The Coalition for Government Procurement

This week’s blog continues the discussion on Schedules Modernization.   I was interviewed this week by Federal News Radio’s Francis Rose regarding schedules modernization; to listen click here.

At the beginning of the year the FAR & Beyond blog identified Fourteen Thoughts for 2014 with each thought subsequently being addressed in at least one blog during the year.   In light of the Federal Acquisition Service’s (FAS) continuing focus on standardized labor categories as an element of Schedules Modernization, it is time to address Thought No. 6 of the Fourteen Thoughts for 2014:  “Standardized labor categories: Towards coin-operated Schedule contracts for professional services.”  

Standardized Labor Categories and Innovation

At a time when the Administration and the Office of Management and Budget (OMB) are seeking greater access to innovative solutions that increase Taxpayer return on investment (ROI), standardized labor categories are anti-innovation. Standardized labor categories put the lid on the private sector’s ability to deliver cutting-edge, best-in-class capabilities, services and solutions that save money for customer agencies and the American people.  Quite simply, standardized labor categories, like a coin-operated vending machine, limit choice, flexibility and competition.  Standardized labor categories do not leverage commercial business practices in delivering high value solutions to meet agency mission requirements.  Rather, standardized labor categories force firms to reengineer business practices and processes to fit the labor formula dictated by GSA creating inefficiencies in the procurement and performance of customer service requirements.

Economies of Skills, Flexibility and Innovation

Innovation in government procurement begins with a focus on leveraging economies of skill.  Schedule contracts for professional services and information technology (IT) must be structured to leverage economies of skill.  That means contracts must provide flexibility at the task order level for contractors to structure complex solutions to meet complex customer agency requirements.  Standardized labor categories for commercial services simply do not provide the necessary flexibility.

GSA’s Professional Services schedules and IT Schedule 70 have a wonderful opportunity to leverage economies of skill through innovation in schedule contract structures and pricing models.  The Coalition applauds any effort to incorporate ODC capabilities into schedule contracts.  Likewise, the Coalition believes it is time to explore the establishment of an unpriced schedule for IT and professional services, as recommended by the SARA Panel in 2007.  The government has yet to take full advantage of the ongoing convergence of IT and services in the commercial marketplace.  Cloud, software as a service (SAAS), as well as complex, integrated IT service solutions are driving innovation in the market.  Flexibility in pricing and task order structure are keys to leveraging economies of skill for these new, cutting edge services, thereby increasing Taxpayer ROI.

The Coalition Innovation Task Force

The GSA Schedule program is in a unique position, with its statutory authority and access to the commercial marketplace, to drive access to commercial innovation in service delivery.  In response to this unique opportunity, the Coalition provided GSA and OMB with a white paper on transforming IT Schedule 70 into the Commercial IT Innovation Schedule.  As a next step, the Coalition will establish a “Coalition Innovation Task Force (CITF)”.  The task force will develop and recommend alternatives that deliver innovative solutions to meet federal agency needs.  The goal of the CITF is to harness a broad spectrum of ideas and experience to promote flexible, creative, and dare I say, innovative contracting structures.  The ultimate objective is to promote effective, efficient and exceptional solutions for government and its industry partners.  How can schedule contracts be restructured to leverage customer-focused supply management and service delivery?   How can the government leverage “share in savings” mechanisms to support agency missions?  How can cloud offerings be optimized via the Schedules program?  The CITF will tackle these questions and more.

In the coming weeks you will hear more about this initiative. We look forward to inviting the participation and thought leadership of government and industry in this important effort.

Roger Waldron

President

On June 12th Tom Sharpe, Commissioner of the Federal Acquisition Service (FAS), posted a new blog entitled “Modernizing GSA’s Schedules Program for Today’s Marketplace.”

As you may recall, earlier this year GSA published its Strategic Plan for the next four years.  The plan did not set forth a strategic vision for the MAS program—a troubling statement about the future of FAS given that the MAS program accounts for at least 75 percent of the dollar volume of all customer agency purchases made through FAS programs. As such, it is gratifying to see a renewed focus on the MAS program as evidenced by Commissioner Sharpe’s June 12 blog.  It is also gratifying to see FAS seeking to address Other Direct Costs and exploring the creation of an unpriced IT and professional services schedule that has the potential to better leverage the convergence of technology and services and “as a service offerings” like cloud.   It is also a positive step that FAS will be doing a “white space” look at the MAS program.  The Coalition looks forward to continuing the dialogue on the future of the MAS program as outlined in our Innovation Paper and our MAS Pricing White Paper.

At the same time, several of the “modernization” initiatives set forth in the June 12th blog raise significant questions about whether the future MAS will be an open, dynamic and innovative market for customer agencies and commercial firms seeking to do business with the federal government.   Here is a summary and comment on the initiatives outlined in the June 12th  blog:

Standardized Part Numbers and Special Item Numbers

First, FAS will seek to standardize part numbers or special item numbers to reduce price variability at the contract level and enable customers to make better price comparisons at the order level.

