch, Office of Acquisition Management, FAS, GSA

Randal Culpepper, Air Force Program Executive Officer, Combat and Mission Support

Robert Bourne, Division Director, Acquisition Management Center

Mark Lee, Deputy Director, Office of General Services Acquisition Policy, Integrity & Workforce Office of Government-wide Policy

Amanda Fredriksen, Assistant Commissioner for Strategic Business Planning

Beth Foltz, Office of Strategic Planning

 

Also, a sincere thank you once again to all our sponsors:

Bloomberg Government - Title Sponsor

Johnson & Johnson Health Care Systems – Gold Sponsor

Deltek – Silver Sponsor

The George Washington University – Breakfast Sponsor

The Gormley Group and 3M – Refueling Station Sponsor

Deloitte and AMERICAN SYSTEMS – Lunch Sponsor

Berkeley Research Group – Networking Reception Sponsor

Lastly, thank you to everyone who attended the Spring Training Conference.  The Coalition truly appreciates your participation!   We will continue to work harder than ever to deliver value to our membership and the procurement community as a whole!

Sincerely,

Roger Waldron

President

I can’t believe our Spring Training Conference is already less than a week away, coming up next week on Thursday, April 10th!  As the Vice President of Membership and Marketing here at The Coalition, my number one priority is to form a relationship with each of our members and gain a solid understanding of their business so that we as an organization can help maximize the value The Coalition provides, with the help of your feedback.  Our Spring Training Conference offers the perfect setting, the trifecta of 1.) education and training; 2.) discussion and discourse; and 3.) networking and camaraderie.

We will begin the morning focusing on the education piece, hearing Cameron Leuthy, Senior Budget Analyst at Bloomberg Government, talk about Selling in the Federal Market – Who’s Buying and Who’s Not.  Cameron will be followed by an excellent panel discussion on Oversight and Enforcement – The OIG Perspective, which will be moderated by Angela Styles of Crowell & Moring, and will include panelist Richard Levi, Counsel to the Inspector General, GSA; and Maureen Regan, Counsel to the Inspector General, VA.  Next up is our Legal Panel discussion on Maximizing the Benefits, Avoiding the Risks, led by Jason Workmaster of McKenna Long & Aldridge; Jonathan Aronie of Sheppard-Mullin; and David Dowd of Mayer Brown.  Following the legal panel you will have the pleasure of listening to Harry Hallock, Deputy Assistant Secretary for the US Army, discuss Army Acquisition – Current and Future Initiatives.  Our last panel discussion will be held after lunch and titled Government-Wide Acquisition Summit.  This discussion will be moderated by Bill Gormley of The Gormley Group and will included panelist Dr. Angela Billups, Senior Procurement Executive, Associate Deputy Assistant Secretary for Acquisition, HHS; Richard Ginman, Director, Defense Acquisition and Procurement Policy; and Jeffrey Koses, Senior Procurement Executive, GSA.

After the conclusion of the Government-Wide Acquisition Summit, we will move on to the piece of the day that allows for great discussions by way of breakout sessions.  You will be able to attend two out of eight sessions based on what topic is most relevant to you.  These will be hour long sessions complete with presentations, but will also provide the opportunity to ask questions directly to the presenters!  The first group of breakout sessions you can choose from include The GSA Acquisition CentersThe GSA Services PortfolioDoing Business with DHS; and an Update on Government-Wide IT Acquisitions.  The second group of breakout sessions will consist of Small Business Preferences – What Does it Mean for Your Business; Air Force Strategic Sourcing – What’s the Current Status and What’s Next?The GSA Schedule Crystal Ball – What to Expect for the Program and its Pricing Policy; and The GSA Category Management – What Does it Mean to Your Business?

The third piece of the puzzle is networking, and there will be plenty of it!  The morning will get kicked off with breakfast and networking, sponsored by The George Washington University.  We will have a morning break sponsored by The Gormley Group and 3M where you will be able to grab some extra coffee and a snack before heading back into the main session.  Lunch will be an excellent opportunity to spend an hour getting to know new faces and making business connections, and is being sponsored by Deloitte and AMERICAN SYSTEMS.  Finally, the day will conclude with a networking reception sponsored by Berkeley Research Group, complete with open bar and appetizers.

