Friday Flash 09.21.18

FAR & Beyond:

Under the Radar:  The Air Force’s e-Commerce “Pilot.”

Last year, this blog discussed the partnership relationship between the Department of Homeland Security/FEMA and Amazon Business.  The partnership created a centralized business account for FEMA purchase card ordering via the Amazon Business marketplace.  The blog highlighted some of the key legal, policy, and operational questions surrounding the partnership.  Earlier this year, the Air Force established an e-Commerce pilot with Amazon for use of the Amazon Business marketplace for purchases.  This week’s blog focuses on the Air Force pilot and the universality of the operational, legal and policy issues surrounding the federal government’s approach to e-Commerce.

As threshold matter, the Air Force pilot overlaps the Section 846 e-Commerce effort underway at GSA and OMB.  It is unclear whether the pilot addresses any of the key operational and policy issues Congress identified in Section 846 to be addressed by GSA and OMB through the Section 846 implementation process.  Those issues include, among other things, the following:

  • The applicability of, and compliance with, specific government requirements (g. Trade Agreements Act, the Buy American Act, and mandatory sources);
  • Small business preferences;
  • Cyber and supply chain risk;
  • Ownership and protection of the transactional data;
  • The prohibition on use of the transactional data by a solution provider for its own competitive purposes;
  • The impact on/operation with pre-existing contract programs; and
  • The identification of products suitable for purchase by the Federal Government via commercial e-Commerce platforms.

Currently, GSA and OMB are in the market research phase of Section 846 implementation.  The agencies are seeking feedback and comments on these issues from stakeholders across the procurement system.  GSA and OMB are to be commended for an open, transparent, and collaborative approach to Section 846 implementation.  It is important for the Air Force to take a similar approach to its e-Commerce initiatives.

The Air Force pilot, to some extent, has been “flying under the radar.”  Our understanding is that the pilot is based on an agreement between the Air Force and Amazon Business for the use of the Amazon Business marketplace for purchases below the Micro-Purchase Threshold (MPT) by six participating bases.  It is not clear whether the pilot addresses any of the operational, legal, and policy issues identified in Section 846. Indeed, the agreement itself raises a series of issues/questions:

Competition in Contracting Act (CICA):  Here, there appears to be a bargained-for exchange between the parties.  The Air Force has established Amazon as a formal channel with a distinct/different/evaluated status as an Air Force source of supply in exchange for the marketplace services and data.  Observers need to understand the nature of the transaction, in particular, the underlying authority for the agreement (i.e. whether it is subject to CICA), whether the agreement rises to the level of a contract, and the criteria used for selecting the pilot participant(s).

Compliance and Government Requirements:  The pilot limits covered Air Force purchases to below the MPT.  It is significant to note that with the MPT limit, the Air Force has chosen to create a new, formal supply channel where a host of government requirements, such as the Trade Agreements Act (TAA), Buy American Act, Berry Amendment, and small business preferences, do not apply.  This approach raises significant management and strategic risk questions.  For example, recognizing that TAA requirements do not apply to transactions below the MPT, it is unclear whether the Air Force has formalized a supply channel open to Chinese products at a time when supply chain risk associated with those and other products is being considered in multiple bills on Capitol Hill.

Cyber and Supply Chain Risk:  More generally, it is unclear whether there are any requirements or restrictions in place to address cyber and supply chain risk, such as a limitation on types or categories of products.

Data ownership and control:  Recognizing that data traversing the pilot platform belongs to the Government, it would be helpful to understand what protections of that data have been established under the pilot.  In this regard, it is noteworthy that Section 846 prohibits competitive use of the third-party supplier’s transaction data by an e-Commerce platform provider.  Controls on this data are important because information, like the business intelligence regarding Air Force purchasing patterns, is significant, and the absence of controls would yield a windfall to a marketplace provider at the expense of the taxpayer and potentially undermine competition to provide such solutions in the future.

Conflict of Interest:  There are potential organizational and other conflict of interest issues that could be attendant to this pilot, such as circumstances where the marketplace provider is also a competitive supplier.  See FAR 9.5.  Additionally, the pilot raises the potential for “pre-selection” of a source and compromising the imperative of full and open competition for future Air Force e-Commerce requirements.

Mandatory Source:  Mandatory source requirements, like AbilityOne, exist for government purchases, and thus, it would be helpful to understand how those source requirements are addressed.  By way of example, under GSA Schedule contracts and electronic systems, there is blocking to ensure that “essentially the same” commercial products are not offered where an AbilityOne item exists and is offered.

Pricing and Competition:  As noted in previous blogs, a recent study comparing prices between GSA Advantage and a commercial e-Commerce platform found that, for the top 60 selling items, GSA Advantage pricing was lower at least 80 percent of the time.  Is the Air Force conducting any similar studies and/or comparisons?  Moreover, the MPT limitation eliminates the ability of the Air Force to leverage requirements to seek competitive pricing and terms, which can be done through a host of multiple award IDIQ contracts across the Department and governmentwide.

It is interesting to note that the issues and concerns identified regarding the Air Force pilot are exactly the issues and concerns GSA and OMB are addressing with all stakeholders as part of the Section 846 initiative.  The Coalition has appreciated and looks forward to continuing the dialogue with GSA, OMB, and all stakeholders regarding the important role e-Commerce can play in delivering best value mission support to customer agencies.  In light of the foregoing, we encourage the Air Force to reach out to GSA and OMB and capitalize on their research and understanding of e-Commerce.