As a threshold matter, there has been little if any real dialogue between FAS and its contractors on the logistics of standardizing part numbers across the hundreds of thousands, if not tens of millions, of products and the variations of these products currently on MAS contracts.   FAS has not reached out to its contractor community to seek insight into how standardization will impact contractor costs, record keeping, systems changes, commercial practices or customer requirements.  Rather, according to the June 12th blog, FAS will be issuing a mass modification in June seeking standardization of part numbers.  Given the significant impact on MAS customers and contractors, the lack of dialogue on this issue is disappointing.

Standardized Labor Categories

Second, FAS will be working with stakeholders and service contractors to figure out the best approach to standardize labor categories for services.

Simply put, standardized labor categories are not only inconsistent with the commercial nature of the MAS program, they represent LPTA by other means.   Standardized labor categories will limit the ability of commercial firms to offer innovative solutions and pricing to meet customer needs.   As a result, standardized labor categories will drive best in class, innovative commercial firms from the MAS program.  Standardized labor categories are anti-innovation at a time when the federal government is seeking to embrace innovation.

Transactional Data

Third, in order for government to reduce what it is paying for products and services FAS will be collecting transactional data on products and services and providing it to customer agencies.  As envisioned by FAS, this transactional data will help agencies make informed buying decision decisions and negotiate better prices.

Price alone is incomplete data.  Terms and conditions, volume commitments, spending patterns, and performance requirements (SOW) all impact pricing.  Focusing on price alone will not assist agencies in making sound procurement decisions.  Not only is the quality of the data a concern, so is the quantity.  Given the millions of transactions under the MAS program how will agencies make sense of the pricing data?  If sound data is to be provided to customer agencies, it must include all the key elements impacting price.  The sheer volume of sound data is likely to overwhelm the customer.  Moreover, the variations in data collection requirements across government increases the complexity, cost and burden associated with this effort.

The costs of data collection and reporting on MAS contractors must be considered—costs that will inevitably be passed on to customer agencies.  Are such costs worth it?  Transactional data may provide some benefit during the market research phase but does that benefit outweigh the costs associated with collecting the data?   Are resources better focused in other areas/initiatives—like improving requirements development and streamlining the acquisition process?  The key to best value outcomes and pricing is not transactional data; rather it is sound requirements and volume commitments for agency specific requirements.

The current “modernization” of the MAS program is built on the assumption that the federal government is a single buyer, or rather, should act as a single buyer.  It is a faulty assumption.  The federal government contains many entities with varying missions, cultures, organizational structures, budget profiles, spending patterns, operational and technical requirements.  Not all agency missions are the same.   As such, the closer a procurement is to the requirements holder the more likely a sound, best value outcome.  That is why the Coalition has supported use of agency specific BPAs that set forth sound requirements and volume commitments.

Diversity is inherent in the federal market.  There are literally thousands of buyers with requirements and sellers ready to meet those requirements.  At its best GSA can provide an open, dynamic, innovative and competitive marketplace where customer agencies and commercial firms can transact business.  GSA’s time and talent should be focused on enhancing access to the diversity, dynamism and innovation of the commercial marketplace for MAS customer agencies.

Look for more commentary on Modernizing the Schedules program in future FAR & Beyond blog posts.

Roger Waldron

President

Legal Corner

By: Thomas A. Lemmer, Partner, McKenna Long & Aldridge LLP; Steven M. Masiello, Partner, McKenna Long & Aldridge LLP; Tyson J. Bareis, Associate, McKenna Long & Aldridge LLP

The Defense Contract Audit Agency has issued new audit guidance on the important topic of labor qualifications under time and material contracts.  See MRD 14-PPD-008(R).  This guidance matters to contractors because it relates to the common DCAA position (based on FAR 52.232-7(a)(3)) that contractors should not be paid any amount for effort performed by employees that fail to meet contractual qualification requirements.

The audit guidance clarifies that contracting officers have authority to approve the use of non-qualifying labor both before and after the labor is provided and directs auditors to coordinate with contracting officers before issuing audit findings in this area.  Even in circumstances where contracting officer approval has not and will not be given, the guidance recognizes that:

[I]n many cases, the contracting officer is not going to withhold payment of all labor costs when an employee does not meet the labor qualifications if the work delivered did adequately complete  the scope of work.  In these cases, the contracting officer will need to modify the contract for a  new rate or contract line item to reimburse the costs.  Auditors should assist the contracting officer to help in arriving at a rate that is more appropriate than the rate charged by the contractor (e.g., a rate based on the fully burdened rate of pay for the unqualified employee, or the labor category where that employee truly fits).

