On Thursday the Coalition traveled to Chicago to host a “Myth-Busters” Healthcare Committee meeting with the Department of Veterans Affairs (VA) National Acquisition Center (NAC). The VA NAC manages a family of Federal Supply Schedule (FSS) contracts for pharmaceuticals, medical supplies and services. A primary focus of the Coalition Healthcare Committee is the operations, policies and procedures of the VA’s FSS program. The meeting provided an opportunity for the VA NAC leadership team and members to engage in a “Myth-Busters” dialogue on key issues, initiatives and policies governing the procurement operations and administration of the VA’s FSS program.
Feedback from the attendees on the meeting was uniformly positive! Members in attendance appreciated the open, transparent discussion on the VA’s FSS program. Thank you to Craig Robinson, Associate Deputy Secretary for National Healthcare Acquisitions, for facilitating and participating in the Myth-Busters dialogue! Thank you to Contract Division Chiefs Greg Madden, James Booth, and Bob Satterfield for addressing many key issues and questions throughout the meeting. Thank you to all the Senior VA contracting officers and VA legal counsel who attended the meeting and also participated in the dialogue.
Myth-Busters dialogue is vital to a healthy, efficient and effective procurement system. Positive dialogue between government and industry regarding procurement policies, acquisition procedures, and mission requirements fosters greater understanding on both sides—understanding that reduces uncertainty and risk which ultimately reduces costs for all in the procurement process. Indeed, dialogue and communication are the foundations upon which successful procurement outcomes for the American people are built. We believe that this week’s Myth-Busters dialogue with the VA NAC promotes a more efficient and effective FSS program that supports our Veterans’ healthcare needs. After all, isn’t that what it is all about? Our Myth-Busters dialogue supports a VA FSS program that delivers best value support for our Veterans—those who have who have done so much for all of us!
On behalf of the Coalition membership, I commend and thank the VA NAC team for the Myth-Busters conversation and look forward to continuing the dialogue!
Roger Waldron
President
FAS Review to Follow IG Report
Federal News Radio reported this week that GSA chief acquisition officer, Anne Rung, will be leading a review of procurement procedures with FAS Commissioner Tom Sharpe as a result of the Office of Inspector General (OIG) report released earlier this month. The report titled, Improper Management Intervention in Multiple Award Schedule Contracts, identified instances where Federal Acquisition Service (FAS) management overrode contracting officer determinations based on contractor complaints without proper justification.
The review was announced in a letter from Acting Administrator Dan Tangherlini, who wrote that “while our managers play an essential role in supporting our mission by overseeing the work of contracting officers, improper intervention in procurement processes is unacceptable.”
In addition to the review, FAS Commissioner Tom Sharpe is expected to issue an instructional letter concerning proper communications between management, contracting officers, and industry. The IG report recommended that FAS management be required to fully document all conversations and correspondence with contractor officials about specific contracts and offers. The Coalition is issuing a joint letter with TechAmerica and the Professional Services Council (PSC) encouraging a balanced approach to implementation of the IG report’s recommendations.
GAO Assesses Impact of Reducing Contractor Compensation
The Government Accountability Office (GAO) has gathered information on the impact of lowering the compensation cap for executive level contractors. In a recent report, the GAO found that reducing the cap to the President’s salary ($400,000) or to the Vice President’s salary ($230,700) would greatly increase the number of employees with compensation costs who exceeded the cap from 2010 to 2012. From 2010 to 2012, contractors identified over $180 million per year in compensation costs that would have exceeded a cap set at the President’s salary, and about $440 million per year if the cost were set at the Vice President’s salary. GAO found that executives who exceeded the cap were generally from large-tier companies, with a select few from small tier companies. The GAO’s report explained that government representatives generally support reducing the cap as a means to reduce Department of Defense (DOD) contracting costs. However, industry representatives have indicated that reducing the cap would result in negative effects. For example, reducing the cap may affect companies’ ability to attract and retain top talent and potentially lead companies to reassess their business and staffing models. Capping employee compensation costs also has the potential to shift work or personnel from government business to the commercial sector.
