Comment of the Week
Thought No. 2 of the “Thirteen Thoughts for 2013”: The GSA Expo: To be or not to be. The GSA Expo is a Myth-Busters event that brings government and industry acquisition professionals together to “continue the dialogue” on key issues and challenges facing the procurement system. The GSA Expo is the leading procurement training and professional development event for government and industry. In a time of fiscal challenge, the GSA Expo allows agencies and industry to efficiently and effectively leverage training and travel funding by providing thousands of procurement training hours for attendees. The GSA Expo is also a business intelligence event for GSA, customer agencies and industry. GSA and customer agencies share information on key program initiatives and acquisition policies while industry shares information on its key contracting and performance capabilities as well as important trends in the commercial marketplace. The GSA Expo is unique. It brings the GSA market to a single event including the contracting programs and professionals from the Federal Acquisition Service and the Public Buildings Service.
On January 9 the Coalition hosted a Forum, “Continuing the Dialogue: Planning for the GSA Expo.” The event provided GSA with an opportunity to share information regarding the planning and logistics for the 2013 Expo to be held on May 14-16 in Orlando. The event also provided members with an opportunity to provide GSA with feedback regarding last year’s Expo as well as hopes and expectations for 2013. The feedback from Forum attendees to GSA focused on a fundamental imperative: GSA needs to embrace the Expo as the leading Myth-Busters, training event for the procurement community. The GSA Expo competes for contractor marketing dollars along with many other events throughout the business year. Contractors and customer agencies take their cue from the host, GSA. By embracing the GSA Expo’s mission of continuing the dialogue and advancing the professional development of the acquisition workforce, GSA can provide a great service to customer agencies and the taxpayer.
GSA has an opportunity to demonstrate to key stakeholders the positives of the Expo. Joe Jordan, Administrator for Federal Procurement Policy, should be invited to attend. GSA also can invite the Chief Acquisition Officers Council to attend and participate in the Myth-Busters dialogue. GSA can and should invite key stakeholders from Capitol Hill to participate and address the attendees. All these folks should walk the Expo floor and engage with government and industry acquisition professionals who support the federal government’s mission every day.
Time is running short. As of today, contractors and attendees can not register for the 2013 Expo. The training, meeting and events schedule has not been published. The number and identification of GSA attendees is very important for GSA’s customer agencies and contractors. These key items, along with many other logistical matters are unknown and creating unnecessary confusion in and outside of government.
So back to the fundamental question: the GSA Expo, to be or not to be? The GSA Expo can continue to be a wonderful Myth-Busters and training event. The community will support it. Will GSA?
My last point, GSA needs to authorize approval of its acquisition workforce to attend this cost effective annual training event! GSA actually will save taxpayer dollars in allowing its 1102’s from FAS and PBS to attend. Yes, budgets are strained but this GSA training expenditure actually stretches taxpayer dollars.
A multi-association event was held yesterday on the Strategic Sourcing of Professional Services by the Coalition for Government Procurement, Professional Services Council, TechAmerica and ACT-IAC. It was a wonderful opportunity to continue the dialogue between the General Services Administration (GSA) and the Office of Management and Budget (OMB) regarding the strategic sourcing of professional services. As part of an industry panel, Coalition President, Roger Waldron, spoke to the complexities involved in this area and highlighted some key challenges of the recently published OASIS business case. In his comments, Roger Waldron emphasized the importance of maintaining flexibility through the OASIS contract, providing opportunities for innovation, and best value solutions that meet customer requirements. He also advised that increasing pressure to lower labor rates could reduce the potential effectiveness of the contract. As GSA and OMB continue to develop their approach to strategic sourcing, the Coalition looks forward to continuing the dialogue on this important issue.
GSA hosted an Industry Day this week to launch a new Federal Strategic Sourcing Initiative (FSSI) for janitorial, sanitation (JanSan) and maintenance, repair, and operations (MRO) products. The Administration plans to establish five strategic sourcing vehicles in FY2013. The JanSan and MRO FSSI contracts represent two of the five, with three more FSSI vehicles expected this fiscal year.