The above language is helpful to contractors because it emphasizes the need to communicate with contracting officers and contractors to resolve this type of labor issue.  This approach is consistent with the fact that, when DCAA questions billings due to employee qualification issues, the agency is not questioning the allowability of costs and, instead, is questioning whether amounts paid to the contractor are appropriate under the terms of the contract.  As the DCAA guidance implicitly recognizes, such issues are more akin to contract administration matters, which are within the purview of the relevant contracting officer to address and resolve.

Predictably, the audit guidance also directs auditors to consider whether contractor failures meet labor qualification requirements represent business systems issues.  Specifically, the guidance notes:

If the audit team determines that the contractor has a material amount of T&M billings that include hours that do not meet the labor qualifications specified in the contract, a significant deficiency related to DFARS 252.242-7006(c)(12) should be reported.  The contractor has failed to establish adequate internal controls to exclude from costs charged to Government contracts, amounts that are not allowable in terms of contract provisions in the FAR 52.232-7 T&M Payment Clause.  An adequate accounting system would include procedures for a contractor to ensure that they get the Contracting Officer’s specific authorization prior to the delivery and billing of hours that do not meet the qualifications specified in the contract.

(Emphasis added).  By failing to direct auditors to consider whether the conduct observed results from a systemic issue or has a material impact on the reliability of contractor billings, the above guidance vastly oversimplifies the analysis necessary to determine whether conduct represents a significant deficiency under the Business Systems Rule.  Unfortunately, this simplistic view of the Rule is consistent with the level of analysis often provided by auditors when determining that a significant deficiency exists in a contractor’s business system.  Contractors should continue to be skeptical of these auditor assertions and, when appropriate, resist such assertions as inconsistent with the definition of “significant deficiency” in the Business Systems Rule.

If you have any questions concerning this recent audit guidance, please contact the authors of this alert or the McKenna Long attorney with which you typically work.

 

In April 2014, the National Dialogue was launched by the Chief Acquisition Officer (CAO) Council in conjunction with the FAR Council, the Chief Information Officers Council, the General Services Administration and OMB’s Office of Federal Procurement Policy.  With the use of social media, the National Dialogue collected feedback from the public about the rules, requirements and procedures that create barriers to the Federal market and ideas about how to improve the system.  The website, “Open Dialogue on Improving Federal Procurement” can be found here.  According to the website, the intent of the dialogue was to provide an opportunity for the public to discuss potential improvements to the Federal contracting process—think of it as a social media Myth-Busters effort!  The dialogue was divided into three campaigns:

  •  Campaign 1: Reporting and compliance requirements
  •  Campaign 2: Procurement Rules and practices
  •  Campaign 3: Participation by small and minority business, new entrants, and non-traditional government contractors

For each of these campaigns, the public was invited to provide insight, ideas and feedback on potential improvements that could be accomplished through executive action (regulatory, administrative or management) as well as through legislation.  The public recommendations for improvements were posted under each campaign with the corresponding opportunity to vote/endorse individual recommendations.

In May, OMB posted the final results of the National Dialogue on Federal procurement.  The Coalition for Government Procurement’s (“the Coalition’s”) reform recommendations topped the list of ideas to improve the Federal acquisition system and increase access to the Federal market.  The following Coalition recommendations made the final top 10 list in the National Dialogue, based on the number of votes received:

  • Reduce Extensive Data Collection Requirements
  • Remove the Price Reductions Clause and Reform Pricing for the Multiple Award Schedules
  • Address Burdensome Ordering Procedures for Blanket Purchasing Agreements (BPAs)
  • Reduce Contract Duplication
  • Increase Clarity of Intellectual Property (IP) Rights- GSA Schedules
  • Implement Other Direct Costs-GSA Schedules
  • Reduce Restrictive Experience Requirements- GSA Schedules

The results of the National Dialogue are a strong statement for improving the GSA Schedules program.  Collectively these recommendations would transform the GSA Schedules program into an innovation portal for government customers and commercial firms; a streamlined, efficient and effective marketplace where customer agencies could access the latest commercial technologies, services and products.  The Coalition’s reform recommendations will reduce barriers to entry into the Federal market thereby increasing competition, reducing cost, and promoting access to commercial innovation for government customers.

Significantly, the Coalition’s recommendations can all be accomplished through executive action.  OMB and the CAO Council are expected to review the results of the National Dialogue and determine the next steps to remove barriers and burdens in Federal procurement.  The Coalition looks forward to the implementation of the top recommendations received in the dialogue, which will lead to a more efficient and effective acquisition system for agencies and the American taxpayer.

Roger Waldron

President

At least 10 firms filed Government Accountability Office (GAO) bid protests this week against the six month extension of the strategic sourcing Office Supply (OS2) Blanket Purchase Agreements (BPAs).   GSA had extended the OS2 BPAs for a six month term beyond the original five year period.  The intent of the extension was to provide BPA coverage until the OS3 IDIQ contracts are awarded this fall.  Under the bid protest rules, OS2 BPA performance must be suspended pending resolution of the bid protests unless the government makes a written determination to continue performance.  As a result, there is currently no Federal Strategic Sourcing Initiative (FSSI) vehicle in place for office supplies.  Office supplies are available through the GSA Schedules program.

