Commercial organizations invest the time and resources necessary to understand and define requirements. They use multidisciplinary teams to plan their procurements, conduct competitions for award, and monitor contract performance. They rely on well-defined requirements and competitive awards to reduce prices and obtain innovative, high quality goods and services. Procurements with clear requirements are far more likely to meet customer needs and be successful in execution.

See the Report of the Acquisition Advisory Panel to the Office of Federal Procurement Policy and the United States Congress, at page 87.

The current focus on oversight and transparency as the perceived cure all for the procurement system misses the mark. Oversight and transparency initiatives focus on the post award environment. As such, audit and new contractor reporting regimes merely produce data regarding ongoing contract performance. On the other hand, successful contract performance is fundamentally contingent on what has come before—requirements development, competition, negotiation and award of contracts. Sound requirements effectively communicated to industry reduce risk in contractor performance. Reduced risk leads to more efficient and effective contractor performance and pricing.

If the government (Congress and the Administration) really want to improve contract outcomes and save the taxpayer money, sound requirements development is the key. Make no mistake, it is not easy. Creating a government infrastructure that delivers sound requirements development will take discipline, sustained effort, time, training and investment to improve government requirements development. It will not grab headlines, but it will make a positive difference for government, industry and the taxpayer.

At the Coalition’s Spring Conference, Shay Assad, Director of Pricing, Department of Defense (DoD), discussed DoD’s training of program managers and the critical role of requirements development. The Coalition strongly supports DoD’s ongoing work in improving requirements development. Along these lines, the Coalition supports the creation of a center of excellence for market research, requirements development and acquisition planning within the General Services Administration (GSA). This center of excellence would leverage government resources and provide support to customer agencies using GSA contract vehicles to meet their needs.

Finally, as you know from previous blog posts, the Coalition strongly supports the Administration’s efforts to improve government-industry communications via the “Myth-Busters” campaign. Central to the “Myth-Busters” campaign is the imperative of effective communication between government and industry during the requirements development phase. Effective government-industry communications improve SOWs, RFQs and RFPs which, in turn, leads to increased competition and positive contract performance. As OFPP’s February 2, 2011 memorandum observed,

Access to current market information is critical for agency program managers as they define requirements and for contracting officers as they develop acquisition strategies, seek opportunities for small business, and negotiate contract terms. Our industry partners are often the best source of this information, so productive interactions between federal agencies and our industry partners should be encouraged to ensure that the government clearly understands the marketplace and can award a contract or order for an effective solution at a reasonable price. Early, frequent and constructive engagement with industry is especially important for complex, high-risk procurements, including (but not limited to) those for large information technology (IT) projects.

Industry exhibits at the upcoming GSA Expo are an excellent source of market information for agency program managers. The Expo also provides over 12,000 hours of professional training for government and industry contracting professionals.

The Coalition looks forward to continuing our “Myth-Busters” dialogue with GSA, the VA, OFPP and DoD regarding key procurement issues, including the challenge of sound requirements development. To that end, the upcoming May 4th blog post will highlight the Coalition’s “to do” list resulting from the acquisition dialogue during last week’s Spring Conference.

ODCs remain a top priority. The lack of ODCs on MAS services contracts reduces efficiency and competition for commercial solutions to government requirements. It also leads to contract duplication as customer agencies create alternative contract vehicles to address their needs. It does not have to be this way. The FAR provides a solution through FAR Part 12 and the commercial item clauses. FAR 52.212-4, Alternate I, provides an efficient and accountable method to include materials, ODCs and indirect costs in task orders under commercial item contracts. Importantly, as the blog post has noted before, most MAS service contracts already include the clause. The infrastructure for addressing ODCs is already in place!

