Friday Flash 1.13.17

FAR & Beyond:

Reengineering the VA MAS Program to Deliver Best Value for Veterans. 

This week, President-elect Donald Trump raised questions regarding the federal government’s bidding process for pharmaceuticals.  The Presidential-elect’s questions lead the Coalition to remind the procurement community of the critical issue driving unnecessary costs and other inefficiencies in the government’s purchase of  products, including pharmaceuticals, and services: notwithstanding the statutory requirement to utilize commercial terms and conditions to the maximum extent practicable, the acquisition system has devolved into a process-laden, “other-than-commercial” environment that increases costs, limits competition, and raises barriers to entry for commercial firms.  As currently structured, the VA Multiple Award Schedule Program is such an environment.

The VA MAS program accounts for $14 billion in annual purchases, of which, pharmaceuticals account for $11 billion.  As currently structured, the VA MAS program operates under outdated pricing policies (from the 1980’s), a significant number of non-commercial terms and conditions, and burdensome evaluation and award processes.  As a result, it typically takes up to three years to award a new VA MAS contract and up to a year to modify a pre-existing contract.  The result is limited access to new medical technologies/capabilities, increased costs, and reduced competition.  It does not have to be this way.

For their part, Coalition healthcare members have been ready to help the VA reengineer the program to deliver cost effective, best-value medical support for veterans.  To that end, on July 1, 2016, the Coalition submitted to VA a white paper assessing the current pricing policies and negotiation practices, and it recommended process improvements to create a more commercial-like model to reduce costs and provide timely access to medical products, services, and solutions, including pharmaceuticals.  On September 6, 2016, those Coalition healthcare members followed up with a set of “quick-fixes” for the program.  At this point, however, the VA has not moved forward to address the outdated pricing framework and revitalize the VA MAS program.

The VA MAS program has great potential as a cost-effective method of providing pharmaceuticals, as well other medical products and services critically needed by our nation’s veterans.  To acquire best value, pharmaceuticals and other commercial medical products and services for our veterans, the VA, consistent with the Federal Acquisition Streamlining Act (FASA), must utilize, to the maximum extent practicable, commercial terms, conditions, and practices.

In light of the foregoing, the main culprit is the process and not a particular industry sector.  As in the past, Coalition members stand ready to work with the VA, and the government generally, to revitalize commercial item contracting through the VA MAS program and bring best value medical support to our veterans.

 

Cybersecurity Recommendations for the Next Administration

Last week, the Center for Strategic & International Studies (CSIS) published a report titled, “From Awareness to Action: A Cybersecurity Agenda for the 45th President,” which provides the incoming Administration with more than 20 recommendations regarding how they can formulate an effective and efficient cybersecurity plan. Building off of their 2008 report, CSIS recommendations address specific policies, organizational changes, and resources that the new Administration should utilize in order to ensure the stability and security of the nation’s digital environment.

CSIS’ recommendations included, but were not limited to:

  • Taking a more assertive approach to fighting cyber crime
  • Increasing transparency for cyber incidents
  • Strengthening the Department of Homeland Security to ensure it has the capabilities it needs to effectively combat cyber crime
  • Increase the use of shared and cloud services

To read the full report, click here.

 

Administrator Roth on the Past Eight Years

denise roth flash pic

Last week, the Administrator of the General Services Administration (GSA), Denise Turner Roth, posted a blog reflecting on the past eight-years at GSA. Specifically, the blog examined the agency’s efforts, such as launching the Acquisition Gateway,that it has undertaken to enhance its abilities as an innovative, active, and adaptable agency. Moving forward, Administrator Turner Roth believes that GSA will remain committed to similar efforts that seek to deliver best value for its customer agencies and the American taxpayer.

 

Mary Davie on the New ITC

Last Thursday, the Assistant Commissioner of the Federal Acquisition Service (FAS), Mary Davie, published a blog outlining the new capabilities of the Information Technology Category (ITC), previously known as the Integrated Technology Services (ITS). The name change is part of an effort to align the General Services Administration around the Category Management initiative and enhance its services for customer agencies.

