Welcome back! With the shutdown behind us—at least for now—the procurement community can get back to the business of competing, awarding and implementing contracts that support agency missions across the nation and the world. The impact of the shutdown is a stark symbol of how current fiscal challenges are reshaping the federal procurement marketplace. It is also the theme of the Coalition’s 2013 Fall Training Conference: “The New Federal Market.”
The 2013 Fall Training Conference will be held on October 30th at the Fairview Marriott in Falls Church, Virginia, right off 495 and Route 50. The agenda can be found here. The agenda and confirmed speakers reflect the Coalition’s efforts over the last three years to expand its dialogue with key procurement organizations across the federal enterprise. This year we are honored to have Frank Kendall, Under Secretary of Defense for Acquisition, Technology and Logistics and Major General Wendy M. Masiello, Director of Contracting, United States Air Force as our Keynote Speakers. The agenda also includes officials from the Department of Homeland Security, the Department of Veterans Affairs, the Office of Management and Budget as well as the General Services Administration. And, as always, the afternoon Myth-Busters Breakout Sessions will provide a positive forum for dialogue between procurement officials/professionals from government and industry.
During the conference luncheon the Coalition will be presenting the 2013 Excellence in Partnership (EIPs) Recognitions to 12 individuals and/or organizations including the Lifetime Acquisition Excellence Award to Dr. Nick Nayak, Chief Procurement Officer, Department of Homeland Security. A list of the honorees can be found in the EIP recognitions announcement below. Our EIP luncheon speaker is the always thought-provoking Steve Schooner, Nash & Cibinic Professor of Government Procurement Law and Co-Director of the Government Procurement Law Program at The George Washington University Law School.
The conference provides a wonderful forum for the procurement community to participate in a conversation focusing on key procurement issues, challenges and opportunities! It is a unique Myth-Busters opportunity for contracting officers, contract and program managers, compliance professionals, in-house counsel, business development and financial officers from across government and industry.
You can register here for the 2013 Fall Training Conference: “The New Federal Market.” We look forward to seeing you on the 30th!
The Coalition is pleased to announce the recipients of the Excellence in Partnership (EIP) awards for 2013. The 2013 EIP honorees were chosen in nine distinguished categories including a new category, the Veterans Hiring “Continuing the Commitment” Award, honoring well-established and successful hiring programs for military veterans in the private sector.
This year’s government and industry EIP honorees are:
- Contractor Savings Award – General Dynamics Information Technology
- Government Savings Award (DoD) – OHIO Replacement (PMS397) R&D Contract Team, U.S. Navy
- Myth-buster’s Award (Civilian) – Aletha Pelham, Facilities Maintenance and Hardware Acquisition Center, General Services Administration
- Myth-buster’s Award (DoD) – Surface Ship Torpedo Defense Team (PMS415), U.S. Navy
- Lifetime Acquisition Excellence Award – Dr. Nick Nayak, Chief Procurement Officer, Department of Homeland Security
- Best Veteran Hiring Program (Government) – Virginia Department of Motor Vehicles
- Best Veteran Hiring Program (Industry) – Booz Allen Hamilton
- Veterans Hiring “Continuing the Commitment” Award – CACI, Inc. and L-3 Communications
- Green Excellence in Partnership Award (Industry) – The HON Company, MechoSystems and Ricoh Americas Corporation
The EIP awards were developed 14 years ago to promote government and industry partnership and to honor individuals and organizations in the acquisition community that have made significant contributions to the procurement system while providing best value to the taxpayer.
The 2013 Excellence in Partnership honorees will be recognized as part of the Coalition’s 2013 Fall Training Conference—The New Federal Market—on October 30th at the Fairview Park Marriott in Falls Church, Virginia. We invite all Coalition members to join us in honoring this year’s outstanding group of EIP awardees.
October 30, 2013
Now that the Government has reopened, how has the federal market changed in the wake of the government shutdown and budget cuts?
What business intelligence is needed to succeed in FY 2014?
How do actions from The Hill affect your business strategy?
How will changing Agency Budget Priorities impact your business?
Learn the answers to these questions from Federal Acquisition Leaders, Agency CFOs and Government Officials at The Coalition’s 2013 Fall Training Conference – The New Federal Market.
Breakout sessions will address new developments in government-wide acquisition programs including Strategic Sourcing, GSA Acquisition Center Initiatives, Veterans Affairs, GSA e-marketing, Professional Services and more.
Confirmed Speakers include
- Frank Kendall, Under Secretary of Defense for Acquisition, Technology and Logistics – Department of Defense
- Major General Wendy M. Masiello, Director of Contracting—Air Force
- Peggy Sherry, Chief Financial Officer, Dept. of Homeland Security
- Emily Murphy, Senior Counsel, House Committee on Small Business
- Norman Dong, Deputy Controller— Office of Management and Budget
- Kathleen Turco, Chief Financial Officer—Veterans Health Administration
- Anne Rung, Chief Acquisition Officer—General Services Association
- Michael Smith, Director of Strategic Sourcing —Department of Homeland Security
Government Back to Work, Default Avoided
Late on Wednesday, the House and Senate passed legislation to fund the federal government through January 15 and increase the debt ceiling through February 7. The Senate voted 81-18; the House voted 285-144. Additionally, Congress established a framework for bipartisan budget negotiations to begin. According to Defense News, members of the bipartisan bicameral group must report recommendations for longer-term spending levels and deficit reduction by December 13.
