On July 2, the General Services Administration (GSA) announced the cancellation of the Alliant 2 Small Business solicitation. The cancellation represents a major change in the federal market for small business technology firms, eliminating a channel that accounted for over $8 billion in spend over the life of the contract by customer agencies contracting with those firms. The original Alliant SB contracts were awarded back in 2009 and expired in 2019. Alliant SB was a “Best-in-Class” contract, as designated by the Office of Management and Budget.
With the cancellation of the follow-on procurement, there is a significant, potentially long-term, gap in federal market opportunities for small IT services firms. Although GSA’s announcement highlighted plans for a new, enhanced small business GWAC program, there little insight regarding GSA’s implantation plan or timeline. GSA did indicate that “following additional market research with customer agencies[,] the future GWAC program strategy will include new solicitations” for pools of small businesses across multiple socio-economic categories. GSA did indicate that the follow-on 8(a) STARS procurement would be part of the overall strategy and, as promised, earlier this week GSA released the 8(a) STARS III request for proposals (RFP).
Notwithstanding the release the 8(a) STARS III RFP, the cancellation of Alliant 2 SB and the corresponding uncertainty surrounding the future of GSA’s small business GWAC portfolio already is roiling the market. At this critical time, it is incumbent on GSA to reach out publicly to customer agencies and the IT small business community and set forth the rationale (e.g. changed requirements) that prompted cancelling the Alliant 2 SB solicitation. More importantly, GSA need to lay out, publicly and proactively, the way forward in managing its portfolio of GWACs and how it plans on replacing Alliant 2 SB. Details matter for businesses investing in the federal market. The sooner GSA presents its plan, the sooner industry and customer agencies can adapt/adjust to the new dynamic. The Coalition stands ready to engage with GSA and all stakeholders on the future of small business interagency contracting opportunities.
In this regard, the Coalition again highlights that chief among the strategic opportunities for small businesses is the unpriced schedules for services. Unpriced schedules will promote/enhance opportunities for small businesses immediately. In addition, unpriced schedules will eliminate costly barriers to entry in the negotiation and award of MAS contracts, enhancing access to small business innovation from the commercial IT market. Unpriced schedules also will reduce burdensome contract administrative and compliance costs for small businesses, allowing them to focus resources on task order competition and performance, where it really counts.
Simply put, unpriced schedules will be a great multiplier in effectively bringing competition, innovation, and small business capability from the commercial market to customer agencies. As such, they will be a win for small businesses, customer agencies, and GSA, especially considering that GSA has a strong small business MAS program from which to launch the promotion of additional opportunities for small business. For example, in FY19, IT Schedule 70 accounted for over $5.5 billion (over 35% of total IT Schedule 70 dollars) in customer agency purchases from small businesses, which is more than all of GSA’s small business GWACs combined. Indeed, IT Schedule 70 remains the unsung hero of IT small business spending.
GSA has the organic tools to put this effort in place quickly, as it has exclusive statutory authority for the MAS program, the concomitant regulatory framework and flexibility to implement the unpriced schedules via the General Services Acquisition Regulation (GSAR), and the use/issuance of special ordering procedures. The adoption of unpriced schedules for hourly rate services, combined with pricing reform for cloud services, would be a powerful, future forward statement in providing access to cutting edge technologies/capabilities from the commercial market. Moreover, there is precedent for such an approach. Professional IT services would not be on schedule but for GSA exercising its exclusive program authority to add hourly rate services to schedule contracts and establishing special ordering procedures for customer agency task order competitions.
As final note, it should be noted that the cancellation of Alliant 2 SB also opens the door for National Institute for Health’s (NIH’s) CIO-SP4, the proposed follow-on to the current CIO-SP3 GWAC. Significantly, as currently structured, CIO-SP4 will be a single contract vehicle including both small and other than small businesses. To maximize opportunities for small businesses and increase efficient and effective access for customer agencies, CIO-SP4 should move to split the proposed procurement into separate contract vehicles, one small business and one other than small businesses. This structure mirrors the successful approach taken by the original Alliant SB contract vehicle. Coalition members, small and other than small, look forward to engaging with NIH on this critical market entry opportunity, and we remain committed to assisting GSA with its efforts to implement the unpriced schedule.
