On June 4th the GSA Office of Inspector General issued Report Number A120161/Q/6/P13003, entitled “Improper Management Intervention in Multiple Award Schedule Contracts.” The audit raises concerns regarding management intervention in the ongoing negotiation of GSA schedule contracts and the subsequent outcomes. The report raises some complex and challenging questions about the management and operation of the MAS program or, in fact, any procurement operation—questions that will need time and thoughtful discussion across the entire GSA procurement community. Here are some of the questions that come to mind:
- What impact does the outdated MAS pricing policy play in creating ambiguities, uncertainties, and roadblocks in the negotiation process? Negotiations are generally based on interpretations of the pricing policy—which no longer reflects the commercial marketplace or subsequent task order competition process. Contracting officers, contractors and managers alike are increasingly being put in difficult situations, trying to apply an outdated policy to current 21st century commercial practices.
- How can the integrity and authority of the contracting officer be maintained while providing appropriate avenues for dialogue or mediation in the contract negotiation process?
- What is the role of management in a procurement operation? What strategies are available to assure performance that results in regulatory compliance as well as creative and flexible contract vehicles that respond to customer needs?
- Who does a contractor go to when there is an impasse?
- Is there a role for the GSA Ombudsman as a third party neutral when there are disagreements between the contracting officer and the contractor?
- Many senior managers are contracting officers themselves. Can a warranted contracting officer/manager review or otherwise address the work of a subordinate contracting officer?
- How do we bring all MAS stakeholders (GSA management, contracting officers, IG, customers and contractors) together for a Myth-Busters dialogue on these complex questions?
The Coalition believes that a non-attribution dialogue on these questions would be a positive first step in addressing the difficult and complex issues raised by the report. The Coalition welcomes the feedback and thoughts on how to proceed with such a Myth-Busters dialogue.
The Office of Inspector General (OIG) at the General Services Administration released a report this week entitled, Improper Management Intervention in Multiple Award Schedule Contracts. The OIG’s investigation focused on IT Schedule 70 and has implications for the entire MAS program. According to the report, the OIG “identified numerous instances where Federal Acquisition Service (FAS) management, based on complaints from contractors, overrode contracting officer determinations without proper justification, pressured contracting officers to extend or award contracts, and reassigned contracts to different contracting officers.” The OIG expressed concern that in at least one of the three situations investigated, FAS management interference “resulted in a contract with higher prices and less favorable terms than those recommended by the original contracting officers.” As a result, the OIG recommended that the FAS Commissioner:
1. Ensure that the contracting process is independent and free from FAS management interference due to contractor pressure. These steps should include:
a. Requiring FAS management not to intervene in contracting actions in response to requests from contractors except for instances of misconduct or other serious administrative issues;
b. Requiring FAS management to fully document all conversations and correspondence with contractor officials regarding specific contracts and offers, to include such information as date, time, participants, and specific details of information exchanged; and
c. Issuing a memorandum expressing support for contracting staff making independent determinations, including decisions to not award contracts or contract extensions.
2. Take appropriate action to either renegotiate or cancel the Carahsoft and Deloitte contracts.
3. Take appropriate administrative action to address the FAS management and contracting staff conduct identified in this report.
FAS Commissioner, Tom Sharpe, agreed with the recommendations. In his response letter in the report, Sharpe explains that GSA will conduct a top to bottom review of the management controls, policies and guidance in place for the MAS program. Instructional letters and procurement information notices will also be published mandating training and documentation requirements for the acquisition workforce. Sharpe estimates that the review will be completed and required actions indicated by July 2013.
According to Federal News Radio, the Department of Defense will submit a report to Congress detailing how it will cut billions from the defense budget. The report was requested by the Senate Armed Services Committee and is due July 1. It is expected to cover reductions to the fiscal year 2014 defense budget totaling $52 billion. Chairman of the Senate Armed Services Committee, Carl Levin (D-Mich.) stated in a press release that the plan “will show how devastating these cuts would be for the Department of Defense.” Levine is hopeful that “the identification of these specific reductions will serve both to help Congress and the Department prepare for the possibility that we will be unable to avoid another round of sequestration and to show Congress and the public how unpalatable that outcome would be.”