I would like to recognize the contributions from all of our sponsors, especially our Title Sponsor, Bloomberg Government; our Gold Sponsor, Johnson & Johnson Health Care Systems; our Silver Sponsor, Deltek; and our Media Sponsor, Federal News Radio, who will be set up all day at the Marriott broadcasting live during the day’s events!  Additionally, a big thank you to all our Keystone Members and Strategic Partners who make events like this possible in the first place.

If you haven’t registered yet, please do so today as space is filling up fast!  For everyone else, please find me and introduce yourself if we haven’t already met.  A lot of hard work goes into creating this successful event and we couldn’t be more excited it’s just around the corner.  From all of us at The Coalition, we look forward to welcoming you to our 2014 Spring Training Conference!

Sincerely,

Matt Cahill

Vice President of Membership and Marketing

GSA’s Office of Inspector General’s recent memorandum to the FAS Commissioner continues to confirm the impracticality of contract compliance under the current MAS pricing policies.  The memorandum is the third in a series of memoranda (March 25, 2014, March 8, 2013 and September 26, 2011) regarding recurring issues identified in the preaward contract audits done by the Inspector General’s Office of Audits.

Consistent across each of the memoranda is the IG’s finding that contractors “provided information that was not current, accurate, and/or complete to support proposed prices.”  Or, as stated in the March 25, 2014 memorandum, “[c]ontractors continue to provide commercial sales practices disclosures that are not current, accurate, and/or complete to support their proposed prices.”  The IG found that over the three years covered, close to 80 percent of the audited contracts had issues regarding the currency, accuracy and completeness of the commercial sales practices information submitted to support pricing.  The chart below highlights the prevalence of the CSP issues identified by the IG across the contracts.  The chart is taken from the March 25th memorandum:

CSP Chart

The chart is a powerful statement regarding the cumbersome, confusing and impractical nature of the CSP disclosure requirements for contractors and contracting officers.  It is evident from the high degree of non-conformance that even experienced contractors struggle with the disclosure requirements.  Moreover, the oversight community’s expansive, literal interpretation of the pricing disclosure requirement increases the compliance risk for MAS contractors beyond what was ever intended under the program.  When the GSA IG Office of Audits finds over a three year period that 80 percent of contractors fail to submit current, accurate and complete CSP data, it is a compelling statement that the MAS pricing policies and procedures are impossible to comply with for contractors competing in the commercial marketplace.   This is not a new issue.  Over 20 years ago the United States Court of Appeals for the First Circuit found the Government’s reading and implementation of the MAS pricing disclosure requirements unreasonable.  As the overwhelming noncompliance noted by the IG demonstrates, the same issues are at play today.

In United States v. Data Translation Inc., 984 F2d. 1256 (1st Circ. 1992) the United States Court of Appeals addressed the practicality, or rather, the impractically of compliance with an expansive or literal reading of the MAS pricing disclosure requirements.  In a 1992 decision authored by then Chief Judge Stephen Breyer (now Supreme Court Justice Breyer) the Court of Appeals affirmed the District Court’s verdict’s denying the Government’s claim that Data Translation violated the contract terms and the federal False Claims Act (31 U.S.C. 3729 et. seq.) by failing to fully disclose the pricing discounts it gave to non-governmental customers as required by the terms.  In sum, the Government alleged that the pricing information it relied upon in negotiating the contract was not current, accurate or complete.

The Court concluded that a literal reading of the disclosure form that all pricing transactions were to be disclosed created ambiguity and incomprehensibility.  According to the Court, no reasonable person could have believed that the Government really wanted the complete and total disclosure for which the disclosure language appeared to ask. Rather, the Court concluded that a reasonable interpretation of the clause would require disclosure of similarly situated transaction pricing.  In reaching these conclusions the Court examined three sets of considerations:  (1) Business context of the compliance requirements; (2) Statutory context of the MAS program and the compliance requirements; and the (3) Negotiation context addressing the facts and expectations of the parties during the contract negotiations.  This blog will address the business context and the statutory context.