With regard to the pricing policies and the role of the PRC, the Coalition welcomes the upcoming 2012 launch of the GSAR rewrite that will include a review of the current pricing policies and procedures. It is time. The current policy was written in the early 1980s! The commercial marketplace is a much different place. Services account for the majority of purchases by both commercial customers and the government. The internet exists! Technology has changed the way companies compete. Just as importantly, the new statutory mandates for task order competition now drive pricing under the MAS program—not the PRC. In response to GSA’s Federal Register notice seeking comment on the paperwork burden associated with the PRC, the Coalition provided two submissions with compelling information on the significant burden associated with the clause. The administrative costs of PRC compliance far outweigh its perceived benefits, especially when competition and requests for price reductions at the task order are mandated by regulation. The new FAR 8.4 competitive ordering procedures trump the PRC.

Data collection requirements are a new area where GSA is seeking to serve its customer agencies. It is an area where we look forward to working with GSA to identify commercial best practices. Lastly, the Coalition believes that the key to effective use of BPAs is the inclusion of volume commitments that create real incentives for contractors to participate while setting sound expectations for the work to come. On all these issues, the Coalition encourages feedback. Please let us know what you think!

A final note, our Spring Conference will include a session with GSA’s Steve Kempf, FAS Commissioner, focusing on the Next Generation MAS program and Jim Ghiloni, OASIS Program Manager. These conversations will provide a great opportunity to learn more about the acquisition strategies and potential contract structures for these two important contracting programs. We look forward to seeing you there!

In preparing for our recent “Common Sense in Government Procurement Awards” to Senators Joe Lieberman and Susan Collins, I found a quote from Senator Collins that truly struck me as the fundamental truth about our procurement system. Senator Collins observed that “no matter how many laws we pass or OMB guidance documents are issued, the effectiveness of our federal acquisition system depends on a vital human component—the acquisition workforce. “ That is why the Coalition strongly supports investment in the professional development of the acquisition workforce including training through the Federal Acquisition Institute, the Department of Veteran Affairs Acquisition Academy and the Defense Acquisition University. In addition, GSA has significantly increased their schedules training webinars and has received immensely positive feedback on these courses from customer agencies. Finally, events like the GSA Expo, with over 12,000 hours of acquisition training, play a critical role in providing the acquisition workforce with the latest information regarding new acquisition policies, procedures and best practices. The Expo training is not limited to government personnel— contractor acquisition professionals also benefit.

In the spirit of Myth-Busters, exchange programs between the government and the private sector should be expanded. Exchange programs, where government acquisition professionals spend time in the private sector and then take their experiences and lessons learned back to their agencies or departments, can dramatically improve contractual operations. The more government and industry understand each other’s operations the better they can work together to deliver best value to the taxpayer. Think of it as another form of transparency that can improve outcomes for government and its contractors! Finally, the Myth-Busters campaign should consider how to improve communication and interaction between contracting officers and program managers. Too often during the course of an acquisition engagement, communication between government contracting officers and program managers is limited. The better these two key players coordinate and work together the more likely the procurement and resulting contract will lead to a positive outcome.

The Coalition is committed to training the procurement community as a whole. For example, on April 18 we will hold a forum on the Civil False Claims Act and the key compliance requirements of the GSA schedules. It will provide attendees an opportunity to learn more about the schedules compliance requirements and the vital importance of investing in compliance programs. Our Spring Conference (April 26 and 27) provides a wonderful opportunity for government and contractor personnel to learn more about key initiatives, acquisitions and policies coming from the Department of Defense, the Department of Homeland Security, the Department of Veterans Affairs and GSA. The information and dialogue that take place at the Conference helps better inform everyone, which improves decision making. Finally, we will have a webinar on GSA Federal Supply Schedule Option Extensions on May 3. Over the coming weeks, the Coalition will take significant steps to further enhance our professional capabilities and training. Stay tuned!

A March 2, 2012, final rule requiring competition for certain orders placed under Federal Supply Schedule (“FSS”) contracts increases the burdens on agencies before schedule orders can be placed.  The trend toward increased complexity is eroding GSA’s ability to legitimately tout the MAS program as a simplified acquisition process.  These developments may not all be bad for contractors, however.  With increased competition, the basis for the Price Reduction Clause (PRC) is arguably similarly eroding.