The two new FSSI vehicles for JanSan and MRO products are based on the GSA Schedules. Applicable Schedules for the JanSan FSSI contract are Schedules 51V, 73, and 75. The MRO FSSI contract will cover products from Schedules 51V, 56, and 81B. Services offered under these Schedules are currently not being considered as part of the upcoming FSSI contracts.
GSA estimates that Federal spending for JanSan and MRO products totaled more than $1.6B in FY2011. Most of these purchases were retail buys, often on credit cards, with no savings applied. GSA believes that a savings of 10- 20% can be achieved by strategically sourcing JanSan and MRO products. They are proposing that the FSSI vehicles offer reduced pricing by leveraging greater purchasing volumes, point of sale discounts, Level III data, and standardized part numbers so that Federal customers can better compare pricing.
The timeline for the establishment of the two new FSSI vehicles is fairly aggressive. During the industry day, GSA announced that they plan to release an RFQ by June 2013 and award by August 2013.
Moving forward, GSA will engage with industry through GSA Interact. An industry community on Interact for the JanSan and MRO FSSI acquisition is expected to be launched very soon, if not today. When the industry community is launched, GSA will announce the opportunity for vendors to meet one-on-one with GSA. Slides from the industry day and the transcript will also be posted on Interact.
On January 29, the GAO released its report to congressional committees on the management of interagency contracting. The GAO noted that both OFPP and GSA have implemented corrective actions to address the key interagency contracting issues identified in their 2010 report on the creation, use, and oversight of interagency contracts. According to GAO, OFPP has developed a policy framework for the establishment and oversight of interagency contract vehicles, which focuses on ensuring that new interagency contracts demonstrate the value through a sound business case. Also in response to GAO concerns, OFPP has expanded the functionality of a database that provides information on interagency contracts.
The report also details the positive steps GSA had made in the area of interagency contracting management and oversight. For instance, GSA had improved the availability and use of pricing data on its Multiple Award Schedules program. However, GAO found discrepancies in how DoD determinations addressed factors cited in the FAR or OFPP guidance. GAO noted that these variations appear to be the result of differences between the FAR and OFPP guidance and DOD’s acquisition regulation. In order to correct these, the GAO recommends that that DOD and GSA take steps to update policies and guidance to ensure that recent interagency contracting policy changes are implemented consistently.
The Coalition is establishing a Strategic Acquisition Working Group to make recommendations to the government about how to increase efficiencies in federal procurement and eliminate unnecessary cost drivers in the procurement system. As new Federal strategic sourcing solutions are being developed, this is a wonderful opportunity to share best commercial practices with GSA and OMB. More details will be discussed with members in the committee meetings this month. If you are interested in learning more or would like to volunteer, please contact Aubrey Woolley at firstname.lastname@example.org.
A number of large defense contractors have spoken positively over the prospects of a deal to avoid sequestration. An article in the Washington Post states that companies “do not appear to believe that [sequestration] will come to pass.” According to the Washington Post, this may be because Congress continues to avert fiscal crises at the very last minute, and because the Obama administration asked contractors last year not to issue layoff notices in preparation for cuts that were originally scheduled to begin this month. The full article can be viewed here.
On January 28, Director of Defense Procurement and Acquisition Policy (DPAP) Richard Ginman released a memorandum reporting that DoD compliance with contractor past performance reporting requirements have improved. A November 2011 memo tasked the DoD to monitor and communicate compliance information on past performance reporting to the senior procurement executives on a quarterly basis. The memo states that the PPIRS compliance metrics review for the first quarter identified the average in the Department as 67.5%. When compared to the previous quarter, this is an increase of 1.5%. For more information you can view the entire memo here.
The Office of Management and Budget (OMB) released a strategic plan this week to make Federal electronics and information technology more accessible for people with disabilities. The strategic plan was developed based on concerns that implementation of Section 508 of the Rehabilitation Act (“Section 508”) is inconsistent across Federal agencies. Section 508 requires that electronic and information technology that is developed, procured, maintained, or used by the Federal Government is accessible for Federal employees and members of the public with disabilities.
