This week it is Thought No. 5 of the Thirteen Thoughts for 2013: “Closing the door on the Demand Based Model in 2013!(?).” In 2012 the General Services Administration issued a Federal Register notice regarding its intent to implement a Demand Based Model (DBM) for the Multiple Award Schedule (MAS) program. The DBM’s goal is reduce GSA’s operation costs primarily by limiting the number of offers and contracts under the MAS program. A key feature of the DBM is GSA’s proposal to eliminate continuous open seasons and close certain schedules and/or Special Item Numbers (SINs) from receipt of new offers. In response to the Federal Register notice, the Coalition submitted comments opposing the closing of schedules for receipt of new offers. To date, GSA has not closed any schedules as part of a DBM implementation. The Coalition applauds GSA taking a step back from such an anti-competitive measure that would negatively impact opportunities for small business.
Continuous open seasons reflect fundamental faith in the commercial market place. They support opportunities for all business, small, medium and large, to bring the latest commercial solutions to the federal market. Continuous open seasons foster greater competition and innovation in the federal market which benefits customer agencies, the private sector and ultimately the American taxpayer. Indeed, GSA provides a wonderful service to customer agencies and business through the management and operation of the MAS program. It is the central federal market place for customer agencies and commercial firms to conduct business. Now that it appears that GSA is keeping the door open to new offers, it is time to focus on increasing MAS opportunities and efficiencies for customers and contractors. It is time to empower an “Opportunity Based Model!”
Here are the key features of an Opportunity Based Model for the MAS program:
- MAS program management should be consolidated in a single office within the Federal Acquisition Service (FAS). Currently MAS program operations are managed in no less than three business lines. By consolidating management in a single office, FAS will be able to more efficiently and effectively manage the negotiation and administration of contracts. Too often each of the acquisition centers within the separate business lines that have their own unique approach to the submission, negotiation and award of MAS contracts. This uncertainty increases costs and delays in the offer process for GSA and industry. Consolidation of management will achieve structural and operational savings for all.
- Update and reform the MAS pricing policy. The current pricing policy dates from about 1982 (the year I graduated from College!). It is old and outdated! The policy focuses on commercial products which made sense at the time since the majority of MAS purchases were for products. However, today services account for approximately two thirds of the purchases. Moreover, current statute and regulation require task order competitions for orders exceeding $150,000. Significant time, energy and money are spent by GSA and contractors in dealing with a policy that does not reflect current commercial practice and the market profile. Most importantly, the Price Reduction Clause limits the ability of MAS contractors to compete in the commercial market thereby limiting growth in the private sector. As an anti-competition, anti-growth provision, the PRC should be eliminated.
- Put “commercial” back in commercial item contracting. Over the years the number of laws, regulations and provisions applicable to commercial item contracts has grown significantly. It is time for a top down review of MAS contract provisions to identify and address terms and conditions that are inconsistent with commercial practice. Moreover, where the costs of certain terms and conditions outweigh the benefits, they should be eliminated from MAS contracts. The Coalition stands ready to support such an effort as a subject matter expert.
- Conduct a data summit. Data is not a free good. Data is also proprietary. Over the years FAS has asked for additional data reporting across the MAS platform. In many respects contractors are being asked to report data that the government has created. In one sense GSA is avoiding the direct cost of data collection by passing it on to contractors. These data collections increase operational costs for contractors. Increased costs that are ultimately passed on to GSA’s customers in the form of increased contract prices/costs. A summit would serve to better inform both GSA and its contractors on the role of data collection in the MAS program. What is the data being used for? What is “good” data? Are there commercial best practices for data collection and management? To the extent the data is needed and used, how can government and industry work together to make sound, strategic and efficient decisions regarding data management?
- Address other direct costs (ODCs) on MAS contracts. Implementing the FAR based commercial item ODC clauses would empower the MAS program to more effectively and efficiently provide commercial solutions that meet customer needs. It would increase competition and innovation in the program. It would also lead to less contract duplication as the MAS program would better meet customer agency needs thereby reducing the demand for new contract vehicles.
The Coalition looks forward to continuing the dialogue with GSA and the entire procurement community on creating greater opportunities for customer agencies and contractors through the MAS program. Please let me know your thoughts and ideas regarding an “Opportunity Based Model” for the MAS program.
