Contract duplication remains a cost drag on the entire federal acquisition system. Contract duplication increases bid and proposal, administration and management costs for government and industry. Last summer the Coalition issued a summary report highlighting the results of a survey conducted among our member firms regarding contract duplication costs. The report was subsequently provided to the Department of Defense (DoD), the General Services Administration (GSA) and the Office of Management and Budget (OMB). The report has helped increase the awareness across government of the costs associated with contract duplication.
That is why it is gratifying and encouraging to hear senior leaders in government talk about addressing contract duplication. Federal Acquisition Service (FAS) Commissioner Tom Sharpe has been a strong voice regarding the need to reduce contract duplication costs across government. Tom and his FAS team play a leading role in reducing contract duplication. The Multiple Award Schedules (MAS) program, the IT GWACs and OASIS are the keys to reducing horizontal contract duplication across the federal enterprise. These contract vehicles provide or will provide a streamlined, competitive process for agency requirements. Use of these government-wide contract vehicles saves time and money for government, industry and the American taxpayer.
Unfortunately, too often across government there is bias against use of these contract vehicles. It is the “not invented here” syndrome or “my requirement is so unique I need my own contract vehicle” rationale that continues to support contract duplication. Frankly, the depth and breadth of the MAS program, IT GWACs and, eventually, OASIS, provides solutions across the spectrum of agency specific requirements. Of course there will remain a need for agency specific contracts but GSA’s contract vehicles and the other IT GWACs (NASA and NIH) can meet the vast majority of agency needs.
That’s why the current Defense Procurement and Acquisition Policy (DPAP) review of DoD’s policies and procedures governing the use of interagency contracts is timely. It provides an opportunity to streamline DoD’s process for using MAS contracts, IT GWACs and other interagency contract vehicles. Streamlining DoD’s process will reduce contract duplication and increase competition among contract vehicles resulting in savings. At the same time, we believe the time is right for OMB to make a policy statement in favor of using GSA’s pre-existing government-wide contract vehicles as a means of reducing contract duplication and saving money. After all, it is the strategic acquisition thing to do!
Have a “cool” weekend!
The Coalition appreciates FAS Commissioner Tom Sharpe for engaging in a myth-buster’s dialogue yesterday at a premier member event. We had a wide ranging conversation about how GSA can reach its market share objective of 17% of the addressable Federal market for FY 2013. GSA estimates that they are currently at 15%. Topics discussed included Other Direct Costs (ODCs), contract duplication, the modifications process, and GSA’s marketing message. The Coalition looks forward to working with Commissioner Sharpe in these areas to build a stronger GSA.
The movement towards strategic sourcing continues to pick up speed. Following a Senate hearing on Monday, a bi-partisan group of nearly 70 lawmakers from both Chambers of Congress called the “No Labels Caucus” released a bill this week to increase strategic sourcing in Federal procurement. The Buy Smarter and Save Act sets specific spending and savings goals for agencies. For FY 2014 and 2015, the bill establishes a strategic sourcing procurement goal of $100 billion government-wide. The savings goal during these years is $10 billion. Between FY 2016 and 2018, the bill proposes that the government spend $75 billion through strategic sourcing and sets an annual savings goal of $7.5 billion. A subset of agencies, including the Department of Defense and the Department of Homeland Security, are to identify a product or service from their top 20 procurement spending categories to strategically source.
The Buy Smarter and Save Act tasks the Office of Management and Budget (OMB) with issuing specific guidance to agencies about how to implement strategic sourcing including: 1) the criteria used to determine which goods and services should be strategically sourced, 2) data reporting requirements, and 3) how savings should be calculated and verified. In issuing this guidance, OMB should consider how a strong industrial and manufacturing base can be maintained and the impact on small business consistent with the Small Business Act.
During the Senate hearing on Monday, Members of the Homeland Security and Governmental Affairs Committee questioned why the government was not doing more strategic sourcing given the billions of taxpayer dollars that could be saved. According to Ranking Member Tom Coburn (R-OK), the government should pursue higher categories of spend rather than “low hanging fruit”. He also encouraged the Office of Federal Procurement Policy (OFPP) to issue guidance to agencies about how strategic sourcing savings should be calculated to increase the reliability of data in this area.
