Putting the Puzzle Together to “Deliver” for Customer Agencies

This week’s blog is the third in a series focusing on the puzzling approach to MAS FSS price analysis issues and the default to a Low Price Regardless of Context (LPRC) analytical scheme exercised by GSA. Last week, our discussion reviewed some “puzzling” aspects of the MAS FSS price analysis. Specifically, what Professor Steve Schooner has long called, “the tyranny of low price,” i.e., the obsession with low prices absent a review of the terms, conditions, and other drivers of those prices; unclear operational policy guidance; repeated renegotiation of downward contract pricing; and inconsistent application of rules governing pricing analysis. This week, we drill down into GSA’s rules, tools, and practices that highlight the puzzling nature of GSA’s approach to pricing analysis.

We begin with the solicitation instructions to offerors that outline the administrative, technical, and pricing elements that are required when offerors submit proposals.  Regarding price proposals, GSA continues to state its:

pricing goal** is to obtain equal to or better than the offeror’s Most Favored Customer (MFC) pricing under the same or similar terms and conditions. GSA seeks to obtain the offeror’s best price based on its evaluation of discounts, terms, conditions, and concessions offered to commercial customers. However, offers that propose Most Favored Customer pricing that is not highly competitive will not be determined fair and reasonable and will not be accepted. The U.S. Government Accountability Office [(GAO)] has specifically recommended that the price analysis GSA does to establish the Government’s MAS negotiation objective should start with the best discount given to any of the vendor’s customers.

(Emphasis added; quotations omitted.)

We commented on this language almost a year-and-a-half ago.  Among other things, we noted in part that the language:

“essentially inserts a new price analysis requirement that the negotiated prices must be ‘highly competitive’ to be fair and reasonable. To the best of our knowledge, there is no regulatory definition of ‘highly competitive,’ but in any case, pursuing this goal is especially challenging when MAS contracts only provide a $2500 guaranteed minimum with the subsequent opportunity to compete for work at the task order level.”

The ”highly competitive” language is arbitrary.  It has no basis in statute or regulation.  Moreover, to the best of our knowledge, there is no public rationale or guidance from the FAS operational policy justifying or explaining the use of this standard.  A year and a half ago, we wrote that GSA should “revise and clarify this language” because it is confusing and contradictory, so much so that the MAS process has been criticized for lacking consistency among acquisition centers, “and even from contracting officer to contracting officer within an acquisition center.”  In the time since the writing of that blog, GSA has not responded with a clarification or retraction of this language in price analysis.  That the language remains in solicitation instructions perpetuates the confusion surrounding MAS price analysis and manifests GSA’s ongoing obsession with LPRC.  Finally, as previously noted, the language is inconsistent with statute and regulation, further validating the need for transparency and accountability through the public release of all internal FAS operational policy guidance.

This LPRC obsession is driving odd behavior across the program and driving small business contractors away from GSA.  This is best evidenced by recent anecdotes regarding GSA’s approach to price analysis.  MAS contractors are reporting instances of Economic Price Adjustment (EPA) requests that are being rejected by FAS due to comparisons with their own current contract price for items that are the subject of the EPA request!  Apparently, the rejections stem from the application of the GSA price analysis tool, the Price Point Plus Portal (4P) tool.  The tool listing and utilizing the contractor’s existing contract price (i.e., the price for which the EPA was being sought) in their pricing comparison for the EPA.  This illogical, “system driven” approach ensures that no EPA will be accepted as the proposed EPA price is found unreasonable as compared to the current price of the item for which the EPA is being requested.  It is confounding to see how the circular application of the 4P tool is distorting price analysis for the EPAs.

The negative impact of the pricing puzzlers and drive for LPRC on MAS operations and customer agencies is real.  MAS customer agencies are continuing to experience unfulfilled or cancelled MAS orders as MAS contractors struggle to maintain their federal business (especially small businesses).  Orders are unfulfilled as contractors, not seeing any movement on their EPA requests, cannot sell at a loss, regardless of who the customer is.

How do we put the MAS price analysis puzzle back together to deliver for customer agencies?  As a threshold matter, this is a collective effort with FAS and industry working together towards a balanced, sound approach to MAS contract negotiation and management.  Here are some suggestions:

• FAS pricing training should include business economics, (e.g. how companies go to market, respond to competition, assess and price terms and conditions) and focus on commercial market dynamics. This training would include “reverse industry days” where companies and subject matter experts address business operations and commercial market drivers.  This training would also address the Trade Agreements Act (TAA) as a key term and condition driving contractor decision making.
• The 4P tool should be modified to directly address the age of historical pricing. This step acknowledges the ongoing impact of inflation on market pricing.  Further, to the extent FAS’s pricing tools are scraping commercial websites for pricing, the data collected should include key terms and conditions such as delivery and country of origin.
• To ensure a balanced, accountable approach to MAS price negotiations, all internal FAS policy guidance should be released to the public for review and comment.
• FAS should revisit the application of Section 876 which removes a program barrier to entry by eliminating the requirement to negotiate service rates at the contract level. The transactional data clearly demonstrates competition, value and price are driven at the order level.  Thus, by doing so, Section 876 breaks down a barrier to innovation and small business participation.
• Identify and address stovepipes in the management of the MAS program. This will enhance consistency and improve efficiency to deliver the best value for customer agencies, FAS and its industry partners.
• Invest in the MAS Program Management Office to address consistency and efficiency across the MAS acquisition workforce. Continuous assessment and identification of measures to increase efficiency and effectiveness in MAS operations would be part of its tasking, along with the resources to drive continuous improvements.

