On August 22, 2013, GSA’s Federal Acquisition Service (FAS) posted a blog entitled “OASIS: What You Need to Know About GSA’s Plan to Reduce Contract Duplication.”
The blog correctly notes that OASIS can play a positive role in reducing contract duplication by delivering best value, cost effective service solutions for customer agencies. At the same time, the blog’s focus on OASIS as an antidote for contract duplication also highlights the huge, unfilled potential of the GSA Schedules program to deliver best value service solutions to customer agencies and the American people. The blog states that “OASIS takes the GSA Schedules to the next level by combining professional services and IT services into a single source for both commercial and noncommercial needs—and eliminating the unneeded duplication of contracts.”
Ironically, FAS has the opportunity and the authority to take the GSA Schedules program to the next level by incorporating “other direct costs” (“ODCs”) into GSA Schedule contracts. By utilizing the vetted, FAR-based commercial item clauses for acquisition and reimbursement of ODCs, materials and indirect costs, FAS can further enhance customer agencies’ ability to efficiently and effectively acquire complete solutions to requirements under the GSA Schedules program. Currently, the inability of customer agencies to include ODCs, materials and indirect costs on Schedule orders increases contract duplication thereby increasing costs and reducing efficiency for government and industry. The increased costs of contract duplication hit small businesses particularly hard.
Over five years ago, FAR Clause 52.212-4 Alternate I authorizing ODCs on commercial item contracts, went through the formal rule-making process. Currently FAR 52.212-4, Alternate I, is already in many GSA Schedule contracts but remains unavailable for use by customer agencies. This current “ODC disconnect” between the GSA Schedules program and the FAR implementation of ODCs pushes agencies to find alternative solutions. For example, the Department of State could conduct an open market procurement utilizing the commercial item clauses under FAR Part 12 for an IDIQ contract that provides for the inclusion of ODCs, materials and indirect costs for its requirements at the order level. However, if the Department of State wanted to utilize GSA Schedules for a requirement that included ODCs, materials and/or indirect costs, it could not. Contract duplication is the result.
The GSA Schedules program is the largest commercial item contracting program in government, accounting for approximately $40 billion in annual purchases by the federal government. Professional services and IT services account for approximately half that number ($18-20 billion annually). GSA has the opportunity to further leverage the program for customer agencies. GSA has the statutory authority and responsibility for the policies and procedures governing the program. The FAR-based commercial item clauses are there. The market is ready. The contractor community is motivated to work with GSA on this issue to ensure an effective, accountable solution that works for all.
It is time to take the GSA Schedules to the next level for customer agencies and the American people. Let’s work together to enhance competition, increase efficiency and reduce contract duplication. Let’s implement ODCs!
Roger Waldron
President
Honor Wounded Veterans and Play Golf!
The Coalition’s annual Charity Golf Tournament has even greater meaning as we are now also honoring our good friend and colleague, Joe Caggiano. Joe was not only a 23-year veteran of the federal contracting marketplace but a naval veteran as well. We look to honor his memory and his passionate support of our nation’s heroes through the Joseph P. Caggiano Wounded Veteran Golf Tournament.
Proceeds from the tournament will be donated to Hope for the Warriors and Operation Second Chance.
How will member participation in the golf tournament support wounded veterans and their families? Hope for the Warriors will use the contributions to provide a full cycle of care to service members, veterans and military families including Employment & Education, Clinical Care Management, Recreational & Athletic Programs, and Community Outreach. Also, by participating in the tournament you will help Operation Second Chance provide emergency financial assistance to wounded, injured and ill veterans, in the form of rent, utilities, daily essential items, travel and morale. These organizations are deeply grateful for your continued support of our heroes!
The tournament will be August 28 at the Whiskey Creek Golf Club in Ijamsville, Md. If you would like to participate as a player, a sponsor, or both – please contact Athena Oliff at aoliff@thecgp.org. A special thank you to our title sponsor, Price Waterhouse Cooper, as well as our event sponsors, Cohn Reznick, Integrity Consulting and Baker Tilly for their generosity in making this event possible.
