This week’s comment will occur at the Coalition’s 2012 Fall Training Conference! The session is entitled, From Strategic Sourcing to Strategic Acquisition: Delivering a Cost Effective Acquisition System for Government, Industry and the Taxpayer, and will take place on October 24, the first day of our conference at 3:15 pm. The purpose of the dialogue will be to explore and identify key procurement issues for the new fiscal year and beyond. You do not want to miss this engaging dialogue and more at this year’s 2012 Fall Training Conference. To register click here. See you in a few days!
Thank you to our valuable members for your input regarding the Breakouts for our 2012 Fall Training Conference – Continuing the Dialogue. We are grateful for your interest in joining multiple sessions – to accommodate your request, we have staggered the breakout schedule for 2012. New breakout sessions for 2012 include OASIS, GSA GWACs, E-Tools, and GSA Schedule Policy. We are also excited to have GSA leadership from the Public Buildings Service join this year’s breakout with Larry Melton, Assistant Commissioner of Facilities Management.
We look forward to seeing you at our breakouts on day 2 of the conference, October 25th. Please see the 2012 breakout schedule below:
|GSA Guest Speakers
|Public Buildings Service
|General Supply and Services Business line; GSA Greater Southwest Acquisition Center
|Nancy Goode & Shalloy Castle-Higgins
|Professional Services (Management Services Center and Center for Innovative Acquisition Development)
|Gerri Watson & Dyad Searcy
|IT Schedule 70
|Warren Blankenship, Cheryl Harris, Angela Jones, Dennis Harrison
|Keith Machan & Tim Dempsey
|GSA Schedule Policy (GSA Office of Acquisition Management)
|Robyn Bourne, Mark Lee, Judith Nelson
|Integrated Workplace Acquisition Center, IWAC
The House Oversight and Government Reform Committee participated in a dialogue this week with industry on the proposed Federal IT Acquisition Reform Act at the George Washington Law School. Industry panelists who provided feedback on the bill included Coalition President Roger Waldron, Coalition member David Drabkin with Northrop Grumman, Kevin Hartley with Microsoft, Angela Styles with Crowell & Moring, and Doug Bourgeois with VMware US Public Sector.
The IT Acquisition Reform Act is designed to improve the government’s procurement of IT to maximize return on investment, reduce operational risk and provide responsive services to citizens. It would give agency chief information officers increased budget authority and promote more sharing of information through centers of excellence.
The Coalition is working with our members to develop a position on the bill. We appreciate the House Oversight & Government Reform for looking into the issue of how the government can buy IT smarter. It is an opportunity to reinvigorate an emphasis on commercial item contracting and reduce government unique requirements to improve efficiency and cost savings for both the public and private sectors. It is also an opportunity to reduce contract duplication. The Coalition looks forward to continuing the dialogue on IT acquisition reform. Members who have feedback on the bill please contact Aubrey Woolley at firstname.lastname@example.org.
The President’s Management Advisory Board (PMAB) is met last Friday, October 12 to discuss a number of topics, including increasing strategic sourcing governmentwide to generate more savings for the American taxpayer and better leverage the buying power of the Federal Government. The PMAB provides advice and recommendations to the President and the President’s Management Council on best practices to improve Federal Government management and operation. In last week’s meeting, Acting Administrator Dan Tangherlini and Administrator for Federal Procurement Policy Joe Jordan outlined key components of the government’s strategic sourcing initiative:
- Focusing on the top spending agencies rather than trying to “boil the ocean”
- Renewing focus on GSA as a lead agency to deliver cost savings and operational efficiencies through strategic sourcing
- Setting milestones to stand-up several new vehicles in key commodity categories over the next two years
- Mandating the use of government-wide strategic sourcing solutions to the extent practicable
- Maintaining or increasing small business utilization for any new strategic sourcing solution
Target agencies identified for strategic sourcing are the “Top 7” spending agencies— Department of Defense, Department of Energy, Department of Health and Human Services, Department of Veterans Affairs, NASA, Department of Homeland Security, and GSA.
Five new commodity targets for FY2013 are desktop publisher software, wireless, janitorial and sanitation products, maintenance and repair products, and rental cars.
A centralized tool that can collect and share pricing data was also described. Materials from the briefing indicate that a proof of concept is under development and will be deployed by December 31, 2012. The government also plans to work with vendors and agencies to acquire the initial set of targeted data and to conduct frequent updates on prices paid from vendors.