These suggestions are an effort to open the conversation on keys to delivering for the American people. Coalition members stand ready to work with FAS and all stakeholders to ensure the MAS program delivers best value solutions to meet customer agency mission requirements.  Continuous improvement in the MAS policies, procedures, and workforce training will enhance delivery of best value solutions for customer agencies through sound business opportunities for MAS contractors.

The Coalition’s 2022 Year in Review is Now Available!

The Coalition is pleased to announce the 2022 Year in Review is now available. The Year in Review highlights our accomplishments, policy initiatives, events, and trainings over the past calendar year. In 2022, the Coalition worked to continue its mission of achieving “common sense in government procurement.” Some of the key programs and topic areas of 2022 included the impacts of inflation, the expansion of the Transactional Data Reporting program, the Cybersecurity Maturity Model Certification 2.0 Assessment Framework; and key contracts like OASIS+, CIO-SP4, and the Department of Veterans Affairs Medical/Surgical Prime Vendor program.

In 2022, we were fortunate to return to in-person events. In addition to our two annual conferences and the Joseph P. Caggiano Memorial Golf Tournament, we introduced two new events for our members. In October, we hosted The IT Category: Creating Opportunities for Small Business, and in December, we wrapped up the year with Off the Shelf: Exclusive and In-Person!, a special holiday reception. Thank you to all government and industry experts who participated in our events!

Finally, the Coalition would like to acknowledge our members for your continued support and engagement. Without the commitment of our members, the Coalition’s efforts and achievements would not be possible. We hope that you enjoy the 2022 Year in Review!

GSA Releases FAS Winter Newsletter

The General Services Administration’s (GSA) Federal Acquisition Service (FAS) published its quarterly newsletter summarizing key updates from January 2023 to March 2023. Among other topics, the newsletter contains updates on Vendor Support Center registration requirements, entity validation in SAM.gov, and GSA Advantage! Order Status. Additionally, the newsletter provides updates on the FAS training schedule and Multiple Awards Schedule office hours. To access the FAS Winter Newsletter, click here.

April 19 Meeting with the VA NAC in Chicago

The Coalition will hold a meeting with the VA National Acquisition Center (NAC) on Wednesday, April 19 hosted by Mayer Brown at their office in downtown Chicago. The program will cover the latest developments for VA FSS and NCS contracts and will include time to network with the leadership of these contracting programs.
We are pleased to announce the following agenda for the meeting:

Wednesday, April 19
(All times are Central Time. The meeting will be in-person only for members.)

• 11:30am – 1:00pm: Registration and Lunch
• 1:00pm – 4:30pm: VA NAC Leadership Remarks, VA FSS Chiefs Panel, and VA NCS Chiefs Panel
• 4:30pm: Conclusion

The annual VA NAC meeting is one of the most popular events for our healthcare members. VA speakers will include:

• Christopher Parker, Associate Executive Director, Strategic Acquisition Center & Acting Associate Executive Director, National Acquisition Center
• VA Federal Supply Schedule (FSS) Director, Dan Shearer and FSS Chiefs
• VA National Contract Service (NCS) Director, Fran DeRosa and NCS Chiefs

For the detailed agenda, click here.

For questions or assistance with registration, please contact Erin Cartwright at ecartwright@thecgp.org.

Don’t Miss the 2023 Spring Training Conference! Register Now!

The Coalition’s 2023 Spring Training Conference – Procurement Watchwords for 2023 is less than one month away! Don’t miss your chance to register for the two-day conference, which will take place on May 2-3 in Falls Church, VA. This year’s Spring Training Conference focuses on four major procurement “watchword” themes that will serve as driving forces for the acquisition system and government operations over the course of the year: Market Continuity, Cybersecurity, Supply Chain Security, and Sustainability.

This year’s lineup of sessions promises to deliver an experience packed from top to bottom with the most valuable content for federal contracting professionals.

May 2 – Governmentwide Focus

To kick off the Spring Training Conference, we are pleased to have invited Lesley Field, OMB Deputy Administrator for Federal Procurement Policy, to deliver the Keynote Address. During the Keynote Address, Field will address her priorities and initiatives, especially as they relate to the recent OMB memo on the creation of a more diverse and resilient Federal marketplace through increased participation of new and recent entrants.

To view the full 2023 Spring Training Conference draft agenda, which includes all invited speakers, click here.