The National Aeronautics and Space Administration (NASA) released a request for proposals (RFP) for its fifth version of Solutions for Enterprise-Wide Procurement (SEWP V). According to a cover letter included with the RFP, offerors will be competing for multiple Firm-Fixed Price (FFP), Indefinite Delivery, Indefinite Quantity (IDIQ) contracts with FFP/IDIQ delivery orders for IT/Audio Visual products and product-based services. The contract will have a base ordering period of five years with a five-year option. NASA will award the contracts covering computer systems, servers, networking, security, and video and conference tools in full and open competition. Set-asides for small businesses, service-disabled veteran owned small businesses and historically underutilized small businesses are included for mass storage devices, server support devices and multi-functional devices. Proposals are due by October 14, 2013 at 3pm ET.
Vendors should also note that the contract vehicle includes the restrictions on sourcing IT manufactured in China that were mandated under the current continuing resolution. NASA must conduct a risk assessment of IT hardware or software manufactured or assembled by “entities that are owned, directed or subsidized by the People’s Republic of China,” reports FCW. NASA’s Office of the Chief Information Officer will make a determination about whether the IT acquisition is in the national interest, and only approved items will be made available under NASA SEWP V.
Industry Submits Letter to GSA on OASIS
The Coalition signed a letter to GSA with TechAmerica and the Professional Services Council (PSC) expressing concern about specific past performance requirements in the One Acquisition Solution for Integrated Services (OASIS) RFPs. The RFPs currently include a requirement to have specific NAICS code past performance experience in order to qualify for OASIS pool eligibility. The letter notes that many small business participants within the three associations may have to “no bid” OASIS due to this requirement. Together, we are requesting a meeting with FAS Commissioner Tom Sharpe in order to discuss this matter further. A copy of the joint-industry letter is posted on the Coalition website at https://thecgp.org/images/Industry_Letter_on_OASIS_NAICS_Codes_Requirements.pdf.
DISA to Take New IT Acquisition Approach
The Defense Information Systems Agency (DISA) is committed to a more agile approach to IT acquisition, according to Federal News Radio. At the agency’s annual industry conference in Ft. Meade, Lt. Gen. Ronnie Hawkins, DISA’s director, said that he has asked his staff to “focus on being able to pivot and deliver capability in short periods of time. Rather than it taking us years to do it, we’re going to be doing it in sprints.” DISA’s acquisition executive, Jennifer Carter supports giving agency program managers more flexibility in what they can deliver through each acquisition cycle. Also, DISA officials noted that vendors should expect more competition via task orders on existing contract vehicles.
Another DISA goal is to reduce the time it takes to award contracts for IT equipment and services. “Most of our approaches going forward are probably going to be of that nature. We’re trying to keep out ahead and have opportunities to introduce the next generation of tools. If we waited for a product to be mature and completely proven before we started the process to offer it to our users, we’d always be buying our devices off of eBay because they’re no longer sold. We can’t afford to be in that mode,” Carter said.
Feedback for GSA on EULA Reviews
The Coalition is collecting industry feedback on the EULA review process for Kay Ely, Director of IT Schedule Programs. Is your company seeing an improvement in the EULA process? Are you still experiencing significant delays? Please send your response by COB Wednesday, Spet. 4 to Aubrey Woolley at awoolley@thecgp.org or call (202) 315-1053. Please note that feedback to Kay Ely will address the overall EULA process and not identify any individual companies.