On June 26, the General Services Administration (GSA) announced contract awards to three e-marketplace platform providers as part of implementation efforts for the Commercial Platforms initiative and Section 846. Contracts were awarded to Amazon Business, Fisher Scientific, and Overstock.com. GSA’s intent is to test the use of commercial e-commerce portals for purchases below the micro-purchase threshold using a proof-of-concept for up to a three-year period.
These contracts and platforms will be available to federal agencies as part of an effort to modernize the purchasing experience for them. The following agencies are participating in the proof of concept with a small subset of their purchase card holders:
- Department of Veterans Affairs
- Department of Justice
- Department of Labor
- General Services Administration
- Environmental Protection Agency
According to GSA, each agency is structuring their participation differently with some agencies identifying select card holders, while others are identifying a specific office and/or bureau to participate. GSA anticipates the platforms will be available for use in the next 30 days.
The next webinar in our Summer Lunch and Learn Series will be with Greg Madden and Hannah Zerphey from Orlaithe Consulting on Thursday, July 16 where they will be discussing Obtaining and Administering a Federal Supply Schedule Contract Vehicle with VA. Obtaining and administering a Federal Supply Schedule contract vehicle with VA can be challenging, especially for small business distributors that do not have significant commercial sales of their own. This webinar will include:
- What is required to prepare and submit a Federal Supply Schedule contract proposal package that meets the associated statutory, regulatory, and contractual requirements;
- Common pitfalls and best practices during the proposal review and negotiation stages, particularly in connection with distributors that have insignificant commercial sales in comparison to their sales to the federal government;
- The ongoing requirements and deliverables that contractors must adhere to or provide during the term of the contract; and
- How a VA FSS contract fits into the wide world of federal healthcare procurement, including VA’s MSPV Program and national contracts as well as DOD’s DAPA and eCAT programs.
Greg and Hannah will provide valuable information for businesses that sell primarily or exclusively to the federal government; company contract administrators; companies that sell healthcare goods and services to the government without an FSS contract in place; and companies with an FSS contract that want to understand how to leverage their FSS contract to expand sales beyond the VA.
Thank you to Lorraine Campos, Brian McLaughlin, and Lyndsay Gorton from Crowell & Moring LLP for their excellent webinar before the holiday weekend on A Discussion on the Recent Report – Top Challenges Facing Federal Agencies COVID-19 Emergency Relief and Response Efforts – and how Contractors Can Prepare for Inspector General Audits and Investigations.
This week we received very timely and important information from Allison Pugsley and Ryan Harrigan from Hogan Lovells on VA Pharmaceutical Pricing Issues. Thank you for everyone’s participation!
Absent Legislative Action, Section 889 (a)(1)(B) to be Effective on August 13
Section 889(a)(1)(B) of National Defense Authorization Act Fiscal Year 2019 (NDAA FY19) goes into effect on August 13, 2020. As Defense One reports there have been requests for a six-month extension for compliance with the law, but lawmakers appear to want implementation to occur on time. Ellen Lord, the undersecretary of Defense for Acquisition and Sustainment, stated in her congressional testimony that the immediate enforcement of Section 889 could have “unintended consequences for the defense industrial base.” On July 9, the Federal Acquisition Regulation (FAR) rule to include Section 889(a)(1)(B) has progressed from proposed rule to interim final rule and has changed to a major rule.
GSA Announces 2020 AI and Machine Learning EULA Challenge
The General Services Administration (GSA) announced its Artificial Intelligence and Machine Learning End-User License Agreement Challenge for 2020. The goal of this challenge is to develop an artificial intelligence (AI) or machine learning (ML) solution that reviews end-user license agreements (EULA) for terms and conditions that are unacceptable to the government. An EULA details the rights and restrictions that apply to the use of software or services. On average, it takes 7-14 days to review an EULA. GSA is looking for an AI or ML solution that will improve this manual process and decrease the review time. The solution will include a user interface that GSA will use to process documents and identify the unacceptable clauses. Registration opened on July 6, and solutions must be submitted before August 20. For more information on the challenge, click here.