The final rule implements Section 863 of the NDAA for 2009 (Pub. L. 110-417) as well as a March 4, 2009, memorandum issued by President Barack Obama, and makes changes that are reminiscent of the DOD specific changes required by the 2002 NDAA (Pub. L. 107-107 § 803).  While these changes reflect the government’s commitment to the fundamental procurement policy that views competition as the best means of ensuring the government is paying fair and reasonable prices and achieving best value outcomes for each tax-payer dollar, the changes ignore that in the MAS context schedule contracts are awarded with prices that have already been found fair and reasonable, based upon the contractor’s disclosure of its commercial sales practices, and orders placed against those contracts were already considered competitive.

Under the new rule (with limited exceptions), the government must publicize each intended purchase under a multiple-award contract that will exceed the simplified acquisition threshold (including a work description and bases for selection) on e-Buy or FedBizOpps.gov. The notice must be provided either to every contractor under the multiple-award contract offering the supplies or services, or to at least “as many contractors as practicable.” See § 8.405-1(d); 16.505(b)(2)(ii)(D). If fewer than all contractors are notified, no purchase can be made unless three qualified contractors submit offers or the contracting officer determines that no additional qualified contractors can be identified. Additionally, all contractors responding to the notice must be afforded a fair opportunity to make an offer and have that offer considered by the purchaser. Id. Such consideration must be documented as part of the award decision. See § 8.405-1(f)-(g).

These FAR changes are applicable to task and delivery orders placed against multiple-award contracts–including FSS contracts and Blanket Purchase Agreements (“BPAs”) awarded under FSS contracts pursuant to FAR subpart 8.4. The changes are also applicable to indefinite-delivery/indefinite-quantity contracts awarded pursuant to subpart 16.5. They do not, however, apply to BPAs awarded pursuant to FAR part 13.

Agencies traditionally have used the schedules to expedite acquisition, free of many of the requirements of a typical procurement action (i.e., developing the statement of work, publication, competition, etc.).  In response to concerns raised by the GAO in November 2000, and in recognition of the shift in federal procurement from supplies to services, a number of changes were made to FAR subpart 8.4 to establish additional procedures when the government acquired services that necessitated the development of a statement of work.  See 69 Fed. Reg. 34231 (Jun. 18, 2004).  These changes ensured that the MAS program’s simplified acquisition procedures for supplies and many definite scope services would be reasonably balanced against the need for additional protections for services acquisitions where a fixed price or clear scope T&M arrangement was not yet available.

In fact, the great success of the MAS program that began in the late 1990s and that has resulted in the very significant growth in procurement dollars flowing through the schedules is, in large part, a product of the ease with which acquisition outcomes could be achieved while still ensuring the government was receiving a fair and reasonable price.  The March 2, 2012, final rule, however, further erodes purchaser flexibility, could prompt agencies to reassess the value proposition of using the schedules, and is very likely to increase bid protests and disputes.  These outcomes are antithetical to a simplified acquisition process.

On the other hand, there is a potentially positive development from the Final Rule.  The shift toward increased competition for all schedule orders over the simplified acquisition threshold gives new viability to the long-running effort to remove the Price Reduction Clause from schedule contracts.

As noted in the response to comments in the Final Rule, one of arguments advanced was that the old FAR subpart 8.4 ordering procedures and the PRC reflected the balance between competition and price reductions for orders above the maximum order threshold (MOT).  Specifically, the PRC recognizes that price reduction remedies are not necessary above the MOT because competition and requests for price reductions were required by the old FAR subpart 8.4.  Importantly, the new FAR subpart 8.4 ordering procedures have replaced the MOT with the simplified acquisition threshold and, as such, the PRC should be revised and, indeed, largely eliminated. Thus, Contractors and industry organizations could have a viable new basis to push for regulatory change.