With regard to the business context, the Court observed that an ordinary business person would not interpret the disclosure form literally as the form “asks a business to shoulder a compliance burden which will often seem inordinately difficult or impossible to carry out.”  The Court used as an example the burdens a commercial firm in a competitive industry would face in tracking each and every sale across thousands of different customers, through a host of sales personnel, facing shifting competitive pressures from market to market, time to time and from one customer to another.  Tracking that would not only include price points but price-related terms and conditions.

With regard to the statutory context, the Court highlighted the legislative intent behind the MAS program.  The overarching goal in creating the MAS program was “simplification” of the procurement process through reliance of competitive commercial markets.  The Court contrasted the simplification goal with the burdensome nature of the disclosure requirement articulated in the contract stating “if the MAS properly selects its products from those sold in truly competitive commercial markets, elaborate paperwork, audits and inspections, then by significantly increasing competitive firms cost of doing federal government business, could result in the government’s being charged higher, not lower prices.”   In a statement regarding the Government’s MAS pricing policies, procedures and their interpretations that remain true today, the Court observed the following:

[A] system that lays down a literal rule with which compliance is inordinately difficult, turning nearly everyone into a rule violator, and then permits the agency to pick and choose when and where to enforce the rule, is obviously undesirable.  It destroys in practice the very hope of rationally cabining agency discretion that the rulemaking process promises in principle.

That the GSA IG has consistently found that the vast majority (four out of five) of  MAS contractors have issues with the currency, accuracy and completeness of the CSP pricing disclosures is a powerful statement regarding the impracticality/ incomprehensibility of the disclosure requirements.  Moreover, the new statutory and regulatory requirements for competition at the task and delivery order level drive pricing and value for customer agency requirements; not a pricing compliance scheme that increases costs to companies, limits their ability to compete in the private sector, and creates barriers to new, innovative solutions.

The need for reform of the MAS program remains clear as evidenced by the GSA IG’s memoranda.  Reform should reflect the current state of the commercial market place and the statutory and regulatory mandates for competition at the order level—competition for agency specific requirements should and does drive pricing in the MAS program. The Coalition has developed a white paper addressing the outdated, pricing policies and procedures.  The Coalition looks forward to a positive dialogue addressing the current pricing framework.  Such a dialogue provides an opportunity to increase competition, value and innovation under the MAS program.  It is time to reform the pricing policy.

Roger Waldron

President

 

For this week’s comment I wanted to share with you my inaugural blog post that was first published on the Federal Times’ Acquisition Blog (www.federaltimes.com). The post highlights Thought #2 “GSA’s Strategic Plan:  Plan versus implementation,” one of the issues contained in my “Food for Thought in 2014”:

GSA’s Draft Strategic Plan for FY 2014 – 2018: Where is the $40 Billion Multiple Award Schedules program?

Today marks the launch of a new blog focusing on GWACs and GSA.  I want to thank Federal Times for the opportunity to expand the dialogue on interagency contracting and in particular GSA’s role in our procurement system.  And what better way to kick things off but to focus on GSA’s Draft Strategic Plan for FY 2014-2018 and what it says and doesn’t say about the future role of GSA.

On December 20, 2013, GSA posted on its website the agency’s Draft Strategic Plan for FY 2014-2018.  The plan can be found here.   GSA is to be commended for posting the plan and providing the public with an opportunity to comment.  It is welcomed transparency that provides all stakeholders in GSA’s programs with an opportunity to provide feedback on the way forward for the agency.

The plan identifies three strategic goals: (1) Savings: Provide savings to federal departments and agencies; (2) Efficiency: Improve the efficiency of operations and service delivery; and (3) Service: Deliver excellent customer service.  The goals are laudable.  They reflect the necessary and appropriate focus on delivering savings and value to customer agencies and the American people.

However, the vision and strategies for achieving the strategic goals fail to  focus on improving GSA’s largest, most successful contract vehicle the Multiple Award Schedule (MAS) program. As such,  GSA is unlikely to achieve the strategic goals identified in the plan without a course correction.