After the Keynote, we will move into our plenary sessions, which cover governmentwide policies and programs from agencies including DoD, GSA, NASA, and more. The importance of the procurement watchwords will be highlighted during these sessions, including: 

Market Continuity – We have invited leadership from GSA’s Federal Acquisition Service (FAS) to share priorities and initiatives from each of their offices. During the FAS Executive Panel, attendees will hear FAS Assistant Commissioners discuss GSA’s continued efforts regarding a number of different procurement programs and how they are moving forward. Invited panelists include Charlotte Phelan, Office of Enterprise Strategy Management; Erv Koehler, Office of General Supplies and Services; Tiffany Hixson, Office of Professional Services and Human Capital Categories; Laura Stanton, Office of Information Technology Category; and Christopher Bennethum, Office of Assisted Acquisition Services. 

Cybersecurity – The Cybersecurity Panel invites government officials to address recent developments for multiple cybersecurity measures, such as the release of the Cybersecurity Maturity Model Certification (CMMC) DFARs rule and FedRAMP authorization. 

Supply Chain Security – The third panel of the day focuses on Supply Chain Security, and we have invited  both government and industry subject matter experts, including John Tenaglia, Principal Director, DPC,  to address supply chain-focused policies, programs, and regulations that will impact the procurement system. Topics covered during the panel include the Cybersecurity Supply Chain Risk Management (C-program, the 2023 National Defense Authorization Act, the Defense Production Act, and Buy American laws.  

Sustainability – The first day’s general sessions will wrap up with the highly informative Sustainability Panel. We have invited speakers from the EPA, GSA and Department of Defense, including Holly Elwood, the EPA’s Senior Advisor to the Environmentally Preferable Purchasing Program. She will cover sustainability-related programs and policies, such as the FAR proposed rule regarding disclosure of greenhouse gas emissions and climate risk, the Environmentally Preferable Purchasing program, and federal high-performance green buildings. GSA and DoD recently signed an MOU to bring more sustainable products to the Federal market, which will also be discussed. 

Following the general sessions, you will not want to miss out on a selection of nine afternoon Market Continuity Panels that will offer a deep-dive into specific agency and governmentwide contract programss and initiatives, such as: 

• NASA SEWP VI 
• OASIS+ 
• Alliant 3
• Other Transaction Authorities
• GSA Schedules 
• GSA’s Office of the Future 
• NITAAC Contracting 
• Assisted Acquisition Services 
• GSA Global Supplies and Services 
• Congressional Updates 

May 3 – Healthcare Focus  

Once again, we have put together multiple sessions that highlight the four watchwords, specifically focused on healthcare procurement. We are happy to announce that VA Chief Acquisition Officer Michael Parrish has been invited to provide the Keynote on his priorities for the department.   

Market Continuity – In the morning, VA leadership has been invited to participate in back-to-back panels to discuss their ongoing efforts to provide support to veterans and VA healthcare facilities. Afterwards, the first panel will feature leaders from the VA’s Office of Acquisition, Logistics, and Construction, including Executive Director and Senior Procurement Executive Angela Billups and Deputy Executive Director Phil Christy. Following this panel, we have invited Veteran Health Administration leadership to speak, including Andrew Centineo, Executive Director of Acquisition, Technology, and Logistics, on VHA’s contracting programs and initiatives.

Sustainability – During our lunch break, a special presentation from Crowell & Moring Partners Paul Freeman and Lorraine Campos will discuss how sustainability requirements, such as the greenhouse gas disclosures proposed rule, will specifically impact federal healthcare contractors in the present and future. 

Cyber and Supply Chain Security – In the afternoon, government and industry experts from multiple agencies, including DLA, NIH, and FDA, have been invited to participate on the Cyber and Supply Chain Security Panel to cover focused on healthcare technology systems and efforts to strengthen the medical supply chain. 

Be sure to check out the draft agenda to learn about the afternoon’s Market Continuity Panels, which will provide the latest in-depth information on agency programs such as: 

• Medical/Surgical Prime Vendor (MSPV) Program 
• VA Pharmacy Benefit Management Services 
• Medical Device Cybersecurity 
• DHA and DLA Pharmaceutical Prime Vendors  
• DLA MSPV and ECAT Programs 
• VA Prosthetics  

“Ask the PMO” and New Table Opportunities 

Returning at the Spring Training Conference will be the GSA Multiple Award Schedule and VA Federal Supply Schedule “Ask the PMO” Tables, which allow for attendees to sit down with program managers from GSA and the VA during one-on-one meetings to discuss any questions they have related to the Schedules. 

“Ask the PMO” Tables: 

• Ask the GSA Multiple Award Schedule (May 2) 
• GSA Pricing Tools (May 2) 
• VA Med/Surg Supply BPAs (May 2) 
• Ask the VA Federal Supply Schedule (May 3) 
• VA Pathfinder (May 3) 

We are excited to announce that we have added three brand new opportunities for interested attendees to discuss GSA and VA programs with agency representatives. On May 2, joining the Ask the MAS Table will be the Pricing Tools Table and the Med/Surg Supply BPAs Table. The Pricing Tools Table gives attendees the chance to meet with GSA’s Catalog Management team to ask their questions on how to best utilize the agency’s pricing tools and platforms for contractors. Supply BPA holders can sign up for one-one-one meetings with VA Supply BPA leadership, such as Craig Hilliard, Division Chief, at the Med/Surg Supply BPAs Table. On May 3, the VA will be manning the Ask the VA FSS Table and the new Pathfinder Table, which will highlight how vendors can use the Pathfinder site to engage with the VA and submit their innovative ideas. 

