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Friday Flash 3.16.12

1. Comment of the Week

A previous comment, “Putting Commercial Back in Commercial Item Contracting,” lead to an interview Monday afternoon with host Francis Rose on Federal News Radio’s “In-Depth.”   During the course of the interview Francis asked if I had seen changes in behavior as a result of the Administration’s “Myth-Busters” campaign.  I responded by citing GSA’s willingness to engage with contractors as one example of Myth-Busters communication.  Since the interview I have kept thinking about Francis’ question.  How do we in the procurement community measure the effectiveness of the Myth-Busters campaign? 

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

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

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


Roger Waldron


2. Senate Civilian BRAC Bill Introduced

 A new bill introduced in the Senate on March 8th provides an additional take on reducing the number of unnecessary federal properties. The Federal Real Property Asset Management Reform Act of 2012 (S.2178), would establish a council within the Office of Management and Budget (OMB) to facilitate the disposal of excess federal property. The new proposal contrasts the earlier House bill (H.R. 1734) and varies slightly from an Administration plan. S. 2178 would create the Federal Real Property Council within OMB to “develop guidance for the asset management program of each executive agency.” The council would be staffed by senior real property officers from each executive agency and have the deputy director of management for OMB as its chair. Among other provisions, the bill would require agencies to submit justifications for their leasing decisions and dispose of all properties deemed excessive within two years.

3. New Federal Suppliers Decrease

 This week The Washington Post reported that the number of new suppliers to the Federal Government fell 14 percent in 2011. According to data compiled by Bloomberg Government, the number of first-time contractors that had not conducted business with the Federal Government in the last seven years, decreased from 34,804 in FY 2010 to 29,826 in FY 2011. The percentage of new vendors as a share of the total fell from 19.1 percent to 16.9 percent. Dan Gordon, former Administrator for the Office of Federal Procurement Policy, explained that the lack of new contractors entering the federal space could lead to reduced competition and potentially higher prices. The news comes at a time when many businesses are likely avoiding the federal market given cuts in agency budgets.  Experts have also expressed concern that tight budgets may dissuade small businesses, in particular, from entering the government market.

4. EULA Update

The Coalition continues to engage with GSA on End User License Agreements (EULAs) with TechAmerica and the Business Software Alliance.  In IT Schedule 70 Refresh 30, GSA requires vendors to submit EULAs and Terms of Service Agreements in editable format to assist GSA in reviewing and negotiating each individual agreement.  Currently, GSA does not have plans to change Refresh 30 and has committed additional legal resources to accelerate the review process.  GSA is also continuing to work on a long term solution that will likely be addressed through the solicitation.  The Coalition will keep members posted on future developments.

5. GSA Issues E-Waste Policy

GSA’s Office of Government-wide Policy has issued new guidelines to federal agencies about the disposal of electronics.  The objective is to divert electronic waste from landfills due to health and environmental concerns, and either reuse or recycle these items.  GSA’s “Disposal of Federal Electronic Assets” bulletin outlines the preferred methods of disposal: 1) reuse within the agency or other federal agencies, 2) donations to states, schools, and non-profits, 3) sale to the public, or 4) product return to the vendor under a take back program that uses a certified recycler. Current certified recyclers are R2 and e-Statements.  The new guidelines apply to computers, monitors, printers, copiers, telephones, communications equipment, televisions and electronic equipment components.  Under the government-wide guidance, these items are banned from landfills and incinerators.   Beginning this fiscal year, federal agencies are also required to report the disposal of these items so that the agencies can account for the electronic items that have left the government, and where they went, on

6. DoD to Increase Energy-Savings Contracts

 The Pentagon plans to increase the number of energy-savings performance contracts (ESPCs). The initiative is in response to a December 2011 Presidential memo that requires agencies to award $2 billion in ESPCs over the next two years. In a hearing on Capitol Hill, Dorothy Robyn, Deputy Undersecretary of Defense for Installations and Environment, discussed DoD efforts to achieve this goal. DoD plans to execute roughly $465 million in ESPCs and Utility Energy Service Contracts (UESCs)  in FY 2012 and $718 million in FY 2013. DoD’s current FY 2013 budget allocates $1.1 billion for energy conservation investments, which will include funding to incorporate more energy-efficient designs, material and equipment into DoD’s inventory. The Defense Department has over 300,000 buildings and 2.2 billion square feet of building space, which puts into perspective the need for cost-savings and energy security in installations management.

7. DoD Competition Report

A GAO report released on March 15th found that the competition rate for DoD non-R&D services (“services”) was almost twice as high as the similar rate for products and almost 20 percent higher than the rate for R&D services. From FY 2007 through FY 2011 competition rates for DoD services have been close to 80 percent but have decreased in the Air Force from 75 percent to 59 percent, the report claims. Also cited in the report, the majority of noncompetitive contracts for services in FY 2011 were due “to the contractor being the only responsible source for the procurement.” The next most relevant “exception was ‘authorized by statute,’” which would include procurements made under the 8(a) business development program among others. The GAO report cited “promoting the role of program officials in influencing competition and better understanding circumstances leading to only one offer on competitive contracts,” as an additional opportunity for OMB and DoD to enhance competition.  The report, however, stops short of making any new recommendations concerning DoD competition.