The current draft plan notes that the Federal Acquisition Service (FAS) provides federal agencies with over 11 million different products and services thereby delivering over $54 billion in procurement solutions, services and products on a government-wide basis.  In looking at the numbers, the MAS program accounts for approximately $40 billion of FAS’s $54 billion or roughly 75 percent (three quarters!) of the total dollar volume.

Yet, the draft strategic plan makes only one formal mention of the MAS program.  The plan is devoid of any discussion on improving the program for the long term. The void raises several questions.

Can a strategic plan that essentially ignores a program that accounts for three quarters of the total business volume be successful?   What does the plan say about the role of the MAS program at GSA?  Is, as many in industry believe, GSA seeking to dismantle the program?  Is there a strategic role for commercial item contracting at GSA?

Reforming the MAS program to streamline the contracting processes, enhance task order competitions and reduce transactional costs can have a profound impact on government-wide procurement operations.  MAS reform that leads to even just a one percent savings across the MAS program would deliver $400 million in annual savings, far exceeding the projected $255 million in savings by 2015 GSA claims will result from its Federal Strategic Sourcing Initiatives.

Moreover, the potential savings through reform and streamlining of the program can have a multiplying effect across the procurement system.  Streamlining the MAS contracting process will reduce operational costs for GSA which in turn could lead to a reduction in the Industrial Funding Fee.  MAS Reform can increase access to new commercial technologies thereby increasing competition, savings, and value for customer agencies.  MAS Reform can reduce contract duplication saving government and industry millions, if not billions over the long term.  Reducing the cost of doing business with the government can result in real savings for contractors—savings that can be passed on to Federal agencies.  The time is now for reforming, streamlining, and improving the MAS program!

Reform of the MAS program includes the following:

  • Create an Innovation Schedule that provides streamlined access to the latest commercial technologies
  • Update the MAS Pricing Policies  to reflect current commercial practices and the federal marketplace where pricing is driven by task order competition for agency specific requirements
  • Eliminate the Price Reduction Clause which increases transactional costs for all while restricting the ability of MAS contractors to compete in the private sector
  • Enhance MAS commercial solutions by authorizing “other direct costs” for orders
  • Review and eliminate all MAS contract terms and conditions where the costs outweigh the benefits

Look for my next blog the second week in February that will highlight the GSA “supplier” relationship. 

Additionally, anyone who is interested in a new invigorated vision for the schedules program should review our recently released letter to Chief Information Officer Steven VanRoekel on transforming IT Schedule 70 into the IT Commercial Innovation Schedule for government IT. Next week, I will be addressing the DoD deviation regarding FAR 8.4 and FAR 15.4.

Roger Waldron

President

Yesterday Dr. Daniel M. Gerstein, Under Secretary for Science & Technology (Acting), U.S. Department of Homeland Security (DHS) , provided the Coalition with a thoughtful, engaging and very informative presentation on Science & Technology’s (S&T) cross-cutting mission.  S&T supports a broad customer base, including the DHS components, federal departments and agencies, and first responder emergency management.  The S&T value proposition focuses on operations, innovation and building partnerships to provide the Homeland Security Enterprise with technologies, solutions and capabilities to better protect the Homeland.  Dr. Gerstein’s discussion with the Coalition and its membership reflected the best in the Myth-Busters tradition of positive, informative dialogue between government and industry.  The Coalition for Government sincerely thanks Dr. Gerstein for his engagement and we look forward to continuing the dialogue!

On April 10th the Coalition will be hosting our 2014 Spring Training Conference, Opportunities for Success in the Federal Market, in Fall Church, Virginia.  The Training Conference provides a wonderful opportunity for members to hear directly from senior procurement leaders and program managers from across the Federal enterprise.  Speakers include:

  • Harry Hallock, Deputy Assistant Secretary (Procurement) U.S. Army
  • Dr. Angela Billups, Senior Procurement Executive, Department of Health and Human Services
  • Mr. Randall Culpepper, Program Executive Officer for Combat and Mission Support, U.S. Air Force
  • David Grant, FEMA Chief Procurement Officer
  • Tiffany Hixon, Regional Commissioner for FAS
  • Richard Ginman, Director of DPAP

The conference also will include a presentation from Cameron Leuthy, Senior Budget Analyst for Bloomberg Government on the current federal fiscal profile, winners and losers under the current budget, and who is buying.

