Thought No. 10: “Myth-Busters—continuing the dialogue is more than checking the box!” Given the current budgetary challenges we face, continuing the dialogue among all stakeholders on key acquisition policies, procedures and programs is vital to improving the efficiency and effectiveness of the procurement system. Over the last decade we have seen the growing unease and corresponding reluctance on the part of federal acquisition professionals to take advantage of the communication tools/opportunities available to them as part of the acquisition process. At the same time it is fair to say that companies have grown increasingly frustrated with the lack of communication. To its credit the Administration recognized this unhealthy trend and responded with the Office of Federal Procurement Policy Myth-Buster’s memorandum. Indeed, the “Myth-Busters” memorandum is fundamentally consistent with the President’s focus on transparency in government. What can be more transparent than engaging in dialogue with companies regarding key procurements and programs that support agency missions?
As the central procurement arm of the federal government, the General Services Administration (GSA) is “strategically positioned” to enhance and improve communications among all stakeholders in the procurement system. GSA provides the framework for customer agencies and contractors to work together to support the mission. At the intersection between customers and contractors, GSA can have a profound impact on improving communication and outcomes for all. GSA has been taking steps to increase engagement with its customer base and contractors regarding its new mission statement.
On May 22nd, the GSA Business Roundtable, hosted by the Coalition, will provide an opportunity for GSA leadership and Coalition members to have a cross-cutting dialogue regarding the new mission statement and GSA’s government-wide acquisition programs. The Roundtable provides a wonderful opportunity for GSA and its industry partners to engage in a Myth-Busters conversation that does much more than check the box! It is an opportunity to establish an ongoing conversation that focuses on improving the efficiency, effectiveness and openness of GSA‘s procurement programs. The Coalition appreciates the overwhelming positive response we have received from GSA and our members regarding the roundtable. We are looking forward to seeing you there!
There are other examples of Myth-Busters opportunities and examples that are more than just checking the box. The OASIS team is to be commended for its ongoing Myth-Busters outreach and dialogue regarding the OASIS acquisition strategy and draft RFP. The Department of Homeland Security (DHS) Office of the Chief Procurement Officer is to be commended for including as one its four priorities “Quality Industry-Government Communication” and for acting on this priority with a series of outreach efforts throughout the year. The Coalition’s 2013 Spring Conference was another Myth-Busters event with speakers from across the federal enterprise. During the course of the conference Shay Assad, Director of Pricing for the Department of Defense, challenged the audience to provide feedback on how the Department can reduce or eliminate unnecessary procurement costs. We in the private sector must also do more than check the box. As such, the Coalition will be reaching out to our members to identify areas of potential cost savings in order to respond to Shay Assad.
(Next week will focus on “Better Buying Power Metrics: how do we measure success?.”)
The GSA Inspector General, Office of Audits (OIG), issued a report on April 26, 2013, that addresses the issue of whether a contractor must apply price reduction discounts to GSA Schedule orders over the maximum order threshold.
The report addresses a difference in interpretation of clause I-FSS-125, Requirements Exceeding the Maximum Order (MO). The clause is no longer used in GSA schedule solicitations, but remains in some existing contracts. In instructing contractors about their obligations over the MO, I-FSS-125 stated:
(1) offer a new lower price for this requirement (the Price Reduction [sic] clause is not applicable to orders placed over the Maximum Order in FAR 52.216-19.)
Notwithstanding this language the OIG report takes the position that price reductions should apply to all schedule orders not just orders below the maximum order threshold. You can read the entire report here. The report recommends that GSA (1) remove the clause from existing contracts and (2) publish the agency’s interpretation of how price reduction discounts should be calculated on orders that exceed the MO.
We do not read the OIG report to negate the exemptions of Price Reductions Clause, GSAM 552.238-75. The clause states that an order to a commercial customer over the Maximum Order will not trigger a price reduction.
“(d) There shall be no price reduction for sales—
(1) To commercial customers under firm, fixed-price definite quantity contracts with specified delivery in excess of the maximum order threshold specified in this contract”
Rather, in situations where a price reduction is triggered the report asserts that the discounts due to the government should be applied to schedule orders of all sizes.
GSA management concurred in the audit report. We will monitor implementation and will advise of any updates in the Friday Flash.
The Department of Defense has released its final version of Better Buying Power (BBP) 2.0. In the released memo, Under Secretary of Defense for Acquisition, Technology, and Logistics Frank Kendall outlined four overarching principles that underlie BBP and will guide all acquisition activities. These include:
- Think. The first responsibility of the workforce is to think. The BBP encourages professionals to apply their education, training and experience through analysis and creative, informed thought to address daily decisions.