In a recent presentation by Deputy Secretary of Defense, Ashton Carter, he explained that DoD has reviewed 38 categories of spending including cyber, business and acquisition processes in the preparation of the report. The Department will use the findings to plan for a range of future scenarios—from full sequestration resulting in $500 billion in cuts over the next 10 years to the President’s budget proposal, which assumes a repeal of sequestration and $150 billion in cuts in the next decade.
On June 20, The Coalition will hold a Myth-buster’s dialogue in Chicago with the Department of Veterans Affairs (VA) National Acquisition Center (NAC). The meeting is being hosted by the Healthcare Committee and is open to all Coalition members. It will provide members a chance to discuss contract and program topics with Craig Robinson, Associate Deputy Assistant Secretary of the VA NAC, Division Directors James Booth, Bob Satterfield and Greg Madden, as well as other Senior Contracting Officers. The list of topics we plan to address includes:
- NAC priorities and goals for the program
- Strategic Sourcing and the VA Schedules
- Timeliness of processing contract actions
- Use of reverse auctions
The work that the General Services Administration (GSA) has been doing to increase energy efficiency and reduce pollution has been paying off. A recently released performance scorecard for Fiscal Year 2012 reports that the agency has made significant strides to make federal buildings greener. Through the use of solar panels, advanced lighting systems, geothermal technology, wind power, and low-flow plumbing systems, GSA was able to avoid spending $65.5 million dollars in Fiscal Year 2012. This past year the agency surpassed its Fiscal Year 2020 greenhouse gas reduction target by cutting emissions by nearly 35 percent from its 2008 baseline.
As a part of OMB’s release of its first Federal Program Inventory on Performance.gov, GSA released its FY13 Federal Program Inventory. Required by the GPRA Modernization Act (GPRA Modernization Act) of 2010, OMB’s inventory lists approximately 1,600 major programs, their purpose and how each helps agencies achieve their goals and missions. GSA’s inventory separates its programs into three distinct categories: Real Property Programs, Supply and Technology Programs and General Management Programs.
Each of GSA’s listed programs supports at least one GSA Strategic Goal and Strategic Objective. GSA has outlined three main strategic goals for its programs: savings, service, and efficiency. The following is a summary of how GSA plans to reach these goals.
Savings – To achieve savings, GSA plans to leverage the government’s buying power through strategic sourcing, optimize the real property inventory, and improve federal use of space. GSA will also aim to reach sustainability goals and reduce travel.
Efficiency – GSA plans to increase efficiency by enhancing real property asset quality and streamline processes, improving internal operations, data quality, transparency, and reporting.
Service – GSA believes that excellent customer service will make it easier for suppliers and agency customers to do business with GSA. They plan to improve service by strengthening communications, processes and offerings. Objectives to meet this goal include increasing the use of GSA contracts and solutions, enhancing supplier and customer relationships, increasing small business support and creating a high performance workforce.
This week on Off the Shelf, Elliott Branch, Deputy Assistant Secretary of the Navy for Acquisition and Procurement discusses the Navy’s procurement strategies. Branch provides his insights regarding a host of procurement topics, including the role of competition and requirements development. He also discusses strategic sourcing, lowest price technically acceptable, contract duplication and the acquisition workforce. Listen to the full program here on Fed News Radio 1500AM.
The Navy is looking to cut $2 billion from its annual $8 billion IT budget according to Federal News Radio. At a recent event in McLean, the Navy Department’s chief information officer Terry Halvorsen told the audience, “I want to make it clear. We took $2 billion. It’s not that we’re trying to take $2 billion, we’re not going after $2 billion. It’s a big enough number and we’re not going to stop there.” ASI Government reports that the next target for reductions may be $1 billion. Halvorsen also said the Navy is taking steps to make its IT spend more transparent, including by creating a high-level approval process for IT spending that creates a checkpoint for any spending above $25,000, enhancing how the Navy track’s IT expenditures, and an IT dashboard system. The dashboard will help track efficiency for data center consolidation, mobility spending and enterprise software licensing.