Oversight, contract compliance and risk assessment are all keys to success in the federal market.  To that end, the Training Conference will include a session “Oversight and Enforcement – The OIG Perspective with Richard Levi, Counsel to the GSA Inspector General and Maureen Regan, Counsel to the Department of Veterans Affairs Inspector General.  We will also have our annual Legal Panel—Maximizing the Benefits Avoiding the Risks with Jason Workmaster, Partner at McKenna Long & Aldridge LLP, Jonathan Aronie, Partner at Shep

Yesterday Dr. Daniel M. Gerstein, Under Secretary for Science & Technology (Acting), U.S. Department of Homeland Security (DHS) , provided the Coalition with a thoughtful, engaging and very informative presentation on Science & Technology’s (S&T) cross-cutting mission.  S&T supports a broad customer base, including the DHS components, federal departments and agencies, and first responder emergency management.  The S&T value proposition focuses on operations, innovation and building partnerships to provide the Homeland Security Enterprise with technologies, solutions and capabilities to better protect the Homeland.  Dr. Gerstein’s discussion with the Coalition and its membership reflected the best in the Myth-Busters tradition of positive, informative dialogue between government and industry.  The Coalition for Government sincerely thanks Dr. Gerstein for his engagement and we look forward to continuing the dialogue!

On April 10th the Coalition will be hosting our 2014 Spring Training Conference, Opportunities for Success in the Federal Market, in Fall Church, Virginia.  The Training Conference provides a wonderful opportunity for members to hear directly from senior procurement leaders and program managers from across the Federal enterprise.  Speakers include:

  • Harry Hallock, Deputy Assistant Secretary (Procurement) U.S. Army
  • Dr. Angela Billups, Senior Procurement Executive, Department of Health and Human Services
  • Mr. Randall Culpepper, Program Executive Officer for Combat and Mission Support, U.S. Air Force
  • David Grant, FEMA Chief Procurement Officer
  • Tiffany Hixon, Regional Commissioner for FAS
  • Richard Ginman, Director of DPAP

The conference also will include a presentation from Cameron Leuthy, Senior Budget Analyst for Bloomberg Government on the current federal fiscal profile, winners and losers under the current budget, and who is buying.

Oversight, contract compliance and risk assessment are all keys to success in the federal market.  To that end, the Training Conference will include a session “Oversight and Enforcement – The OIG Perspective with Richard Levi, Counsel to the GSA Inspector General and Maureen Regan, Counsel to the Department of Veterans Affairs Inspector General.  We will also have our annual Legal Panel—Maximizing the Benefits Avoiding the Risks with Jason Workmaster, Partner at McKenna Long & Aldridge LLP, Jonathan Aronie, Partner at Sheppard Mullin LLP and David Dowd, Partner at Mayer Brown LLP.

We are very excited to have Steve Schooner, Nash & Cibinic Professor of Government Procurement Law and Co-Director of the Government Procurement Law Program, George Washington University Law School as our Keynote speaker.   It is fitting that Steve will be addressing the Conference on the key procurement trends, challenges and opportunities in the federal marketplace as the Spring Training Conference will mark the beginning a new initiative working with The George Washington University Law School to celebrate and honor the Coalition’s 35th Anniversary!

So not only will the Spring Conference provide an opportunity to hear and learn from procurement leaders from across the federal enterprise, it will also provide an opportunity to be the first to hear about the Coalition’s new initiative to honor our 35th year, promote common sense in government procurement, and support our veterans!  I am confident our members will be pleased and proud of this new initiative.

We look forward to providing our members with an exciting and engaging Training Conference.  See you all April 10th!

Roger Waldron

President

 

Strategic acquisition offers government and industry an opportunity to work together to identify unnecessary costs in the acquisition process and pass those savings along to federal agencies.  However, a new term has entered the dialogue regarding the Federal Strategic Sourcing Initiative (FSSI).  That term is “supplier suppression.”  What does “supplier suppression” mean in the context of FSSI?