- People. Acquisition professionals who are experienced, trained and empowered are critical to applying the Department’s policies and processes effectively.
- Start with the basics. Acquisition fundamentals work and the DoD “needs to apply them effectively.” Kendall listed the following as what DoD should focus on: 1) effective incentives for industry; 2) understanding and active technical risk management; 3) insistence on demonstrated progress before major commitments; 4) getting early decisions right, especially requirements trade-offs; and 5) using the correct type of contract for the job.
- Streamline decisions. Finally, the Department plans to streamline processes and oversight to provide added value. Kendall also notes that this includes acquiring relevant data and encouraging appropriate decision makers to solve differences of opinion.
Additionally, DoD plans to continue to improve in the following seven areas to achieve greater efficiency and productivity in defense spending.
- Achieving affordable programs
- Controlling costs
- Incentivizing productivity and innovation
- Eliminating unproductive processes and bureaucracy
- Promoting effective competition
- Improving tradecraft in the acquisition of services
- Improving the professionalism of the acquisition workforce
Join The Coalition for Government Procurement for a roundtable discussion of the General Services Administration’s $60 billion+ contracting portfolio.
The Business Roundtable will bring together key players from GSA and industry to discuss the agency’s evolving acquisition strategy. The discussion will focus on GSA’s recently revised Mission Statement and how that statement will affect GSA customers and industry. The GSA Administrator, the Commissioners of the GSA Federal Acquisition Service and Public Buildings Services, and the Chief Acquisition Officer will present on the GSA mission and the agency’s six priorities. Leaders of GSA acquisition and program management offices and industry will participate in interactive roundtable discussions in small groups. To view the full agenda—including breakout sessions on MAS Pricing Policy, IT, GWACs, the IWA Center and Federal buildings—and to register visit https://thecgp.org/event/gsa-business-roundtable.
On May 22, the Coalition is hosting a Business Roundtable with GSA leadership, including GSA Administrator Dan Tangherlini, FAS Commissioner Tom Sharpe, PBS Commissioner Dorothy Robyn, and Chief Acquisition Officer Anne Rung.
As the Coalition works with GSA to prepare for the afternoon breakout sessions, we would like to hear from members about the specific topics that you would like GSA to speak to during these small group discussions. Please submit questions or topic ideas to Aubrey Woolley at firstname.lastname@example.org.
Breakouts and GSA invited speakers:
- Leveraging Government Requirements Through Strategic Acquisition
Anne Rung, Chief Acquisition Officer- General Services Administration (GSA)
Jeff Koses, Director – Acquisition Operations, GSA
Peter Han, Acting Director – National Administrative Services and Office Supplies Acquisition Center, GSA
Tiffany Hixson, Regional Commissioner, GSA
- MAS Pricing Policy – Status Quo or time for Change
Houston Taylor, Assistant Commissioner Acquisition Operations, GSA
Bill Sisk, Acting Deputy Commissioner, GSA
Walter Eckbreth – Supply Business Line, GSA, FAS
Dennis Harrison, GSA Schedule 70
Shaloy Castle-Higgins, Director – Greater Southwest Acquisition Center
- Acquisition of Services
Geri Watson, Director, Management Services Acquisition Center
Bruce Spainhour, Director, Center for Innovation Acquisition Development
Jim Ghiloni, Director, OASIS Program Management Office
- Federal Buildings and Integrated Workplace Acquisition Center (IWAC)
Tom James, Acting Regional Commissioner, National Capital Region, PBS
Sue Labman, Director, Integrated Workplace Acquisition Center
- The IT Portfolio
Mary Davie, Assistant Commissioner – Office of Integrated Technology Services and leadership of the IT Portfolio
Kevin Youel Page, Deputy Assistant Commissioner, Integrated Technology Services at GSA
Kay Ely, Director, IT Schedule Programs, GSA
Mark Day, Director Office of Strategic Program, GSA
For more information about the event and to register, visit https://thecgp.org/event/gsa-business-roundtable.