 

GSA Adding Contact Center SIN to Schedule 70

The General Services Administration (GSA) has announced that a new Special Item Number (SIN) will be added to Schedule 70 for Automated Contact Center Solutions (ACCS). The new SIN 132-20 will replace the existing USA Contact vehicle. GSA anticipates that the SIN will be open for vendors to add to their contract by October 1, 2018. By utilizing this new SIN, as opposed to establishing a new contract, GSA believes that it will be able to increase the availability of emerging technologies, as well as provide a smoother process for on and off-ramping. To read the draft SIN description and terms and conditions , click here. For additional information please contact Muneeb Khan at muneeb.khan@gsa.gov or Ellery Taylor at ellery.taylor@gsa.gov.

Labor Department Notifying Companies of Compliance Evaluations

On September 7, the Office of Federal Contract Compliance Programs (OFCCP) in the Department of Labor (DOL) provided notification to more than 400 companies that they have been selected to undergo a compliance evaluation related to their Affirmative Action Programs (AAP). Importantly, for contractors who received notification from the OFCCP, you must have your AAP ready for submission within 75-days of receipt of notification. In addition, OFCCP has indicated that, under select circumstances, contractors may receive a one-time, thirty-day extensions for supporting data contractors. For more information related to the extension, click here.

 

DPAP Renamed in DoD Acquisition Reorganization

Last week, the Department of Defense announced that it has renamed Defense Procurement and Acquisition Policy (DPAP) as Defense Pricing and Contracting (DPC). DoD provided that the name change, which is effective as of September 11, may be followed by additional changes. Specifically, the DPC office is currently evaluating its mission, function, and responsibility, and it will provide any additional changes at a later date.

DoD’s acquisition functions have been undergoing a significant reorganization this year. In January, Deputy Secretary Patrick Shanahan issued a memorandum which split the Office of Acquisition, Technology, & Logistics (AT&L) into the Office Acquisition and Sustainment (A&S) and the Office of Research and Engineering (R&E), and formally dissolved AT&L. Ellen Lord who had previously served as the Undersecretary of Defense for AT&L took over as the Undersecretary of Defense for A&S.

The memo instituted the following changes in establishing the new offices:

  • The workforce under the Assistant Secretaries of Defense for Acquisition; Energy, Installations, and Environment; Logistics and Material Readiness; and Nuclear, Chemical and Biological Defense Programs will be under the authority of the Undersecretary of Defense for A&S
  • The workforce under the Assistant Secretary of Defense for Research & Engineering will be under the authority of the Undersecretary of Defense for R&E
  • The following offices are placed within the Office of the Undersecretary of Defense for A&S: Acquisition Resources and Analysis; Administration; Defense Pricing; DPC; Human Capital Initiatives; International Cooperation; Joint Rapid Acquisition Cell; Manufacturing and Industrial Base Policy; Program Assessment and Root cause Analysis; Small Business Programs; Special Programs; Defense Contract Management Agency; Defense Logistics Agency; Defense Threat Reduction Agency; Office of Economic Adjustment; Defense Acquisition University
  • The following offices are placed within the Office of the Undersecretary of Defense for R&E: Strategic Capabilities Office, the Defense Innovation Unit, the Defense Advanced Research Projects Agency, Missile Defense Agency, DoD Test Resource Management Center, Microelectronics Activity, and Defense Technical Information Center.

 

Check out the Latest MAS Newsletter

General Services Administration (GSA) has published its Quarterly Multiple Award Schedules (MAS) Newsletter on GSA Interact.

The current issue provides an update on GSA’s efforts to address security vulnerabilities in its Vendor Support Center (VSC) application through multi-facto authentication, including information related to troubleshooting support for contractors. In addition, the newsletter discusses the differences between an Inspector General (IG) audit and an Industrial Operations Analyst (IOA) review, as summarized in the following chart:

To read the newsletter, click here.

Fall Healthcare Forum, EIP Dinner, and Training Conference

Fall Healthcare Forum – November 7th

Due to the overwhelming popularity of our Spring Healthcare Forum, we are adding another one this Fall!  Our Fall Healthcare Forum will take place on November 7th at the Fairview Park Marriott in Falls Church, VA. The Coalition will also be hosting its Excellence in Partnership Awards Dinner that evening as well, along with our Fall Training Conference the next day, all at the same venue.

The Healthcare Forum will begin with a keynote address from the Defense Health Agency, where we have invited the Director, Vice Admiral Raquel Bono.  The keynote will be followed by an update on the State of VA Acquisition and we have invited Karen Brazell, Principal Executive Director for Acquisition, Logistics and Construction, VA.

After a short break we will have two morning panel discussions.  The first will be a VA Acquisition Leadership Panel where we have already confirmed the following participants: Phil Christy, Acting Principal Executive Director, Office of Acquisition, Logistics and Construction, VA; Tammy Czarnecki, Assistant Deputy Undersecretary of Health for Administrative Operations, VA; and Ricky Lemmon, Acting Executive Director, Office of Acquisition and Logistics, VA.  The second will be a DHA Panel where we already have John Tenaglia, Head of Contracting, Defense Health Agency, confirmed.  Additionally, we are seeking participation from someone to discuss Health IT and someone from the Defense Health Agency Medical Logistics Division.