Army Plans 25% Cuts in 7 Target Areas
The Army is planning 25 percent cuts in funding and staff levels. Army Secretary John McHugh and Chief of Staff General Ray Odierno have announced the creation of a 2013 Army Focus Area Review Group to make recommendations about how best to apply these budget reductions to service programs across military, civilian, and contractors. Their primary goal is to maximize the use of every dollar given to the Army in lieu of the budget reductions imposed by the Budget Control Act of 2011. The review group must make recommendations as to how these reductions should be made in the following areas:
- Institutional headquarters reductions
- Operational headquarters reductions
- Operational force structure and ramps
- Readiness
- Acquisition workforce
- Installation services and investments
- Army command, control, communications, and intelligence and cyber
For the acquisition workforce, the Army is looking to make reductions in staffing commensurate with the reductions in funding for their functions. The Army plans to make these reductions in a manner that optimizes resources in order to support their core missions. The Army Focus Review Group’s recommendations are due by September 11, 2013.
OMB Releases New Tools on Open Data
This week the Office of Management and Budget (OMB) announced the release of new resources to help federal agencies make data open and available in machine-readable formats (data structured in a format that can be understood and processed by a computer). OMB has released the following new tools on its Project Open Data website in support of this initiative:
- Additional guidance on inventorying and publishing data assets
- New frequently asked questions about how open data requirements apply to federal acquisition and grant award processes
- A framework for creating measurable goals to track progress on increasing data transparency
The purpose of the Open Data Policy is to make open and machine readable the new default for government data collection and distribution in order to enhance availability. This policy has been implemented as an answer to the May 9, 2013 Executive Order released by the White House. The order states that Government information shall be managed as an asset throughout its life cycle to promote interoperability and openness, and, wherever possible and legally permissible, to ensure that data are released to the public in ways that make the data easy to find, accessible, and usable.
OMB has provided some guidance to agencies about how open data applies to federal acquisition. A list of frequently asked questions on this topic is posted at http://project-open-data.github.io/federal-awards-faq/#contracts.
Gratuities – Cautionary Tales for Contractors and Government Employees
By: Tom Barletta, Partner, Steptoe & Johnson LLP; Fred Geldon, Senior Counsel, Steptoe & Johnson LLP; & Mike Navarre, Special Counsel, Steptoe & Johnson LLP
Recent events demonstrate that government investigators and prosecutors are taking more seriously the ethical regulations that govern gratuities. Cases in point:
- On April 25, 2013, the U.S. Department of Justice issued a press release announcing that a Bureau of Prisons (BOP) employee had pled guilty to a charge of receiving unlawful gratuities. The BOP employee, a supervisory traffic management specialist in the BOP Relocation Services section, was responsible for giving relocating BOP employees a list of approved movers and then referring their move to agents of the chosen carrier. While performing these duties the employee received spa and salon gift cards in the amount of $1,007 and $790 from one carrier’s agent, as well as free moving services from moving companies. The BOP employee was subsequently assessed a fine of $1,500 and placed on probation for 18 months.
- On June 5, 2013, the Washington Post reported that the Internal Revenue Service (IRS) had placed two managers on administrative leave for accepting free food and other gifts in violation of government ethics rules. These violations were discovered during an audit of a years-old conference, at which the managers “allegedly held an after-hours party in their private hotel suites.” It apparently was not clear who gave the managers the food, worth $1,162. Acting Commissioner Danny Werfel said in a statement to the Post that the IRS has started the process of firing the managers.
The basic rules applicable to government employees regarding gratuities are set forth in the Standards of Ethical Conduct for Employees of the Executive Branch (“Standards”), which are codified at 5 C.F.R. § 2635. The Standards generally prohibit federal government employees from accepting gifts[1] from “prohibited sources,” a category that includes, among others, contractors (and employees of contractors) doing business with or seeking to do business with the federal government employee’s agency. 5 C.F.R. §§ 2635.102(k), 2635.203(d).
There are some exceptions, however. For example, under the Standards, federal employees may accept, even from “prohibited sources,” items worth $20 or less, as long as the total value of the gifts from the same source is not more than $50 in a single calendar year (calculated by including a contractor and its employees as a single source). 5 C.F.R. § 2635.204(a). The Standards also include other limited exceptions, such as gifts motivated by family relationships.
