Friday Flash, 02.07.14

FAR and Beyond Blog

On January 10^th the “FAR and Beyond” blog published a comment identifying fourteen key procurement items for 2014 that will be addressed throughout the year in future blog postings.   This week it is time to address “GSA’s Strategic Plan:  Plan versus Implementation.”  We appreciate GSA providing the public an opportunity to comment on the draft plan and look forward to continuing the dialogue on delivering best value procurement solutions for customer agencies and the American people.

As you know, my Federal Times Blog highlighted the GSA Strategic Plan’s lack of focus on GSA’s biggest, most strategic program, the Multiple Award Schedule (MAS) program.  In addition, the Coalition submitted comments to GSA on the strategic plan which can be reviewed here.  GSA, with its unique statutory procurement authorities can be the innovation laboratory for streamlining the procurement process.

In the spirit of Myth-Busters, the Coalition would like to offer GSA a list of strategic implementation initiatives to include in the Strategic Plan that would deliver efficiency, savings and best value procurement solutions to customer agencies and the American people:

• Create an Innovation Schedule (The goal is to embrace the commercial marketplace, reduce barriers to entry and deliver innovative, flexible, best in class solutions to customer agencies.  For example, the innovation schedule could enhance and grow flexible, cloud solutions, and software as a service.)
• Review, reform, and/or eliminate acquisition regulations, procedures, terms and conditions where the costs outweigh the benefits.
• Reform the MAS pricing policies to better leverage and reflect the current commercial marketplace as well as the statutory requirement for competition at the order level.   This includes implementing “other direct costs” on MAS contracts and orders.
• Embrace the MAS program for the Networx follow on procurement. (GSA has incorporated SATCOM services onto IT Schedule 70—it’s time to add all forms of commercial data transmission/management to the MAS program.)
• Pursue the Alliant follow on procurement (The Alliant follow on procurement will be a critical part of GSA’s ongoing IT portfolio.  It is a portfolio that can reduce contract duplication, increase efficiency and deliver best value solutions to customer agencies.)
• Improve the effectiveness and cost savings under the Federal Strategic Sourcing Initiative by shifting strategic sourcing to agency specific BPAs. (It is clear that the closer the procurement is to the agency requirements holder, the greater the opportunity for a best value outcome.  Agencies can articulate their requirements, schedule, buying patterns and dollar volume commitments better than can ever be set forth in a set of generic, government-wide BPAs or contracts.  The result will be enhanced competition, greater value and a vibrant supply chain for years to come.)

At their core, these recommendations are about simplifying the procurement process for customer agencies, GSA acquisition professionals, and contract partners.  There is power in simplicity!  Streamlining processes empowers customer agencies and contractors to focus on competing requirements and delivering best value solutions.  We have had more than a decade of layering on additional processes, procedures and oversight—we can no longer afford costly procurement policies and procedures that increase transactional costs.

Roger Waldron

President

 

GSA IG Presents to The Coalition on Mandatory Disclosure

This week The Coalition hosted an event with the GSA Inspector General Brian Miller in conjunction with the 5^th Anniversary of the Mandatory Closure Rule.  Also presenting were Jonathan Aronie, Partner at Sheppard Mullin and GSA Assistant Counsel Aleksandra Doran. The event featured a robust dialogue between government and industry concerning current compliance issues. Among other topics, the discussion focused on Mandatory Disclosure Rule (MDR) policies and procedures; best practices for identifying, addressing, and making disclosures; and MAS audits. The Coalition and its members sincerely appreciate Brian Miller, Aleksandra Doran and Jonathan Aronie for the incredibly informative and engaging presentation and discussion.

 

OS3 FSSI RFP Released

GSA released a final RFP for the third generation office supplies contract under the Federal Strategic Sourcing Initiative (FSSI).  In contrast to previous FSSI vehicles for office supplies, “OS3” will have multiple Indefinite Delivery Indefinite Quantity (IDIQ) contracts and is open to non-Schedule holders.  GSA estimates the value of the contract for the “purchasing channel” to be $250 million annually.  To access the OS3 Purchasing Channel RFP, click here.  Responses are due May 17, 2014.