After a networking lunch, attendees will have the opportunity to engage in Business Intelligence Sessions, which provide an interactive, collaborative, and informative dialogue with Federal experts and leaders in procurement. You will be able to choose form the following sessions:

First Business Intelligence Session:

VA Pharma Session

  • Mike Valentino, Chief Consultant, Pharmacy Benefits Management Services (PBM), VA (Invited)
  • Tom Emmendorfer, Deputy Chief Consultant, PBM, VA (Invited)
  • Jennifer Zacher, Assistant Chief Consultant, PBM, VA (Invited)

MSPV Session

  • Dr. Jaime Friedel, Director of Procurement MSPV, VA (Invited)
  • Spencer Roberts, Director, Healthcare Commodities Program Office, Veterans Health Administration (Invited)
  • Brian Love, Contracting Officer, MSPV 2.0, VA (Confirmed)

Second Business Intelligence Session:

DoD Pharma Session

  • David Bobb, Chief, Pharmacy Operations Division, DHA (Invited)

DAPAs and ECATs

  • Dan Keefe, Medical Director of Supply Operations, Defense Logistics Agency (Invited)
  • Jody Goldsmith, Deputy Program Manager, MSPV Formulary Management (Invited)

Prosthetics and Non-Expendable Equipment

  • Jack DuFon, Executive, Non-Expendable Equipment Office, VA (Invited)
  • Penny Nechanicky, Director, Prosthetics and Sensory Aids Service, VA (Invited)

Click here to view the draft agenda and don’t miss our early bird registration discount before September 28thclick here to register!  To reserve a room in our discounted block at the Fairview Park Marriott (event location), please use this reservations link.

 

2018 Excellence in Partnership Awards – November 7th

The Excellence in Partnership (EIP) Awards honor individuals and organizations in the acquisition community who have made significant contributions to the procurement system that deliver best value and meet agency missions. Historically, these awards have been given to individuals, organizations, and contractors involved in procurement with GSA, VA, DOD, DHS, and other government agencies.

The Coalition is excited to announce that is now accepting nominations for the 19th Annual EIP Awards celebration! To nominate a deserving candidate and/or organization, click here. The Coalition will be accepting nominations through October 19, 2018.

This year’s categories will include:

  • Lifetime Acquisition Excellence Award – Presented to an individual in the government contracting community for demonstrating a long-term commitment to career excellence.
  • Acquisition Savings Award – Presented to an organization or individual for developing solutions resulting in savings to the government and taxpayer.
  • Veteran’s Employment Award – Presented to a government agency or contractor or individual for promoting and executing a successful veteran program.
  • Contract Streamlining Award – Presented to an organization or individual for efficiently using/creating resources that simplify processes or systems in the procurement and contracting environment.
  • Increasing Competition Award – Presented to an organization or individual for pursuing best value solutions through enhanced competition.
  • Improving Transparency Award – Presented to an organization or individual (government or contractor) for improving and maintaining an effective bridge of communication between government and industry.

Click here to submit your nomination for the 2018 EIP Awards before the October 19, 2018 deadline. If you have any questions, please contact Jason Baccus at JasonBaccus@thecgp.org.

The EIPs will take place from 6:00pm – 10:00pm at the Fairview Park Marriott in Falls Church, VA on November 7th.  To register for this special evening, along with the Fall Healthcare Forum (earlier in the day) and Fall Training Conference (next day), please click here!

 

Fall Training Conference – November 8th

The Coalition for Government Procurement is pleased to invite you to our annual Fall Training Conference – The Federal Market Forecast, on November 8th in Falls Church, VA.

We will start the day with a Keynote Acquisition Executive Panel and have invited the following panelist to participate: Soraya Correa, Chief Procurement Officer, DHS; Elliott Branch, Deputy Assistant Secretary for Acquisition and Procurement, Department of Navy; Jeff Koses, Senior Procurement Executive, GSA; and Jose Arrieta, Senior Procurement Executive, HHS.  This panel will be moderated by Angela Styles, Partner, Bracewell.  Following the Keynote Panel, we will have an Inspector General Panel where we have invited Brian Miller, Former GSA Inspector General to moderate, and Carol Ochoa, GSA Inspector General; Michael Missal, VA Inspector General; and Glenn Fine, DoD Acting Inspector General, to participate.

The latter half of the morning will be comprised of two additional panels.  The first, Schedules Modernization – The $46 Billion Market, will be moderated by Jonathan Aronie, Partner, Sheppard Mullin and we have invited Stephanie Shutt, MAS Program Management Office, GSA, and Dan Shearer, FSS Director, VA.  The second, e-Commerce – The Question, will be moderated by Tom Sisti, SAP, and we have invited the following participants: Laura Stanton, Assistant Commissioner for Enterprise Strategy Management, GSA; LeAntha Sumpter, Deputy Director, DPAP; and Mathew Blum, Associate Administrator at the OFPP.  Additionally, we are awaiting confirmation on the most appropriate contact at the Air Force so that we can invite him/her to attend as well.

While there will be ample networking opportunities during our sit-down lunch, we have also invited the Honorable Thomas M. Davis III, Former Member of Congress (VA), Former Chair of the House Committee on Oversight & Government Reform, and currently with Deloitte Services, to provide a detailed election analysis and summarize what the new Congress will mean both for government and industry.