The size of the gratuities in the two recent examples discussed above far exceeds these thresholds. In the case prosecuted by the Justice Department, however, the amount at issue was significantly less than amounts usually cited in large corruption cases, and demonstrates that even these (relatively) small violations are attracting the attention of auditors, investigators, and prosecutors.
Although the Standards apply only to government employees who receive gratuities rather than to contractor employees who offer gratuities, contractors can face potential liability in relation to gratuities as well.
The federal criminal gratuities statute, 18 U.S.C. § 201, provides for fines or imprisonment for anyone who, for example,
directly or indirectly gives, offers, or promises anything of value to any public official, former public official, or person selected to be a public official, for or because of any official act performed or to be performed by such public official, former public official or person selected to be a public official.
18 U.S.C. § 201(c)(1)(A).
Unlike a bribe, an illegal gratuity does not require an intent to influence; rather, the illegal gratuity only need be given “for or because of” an official act. An illegal gratuity “may constitute merely a reward for some future act that the public official will take (and may already have determined to take), or for a past act that he has already taken.” United States v. Sun-Diamond Growers of California, 526 U.S. 398, 404-405 (1999). There must, however, be a connection, i.e., the government must prove “a link between a thing of value conferred upon a public official and a specific ‘official act’ for or because of which it was given.”[2] Id. at 414.
The risk to contractors is heightened, however, because the line between an acceptable gift and an illegal gratuity is nuanced. For example, in United States v. Hoffmann, 556 F.3d 871, 877 (8th Cir. 2009), the court rejected the defendant’s contention that the Government had failed to prove that he violated the gratuities statute because he did not reasonably believe that the government employee would take an official action and because the government employee never did so. Rather, the court upheld the conviction finding that a “reasonable juror could conclude” that the contractor gave the government project manager a set of golf clubs “to . . . reward future performance.”
The risk to contractors is demonstrated by yet another recent Justice Department announcement in a whistleblower “qui tam” case that included gratuities allegations. On March 7, 2013, DOJ announced that three CIA contractors (American Systems Corporation, Anixter International Inc., and Corning Cable Systems LLC) had agreed to pay $3 million to settle allegations they violated the False Claims Act and Anti-Kickback Act. The announcement included allegations[3] that in pursuit of a 2009 contract the companies had provided gratuities (meals, entertainment, gifts, and tickets to sporting and other events) to CIA employees.
Prohibitions on gratuities applicable to contractors are also incorporated into various FAR provisions. For example, FAR 52.203-13(b)(3) (Contractor Code of Business Ethics and Conduct) requires that contractors “timely disclose, in writing, to the agency Office of the Inspector General, with a copy to the Contracting Officer, whenever, in connection with the award, performance, or closeout of this contract or any subcontract thereunder, the Contractor has credible evidence that a principal, employee, agent, or subcontractor of the Contractor has committed . . . [a] violation of Federal criminal law involving . . . gratuity violations found in Title 18 U.S.C.” In addition, FAR 52.203-3(a) allows the government to terminate a contract if a contractor or contractor employee “[o]ffered or gave a gratuity (e.g., an entertainment or gift) to an officer, official, or employee of the Government; and [i]ntended, by the gratuity, to obtain a contract or favorable treatment under a contract.” The government also may recover damages and/or suspend or debar a contractor from federal contracting for violations of this clause. See FAR 3.204(c).
Finally, in addition to potential criminal penalties and suspension and debarment, providing gratuities to government employees can also result in other adverse effects for a contractor, such as negative past performance ratings that could affect current and future business.
In sum, to maintain healthy relationships with their government customers and to protect government employees and themselves from potential liability, contractors should understand the laws and regulations applicable to gratuities to government employees, have a clear policy regarding gratuities (which, for many contractors includes a prohibition on giving gratuities) and provide appropriate education and training to their employees.
Of course, contractors should also be aware of laws and prohibitions that apply in related contexts, including anti-kickback laws that prohibit certain improper payments between prime contractors and subcontractors, the Foreign Corrupt Practices Act, which prohibits certain types of payments to foreign officials, and laws and regulations that regulate payments that can be made to members of Congress and staff.