SAM Highlighted in Tangherlini Nomination Hearing
GSA Acting Administrator Dan Tangherlini had his confirmation hearing before the Senate on Tuesday. During Tangherlini’s testimony, he discussed GSA’s focus on its mission to deliver the best value in real estate, acquisition, and providing technology services to government and the American people. Relevant to GSA Schedule contractors, Tangherlini also said that the System for Award Management (SAM) would be a top priority during his time at GSA. SAM is designed to integrate eight different acquisition systems, including the Central Contractor Registration (CCR), the past performance database and the suspension and debarment database. It has had challenges since last summer. Senator Claire McCaskill (D-Mo.) asked multiple questions during the hearing pertaining to whether the schedule to complete SAM has slipped from the 2015 deadline initially established. McCaskill said that she would like to see a working and beneficial SAM system during Tangherlini’s service as GSA Administrator. Tangherlini emphasized GSA’s commitment to SAM as a priority and said that GSA would provide more details about their plans moving forward and provide a realistic timeline for the project.
More on Dan Tangherlini’s testimony is posted at http://www.gsa.gov/portal/content/173615.
In a recently released report, the Government Accountability Office (GAO) asks agencies to utilize Office of Management and Budget (OMB) TechStat sessions when reviewing IT investments. TechStat sessions are accountability reviews of IT investments that enable the government to turn around, halt or terminate projects that are not producing results. In the report, “Additional Executive Review Sessions Needed to Address Troubled Projects,” the GAO looked at IT projects for the Departments of Agriculture, Commerce, Health and Human Services, and Homeland Security. These agencies were chosen given their large number of “high-risk” investments. Given the amount of medium- and high-risk IT investments, the report found that an inadequate number of TechStat review sessions had been conducted. In order to correct this imbalance, GAO recommends OMB require agencies to address high-risk investments more thoroughly. GAO also urges the selected agencies to address weaknesses in following OMB’s TechStat guidance.
DLA and DISA Discuss IT Reductions
Defense Logistics Agency (DLA) and Defense Information Systems Agency (DISA) leaders are having discussions in order to reduce Information Technology costs by 20 percent without reducing the services they provide. Services DISA provides to the DLA include server and mainframe hosting, telecommunications, and network services. Last year, DLA spent $243 million on DISA services. It has been reported that about 31 percent of those costs went toward custom services that may no longer be necessary. Both DLA and DISA are working to make more cost-conscious decisions on partnering together on emerging technologies and collaborating more on requirements determinations. The agencies are looking to reduce overall operating costs by $14 billion in the next five years. DLA and DISA are already under way to save $7.7 million through storage reconfiguration of the Enterprise Business System, a system which DLA uses to manage its daily business. They also hope to cut costs by combining voice and data services, as well as migrating DLA’s email to DISA’s Defense Enterprise Email.
Increasing Quality of USAspending.gov Data
According to FCW, OMB has issued a policy memorandum on June 12 requiring agencies to improve data quality for USAspending.gov. USAspending.gov allows the public to search for data related to all Federal contracts and is populated through multiple sources including the Federal Procurement Data System (FPDS) and SmartPay.
In order to increase the reliability of the data in USAspending.gov, the OMB memo requires agencies to establish unique identification numbers for financial awards and to develop a process to compare the data submitted to USAspending.gov with data in the agency’s financial system.
Beginning in October 2013, each Federal agency must assign a Federal Award Identification Number (FAIN) to each financial assistance award which will help to facilitate the tracking of sub-awards. Consistent with the trend of increased data reporting in the government, the memo also states that in the future OMB and Federal agencies will continue to explore more automated and comprehensive data reporting methods to better track contract spending through USAspending.gov.
On Friday of last week, the House of Representatives voted 315-108 in favor of passing a $638 billion defense spending bill. Facing a veto threat from the Administration, the National Defense Authorization Act (NDAA) for FY 2014 will have to be reconciled with a Senate version that recently passed out of the Senate Armed Services Committee.
Of particular note to IT contractors, the Federal IT Acquisition Reform Act (FITARA) passed the House as an amendment to the NDAA. “This amendment is not controversial, but it’s critical. At a time when over $80 billion is spent and over 10 percent of it goes completely wasted on IT purchases by the government, there’s never been a more important time to update the legendary, historic Clinger-Cohen Act,” said Rep. Darrell lssa (R-Calif.), FITARA sponsor and chairman of the Oversight and Government Reform Committee. Among FITARA’s provisions are plans to centralize IT authority under one CIO in each agency, codify Administration initiatives through the IT dashboard, and the eliminate duplicative IT investments.
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.
Register for In-House Counsel Training, June 27
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
Washington, DC
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.
Register for Q4 Unveiled! Federal Spending and Market Outlook, June 27
Webinar
12:30 pm
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.
Featured Speakers
Bill Gormley, President, The Gormley Group
Cameron Leuthy, Analyst, Bloomberg Federal
Roger Waldron, President, The Coalition for Government Procurement
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