In the afternoon, attendees will have the opportunity to engage in Business Intelligence Sessions, which provide an interactive, collaborative, and informative dialogue with Federal experts and leaders in procurement. We have invited over 30 of these such leaders to discuss the following eight sessions that you can choose from:

First Business Intelligence Session:

  • IT Modernization & Innovation
    • Kelly Olson, Deputy Commissioner/ Director (Acting), TTS, GSA
    • Crystal Philcox, Deputy Assistant Commissioner for Category Management, GSA
    • Eric Cho, Project Lead, Procurement Innovation Lab, DHS
    • Bill Zielinski, Acting Assistant Commissioner for the IT Category, GSA
  • General Products
    • Jill LaDuca, Director, Southwest Supply and Acquisition Center, GSA
    • Brian Knapp, Director, Integrated Workplace Acquisition Center, GSA
    • Peter Han, Director, Northeast and Caribbean Acquisition Center, GSA
    • Teresa McCarthy, Director, Heartland Acquisition Center, GSA
  • Services
    • Alex Rouse, Professional Services Program Executive, GSA
    • Ken Brennan, Deputy Director, DPAP
    • Jacob Bertram, Director of Contract Operations, Office of Professional Services and Human Capital, GSA
  • VA Federal Supply Schedules
    • Bob Satterfield, FSS Chief, VA
    • Deborah Zuckswerth, FSS Chief, VA
    • Diana Lawal, FSS Chief, VA
    • James Booth, FSS Chief, VA
    • Christine Szrom, FSS Chief, VA

Second Business Intelligence Session:

  • Cyber & Supply Chain Security
    • Bob Metzger, Partner, Rogers Joseph O’Donnell
    • Emile Monette, Cybersecurity Strategist, DHS
    • Bill Zielinski, Acting Assistant Commissioner for the IT Category, GSA
    • Defense  Pricing and Contracting (DPC) Representative, TBD
  • GWACs
    • Keith Nakasone, ITC Deputy Assistant Commissioner Acquisition, GSA
    • Al Marshall, Technical Strategy Manager, NASA SEWP
    • GSA Speaker, TBD
    • NITAAC TBD
  • FedMall
    • Adarryl Roberts, Program Manager, DLA
    • Kathleen Lemming, Senior Procurement Analyst, DPC
    • FedMall Customer, TBD
  • MSPV Attributes Discussion – Is The Future Now?
    • Spencer Roberts, Director, VHA Procurement & Logistics Office

As always, the Conference will conclude with a networking reception from 4:30pm – 6:00pm to allow you to further engage your peers and the day’s speakers.

To view the full DRAFT agenda, click here.   Don’t miss our early bird registration discount before September 28thclick here to register!  To reserve a room in our discounted block at the Fairview Park Marriott (event location), please use this reservations link.

 

Legal Corner:

Competition in Commercial Contracting: Is this Difficult?

The Legal Corner provides the legal community with an opportunity to share insights and comments on legal issues of the day. The comments herein do not necessarily reflect the views of the Coalition for Government Procurement. 

By: Marcia G. Madsen, Partner, Mayer Brown LLP; David F. Dowd, Partner, Mayer Brown LLP; and Luke Levasseur, Counsel, Mayer Brown LLP

Two interesting – and perennial – issues came together during the last week in a way that should re-focus the procurement community on the importance of requirements development and competition for federal contracts. First, the U.S. Government Accountability Office (GAO) issued its latest study regarding the Government’s implementation of the Services Acquisition Reform Act (SARA) Panel recommendations. Then, the U.S. Court of Appeals for the Federal Circuit upheld the Court of Federal Claims (COFC) decision in the Palantir case. In its important opinion, the appeals court held that the Government failed to follow the Federal Acquisition Streamlining Act (FASA) when analyzing its requirements and determining whether to conduct a competition.

Why is this intersection of the SARA Panel recommendations and the Federal Circuit’s Palantir decision important? In its report a decade ago, the SARA panel emphasized the importance of requirements definition to achieving competition and reducing prices. The SARA panel heard testimony from many commercial buyers of services – including IT services – all of whom emphasized the importance of requirements definition to obtaining solutions competitively at firm fixed prices. The SARA Panel then made recommendations based on that evidence. In Palantir, the Federal Circuit affirmed the COFC’s conclusion that the Army failed to comply with 23 year-old statutory provisions regarding market research in its requirements development process related to an information processing and dissemination system. As a result, the Army failed to determine whether a commercial solution – such as one from Palantir – would satisfy its requirements. Instead, the Army settled on a custom-developed approach under a single indefinite delivery indefinite quantity (IDIQ) contract.

What happened in Palantir is not an isolated incident. In fact, GAO reported last week that DoD’s competition rates have declined by four percent. The latest quarterly competition report for DoD shows that just over half of acquisition spending is competitive. The Palantir decision calls into question, again, DoD’s requirements development process and shows that DoD’s resistance to market research and competition, including for commercially available technology must come to an end.

Palantir

Late last week, the Federal Circuit issued its closely-watched decision in Palantir USG, Inc. v. United States, Fed. Cir. No. 2017-1465. Palantir was an appeal from the COFC’s decision in favor of Palantir’s protest that the Army violated a statutory preference for the acquisition of commercial items. Prior to the COFC protest, GAO had denied a protest by Palantir on the same grounds.

At issue was the Army’s solicitation for the second increment of the system for processing and disseminating intelligence and other information, known as the Distributed Common Ground System-Army Increment 2 (DCGS-A2). The solicitation called for the award of a single IDIQ contract to develop, integrate, maintain, and support the Army’s data architecture.

Palantir involved the application of a decades-old mandate, from FASA, that agencies must “to the maximum extent practicable” procure commercially availably technology to meet their needs. FASA § 8104 (codified for DoD at 10 U.S.C. § 2377). The statute requires an agency to use the results of market research to “determine” whether there are commercial items that “meet the agency’s requirements; could be modified to meet the agency’s requirements; or could meet the agency’s requirements if those requirements were modified to a reasonable extent.” 10 U.S.C. § 2377(c)(2).

As the Federal Circuit noted, FASA’s preference for commercial items is achieved in part by requiring agencies to engage in market research and (i) identify what is available, then (ii) rely on that research to determine whether commercial items can satisfy the agency’s needs. Palantir challenged the adequacy of the Army’s market research and its use of the results in making its decision with respect to its DCGS-A2 needs. Palantir argued that one of its commercial software products could satisfy the Army’s actual needs.

