Friday Flash, 11.26.13

FAR and Beyond Blog

Thanksgiving is one of my favorite holidays. The big turkey dinner followed up with NFL football (as one of several thousand shareholders, I will be cheering on the Green Bay Packers this Thursday!). However, over the years I have come to appreciate the thanks in Thanksgiving. Thanks for my family and my friends. Thanks for my home. Thanks for my job—it is so much fun and so meaningful.

At this special time we must also give thanks for all those who go in harm’s way to protect us, our service men and women, civil servants and contractor personnel. Please keep them in your thoughts and prayers. Please also keep families of all our fallen in your prayers.

Although we live in challenging times, I am confident we will overcome our present difficulties. We have done it before. With that in mind, I wanted to share with you Abraham Lincoln’s famous Thanksgiving Day Proclamation. The October 3, 1863 Presidential Proclamation called on the nation to observe the last Thursday in November as a day of Thanksgiving. Issued at the height of our greatest crisis, the Civil War, it still has meaning today.

A Proclamation

The year that is drawing towards its close, has been filled with the blessings of fruitful fields and healthful skies. To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added, which are of so extraordinary a nature that they cannot fail to penetrate and soften even the heart which is habitually insensible to the ever watchful providence of Almighty God.

In the midst of a civil war of unequaled magnitude and severity, which has sometimes seemed to foreign States to invite and to provoke their aggression, peace has been preserved with all nations, order has been maintained, the laws have been respected and obeyed, and harmony has prevailed everywhere except in the theatre of military conflict; while that theatre has been greatly contracted by the advancing armies and navies of the Union.

Needful diversions of wealth and of strength from the fields of peaceful industry to the national defense have not arrested the plough, the shuttle or the ship; the axe has enlarged the borders of our settlements, and the mines, as well of iron and coal as of the precious metals, have yielded even more abundantly than heretofore. Population has steadily increased, notwithstanding the waste that has been made in the camp, the siege and the battle-field; and the country, rejoicing in the consciousness of augmented strength and vigor, is permitted to expect continuance of years with large increase of freedom.

No human counsel hath devised nor hath any mortal hand worked out these great things. They are the gracious gifts of the Most High God, who, while dealing with us in anger for our sins, hath nevertheless remembered mercy.

It has seemed to me fit and proper that they should be solemnly, reverently and gratefully acknowledged as with one heart and one voice by the whole American People. I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November next, as a day of Thanksgiving and Praise to our beneficent Father who dwelleth in the Heavens. And I recommend to them that while offering up the ascriptions justly due to Him for such singular deliverances and blessings, they do also, with humble penitence for our national perverseness and disobedience, commend to His tender care all those who have become widows, orphans, mourners or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the interposition of the Almighty Hand to heal the wounds of the nation and to restore it as soon as may be consistent with the Divine purposes to the full enjoyment of peace, harmony, tranquility and Union.

In testimony whereof, I have hereunto set my hand and caused the Seal of the United States to be affixed.

Done at the City of Washington, this Third day of October, in the year of our Lord one thousand eight hundred and sixty-three, and of the Independence of the United States the Eighty-eighth.

By the President: Abraham Lincoln

Happy Thanksgiving to all Friday Flash readers!

Roger Waldron

President

 

Dec 3 – Join PBS Kevin Kampschroer on Federal Green Buildings

Join the Coalition on December 3rd for a myth-buster’s conversation with Kevin Kampschroer, Director of GSA’s Office of Federal High Performance Green Buildings about their recent green buildings recommendations for Federal buildings (see press release).  This is a great opportunity for members to hear directly from Kevin Kampschroer about how GSA’s recommendations will impact Federal agencies’ approach to meeting their green buildings requirements.  GSA has recommended that the Federal government use Green Globes 2010 and LEED 2009 as the third party certification systems for construction and renovation projects.

Federal Green Buildings Certification Meeting

with Kevin Kampschroer

Tuesday, Dec 3

2:00pm

HON

1101 Connecticut Ave., Suite 300

Washington D.C., 20036

To RSVP to attend, please contact Roy Dicharry at rdicharry@thecgp.org.

 

Air Force Establishes Virtual Contracting Agency

The Air Force recently launched the Air Force Installation Contracting Agency (AFICA), a field operating agency that provides centralized contracting services to bases worldwide. AFICA reports directly to the deputy assistant secretary for contracting and ensures bases around the world receive the installation contracting services they need to remain mission-ready, according to an Air Force press release. “This new field operating agency will help us usher in a new era of support to our customers by maximizing our precious and scarce resources,” said Maj. Gen. Wendy Masiello, the deputy assistant secretary for contracting. The initiative has consolidated the manpower and functions of eight major command contracting staffs, the Enterprise Sourcing Group, and five specialized execution units into the FOA. The Enterprise Sourcing Group has been redesignated as AFICA and is headquartered there. Additionally, AFICA assumes a role in Air Force contracting oversight, specialized execution, and strategic sourcing. The agency is comprised of 700 personnel at 17 locations worldwide and will support customers at eight major commands:

1. Air Combat Command
2. Air Education and Training Command
3. Air Force Global Strike Command
4. Air Mobility Command
5. Air Force Special Operations Command
6. Air Force Space Command
7. Pacific Air Forces
8. United States Air Forces in Europe

 

GAO Explores Federal Workplace Mobility

The General Accountability Office (GAO) released a report this week on Federal Real Property and how agencies have used mobility to reduce space.  The agencies they studied have worked to adopt workforce mobility to increase their use of alternative work arrangements and achieve space efficiencies.  To do so, they increased telework, introduced hoteling, and reduced the size of individual workspaces.

GSA plays a central role in the transition for agencies—from providing general guidance and customized programs to help agencies address their changing space needs.  GSA has also shared their own experience in designing its headquarters renovation with customer agencies.  In GSA’s redesigned building at 1800 F St NW in Washington, DC, they made extensive use of open, collaborative work environments; eliminated private offices for most employees, including senior-level employees; and implemented a hoteling program for all employees.

The two GSA programs highlighted in GAO’s report are the Client Portfolio Planning and National Engagement for Workplace programs.  Both are part of the Total Workplace Program Management Office in the Public Buildings Service.  These programs are designed to help agencies explore mobility and determine the type of workplace configuration that best meets the agency’s mission.  Through the National Engagement for Workplace program, GSA works with agencies to identify new ways of working that leverage technology and furniture solutions.  According to the report, GSA helps to develop the business case for pursuing change.  GSA funds initial services under the program, such as performing space utilization studies and implementing pilot programs.  Customer agencies fund subsequent services, like implementing programs and evaluating results.  They are currently working with the USDA, Department of Education, Food and Drug Administration and others.

GAO notes in the report that despite progress made by the five agencies[1] evaluated in the study, actions like telework and hoteling may not be appropriate in all instances.  Agency officials noted that some employees may not want to telework for personal reasons or be unable to do so because of the nature of their work.  Employees who interact with the public or work with classified documents are examples.

To access the full report, visit www.gao.gov/assets/660/658454.pdf.

---

 

Federal Budgeters “Master’s of the Band-aid Solution”

A survey of Federal budget professionals was published this week on the budget challenges the government has faced the last two years.  As the publishers of the survey, Grant Thorton and the American Association of Budget and Program Analysis (AABPA), note “constrained by funding and politics, agencies have been forced to become masters of the band-aid solution – finding the quick, low-cost fix that pushes challenges into the future rather than solving them in the present.”  To access the survey report, visit www.grantthornton.com/~/media/content-page-files/public-sector/pdfs/surveys/Budget-2013-Survey.ashx.

 

Defense Official Addresses Contracting ‘Myths’

In a recent article from Federal Times, DoD Director of Defense Pricing Shay Assad addressed a number of issues concerning Defense procurement. Principally he used the interview to ‘dispel’ some myths surrounding the Defense Department’s contracting workforce. In Federal Times, Assad stated that contrary to popular belief, the DoD contracting workforce has grown by nearly 24,000 people over the last five years while 34 percent of its employees have industry and business experience. The target number for hiring experienced contracting professionals is 35 percent. Concerning the perception of increased use of lowest-price, technically acceptable contracts, Assad notes that only one major program falls under that category and that LPTA is less than 2 percent of DoD purchasing. He also notes that he is not pushing to increase that number.

Assad also outlined some new initiatives that the Department is working on to enhance their processes and obtain better prices from vendors. These include:

• Growing the Contract Business Analysis Repository (CBAR), a system which provides contracting officers business information about contractors. Assad says that about 1,000 contracting employees have access to the system.
• Increasing training of contracting employees with better courses and more funding.
• Creating 11 integrated cost-analysis teams across DoD that provide accurate pricing information to contracting employees.

 

Guidance for Federal Green Purchasing Released

The Environmental Protection Agency (EPA) has released a draft notice regarding the use of ecolabels in Federal procurement.  The EPA is developing the guidelines to help agencies identify which private sector standards and ecolabels federal purchasers should consider when buying greener products.  The Coalition will be submitting comments through the Green Committee’s Ecolabels Working Group.  If you would like to participate, please contact Aubrey Woolley at awoolley@thecgp.org.

 

OMB Issues Continuous Monitoring Guidance

The Office of Management and Budget (OMB) has issued guidance to agencies on managing information security risks on a continuing basis to strengthen the nation’s cybersecurity posture.  OMB has identified cybersecurity as one of 14 Cross Agency Priority (CAP) Goals. The memo builds upon efforts towards achieving the cybersecurity CAP goal.