At bottom, “supplier suppression” means constricting the supply chain and, ultimately, restricting competition through a limited set of generic, government-wide contract vehicles.  GSA is currently repeating its past.  Over 20 years ago, GSA had a limited set of FSS contracts that were mandatory for use across the federal government.  The result was static pricing, restricted competition, limited access to best in class commercial companies, and high customer dissatisfaction.  Customer agencies avoided using GSA.

“Supplier suppression” will have long term negative consequences for customer agencies and the American people.  Limiting competition in the supply chain will inevitably lead to higher prices and lower quality for customer agencies and the American people.

In response to FSSI and the concept of supplier suppression, the Coalition has begun work on a white paper focusing on FSSI and its impact.  The Coalition will host a Forum focusing on FSSI and its impact on customer agencies, contractors and the American people.  The Coalition has also developed a set of “Strategic Acquisition Principles” that, if adopted, would deliver best value solutions for customer agencies while maintaining a vigorous, robust commercial supply chain.  At the heart of these principles are sound requirements development and volume commitments as driving value for customers and sound business opportunities for contractors.  Effective requirements development is the key.

Strategic Sourcing initiatives, appropriately structured, could be a win for all stakeholders.  The current FSSI approach, however, creates significant detachment between customer agencies and contractors.  It is a top down approach rather than a bottom up one.

The Coalition’s “Strategic Acquisition Principles” are built around the fundamental procurement principle that the closer the acquisition is to the requirements holder the more likely a best value outcome will result for all.  The closer a procurement is to the actual requirements holder, the better opportunity for clear, consistent requirements with corresponding volume commitments.  Clear, consistent requirements and volume commitments drive competition and savings.  Here are the Coalition’s principles:

 Strategic Acquisition Principles

  1. Strategic acquisition offers government and industry an opportunity to work together to identify unnecessary costs in the acquisition process and pass those savings along to federal agencies.  Commercial item contracting is a model that reduces the cost of acquisition.  By eliminating government-unique requirements in favor of commercial practices, the costs involved in doing business with the Federal government are reduced and the taxpayer saves. In essence, put “commercial” back into commercial item contracting and save.
  2. Savings calculations should cover the Total Acquisition Costs to the government including the administrative costs involved in planning, conducting acquisitions, data collection, and contract management.  How the government calculates its strategic sourcing savings should also be transparent to the American public.
  3. GSA Schedules are a strategic source. Agency specific BPAs with well-defined requirements and volume commitments lead to innovative solutions through robust competitions, at competitive prices, with improved efficiency.  Generic government-wide BPAs add costs without commensurate value.
  4. Continuous open seasons enhance competition and innovation while meeting the Multiple Award Schedule program’s statutory mandate that it remains open to all sources.  Continuous open seasons facilitate an active supplier base; provide access to the latest commercial services, products, and solutions for GSA and its customer agencies; and encourage task order competition.

We look forward to your feedback on these principles.  More importantly, we look forward to delivering our Strategic Sourcing White Paper and hosting our Strategic Sourcing Forum in June.

Roger Waldron

President

As March enters in like a polar bear, it is time to provide an update on the Coalition’s event schedule for March and April.

Myth-Busters Forum with Daniel Gerstein, Acting Under Secretary for Science & Technology (S&T) at the Department of Homeland Security, March 13

On the morning of March 13th the Coalition will be hosting a Myth-Busters Forum with Daniel Gerstein, Acting Under Secretary for Science & Technology (S&T) at the Department of Homeland Security.  The forum will held at the law offices of McKenna Long & Aldridge, LLP.  DHS S&T plays a central and strategic role in supporting/facilitating requirements development, acquisitions and the implementation of cutting edge technologies supporting DHS component offices nationwide.