In light of the Final Rule, schedule holders will be well served by carefully assessing how these new notice and competition requirements present new risks but also new opportunities to secure agency orders.  The notice requirements could have significant impacts on relationships that schedule vendors have established over many years of successful contract performance.  On the other hand, vendors that have traditionally not enjoyed significant market share would be wise to carefully consider how to best leverage this new opportunity to compete for agency requirements that are fulfilled through the MAS program.

With regard to perspective, in my view, the role of the procurement community in the operation of our federal government cannot be overstated. Procurement literally touches every program activity, mission, and arm of government.  The infrastructure of government depends upon an efficient and effective procurement system.  The keys to an efficient procurement system that delivers best value to the taxpayer are the following:

(1) A highly qualified, professional acquisition workforce;
(2) Sound requirements development;
(3) Contract structures that increase efficiency, competition and access to the commercial marketplace; and
(4) Contract rationalization that eliminates costly duplicative contracts and contract vehicles.

To use football terminology, these are the fundamental “blocking and tackling” of our procurement system. Layer after layer of contract oversight and audit can be imposed on the system, but ultimately, the success of the system in delivering best value to customer agencies is dependent upon these four fundamentals.  Over the next four weeks my blog posts will highlight each of these fundamentals.

This week’s fundamental is “Contract rationalization that eliminates costly duplicative contracts and contract vehicles.”  At a time of significant budgetary challenges, the federal government and its contractor base can no longer afford contract duplication.  On April 5, 2011, the Coalition sent to its member firms a survey addressing contract duplication.  The purpose of the survey is to collect data on the costs associated with duplicative contracts for the same or similar services. Duplicative contracts unnecessarily increase bid and proposal costs as well as contract administration and overhead costs for both government and industry, costs that are ultimately borne by the taxpayer. The Contract Duplication Survey provides an opportunity to identify and articulate the impact of duplicative contracts.  The information collected from the survey will be used to develop a white paper addressing the costs of contract duplication.

The Office of Federal Procurement Policy’s business case memorandum provides a good first step in addressing contract duplication.  In the spirit of Myth-Busters, the next step will be to identify potential solutions and recommendations to reduce unnecessary contract duplication and share them with the procurement community.

On February 27, 2012, the Coalition submitted comments to GSA regarding the paperwork burden associated with the Price Reduction Clause (PRC). Thanks to our members and others who submitted responses to our survey questions regarding the costs associated with the PRC, we were able to provide compelling information to GSA regarding the overly burdensome and costly requirements of the PRC, especially in light of the new statutory and regulatory competition requirements for task and delivery orders under the Multiple Award Schedule (MAS) program. Our comments reflect the need for serious review and reform, if not elimination, of the PRC. Since the submission of our comments to GSA, the public comment period has been extended to April 16th. The Coalition will be supplementing our initial comments.

February was a very busy month. During the third week in February, the Coalition held another very successful MAS Basic Training Course. Thanks to participation by McKenna Long & Aldridge LLP; Washington Management Group, A Deltek Company, Xerox Corporation, HP Enterprise Services, and GSA, the MAS Basic Training course provided attendees with a grounding in the key fundamentals of the MAS program. On February 29th, the Coalition held a breakfast event featuring GSA’s David McClure and Mark Day discussing GSA’s cloud computing initiatives and FedRAMP.

In March, the Coalition welcomed L-3 STRATIS as the newest Keystone member. On March 21, the Coalition was honored to present Senators Lieberman and Collins with the Coalition’s Common Sense in Government Procurement Award. Finally, as we close out the quarter on March 29th, the Coalition submitted written testimony to the Subcommittee on Contracting Oversight, Committee on Homeland Security and Government Affairs, regarding contractor costs and insourcing versus outsourcing functions.

Looking ahead to the second quarter, the Coalition is very excited about our events. These events will bring the procurement community together to discuss key issues, challenges and trends in government contracting. First, on April 18th the Coalition will be hosting a forum focused on the nexus between MAS contract compliance and the Civil False Claim Act. This session will feature defense counsel and relator’s counsel presenting the life cycle of a mock civil False Claims Act case involving the MAS. In addition, we have invited counsel from the Department of Justice to participate and are awaiting confirmation. This event is a wonderful educational opportunity for in-house counsel, compliance officers, auditors, accountants, and contracting officers from industry and government. For more information, please visit our website.