On October 16, the Department of Defense issued a notice in the Federal Register that it has implemented the Office of Management and Budget (OMB) one-year policy that calls for accelerated payments to prime contractors in order to provide expedited payments to the prime’s small business contractors. In response to OMB’s policy, DoD has taken steps to make payments under contracts as soon as practicable, with the goal of paying its contractors within 15 days. DoD strongly encourages all prime contractors to accelerate payments to small business subcontractors under existing contracts to the maximum extent practicable. DoD has begun using a new contract clause, pursuant to Class Deviation 2012–O0014 as part of the one year policy. The rule is in effect through July 10, 2013, unless otherwise rescinded or extended.
The General Services Administration (GSA) Office of Small Business Utilization was presented with the Small Business Administration (SBA) Leadership Award for its work helping small and disadvantaged companies bring their cost-effective and innovative solutions to the federal marketplace. In the last fiscal year, GSA awarded 19.02 percent of its contracts to small and disadvantaged businesses and received an A+ grade on SBA’s FY2011 small business procurement scorecard for exceeding SBA small business contracting goals in nearly all categories. Congratulations GSA!
House Committee on Oversight and Government Reform Chairman, Darrell Issa, sent a letter to ten major government contractors demanding that they provide information and documents on their communications with the Administration on the WARN Act. The October 11 letter was sent to top executives at Lockheed Martin, Northrop Grumman, Boeing Company, SAIC, Raytheon, General Dynamics, Hewlett-Packard Company, Booz Allen Hamilton, CSC, and DynCorp International. The House committee is investigating OMB guidance advising contractors that providing layoff notice to employees 60 days in advance of potential sequestration is unnecessary and that the Federal government may reimburse contractors for WARN Act-related costs. The letter states that “the guidance seems intended to invite federal contractors to flout the law, and in doing so places a large contingent financial liability on the shoulders of American taxpayers in order to indemnify those contractors who follow the administration’s direction.” Chairman Issa requested that contractors provide documentation of internal legal analysis of WARN Act obligations in the event of sequestration and details about communications with public officials to the committee by October 24.
Defense Procurement and Acquisition Policy (DPAP) director Richard Ginman released a memorandum entitled Authorization for Contractors to Use Government Supply Sources in Support of Operation Enduring Freedom. The October 12 memo notes that effective immediately, contracting officers are encouraged to authorize contractors, including those with fixed-price contracts, to use the General Services Administration (GSA) Central Asia and South Caucasus Supply Catalog in performance of contracts supporting Operation Enduring Freedom. This memo is a deviation from Federal Acquisition Regulation (FAR) 51.101, which restricts the use of government supply sources in other than cost-reimbursement contracts. The deviation remains in effect until incorporated into the Defense Federal Acquisition Regulation Supplement (DFARS) or otherwise rescinded.
FierceGovernmentIT reported this week that the Office of Management and Budget plans to release an open data policy on November 23. Speaking at the World Government Summit on Open Source, Federal Chief Information Officer Steven VanRoekel said, “The policy will require agencies to start buying in different ways, to start building in different ways.” VanRoekel went on to explain that data.gov would become the central repository to access all live data at Federal agencies.
Source: Spotlight: Open data policy coming Nov. 23, says VanRoekel, October 15, 2012
Senate majority leader Harry Reid (D-Nev.) announced this week that he plans to bring cybersecurity legislation (Cybersecurity Act of 2012, S. 3414) back to the Senate floor when Congress returns to session after the elections. Administration officials and members of Congress have expressed concern over recent gridlock on the issue of cybersecurity. Senator Joe Lieberman (I-Conn.), Secretary of Defense Leon Panetta and the Administration have all voiced concern regarding the nation’s cyber infrastructure and support Senator Lieberman’s bill, which was recently blocked in the Senate. Analysis suggests that even if the bill were to clear its Senate hurdle, it would require reconciliation with the House version, which is softer on industry requirements and focuses on improving information sharing. At the same time, the Administration has been considering releasing an Executive Order on cyber that would include among others, voluntary standards for companies as proposed in the Cybersecurity Act of 2012.
