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Friday Flash, 11.09.12

Comment of the Week

As you know, putting “commercial” back into commercial item contracting is one of the Coalition members’ top priorities. Over the last decade the procurement community has seen a significant growth in the imposition of government unique requirements on the procurement of commercial services and products.  This retreat from commercial item contracting increases costs, reduces competition, limits innovation and costs jobs.  Given the budgetary challenges we are facing, the federal government cannot afford to continue impose unique terms, clauses and regulations on commercial item contracts that increase costs while adding no value.  It is time for a retrospective review of commercial item contracting, including the GSA Multiple Award Schedules (MAS) program, to identify and remove costly, unnecessary government unique terms, conditions, and requirements.

Conducting a retrospective regulatory review that focuses on putting “commercial” back into commercial item contracting is good for the taxpayer, the federal government, and the private sector.  It is also consistent with President Obama’s January 18, 2011 Executive Order 13563—“Improving Regulation and Regulatory Review” and May 10, 2012 Executive Order 13610—“Identifying and Reducing Regulatory Burdens.”  These Executive Orders seek to “modernize our regulatory system and to reduce unjustified regulatory burdens and costs.”  To that end, reducing unnecessary regulatory burdens and costs on commercial contractors will increase the efficiency and effectiveness of the federal procurement system.  As a result agencies will be better equipped to meet mission requirements in a more cost effective manner.

The best place to focus such retrospective review is GSA and the VA MAS program.  The MAS program is the foundation for government-wide commercial item contracting.  The $50 billion MAS program is the largest government-wide commercial item contracting program.  (Orders under the GSA MAS program account for approximately $40 billion annually while the Department of Veterans Affairs MAS program accounts for another $10 billion in orders each year.) As such, the taxpayer has a wonderful opportunity to increase MAS efficiency and save money by reinvigorating commercial item contracting.  To that end, in the October 26th Friday Flash the Coalition requested your input as to those terms, conditions and regulatory requirements that are inconsistent with commercial practices; increase costs and/or reduce program efficiency.  Your input will form the basis for an ongoing “Myth-Busters” conversation with GSA, VA and its stakeholders on the imperative of “putting commercial back into commercial item contracting.”

Consistent with the Myth-buster’s initiative, FAS has requested this input as part of the continued dialogue on GSA programs that took place at our Fall Conference.  Please remember that suggestions are welcome from the entire procurement community, including government and the private sector.  Thank you for the comments we have already received to date!  For those of you who have not yet responded, please provide your comments/input to Roy Dicharry at by November 30th.

Roger Waldron



DoD: Better Buying Power 2.0 & More Coming

During the 31st Annual Government Contract Management Conference in Washington DC, undersecretary of defense for acquisition, technology and logistics Frank Kendall updated the audience on three initiatives that the Department is looking at with respect to acquisition. First Kendall explained that he is rewriting DOD 5000.02, the DOD instruction that covers the acquisition system. “What I found is that there had been a lot of laws that had been passed that needed to be integrated into the document,” Kendall said.

Additionally, Kendall stated that he believed the Department should release a “report on the performance of the acquisition system…I have a very strong belief that we need to be data-driven in what we do.” According to the press statement, the proposed report will begin to put some quantitative analysis and data analysis into the defense acquisition equation. “It’s about putting it out in the public domain so everybody that thinks they’re an expert on acquisition … can go back and look at this data and see if there’s anything in the history that tells us what works and what doesn’t,” Kendall said.

Finally, the DoD’s Better Buying Power 2.0 is anticipated to be released in the near future. The undersecretary explained that Defense will conduct a deeper analysis of service contracting, and develop the acquisition workforce. Furthermore ASI Government highlighted what undersecretary Kendall explained as key areas of the initiative. These areas include, greater attention to cost control, building stronger partnerships with the requirements community, clarifying that COs should choose the best contract type for the acquisition (not only fixed-price), emphasizing best value, and better defining low price, technically acceptable.


Webinar Series: Beyond Commercial Item Contracting

A Two-part Primer on Negotiated Contracting Under FAR Part 15

PART 1: FAR Part 15 vs. FAR Part 12 – A New World of Risk

Join Baker Tilly for the first of a two-part Primer on Negotiated Contracting Under FAR Part 15.  Part 1 of this series will focus on FAR Part 15 vs FAR Part 12.  In tough economic times, many commercial companies attempt to maintain or grow revenues by securing contracts with the US Federal Government.  Commercial item contracting (Part 12 of the Federal Acquisition Regulation (“FAR”)) carries the least risk.  When stepping outside the commercial item arena and into the world of negotiated government contracting, unpleasant surprises await the unwary and unprepared.  Expectations of reasonable profits may ultimately yield real losses and latent liabilities. Rewards accrue to those who know beforehand what they’re getting into. In this one-hour webinar, we will discuss:

·         How the size of your company, contract value, and contract type govern the applicability of contract and regulatory compliance requirements;

·         The essential prerequisites necessary to identify, manage and mitigate compliance risks successfully;

·         The current state of the negotiated government contracting environment, including several hot topics every FAR Part 15 contractor must know.