The office supply strategic sourcing initiative is the canary in the coal mine.  It highlights the distortion of the federal market place being wrought by FSSIPerhaps it is time for a “pause and reflect” regarding the Office of Management and Budget’s (OMB’s) cross-cutting, top down, centralized approach to strategic sourcing.  With that in mind, some reflections on the federal market and strategic sourcing:

  • Effective accomplishment of critical agency missions must be the government’s first priority.
  • One size does not fit all.  Department and agencies have varying missions.  The variety of roles and functions across government translate into different mission support needs, funding profiles, technical requirements, governing regulations and cultures.  There are good reasons why agencies buy differently—their organizational circumstances are unique to their mission.
  • Strategic acquisitions must consider total cost.  Award price alone is incomplete data.  Price as a primary measure of success ignores the costs associated with creating and managing the FSSI infrastructure across the federal enterprise.   It also ignores contract terms that drive pricing.
  • Clear requirements and volume commitments are the keys to increasing best value outcomes for customer agencies.   The closer the procurement is to the requirements, the better chance for a sound outcome.  That is why the Coalition has consistently supported the use of agency specific BPAs as a strategic acquisition approach.  Agency specific BPAs provide a sound platform for volume commitments and clear statements of work.
  • The federal market is large and significant, however, the federal government is not always the “largest buyer”.  In reality, for traditional commercial firms the federal government may account for only a fraction of a percent of total sales.  As such, the Government can increase efficiency and reduce costs by reducing the number of Government unique requirements in its FSSI.
  • Reducing the contractor base can cause real harm to the long term health of the federal market.  For example, FSSI has closed the office supply market to small businesses.  Large businesses are not immune.  For example, the current strategy for the follow on OS3 procurement is to award to only one large business.  It is not in the interests of a strong, vibrant supply chain to limit the federal office supply market to one large business and a limited number of small businesses.
  • There are some commercial markets where centralized strategic sourcing may make sense.  GSA has had success with its overnight delivery strategic sourcing initiative.  Similarly, GSA’s FSSI Wireless BPAs have seen positive results.  What do these programs have in common?  First, each has a limited number of competitors in the commercial market.  Second, all the key competitors received an award and the subsequent opportunity to compete for task orders.   Third, GSA has developed a set of best practices and tools to assist agencies in managing requirements. GSA is on the right track in areas where it is developing best practices guides and providing acquisition support for customers of it GSA Schedules and GWAC programs.

It is time for a “pause and reflect.”  Government and its private sector stakeholders have an opportunity to structure strategic acquisition reform that focuses on agency specific requirements, enhances competition, creates opportunities, supports innovation, and maintains a healthy vibrant commercial supply chain.  It is time for a Myth-Busters dialogue on FSSI with OMB and the Strategic Sourcing Leadership Council.

 

Roger Waldron

President

 

Utah, Omaha, Gold, Juno, and Sword: The Beaches of Normandy on June 6, 1944

Today marks the 70th Anniversary of D-Day—the day when the Allies launched Operation Overlord, the campaign to liberate Europe. Democracy, liberty and the fate of Western Civilization hung in the balance.  Here is Supreme Allied Commander General Dwight D. Eisenhower’s message to the soldiers, sailors and airmen of the Allied Expeditionary Force:

Soldiers, Sailors and Airmen of the Allied Expeditionary Force!

You are about to embark upon the Great Crusade, toward which we have

striven these many months. The eyes of the world are upon you. The

hopes and prayers of liberty-loving people everywhere march with you. 

In company with our brave Allies and brothers-in-arms on

other Fronts, you will bring about the destruction of the German war

machine, the elimination of Nazi tyranny over the oppressed peoples of

Europe, and security for ourselves in a free world. 

 

Your task will not be an easy one. Your enemy is well trained, well

equipped and battle hardened. He will fight savagely. 

But this is the year 1944! Much has happened since the Nazi triumphs of

1940-41. The United Nations have inflicted upon the Germans great defeats,

in open battle, man-to-man. Our air offensive has seriously reduced their

strength in the air and their capacity to wage war on the ground. Our Home

Fronts have given us an overwhelming superiority in weapons and munitions

of war, and placed at our disposal great reserves of trained fighting men.

The tide has turned! The free men of the world are marching together to

Victory!

 

I have full confidence in your courage and devotion to duty and skill in

battle. We will accept nothing less than full Victory!

Good luck! And let us beseech the blessing of Almighty God upon this great

and noble undertaking.

SIGNED: Dwight D. Eisenhower

Please take a moment today to remember those who made the supreme sacrifice for us.  Take a moment to remember, appreciate and thank the Veterans of D-Day; the Veterans of World War II.  They saved the world.