GSA’s Green Procurement Compilation (GPC)—formerly the Green Products Compilation—recently added a new portal for green services. The GPC provides green procurement guidance for Federal agencies such as information about green purchasing requirements and links to where to buy. The green services that are currently available in the GPC are Cafeteria & Food Services, Electronic Leasing, Fleet Maintenance, Janitorial Services, Landscaping Services, Laundry Services, Meeting & Conference Services, and Pest Management. For these services, the GPC also provides Federal customers with information about the required green products to be delivered as part of the service, optional green products, evaluation factors, and links to the applicable Multiple Award Schedules. GSA is in the process of populating this information in the new services portal. To access the GPC, visit http://sftool.gov/GreenProcurement.
In a recent House Oversight and Government Reform Committee hearing, the acting deputy commissioner of the GSA’s Public Buildings Service (PBS) told the committee that GSA faces major challenges in the real estate area. The PBS inventory’s average age is 47 years—close to the 50-year life expectancy of most commercial office buildings. Michael Gelber noted that in recent years, GSA has not had “access to all of the annual revenues collected by the [Federal Buildings] Fund, limiting resources available to maintain and restore these assets and meet the needs of our partner Federal agencies.” Due to the shortage in funds GSA has relied on leased space to house federal agencies, even though leasing is often more expensive than ownership. In order to mitigate this problem, GSA is taking the following actions:
- Working with agencies to reduce space requirements and dispose of unneeded property.
- Reducing the operating costs of GSA’s buildings
- Leveraging private capital to deliver better and more efficient space to GSA’s partner federal agencies, including through the use of GSA’s exchange authority.
Additionally Gelber mentioned the OMB memo from Director Jeffrey Zients, which mandated that agencies not increase the size of their civilian real estate inventory from FY 2012 levels. Due to this memo and March 2013 guidance from OMB’s Comptroller, agencies are required to submit a Revised Real Property Cost Savings and Innovation Plan by mid-May 2013. Gelber explained that the plan will provide a 3-year window into real estate decisions of each agency and their plan to maintain or reduce their overall footprint.
The Administration is proposing a significant budget cut next year for information technology modernization and new initiatives, which include cloud computing and mobile technology programs. According to the Federal Times, this 9% reduction in funds for IT development, modernization, and enhancement (DME) initiatives could include cloud computing and mobile technology programs. ASI Government said that the Departments of Homeland Security and Veterans Affairs are specific agencies expected to have their DME budgets cut.
Despite this reduction in IT modernization funds, there are some areas of growth. An Office of Management and Budget spokeswoman explained that the President’s FY14 budget includes an increase in operations and maintenance (O&M) funds, which can include work such as transitioning to the cloud. Giovanni Leusch-Carnaroli, a former associate chief information officer (CIO) at the Department of Transportation, also stated that “it’s not completely black and white.” In an interview with Federal Times, he went explained that some agencies might use O&M funding for new and existing projects, or use most of their DME funding for mission critical systems.
Let’s Just Pretend the FAR Change Didn’t Happen
By Phil Seckman, Partner, McKenna Long & Aldridge LLP
The Federal Circuit’s recent decision in Sharp Electronics Corporation addresses a quandary familiar to federal supply schedule contractors regarding the proper contracting officer (CO) to whom the contractor must direct its contract claims to ensure jurisdiction. Sharp Corporation v. McHugh, 2013 WL 646330 (Fed. Cir. 2013). The Federal Circuit’s decision relates to a 2002 change to the Federal Acquisition Regulation (FAR) and seeks to provide contractors with certainty by announcing a so-called bright-line rule for interpreting the meaning of the disputes provision for schedule contracts. Despite the Federal Circuit’s intentions, ambiguities remain.
Prior to the 2002 FAR change, the FAR provided that “[t]he ordering office shall refer all unresolved disputes under orders to the schedule contracting officer for action under the Disputes clause of the contract.” 48 C.F.R. § 8.405-7 (2000). Because only the GSA CO had authority under the Disputes clause, it was clear before the FAR change that any contractor claim relating to an order placed under a schedule contract must be submitted to the GSA CO to ensure jurisdiction under the Contract Disputes Act (CDA). The FAR also made it clear that the ordering office was to refer any unresolved contractor claims to the GSA CO.
Then, on June 27, 2002, the FAR was amended to incorporate new policies for disputes in schedule contracts. 67 Fed. Reg. 43,514 (the final rule was effective on July 29, 2002). As the FAR councils noted when publishing the proposed rule, the change was being made to “permit the ordering office contracting officer to issue a final decision regarding disputes pertaining solely to performance of schedule orders.” 65 Fed. Reg. 79,702 (Dec. 19, 2000).