On April 26th and 27th, the Coalition will be holding our Spring Conference. We are very fortunate to have an esteemed group of senior procurement leaders from DoD, DHS, GSA and the VA joining us for a continuing dialogue on the key procurement issues of our time. View the two day Spring Conference agenda. In addition, we are pleased to announce that Jim Ghiloni, the PMO for One Acquisition Solution for Integrated Services (OASIS) (formerly Integrations) will be speaking at our conference the afternoon of April 26th.

The Coalition kicks off May with a webinar focused on Federal Supply Schedule Option Extensions: Contractor Challenges and Best Practices presented by Baker Tilly. May also brings the GSA Expo and the Coalition’s Partnership Dinner on May 16th at the Marriot Riverwalk. The Partnership Dinner provides a wonderful opportunity for a Myth-Busters dialogue regarding GSA’s key acquisition programs and initiatives. We are also working on having a veterans organization participate in the event. For more information, visit the Partnership Dinner page on our website. Also on May 16th, the Coalition will be holding a breakfast meeting for our Board of Advisors attending the Expo. Finally, June 14-15 will be our second MAS Basic Training Course offering of the year.

While these activities and events are on going, we continue to operate our Committees, meeting regularly to discuss and address key procurement issues. It is a testament to the commitment and engagement of you, the members, that our Committees are active and involved in key challenges facing our procurement system. At the same time, we all appreciate the willingness of our colleagues in Government, especially at GSA and VA, to engage in discussions regarding their acquisition programs. Transparency and positive dialogue between Government and industry remain the foundation upon which our system can operate more efficiently and effectively for all.

A final thought, watch for future announcements from the Coalition this quarter. The best is yet to come!

Throughout their careers, Senator Lieberman and Senator Collins have worked tirelessly for common sense solutions to the procurement challenges facing our federal government.

Senator Lieberman was an early co-sponsor of the Federal Acquisition Streamlining Act of 1994. Based on an analysis of hundreds of acquisition laws, FASA streamlined the acquisition process. It established commercial item contracting as a critical norm in government procurement, which profoundly changed the way government purchased goods and services. I saw its effects first hand as an attorney at GSA. The era of government detailed specifications and item descriptions ended. Instead, where it could, the government bought commercial products and services. This increased access to the commercial marketplace spawned an increase in competition, which reduced procurement cycles, triggered savings of billions and billions of dollars from downward price pressure, and, equally as important, opened the government to technological refreshment with new innovations. I also witnessed this fundamental change throughout government with an increase in value to the agencies. From my viewpoint, after spending 25 years in the procurement trenches, I would submit that the Competition in Contracting Act (CICA) and FASA remain the two most important, ground-breaking procurement reforms that have saved the taxpayer’s money.

Senator Lieberman has been a staunch supporter of competition in contracting for years, but it might come as a surprise to some of you that staff leadership of CICA was executed by our second awardee, Senator Collins. Before ascending to the office of Senator, as a staff expert in the Senate, she worked without rest until this landmark legislation was crafted, and when she was finished, Congress laid what is now the prime directive of federal procurement— full and open competition. Unquestionably, this feature alone makes CICA the most profound and important procurement reform of the last century. From the role of sealed bids and negotiated procurements to the statement and use of evaluation criteria (and evaluation of price) to the statement of work requirements, CICA’s imperative of full and fair competition permeates every aspect of our system. Simply put, CICA is the Constitution of federal procurement, providing structure and operational guidance that has saved the taxpayers billions of dollars over the last three decades.