Should We Protest? Recent Data from The Government Accountability Office Helps Answer the Question
By Jack Horan, Partner, McKenna Long & Aldridge LLP
Many factors go into a decision of whether to protest after a contractor finds out it was not successful in winning an order or contract:
- Did the agency make a mistake?
- How strong is my evidence?
- Did the mistake affect the award decision?
- How much will a protest cost?
- Will a protest affect my relationship with the agency?
- If I win the protest, what remedy will the General Accountability Office (“GAO”) recommend?
For a contractor to make a reasoned decision on whether to protest, including a schedule contractor competing for commercial items sales, the contractor has to have some measure on the likelihood of success of a protest. Recent data and analysis provides valuable context on GAO protest decisions that will assist contractors in making this important decision. An annual report by the GAO, GAO Bid Protest Overview, GAO-13-404SP, Feb 20, 2013, authored by Ralph White, Managing Associate General Counsel, provides useful information on the results of bid protests over the past five years. An article written by Professor Dan Gordon, Associate Dean for Government Procurement Law Studies at The George Washington University Law School, digs a little deeper into GAO’s statistics, and looks at the number of protestors that actually win the contract after protesting.
According to GAO’s Bid Protest Overview, GAO closed 2,495 bid protest cases in 2012, issuing a decision in 570 cases, or approximately 23% of the closed cases. Of those cases that go to a decision, GAO sustained 106 protests, or approximately 18.6% of the 570 decisions. “Sustained” means the GAO agreed with the protestor that the government had made a material error in the procurement, and GAO recommended that the government take action to address its error.
GAO also calculated the success rate of protests, defined by GAO as when the protestor obtains “some form of relief from the agency, as reported to GAO, either as a result of voluntary agency corrective action or our Office sustaining the protest.” By this measure, protestors achieved success in 42% of the closed protests for that year. The 2012 success rate was representative of previous years, which ranged from 42% to 45% from 2008 to 2011. In short, protestors have done fairly well over the past five years according to the GAO’s view of success, achieving either a sustained protest or voluntary corrective action in at least 42% of the cases.
In his article, Bid Protests: The Costs Are Real, But the Benefits Outweigh Them, which will appear in the Spring 2013 issue of the Public Contract Law Journal, Professor Gordon digs a little deeper into GAO’s statistics, analyzing, among other issues, the percentage of protestors that received award of the contested contract after the protest. Reviewing the protests in 2010 that were sustained, Professor Gordon was able to determine the final results in 40 cases:
- nine contracts awarded to the protester;
- 18 contracts awarded to an offeror other than the protester;
- one case where the GAO granted the specific relief (other than contract award) requested by protestor;
- three procurements cancelled; and
- nine cases where the agency did not take corrective action.
Thus, of 27 cases that ended in the award of a contract, the protestor received the contract in nine cases, or one-third of the awards. In another case, the GAO recommended, and the government provided, the relief the protestor requested. Thus, in 25% of the 40 known results, the protestor received the final result it sought – nine contract awards and a tenth case where the protestor received the relief it sought. In addition, using a broader definition of “success,” protestors received award of the contract in nine of the 31 cases where the government took corrective action of some type (or 29% of the cases).
Professor Gordon did not attempt to extrapolate his findings based on known cases to the bulk of protests where results were not known. Others have attempted an extrapolation, at least one unsuccessfully and reaching inaccurate results. See Miller, Protests rarely result in U.S. contract reversals,study shows, Washington Post, March 11, 2013, available at http://goo.gl/iSb2o (concluding that less than one percent of protests filed in 2010 resulted in award to the contractor). A reasonable extrapolation of Professor Gordon’s analysis demonstrates that protestors have been successful even by Professor Gordon’s measure. See Papson, Carey and Meier, FEATURE COMMENT: The Odds Of Winning A Contract After Protesting Are Higher Than You Think, The Government Contractor, Vol 55, No. 16 (April 24, 2013). Applying the 29% success rate of award after corrective action from Professor Gordon’s data to the total number of protests in 2010, protestors won award of the contract after 12.2% of the total protests filed in 2010 (extrapolated). In light of such factors as the strength of the protest, the level of competition for the final award, and that the government deemed another offer to be the winner in the first instance, a success rate of approximately one in eight seems reasonable.