For this week’s comment I wanted to share with you my latest blog post that was first published on the Federal Times’ Acquisition Blog (www.federaltimes.com) on May 16, 2014.

The Multiple Award Double-Standard, Part II

April’s blog focused on the Defense Procurement and Acquisition Policy’s (DPAP’s) double standard regarding the treatment of orders under the GSA Schedules program versus other multiple award contracts. This month’s blog answers the question, why the double standard? Simply put, there is no reasonable basis for the disparate treatment of orders under the GSA Schedules program as compared to orders under other multiple award contracts.

First, as explained in my April blog, the regulations governing orders under the GSA Schedules program (FAR 8.404) and orders under multiple award contracts (FAR 16.505(b)(3) contain the same fundamental guidance regard the determination of fair and reasonable pricing. Moreover, there is guidance throughout FAR 8.4 requiring price analysis or determination of fair and reasonable pricing when competing and placing an order that includes a statement of work.

Second, by statute and regulation, the competition requirements (i.e. the government’s obligation to provide contractors with notice and an opportunity to compete) for task and delivery orders are essentially the same. As a threshold matter under both GSA Schedules and other multiple award contracts, statute and regulation require the ordering activity to provide notice (including description of supplies and services to be acquired and the evaluation criteria) and an opportunity to compete to all contractors capable of meeting the requirement. Further, the ordering procedures for both GSA Schedules (FAR 8.4) and other multiple award contracts (FAR 16.505) require written determinations or justification when a contracting officer does not provide the required notice. The competition requirements for multiple award contracts, including GSA Schedules, were recommended by the Acquisition Advisory Panel (AAP), established by the Services Acquisition Reform Act of 2003 to make recommendations on improving the procurement system. The AAP’s recommendations regarding task order competition under multiple award contracts were enacted into law as Section 863 of the 2009 National Defense Authorization Act.

Third, GSA’s continuous open seasons ensure ongoing access to the commercial marketplace. Commercial firms can submit an offer for a schedule contract every business day of the year. Continuous open seasons are the answer to those critics of multiple award contracts that argue they are uncompetitive because they close federal markets to new offers. In the GSA Schedules world, the market is always open to new offers. Moreover, other multiple award contracts are increasingly adopting “on-ramps.” On-ramps are a form of continuous open season as they allow firms that are not on a multiple award contract to submit offers to join the contractor pool. Imitation is the sincerest form of flattery!

Finally, GSA Advantage!, the electronic catalog for the GSA Schedules program, and e-Buy, GSA’s electronic quote tool, support transparency of pricing, market research, and task order competition. In fact, e-Buy is identified in FAR 8.4 as the method of providing notice and an opportunity to compete to all schedule contractors consistent with the statutory competition requirements.

Given the competitive features of the GSA Schedules program, that DPAP’s guidance is targeted solely at the GSA Schedules program is perplexing. More recently, in explaining the rationale behind the deviation, DPAP focused on pricing of orders below the micro-purchase threshold ($3,000). Perhaps the focus on micro-purchases reflects a realization that the GSA Schedules ordering process is as competitive, if not more competitive, than other multiple award contracts. After all, competition is not required for purchases at or below the micro-purchase threshold; the government can go directly to a single source whether it is buying open market or ordering from a pre-existing contract like the GSA Schedules.

If DPAP’s real concern is the pricing for orders below the micro-purchase threshold, than invocation of FAR 15.404-1 is a case of over regulation. The deviation creates confusion and uncertainty in the GSA Schedules marketplace. As such, the deviation will foster increased contract duplication. Unfortunately, the costs associated with increased contract duplication will far outweigh any savings achieved for GSA orders resulting from the deviation.

The facts and circumstances surrounding DPAP’s deviation raise several questions.

■ Did DPAP conduct a cost/benefit analysis before issuing the deviation?

■ Did DPAP consider the potential for increased contract duplication resulting from the deviation?

■ Did DPAP review the entirety of FAR 8.4 before issuing the deviation?

■ Did DPAP review FAR 16.505 and compare it to FAR 8.4 before issuing the deviation?

■ Will DPAP issue a deviation regarding FAR 16.505?

■ Finally, again, why the multiple award double standard?

Roger Waldron

President

Happy Memorial Day!

May 23rd, 2014

Originally published in the Friday Flash on May 25, 2012:

Memorial Day marks the unofficial beginning of summer (growing up in small town in Northern Maine it usually seemed that summer didn’t begin till July 4th).  As a child I remember that in days leading up to Memorial Day, members of the Veterans of Foreign Wars (VFW) would stand outside the grocery store requesting donations and handing out “Buddy Poppies.”  To me, these men were a big deal, most were World War II or Korean War Veterans.  These men were considered local heroes, highly respected for their service.  One or two were World War I veterans—I grew up in the 1960’s and 70’s and there were still many World War I veterans who were in their 60’s and 70’s.  On Memorial Day our town would hold a parade honoring those who had fallen in service to our nation.  All the local veterans would march in the parade, accepting donations and handing out Buddy Poppies.