To register for the conference, click here. Click here to reserve your discounted hotel room. 

Become a Sponsor!  

Spring Training Conference is quickly approaching, and sponsorship opportunities remain available! The conference provides an excellent opportunity to support the Coalition and showcase your organization’s brand to an audience of Federal contracting professionals and key government decision makers. The following packages can still be claimed: Networking Receptions, Conference Lanyards, Breakout Sessions, WIFI, Lunches, Breakfasts, Conference Program, and more. 

Current sponsors include: 

Platinum Sponsors: AvKARE, Covington, and McKesson 

Gold Sponsors: Amazon Web Services, Dell, Four Points Technology, and Raytheon 

Silver Sponsors: GDIT, The Gormley Group, and Sheppard Mullin 

Coffee & Networking Sponsor: SAIC 

Learn more about all of the excellent benefits offered with each of these packages in the Coalition’s Sponsorship Prospectus. 

All sponsorship opportunities will be offered on a first-come-first-serve basis. If you have any questions, or are ready to secure your sponsorship, contact Heather Tarpley at htarpley@thecgp.org or 202-315-1055. 

VA Releases Notice of Integrated Healthcare Transformation 2.0 IDIQ Contract

The Department of Veterans Affairs (VA) released a notice on the Veterans Health Administration (VHA) Integrated Healthcare Transformation (IHT) Indefinite Delivery Indefinite Quantity (IDIQ) 2.0 contract. The purpose of the notice is to provide advance notice to industry of the VA’s intention to begin requirement development for the next VHA ITH IDIQ contract and inform industry of plans to increase the contract’s ceiling. The Integrated Healthcare Transformation IDIQ contract is a Healthcare Consulting contract with a base period of April 1, 2020 – March 31, 2025 with one option period extending for another five years. However, due to high utilization, the contract has nearly hit its original ceiling, and the VA plans to increase the ceiling by $450 million and begin soliciting the next IDIQ.
The VA will begin industry outreach to prepare for proposals from viable Service-Disabled Veteran-Owned Small Businesses. To sign up for notifications about the contract, interested parties can email hermann.degbegni@va.gov with subject line:
“IHT 2.0 Interest – (insert company name).” Please include in the email a company point of contact with the email address. Failure to include this subject line and information may result in the government missing your company’s response.

NITAAC Announces Progress on Final CIO-SP4 Awards

Federal News Network reports that the National Institutes of Health’s IT Acquisition and Assessment Center (NITAAC) progressed towards final awards for its $50 billion CIO-SP4 contract—but unresolved bid protests mean that the acquisition is not final just yet. On March 31, NITAAC released a preliminary list of 431 apparent successful offerors, pending confirmation from the Small Business Administration that the 257 small business awardees are in fact small and meet certain socio-economic criteria. More awards may come, however, because NITAAC faces more than 30 active bid protests at the Government Accountability Office.

Filed by offerors around March 30, the protests allege NITAAC’s cut-off score for evaluating submissions was arbitrarily high. So far, the procurement has faced 188 total protests.

The current CIO-SP3 contract expires on April 29, and experts believe that NITAAC will most likely, as it has done several times over the past year, extend it to ensure coverage for customers. Like CIO-SP3, CIO-SP4 will provide IT solutions and services specific to biomedical and scientific needs, as well as more general IT services.

GSA Administrator Hosts Tribal Consultation on Federal Acquisition

On Monday, Administrator Robin Carnahan hosted the General Services Administration’s (GSA) formal Tribal consultation at the Reservation Economic Summit. According to a GSA press release on the conference, “hosted by the National Center for American Indian Enterprise Development (NCAIED), RES is an annual national event attended by thousands of Tribal government officials and business leaders throughout Indian Country.” Speaking at the event, Carnahan said that “President Biden and leaders across this Administration have made it a priority to strengthen the ties and trust between Tribal Nations and the United States.” She highlighted recent GSA efforts to improve Tribal-Federal collaboration, including consulting with the Grand Portage Lake Superior Chippewa tribe on a Federal project taking place on tribal lands and a tool, to be released later this year, to “increase visibility of Native American owned businesses for GSA customers, partners, and acquisitions professionals.”

At the consultation itself, Carnahan and other GSA acquisition leaders were joined by over 100 conference participants to discuss acquisition issues affecting tribes, including “small business contracting, partnering with GSA to procure electric vehicles, and a pilot program to support federal buying of carbon pollution-free electricity from Tribal organizations.” Since 2000, Executive Order 13175 has required Federal agencies to consult with tribes regarding policies that may affect them. The current administration re-emphasized the requirement in January 2021 when the Office of Management and Budget issued a memorandum that required each agency to submit an action plan for the executive order, designate an official to oversee it, and update OMB on their progress at least once a year.