The ITC will include four new divisions which will provide additional support to agencies and contractors:

  • Customer Engagement,
  • Supplier Management and Compliance,
  • Innovation, and
  • Acquisition and Category Management Support.

 

OFPP Releases Third Myth-Busting Memo on Effective Debriefings

In an effort to improve industry communications, of the Office of Federal Procurement Policy (OFPP) has released a third myth-busting memo on Government-Industry Communications. The first myth-busting memo was issued by then-OFPP Administrator Dan Gordon in February 2011 to address misconceptions about vendor communication from the perspective of the Government. The second myth-busting memo was issued by acting OFPP Administrator Lesley Field in May 2012 to address misconceptions about vendor communication from the perspective of Industry.

The third memo, which was issued Thursday, January 5, focuses on the debriefing process. It highlights best practices for debriefing currently used by the Department of Homeland Security, National Aeronautics and Space Administration, Department of Defense, and Department of the Treasury. The following is a chart from the memo describing common misconceptions about the debriefing process.

Misconception Fact
“Companies do not really use the information provided in a debriefing to improve their work” Industry has indicated that offerors are less likely to protest when they understand their weaknesses and have clarity on the source selection outcome.10 Industry has also stressed the value derived from understanding the government’s perspective on the proposal’s strengths and weaknesses and the relevance of this information to future business decisions and future proposals.
“Debriefings always lead to protests” An effective debriefing process can greatly reduce the frequency of protests, as protests are often driven by a desire to obtain additional information – information that should otherwise be available via a proper debriefing. According to data in the Government Accountability Office’s (GAO) Bid Protest Annual Report to Congress, the most common reasons why unsuccessful offerors file protests is related to issues with the evaluation criteria in the solicitation. 12 Although offerors have access to the evaluation criteria, they often lack substantive insight into how the source selection officials assessed the proposal’s strengths and weaknesses. Unsuccessful offerors are able to accept unfavorable findings in a debriefing if they perceive that the government has acted with fairness, consistency, objectivity, and in accordance with evaluation criteria described in the solicitation. In some cases, the government’s ability to establish this credibility and rapport may be weakened if the offeror’s perceptions from earlier experiences with the agency are poor – which is another reason for the need of improved debriefings across the government. As a note, higher-dollar procurements that require significant up front proposal development costs and offer greater economic benefits if won may be more likely to be challenged despite the quality of the debriefing.
“Debriefings are unpredictable and there is no way for government personnel to prepare.” A successful debriefing, whether oral or in writing, requires attentive preparation that can be planned with the aid of relevant subject matter experts and can vary with the complexity and the value of the procurement. While an agency may not be able to fully predict a vendor’s exact motivations for requesting a debriefing, there are a number of common-sense assumptions that can be made, such as the likelihood that the unsuccessful offerors seek context to better understand why the proposal was not selected and to gain feedback to strengthen their position in the future. A well-prepared and clearly-organized debriefing will gain the confidence of the unsuccessful offeror by demonstrating that the government’s selection was merit based, rational, and reasonable. Prior to holding the debriefing, all government personnel attending the debriefing should be informed about the overall process and be made aware of the agenda.

 

FAR 15.505(c)-(d) and 15.506(b)-(c) discuss the authority of the contracting officer in determining the best method for the debriefing. The contracting officer may consider having the technical and program personnel attend the debriefing. The contracting officer should prepare a detailed agenda and outline of information to be presented, gather all of the debriefing materials, draft an opening and closing statement, and confirm that all participants, including those who are new to the debriefing process, are comfortable with the information being presented.