The strategic sourcing bill includes many of the recommendations made by GAO during their testimony before the Senate. Consistent with a GAO report on services acquisition in April, GAO encouraged the government to do more strategic sourcing beyond traditional commodities. GAO estimates that potential savings for services could equate to $12 billion (considering a savings rate of 4 percent on the $307 billion spent on services in FY 2012). GAO has also recommended that agencies establish a strategic sourcing official in each agency and set procedures to hold agencies accountable to specific spending and savings goals.
The Coalition is submitting written testimony on strategic sourcing to the Senate Homeland Security and Governmental Affairs Committee as a follow-up to the hearing. Please contact Aubrey Woolley at firstname.lastname@example.org by COB Wed., July 24 if you would like to provide input for the Coalition’s testimony.
On Tuesday, the General Services Administration (GSA) named Bill Sisk as the new Deputy Commissioner of the Federal Acquisition Service (FAS). Sisk brings over 20 years of experience working at GSA which includes roles such as Assistant Commissioner for the Office of General Supplies and Services, FAS Southeast Sunbelt Region Commissioner and Acting PBS Southeast Sunbelt Region Commissioner. Following the departure of Jon Jordan in November 2012, Fisk became the FAS Acting Deputy Commissioner. The Coalition congratulates Bill Sisk on his new assignment with GSA.
The Office of the Chief Procurement Officer (OCPO), Department of Homeland Security (DHS) has requested that the Coalition for Government Procurement participate in a telephone interview to discuss ways OCPO can improve communication within industry. We congratulate DHS for taking concrete steps to make myth-busting a reality. You can be a part of the solution by giving us your real world experience communicating with DHS and any recommendations for improvement. Please call or email Carolyn Alston, Coalition Executive Vice President and General Counsel not later than Tuesday July 23. (202-600-2925) (email@example.com)
The Air Force’s Life-Cycle Management Center plans to use the General Service Administration (GSA) One Acquisition Solution for Integrated Services (OASIS) contract as its preferred vehicle for complex services. According to Jim Ghiloni, director of the OASIS program management office, the Air Force expects to spend nearly $500 million a year through the GSA contract. However, sequester budget cuts could affect Air Force spending. The center, which is headquartered at Wright-Patterson Air Force Base in Ohio, is responsible for life cycle management of Air Force weapon systems.
Over the next several weeks, we will highlight the Coalition staff and how they can help you maximize the value of your membership—from gathering more insight into the Federal market, to contracting and compliance trends, to broadening your network of industry partners. This week we are highlighting Sandy Arce, Member Services Executive.
Have questions about your membership benefits or how to get more involved in the Coalition? Contact Sandy Arce, our Member Services Executive. Sandy can help you sign up to get updates on any of our committees and working groups, let you know about upcoming events and training opportunities, provide policy updates, and answer any questions you may have about your discounts and benefits.
Prior to joining the Coalition, Sandy was a Market Intelligence Analyst at FedSources Inc. where she specialized in Civilian, Defense, State and Local IT and Professional Services requirements. Sandy holds a Bachelor of Arts degree from the University of Mary Washington and a master’s degree in public policy from George Mason University and has lived and studied abroad in Bolivia and Argentina. Sandy is an avid soccer (fútbol) fan and has traveled to over 20 countries in the last 6 years. If you have any questions regarding your membership benefits or would like ideas on where to travel this summer, you can reach Sandy at firstname.lastname@example.org or 202-315-1054.
In a recent memorandum, Acting Deputy Director for Management Steven VanRoekel extended the Office of Management and Budget (OMB) policy to provide accelerated payment to small business subcontractors through prime contractors. In response to OMB’s initial policy memo in June 2012, the government temporarily accelerated payment to their prime contractors and added contract clauses requiring prime contractors to accelerate payments to their small business subcontractors.