Throughout their tenures over the last ten years as Chairman and Ranking Member respectively of first the Senate Committee on Government Affairs Committee and the Senate Committee on Homeland Security and Government Affairs (I note during the last decade Senator Collins and Senator Lieberman have at alternately served as Chairman and Ranking Member), Senator Collins and Senator Lieberman have worked in a bipartisan manner to address new challenges facing our procurement system; always with the goal of improving the system for government, industry, and most importantly the taxpayer. Again, as a former government employee and as a member of the Service Acquisition Reform Act (SARA) Acquisition Advisory Panel, I have a unique perspective on their efforts. The Senators took the SARA Panel Report very seriously; indeed the Chairman of the SARA Panel testified before the Committee on its findings. Chief among the reform measures championed into law by Senators Lieberman and Collins were: (1) requirements for increased competition for task and delivery orders under multiple award contracts, including the GSA schedules program; (2) the creation of a Contingency Contracting Corps to respond to national emergencies; (3) appropriate limitations on sole source contracts; (4) measures to further prevent abuse and increase accountability, in particular with regard to unauthorized spending through interagency transactions; and (5) measures to improve the federal procurement data system to include timely data regarding interagency contracting actions to provide the public with greater transparency of government spending.

These reforms represent common sense approaches to the procurement challenges of the last decade. To their credit, however, and consistent with their common sense approach, both Senators have worked steadfastly to address the key to the future health of the procurement system, that is, the care and feeding of the acquisition workforce. Their leadership in addressing the acquisition workforce is an investment in the future. As Senator Collins has said, “no matter how many laws we pass or OMB guidance documents are issued, the effectiveness of our federal acquisition system depends on a vital human component—the acquisition workforce.” This statement reflects the shared values of the Senators. And as a result of their efforts, key legislation addressing the acquisition workforce has become law, including the requirement for OFPP and FAI to prepare a Strategic Plan for Acquisition Workforce Development, as well as the Federal Acquisition Institute Improvement Act of 20ll, which will deliver improved training and professional development for the federal acquisition workforce.

Most recently, Senator Collins efforts to keep politics out of the procurement system reflect yet another common sense approach.

It should come as no surprise to anyone here that our nation faces a significant threat in cyberspace. On a daily basis, those who wish to do us harm or who seek to steal our innovation and know-how probe our networks daily to find points of vulnerability to exploit. The Senators’ Cybersecurity Act of 2012 represents their coordinated effort to confront this problem, but, behind the scenes, it represents so much more for our community.

Over three years ago, the Senators and their staffs began the hard work of defining the problem and crafting a solution. In a sense, if there is a cybersecurity bandwagon today, it is fair to say that they had a leading role in building it. At that time, some thought it made sense simply to leverage the procurement system outright. It took the thoughtful analysis of the Senators to make sure that any use of the procurement process to affect cybersecurity respected, to the maximum extent practicable, the foundational principles of the system: full and open competition and leveraging commercial items and practices. In this regard, they reached out to all stakeholders of the system in an effort to minimize any unintended negative consequences. Their stewardship in this regard is emblematic of their statesmanship, and deeply appreciated by our community.

The problem with honoring two such noble and deserving candidates is that they have an enormous record behind them. Suffice it to say, however, the Senators’ balanced, thoughtful common sense reforms of our procurement system have helped ensure our system continually strives for efficient and effective results and best value for the American taxpayer. Finally, some thoughts on the Senators and the Common Good: Senator Lieberman’s and Senator Collins’ bipartisan efforts to address the challenges of our procurement system demonstrate how achieving the common good need not be blood sport. Their leadership on the Senate Committee for Homeland Security and Government Affairs has and continues to be balanced, prudent, and collaborative approach. They get things done in a positive way, and this constructive approach has resulted in sound solutions for government, industry, and the taxpayer. The importance of the common good is also reflected in their committee staffs, which work together in a collegial, respectful, and cooperative manner. If staffs are a reflection of their Members, then it is safe to say that their bosses are among the finest, open, and decent people you could meet.

We should all thank the Senators for their public service and their “Common Sense for the Common Good.”