“Contracting officials should provide minimal feedback for procurements conducted under the Federal Supply Schedules or when using simplified acquisition procedures because offerors who participate in acquisitions conducted using these tools understand that agencies are only required to give those offerors a brief explanation for the basis of the award decision.” Providing meaningful debriefings can improve the government’s ability to gain better value from acquisitions conducted using simplified acquisition procedures or through the Federal Supply Schedules. Use of a simplified process does not mean that an offeror can more easily infer the reason for non-selection. Although the risk of protest is lower with smaller dollar acquisitions, benefits such as helping vendors understand how to make their offers more competitive and instilling confidence to participate in future actions can be especially valuable given that small businesses are more likely to bid on these contract actions. FAR Parts 8.405-2(d) and 13.106-3(d) require agencies to provide offerors who request information on awards based on factors other than price alone only with brief explanations of the basis for the award decision. However, this does not preclude agencies from providing offerors with similar or the same type of information agencies would otherwise provide to offerors pursuant to procurements conducted under FAR Part 15. The government’s explanation of why the offeror was unsuccessful may be the only value the offeror receives for its participation and may help mitigate the risk of protest.
“When an offeror brings an attorney to the debrief that signals that the offeror will protest, therefore, contracting officials should limit the debrief discussion.” A vendor’s decision to bring an attorney to the debriefing does not necessarily signal a heightened potential for a protest or potential of a difficult conversation, especially if the agency is prepared to give an informative and well planned debriefing. Vendors have various internal policies and procedures that may require that an attorney always participate in meetings with government officials. As an assurance and as precaution, many agencies ensure that government legal counsel is made aware of and involved in debriefing preparation and the actual debriefing as best determined by the agency. Agencies’ use of and consultation with legal counsel is encouraged as a best practice as it helps facilitate a meaningful debriefing.
“To avoid any issues being raised by the other offerors, the government should disclose to the debriefed offeror only its proposal ratings and that it was not selected as the winning proposal – the government should avoid engaging in further discussions or follow-up questions during the debrief.” The debriefing is meant to provide a thorough explanation of the basis for the award and should comply with the minimum requirements in accordance with FAR 15.506(a)(1), including an explanation of deficiencies and strengths of offeror proposal; ratings of debriefed offeror’s proposal and successful offeror’s proposal; past performance ratings of the offeror; overall general ranking of proposals when any ranking was developed by the agency during the source selection; and reasonable responses to relevant questions.

 

A debriefing cannot provide a page-by-page analysis of the offeror’s proposal; a comprehensive point-by-point comparison of the unsuccessful offeror’s and the successful offeror’s proposals or a side by side, detailed, rating comparison among the offerors; or a debate on the government’s award decision – such disclosures are prohibited per FAR 15.506(e). However, by explaining the deficiencies in an unsuccessful offeror’s proposal, the unsuccessful offeror may avoid repeating the same issues in future proposals. In turn, this may broaden the future field of the competition where the Federal government can obtain better, more responsive offers.

 

As explained above, successful debriefings instill confidence in the unsuccessful offerors that the government treated all offerors fairly and assure them that the government evaluated all proposals in accordance with the solicitation and applicable laws and regulations.

“The government should not spend time debriefing the winning offeror – this is not valuable to either side.” An effective debriefing can provide short term and long term benefits for both contracting officials and the successful and unsuccessful offerors. FAR 15.506 allows for post-award debriefings for any requesting offeror, including the winning offeror. During a debriefing, contracting officials have the opportunity to received feedback from the offeror on the solicitation and the source selection process. Industry continues to emphasize the important value of debriefings and the fact that offerors are able to identify areas of improvement and responsiveness in proposals and can adjust future proposals to more clearly state how a potential proposal meets the government’s needs.
“All debriefings should be completed in writing.” Debriefings may be completed orally, in writing, or by any other methods acceptable to the contracting officer. While there is no specific requirement on the manner in which a debriefing should be completed, both agencies and industry have expressed a preference for in-person debriefings. In-person debriefings allow for an open, flexible space where the government and offeror are able to communicate in a productive manner and foster a positive rapport. If financially prohibitive for the offeror to attend a debriefing in person, the contracting officer may consider a phone teleconference, a video teleconference, or a written response. Altogether, the preferences of the offeror should be afforded due consideration, however, the contracting officer maintains and makes the final decision as to the location and methodology for the debriefing.