Cyber solutions, chemical/biological detection technologies, behavioral sciences, and first responder infrastructure, are among the mission capabilities DHS S&T supports across the homeland security enterprise.  DHS S&T is a key interface connecting requirements to technologies through its work with stakeholders within DHS, at the state and local level, internationally, and the private sector.  Our DHS S&T Myth-Busters Forum with Daniel Gerstein focuses on how technology is supporting the DHS mission, and importantly, how industry can engage DHS.  The forum also provides an opportunity for dialogue on the vital role technology identification, development and implementation plays in protecting the homeland.  The forum is a must attend event for industry program managers, account managers and executives focusing on the DHS market.

Myth-Busters webinar on Contractor Assistance Visits under GSA Multiple Award Schedules, March 25

On March 26th, the Coalition will be hosting a Myth-Busters webinar focusing on the processes and procedures for Contractor Assistance Visits under the GSA Multiple Award Schedule program.   As you know, Contractor Assistance Visits are conducted by the Industrial Operations Analysts (IOA) from GSA’s Federal Acquisition Service (FAS).  An MAS contractor can expect 2-3 visits from an IOA over the course of a five year contract period.  It is vital to understand the IOA role and expectations for MAS contractors.

The Myth-Busters webinar features Tom Brady, Director, Supplier Management Division, Office of Acquisition Management at GSA’s Federal Acquisition Service.  Tom will be discussing the respective roles of the Administrative Contracting Officer (ACO) and the IOA.  Topics will include the updated review parameters and processes for IOA visits as well as key compliance issues (e.g. Industrial Funding Fee) surrounding MAS contracts.  This webinar is a “must dial in” event for contractor compliance managers, in house counsel, contracting officers, and executives responsible for management and oversight compliance.

2014 Spring Training Conference on Opportunities for Success in the Federal Market, April 10

On April 10th, the Coalition will hold our Spring Training Conference at the Fairview Marriott in Falls Church, Virginia.  The theme for this year’s Spring Training Conference is Opportunities for Success in the Federal Market.  The Spring Training Conference’s speakers include representatives from:

  • Department of Army
  • Department of Air Force
  • Department of Health & Human Services
  • Defense Procurement and Acquisition Policy (DPAP)
  • GSA Office of the Chief Acquisition Officer
  • Offices of the GSA Inspector General and VA Inspector General

Our breakout sessions include a session focusing on the GSA FAS Acquisition Centers, the Department of Homeland Security, the IT GWAC programs (GSA, NASA, and NIH), the Small Business Administration, and GSA’s Office of Acquisition Management.  It is a jam packed line up!  To review the agenda and register click here.

The breadth and depth of speakers demonstrates our commitment to fostering a robust Myth-Busters dialogue between government and industry.  Robust dialogue and communication improves understanding and opportunities to deliver best value procurement solutions that support agency missions for the American people.  We look forward to seeing you there!

Roger Waldron

President

 

By Guest Blogger: Ray Bjorklund, President, BirchGrove Consulting LLC

As a business developer, you follow the money. You trek toward the customers that spend money and the customers that spend the most. Discretionary spending authority, appropriated by Congress, is your bellwether.

As an experienced business developer, you follow that portion of the budget authority intended to be spent on contracts for what your company offers. Discretionary spending does not necessarily correlate to contract spending; about 40% of discretionary spend goes to compensation of government employees and not to contracts; that percentage is slowly rising, as agencies are told to buy less of everything.

Your objective should be to become a savvy business developer.  Savvy business developers, look beyond planned contract spending for any trends that will shift your prospects in the federal market segment you are pursuing, either in specific customer agencies, in the types of services or products purchased, or both.

Using the federal budget, how does the savvy business developer develop the situational awareness to find opportunity?  The President’s Budget is an annual political statement, which the Executive Branch begins preparing approximately 18 months before the fiscal year starts. When you add up the documents prepared by the Office of Management and Budget and all the congressional justification materials prepared by the agencies, the page count is well north of 20,000. There are many messages, some bold and some mysterious, residing in those pages. In the 2014 budget it is clear that spending on infrastructure, education for jobs, and veterans assistance are again important messages.