It is really a two part question. First, has communication between government and industry increased and/or improved? Second, has the communication lead to more efficient and effective procurements and/or outcomes? Ultimately, communications can improve but without corresponding improvements in outcomes, Myth-Busters will not have reached its full potential for success. Myth-Busters really depends upon shared contributions from all, including government contracting officers, legal counsel and program managers as well as their counterparts in industry. No one group has all the answers. Communications between government and industry acquisition professionals leads to greater mutual understanding of government requirements and commercial practices. The key test is whether that improved understanding is translated into more efficient and effective contracts and contract vehicles.

In the case of the GSA’s Multiple Award Schedule (MAS) program, communication and contributions by and among customer agencies, GSA and its contractors can shape an even more efficient and effective Next Generation MAS. Given the very sound, successful foundation of the current MAS program, the Next Generation has great potential to deliver even greater value to customer agencies and competitive opportunities for commercial firms. In many ways the dialogue regarding the Next Generation has already begun. Think about it. Today customer agencies, GSA and its contractors are engaging around a host of key procurement issues that will shape the future MAS: Other Direct Costs, data collection, the Price Reduction Clause and pricing policies, Enterprise User License Agreements, socio-economic opportunities, and contract duplication. Finding balanced, sound and efficient solutions to these issues will ensure that the Next Generation MAS delivers even greater value to customer agencies and even more business opportunities for MAS contractors.

As Captain Jean-Luc Picard of Star Trek: The Next Generation, would say “Make it so!”

In a long-running civil False Claims Act (“FCA”) case, United States ex rel. Rille v. Sun Microsystems, Inc., No. 4:04-C-V00986-BRW, the U.S. District Court for the Eastern District of Arkansas recently denied a Government motion to dismiss, on public disclosure grounds, the relators’ claim that Sun had fraudulently provided inaccurate Commercial Sales Practices (“CSP”) data in support of the pricing of its General Services Administration (“GSA”) Schedule. The court’s denial of the Government’s motion is troubling for several reasons.

The Sun case began in 2004 when the relators filed their initial qui tam complaint. As relevant here, that complaint alleged that Sun participated in an industry-wide “strategic alliance” scheme that somehow resulted in violations of the requirement that a contractor be “truthful in negotiations, and … certify that the cost or pricing data they proffer to the Government is current, accurate, and complete.” The relators’ 2004 complaint did not expressly allege that Sun had “defectively priced” any particular contract, let alone that it had submitted inaccurate CSP data in connection with its GSA Schedule.

At the same time the relators were filing their initial complaint, the GSA Inspector General (“IG”) was conducting a wholly independent audit of Sun’s GSA Schedule. The IG’s findings, including allegations that Sun had defectively priced its GSA Schedule by providing inaccurate CSP data, began to be made available to Sun in 2004 and were the subject of press reports in 2005. In 2006, the relators in the Eastern District of Arkansas case amended their complaint to allege that Sun had provided GSA with inaccurate information regarding its “best pricing.”

On the basis of the above chronology, the Government moved to dismiss, on public disclosure grounds, the relators’ claim that Sun had defectively priced its GSA Schedule. The Government argued: (1) that the relators did not assert this claim until 2006; (2) by that time, the claim had been publicly disclosed; and (3) that the relators were not original sources.

The court rejected all three of the Government’s arguments. First, the court found that the 2004 qui tam complaint’s vague references to violations of the general requirement that contractors submit accurate cost or pricing data were sufficient to encompass the claim that Sun had defectively priced its GSA Schedule. This finding is disturbing as it reflects a willingness to read relators’ complaints very liberally. This has potentially negative implications for Rule 9(b) motions (in which defendants seek to have FCA complaints dismissed for failing to plead fraud with particularity) as well as for statute of limitations analysis.