White House Releases Executive Order Restricting Government Use of Commercial Spyware

The White House released an Executive Order prohibiting the use of commercial spyware that poses a risk to national security due to potential misuse by foreign governments. The order defines commercial spyware as posing a security risk when:

• A foreign government or foreign person has used or acquired the commercial spyware to gain or attempt to gain access to United States government computers without proper authorization.
• The spyware was or is furnished by an entity that maintains, transfers, or uses data obtained through the product without authorization from the licensed end-user or the United States Government
• The spyware is under direct or effective control of a foreign entity engaged in intelligence activities targeting the United States.
• The spyware has been used by a foreign government or person to collect information on political entities to intimidate, curb political activity, or otherwise limit freedoms of expression.
• The spyware has been used by a foreign government or person to monitor a United States person without their consent to facilitate the tracking of said person without proper legal authority.
• The spyware has been furnished by an entity that provides commercial spyware to governments for which there are credible reports by the Department of State that said governments engage in gross violations of human rights as pursuant to section 5502 of the NDAA FY 2022.

In determining the security risk of commercial spyware, agencies must consider whether the furnishing entity was aware of the risks of the technology being used in the aforementioned manner. Additionally, agencies are to consider what mitigating measures were taken by the furnishing entity to prevent inappropriate use. Under the order, agencies must report to the Assistant to the President for National Security Affairs their justification for using commercial spyware before they begin usage and provide reports on all operational uses. The executive order was created to develop international standards and norms for commercial spyware “…that are consistent with respect for the rule of law, human rights, and democratic norms and values.”

Legal Corner:

Government Contractors Face an Immediate Deadline to Delete TikTok from Some IT

The Legal Corner provides the legal community with an opportunity to share insights and comments on legal issues of the day. The comments herein do not necessarily reflect the views of The Coalition for Government Procurement.

By Terry L. Elling & Jeremy D. Burkhart, Holland and Knight LLP

Earlier this month, bipartisan legislation was introduced in the U.S. Congress that would allow the U.S. to regulate and even ban the app TikTok. Although the proposed legislation has dominated the news coverage, a recent Office of Management and Budget memorandum currently prohibits the use of TikTok on information technology used by federal agencies and contractors. This blog discusses the immediate ramifications applicable to government contractors and steps contractors should take to help ensure they are prepared to implement requirements that could soon apply to them.

First, we discuss why TikTok has generated such controversy and restrictions placed on government use.

Concern Over TikTok and the Proposed Legislation

TikTok is owned by the Beijing-based company, ByteDance, which is subject to Chinese laws that make information from users accessible to the Chinese government.

This raises obvious concerns that the Chinese government could spy on American users or even use the app to spread propaganda and disinformation. TikTok is currently under criminal investigation by the FBI and the U.S. Department of Justice, and ByteDance has confirmed that it has previously used TikTok to monitor the physical locations of U.S. journalists.

The proposed legislation currently before Congress, the RESTRICT Act, would empower the U.S. Department of Commerce to “identify, deter, disrupt, prevent, prohibit, and mitigate transactions involving information and communications technology products in which any foreign adversary has any interest and poses undue or unacceptable risk to national security.”  Although the bill does not expressly mention TikTok by name, the bipartisan group of senators who introduced it have specifically cited TikTok as the driving motivation for the proposed legislation. President Joe Biden¹ has endorsed the RESTRICT Act, and it is expected to pass Congress in its current, or a substantially similar, form and become law.

Concurrently, the Committee on Foreign Investment in the United States (CFIUS) is threatening to ban TikTok if the company does not spin off from the app’s Chinese owners. It appears unlikely, however, that the Chinese government would allow ByteDance to divest itself of TikTok.

OMB Directives to Federal Agencies and Contractors

The White House issued a memorandum on Feb. 28, 2023, requiring the removal of TikTok² from federal information technology. This memo fulfilled the requirement set forth in the Consolidated Appropriations Act, 2023 (the Act), which instructed the Director of the Office of Management and Budget (OMB) to develop standards and guidelines for agencies to require the removal of TikTok from federal information technology.

The OMB directive has important implications for government contractors, as the memo applies to all “information technology,” as that term is defined in 40 U.S.C.§ 11101(6). This covers not only information technology (IT) owned or operated by federal agencies, but also IT “used by a contractor under a contract with the executive agency that requires the use” of that IT, whether expressly or “to a significant extent in the performance of a service or the furnishing of a product.“ (emphasis added).

This definition does not, however, “include any equipment acquired by a federal contractor incidental to a federal contract.” Unfortunately, the OMB directive provides no detail on this point. In the authors’ view, the directive encompasses IT that is reasonably necessary to the contractor’s business, but is only incidental to the performance of its government contract, such as payroll, financial management and human resources systems, especially if those systems do not interconnect with any federal information systems.³

In other words, the OMB memo covers IT owned or operated by federal agencies, as well as any IT used by a contractor under a contract where the agency requires the use of that IT, either expressly or to a significant extent.