The Section 508 Strategic Management Plan outlines steps for Federal agencies to (1) increase transparency, (2) strengthen accountability, and (3) improve collaboration regarding accessible technologies. Acquisition is a key aspect of the plan, assigning agency Chief Acquisition Officers (CAOs), Chief Information Officers (CIOs), Senior Procurement Executives, and Contracting Officers with specific Section 508 procurement responsibilities. GSA also plays a critical role by providing accessibility technical assistance, workforce training, and acquisition tools for agency personnel.
In order to improve Federal agency management of Section 508, OMB’s strategic plan tasks the CIO Council’s Accessibility Committee with developing templates which agencies can use to determine their baseline level of compliance and measure progress in the future. Agency CIOs and CAOs are responsible for setting agency Section 508 goals and reporting progress to OMB.
In OMB’s memo announcing the plan, Joe Jordan, Administrator for Federal Procurement Policy and Steven VanRoekel, Chief Information Officer, emphasized that “acquiring and managing accessible [electronics and information technology] must be an integral part of the acquisition and information technology lifecycles and needs to be a management priority if we are to continue to fulfill our promise of an open and transparent government”.
What Does 2013 Have In Store for Government Contractors and Their Lawyers?
By Louis Victorino, Partner, Sheppard Mullin and Jonathan Aronie, Partner, Sheppard Mullin (originally published in the San Diego Business Journal)
It has been noted, the more things change, the more they stay the same. In the world of Government Contracts Law, however, the more things change, the more the phone rings. And while we’re only a month into 2013, the phone has been ringing off the hook. Here are a few of the reasons why.
The Government’s anti-contractor bias continues unabated. From the moment President Obama stepped into office, his executive team made clear their distrust of defense contractors. Indeed, one of OMB’s first public pronouncements focused on curbing perceived rampant contractor fraud. Shortly thereafter, Congress passed the Close The Contractor Fraud Loophole Act, certainly not the title one gives to an Act intended to extoll the virtues of the long and critical partnership between Government and industry. In late 2008, the Government continued down the anti-contractor path when it created what is known as the Mandatory Disclosure Rule, a regulation that requires contractors to self-report “credible evidence” of an extremely broad list of potential wrongdoing. The purported rationale for the rule? The Government’s belief that contractors were affirmatively hiding their fraudulent activities from the Government. Putting aside for a moment the many flaws in the Government’s apparent view that contractors generally are not to be trusted, the fact is the anti-contractor bias remains strong in 2013 and shows no signs of abating.
Increased enforcement activities. Tied closely to the Government’s view that contractors are not to be trusted, is the Government’s ever-increasing efforts to police those contractors more aggressively. Like 2012 before it, 2013 is poised to see increases in federal audits, investigations, and False Claims Act lawsuits. DCAA, the Defense Department’s primary audit watchdog, for example, continues to reach new levels of aggressiveness. As one commentator put it not long ago, the DCAA “is out of control.” Suspensions and debarments also are likely to increase in 2013. The President has directed federal agencies to make better use of the suspension/debarment process, and the OMB is making sure the President’s direction is implemented. It would be naïve, of course, to think this increase in enforcement activity is due solely to a mistrust of contractors. The Government’s collection of $4.9 Billion (yes, that’s Billion with a B) in False Claims Act settlements and recoveries in 2012 no doubt feeds the Government’s view that contractors need more policing, and fuels the arguments of the enforcement community that they need to be more, not less, aggressive.
Shrinking pots of money mean more bid protests. The number of bid protests (that is, disputes between a contractor and an agency over the non-award of a federal contract) has increased every year since 2008. In 2008, 1,652 actions were filed with the General Accountability Office (GAO), the primary arbiter of procurement award disputes. That number steadily increased to 2,475 in 2012. Whether or not that number will rise again in 2013 remains to be seen, but the likelihood that larger award decisions will be protested by a disappointed bidder will increase. As federal opportunities become fewer, the competition for those that remain almost certainly will heat up. In short, some companies simply cannot afford not to protest.