The revised regulation provides:
(a) Disputes pertaining to the performance of orders under a schedule contract. (1) Under the Disputes clause of the schedule contract, the ordering activity contracting officer may —
(i) Issue final decisions on disputes arising from performance of the order (but see paragraph (b) of this section); or
(ii) Refer the dispute to the schedule contracting officer.
(2) The ordering activity contracting officer shall notify the schedule contracting officer promptly of any final decision.
(b) Disputes pertaining to the terms and conditions of schedule contracts. The ordering activity contracting officer shall refer all disputes that relate to the contract terms and conditions to the schedule contracting officer for resolution under the Disputes clause of the contract and notify the schedule contractor of the referral.
(c) Appeals. Contractors may appeal final decisions to either the Board of Contract Appeals servicing the agency that issued the final decision or the U.S. Court of Federal Claims….
48 C.F.R. § 8.406-6 (2004) (the text from the 2002 FAR amendment was renumbered in 2004).
The plain language of this regulation establishes that when a contractor submits a claim to an ordering activity CO, it is that CO’s responsibility to determine whether a dispute relates solely to the performance of an order or, instead, pertains to the terms and conditions of the schedule contract. Thus, one might have read the regulation to mean that a contractor could submit a claim to either the ordering activity CO or the GSA CO. Then, the government would determine which CO possessed authority to issue a final decision.
While such an interpretation is certainly logical and reasonable, it is wrong. The Federal Circuit’s decision makes it clear that it is the schedule contractor, and not the CO, that is responsible for determining to whom its claims must be submitted. Failure to identify the correct CO may result in the dismissal of an appeal for lack of CDA jurisdiction. Choosing the appropriate CO is made all the more critical where a schedule contractor is nearing the CDA six-year statute of limitations.
The Sharp Electronics case involved a contractor’s certified claim requesting fees under the termination provisions of an Army order placed against a schedule contract. The contractor submitted its claim to the Army CO. Critically, the Army CO disregarded the clear responsibility under FAR 8.406-6 and ignored the claim. Thus, the 60-day CDA decision period elapsed and — in the contractor’s view — resulted in a “deemed denial.”
The contractor then appealed to the Armed Services Board of Contract Appeals (ASBCA). Sharp Elecs. Corp., ASBCA No. 57583, 12-1 B.C.A. 34,903. Both the contractor and the government believed that their dispute should be decided by the ordering agency CO. Both parties believed the dispute was based on the order contract performance and not the terms of the schedule contract. In fact, neither party raised the jurisdictional issue. The ASBCA raised the issue on its own.
The ASBCA then held that it lacked jurisdiction over the appeal because the dispute did require the interpretation of the schedule contract and, therefore, only could have been decided by the GSA CO. The contractor’s decision to submit the claim to the Army CO, combined with that CO’s failure to forward the claim, meant there had been no properly submitted claim under the CDA and, therefore, no “deemed denial” from which to appeal. Id. The fact that the regulation clearly places the responsibility upon the ordering activity CO to make a determination regarding his/her own authority to resolve the dispute and then to forward claims to the GSA schedule CO when the dispute pertains to the terms and conditions of the schedule contract did not alter the outcome.
In a split decision, the Federal Circuit affirmed the ASBCA decision finding that under FAR 8.406-6 the ordering agency CO did not have the authority to make a determination regarding the contractor’s claim because the dispute involved, at least in part, interpretation of the terms of the schedule contract. The Federal Circuit’s decision announces a so-called bright-line rule that “all disputes requiring interpretation of the schedule contract go to the [GSA] schedule CO, even if those disputes also require interpretation of the order, or involve issues of performance under the order.” See Sharp Elec., supra at *6
The Federal Circuit, in highlighting the bright-line, attempts to address the jurisdictional uncertainty under FAR 8.406-6 created by the 2002 rulemaking. As noted by the dissent, however, the Court has succeeded in, effectively, reinstituting the prior rule that all disputes relating to schedule contracts should be submitted to the GSA CO. In other words, when in doubt, contractors must submit claims to the GSA CO.
Perhaps being defensive regarding the dissent’s objections, the Court noted that under a schedule contract an ordering agency CO remains authorized to make final determinations regarding performance, the terms of an order or its modifications “as long as the dispute does not involve interpretation of the schedule contract.” The Court also states that an ordering agency CO may resolve a dispute by “applying the relevant provisions of the schedule contract “as long as their meaning is undisputed.”