But consider that federal contracts for “infrastructure” will decline by $700M to $11.1B in 2014. Spending on workforce development contracts will rise 10% to $6.1B. Federal contract spend on veterans programs will increase from $33.5B to $35.7B, or 7%. You may have to decide between growth and revenue. Do you want to pursue growth, perhaps with smaller revenues? Or do you want to do business where the government spends a lot, even though spending is declining in those areas?

And then there are more specific, exciting growth areas like big data and cyber security. Looking beyond the hype, however, we see subtle shifts among the categories of contract spending and a few initiatives that propose new or at least different levels of contract spending.

The Air Force plans to ramp up cyber superiority spending to more than $4.1B, 8% over 2013. Are there cyber contract opportunities? No and yes. There are increases in spending on military personnel and civil service that will suppress spending on services contracts. But one of the largest components of the net increase is $85M in new construction at Fort Meade, the first increment in a new $358M operations center for about 1,400 cyber people. The new facility will eventually require another $64M in equipment and IT and over $6M in furniture. Watch it unfold over the next couple of years.

Worried about another sequester? The lateness of the 2013 decision to sequester budget authority inhibited many spending initiatives and compounded uncertainty about any requirement for a 2014 sequester. Program planning and rationalization suffered.

Then the partial government shutdown in Oct 2013 overrode the Administration’s intent to systematically plan for a 2014 sequester. The bipartisan, bicameral budget deal provided a little stability. But not enough stability to completely overcome the risk aversion that persists. The good news is that a 2014 sequester is extremely unlikely. The bad news is that it’s going to get a little worse, before it gets better.

Still struggling to find new opportunities? Since there will be little overall change in the level of contract spending, a business developer has to peer deeper into the budget to see if the contract spending is really new or is merely going to entrenched incumbents, with little opportunity to get a foot in the door.

To meet your shareholders’ expectations of revenue, you must “up your game” in following the money and become the savvy business developer. Somewhere in those 20,000 pages of nooks and crannies, you’ll find fresh opportunities.

###

Wednesday night brought 14 inches of snow—significantly more than predicted! (Gee, how did that happen?)  I spent Thursday morning shoveling the driveway and sidewalk.  Everything is closed.  The streets are not plowed.  It is Washington, DC.  Enough already!  It is time for Olde Man Winter to retire!  And with the venting done, let’s turn to this week’s comment.

Earlier on Wednesday the Department of Defense (DoD) issued a request for public comment as part of the Director of Defense Procurement and Acquisition Policy’s (DPAP’s) “assessment to identify impacts experienced by industry resulting from contracting statutes.” The Federal Register notice can be found here.   DPAP has identified approximately 400 DFARS requirements based solely on statute.   As part of the assessment, the DPAP Director is seeking public input with regard to—

  • Particular impacts associated with specific contracting statutes;
  • Why the identified impact does not achieve the intended benefit of the identified legislation, or why the identified benefit is not helpful to the Department; and
  • Any recommendations for alternative approaches to achieve the intended benefit of the identified legislation.

The notice also states that DPAP is interested in feedback on DFARS provisions that are not based on statute, but warrant similar consideration.   Public comments are due March 14th.

DPAP’s request presents a wonderful opportunity to provide information/data regarding statutory requirements where the costs outweigh the benefits.  Just as important, the public should use this opportunity to also address the benefits of certain statutes.  In particular, the benefits of the current statutory definition of “commercial item” far outweigh perceived costs.  With the budget challenges facing the federal government, innovation can drive savings, efficiency and effectiveness.  The flexibility provided by the “of a type” definition enhances competition and expands the commercial market across the federal enterprise.  Simply put, the commercial item definition facilitates access to new technologies, solutions and services.  We cannot afford to restrict it.

Our first comment in response to the notice will be a recommendation to extend the due date for comment to May 14th.  Given the importance of the task combined with the extensive number of statutory requirements to review, additional time is needed for the public to respond with fulsome, sound comments for consideration by the Secretary of Defense..

Finally, the Coalition will be responding to the request for comment.  We will be providing our members with the 400 statutory cites with the corresponding DFARS reference as compiled by DPAP.  We look forward to your feedback.  Next week we will be seeking volunteers for a working group to develop consensus comments for submission to DPAP.

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