This webinar is free to Keystone and Premiere Members.  Regular members may join the webinar for $50, Non-Members $80 and $10 for government employees.

Register Here


Best Wishes to Deputy FAS Commissioner Jordan

The Coalition sends our best wishes to Deputy FAS Commissioner Jon Jordon on his retirement.  Jon has served as a public servant for the past 38 years at GSA.  If there is an unsung hero of GSA, it’s Jon Jordan, who has spent his tenure at GSA as a dedicated steward of taxpayer dollars within the agency.  GSA is certainly a better organization because of his service.  The Coalition sincerely appreciates his commitment to efficiency, effectiveness, and fiscal responsibility over the years.  We wish Jon Jordan and his family the best in his retirement!


Army to Rebalance Military, Civilian & Contractor Workforce

During a recent event held at the Center for Strategic and International Studies, the Army Chief of Staff General Raymond Odierno stated that he is seeking to “rebalance” the military, civilian and contractor workforce. “What we’ve had to do because we’ve had lots of contractors and civilians, we want to keep some of that capacity and unique capability, but I got to invest more uniform back in, senior non-commissioned officers and officers back into our training pipeline and back into our doctrine pipeline,” Odierno said. The Army Chief of Staff sees these elements as the basis of leadership that allows the Army to expand more quickly, if needed in the future. According to Odierno, the Army’s Training and Doctrine Command will lead the effort to balance the workforce among contractors, civilians and uniform personnel. For a full transcript of the remarks, click here.


Small Business Forum – November 28th

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 November 28, 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.

SBA & GSA Keynote:

  • A. John Shoraka, Associate Administrator of Government Contracting and Business Development, SBA
  • Jiyoung Park, Associate Administrator Office for Small Business Utilization, GSA

Industry Panel:

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:

Industry                                                                              Government

– 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


DoD: Sequestration Preparation Underway

As a part of his keynote address during the 31st Annual Government Contract Management Conference in Washington DC, undersecretary of defense for acquisition, technology and logistics Frank Kendall explained that the DoD has begun to prepare for billions of cuts scheduled to occur on Jan. 2 of this next year, should Congress fail to reach a deficit reduction deal and avoid the automatic sequestration cuts. “We actually are starting to do some planning,” Kendall stated. However, he also stressed that, “we have to collectively do everything we can do to see to it that [sequestration] doesn’t happen. It would be a devastating result, not just for the department, but for the country if cuts of that magnitude were applied so indiscriminately. We essentially have to go into every budget account and maybe every budget line, and take the same percentage out of essentially every line.” Despite the devastating effects of the sequester looming, the undersecretary expects “there’ll be a delay for a few months, and then after the new Congress comes in, in January, we’ll sort it all out,” he said.


Off the Shelf: Civil False Claims Act & GSA Schedules

This week on “Off the Shelf”, Jack Horan, partner at McKenna Long & Aldridge LLP, discusses the latest developments in the Civil False Claims Act area with a special focus on the GSA Multiple Award Schedule program.

Horan walks through the key compliance issues in the schedules program including the Price Reduction Act, Commercial Sales Practices, Trade Agreements Act, and labor qualification requirements.  Widely recognized as an expert on the Civil False Claims Act and government contracts, Horan provides valuable insights regarding key compliance challenges and effective management responses for schedule contractors.  To listen to the program, click here.


Legal Corner 

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.[1]

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.”[2]  The Labor Department’s interpretive guidance[3] 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.[4]  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.[5]  However, the guidance has exacerbated partisan tensions.[6]  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.”[7]

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[8] 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.

[1] Pub. L. 100-379, codified at 29 USC 2101 et. seq.

[2] 20 C.F.R. 639.9(b)(1); see also, 29 USC 2102(b)(2).

[3] Department of Labor, Training and Employment Guidance Letter No. 3-12, July 30, 2012.

[4] 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.

[5] Sara Sorcher, White House Moves to Head Off Sequester Layoffs, National Journal, Sept. 29, 2012, at

[6] 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

[7] Letter from Senators Charles Grassley and Kelly Ayotte to Jeffrey Zients, Acting Director, Office of Management and Budget, (Oct. 1, 2012), at

[8] 31 USC 1304.