The latest memo extends the temporary policy for one year until July 11, 2014. VanRoekel writes that this extension will allow OMB and agencies to continue to evaluate the impact of accelerated payments on small business subcontractors and allow the Federal Acquisition Regulatory Council to solicit public input on strategies that might be used over the longer term to help maintain effective cash flow and prompt payment to small business subcontractors.
Beware the Anti-Deficiency Act and the New Interim Rule Regarding Indemnification Clauses in Social Media and License Agreements
By Jason N. Workmaster, Partner & Marques O. Peterson, Associate, McKenna Long & Aldridge LLP
On June 21, 2013, the FAR Council issued an immediately-effective interim rule that provides that any indemnification clause that is included in an End User License Agreement (EULA), Terms of Service (TOS), or similar legal instrument and that would create a violation of the Anti-Deficiency Act (31 U.S.C. § 1341) (the “ADA”) is unenforceable against the Government—regardless of actions a contracting officer might have taken indicating acceptance of the clause. See 78 Fed. Reg. 37,686 (Jun. 21, 2013). The ADA is a Federal statute that, among other things, prohibits government employees from entering into an “obligation exceeding an amount available in an appropriation or fund for [that] obligation.” 31 U.S.C. § 1341(a)(1(A). The FAR Council issued the interim rule “to address concerns [relating to the ADA] raised in an opinion from the U.S. Department of Justice (DOJ), Office of Legal Counsel (OLC) involving the use of unrestricted, open-ended indemnification clauses in acquisitions for social media applications,” even though the Government contends that, even without the regulatory change, the clauses in questions were unenforceable under existing law. Id.
Recently, government officials have become concerned about the use by government employees of internet based social media applications and licenses, and the specific terms of their respective agreements for these applications. The concern arose from the recognition that many supplies or services purchased by government employees through social media applications are subject to supplier license agreements, particularly in information technology acquisitions. As a result, in a March 2012 opinion, OLC addressed the circumstance in which a government purchase card holder, in the course of registering for a social media or license agreement account, consents to an online TOS agreement that holds the provider of the service harmless in the event that harm is caused to a third party when the application is used by the Government. According to the OLC, such a circumstance amounts to the government employee binding the Government, without statutory authorization or other exception, to an open-ended, unrestricted indemnification term. The OLC contends that this constitutes an ADA violation because the agency’s agreement to an open-ended indemnification clause, such as the TOS described above, could result in the agency’s legal liability for an amount in excess of the agency’s appropriation.
Responding to the OLC opinion, the Office of Management and Budget (OMB) issued a memorandum on April 4, 2013 outlining management actions to ensure agencies act in compliance with the ADA and consistent with the OLC opinion. See OMB Guidance M-13-10, Antideficiency Act implications of Certain Online Terms of Service Agreements, available at http://www.whitehouse.gov/sites/default/files/omb/memoranda/2013/m-13-10.pdf.
Prompted by the OMB memorandum, the FAR Council drafted this interim rule to address the perceived risk of an alleged ADA violation arising from indemnification clauses in the TOS of social media products. Moreover, the interim rule raises the possibility of additional coverage in the FAR to address other clauses in these TOSs that the Government apparently believes may create ADA violations. For example, the FAR Council highlighted a clause – one requiring the automatic renewal of subscription service – that it asserts might violate the ADA if it obligated the Government to pay for supplies or services in advance of the agency’s appropriation. Such additional coverage, however, was left to another day and is not included in the current interim rule.
Instead, for now, the interim rule amends FAR parts 12, 13, 32, 43, and 52 to state that indemnification clauses that violate the ADA are unenforceable, as noted above. While adding little to existing law, it is likely that these changes will make it at least somewhat harder for contractors to demonstrate that the Government is bound by these indemnification provisions—which the Government contends were unenforceable anyway.
In any event, written comments about the rule are due to the Regulatory Secretariat on or before August 20, 2013, and this interim rule is a good reminder that the Government remains vigilant about using the ADA and its regulation-making power to the fullest extent possible.