Despite these statements, however, the actual effect of this holding, as the dissent properly points out, will be that most contract disputes under schedule contracts will be submitted to the GSA CO and not the ordering agency CO. Indeed, many disputes can be characterized as requiring interpretation of the schedule contract. Thus, contractors that submit claims to ordering activity COs who are inclined to disregard the claim, as did the Army CO in the Sharp case, run the risk that what seems to be a “deemed denial” is, in reality, a nullity under the CDA.
For these reasons, prudent schedule contractors will submit claims to GSA COs. GSA COs, however, typically have very little, if any, knowledge regarding the facts of a dispute that primarily relates to performance under an order and only tangentially requires the interpretation of the schedule contract. This could lead to increased denials or deemed denials of contractor claims. Nevertheless, after this decision, if a dispute may pertain to interpretation of a schedule contract terms and provisions, a schedule contractor, particularly one with a potential statute of limitations issue, will be wise to submit its certified claim to the GSA CO or risk a similar outcome.
Coalition Response to OASIS RFI
The Coalition’s OASIS Working Group submitted comments this week on the One Acquisition Solution for Integrated Services (OASIS) draft RFP. The comments were submitted after members had several opportunities to hear from GSA about the draft solicitation and ask questions. The Coalition sincerely appreciates GSA’s commitment to engaging in a Myth-Buster’s dialogue with industry on the upcoming complex professional services contract. The OASIS comments are posted on our website at https://thecgp.org/images/OASIS-Comments.pdf.
Cybersecurity on Agenda for IT/Services, May 9
Members of the IT/Services Committee will have an opportunity to hear from GSA about two current cybersecurity initiatives within the agency and the results of FAS’s Supplier Perception Survey for Schedule 70 and GWACs. The meeting is scheduled for next Thursday, May 9 at 10am at Northrop Grumman (7575 Colshire Drive, McLean, VA 22102). Members who would like to attend please RSVP to email@example.com for security purposes.
HSPD-12: DHS Releases Draft PWS
DHS plans to award a single vendor to support its implementation of Homeland Security Presidential Directive 12 (HSPD-12). The DHS Office of the Chief Security Officer has a requirement for an Identity Management System and Enrollment Issuance Workstations to support the implementation of HSPD-12 and gain the capability to enhance security, increase efficiency, reduce identity fraud, and protect personal privacy. DHS encourages interested vendors to review the Draft Performance Work Statement posted on FedBizOpps.gov and provide comments or questions via e-mail no later than 4:00 PM EST on May 15, 2013. DHS anticipates that the solicitation will be issued in late June 2013.
DOE Extends ESPC Comment Period
The Department of Energy has extended the comment period for an April 3 RFI concerning Energy Savings Performance Contracts (ESPCs). Previously reported in the Flash, the comment period will now end on May 17, 2013 instead of May 3. The RFI is looking for information on how to improve ESPCs—particularly the Department of Energy’s Federal Energy Management Program indefinite-delivery, indefinite-quantity contracts. Areas of interest include decreasing time to award, improving contract structure and processes, increasing the certainty of savings, and ways to encourage innovative or underused technologies.
Join The Coalition and experts from Berkeley Research Group on May 21 at 12:30 pm for a discussion regarding the systems, processes and controls necessary to comply with the requirements of the PRC and other post-award pricing considerations. The presentation will provide an overview of the requirements of the PRC and common misconceptions related to the clause. In addition, we will share best practices and strategies for minimizing PRC and other pricing compliance risks. Finally, we will discuss processes, controls, roles and responsibilities typically found in effective PRC monitoring systems. Perhaps the most debated and lamented post-award pricing requirement in a GSA and VA schedule contract is the Price Reduction Clause (PRC). Despite being cited as the basis for a number of infamous civil False Claims Act settlements involving GSA and VA Schedule contracts, there is very little information available in the public domain in the form of case law, audit guidance or best practices pertaining to compliance with the clause. Registration and more information!>>
Continuing Legal Education (CLE) credits are now available for the Coalition’s General Services Administration (GSA) Schedule Contracting for In-House Counsel training scheduled for June 27, 2013. Attendees can earn 6 CLEs for the course with the Virginia State Bar.
GSA Schedule Contracting for In-House Counsel Training
June 27, 2013 8:00 am
McKenna Long & Aldridge LLP
1900 K St NW
About the course:
This GSA Schedule Contracting for In-House Counsel training will provide information and tools to help you understand the GSA/VA Schedule contracting program and provide insightful legal advice to your in-house client.
The GSA Schedule, including the delegated VA Schedules, 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, medical equipment and a vast array of commercial products.
Schedule contracts offer 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, 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.