 

Gordon Investigates GAO Bid Protest Numbers

The statistics published in GAO’s annual bid protest report are worth a closer look, according to Daniel Gordon, former administrator of the Office of Federal Procurement Policy and now associate dean for government procurement law studies at the George Washington University Law School. A new report from Gordon indicates that vendors who file protests with the Government Accountability Office (GAO) may have a greater chance of obtaining the contract when the agency decides to take corrective action before GAO comes to a decision. The research analyzes 194 protests from 148 different procurements that GAO dismissed due to agency corrective action. In many of these cases, the protestor obtained some form of relief. Gordon suspects that the reason for this is that companies generally file protests only when they have genuine concern about the way a procurement was conducted. Gordon concludes that, in undertaking corrective action, contracting agencies frequently take actions that give the protesters fair consideration for award of the contested contract or order. For a full copy of the report, visit the link here.

 

Welcome Millisa Gary, GSA Procurement Ombudsman

GSA has announced that Millisa Gary will serve as the new Procurement Ombudsman.  In this role, Millisa will reach out to industry, meet with federal contractors to ensure their voice is heard, identify trending issues, develop and deliver training and seminars, and pursue opportunities that help support the GSA acquisition workforce.   Millisa Gary will also work with industry to recognize opportunities for improvement at GSA, areas to explore for cost savings, and other ways to increase communication and collaboration between GSA and its partners.

With her more than 30 years of acquisition experience, Millisa has performed operational contracting, Federal Supply Schedules policy development, small business advocacy, FAR acquisition rule-making and legislation drafting. She has seen the issues from multiple perspectives, and will be a powerful voice for performance improvement within OGP.

The Coalition congratulates Millisa Gary on her new role and looks forward to working with her on improving “common sense in acquisition” for customer agencies and the taxpayer.

 

GAO Study: Inventory of Federal Structures

The Federal Government’s real property portfolio includes buildings, land and structures.  GAO has found that the government’s inventory of “structures” that agencies own—like roads, dams, and towers—is inconsistent and unreliable.

The Federal Real Property Council (FRPC) is responsible for operating all federally owned structures.  The FPRC maintains a database of all of these properties called the Federal Real Property Profile (FRPP).  In reviewing the data in the FRPP, GAO found inconsistencies in the information reported making it less reliable for decision-making.  Some of the problems were inconsistencies between agencies in how structures are defined and differences in how agencies categorize these properties.  GSA officials interviewed as part of the study indicated that the FPRC chose to allow flexibility in the way that agencies report to account for the wide diversity in Federal structures.

GAO recommends that the Office of Management and Budget work with the FRPC to develop guidance that would improve the consistency of data in the FRPP.  They also advise GSA to clarify the definition of structures and look at limiting the data collected from agencies.  For data reporting, GAO stresses the importance of limiting the number of fields to the vital few that are most essential for decision-making due to the costs involved.  To read the full report, visit www.gao.gov/products/GAO-14-87.

 

Senate Report Evaluates Agency Cyber Performance

A recently released report from the Senate Homeland Security and Governmental Affairs Committee entitled, The Federal Government’s Track Record on Cybersecurity and Critical Infrastructure, criticizes agencies for significant breaches in cybersecurity that could affect critical U.S. infrastructure. According to the report, public disclosures attest that more than 15 agencies fell victim to hacks that accessed, stole and took control over their networks. Additionally, “largely invisible to the public and policymakers are over 48,000 other cyber “incidents” involving government systems which agencies detected and reported to DHS in FY 2012”, the report notes. The report was compiled with access to more than 40 audits and other reviews by agency inspectors general, including mandated annual Federal Information Security Management Act (FISMA) audits for nearly a dozen agencies, as well as open-source reporting on cybersecurity and federal agencies.