 

Defense Innovation Board Approves Recommendations

On Monday, the Defense Innovation Advisory Board approved eleven recommendations for the Department of Defense (DoD) to improve its technology, culture, operations, and processes. The Board was established last year by Defense Secretary Ash Carter in order to ensure improve the innovation of DOD and help maintain military’s technological edge.

The Board’s members include Eric Schmidt, chairman of Alphabet (Google’s parent company); Reid Hoffman, co-founder of LinkedIn; Jeff Bezos, founder, and chief executive of Amazon; Harvard’s Robert Walmsley University Professor Cass Sunstein; and well-known astrophysicist and cosmologist, Neil deGrasse Tyson.

The Board’s recommendations include:

  • Appoint a chief innovation officer and build innovation capacity in the workforce;
  • Embed computer science as a core competency of the department through recruiting and training;
  • Embrace a culture of experimentation;
  • Assess cybersecurity vulnerabilities of advanced weapons;
  • Catalyze innovations in artificial intelligence and machine learning;
  • Expand use of available acquisition waivers and exemptions;
  • Increase investment in new approaches to innovation;
  • Improve DoD access to code;
  • Establish software development teams at each major command;
  • Make computing and bandwidth abundant;
  • Reward bureaucracy busting; and
  • Lower barriers to innovation.

 

GSA Enterprise Infrastructure Solutions RFI

Earlier this week, the General Services Administration (GSA) issued a Request for Information (RFI) seeking feedback on the Government’s proposed plans for transitioning full-service telecommunications customers from expiring regional local service contracts to the Enterprise Infrastructure Solutions (EIS) contracts. In particular, GSA is seeking feedback from industry stakeholders regarding the Government’s proposed process for selecting contracts to the EIS vehicle and what provisions would be required to address gaps in coverage.

Comments on the RFI are due by February 27, 2017.

 

This Week on “Off the Shelf”: A Recap of the 2016 Presidential Election

tom davisThis week on “Off the Shelf”, Tom Davis, Director of Federal Government Affairs for Deloitte and former congressman from Virginia’s 11th District, analyzes the results of the 2016 presidential election: What happened? Why did it happen?  Where do the political parties go from here?

To listen to the show, click here.

 

OASIS Small Business On-Ramp Extension

The General Services Administration (GSA) has extended the on-ramp for Pool 2 deadline for OASIS Small Business to Thursday, January 26, 2017. Originally, GSA intended to award 40 contractors in Pool 2 of the OASIS Small Business On-Ramp. To date, however, only 9 such contract awards have been made. The scope of Pool 2 includes: Offices of Certified Public Accountants, Tax Preparation Services, Payroll Services, Other Accounting Services, and Research and Development in the Social Sciences and Humanities.

Click here to read the notice.

 

Will Trump Make Acquisition Great Again?

Former Office of Federal Procurement Policy (OFPP) Administrator, Dr. Steven Kelman has written a blog on the future of the Federal Market under the Trump Administration, which has been re-published below. Dr. Kelman is the Weatherhead Professor of Public Management at the Harvard Kennedy School, and in November he was presented with the Common Sense in Government Procurement Award, the Coalition’s highest honor.

Just after the election, I wrote a blog post asking whether President-elect Donald Trump was likely to have a management agenda at all. My concern was based on the observation that most in the traditional Republican management community had not supported Trump and thus had not produced the campaign policy papers proposing any government management agenda, the way previous Democrats and Republicans had.

The FCW.com report last week that two respected IT veterans and former feds, Casey Coleman and Karen Evans, would serve on the so-called landing teams for the General Services Administration and Office of Management and Budget respectively, somewhat alleviates those concerns. But the exact role of these teams for Trump, and particularly whether participation might be a signal of whether a job was in the offing, has been somewhat unclear.

However, at this point the question of whether Trump’s administration will have a formal management agenda – a document with policy positions and priorities — has been overshadowed by the actions of the president-elect himself, which have given procurement policy a visibility unparalleled, I think, in U.S. public management history.