GAO denied Palantir’s protest and found that the Army’s decision that significant portions of the anticipated scope of effort were not available as a commercial product was not unreasonable. Although Palantir had argued the agency’s requests for information in its market research did not directly solicit information on commercial solutions, GAO held that the agency reasonably concluded that a single integrated solution was not available for procurement through a FAR Part 12 procurement.

Palantir then filed a bid protest action at the COFC, and the court ultimately disagreed with GAO. The COFC held that the market research failed to address what commercial items were available or whether they could be modified to meet the Army’s needs. The COFC emphasized the statutory phrase “maximum extent possible” and concluded that the Army had not satisfied this test by “fully investigat[ing]” the availability of commercial items.

The Federal Circuit agreed with the COFC. Rather than focus on the COFC’s phrasing that the Army failed to “fully investigate” the availability of commercial items – which the Government argued imposed a test beyond what the statute requires – the Federal Circuit focused on the statutory language and held that the COFC applied the law correctly. The Circuit noted that the evidence showed the Army was on notice of the possibility that commercial items could satisfy its needs for portions of DCGS-A2. The Army also became aware of Palantir’s capability to provide a commercial item that could be modified or integrated to meet the Army’s needs. The Army’s market research report, however, had concluded – with “scant explanation” according to the Federal Circuit – that DCGS-A2 could not be procured as a commercial item. As a result, the Federal Circuit affirmed the COFC’s decision granting the protest.

Under Palantir, the statutory mandate to consider commercial items to the “maximum extent possible” is given real teeth. An agency may not assume that developmental solutions are necessary and conduct market research focused only on such a solution. To the contrary, the agency must look actively to see if commercial items exist that can, or could be modified, to meet its needs. In applying that test as interpreted by Palantir, agencies can be expected to look more thoroughly and, reasonably, decide to issue more solicitations for commercial items to meet their needs in lieu of developmental solutions. Nearly two and one-half decades after FASA was enacted, the Palantir decision holds out at least the hope that there may be a renewed emphasis on the acquisition of commercial items, including for larger and more complex projects such as that reflected by DCGS-2A.

Palantir also is important for the acquisition community in another respect. As a “second-bite” protest, i.e., a COFC protest that follows a denied GAO protest, Palantir involves the very type of protest case that some have criticized as unduly burdensome or unnecessary to the acquisition process. The decision shows that an additional forum and further review may be needed to reach the correct result. Had the matter been limited to GAO, the statutory violation would not have been remedied – to the detriment of DoD and the taxpayers, as well as industry.

GAO and Competition

Palantir appears amidst the background of GAO’s continued observations regarding challenges in the acquisition process, including requirements definition and competition. Most recently, these observations were noted in a September 13, 2018 report regarding competition in DoD acquisitions. Among other findings, the report explained that agencies have not fully embraced initiatives and techniques to reduce the prices they pay, including “robust market research.”

In discussing the declining competition rate for DoD over time, GAO stated that it had previously identified factors that affect competition rates, including “the government’s preference for a specific vendor, inadequate acquisition planning, and overly restrictive government requirements.” GAO noted that competition rates have remained largely unchanged despite Office of Federal Procurement Policy memoranda directing agencies to increase competition.

There is little doubt that competition, particularly in the acquisition of commercial items, can benefit the Government by offering access to innovative products and services for which the Government would not bear the full development cost and risk that Government-unique solutions may entail. Despite years of statutory, regulatory, and policy guidance, however, DoD is falling behind in that area. We hope Palantir helps reverse this trend.

 

Healthcare Spotlight:

U.S. Senate Passes Bill Requiring Prescription Drug Ads to Include Prices

The Healthcare Spotlight provides the legal community with an opportunity to share insights and comments on healthcare issues of the day. The comments herein do not necessarily reflect the views of the Coalition for Government Procurement. 

By: Alice Valder Curran, Partner, Hogan Lovells; Meredith Manning, Partner, Hogan Lovells; Heidi Forester Gertner, Partner, Hogan Lovells; and Kathleen A. Peterson, Counsel, Hogan Lovells

On Thursday [August 23, 2018], the U.S. Senate passed (85-7) the fiscal year 2019 minibus appropriations bill (H.R.6157) that would fund the Departments of Labor, Health and Human Services (HHS), and Education, attaching to it a large amendment package.  The bill includes S.Amdt. 3964, an amendment introduced by Sens. Richard Durbin (D-IL) and Chuck Grassley (R-IA) that provides HHS with $1 million “to issue a regulation requiring that direct-to-consumer prescription drug and biological product advertisements include an appropriate disclosure of pricing information with respect to such products.”  The U.S. House of Representatives has yet to take up their version of the HHS funding bill for FY-2019, or to consider this amendment.

Vague Amendment raises Free Speech concerns, other questions

There remains significant ambiguity over whether HHS has the legal authority to enact such a rule and how any such potential regulation would be enforced.  Coalition for Healthcare Communication Executive Director John F. Kamp told the New York Times in May that a drug-price disclosure requirement, “as a form of compelled speech, could violate the First Amendment.”  The measure says HHS would enforce “appropriate disclosure of pricing,” but it is unclear what pricing information should be communicated to the consumer: the Wholesale Acquisition Cost (WAC) or a different metric.  The price that a consumer ultimately pays may not be reflective of the price at which the manufacturer makes the drug available to providers or insurers (due to various negotiated price concessions such as rebates, as well as due to the fact that benefit plan requirements that may govern patient out-of-pocket costs).  Any proposed regulation therefore would need to specify whether drug makers could include caveats regarding such differentiating factors.