The General Services Administration (GSA) will not be holding the GSA Expo in Orlando in May 2013. The Coalition appreciates GSA Administrator Dan Tangherlini’s leadership in resolving the uncertainty regarding this year’s conference.
Registration is now open for the Coalition’s Spring Training Conference on April 17th 2013 at the Crystal Gateway Marriott. Attendees will engage in a government-industry “Myth-busters” dialogue with acquisition leadership from the Department of Defense, Department of Veterans Affairs, General Services Administration and others about key procurement issues that impact members’ government business. The focus on “strategic acquisition” at this year’s conference is in response to increased interest in federal strategic sourcing. Strategic Acquisition can both improve the efficiency of government and provide an opportunity for businesses to offer innovative solutions that help agencies meet this goal. We have developed a robust and informative agenda with early speaker confirmation from Government and industry leaders alike. This is a conference you will not want to miss! Register Here!
This week GSA Administrator Daniel Tangherlini addressed plans to further consolidate departments as a result of the agency’s top to bottom review. In a blog post, Administrator Tangherlini explained that over the past 10 months, the top to bottom review found that the agency can do a better job by consolidating GSA’s administrative services. GSA will consolidate the IT, HR, administrative, and financial functions within the agency. In the coming weeks, GSA plans to simplify the IT department and ease access to agency data by bringing IT personnel, budgets, and systems under the authority of the Chief Information Officer. With regard to the consolidation of human resources, Administrator Tangherlini said that “bringing all human capital management personnel and operations together under the Chief People Officer ensures GSA’s HR needs are comprehensively met.”
Coalition President, Roger Waldron, was featured in Federal Computer Week this week in an article about interagency contracting. The article focused on the removal of interagency contracts from the Government Accountability Office’s High Risk List. They were first added to the list back in 2005. In his comments, Roger described the removal of interagency contracts from GAO’s list as a positive development— especially given that if done well, interagency contracts lead to fewer duplicative contracts.
The Coalition supports acquisition policies that reduce the number of duplicative contracts across the government. As shown by the results of our contract duplication survey, member companies of all sizes are expending significant resources as a result of duplicative contracts. The survey results were shared with officials at GSA, DoD, and the Office of Federal Procurement Policy (OFPP) with specific recommendations to reduce the cost burdens associated with contract duplication for both government and industry. We look forward to continuing to work with the government to strengthen interagency contracting.
“Continuing the Dialogue”
PBS Acquisition Focus for 2013
Dorothy Robyn, Commissioner, GSA Public Buildings Service
A Panel of Government- Industry Experts on
“Cost Savings Solutions for Federal Buildings”
Thursday, March 28, Offices of Mayer Brown, 1999 K St, NW, Washington DC
Registration at 7:30am, Presentation and Discussion at 8:00am
Join the conversation as we delve into the PBS acquisition focus for 2013 with PBS Commissioner, Dorothy Robyn. A panel of government and industry experts will follow that will address “Cost Savings Solutions for Federal Buildings”. Topics to include smart buildings strategies and alternative workplace solutions including modular furniture that will help agencies save taxpayer dollars.
PBS Commissioner, Dr. Robyn leads one of the largest and most diversified public real estate organizations in the world. The Public Buildings Service is responsible for providing superior workplaces for federal customer agencies at good value for the American taxpayer.
Dr. Robyn manages the nationwide asset management, design, construction, leasing, building management and disposal of approximately 375 million square feet of government-owned and leased space, accommodating over 1 million federal workers, and covering all 50 states, six U.S. territories and the District of Columbia. Additionally, Dr. Robyn oversees an annual budget of more than $9.4 billion and a workforce of almost 6,800.
Attend this session to see how PBS priorities and initiatives will impact sales of products and services that you offer to Federal customers. For more details and to register, please contact Athena Oliff at email@example.com.
The General Services Administration (GSA) is considering adding a new special item number (SIN) under MAS Schedule 599 for Meetings Management & Related Services. The potential new offering is designed to help the government tailor conference management to meet agency needs and better control spending. According to GSA’s solicitation documents, the program is estimated to save the government 10 to 20% on meetings and conferences. In addition, GSA believes that services provided through a Meetings Management SIN could also support more effective negotiations across multiple meetings, minimize cancellation penalties, and provide comprehensive expense and data management for the government. Responses are due March 6, 2013.