 

Compliance Lessons from the Office of Inspector General

By: Jack Horan, Partner, McKenna Long & Aldridge LLP

Effective and compliant contract administration should be a primary goal for all government contractors, including, of course, contractors with the Department of Veterans Affairs (VA).  As with any other business goal, compliance should be attained efficiently.  Within the web of statutory, regulatory, and contractual requirements, VA contractors should understand the areas where noncompliance creates the greatest risk and exposure, and spend their resources accordingly.

As with the Offices of Inspectors General throughout the government, the VA Office of Inspector General (OIG) is a central player in the oversight of contracts, enforcing compliance with all major VA statutory, regulatory, and contractual requirements, and redressing compliance failures.  As part of its responsibilities, the VA OIG reports to Congress twice annually on the audits, reviews, and investigations it conducts.[1]  Although intended for other purposes, these reports can assist VA contractors in identifying the requirements that are of the most importance to the VA, and should be most important to the contractor.  In short, VA OIG’s actions over the prior year serve as a lesson to contractors on where to spend their time and money (and the effect of noncompliance).

The VA OIG has “a nationwide staff of auditors, investigators, health care inspectors, and support personnel” in six major component “offices” that conduct “independent oversight reviews to improve the economy, efficiency, and effectiveness of VA programs, and to prevent and detect criminal activity, waste, abuse, and fraud.”  For a VA contractor, the three component offices that are of most importance are:  (1) the Immediate Office of the IG; (2) the Office of Counselor to the IG; and (3) Office of Investigations.^[2]

The Immediate Office of the IG is top-tier management, with the Deputy Inspector General operating as the “Chief Operating Officer.”  In addition to planning, directing and monitoring all [IG] operations,” the Immediate Office establishes investigative priorities for the Office, and identifies and promotes legislative initiatives to Congress.

The new year should bring a new IG to the VA.  On November 6, 2013, GeorgeOpfer announced his retirement as IG after more than 44 years of government service.  Mr.Opfer assumed responsibility as Inspector General on November 17, 2005, after being nominated by President GeorgeW.Bush.  Although President Obama has not nominated a replacement, Mr.Opfer’s long-time Deputy, RichardGriffin, is currently serving as Acting Inspector General.  Mr.Griffin has been a Deputy Inspector General since November 23, 2008, and previously served as Inspector General from November 1997 to June 2005.

A change in Inspector General can have a significant effect on the priorities, policies, and procedures of an office – as demonstrated by the GSA’s OIG under the direction of the current IG, Brian Miller.  Given his status as Acting Inspector General and his long service under Mr.Opfer, it would be surprising if Mr.Griffin made dramatic changes to the VA OIG’s policies or procedures.  Significant changes will likely come, if at all, under the next IG.

The Office of Counselor provides counsel to the OIG on False Claims Act cases affecting the VA and serves as liaison to the Department of Justice on False Claims Act cases.  The Office of Counselor also manages the Office of Contract Review, which  provides pre-award and post-award audits of contractors’ proposals and contracts under an agreement with VA’s Office of Acquisition, Logistics and Construction (OALC).[3]  The majority of pre-award audits of proposals for contracts or modifications under the VA’s Federal Supply Schedule (FSS) program.  The Office automatically reviews the pricing for all proposals when the estimated contract or modification exceeds $5,000,000 under Schedule 65IB, Drugs, Pharmaceuticals, and Hematology Related Products, and $3,000,000 for the other VA Schedules.  The Office of Contract Review also reviews pharmaceutical manufacturers’ compliance with the pricing requirements of the Veterans Health Care Act.  Thus, the Office of Contract Review reviews pricing for major VA contracts and ensures the pricing is compliant with contractual, regulatory, and statutory requirements, and provides a recommendation to the contracting officer on the prices the VA should pay for items on large FSS contracts.