So, what is the takeaway from all of these numbers. By any measure, protests are successful. If the measure of success is ensuring that all offerors had a fair chance of award (my personal view), GAO statistics demonstrate that protests resulted in corrective action – specifically intended to make sure the rules of the procurement are fair and legal – at least 42% of the time in the last five years. By Professor Gordon’s more narrow measure – whether the protest resulted in the protestor obtaining the contract – more than 12% of protestors achieved success in 2010. Keep in mind that both of these results are based on all of the protests filed during the respective periods – some terrible, some very strong. With experience, or the assistance of an experienced protest lawyer, these numbers provide a useful benchmark for analyzing the likelihood of success of a specific protest evaluated on the merits.
On Tuesday, the House of Representatives passed the FY14 Military Constructions and Veterans Affairs appropriations bill (H.R. 2216). The legislation includes $73.3 billion in discretionary funding, which is $1.4 billion above the enacted level for fiscal year 2013, and approximately $2.4 billion above the current level caused by automatic sequestration spending cuts, which do not affect Veterans spending. The current bill is $1.4 billion below the President’s request for these programs. The legislation was approved by the House on a vote of 421-4.
GSA Interact has added a new interactive web community for the development of another Federal Strategic Sourcing Initiative (FSSI) BPA, Office Supplies (OS3). The forum aims to increase engagement and interaction with industry partners and FSSI 0S2 Commodity Team stakeholders. For more details and to join, please visit https://interact.gsa.gov/blog/welcome-fssi-os3-community.
On Wednesday, the House Small Business Committee Chairman Sam Graves (R-MO) introduced The Make Every Small Business Count Act of 2013 (H.R. 2232), a bill that aims to provide incentives to federal prime contractors that consider small business for more subcontracts. The bill would allow for prime contractors to be credited for subcontracts awarded at lower tiers. The act is designed to motivate prime contractors to work with and consider small business bids, as well as seeing to it that small businesses have an equal opportunity.
Registration is open for the Coalition’s General Services Administration (GSA) Schedule Contracting for In-House Counsel training on June 27, 2013. Attendees can earn 6 Continuing Legal Education credits (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.
This webinar comes just in time to help identify end of year business opportunities for your company. Please join the Coalition for Government Procurement in a discussion of federal spending and market outlook for the end of the Government’s 2013 fiscal year. This dialogue will cover FY13 budget execution, including burn rate and sequester implementation as well as what to expect of the FY14 Appropriation process. Find out how agencies plan to spend and what your company should be doing about it. Attendees will learn successful marketing tools to help navigate the current state of the market.
Who Should Attend
Government Contractors and Prospective Contractors – Business Development, Marketing Managers, Contract Managers and Administrators
Government – Assisted Services Providers, contracting official and program managers
* Registrants will receive dial-in information two days prior to the event
Coalition members have been offered a special discount to the ADVANCED ISSUES IN MULTIPLE AWARD SCHEDULE CONTRACTING training June 12 and 13 in Sterling, Virginia. This comprehensive course, taught by Jonathan Aronie and Larry Allen, has received consistently outstanding reviews since it first began years and years ago.
The course is designed to cover the primary “high risk areas” of Schedule Contracting, with a special focus on compliance, audits, and risk avoidance. Detailed discussions of the Price Reductions Clause, the Industrial Funding Fee, Contractor Teaming Arrangements, Out of Scope Contracting, and the Trade Agreements Act will serve as the vehicles to examine all three subject areas. The course will provide practical advice on how to recognize the benefits of contracting with the Federal Government while minimizing the risks by, among other things:
- Negotiating (or renegotiating) a realistic and flexible contract as the primary means of ensuring future compliance and minimizing future risk
- Implementing a functioning internal compliance program, and
- Dealing with compliance issues as they arise during contract performance, especially in the context of the Price Reductions Clause, as it relates to pricing and discounting to commercial customers.
To register or for more information, call 888.494.3696, or visit www.fedpubseminars.com. Be sure to ask for Larry’s and Jonathan’s “Advanced Issues in Multiple Award Schedule Contracting” class, and don’t forget to ask for your MultiAward50 discount.