The Government will take more work in-house. With shrinking budgets and the elimination of programs, the Government will bring more work in-house in 2013 to maintain their internal funding levels and workforce headcounts. The move to in-sourcing will be advocated by Government labor “unions” and supported by the Democratic administration. See, e.g., Subtitle C of Title III of the National Defense Authorization Act for Fiscal Year 2012. This won’t just be in-sourcing of traditional Systems Engineering and Technical Assistance (SETA) work and weapons depot work, but will extend to major weapon systems repairs and overhaul, as well as design, development, and implementation of major Government software system upgrades. We also likely will see that Government engineering centers and laboratories will move to keep in-house significant research and development funding and activities. These efforts will have an obvious significant impact on contracting opportunities available to private companies, large and small.
The Government will become more aggressive with respect to securing intellectual property. As a consequence of bringing more work in-house, the Government will need the intellectual property necessary to perform that newly in-sourced work. As a result, 2013 likely will manifest an acceleration of recent trends to a more confiscatory Government policy regarding rights in data, including patents and copyright. Regardless of the standard rights in data delineated in applicable regulations and contract clauses, in connection with the solicitation of contracts for major programs, the Government will seek to obtain, at a minimum, a Government Purpose Rights License not only to data first produced or developed under the contract but also to a significant portion of all data used in the performance of the contract. Definitions of “Commercial Items” will be narrowed, expanding the Government’s rights in data, including software. Formal challenges to current contractor claims of data rights will increase. And, unfortunately, in some instances, contractor intellectual property simply will be used by the Government, with the propriety of the use left to be determined by years of litigation.
Greater competition for fewer dollars will prompt industry consolidation. The reduced number of contracting opportunities will have many collateral impacts on the Government contracting community and their legal advisors. As occurred with the end of the “cold war,” there likely will be an upswing in industry consolidation. With a reduction in funding and new programs available to contractors, the industry base will need to shrink. Some commercial and “dual use” companies simply will abandon the market. Others, with shrinking backlogs, will seek strength and economies through corporate combinations or “spin-offs.” Some companies, particularly smaller companies, will be targets of acquisition because of their success in winning large or significant program contracts. A business that wishes to be the leader in a particular technology may well need to acquire the winning competitor of the next and only large, long term contract involving that technology.
The increased pressure that comes with increased competition will cause some to stray. While the federal contracting community is, far and away, one of the most self-policed industries in the country, every industry has its exceptions. While most contractors will assess the new environment and adapt their business strategy accordingly, some will bend to the new fiscal pressures and adapt their strategies in more reckless ways. When contractor managers and employees see their livelihoods hitched to the success of the next proposal submission, some will do foolish things – some will seek inside information regarding the procurement, seek proprietary information about their competitors, provide false information to support their offer such as “inflated” resumes or product performance claims, and any number of other prohibited activities. In short, some people do pretty stupid things when they are under pressure. Fortunately, these events are the exception rather than the rule, but companies cannot afford to take any chances. If contractor leadership is not extremely vigilant and committed to internal integrity and compliance, the increased audits and investigations described above may well negate all efforts to be successful in the new smaller, Government contracting market.
Contractors continue to embrace ethics and compliance as a core element of success. Years ago, the implementation of an in-house ethics and compliance program was viewed by many contractors as a necessary evil; something needed to keep the lawyers happy, but rarely embraced by the “revenue generators.” Over the last 5-10 years, however, there has been a cultural shift among contractors. Contractors now embrace the benefits of an effective ethics and compliance program. Codes of Conduct are the rule rather than the exception. Training programs are standard fare for Government contractors. While the Government can take some credit for this evolution – there is nothing like a few multi-million dollar False Claims Act settlements in your industry to highlight the importance of compliance – contractors also deserve much of the credit for embracing the benefits of such programs. As the Government’s enforcement activities become more and more aggressive, one can expect to see a continued increase in the roster of Company’s embracing the benefits of an effective internal control system and ethics/compliance program.
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In short, we are reminded of an observation provided by an astute securities law school professor who noted: When the stock price of a company goes up, stock sellers will sue the buyers. When the stock price goes down, the buyers will sue the sellers. When the stock price remains the same, each will sue the other. Government contracting is a challenging market. Challenges exists in up-times and they exist in down-times. They likely will be different challenges from year to year, but challenges always are present. The astute contractor understands this and guides the organization accordingly.