The OMB memo contains three compliance deadlines. Below, we describe each deadline, and then discuss how this deadline affects government contractors.

The Deadlines

By March 29, 2023, federal agencies are required to 1) identify the use or presence of TikTok on IT, 2) remove and disallow installations of TikTok on IT owned or operated by agencies and 3) prohibit internet traffic from IT owned by agencies to TikTok. In other words, agencies must eliminate TikTok from phones and systems and prohibit internet traffic from reaching the site.

The March 29, 2023, deadline is for agencies, so it does not require immediate action by contractors. To the extent that companies can, however, it is prudent to coordinate with contracting officials to facilitate compliance by the agency.

The OMB memo further provides that by May 28, 2023, agencies must 1) ensure that any new contracts issued do not contain requirements that may include the use of TikTok in performance and 2) cease use of contracts that contain requirements that may include use of TikTok in performance of the contract or so modify those contracts.

The May 28, 2023, deadline is the most important for government contractors. By this date, contractors will want to ensure that they themselves are compliant with the earlier agency deadline. In other words, contractors should ensure that TikTok 1) is removed from all of its IT 2) cannot be downloaded or otherwise accessed on any company IT and 3) any use thereof can be identified.

Technically, contractors are required to address only IT that is used in the performance of a government contract. It is recommended, however, that contractors take steps to ensure that all company IT meets these requirements given that the IT utilized in the performance of a contract is often fluid and not easily segregated. This is particularly true in the case of IT used by contractor employees for a variety of purposes, only one of which may involve meeting contract performance requirements.

By June 27, 2023, for any contracts whose performance may involve the use of IT by the contractor, agencies must 1) ensure that any modification that extends the period of performance, including through exercise of an option, includes a requirement to conform with the TikTok ban and 2) ensure that each agency solicitation thereafter that may involve use of IT by a contractor requires conformance with the TikTok prohibition as part of any resulting contract. In other words, by June 27, 2023, all solicitations will include the TikTok prohibition, and no current contract will be extended or have an option exercised without including this prohibition.

Exceptions to the OMB directive are permitted for law enforcement activities, national security interests and activities, and security research, but applications must be submitted in advance for exceptions that are very restrictive and are not automatic.

To date, agencies have not yet released any proposed or interim rules and there have been no proposed Federal Acquisition Regulations (FAR) or the Defense Federal Acquisition Regulation Supplement (DFARS) amendments.

Conclusion

Contractors should lean forward on the requirements in the OMB memo and take steps to remove and prohibit TikTok from all information technology that may be used to perform federal contracts. Although the United States could eventually ban TikTok entirely, the precise requirements and implementation time frames are not set. Government contractors, however, have imminent deadlines for compliance with OMB’s directive as noted above.

For additional information on the OMB directive and how it impacts government contractors, please contact the authors or any member of Holland & Knight’s Government Contracts Group.

Notes

¹ On March 27, 2023, President Joe Biden signed an Executive Order that prohibits U.S. government agencies from using commercial spyware that presents a national security risk to the United States.

² The “covered application” being banned is defined as “the social networking service TikTok or any successor application or service of TikTok developed or provided by ByteDance Limited or an entity owned by ByteDance Limited.”

³ This view is consistent with that expressed in 40 U.S.C. 11101, Department of Defense Instruction 5000.82, Acquisition of Information Technology, and OMB’s 2012 Memo (M-12-20) providing reporting instructions under the Federal Information Security Management Act (FISMA).

Healthcare Corner:

Meet the VA Pathfinder Program at Spring Conference!

The US Department of Veterans Affairs (VA) recently launched a new resource for vendors to share their new innovations with the VA, Pathfinder.gov. It is also a resource for companies to partner with the VA to conduct research and bring innovative ideas to market.

Since its launch in June 2022, there has been growing interest in how the Pathfinder site can be used to introduce new technologies to the VA, connect vendors with current contract opportunities, and what companies can expect when submitting ideas through the website.

Given members’ interest in this new resource, the Coalition is pleased to announce that the VA Pathfinder program will be participating in this year’s Spring Training Conference with a Pathfinder Tabletop on Day 2 of the conference, May 3. Attendees may drop by the VA Pathfinder table during registration and breakfast at 7AM to schedule a time to meet with a representative from the program. The table will be available all day on May 3 for members to drop by and learn more about the program.
The full list of healthcare-related tabletops participating in the conference will be:

• VA Med/Surg Supply BPAs (May 2)
• Ask the VA Federal Supply Schedule (May 3)
• VA Pathfinder (May 3)

For more information about the conference and to register, click here.

A View From Main Street

By Ken Dodds, Live Oak Bank

The following blog does not necessarily represent the views of The Coalition for Government Procurement.