8. GAO Assesses Integrated Acquisition Environment

GAO issued a report this week on GSA’s Integrated Acquisition Environment (IAE).  The purpose of the study was to assess progress made in consolidating IAE systems and to identify any challenges that may affect the project’s completion.  IAE is designed to integrate a number of acquisition data systems into a unified system.  Systems included in IAE are FedBizOpps, Central Contractor Registration (CCR), the Excluded Parties List System (EPLS), and the Federal Procurement Data System – Next Generation (FPDS-NG).  GSA has completed adopting and acquiring these systems as part of IAE and is still in the process of consolidating the portfolio into one system, called the System for Award Management (SAM).  Three of these systems are on schedule to be consolidated by May 2012.  GAO’s report noted that since 2009, IAE costs have increased by $85 million, from about $96 to $181 million.  One external factor contributing to these rising costs is recent statutory requirements and policy changes, since these systems have been used more than anticipated.  Due to higher costs and constrained resources, GAO recommends that GSA reassess the IAE business case to determine whether the current acquisition strategy is most effective.  GSA agreed with the GAO’s recommendations and has established a project team to reassess and develop a broad plan addressing IAE and SAM.   

9. Army Considers EXPRESS Update

The U. S. Army Contracting Command-Redstone (ACC-R) is considering updating the Expedited Professional and Engineering Support Services (EXPRESS) Program. The EXPRESS Program provides of advisory and assistance services to the U.S. Army Missile Command and its customers. The EXPRESS Program consists of a group of 27 Blanket Purchase Agreements set up against Federal Supply Schedule primes in accordance with FAR 8.404(b)(4).

In a special notice issued last month, the ACC-R seeks comments and recommendations for updates to the program. Please see the special notice for more details.

10. Legal Corner

In False Claims Act Case Involving GSA Schedules Program, Federal District Court Issues Troubling Decision Regarding Public Disclosure Bar

By Jason Workmaster, McKenna Long & Aldridge LLP

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

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

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

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

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

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

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

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

11. ACI’S Advanced Forum on “Government Contract Cost & Pricing”

April 17-18, Arlington, VA

This highly practical forum is the premier networking and benchmarking event on how to overcome complex, new and emerging cost or pricing issues affecting your business. In addition to CLE and CPE, attendees will benefit from enhanced networking and Q & A sessions.

Speakers include: DCAA, DCMA, DPAP, DoDIG, GAO, DynCorp, Honeywell, Textron, General Dynamics, Alion, United Launch Alliance, KBR, Lockheed Martin, Fluor, Austal USA .
CGP members are entitled to a discount when referencing the code: CGP 200.

For more information please visit our website.

12. Thank you to our MAS Basic Trainers

In February, the Coalition held a very successful MAS Basic Training Course.  The course brought together experts from both government and industry to speak to the most relevant issues in federal procurement.  Our sincere appreciation goes out to all of our trainers who made the course such a success!

Our trainers for the February MAS Basic Training were:

• Tim Dempsey, Systems Chief, MAS Program Office, FAS Office of Acquisition
• Denise Alley, Procurement Analyst, GSA MAS Program Management Office

McKenna Long & Aldridge
• Alison Doyle, Partner, McKenna Long & Aldridge LLP
• Jack Horan, Partner, McKenna Long & Aldridge LLP
• Jason Workmaster, Partner, McKenna Long & Aldridge LLP

Coalition Members
• Dave Goins, Manager Federal Contracts, Xerox Corporation
• Kitty Klaus, Program Manager, HP Enterprise Services

• Carolyn Alston, General Counsel, WMG/Deltek
• Joel Emmerich, Consultant, WMG/Deltek
• Lorie Grotos, Senior Consultant, WMG/Deltek
• Jack Mackey, Principal Consultant, WMG/Deltek
• Patrick Morrison, Director of Client Services, WMG/Deltek
• Peter Weishaar, Consultant, WMG/Deltek

The Coalition looks forward to continuing the tradition of delivering outstanding content at future MAS Basic Trainings!

13. GSA & USAF Hosting “Suspension & Debarment: What Industry Needs to Know”

The U.S. General Services Administration and U.S. Department of Air Force are sponsoring an upcoming event, “Suspension and Debarment: What Industry Needs to Know–Demystifying the Process and Values-Based Ethics.” This event is designed to educate industry about the Suspension and Debarment process, which will increase industry’s understanding of the types of contractor behavior that may help contractors to mitigate their risk of being suspended or debarred from Federal procurement and non-procurement programs.

When: Thursday, April 26, 2012, 8:30 a.m. – 12:30 p.m.

Where: GSA One Constitution Square, 1275 First St, NE Washington DC (accessible via the New York Avenue Metro Station, Red Line)


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