Member Survey on the Government Shutdown
Following the government shutdown, the Coalition is surveying members on the impact of the shutdown on the contractor community. The purpose of the survey is to identify some lessons learned and make recommendations to key stakeholders in the government about how to best prepare contractors in advance of a shutdown. Your participation is essential to developing these recommendations for the government. All responses to the survey are anonymous and for non attribution. To take the 5 minute survey now, click here.
Next Steps for Contractors After the Shutdown
Now that the government shutdown has ended, what are the appropriate next steps for contractors? Roger Waldron, Coalition President, gave contractors 3 recommendations during an interview this week on the Federal Drive with Tom Temin and Emily Kopp. To learn what they are, listen to the Federal News Radio interview at http://media.dev-cms.com/wtop/31/3118/311807.mp3.
OASIS and SEWP V Extend Deadlines
Vendors will have until October 30 to submit proposals for GSA’s OASIS contract, according to an October 17 FedBizOpps.gov notice. GSA had previously extended the deadline for submissions to its OASIS RFP twice — once to Sept. 17 based on industry feedback and then again to Oct. 10 because of the ongoing shutdown. NASA’s SEWP V contract has also extended its deadline to Nov. 1. The previous due date was Oct. 18.
DoD Ashton Carter to Step Down
Deputy Defense Secretary Ashton Carter will step down on December 4 after more than two years in the position. Carter informed Defense Secretary Chuck Hagel of his decision to step down on Thursday, reports Federal Times. Carter served as deputy for former Defense Secretary Leon Panetta and, since March, for Secretary Hagel. Prior to his most recent government service at the Department of Defense (DoD), Dr. Carter was chair of the International and Global Affairs faculty at Harvard University’s John F. Kennedy School of Government and Co-Director of the Preventive Defense Project. A graduate from Yale and Oxford, Dr. Carter served as the DoD undersecretary for acquisition, technology and logistics, where he instituted the Better Buying Power initiative, the current acquisition reform program designed to increase the efficiency of the Department’s spend.
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 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.” 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 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.
 “Gifts” include entertainment, favors, discounts, hospitality, transportation, and other things of value. 5 C.F.R. § 2635.203(b).
 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.
 The Justice Department also alleged that the companies improperly received source selection information from a CIA employee to whom they had provided gratuities.
House Hearing Examines Contract Bundling
On October 10, the House Small Business Subcommittee on Contracting and Workforce held a hearing entitled “Bungling Bundling: How Contract Bundling and Consolidation Remain Challenges to Small Business Success.” Gloria Larkin president of TargetGov at Marketing Outsource Associates, Inc., and vice chair of the Educational Foundation of Women Impacting Public Policy (WIPP) testified before the Subcommittee. In Larkin’s testimony, she explained how contract bundling and consolidation affect small businesses. A survey of WIPP members found that small businesses are wary of entering the federal market for the following reasons:
- Costs. The testimony stated that, “small businesses invest $20,000, $30,000 or more in valuable, non-billable time to simply write a proposal, not taking into account the business development and marketing efforts that go into planning, positioning, pursuing, proposing and possibly winning.”
- Time and effort. Many times small firms cannot afford to allocate resources for the marketing and sales operations required to win federal contracts.
- Size. Because the government requires that past performance show work completed on a similar contract, small businesses that are small based on their annual revenues cannot demonstrate past performance on a contract with a value exceeding that revenue. Therefore, as consolidated contracts increase in value, small firms must engage in expensive teaming efforts.
- Bonding. Small firms are unable to receive bonding for contracts valued much higher than their annual revenue.
- Teaming. Teaming arrangements can be intricate and expensive, and costs are unallowable and must be paid by the small firm directly.
- Winning task orders. Once a small vendor wins a spot on a bundled contract, it must expend more resources competing for task orders.
- Protests. Even if a small firm wins a contract, protests can delay work and the resulting revenue.
Off the Shelf – The Impact of the Government Shutdown
This week on “Off the Shelf”, Chris Payne, senior economic analyst and Cameron Leuthy, senior budget analyst for Bloomberg Government, discuss the impact of the shutdown and the current political climate that got us to this point. Given that a similar situation could occur in January and February 2014, Payne outlines the economic ramifications for government and industry. He also makes the case as to why having a debt ceiling does not make fiscal, economic or policy sense. Leuthy talks about the budgetary impact of shutdown and what it means for contractors supporting customer agency missions. Be sure not to miss this discussion. Members can listen to the program here!
The U.S. EPA is expected to release a much anticipated public notice regarding the use of ecolabels in Federal procurement. Members are advised to monitor the Federal Register in the coming weeks. Green Committee members will be notified once the notice is released. The Coalition for Government Procurement will provide comments in response through the Ecolabels Working Group. If you’d like to join the Ecolabels Working Group or the Green Committee, please contact Aubrey Woolley at firstname.lastname@example.org or (202) 315-1053.
Reducing Contract Duplication
Coalition President, Roger Waldron, joined In Depth with Francis Rose this week to discuss the acquisition challenges government and industry face now that the government shutdown is lifted. Key to achieving best value for Federal agencies and the American taxpayer is reducing the number of duplicative contracts across the government that offer the same or similar services and products. To listen to Roger Waldron’s discussion with Francis Rose on contract duplication, click here.
Boot Camp for VA Schedules Contracting
Like GSA Schedule contracts, the VA Schedules are IDIQ type contracts awarded to pre-approved vendors using full and open competition; however, there are subtle differences between the GSA and VA Schedules that can make a significant impact on negotiating and administering a VA Schedule contract. Take advantage of Centre’s extensive experience with the VA FSS Program by registering for the VA Schedules Contracting class.