The Rule of Two and Orders

The statutory rule of two provides each “contract” below the simplified acquisition threshold (SAT) shall be reserved for small business concerns (SBCs) unless the contracting officer is unable to obtain competitive offers from two or more capable SBCs.[1] The rule of two above the SAT is regulatory, not statutory, and essentially provides the contracting officer shall set aside any “acquisition” if there is a reasonable expectation that offers will be obtained from at least two responsible business concerns and award can be made at fair market price.[2] The FAR clearly exempts GSA Schedule ordering from the rule of two.[3] Apparently the part of the FAR applicable to ordering under non-Schedule multiple award contracts (MACs) is not as clear (at least for some).[4]

In a 2007 Report to Congress, the Acquisition Advisory Panel (Panel) reported that, “[t]he set aside requirements of FAR Part 19 generally apply before task or delivery order contracts are solicited and awarded, not when an order competition is conducted or the order is placed.”[5] According to the Panel setting orders aside for small business could violate the fair opportunity requirements and other statutory provisions applicable to MACs.[6] Explicit authority to set aside orders did not exist, so the Panel recommended, “that contracting agencies be given explicit discretion to limit competition for orders to SBCs.”[7]

A 2010 Presidential Interagency Task Force reported, “under current policies, set-aside considerations are made prior the award of a contract.”[8] The Task Force further stated, “there has been a general reluctance among acquisition policy officials to advocate for regulatory changes that might require the mandatory application of set-asides to orders in the same manner that law and regulation currently require for contracts.”[9] The Task Force recommended that OFPP lead an effort to determine when orders can or should be set aside for small business and pursue regulatory or statutory changes.[10]

Prior to 2010, GAO denied protests arguing that the rule of two applied when agencies used the GSA Schedule,[11] sustained protests that the rule of two applied when an agency tried to order under other MACs,[12] but denied an agency’s request to modify a recommendation and allow the agency to set aside an order under a MAC.[13] In 2010 Congress amended the Small Business Act via section 1331 of the Small Business Jobs Act, using language mirroring the Panel’s recommended language, to provide, “Federal agencies may, at their discretion…set aside orders placed against multiple award contracts for small business concerns.”[14]

In a 2011 interim rule implementing these authorities, the FAR Council stated, ”the FAR is silent on how to apply set-asides at the task-or-delivery order level.”[15]

In its proposed rule to implement section 1331, SBA stated, “[t]he proposed rule preserves the discretion that section 1331 vests in agencies to decide whether or not to use any of the enumerated set-aside and reserve tools.”[16] SBA stated, “[a]gencies have the discretion to forego using the section 1331 tools even if the rule of two could be met; they simply need to explain how their planned action is consistent with the best interests of the agency.”[17] SBA acknowledged GAO’s 2008 Delex decision which held the rule of two applied to orders, but nevertheless stated the only time that an agency must set aside an order for small business if the rule of two is met is when the agency inserted a clause in the contract stating that it would do so.[18]

SBA reiterated in the final rule that it was preserving the discretion section 1331 places in agencies, and an agency that preserves the right to set aside orders under a multiple-award contract is not required to do so even if the rule of two is met.”[19] Thus, SBA’s rules provide the contracting officer “must” set aside a multiple award contract if the requirements for a set-aside are met, but the contracting officer “in his or her discretion may” set aside an order for small business.[20]

In response to comments that the rule of two should be mandatory with respect to orders, the FAR Council stated in a 2020 final rule that, “Section 1331 of the Jobs Act (15 U.S.C. 644(r)) addresses order set-asides and makes the application of the ‘rule of two’ discretionary for orders placed under multiple-award contracts only.”[21] According to the FAR Council, “Congress was clear in section 1331 of the Jobs Act that under a multiple-award contract, agencies may, at their discretion…conduct a set-aside of orders under a multiple-award contract.”[22] Consequently, the FAR provision pertaining to orders under multiple-award contracts provides “contracting officers may, at their discretion, set aside orders placed under multiple-award contracts” for SBCs.[23]

In addressing order set-asides, Congress, SBA and the FAR Council would have used words like “shall” and “must” instead of words like “may” or “discretion” if they had intended for the rule two to apply to order decisions. There would not be separate sections of the FAR and SBA’s rules that apply to set-aside contracts and sections that apply to set-aside orders. GAO recognizes that regardless of how the rule of two could have been interpreted prior to 2010, section 1331 gave agencies the express authority to circumvent the rule of two as it applies to contracts by ordering under a MAC.[24] A Court of Federal Claims (COFC) Judge found otherwise.[25] Although COFC decisions are not binding on other COFC Judges, a steady stream of litigants will challenge procuring agencies’ exercise of their discretion with respect to order set-asides at COFC, until: (1) The Federal Circuit issues a decision, (2) SBA and the FAR Council issue regulations clarifying that the rule of two is, or is not, mandatory with respect to non-Schedule orders, or (3) Congress further clarifies that the rule of two is, or is not, mandatory with respect to non-Schedule orders. The threat of COFC litigation probably makes the rule of two mandatory with respect to non-Schedule orders for the time being, which is a good thing for small business.

Do you have a topic you wish to be covered or a question on how Live Oak Bank can support your business? Email me at ken.dodds@liveoak.bank. 

[1] 15 USC 644(j).

[2] FAR 19.502-2(b).

[3] FAR 8.405-5.