In my last blog post, I noted that Trump already had been involved in two high-profile procurement issues: his contract for the Trump-renovated Old Post Office Building hotel (which my friends Steve Schooner and Dan Gordon have loudly advocating cancelling on the grounds that when Trump assumes office the contract will violate procurement regulations); and his pressure on Carrier to cancel plans to outsource jobs to Mexico (which may have involved suggestions, also contrary to procurement regulations, that Carrier’s parent UTC could lose military contracts in retaliation for moving the jobs).

Then, the day after that post was published, Trump inserted himself into yet another acquisition issue – the military’s contract with Boeing for development and production of the next generation Air Force One. He tweeted that Boeing’s “costs are out of control, more than $4 billion,” adding the admonition, “Cancel order!”

There was a fair amount of brouhaha over this tweet. Some noted that it came shortly after a statement by Boeing’s CEO criticizing Trump’s views on trade, which could be harmful to Boeing because of the company’s massive exports to China. Trump also was accused of bullying.

The initial round of reactions also suggested that the $4 billion price tag was taken out of thin air, noting that currently the only Boeing contract for a new Air Force One is for $170 million to develop requirements for the contract. Further examination, though, showed there were indeed Air Force documents that estimate eventual total costs at around $4 billion, though most of those costs were for special features and modifications that made the plane dramatically different from an ordinary commercial 747. In all, Politifact rated Trump’s statement as “half true.”

But what really caught my eye was an article in The Wall Street Journal the next day where Trump was quoted as saying he would “personally negotiate the Air Force One price with Boeing.” This statement didn’t get nearly the attention of the original tweet. In a post on the Government Contracts at GW Law Facebook page, Professor Schooner wrote he was “speechless” over Trump’s statement. I assume he meant that as a criticism, but I will confess my reaction was much more positive.

To be sure, we don’t really know whether plane is overpriced in the first place. And clearly, the president of the United States has no time to become involved in procurement contract negotiations very often. But unlike the suggestion that the military might cancel a weapons contract with UTC if the firm moved Carrier jobs to Mexico, there is nothing illegal about the president negotiating with a contractor about their prices. Unorthodox yes, inappropriate no. The argument that it’s never been done this way before is no more convincing than when used to dump on a change effort in any organization.

Indeed, for the president of the United States to send a strong signal to contractors that he wants to be aggressive on prices the government pay is a plus, not a minus. As one commentator on the Facebook page argued, “This is good. Someone has to set an example and if no one is willing to take action let the president drive down costs!”

Beyond that, this transition is bringing unprecedented attention to government acquisition. As another Facebook commenter wrote, “I am glad that he is bringing needed attention to the contracts and acquisition field. No other president will be able to do this. Look at the discussions, interest and focus on our field now.” Trump’s interest in dealmaking makes him a natural for interest in government contracting, which is of course in significant measure about that very topic, and it makes the topic a natural for getting more attention from the media and the public.

It would not be a bad thing if this attention encouraged some contracting officials to appreciate better the importance of their jobs. Nor would it be bad if it encouraged some young people starting their careers to think it is cool to work negotiating on behalf of taxpayers.

P.S. Monday morning, as this blog was coming out, Trump tweeted on the largest weapon system currently being developed, the F-35 Joint Strike Fighter. “The F-35 program and cost is out of control,” he wrote. Billions of dollars can and will be saved on military (and other) purchases after January 20th.”

This new tweet underlines all the messages in my blog post. Trump is paying attention to contracting issues, and I do not think this is a bad thing at all. Here’s a new hashtag for tweets on Trump and procurement: #theprocurementpresident.”

 

Legal Corner

Supreme Court Refuses To Require Sanctions for Breach of the Seal Requirement of the False Claims Act

In August, on behalf of the Coalition, Mayer Brown LLP filed an amicus brief in State Farm Fire and Casualty Co. v. United States ex rel. Rigsby.  This is an important case for government contractors and – in the Coalition’s view – that the industry’s view was presented to the Court. Below is an analysis of the Supreme Court’s decision, which was released earlier this week.