So what is a “Buddy Poppy?”  The Buddy Poppy was inspired by the poem “In Flanders Fields,” honoring the fallen of the First World War.   The poem was written by Colonel John McCrae, a Canadian surgeon, who served in the War.  The poem is haunting:

In Flanders fields the poppies blow

Between the crosses, row on row

That mark our place; and in the sky

The larks still bravely singing, fly

Scare heard amid the guns below.

We are the dead. Short days ago

We lived, felt dawn, saw sunset glow,

Loved, and were loved, and now we lie

In Flanders fields

Take up our quarrel with the foe:

To you from failing hands we throw

The torch; be yours to hold high.

If ye break faith with us who die

We shall not sleep though poppies grow

In Flanders fields.

The red poppy flower became the “Flower of Remembrance” for those who served on the Allied side in the First World War.  In 1921, the Franco-American Children’s League sold artificial poppies in America to support orphans and those left destitute by the war in Belgium and France.  Subsequently, the Franco-American Children’s League dissolved, and in the spring of 1922 the VFW began selling poppies made in France to support the orphans and destitute.  By 1924, the VFW began selling “Buddy Poppies” made by disabled veterans.

Since that time, the VFW’s National Buddy Poppy Committee has ensured that the artificial poppies are made by veterans located in VA Hospitals and facilities throughout the country.  The proceeds from the sales of a Buddy Poppies primarily go to support local veteran services.  So when you “contribute” or buy a Buddy Poppy at your local grocery store, it will support a veteran and a neighbor!   Please, when you make your grocery list for the Memorial Day barbecue, make sure you include a “Buddy Poppy.”

This Memorial Day, please make sure you take time to honor all service men and women who have fallen in defense of freedom.   God bless them and their families.  God bless and protect all those in harm’s way.  Please also remember those contractor personnel who have fallen while supporting our troops around the world.

More information regarding the history of the Buddy Poppy campaign can be found at the VA and the VFW websites.

Roger Waldron

President

Upcoming Events in May!

May 16th, 2014

Before we wrap up the month of May, I want to make sure you are aware of two exciting events and two committee meetings that will be taking place in the coming weeks.

The New Guidance on Cybersecurity Acquisition will be held on May 22nd from 8:00am – 11:00am at the Tower Club in Tysons Corner.  This event will include a panel comprised of officials from GSA, DOD, NIST, and several law firms who will all discuss the implications for contractors of the new DOD and GSA final report and guidance on cybersecurity acquisition, including an overview and update on the Draft Implementation Plan and NIST cybersecurity requirement for critical infrastructure.  This forum is a unique opportunity for your company to voice industry comments, questions, and concerns on the report to government officials who play an active role in the policy implementation.  Additionally, we will take a short break during the morning panel discussion to allow for networking both with peers and the panel participants.  This will be a very informative event and we highly encourage you to share information about this session with colleagues in your company responsible for cybersecurity.

Our second event will be a Premier Member only event (plus Strategic Partners and Keystones) with Tom Sharpe, May 29th from 8:30 – 10:30am at Northrop Grumman in McLean.  Mr. Sharp is the Commissioner of the Federal Acquisition Service (FAS) and we invite you to come hear him describe in detail the three year strategic plan for FAS, which will include GSA’s role as “America’s Buyer” and how to achieve a growing market share.

Regarding important committee meetings I wanted to highlight, the GWAC/MAC Committee is scheduled to meet on Tuesday, May 20th at 10:00am at Deloitte in McLean.  Tiffany Hixson, Regional Commissioner, Northwest Arctic Region at GSA will be joining the committee for a valuable discussion.  If that wasn’t enough, Kevin Gallo and/or Fred Haines, Telecommunications Managers with GSA’s Integrated Technology Services, will also be joining the meeting at 11:00 to discuss the acquisition strategy for the upcoming NS2020 procurement.

LastlyJan Frye, the Deputy Assistant Secretary for Acquisition and Logistics, U.S. Department of Veterans Affairs, is meeting with the Healthcare Committee on May 28th at 10:00 at McKenna Long & Aldridge in Washington, D.C.  The Coalition is extending this unique opportunity to have a small group conversation with the head of one of the largest acquisition and logistics programs in the federal government to all Coalition members.   Jan manages and oversees the development and implementation of policies and procedures for department-wide acquisition and logistics programs supporting all VA facilities. His responsibilities include management of VA’s National Acquisition Center in Hines, Illinois, the Technical Acquisition Center in Eatontown, NJ, the Centers for Acquisition Innovation in Austin, Texas and Washington, D.C., the VA Acquisition Academy in Frederick, Maryland, and the Denver Acquisition and Logistics Center in Denver, Colorado. He also serves as the VA Senior Procurement Executive.  Join the discussion to better understand major VA acquisitions across a broad spectrum of items including Healthcare,  IT and services; VA acquisition priorities; and overall budget outlook.