Under the Continuous Diagnostics and Mitigation (CDM) Program established by the Department of Homeland Security (DHS), the General Services Administration (GSA) established a government­wide Blanket Purchase Agreement (BPA) under Multiple Award Schedule 70. Using the CDM Tools/Continuous Monitoring as a Service (CMaaS) BPA, Federal, State, local and tribal governments can deploy a basic set of capabilities to support continuous monitoring of security controls in Federal information systems and environments of operation. According to the memo, the BPA awarded on August 12, 2013, provides a consistent, government-wide set of information security continuous monitoring (ISCM) tools to enhance the Federal government’s ability to identify and respond to the risk of emerging cyber threats. It also utilizes strategic sourcing to minimize the costs of implementing the security requirements.

The CDM Tools/CMaaS BPA is central to the full implementation of ISCM across the Government. In the memo, OMB specifies that agencies-

Establish plans, to the extent practicable, to migrate to the GSA BPA as contract terms expire for acquisition vehicles currently used to acquire ISCM products and services. If an agency determines that it cannot use the GSA BPA, the agency Chief Operating Officer or the Deputy Secretary must submit a letter of attestation to the OMB Deputy Director for Management (and send a copy to egov@omb.eop.gov) with a justification as to why they cannot use the BPA, and demonstrate that the total cost to implement ISCM products and services from agency-specific or other contract vehicles is less than pricing available from the BPA.

For more information, members are encouraged to review the guidance at www.whitehouse.gov/sites/default/files/omb/memoranda/2014/m-14-03.pdf.

 

Legal Corner

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.

 

DFARS Final Rules on Unclassified Information & Supply Chain

On November 18, the Department of Defense (DoD) issued its final Defense Federal Acquisition Regulation Supplement (DFARS) Rule imposing heightened security safeguards and mandatory reporting requirements on DoD contractors handling unclassified controlled technical information.  According to a Government Contract Advisory from McKenna Long & Aldridge LLP, DoD contractors and subcontractors with information systems containing unclassified controlled technical information must assess their compliance with the final rule’s security standards and ensure procedures are in place to promptly report and thoroughly investigate cyber incidents in connection with future contracts. McKenna notes that a number of changes have taken place since the issue of the June 29, 2011 proposed rule. Most importantly, the scope of the rule has been modified to limit the categories of DoD information subject to enhanced security protections and mandatory reporting solely to “unclassified controlled technical information.” The rule defines “unclassified controlled technical information” as technical data or computer software with military or space application that is subject to controls on access, use, disclosure or distribution, including engineering data and drawings, associated specifications, data sets, studies and analyses, computer software executable code and source code.

Also effective this week, a DFARS interim rule allows DoD to consider the impact of supply chain risk in specified types of procurements related to national security systems. According to ASI Government, Section 806 of the fiscal year 2011 National Defense Authorization Act, as amended by the 2013 act, allows DoD to:

1. Exclude a source that fails to meet qualification standards, for the purpose of reducing supply chain risk for covered systems;
2. Exclude a source that fails to achieve an acceptable rating with regard to an evaluation factor regarding supply chain risk during proposal evaluation; and
3. Withhold consent for a contractor to subcontract with a particular source or to direct a contractor for a covered system to exclude a particular source from consideration for a subcontract.

Comments on the interim rule are due by January 17, 2014.

 

House Passes DATA Act

On Monday, the House of Representatives passed the Digital Accountability and Transparency Act (DATA Act) (H.R. 2061) by a vote of 388 to 1. The DATA Act would build on the Federal Funding Accountability and Transparency Act of 2006, by requiring standardized reporting of federal spending to be posted to USASpending.gov and grouped by appropriation, agency, account, and program activity. The bill now heads to the Senate for consideration.

 

Civilian Property Realignment Act Reintroduced

Senators Mark Warner (D-Va.) and Roy Blunt (R- Mo.) have reintroduced the Civilian Property Realignment Act.  The bill is designed to reduce excess federal property in order to save an estimated $9 billion over the next 10 years.  According to a press release on Senator Warner’s website, the bill would:

• Establish an independent commission to downsize federal real estate.  The Commission will have seven members appointed by the President and Congress to independently evaluate the federal real estate portfolio and develop recommendations twice a year for 10 years.
• Develop disposal and consolidation plans with expedited review.  The recommendations developed by the Commission will be reviewed by the President within 30 days and Congress will have 45 days to disapprove the proposal. Agencies will have up to 3 years to carry out the recommendations.
• Mitigate stakeholder interests and reduce red tape.  The legislation will streamline the existing processes that have prevented downsizing and realignment in the past that will generate long-term savings.
• Improves data quality on federal properties.  This legislation will create a complete and accurate inventory of federal properties, including building condition, annual operating costs of excess properties, value, and utilization.
• Provides Congressional transparency for the Federal Real Property Profile. Provides access for Congressional Committees of jurisdiction and legislative support agencies to real property data to support greater accountability.

A companion bill by Representative Jeff Denham passed the House last year.