So how did the pricing proposed by potential contractors fare with Office of Contract Review?  During fiscal year 2013, the Office conducted 83 pre-award audits of proposals of all types, and identified $655,056,285 in cost savings, or an average of $7.9 million in cost savings per audit.[4]  It’s safe to say that the Office did not routinely accept pricing as proposed by the contractors.

How about proposals for FSS awards, renewals or modifications?  Forty-six of the 83 pre-award audits were of proposals for awards, renewals or modifications under the FSS program^[5] – 32 for initial award, ten for renewals, and four for modifications to add products.[6]  The Office recommended a price reduction for 72% (23 of 32) of the audited proposals for initial award.  The Office recommended a total of $470,428,110 in price reductions, with an average of $14.7 million per audit (including all 32 audits).  Thus, offerors submitting proposals for an initial award of an FSS contract fared worse than the average contractor subject to pre-award audits.

With pricing established by the existing contracts, one would expect that the contractor would fare better in pre-award audits for contract renewals.  Contractors did fare better but the Office frequently challenged the proposed pricing.  The Office recommended a total of $18,577,827 in price reductions, with an average of $1,857,783 per audit.  The OIG recommended a price reduction for 60% (six of ten) renewal proposals.

Contractors seeking product additions fared the best over the past year with the OIG recommending price reductions in only 25% (one of four) of its audits.  The one price reduction was a significant one though — $8,615,256.

So, here are the lessons learned from the pre-award audits:

• Most obviously, the OIG takes a hard look at proposed pricing, in the past year rejecting 72% of pricing proposed for initial award, 60% for renewals, and 25% for modifications.
• A contractor needs to be prepared to support its pricing not only when it is seeking the initial FSS contract, but also at renewal and for each modification.

Now let’s look at post award audits – audits conducted to determine whether a contractor is complying with its pricing obligations.  The Office reported 33 post-award audits in fiscal year 2013, which resulted in the VA recovering contract overcharges totaling over $17.6 million.  According to the OIG, approximately $11.7 million of that recovery resulted from Veterans Health Care Act compliance with pricing requirements, recalculation of Federal ceiling prices, and appropriate classification of pharmaceutical products.

Fourteen of the post-award audits were of voluntary disclosures.  The Office claimed more than offered by the contractor in nine of 14 voluntary disclosures.  The average recovery to the VA from voluntary disclosures was $1,157,117.[7]

The VA recovered 100 percent of recommended recoveries for post-award audits.

Lessons learned from post-award audits:

• Pay close attention to your Veterans Health Care Act pricing – it is a major compliance area for the OIG, comprising the largest recovery area.
• Be prepared to support your accounting and rationale for any voluntary disclosures.  The disclosure is likely to be audited and the proposed repayment amount is likely to be challenged.
• Your opportunity to affect the government’s view of your liability is through negotiations with the OIG.  The Office has an excellent record – 100% of the time – of recovering what it determines the VA is due.

Now, a look at the focus of the Office of Investigations over the past fiscal year.  The Office of Investigations (OI) investigates crimes committed against programs and operations of the VA.  Within the OI, the Criminal Investigations division investigates all types of crimes (including criminal fraud as well as rape and murder) and civil fraud.  For fiscal year 2013, the OI reported opening 45 cases, making 11 arrests, and obtaining more than $564.1 million[8] in fines, restitution, penalties, and civil judgments “in the area of procurement practices.”

The OI specifically identified twelve criminal cases involving procurement violations by contractors – all twelve involved service-disabled, veteran-owned small business fraud.  In those cases, the SDVOSB business either misrepresented the eligibility of its owner, or the true ownership of the business.

Lessons learned from the OI:

• Exposure under the False Claims Act for VA contracts can be very significant – reaching over $500 million in 2013.
• People get arrested and go to jail for defrauding the VA.
• If you tell the VA that you are a serviced-disabled veteran and own and operate a SDVOSB, you better be a service-disabled veteran and own and operate the SDVOSB.