Budget Sequestration, the WARN Act and Compliance Costs—Implications for Contractors
Jim Schweiter, Partner, McKenna Long & Aldridge LLP
Last August, Congress passed the Budget Control Act of 2011 (Pub. L. 112-25). This law authorized raising the debt ceiling, established caps on discretionary spending, and put in place a process known as sequestration to implement a total of $1.2 trillion in automatic spending cuts through fiscal year 2021, unless Congress passes a bill which the president signs to avert such a result. Sequestration is a process of automatic, largely across-the-board spending reductions under which budgetary resources are permanently canceled in order to achieve compulsory deficit reduction.
Much has been written about the draconian effects sequestration will have on the programs, projects and activities of executive branch agencies. Senior executive branch officials, members of Congress and industry leaders all predict catastrophe if sequestration is implemented. In the case of government contractors, the decline in new government work caused by funding reductions, or the truncation of existing government work through contract terminations, changes, or other mechanisms, may cause employers to consider terminating or laying off employees. As a result, it is important for employers to understand their rights and obligations under the Worker Adjustment and Retraining Notification (WARN) Act.
Notification Requirements under the WARN Act
The primary purpose of the WARN Act is to require certain employers to provide at least 60 days advance notice to employees who are impacted by a “plant closing” or “mass layoff.” Each of these terms has a lengthy statutory and regulatory definition but, in brief, a “plant closing” refers to a shutdown of a site of employment resulting in an employment loss for at least 50 employees, while a “mass layoff” means a reduction in force at a single site of employment impacting at least (1) 50 employees and 33 percent of the active employees at that site, or (2) 500 employees.
As a general rule, whenever an employer foresees that 50 or more employees could lose employment at a site of employment within a 90-day period, that employer should carefully analyze whether the definition of a “plant closing” or “mass layoff” may have been met, and thus whether WARN notice requirements have been triggered. If the WARN notice requirements are triggered, the employer must provide written notice of the anticipated employment loss to (1) the affected employees (or to their representative if unionized), (2) a designated state official, and (3) the chief elected official of the unit of local government within which the layoff or plant closing will occur. If the employer provides less than 60 days’ notice before the employment action, it may be subject to paying wages and benefits to the affected employees for the portion of the 60-day period in which notice was not given, in addition to other potential penalties.
The WARN Act recognizes that plant closings and mass layoffs cannot always be anticipated months in advance, and certain exceptions to the 60-day notice requirement exist. The “unforeseeable business circumstances” exception is the relevant exception that would be associated with layoffs or plant closings resulting from the January 2, 2013 onset of sequestration. This exception encompasses a “sudden, dramatic, and unexpected action or condition outside the employer’s control.” The Labor Department’s interpretive guidance noted that although budget sequestration can be seen months in advance, the actual impact on a particular contractor may be unknown until much later. Therefore, an abrupt termination of a particular contract might qualify under the “unforeseeable business circumstances” exception. If contractors must lay off or separate their employees in less than 60 days, such announcements would be sudden and dramatic and therefore consistent with the WARN Act. According to the Labor Department, in such cases employers would not have to provide the full 60-day notice.
Contractor Costs and the WARN Act
The Office of Management and Budget (OMB) just issued new guidance that certain liability and litigation costs associated with WARN Act compliance will be allowable costs under government contracts. Under the OMB memorandum, if sequestration occurs and an agency terminates or modifies a contract which causes the contractor to order a plant closing or layoffs subject to the WARN Act’s notification requirements, and that contractor has followed the Labor Department’s guidance, then any resulting court-determined, WARN Act-based employee compensation costs, attorneys fees and other litigation costs would qualify as allowable costs which would be reimbursable by the contracting agency, regardless of the litigation outcome. Such costs would also have to be both allocable to the contract in question and reasonable in accordance with existing FAR principles.
This new OMB memorandum has prompted several large defense contractors to announce that they will not issue WARN Act notices before January 2, 2013. However, the guidance has exacerbated partisan tensions. Senators Charles Grassley (R-IA) and Kelly Ayotte (R-NH) announced jointly that they had sent a letter of inquiry “asking under what authority the administration is using to say it is okay to disregard the law,” and then promise contractors “a taxpayer funded bailout for their legal expenses if they do so.”