Amendment sponsors attack “Big Pharma” for opposition to measure

Sen. Durbin attacked “Big Pharma” in a statement, saying they were the only groups opposed to the proposal.  Similarly, in a floor speech promoting the amendment, Sen. Grassley assailed pharmaceutical companies for lobbying against drug price transparency measures such as this.

Grassley called the measure “Midwestern common sense” and compared it to price disclosure requirements for cars or gas stations.  Grassley concluded, “We ought to be able to get some of this common sense stuff done,” confidently adding, “We’re going to get this done one way or this other.  If we don’t get it done on this bill, we’re going to get it done, because it’s the right thing to do.”

More drug pricing transparency reforms to come

Earlier last week, the Centers for Medicare and Medicaid Services (CMS) sent to the Office of Management and Budget (OMB) for review a proposed rulemaking titled, “Regulation to Require Drug Pricing Transparency,” the text of which has not been made public; it is unclear what precisely the measure would require.  Earlier this month, CMS also announced plans to begin using “step therapy” to reduce spending on Part B drugs in Medicare Advantage plans.  In February, we outlined the budget proposals of HHS and OMB, predicting more changes to come in this space.  We will continue to monitor these changes and keep you apprised as the funding bills move through Congress.

 

Submit Your 2018 Excellence in Partnership Awards Nomination Today!

The Excellence in Partnership (EIP) Awards honor individuals and organizations in the acquisition community who have made significant contributions to the procurement system that deliver best value and meet agency missions. Historically, these awards have been given to individuals, organizations, and contractors involved in procurement with GSA, VA, DOD, DHS, and other government agencies.

The Coalition is now accepting nominations for the 19th Annual EIP Awards celebration! To nominate a deserving candidate and/or organization, click here. The Coalition will be accepting nominations through October 19, 2018.

Read more about the award categories below:

  • Lifetime Acquisition Excellence Award

Presented to an individual in the government contracting community for demonstrating a long-term commitment to career excellence.

  • Acquisition Savings Award

Presented to an organization or individual for developing solutions resulting in savings to the government and taxpayer.

  • Veteran’s Employment Award

Presented to a government agency or contractor or individual for promoting and executing a successful veteran program.

  • Contract Streamlining Award

Presented to an organization or individual for efficiently using/creating resources that simplify processes or systems in the procurement and contracting environment.

  • Increasing Competition Award

Presented to an organization or individual for pursuing best value solutions through enhanced competition.

  • Improving Transparency Award

Presented to an organization or individual (government or contractor) for improving and maintaining an effective bridge of communication between government and industry.

Click here to submit your nomination for the 2018 EIP Awards before the October 19, 2018 deadline.

 

The Government Contractor Teaming Agreement Toolkit

Steptoe is pleased to announce the release of its Teaming Agreement Toolkit for Government Contractors. Teaming and joint venture arrangements are often a key part of government contracting. FAR Subpart 9.6 recognizes that a teaming arrangement can “offer the government the best combination of performance, cost, and delivery for the system or product being acquired.” As a result, successful team formation – and understanding the potential risks of teaming – are critical aspects of the contract pursuit strategy for federal contractors, as competition for federal programs today often pits team versus team, not company versus company.

Given the stiff competition for federal contracts, there is a premium on selecting teammates with which you can work cooperatively and that share your company’s values and interests in successfully pursuing and obtaining the award of a government contract. The process of team formation, to include assessing the risks of teaming, conducting due diligence in selecting teammates, complying with pro-competition policies and other applicable regulatory requirements, and crafting a teaming agreement that memorializes the parties’ intentions, is fundamental to the success of a teaming arrangement. To provide a resource for companies navigating a potential teaming arrangement, Steptoe created the Teaming Agreement Toolkit to identify certain important considerations and potential risks associated with competitive teaming in the federal marketplace, such as due diligence considerations in selecting a teammate, identifying and potentially mitigating risks, and the current state of the law presenting hurdles in negotiating enforceable pre-award teaming agreements.

As a toolkit, it does not address every requirement, issue or risk that a company must consider in pursuing a teaming arrangement, but Steptoe can assist contractors through the process of forming and implementing a contractor team arrangement consistent with your company’s goals and objectives.

We hope you find our Teaming Agreement Toolkit a constructive guide for identifying and tackling these issues.

To access the Teaming Agreement Toolkit, click here.

 

In Case You Missed the MSPV-NG Update Meeting…

On Thursday, August 23, the Coalition for Government Procurement hosted an industry meeting featuring guest speakers, Jaime Friedel, Director of Procurement Medical/Surgical Prime Vendor (MSPV) at the Department of Veterans Affairs’ (VA) Strategic Acquisition Center (SAC). During the meeting, the VA SAC provided an update on the MSPV-Next Generation (MSPV-NG) program, the current formulary status, and the next steps for adding products. A recording of the meeting is now available.  To access the recording, click here. If you have any questions regarding how to access the recording, please contact Andrew Sisti at ASisti@thecgp.org.

 

Seeking Member Input on Proposed Rule

The Department of Defense (DoD) has released a proposed rule which would revise the Defense Federal Acquisition Regulation Supplement’s (DFARS) policies related to progress payments and performance-based payments. Specifically, DoD is proposing that the customary progress rate for large businesses be lowered from 80-percent to 50-percent, while maintaining the current rate for small businesses.