Please see a summary below of dates and details and feel free to pass this along to any of your internal colleagues you think would benefit from attending.  For assistance with event registration, please contact Matt Cahill at 202-315-1054 or mcahill@thecgp.org.  For assistance with committee meeting registration, please contact Roy Dicharry at 202-331-0975 or rdicharry@thecgp.org.  Note that it’s imperative you RSVP with Roy for the committee meetings due to building security procedures.

1. Tues., May 20 – GWAC/MAC Committee Speakers: Tiffany Hixson, Regional Commissioner, Northwest Arctic Region Kevin Gallo and/or Fred Haines, Telecommunications Managers with GSA’s Integrated Technology Services
Deloitte
1750 Tysons Blvd, McLean, VA
10:00am – 12:00pm
(Slots are going fast. Members who would like to attend, please RSVP to Roy Dicharry at rdicharry@thecgp.org ASAP.)

2. Thurs., May 22 – The New Guidance on Cybersecurity Acquisition (featuring DoD, NIST, GSA speakers and legal experts)
Tower Club
8000 Towers Crescent Drive, Suite 1700, Vienna, VA
8:00am – 11:00am

3. Wed., May 28 – Healthcare Committee
VA Acquisition: Meet with Jan Frye, Deputy Assistant Secretary, Office of Acquisition and Logistics at the Department of Veterans Affairs
McKenna Long & Aldridge
1900 K Street NW, Washington, DC
10:00am – 12:00pm

4. Thurs., May 29 – Premier Member only event (plus Strategic Partners and Keystones) with Tom Sharpe, Commissioner of the Federal Acquisition Service (FAS)
Northrop Grumman
7575 Coleshire Drive, McLean, VA
8:30am – 10:30am

Matt Cahill

Vice President, Membership and Marketing

Legal Corner

By: Jason A. “Jay” Carey, Partner, McKenna Long & Aldridge LLP; Alison L. Doyle, Partner, McKenna Long & Aldridge LLP; John W. Sorrenti, Associate, McKenna Long & Aldridge LLP

The Federal Acquisition Regulation (“FAR”) currently imposes personal conflict of interest (“PCI”) requirements on contractors performing acquisition functions closely associated with inherently governmental functions.  FAR subpart 3.11.  Contractors performing such work must screen for and prevent PCIs, and the screening process includes disclosure and review of covered employees’ financial interests and other relationships.  Compliance can be a significant burden and understandably raises concerns about the proliferation of personal financial information in the hands of contractors and the government.

On April 2, 2014, the FAR Council issued a proposed rule that would greatly expand the application of those PCI requirements to contractors performing a number of other (non-acquisition) “functions closely associated with inherently governmental functions,” as well as contracts for personal services.  79 Fed. Reg. 18503 (Apr. 2, 2014).  The proposed rule’s implementation of the underlying statute raises red flags, and would require many new contractors to accept significant and ambiguous compliance burdens.  Comments are due by June 2, 2014.

The proposed rule purports to implement section 829 of the National Defense Authorization Act for Fiscal Year 2013, which required the Secretary of Defense to review existing PCI requirements to determine whether they should be extended to other defense contractors through a revision of the Department of Defense supplement to the FAR.  The proposed rule, however, goes beyond the stated intent of section 829, extending the requirement to all agencies, not just the Department of Defense.  Contractors and industry groups submitting comments may want to address the propriety of this approach given the statutory language.

With respect to the substantive requirements of the proposed rule, it deletes the current limitation to acquisition-related functions, and applies PCI rules to all contractor “functions closely associated with inherently governmental functions.”  Section 829 referred to 10 U.S.C. § 2838(b)(3) to define the term “functions closely associated with inherently governmental functions,” and that statutory provision defined the term as the list of functions in FAR § 7.503(d).  The proposed rule, however, does not adopt this definition — and, in fact, does not define the term at all.  Rather, the rule refers generally to FAR subpart 7.5.  But that subpart does not define the term, or even contain the words “closely associated.”  As a result, the proposed rule provides no guidance to contracting officers regarding what it means for a function to be “closely associated” with inherently governmental functions.  Leaving this essential term undefined will assuredly create confusion, and lead to an inconsistent and uneven application of the rule from agency to agency and contracting officer to contracting officer.  And over time, agencies will gravitate to the most conservative approach — i.e., the broadest application — without any systematic assessment of whether that approach makes sense, or is worth the cost to contractors and the procurement system.