[1] “Gifts” include entertainment, favors, discounts, hospitality, transportation, and other things of value. 5 C.F.R. § 2635.203(b).
[2] The Court in Sun-Diamond also rejected the Government’s contention that the illegal gratuities statute is violated by providing a gift to an official because he is in a position (i) to act favorably at some unknown future time, or (ii) to “build a reservoir of goodwill that might ultimately affect one or more of a multitude of unspecified acts.” Sun-Diamond, at 405.
[3] The Justice Department also alleged that the companies improperly received source selection information from a CIA employee to whom they had provided gratuities.
SBA Names Jeanne Hulit Acting Administrator
The Small Business Administration (SBA) named Jeanne Hulit, associate administrator and head of the Office of Capital Access, as acting agency administrator. Hulit takes over the role of current SBA administrator Karen Mills following her departure at the end of August. The nomination of a permanent successor is still pending.
Strategic Sourcing Working Group Meeting – Sept. 5
The Coalition is establishing a multi-industry Strategic Sourcing Working Group to work on the association’s strategic sourcing strategy moving forward. Current Federal Strategic Sourcing Initiative (FSSI) BPAs that cover the membership include OS2 for office supplies, Print Management Services and SmartBuy. FSSI contract vehicles in development include Janitorial and Sanitation products; Maintenance, Repair and Operations products; and OS3 for office supplies. The government is looking to establish more FSSI contracts in FY2014.
Members interested in getting involved in the Strategic Sourcing Working Group, please contact Roy Dicharry at rdicharry@thecgp.org. We will have our first meeting on September 5th at 2pm at Mayer Brown LLP (1999 K Street, N.W. Washington, DC 20006).
Join the Coalition and Bloomberg Government- Sept 4 (webinar)
An Update on Sequestration and the Budget– As the effects of sequestration set in, many continue to wonder what federal programs are being cut and what the future holds for additional reductions. Please join Bloomberg Government and The Coalition for Government Procurement on September 4 at 2:00pm ET for a monthly webinar focused on the current state of sequestration and an outlook for upcoming budget cuts. Industries covered will include defense and federal contracting among others. For more information and to register, visit http://connect.bloomberg.com/microsite/sequestration0813/regform-cgp/0.ashx.
DHS CPO Webinar Series
The Department of Homeland Security (DHS) has posted a notice on FedBizOpps.gov about a series of industry webinars to be moderated by DHS’s Office of the Chief Procurement Liaison during FY 2014. The webinar series aims to share information and answer questions with industry around various procurement topics and opportunities similar to past DHS Industry days. DHS requests industry participation and urges members to post discussion topics or questions to
DHSIndustryInformation@hq.dhs.gov. Registration information for the webinars will be provided at FedBizOpps.gov in October 2013. For any questions please contact Bob Namejko, DHS Industry Liaison at robert.namejko@hq.dhs.gov.
Join the Coalition for the 2013 Fall Training Conference!
How has the federal market changed in the wake of sequestration? Find out at the Coalition’s 2013 Fall Training Conference – The New Federal Market. You can expect active presentations and discussions regarding long term changes in what, how and from whom agencies acquire services and products. The agenda also includes a number of breakout sessions that address new developments in government-wide acquisition programs.
Confirmed Featured Speakers
- Frank Kendall, Under Secretary of Defense for Acquisition, Technology and Logistics – Department of Defense
- Major General Wendy M. Masiello, Director of Contracting – Air Force
- Kathleen Turco, Chief Financial Officer – Veterans Health Administration
- Anne Rung, Chief Acquisition Officer – General Services Association
- Troy Cribb, Chief Counsel for Government Affairs – Senate Homeland Security & Government Affairs Committee
Click here for more information and to register.
Show your support for education and training of the acquisition workforce and constructive dialogue between government and industry. Click here to see our available sponsorships or call Athena Oliff at 202-315-1052 to discuss your participation.