In addition, the proposed rule would allow both large and small businesses to achieve progress rates that exceed the customary rates based on their performance across the following five key business domains:

  • On-time or Accelerated Deliveries
  • Contractor Quality
  • Contractor Business Systems
  • Opportunities for Small Businesses, and the Blind or Severely Disabled
  • Receipt of Timely Proposals

Notably, successful performance across these domains could increase the progress rate to as high as 95-percent of contract cost.

Last week, DoD held a public meeting on the proposed rule to gather feedback from industry. During the meeting, industry raised several concerns with the proposed rule. The proposed rule implements Section 831 of the 2017 National Defense Authorization Act (NDAA), which establishes a preference for performance-based payments, and aligns DoD with commercial best practices. However, industry raised concerns that the decreased payment rate could prevent DoD from achieving those objectives by discouraging companies from entering the Federal market. Additionally, industry voiced concerns that some of the criteria, identified by DoD in the five business domains, were arbitrary and that metrics for the domains were unclear. Finally, industry raised concerns that the payment rate could lead to decreased cash flow which can harm small business subcontractors and decrease investments in research and development.

The Coalition will be commenting on the proposed rule. Please send any feedback to Sean Nulty at SNulty@thecgp.org by Tuesday, October 9. Comments on the proposed rule must be submitted to DoD by October 23, 2018.

 

Upcoming Training Opportunities

OASIS Update: Summer’s over, but the pools are just opening up on OASIS – September 26th  

The One Acquisition Solution for Integrated Services (OASIS) contract has become a go-to contracting platform for many federal buyers. As OASIS nears the end of its base period (June 2019 for OASIS Small Business and September 2019 for OASIS Unrestricted), GSA is preparing for a significant increase in the number of contractor on-ramps for the second 5-year period of the contract vehicle. With over $10B in obligations in just over four years, open season on-ramping represents a significant opportunity for prospective contractors to consider adding this “Best-In-Class” contract to their portfolios.

Please join us for an hour-long webinar as Baker Tilly provides an overview of the OASIS contract, reviews contract requirements, and provides perspective that contractors should consider as they make bidding decisions.  Some of the specifics that will be covered during the webinar include:

  • The Federal Government’s coordinated acquisition strategy under Category Management
  • The OASIS contract’s role as a Best-In-Class contract
  • A reflection on the OASIS contract’s successes since inception in 2014 and areas for improvement
  • GSA’s Strategy for expanding OASIS and potential future on-ramps
  • Details about the on-ramping process for small and large businesses
  • GSA’s proposal review and contract award processes
  • Proposal evaluation criteria, Past Performance Project Requirements, and bid / no-bid factors
  • Pricing implications
  • Vendor Self-Scoring

Click here to Register!

MAS Basic Training: The Nuts & Bolts – October 17th

Do you need to better understand management and compliance of the Price Reduction Clause? Need help navigating the Price Negotiation Process? Are you leveraging the GSA Electronic Tools? Do you have all the keys to understanding the Task Order Competition? Know how the GSA Audit Process works? Come find out the answers on these topics and more at our intensive, one-day training workshop that teaches the basics of utilizing the General Services Administration (GSA) Multiple Award Schedules (MAS) program.

Agenda:

7:30 AM Breakfast and Registration

8:15 AM Welcome/Introduction

8:30 AM The GSA Schedules Program: An Entry Point to Government Contracting

10:00 AM Obtaining Your GSA Schedule or Schedule Modification – Navigating Today’s Reality and Schedule Best Practices

10:45 AM Break

11:00 AM MAS Audits – How to Prepare and What They Mean in the Current Market

12:00 PM Lunch Presentation: Ethics and Schedule Business – How to and How Not to Conduct Federal Business

1:05 PM Break

1:15 PM Schedule e-Tools: Tips on Competing and Winning Through the GSA Schedule Program

3:00 PM Break

3:15 PM GSA Option Extensions – Are Your Commercial Sales Practices Current, Accurate, and Complete?

4:30 PM Q&A and Closing Remarks

Click here to register!

Federal Cybersecurity Requirements: Staying Ahead in a Continuously Evolving Compliance Environment – Webinar on October 30th

Since the DFARS “Safeguarding Covered Defense Information and Cyber Incident Reporting” rule was published in October 2016, contractors have been working to identify relevant information and build adequately secure environments to meet contractual cybersecurity requirements. As communication from DoD trickled out through 2017 and 2018, industry continued to evolve in its approach in order to keep up with interpretations of the guidance. Join the Coalition for Government Procurement as we host EY for a discussion on how companies have approached the cybersecurity requirements and how they can continue to tailor their compliance activities to meet the expected future demands of federal cyber requirements.

Click here to register!

OLMs Webinar on October 18th

In June, the General Services Administration (GSA) updated the General Services Administration Acquisition Regulation (GSAR) to incorporate the Order Level Materials (OLM) authority.

The final rule allows buyers to acquire products and services through the Schedules program that are not known at the time of contract award.  While GSA has held numerous trainings and discussions surrounding the new rule, some uncertainty remains around how the rule will be implemented and applied, and how the authority will be used.

Please join us for an hour-long webinar, as Baker Tilly provides an overview of the OLM rule along with a discussion focused on the practical application of the rule and some key considerations for contractors to consider.  This discussion will include:

  • A brief overview of the final rule
  • How the types of materials covered by the rule were previously acquired, and how this may change going forward
  • Strategies for pricing OLMs
  • The 33% limitation
  • Important considerations for contractor assessments and audits
  • Other considerations when proposing a product or service as an OLM

Click here to register!