Second, the court rejected the Government’s assertion that the pre-2006 disclosures constituted “public disclosures” within the meaning of the FCA. Even though the disclosures notified the public that the Government was questioning the adequacy of the CSP data Sun had submitted, the court found that those disclosures did not provide notice that the Government considered Sun’s conduct to be fraudulent. Without such disclosure, the court held, there could not be a “public disclosure” for FCA purposes. This rule—that the public disclosure must specifically assert fraud—is yet another hurdle that, if more widely adopted, would make it harder for FCA defendants to obtain dismissals.

Third, and finally, the court found that, even if the Government had shown that the relators’ defective pricing allegation regarding Sun’s GSA Schedule was based upon a public disclosure, the relators in the case were “original sources.” The court based this conclusion on relators’ knowledge of “contracts between Accenture [relator Rille’s former employer] and Sun,” as well as their possession of “hundreds of thousands of pages of documents at the onset of their qui tam cases” regarding the alleged strategic alliances. This was an extremely low bar for the relators to clear in order to show themselves to be “original sources” regarding their defective pricing claim. And, under this rule, it could be difficult for future defendants to show that a relator was not an original source.

That the court went to such lengths to disagree with the Government itself regarding whether the public disclosure bar required dismissal of the relators’ defective pricing claim in the Sun case is a cautionary tale for future defendants seeking to rely on this tool.

Although the GAO report does not focus directly on the federal procurement system, the report’s title is an apt description of the current federal marketplace. Too many contracts for the same or similar services and products are reducing maximum efficiency and increasing total government and industry costs, costs that are ultimately borne by the taxpayer. At a time of significant budget challenges, reducing duplicative contracts will increase the efficiency and effectiveness of the procurement system saving money for government, industry and the taxpayer. GSA’s governmentwide contracting programs, including the Multiple Award Schedules (MAS), IT GWACs, fleet management services and credit card programs, among others, provide a foundation for addressing contract duplication.

GSA has a wonderful opportunity to leverage its acquisition portfolio to reduce duplication, overlap and fragmentation in the federal marketplace. The key will be the effectiveness of GSA’s contracting programs in bringing sound, cost effective solutions to customer agencies. GSA’s $40 billion and the VA’s $10 billion MAS programs are the lynchpin. They are the most successful commercial item contracting programs in government, period.

Yet, enormous potential still remains for both programs to provide greater value to customer agencies and increased opportunities to contractors. In particular, the lack of Other Direct Costs (ODCs) on MAS contracts unnecessarily restricts the ability of contractors in offering complete solutions in response to customer agency requirements. As a result, new duplicative contracts for commercial services (services that are already on MAS contracts) are created in order to provide customer agencies with complete solutions. Providing an accountable and efficient contract framework for the inclusion of ODCs on MAS contracts and orders is an essential tactical and strategic step in addressing contract duplication.

The MAS program is positioned to accomplish this step. First, the Administrator of GSA has the statutory authority for developing the policies and procedures governing the MAS program. Second, the Federal Acquisition Regulation (FAR) commercial item clauses provide an effective, efficient and accountable framework for including materials and ODCs on MAS contracts and orders. The Coalition has addressed ODCs in previous Friday Flashes.

The Office of Federal Procurement Policy (OFPP) could take another step in reducing contract duplication. Last fall, OFPP issued a governmentwide memorandum entitled “Development, Review and Approval of Business Cases for Certain Interagency and Agency-Specific Acquisitions.” The Coalition applauded the memorandum as a good first step. Among other things the memorandum directs agencies to develop a business case when an agency specific contract or BPA would create significant overlap between the scope of the proposed acquisition and the scope of existing contracts or agreements established under FSSI, SmartBUY or an existing GWAC. However, the memorandum does not require that a business case for a new agency specific contract address overlap with pre-existing MAS contracts. The omission misses a real opportunity to reduce contract duplication. If the services or products are available via MAS contracts, agencies should use them and if not, their business case analysis should address why not. Which leads back to ODCs—well you get the point.

This month the Coalition will be sending out a survey to its members seeking feedback on the costs associated with contract duplication as part of the development of a white paper. I hope you all will participate.

Finally, I would like to take this opportunity to welcome L-3 STRATIS as our newest Keystone member!