Federal News Network reported that the House is considering legislation that would considerably reduce “use it or lose it” spending by giving the Department of Defense (DoD) increased flexibility in its operation and maintenance accounts. Rep. Mac Thornberry (R-TX), ranking member on the House Armed Services Committee, introduced a measure last week that would allow DoD to roll over 50 percent of any unspent operation and maintenance (O&M) funding to the next fiscal year. This could limit the annual end of the fiscal year rush. Rep. Thornberry attempted to add this provision to the Committee’s version of the annual National Defense Authorization Act (NDAA) during its markup session. However, a dispute with the House Appropriations Committee prevented it. Thornberry still intends to add this provision once the NDAA reaches the House floor.
DoD advocated for an identical measure during testimony before the House Budget Committee in March. There is evidence from other agencies that the ability to carry over funds does affect end-of-year spending. Currently, the Department of Justice has the authority to do this for its IT spending and has shown significantly less IT spending (3.4%) during the last week of the fiscal year compared to governmentwide IT spending (12.1%). Armed Services Committee Chairman Rep. Adam Smith (D-Wash.) indicated that he would support this measure if it comes up as an amendment before the full House.
On July 2, the General Services Administration (GSA) announced plans to revamp the Small Business Governmentwide Acquisition Contracts (GWAC) programs. In the announcement, GSA stated that the Alliant 2 Small Business contract will be cancelled. There are plans to enhance the Small Business GWAC program to better address the changing needs of agencies and match the capabilities of small businesses. The new GWAC Small Business program will have pools of qualified small businesses for the multiple socioeconomic categories.
GSA also released the 8(a) STARS III GWAC request for proposal on July 6. GSA announced that this next generation contract will include artificial intelligence, robotic process automation, virtual reality, and expand performance outside of the continental United States (OCONUS). 8(a) STARS III will build on STARS II and incorporate lessons learned from STARS II. The STARS II contract ceiling will be $50 billion. Industry questions about the 8(a) STARS III GWAC can be sent to S3@gsa.gov.
Deadline to Update GSA Advantage Catalogs Oct 1
The General Services Administration (GSA) posted a notice on Interact reminding industry partners to complete the process of fully migrating contracts into the consolidated Schedule. Contractors must update their GSA Advantage catalogs to match the new MAS by October 1, 2020. If a catalog is not updated to the new consolidated MAS structure by October 31, 2020, then that catalog will be removed from GSA Advantage and other GSA eTools. GSA is hosting a Mass Mod Training Session to learn more about Phase 2 and GSA Advantage catalog requirements on July 23rd, 2020 (2:00 – 3:00 PM ET). Register here.
GAO Guidance for Federal Workers Returning to the Workplace
The Government Accountability Office (GAO) released a report stating some key considerations for agencies reentering employees to the workplace. In determining which employees should reenter the workplace, agencies should consider which essential functions can be performed remotely, and the exposure risk level and local conditions. Agencies should ensure that telework practices are sufficient to continue essential operations of the agency. GAO completed this report to ensure the safety of federal employees, since agencies have the responsibility to provide an environment for its employees to complete their jobs safely and effectively. This report used the Census Bureau as an example of how to reenter employees to the workplace. The four takeaways from the report are:
- Taking a phased approach to restarting operations, such as resuming operations that require less physical interaction first
- Making operational changes to minimize face-to-face interactions
- Addressing worker safety concerns
- Communicating pandemic plans to ensure continued operations
For the full report, click here.
On July 1, the Department of Defense (DoD) announced the creation of a Contingency Corridor within the FedMall Marketplace, which will allow DoD small business contractors to exclusively purchase non-medical Personal Protective Equipment (PPE) and similar materials. Currently the corridor has over 200 items such as non-medical masks, hand sanitizer, temperature devices, disinfectant wipes and materials to support social distancing such as Plexiglass. Ordering will be completed with a contractor-authorized credit card. Purchases on FedMall are limited to $10,000.
The contractor registration form is included as Attachment 1 to the press release. In order to receive authorization to the corridor, the contractor must have a Common Access Card (CAC), Personal Identify Verification card, or another electronic certificate that uniquely verifies identify such as a Public Key Infrastructure certificate. If a contractor does not already have any of these items for authorization, the contactor may initiate one here. For more details, see the press release here.