Briefing on Federal IT Acquisition Reform Act

This week, the GWAC, MAC & Enterprise Contracting Committee received a briefing on the draft Federal IT Acquisition Reform Act from Rich Beutel and Eric Cho of the House Committee on Oversight and Government Affairs.  Objectives of the proposed legislation are to cut waste in the acquisition and use of IT in the Federal government, get the best price for the taxpayer, eliminate unnecessary duplication of IT contracts, and to further develop expertise in IT acquisition so that the government can buy smarter, faster and more cost effectively.  The Coalition sincerely appreciates Rich Beutel and Eric Cho for briefing the membership on the details of the draft bill and agrees that contract duplication should be addressed. We look forward to continuing the dialogue with the Committee on this important legislation and will develop comments through the IT Acquisition Reform Working Group.  Members interested in participating in this group please contact Aubrey Woolley at


DoD to Industry: Join Cyber Threat Sharing

Deputy Secretary of Defense Ashton Carter released a memorandum on October 31 encouraging industry partners within the Defense Industrial Base (DIB) to participate in the Department’s voluntary cyber threat sharing program. All DoD Components are to actively encourage their eligible, cleared contractors to consider participating in the voluntary DIB Cyber Security and Information Assurance (CS/IA) program and its optional DIB Enhanced Cyber Security Services (DECS) component. According to the memo the DIB CS/IA program enhances and supplements contractor’s ability to protect and safeguard DoD information that utilizes unclassified information systems. As a part of the program, the DoD provides classified and unclassified cyber threat information and information assurance best practices to DIB companies. In return, vendors report cyber incidents that may involve DoD information systems so the DoD can analyze the threats, develop mitigation strategies, and, when needed, execute cyber intrusion damage assessments. Additionally, the optional DIB Enhanced Cybersecurity Services (DECS) the government provides industry partners, or their authorized Commercial Service Provider, with classified cyber threat or technical information to further counter cyber threats. The DoD maintains that “although threats cannot be eliminated, this voluntary partnership between DoD and the DIB strengthens our collective protection against this real, immediate, persistent, and increasingly sophisticated cyber threat.”


Upcoming Coalition Training!

MAS Basic Training – November 29, McKenna Long & Aldridge, Washington D.C.

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. REGISTER HERE!

GSA/VA Schedule Contracting for In-House Counsel – December 5th Training

The GSA/VA Schedule is a $50 billion contracting program that all federal agencies use to acquire commercial services and products.  These multiple year, government-wide contracts cover professional services, information technology, pharmaceuticals and a vast array of commercial products.

The GSA/VA Schedule offers a huge market opportunity.  Thousands of companies including both Fortune 500 companies and a vast number of small businesses have GSA/VA Schedule contracts.  All federal agencies, and in some instances state agencies, can place orders against the contracts.

Of particular interest to in-house counsel, GSA/VA schedule contracts have a pricing methodology, and disclosure requirements that are unique in federal government contracting.  The contracts provisions must be correctly understood, managed and monitored to assure that your company realizes anticipated profits.  Failure to do so can result in significant monetary, administrative, civil and even criminal penalties.

Join the Coalition on December 5th to gain information and tools to help you understand the GSA/VA Schedule contracting program and provide insightful legal advice to your in-house client.

Click here for more information or to register for this very important training opportunity!


Election Results and Outlook for the 113th Congress- December 6th

The Election is over, the results are in!   But what does it all mean?  Join the Coalition for Government Procurement as we explore the results, the ramifications and the outlook for the new Congress in 2013.  Tom Davis and a panel of industry experts will analyze the results and share insights on what it all means for procurements in 2013.

Keynote Address

The Honorable Thomas M. Davis – former 7 term Virginia Congressman and Chairman of the House Government Reform and Oversight Committee as well as the Chair of the subcommittee on Technology and Procurement Policy.  He now serves as the Director of Federal Government Affairs for Deloitte & Touche LLP, where he continues his commitment to effective, common-sense solutions to government.  Listen to his perspective on what happened, why it happened and what it means moving forward.

Panel discussion

Hear from industry experts how the elections will impact Sequestration, The “Fiscal Cliff,” Business Opportunities, GWAC/MAC Procurements, and other topics.

Jon Etherton, President and owner of Etherton and Associates, Inc., a respected firm that provides services in Federal relations to clients in the defense, intelligence, aerospace and service industries.  Jon Etherton has over 25 years of experience working in and with Congress as well as the Executive Branch on national security funding and policy issues.

Tom Sisti, Senior Director & Chief Legislative Counsel at SAP. In this role he provides legislative analysis and counsel to business leadership and support for SAP business team’s development and program initiatives.

December 6th, 2012

8AM – 10AM

The Tower Club

8000 Towers Crescent Drive #1700
Vienna, VA 22182

Register Here!

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