Tangherlini Warns of Impact of Reduced GSA Funding
On Wednesday, GSA Administrator Daniel Tangherlini wrote in a blog post that the House Appropriations Committee is considering a Fiscal Year 2014 Appropriations bill that severely reduces GSA’s budget. According to the post, the bill would cut nearly $2.5 billion from the President’s 2014 Budget request. Administrator Tangherlini is concerned that this cut in appropriations will negatively impact necessary infrastructure and force the government to default on rent obligations. For more information on this development, please read Mr. Tangherlini’s blog post at the link above.
House Bill Encourages Video Conferencing vs Travel
Last week Representative Michael Fitzpatrick (R-PA) introduced the Stay in Place, Cut the Waste Act of 2013 (H.R. 2643) in the House. The bill would require the Office of Management and Budget (OMB) to develop a plan to reduce the government’s travel spending by 50 percent by 2017. The legislation would also take action to reduce travel spending by requiring federal agencies to adopt video conferencing tools. Fitzpatrick noted in the legislation that while the administration has been using video conferencing as a way to reduce agency travel expenses, such technologies still remain largely untapped.
House Passes Energy & Water Spending Bill
This week the House of Representatives passed the $30.4 billion FY 2014 Energy and Water appropriations bill (H.R.2609). According to The Hill, non-security funding was cut by $2.5 billion from 2013 levels. These cuts include $100 million to civil works programs in the Army Corps of Engineers, $100 million to the Department of the Interior and the Bureau of Reclamation, and a $2.1 billion cut to the Department of Energy. Contractors should note that prior to the bill’s passage, the House included an amendment expanding the list of contractors prohibited from doing business with the Federal government. Now the list would include those who have been convicted of embezzlement, theft, forgery, and bribery, among other criminal offenses according to ASI Government.
Small Business Subcontracting Final Rule
The Small Business Administration (SBA) published a final rule on July 16 to amend it small business contracting regulations. The rule includes the following:
- Requirements for prime contractors to notify the contracting officer when-
- a small business subcontractor is not used to prepare a bid or proposal during contract performance
- payments to a small business subcontractor are reduced or are 90 days or more past due
- Clarifications about subcontract data reporting, such as which subcontracts are included and how data should be reported
- Provisions about subcontracting plan requirements and credit towards subcontracting goals in multiple award multi-agency, Federal Supply Schedule, Multiple Award Schedule and government-wide acquisition indefinite delivery, indefinite quantity contracts.
Members are encouraged to review the final rule for more details. The effective date is August 15, 2013.
On July 31, 2013, key officials from GSA’s Federal Acquisition Service (FAS) will join the Coalition to discuss GSA’s marketing message and initiatives designed to increase market share.
GSA Administrator, Dan Tangherlini, has set an agency goal of having a 17% share of the federal market by the end of the fiscal year, with a goal of a 90 percent in 10 years. According to Administrator Tangherlini and Tom Sharpe, FAS Commissioner, GSA will increase savings across the federal government by increasing its market share.
- Understand GSA’s market strategy
- Learn more about its market growth initiatives
- Hear how the agency plans to achieve its goals
- Identify new ways to effectively market your GSA Schedules
A GSA panel led by Tami Riggs, Assistant Commissioner, Office of Customer Accounts and Research will help contractors understand and convey the marketing message about GSA’s government-wide contracting capabilities and how the agency can increase efficiency, reduce costs and address contract duplication for customer agencies.
This is a must attend event for contractors that wish to better understand the GSA market and more strategically target prospective federal customers through GSA Contracts.
Registration Fees and Information – Register Here!
8:00 am – Registration and Networking Breakfast
9:00 am – Program Begins
Keystone Member: Complimentary
Premier Member: $65
Regular Member: $75
Government: $15 – Must Show Government ID
Save the Date – 2013 Fall Conference – October 30th
Join the Coalition on October 30 for its 2013 Fall Training Conference: The New Federal Market. Hear from Federal agency Chief Financial Officers, Congressional staff and industry leaders about the evolving government market and how best to adjust to this new environment. The conference will be held at the Fairview Park Marriot in Falls Church, VA. More details will be available soon. Please contact Athena Oliff at email@example.com to learn more about sponsorship opportunities or for other information about the event.