Technology Modernization Gains Momentum on the Hill
Federal News Network reported that the House Oversight and Reform Subcommittee on Government Operations is holding two hearings on IT modernization this month, which indicates a revitalized interest in technology modernization by Congress. On June 3, Sen. Maggie Hassan (D-NH) wrote letters to ten agencies asking about their IT modernization strategies. These letters initiated a dialogue between agencies and Congress about sustaining IT modernization. Another sign of interest came when Senators Rob Portman (R-OH) and Hassan introduced the Modernization Centers of Excellence Program Act. The bill details the responsibilities of the Center of Excellence’s role and encourages agencies to use public cloud services to address data management, security, and customer service needs.
PPP Loan Data Released by SBA and Treasury Department
On July 6, the Small Business Administration (SBA) and Treasury Department released the Paycheck Protection Program (PPP) loan data. Lawmakers have asked for transparency with the PPP program, after an initial announcement that the loan data would not be released. Treasury Secretary, Steve Mnuchin, believes that the loan data, which provides the amount of each loan within certain ranges, gives the public an appropriate degree of transparency. The loan data disclosure covers all 4.9 million PPP loans that have been made to date.
Off the Shelf: The Business Implications of Section 889
This week on Off the Shelf, Jason Workmaster of Miller & Chevalier, provided an analysis of the potential compliance challenges and business implications with the impending deadline for implementation of Section 889, the so-called Huawei provision.
Workmaster shared his insights on the potential layers of due diligence work pursuant to Section K pursuant to Section 889.
Turning to other topics, Workmaster reflected on the COVID-19 impact on contractors along with the potential impact on Section 3610 which authorizes reimbursement of certain employee costs associated with COVID-19 stop work situations.
Finally, Workmaster provided best practices tips for audits, and in particular, highlighting the record keeping and compliance documentation associated with the Payroll Protection Program.
Click here to listen to the full program.
With the Presidential Election just months away, against the backdrop of a pandemic, and as the nation comes to grips with significant social concerns, one might be forgiven for not recalling a critical deadline looming before the contracting community. On August 13, 2020, Section 889(a)(1)(B) of the 2019 National Defense Authorization Act (NDAA) will become effective.
You may recall that Section 889 prohibits the Federal Government from obtaining or extending a contract to obtain “any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.” Covered equipment and services include telecommunication equipment produced by Huawei, ZTE Corporation, or a subsidiary/affiliate of either of these entities, as well as video surveillance and telecommunications equipment produced Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, Dahua Technology Company, or any of their subsidiaries/affiliates. The statute also allows for the Secretary of Defense, in consultation with the Director of National Intelligence or the Director of the FBI, to add to this list.
This law was put into place to prevent cyberattacks from foreign adversaries, particularly China, which pose risks for the U.S. government and industries. Subsection (a)(1)(A) of Section 889 became effective in August of 2019, at which time, implementing regulations were issued. Under that subsection, the government cannot procure or obtain products or services that use the prohibited technology as a substantial or essential component of any system, or as critical technology as part of any system. Under Subsection (a)(1)(B), the government cannot enter, renew, or extend a contract with a company that uses such prohibited technology or services. This subsection, along with its potential application, is quite broad, and, notwithstanding its significant implications, the community has yet to see any draft implementing regulations on which to comment and against which it might fashion a compliance regime.
There are signs that Congress has identified some implementation issues with respect to Subsection (a)(1)(B), and it may be trying to address them.
It should be recalled, however, that, notwithstanding any action Congress may take, the fact is that Subsection (a)(1)(B) will become effective on August 13, likely before the enactment of the pending NDAA. Thus, prudence dictates that contractors should prepare either for unequivocal compliance with the subsection or the submission of a waiver request to agencies where they have or anticipate doing business. Contractors anticipating the pursuit of a waiver should be in the process of complying with the detail-based waiver requirements under Subsection (d) of Section 889. In addition, they should be mindful that the waiver is capped at two-years.
In sum, the requirements of Section 889 are real and about to take their full effect. The goal of the law is to address the ever-growing risk of cyberattacks our nation faces from foreign adversaries, in particular, China, a goal with which we and our community agree. It is important that also stakeholders recognize its significance and, based on their organizational needs, act accordingly.