Supreme Court Refuses To Require Sanctions for Breach of the Seal Requirement of the False Claims Act

By Roger V. Abbott

On December 6, 2016, the Supreme Court ruled that the False Claims Act (“FCA”) does not require the dismissal of lawsuits brought by relators who violate the requirement that information regarding the FCA complaint (and alleged fraud) not be disclosed to anyone (other than the district court and Department of Justice) and remain “under seal.” In State Farm Fire & Casualty Co. v. United States ex rel. Rigsby , the Court held that district courts retain discretion to fashion an appropriate remedy based on the facts of the case.

The FCA imposes liability on anyone who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.” Notably, in order to encourage citizens to ferret out fraud, section 3730(b) of the FCA authorizes private citizens (or “relators”) to bring civil actions on behalf of the government, and retain a portion of any recovery. In doing so, however, the FCA imposes certain requirements on relators. The State Farm case focused on the “seal” requirement, which requires that complaints filed by relators “shall be filed in camera, shall remain under seal for at least 60 days, and shall not be served on the defendant until the court so orders.”

In State Farm, the Supreme Court addressed an important question for the government contract community: “What standard governs the decision whether to dismiss a relator’s claim for violation of the FCA’s seal requirement, 31 U.S.C. § 3730(b)(2)?” State Farm argued that respondent’s former counsel had, on multiple occasions, willfully violated the seal by leaking embarrassing stories to the press about fraud allegations and by revealing information about the case to a congressman, who publicly criticized State Farm. State Farm asked the Court to reverse the Fifth Circuit, which had not required the district court to dismiss the case for violation of the seal.

At the Supreme Court, State Farm relied on a Sixth Circuit precedent and argued that the statute’s text (“shall be filed in camera . . . shall remain under seal”) and history require a per se rule that any violation of the seal mandates dismissal. In the alternative, State Farm asked Court to adopt the balancing test used by the Second Circuit, which considers the interests of the government as well as defendants. In contrast, the Ninth Circuit balancing test, which the Fifth circuit had adopted in this case, only weighed the interests of the government.

The Court held that the “plain language” of the FCA does not require mandatory dismissal. The Court reasoned that notwithstanding the use of the word “shall,” the FCA did not include a specific remedy for violation of the seal, and that “[i]n the absence of congressional guidance regarding a remedy . . . the sanction for breach is not loss of all later powers to act.” The Court also held that the “structure” of the FCA indicated that the sanction for breach of the seal requirement does not mandate dismissal. The Court noted that other provisions of the FCA, such as the public disclosure bar, included a specific remedy of dismissal, and concluded that Congress “knew how to draft the kind of statutory language that petitioner seeks to read into section § 3730(b)(2).” Finally, the Court refused to impose a particular nationwide standard, holding that “whether dismissal is appropriate should be left to the sound discretion of the district court.”

The Court, in its concluding remarks, sought to address the concerns expressed by State Farm and the amici curiae, that failure to require mandatory dismissal for violation of the seal would encourage relators to harass defendants into settling claims by leaking embarrassing stories to the news media. The Court noted that “sanction remains a possible form of relief.” Nonetheless, given the extreme set of facts and strong evidence of bad faith in this case, this reassurance is unlikely to provide much comfort for government contractors.

Attorneys at Mayer Brown submitted an amicus brief in this case on behalf of the Coalition for Government Procurement, in support of petitioner.

TAGS: [False Claims Act & Civil Fraud]

 

2017 All Member Meeting with Former Congressman Tom Davis

The Coalition will be kicking off the New Year with a series of meetings and webinars revolving around the presidential transition.  The first of these events will be taking place on Tuesday, January 24th from 8:00am – 11:00am in Tysons Corner and will include the following speakers:

  • Tom Davis discussing The Impact of the Election on the Federal Market
  • Jon Etherton discussing Legislative Outlook for the 115th Congress
  • Ray Bjorklund discussing What to Expect in the 2018 Budget

This will be a complimentary event for all Coalition members, but registration is required for all attendees! If you would like to attend the meeting and you are a member, please register here.