The 2013 market clearly counsels in favor of enhanced care in the pursuit of new business. With respect to new solicitations, assure that the proposed terms and conditions and the statement of work/specifications are reviewed carefully and risks identified. Assure decisions to accept risk are fully informed and made at an appropriate level within the company. Finally, refresh your internal personnel training regarding Government and company rules delineating what are prohibited activities in connection with the submittal of a proposal. And, if all else fails, pick up the phone and give your friendly Government Contracts lawyer a call. You won’t be alone.
This article formed the basis, in part, for an article appearing in the January 21-27 issue of the San Diego Business Journal (www.sdbj.com) and special thanks to the editors of that publication for permission for its re-use.
Senator Introduces Veteran Employment Bill
Last week, Senate Finance Committee Chairman Max Baucus (D-Mont.) introduced the Veteran Employment Transition Act of 2013 (VETS Act of 2013).The legislation is co-sponsored by Senator Jon Tester (D-Mont.) and adds to the existing Work Opportunity Tax Credit for employers by allowing them to claim a $2,400 credit when they hire any veteran discharged within the last five years. The bill also streamlines the certification for veterans and businesses by only requiring veterans to show their discharge papers to demonstrate they were discharged no more than five years before being hired. As a press release from the Senate Finance Committee notes, the process is currently much more complicated. Under current rules, employers have to verify a set of criteria with their individual states’ employment agencies before they can claim the credit.
The VETS Act also would require federal departments to report to the Small Business Administration (SBA) on their contract awards to service-disabled-veteran-owned small businesses (SDVOSBs). According to ASI Government, language in the bill also directs the SBA to nominate contractors with significant progress for recognition by Congress. Additionally, the SBA is tasked with storing contract awards to SDVOSBs on a web site that is updated every three months, and report to Congress annually on the progress of each Federal department in meeting its goals.
GAO: Agencies Should Respond to Public Comments
In a recently released study, the GAO reports that for final rules issued between 2003 and 2010, agencies did not publish a notice of proposed rulemaking for about 35 percent of major rules and about 44 percent of “nonmajor” rules. GAO also found that when agencies requested comments on major final rules issued without a notice of proposed rulemaking, they did not always respond to the comments received. GAO noted that the government missed many opportunities, because when it did respond to comments, it often made changes to improve the rules. “When agencies do not respond to comments requested, the public does not know whether the agency considered their comments, or if it intends to change the rule. As the courts have recognized, the opportunity to comment is meaningless unless the agency responds to significant points raised by the public.”
GAO recommended that OMB issue guidance to encourage agencies to respond to comments on final major rules, for which the agency has discretion, that are issued without a prior notice of proposed rule. OMB disagreed that guidance would offer substantial benefits.
MAS Basic Training – February 14, 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!
Fairfax Chamber 2013 GovCon Symposium: Thriving in the Innovation Era
Tuesday, February 19, 2013
7:30 – 11:30 a.m.
Hilton McLean Tysons Corner
The uncertainty in the government contracting industry has existed for so long that it has in many ways become the “new normal.” Yet, this dynamic industry, which includes the most technological and innovative businesses in the nation, churns on. Join the Fairfax Chamber and its GovCon Council for the annual GovCon Symposium, which will focus on best practices for “doing more with less” and thriving in the “Innovation Era.” This half day program will kick off with a keynote address providing the outlook for the industry and will be followed by four breakouts in two concurrent sessions addressing the industry’s top trends. You’ll walk away with the tools and insights you need for the next year – whatever it may bring.
Panelists include prominent industry innovators and leaders like:
- Greg Baroni, Chairman & CEO, Attain, LLC
- Guy Filippelli, Chairman and Co-Founder, Berico Technologies
- Fred Funk, Co-founder and Vice President, KEYW Corporation
- Joe Martore, President & CEO, CALIBRE Systems, Inc.
- Kymm McCabe, President & CEO, ASI Government
- Peter Schuster, Vice President, Mergers & Acquisitions, SAIC