 

DoD Provides Update on Service Contracts and Category Management

Earlier this week, the Coalition’s GWAC/MAC Committee heard from Ken Brennan, the Reform Lead for Service Contracts at the Department of Defense (DoD), regarding the Department’s efforts to improve services acquisition. Mr. Brennan provided attendees with an update on DoD’s reorganization, the use of contract efficiency assessments to determine the appropriate level of service at the best possible cost, and how category management is impacting the Department’s buying habits. The slides from the meeting can be found here.

 

GAO Issues Follow-up Reports to the SARA Panel

Earlier this month, the Government Accountability Office (GAO) published a report reviewing the recommendations of the Acquisition Advisory Panel in 2007 and the impact on Federal procurement. The Panel was established by Congress in the Services Acquisition Reform Act (SARA) of 2003, and in its final report, raised the following six key concerns for Federal procurement:

  1. Requirement definition
  2. Competition and pricing
  3. Contractor oversight
  4. Acquisition workforce
  5. Federal procurement data
  6. Small business participation

As part of its review, GAO evaluated agencies’ efforts to address the concerns raised by the SARA Panel, including an examination of its previous recommendations.

Requirement Definition

The SARA Panel determined that defining requirements is critical for achieving competitive offers that meet customer needs. The Panel also found that the government invests in requirements definition less than the private sector. Although Congress did implement some of the Panel’s recommendations in 2009, GAO found instances where Department of Defense (DoD) personnel have initiated programs with unrealistic requirement definitions, which may have contributed to increased costs and schedule delays.

In addition, GAO provided that the General Services Administration (GSA) and the DoD have improved the guidance on Performance Based Acquisitions (PBA). Resistance to PBA, however, was identified by GAO among some acquisition officials within DoD who are reluctant to give contractors control over how agency requirements will be met.

Competition and Pricing

To improve the effectiveness of government purchasing activities, the SARA Panel recommended that the government improve its market research efforts and increase its utilization of interagency contracting. During its review, GAO determined that, although Federal agencies have taken steps to improve competition, the government-wide competition rate has remained unchanged. Moreover, GAO found that DoD’s competition rate has actually declined over the past five years.

 

IAE Industry Day, Sept. 25

The General Services Administration (GSA) will be hosting an Industry Day, titled, Preparing for FBO and WDOL’s Transition, on Tuesday, September 25, at 1:00 PM Eastern. GSA will present the new look and feel of the Federal Business Opportunities (FBO) webpage, including information related to setting up e-mail notifications, performing searches, and interested party lists. To register for the event, click here.

Date: September 25, 2018

Time: 1:00 – 2:00 PM Eastern

Registration: Click here

 

DHS RFI and Public Meeting on Cyber Supply Chain Risk

The Department of Homeland Security (DHS) has released a Request for Information (RFI) seeking feedback related to cyber supply chain risk management. As part of its request, DHS announced that it will be hosting a public meeting on Thursday, September 27, at 3:30 PM Eastern.

Notably, the RFI provides that:

“…the Government intends to use the information received… to help make strategic decisions regarding establishing a business due diligence/cyber supply chain risk assessment program capability that is anticipated and will need to scale to be able to support multiple agencies or function as a government-wide shared service.”

Responses regarding the RFI must be submitted by October 19, 2018. The Coalition, which is currently considering the submission of feedback regarding the RFI, will attend the public meeting next week. If you have any feedback on the RFI, please contact Aubrey at awoolley@thecgp.org.

 

Upcoming GSA Industry Training Events

Office Hours: HCaTS and the HR Schedule, Oct. 11

The General Services Administration (GSA) will be hosting an “Office Hours” Webinar on Thursday, October 11, at 11:00 AM Eastern to discuss its range of acquisition solutions that satisfy requirements throughout the entire human-capital life cycle. Attendees will have the opportunity to learn about the “ins-and-outs” of GSA’s human capital solutions, including its Human Capital and Training Services (HCaTS) vehicle. To register, click here.

Meeting Information

Date: October 11, 2018

Time: 11:00 AM Eastern

Location: Online

RSVP: Registration Link

Category Spotlight: Could the New Micro-Purchase Threshold Have Revolutionary Effects?

On Thursday, November 1, the General Services Administration (GSA) will host guest speaker, Dr. Steven Kelman, Weatherhead Professor of Public Management at Harvard University’s John F. Kennedy School of Government, to discuss the impact of recent changes to the micro-purchase threshold (MPT). In particular, this webinar will focus on the potential implications of the recent elevation of the MPT to $10,000 for the acquisition of services. To register, click here.

Meeting Information

Date: November 1, 2018

Time: 2:30 PM Eastern

Location: Online

RSVP: Registration Link

To review additional upcoming GSA training opportunities, click here.

 

Upcoming Committee Meetings

General/Office Products Committee Meeting, Oct. 3

The Coalition’s General/Office Products Committee will be hosting an in-person meeting with the AbilityOne Program on Wednesday, October 3, at 1:30 PM Eastern. The meeting will focus on providing an update on the AbilityOne Commission’s Outstanding Distributor Letter.

Following the release of the Outstanding Distributor Letter, there have been questions and concerns raised related to some of the language included, specifically, the following:

“This year, as an AbilityOne Program Outstanding Distributor, you may be contacted by Amazon Business and invited to sell AbilityOne products on Amazon’s business-to-business e-commerce portal.”

The meeting will be held at the HON Company’s Washington D.C. office, and will feature guest speaker Tina Ballard, the Executive Director of the AbilityOne Commission.

General/Office Products Committee Meeting

Date: October 3, 2018

Time: 1:30 PM Eastern

Location: The HON Company’s Washington D.C. office (1101 Connecticut Avenue, NW, Suite 300 Washington, D.C. 20036)

RSVP: Please RSVP to Andrew Sisti at ASisti@thecgp.org