Regardless of the seemingly inevitable partisanship that accompanies the run up to a presidential election, there are several points about the most recent OMB memorandum for contractors to bear in mind. First, the implementation of sequestration alone does not portend layoffs or plant closings triggering WARN Act notice requirements. There must be some adverse contract action flowing from sequestration’s funding reductions which affects an employer. In addition, the OMB guidance clearly contemplates a court determination of both employee compensation costs, as well as attorneys fees and other litigation costs. However, employers may incur substantial costs associated with the publication and dissemination of WARN Act notices or employee negotiations and settlements not resulting in litigation. Under the OMB guidance, these costs would not seem to be allowable. Contractors who anticipate potential WARN Act liability should seek guidance from contracting officers about the extent to which their WARN Act-related costs will be allowable. Awareness of the OMB memorandum by DCAA and DCMA personnel will almost certainly also take time, and ignorance of the OMB guidance could complicate audits. Finally, before allowable costs may be reimbursed, the Government must have funds available to do so. If sequestration occurs, agencies may not have sufficient funding to reimburse WARN Act-related costs. Even if litigation resulted from a WARN Act dispute, the Judgment Fund would not be available for such purposes because the litigation would not involve the United States.
Prudent employers should prepare for various scenarios and have contingency plans in place to provide appropriate notice as soon as it becomes clear that a particular contract action will cause a WARN-triggering employment loss. Some companies are considering “provisional notices,” which communicate to all employees that federal budgetary issues could result in an employment loss. However, because they do not indicate which specific employees will be impacted and the specific date on which the employment loss will occur, such provisional notices may be “better than nothing” (and may show the employer’s good faith efforts to try to comply with WARN) but are still unlikely to fully satisfy the requirements of WARN. Finally, employers should be aware that several states have their own plant closing laws (sometimes referred to as “mini-WARN” statutes), and some of these laws have more stringent requirements that the federal law. Employers should thus analyze relevant state laws in states in which a significant employment loss may occur.
 Pub. L. 100-379, codified at 29 USC 2101 et. seq.
 20 C.F.R. 639.9(b)(1); see also, 29 USC 2102(b)(2).
 Department of Labor, Training and Employment Guidance Letter No. 3-12, July 30, 2012.
 Office of Management and Budget, Guidance on Allowable Contracting Costs Associated with the Worker Adjustment and Retraining Notification (WARN) Act, Memorandum for the Chief Financial Officers and Senior Procurement Executives of Executive Departments and Agencies, Sept. 28, 2012.
 Sara Sorcher, White House Moves to Head Off Sequester Layoffs, National Journal, Sept. 29, 2012, at http://www.nationaljournal.com/nationalsecurity/white-house-moves-to-head-off-sequester-layoffs-20120928.
 Senators John McCain, R-Ariz., and Lindsey Graham, R-S.C., called the guidance “politically motivated” and said they’d block any contractor payments by the Pentagon to cover failure of issuing WARN Act notices. Joyce Tsai, Partisan Debate Deepens over Layoff Notices Before Sequestration, Stars and Stripes, Oct. 5, 2012, at http://www.stripes.com/partisan-debate-deepens-over-layoff-notices-before-sequestration-1.192039.
 Letter from Senators Charles Grassley and Kelly Ayotte to Jeffrey Zients, Acting Director, Office of Management and Budget, (Oct. 1, 2012), at http://www.grassley.senate.gov/about/upload/100220121.pdf.
 31 USC 1304.
The Air Force Materiel Command posted a special notice on FedBizOpps.gov on October 11. The notice announces that Air Force Materiel Command (AFMC) senior leadership has approved an initiative to streamline the acquisition of engineering and professional services across the Command. The notice goes on to explain that an AFMC Enterprise Services site is being established to provide a single point for communications and to facilitate industry participation throughout the initiative. AFMC’s goal is to increase efficiency in its acquisition processes and to standardize the approach for acquiring enterprise services across AFMC and implement multiple award contract programs that aggregate requirements aligning to AFMC’s 5 major mission areas of Life Cycle Management, Test, Sustainment, Science and Technology, and Nuclear. Materiel Command is attempting to utilize the standardization in the areas of small business treatment, contract type, contract term and simplified and uniform source selection process, both at the basic contract level as well as at the task order level, the notice says. The Air Force intends to use small businesses as prime contractors or members of joint ventures. The initiative will first focus on the Air Force Test Center (AFTC) enterprise program, called Test Mission Advisory Services (TMAS).
A second effort in enhancing enterprise services acquisition will be for the Air Force Life Cycle Management Center (AFLCMC) to be followed by an enterprise program for the Air Force Sustainment Center (AFSC). Any questions on the notice may be directed to Strat.Sourcing.Suppt@WPAFB.AF.MIL.