Finally, one other lesson learned – this one from the structure of the VA OIG.  Contact by the Office of Contract Review and the Office of Investigations can both lead to civil or even criminal liability, but there is a significant difference.  If the contact comes from the Office of Investigations, the issue has already likely been determined to be a potential civil fraud or criminal violation.  There is no doubt that it is time to call your lawyer.

 

GAO: More Benefits Available from Commercial Item Test Program 

The Government Accountability Office (GAO) believes that agencies could be doing more to reap the benefits of a commercial item test program, according to a new report. In

1996, Congress authorized the use of simplified acquisition procedures for commercial items not exceeding $5 million under the Test Program for Certain Commercial Items (test program). Based on the idea that market forces would ensure reasonable prices for commercial items, the test program provides contracting officers with additional procedural discretion and flexibility. This report addresses the extent to which federal agencies have used the test program, and its benefits and risks. GAO found that Federal agencies use the test program for a relatively small portion of all commercial items and services bought. For example, in fiscal year 2011, of the $90 billion agencies spent on commercial items and services, federal agencies utilized only $1.9 billion or about 2 percent using the program. In conducting the study, GAO looked at contract actions within the Departments of Defense (DoD), Homeland Security (DHS), and the Interior (DOI), the largest users of the program. These contracting components used the test program for only about 9 percent of obligations, and 12 percent of new commercial awards fell within test program thresholds in fiscal year 2011.

GAO recommends that DOD, DHS, and DOI collect and assess data to evaluate program use. Furthermore, DHS and DOI should require a commercial item determination for certain acquisitions to better manage risk.

 

Off the Shelf – Successful IT Management

This week on Off the Shelf, Roger Waldron spoke to Van Hitch, senior advisor for Deloitte’s Federal Practice, and former chief information officer for the Department of Justice. As the longest serving cabinet level CIO, Hitch provides his insights on the CIO’s role in delivering IT solutions to supporting internal and external clients. He also highlights the key trends and opportunities for efficiency and savings for the federal government in cloud computing, software as a service and power of mobile devices. Hitch also shares his thoughts on the keys to successful IT management across the federal enterprise. To listen to the program online, visit the link here.

 

Proposed Rule: Contracts Under Small Business 8(a) Program

The Small Business Administration (SBA) published a proposed rule on Monday with a number of changes to the 8(a) program.  The proposed changes include clarifications about when agencies may receive credit towards its small business goals and protesting an 8(a) participant’s eligibility or size status.  To access the rule, click here.  Comments are due April 4, 2014.  Members with any feedback or questions, please contact Carolyn Alston at calston@thecgp.org.

 

Cyber Federal Register Notice Coming Soon

According to a DoD press release, a request for public comment on the recent cyber report will be published in the Federal Register this month. DoD and GSA intend to implement the recommendations through integration with the numerous ongoing related activities like supply chain threat assessments and anti-counterfeiting. We will inform members when the request for public comment is released in the Federal Register.

 

Requisition Channel Industry Day Meeting – February 19

GSA has posted the following announcement on a joint Industry Day for the Maintenance, Repair and Operations (MRO) and Office Supply industries:

Do you have questions about the Federal Strategic Sourcing Initiative (FSSI) for the Requisition Channel for JanSan or want to offer feedback? If so, we invite you to join representatives from GSA for a virtual meeting on Wednesday, February 19, 2013 from 1:00PM to 3:30PM pm (EST). Please note this is a joint Virtual Industry Day with the MRO and Office Supplies Industry for the Requisition Channel.

Please register for this event by Monday, February 17th 2014. You can register for the session using this link.  Register Here.  Also, please let us know if you are a member of the press when you register.

If you have any questions regarding this event and/or FSSI JanSan feel free to reach out to the JanSan Team here on GSA Interact or at FSSI.JanSan-Req@gsa.gov.