The Coalition will continue to track this issue and provide updates to members as the issue develops.
Healthcare Spotlight: House Panel Seeks to Delay Military Treatment Facility Plans
On June 22, Federal News Network reported that the House Armed Service Personnel Subcommittee wants to delay DoD’s plans to cut medical staff and military treatment facilities (MTFs) by one year. The Committee’s defense authorization language prohibits the realignment or reduction of military medical end strength and delays the movement of military family members and retirees from MTFs to the TRICARE network. If these provisions become law, then it would halt the Defense Department’s plan to cut almost 18,000 staff members and restructure up to 50 facilities. An aide for the House Armed Services Committee said that the provision was in part due to lawmakers’ concerns over information they have been provided on the transition. Also, the Committee wants to make sure that the right medical force structure is in place for the pandemic. The aide added that the Committee is not confident about the DoD’s analysis of the TRICARE network and its ability to treat beneficiaries in each MTF location.
The subcommittee is also looking at delaying Congress’ plan to consolidate most military medical institutions under the Defense Health Agency. While the transfer to DHA is set for 2022, the subcommittee’s markup delays the move until 2023. Earlier in the year, Army Secretary McCarthy said that before the transfer takes place, DHA should show that it can handle managing military hospitals.
Evaluation Factors for Multiple Award Contracts
The FAR Council has published a final rule which allows DoD, NASA, and the Coast Guard to award multiple award contracts for the same or similar services without considering price or cost as an evaluation factor for contract award. The final rule implements Section 825 of the 2017 National Defense Authorization Act (NDAA) and is effective August 3, 2020.
The final rule that implements Section 825 is similar to Section 876 of the 2019 NDAA, which allows civilian agencies to award multiple award contracts for services acquired on an hourly rate without considering price as an evaluation factor. According to the Unified Regulatory Agenda, the FAR Council is in the process of implementing Section 876 and plans to issue a notice of proposed rulemaking by September 2020.
Order Issued via Fax or Electronic Commerce
The FAR Council has published a final rule which updates FAR 52.216-18 Ordering to clarify when orders are issued. When using fax, an order is considered issued when the Government transmits the order to a contractor’s fax number. When using electronic commerce, the order is considered issued when the Government posts a copy of the order to a Government document access system or when the Government distributes the order via email to a contractor email address. The final rule is effective August 3, 2020.
VA Acquisition Dialogue with Phil Christy, July 17
Join the Healthcare Committee for a VA Acquisition Dialogue with Phil Christy, Deputy Executive Director of the VA’s Office of Acquisition Logistics and Construction. The virtual meeting is scheduled for July 17 at 8am EST. Topics for the discussion are the VA’s COVID-19 response, the medical supply chain and re-shoring manufacturing, the MSPV program, VA’s participation in GSA e-commerce proof of concept, and more. This will be a member only meeting. To receive the log-in information for the virtual meeting, members may RSVP to Michael Hanafin at MHanafin@thecgp.org.
Schedules Consolidation Update with Stephanie Shutt, July 21
Coalition members are invited to join an all member meeting with Stephanie Shutt, Director of the MAS Program Management Office, on July 21st at 10am EST. Stephanie will brief members on the latest on GSA’s Schedules Consolidation and Phase 3 which is scheduled to launch on August 1st. The meeting will also be a great opportunity for members to have GSA answer their Schedules Consolidation questions. Please submit your questions to Aubrey Woolley at firstname.lastname@example.org and we will be sure to share them with Stephanie in advance of the meeting. To RSVP and receive the log-in information, please contact Michael Hanafin at email@example.com.
IT/Services Committee Meeting with GSA’s Tiffany Hixson, July 23
The Coalition is pleased to announce that GSA’s Tiffany Hixson will be joining our next IT/Services Committee meeting on Thursday, July 23rd at 11am EST. Tiffany Hixson, Assistant Commissioner for the Office of Professional Services and Human Capital Categories, will brief members on the latest initiatives for the Professional Services Schedule and the new GSA Award Exploration Tool. Members interested in receiving the log-in information for this virtual meeting, please RSVP to Michael Hanafin at firstname.lastname@example.org.