Further complicating matters is the ambiguity of the functions listed in FAR § 7.503(d), which sweep in a wide range of services that support government operations, including:

  • Budget preparation (including workload modeling, fact-finding, efficiency studies, and should-cost analyses);
  • Reorganization and planning activities;
  • Development of policies or regulations (including analyses, feasibility studies, and strategy options);
  • Any situation that might permit a contractor to gain access to confidential business information or other sensitive information;
  • Support for responses to Freedom of Information Act requests;
  • Some legal, security, and inspection-related services.

The FAR Council is interested in receiving comments on which functions listed in FAR § 7.503(d) should be included or excluded from the PCI requirements.  In addition to addressing that question, contractors and industry groups should consider commenting on the ambiguous scope of the covered functions in FAR § 7.503, which is certain to lead to uneven implementation.  For example, the new PCI rule would apply to contracts where the contractor may have access to “confidential business information” or “other sensitive information.”  See FAR § 7.503(d)(11).  Those terms are not defined, and have potentially broad application — not just to contractor proprietary information and source selection information, but also to any information the government views as confidential or sensitive.  The reference to “planning activities” in FAR § 7.503(d)(2) is similarly broad and undefined.

Given the absence of any definition of “closely associated,” the lack of clarity in FAR § 7.503, and the conservative nature of many in the acquisition workforce, a broad application of PCI requirements seems likely if the proposed rule is adopted as-is.  As currently drafted, the proposed rule has far-reaching implications, and is likely to impose substantial costs and compliance burdens on contractors — beyond what even Congress intended.  Contractors should consider submitting comments, and closely monitor the progress of the proposed rule.

 

The Coalition welcomes the FSSI OS2 Dashboard as a positive step in improving transparency. The dashboard responds to public requests for more information regarding OS2 including information about pricing, savings and small business participation.

The dashboard states that “[i]n 9 out of 10 cases, the median OS2 price is lower than the median Schedule 75 (Non-OS2).”  The dashboard also provides a pricing table, “April 2014 Price Comparison: Schedule 75 to OS2,” that allows for a comparison of median Schedule 75 prices to median OS2 prices on an item by item basis. The dashboard can be found here.

The pricing information contained on the dashboard is instructive regarding the shortcomings of FSSI.   That 9 out 10 times the median OS2 prices of an item is lower than the median Schedule 75 is unremarkable!  The schedule contracting process is designed to lower prices by competition at the task order stage.  The dashboard’s pricing comparison information confirms the competitive nature of the schedules ordering process—not the efficacy of the current FSSI.   Individual agencies competing specific requirements can and have achieved similar, if not superior savings.  In fact, our members have experienced situations where agency specific BPAs have provided a better deal, including lower prices, than the FSSI OS2 BPAs only to see the agency move to the OS2 BPAs rather than maintaining their own.

The current FSSI approach reflects a vision of GSA as “America’s Buyer.”   The Federal Acquisition Service (FAS) has described current FSSI strategy as “supplier suppression,” the key tenants of which are limiting the number of suppliers, increasing data reporting requirements and driving down pricing through generic government-wide BPAs.  This approach limits competition, hurts small businesses and reduces access to the commercial marketplace.

Sound procurement outcomes are built upon clear, consistent and firm requirements.  Moreover, each agency/department is in the best position to understand, articulate, procure and manage its requirements and mission needs in the procurement process.  That is why the Coalition, with input from the procurement community, has set forth a list of “Best Practices for Establishing Blanket Purchase Agreements.”  Chief among the best practices is focusing on requirements—and that BPAs reflecting single agency requirements should be preferred over multiple agency or government-wide BPAs.  Single agency BPAs allow the government to state specific, realistic, authentic requirements that can be accurately priced.  In contrast, GSA’s generic government-wide BPAs cannot articulate specific, realistic, and authentic requirements through FSSI.  Simply put GSA does not hold or manage other agency requirements.  As such, the current FSSI approach creates detachment between contractors and customer agencies that reduces value and customer satisfaction.

The irony is that the GSA Schedules contract structure, ordering procedures, and electronic tools are all designed to drive competition for agency specific requirements.  As a refresher, here are the key features of the program:

  • Statutory and regulatory mandates for streamlined task and delivery competition
  • GSA Advantage! serves as a market research tool providing customers and contractors with pricing and other key information for products and services on contract
  • E-buy, GSA’s electronic quote tool,  increases transparency and competition by allowing customer agencies to post RFQs and conduct task and delivery competitions consistent with statute and regulation
  • Continuous open seasons that provide the opportunity for commercial firms to submit new offers for commercial products and services every working day of the year

The top down, lowest common denominator approach to FSSI does not reflect the federal marketplace.   At its best, GSA is not America’s Buyer, rather it is the Federal Government’s Procurement Market Maker.  GSA brings customer agencies and commercial firms together via the GSA Schedules to compete, acquire and deliver best value outcomes for the America people.

The FSSI check the engine light is on and it is time for a tune up!

Roger Waldron

President

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