GSA posted a request this week on Interact to the Federal Strategic Sourcing Initiative (FSSI) communities for janitorial and sanitation (JanSan) products and maintenance, repair and operations (MRO) equipment. GSA is interested in hearing from these vendors about how they can best communicate with industry as the new FSSI contracts are developed. They are specifically interested in receiving responses to the following questions:
- Are there especially useful communication tools or methods we should take advantage of?
- How often would you like to hear from the team?
- What topics are important to you?
- What would you like more information on?
The Coalition has also invited GSA leadership to speak with members about other strategic sourcing initiatives, like the One Acquisition Solution for Integrated Services (OASIS), and would be happy to ask GSA’s JanSan and MRO teams to do the same. If you are interested, please contact Aubrey Woolley at (202) 315-1053 or firstname.lastname@example.org.
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.
* * *
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.
The Office of Federal Procurement Policy (OFPP) has posted a notice of public meeting and request for comments in the Federal Register. The notice states that OFPP is seeking input from the public on the practice of comparing the relative cost of performance by Federal employees versus contract performance in order to identify the most cost-effective source. OFPP notes that cost comparisons can be a beneficial tool to help the agency validate whether the current sector performing the work is the more cost- effective source or to encourage the sector currently performing the work to adopt more efficient practices. The notice says that “where the difference in cost between the public and private sectors for performance of the same task is significant, the comparison may support conversion of work from one sector to the other.”
OFPP is seeking feedback on three items:
- When cost comparisons are likely to be beneficial
- What principles should guide the conduct of cost comparisons
- What special considerations should be involved when work currently is being performed by a small business contractor
A public meeting will be held Tuesday March 5, 2013 from 2 pm to 5 pm at the General Services Administration Auditorium located at 1800 F Street NW., Washington, DC, 20405. To pre-register, please send an email to Ms. Aisha Hasan of OFPP at email@example.com by Friday March 1, 2013. OFPP will also accept written comments in response to the notice through April 15, 2013.
Defense Procurement and Acquisition Policy (DPAP) Director, Richard Ginman, issued a memorandum this week rescinding the class deviation designed to accelerate payments to small businesses. Class Deviation 2012-00014 said that Defense Department contracting officers should use clause 52.232-99 (Deviation), which requires prime contractors, upon receipt of accelerated payment from the Government, to then accelerate payment to small business contractors. The DPAP memo, dated February 21, 2013, states that use of this clause is no longer authorized. Moving forward, DPAP plans to continue phased implementation of accelerated payments to small business that also maintain necessary internal controls.
This week’s Off the Shelf radio show features an interview with Bill Gormley, President of The Gormley Group and Chairman of The Coalition for Government Procurement. Host Roger Waldron and Bill Gormley discusses the impact of sequestration on contractors and ways to improve the acquisition system, strategic sourcing, contract duplication, and more. To listen to the show, please click here.
The Department of Defense (DoD) posted a notice in the Federal Register announcing a public meeting on contractor profits on March 20, 2013. The purpose of the meeting is to obtain the views of experts and interested parties regarding the profit guidelines in the Defense Federal Acquisition Regulation Supplement (DFARS). Section 804 of the National Defense Authorization Act for FY 2013 requires DoD to review its profit policy guidelines to ensure that there is an appropriate link between contractor profit and performance. The meeting will be held on March 20, 2013 from 1:00 pm to 3:00 pm at the General Services Administration (GSA), Central Office Auditorium, 1800 F Street NW., Washington, DC 20405. For more information about registration, please review the public notice.
March 18th has been set as the date for the Annual DHS Industry Day to be held at the Washington Convention Center. The Coalition received a notice that registration will be open any hour now! Please be checking the FedBizOpps.gov page for the latest updates. The event will provide advanced acquisition planning information to industry and include panels from major program areas moderated by a variety of industry organizations. For more information please link to the notice above, and be sure to be checking FedBizOpps.gov for the latest updates.
Mark your calendars for a new webinar! Join the Coalition and McKenna Long & Aldridge LLP for a one hour lunchtime webinar at 12:30 pm on Foreign Acquisition and the Trade Agreements Act. Register here! If you would like more information, please contact Athena Oliff at firstname.lastname@example.org or 202-315-1052.
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 email@example.com.