Defense Procurement and Acquisition Policy (DPAP) Director Richard Ginman has issued a number of announcements in October. In addition to the DoD notice on accelerated contractor payments and Operation Enduring Freedom, DPAP has released:
- Class Deviation requiring Additional Approval for T&M/LH Contracts and Orders
- Defense Acquisition Officials: Reminder to Notify GSA of Determinations to Continue Business with Suspended or Debarred Contractors
Notification of Compelling Reason Determination (10/05/2012)
- DoD Reports Improved Compliance Contractor Past Performance Reporting
- Defense Acquisition Officials: Reminder to Post Data on Determinations for Cause and Default in FAPIIS
Increased small business utilization is a high a priority for the Federal Government. As a result, regulatory, legislative and agency level changes that -impact the Federal market are all possible.
On October 30, the Coalition will host a small business forum to gain insight into significant changes to the small business rules and how they will impact sales to federal agencies.
Small Business Administration – Looking Ahead at Federal Acquisition Priorities and Changes
A. John Shoraka, Associate Administrator of Government Contracting and Business Development, SBA
Small and Large Business Collaboration in the Federal Market – What Works and What Needs to Work Better.
Panel Moderator – Joseph Hornyak, Partner, Holland and Knight
James Connal, Vice President, Red River Computer
Tom Walker, Government Manager, Nucraft Furniture
Wayne Pizer, Vice President, L-3 National Security Solutions
Who Should Attend:
Small Businesses that sell to Federal Agencies Federal OSDBU Directors
Large businesses that subcontract to, team with, Federal Buying Officials
or sells indirectly through small businesses
Thank you to our Continuing the Dialogue Sponsors
The Excellence in Partnership Awards and Continuing the Dialogue – our 2012 Fall Training Conference – could not be possible without the support of our Sponsors. The Fall Training conference, Continuing the Dialogue, addresses acquisition policy, the federal market and constructive dialogue between government and industry. Sponsorship of this event demonstrates your support for quality training of acquisition professionals and robust communication between government and industry with the goal of acquisition excellence.
Join your industry peers with this heightened exposure by becoming a sponsor! If you would like to reserve one of our sponsorship opportunities, please contact Athena Oliff at email@example.com or 202-315-1052.
A Special Thank You to our Keystone Members!
The intensive, one day training workshop teaches the basics of utilizing the Multiple Award Schedules program. Over the course of the workshop you will learn how to obtain and manage your GSA schedule, market GSA contracts, comply with Federal procurement requirements, follow policy changes, and prepare for MAS audits. A highlight of the course is training on GSA’s electronic tools including eBuy, GSA Adavantage! and GSA eLibrary. Other material covered will include of structuring your contract to address the schedule compliance requirements while retaining flexibility to compete in the federal and commercial market place, as well as training on the new FAR 8.4 ordering procedures. The courses will be taught by those on the front lines of GSA schedule negotiations and contract management.
Attendees are eligible to earn up to 8 CLP credits with submission of an attendance certificate and course training packet available for pick-up after the event.
The Coalition regularly provides public comments on rules that impact the membership. The following is a list of upcoming rules. We ask that members note the proposed rule on Basic Safeguarding of Contractor Information Systems which was published in the Federal Register last week. The Coalition plans to submit comments on this proposed rule and will provide further analysis on it in an upcoming edition of the Friday Flash.
Summary: DoD, GSA, and NASA are proposing to amend the FAR to add a new subpart and contract clause for the basic safeguarding of contractor information systems that contain information provided by or generated for the Government that will be resident on or transiting through contractor information systems.
Due October 23, 2012. If you have any comments regarding this proposed rule, please contact Aubrey Woolley.
Notice of Proposed Rulemaking
Summary: DHS is proposing to amend its Homeland Security Acquisition Regulation to require contracts for time and material or labor hours to include separate labor hour rates for subcontractors and a description of the method that will be used to record and bill for labor hours for both contractors and subcontractors.
Due October 22, 2012. Please contact Carolyn Alston if you would like to contribute to the Coalition’s comments on this issue.
Notice of Proposed Rulemaking
Summary: The Department of the Treasury is proposing to amend the Department of the Treasury Acquisition Regulation (DTAR) to include a contract clause on minority and women inclusion, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act).
Due October 22, 2012. Please contact Carolyn Alston if you have any feedback on this notice.