[4] FAR 16.505(b)(2)(i)(F).

[5] Report of the Acquisition Advisory Panel to the Office of Federal Procurement Policy and the United States Congress, January 2007, p. 300.

[6] Id.

[7] Id. at 307.

[8] Report on Small Business Federal Contracting Opportunities, p. 8 (publicly available at http://www.sba.gov/ sites/ default/ files/ contracting_ task_ force_ report_ 0.pdf).

[9] Id.

[10] Id. at 9-10.

[11] Global Analytic Information Technology Services, Inc., B-297200.3, Mar. 21, 2006, 2006 CPD 53; Millennium Data Systems, Inc., B-292357.2, Mar. 12, 2004, 2004 CPD 48; Future Solutions, Inc., B-293194, Feb. 11, 2004, 2004 CPD 39; Information Ventures, Inc., B-291952, May 14, 2003, 2003 CPD 101.

[12] Delex Systems, Inc., B-400403, Oct. 8, 2008, 2008 CPD 181; LBM, Inc., B-290682, Sept. 18, 2002, 2002 CPD 157; N&N Travel & Tours, Inc.; BCM Travel & Tours; Manassas Travel, Inc.; Alamo Travel, Inc.; Ravenel Bros., Inc.; and Bay Area Travel, Inc., B- B- 285164.2, B- 285164.3, Aug. 31, 2000, 2000 CPD P 146.

[13] [13] Matter of: Department of the Army–Request for Modification of Recommendation, B-290682.2, Jan. 9, 2003, 2003 CPD 23.

[14] 15 USC 644(r); Public Law 111-240.

[15] 76 FR 68032, 68033.

[16] 77 FR 29130, 29132.

[17] Id.

[18] Id. at 29133, 29143.

[19] 78 FR 61113, 61116

[20] 13 CFR 125.2(e)(1)(i), 125.2(e)(6)(i).

[21] 85 FR 11746, 11748-9.

[22] Id. at 11749.

[23] FAR 19.504(a).

[24] ITility, LLC, B-419167, Dec. 23, 2020, 2020 CPD 412.

[25] Tolliver Grp., Inc. v. United States, 151 Fed. Cl. 70 (2020).

VA EHR Modernization Pause Extended

According to Federal News Network, the Department of Veterans Affairs (VA) will extend its eight-month pause of deployments for its new Electronic Health Record (EHR) system. In an internal memo, the VA notified staff that the EHR would not roll out at its Saginaw, Michigan medical center in June and that more information would be provided in the coming weeks. A week before, VA Secretary Denis McDonough told members of the House Appropriations Committee that the department had no final decision on the Saginaw deployment. It is now unknown when deployments—25 of which were scheduled for fiscal year 2023—will resume. In February, the VA pushed back a different deployment scheduled for later in the year amid concerns, according to VA Undersecretary for Health Shereef Elnahal, that the system’s issues could put research grants at risk.

During the ongoing pause, the VA conducted an EHR Modernization Sprint Review to improve deployments and governance. Stating that “the progress of this project has not met Veteran or VA expectations,” the sprint review identified 138 solutions to address 30 issues on the project and prescribed new go-live and decision-making processes. On Capitol Hill, lawmakers have introduced three different bills in the House and Senate that would impose new requirements and performance metrics for future EHR Deployments, and Representatives Mike Bost (R-IL) and Matt Rosendale (R-MT) have introduced a bill to cancel the project entirely.

GAO Releases Report on Lack of CIO Oversight of VA IT Contract Awards

The Government Accountability Office (GAO) released a report on the VA Chief Information Officer’s (CIO) oversight of IT contract awards. The GAO reviewed 26 VA IT contract awards and found that 14 lacked CIO approval. Of the 14, only one was managed by an office that specializes in IT and 11 had an estimated total lifecycle cost greater than or equal to $15 million.

All 14 contracts that lacked CIO approval needed an automated control to remind contracting officers of CIO review and approval requirements. The GAO concluded that without automated controls it is unlikely that the CIO’s review of VA IT contracts will improve. The GAO expressed concern that this will limit the CIO’s input on IT acquisitions and result in the award of contracts that “are duplicative or poorly conceived.” The GAO recommended that the VA implement automated controls to ensure IT and IT related contract activities are identified for the approval process. The VA concurred with the recommendation.

Federal Contractors Required to Certify Affirmative Action Compliance by June 29 in New Portal

On March 31, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) opened its online Contractor Portal for Federal contractors and subcontractors to certify their compliance with Federal affirmative action program requirements. In the portal, covered contractors will be able to certify that they have both developed and maintained affirmative action programs “for each establishment or functional unit.” Starting in 2023, covered Federal contractors and subcontractors are required to report the coverage period for their affirmative action programs.

Existing covered Federal contractors and subcontractors are required to complete their certification for the second annual cycle by June 29, 2023 through the portal. For contractors within the OFCCP’s jurisdiction that meet “certain contractor dollar and employee thresholds,” they must develop and maintain affirmative action programs, as well as certify their compliance annually.

OFCCP Director Jenny R. Yang stated that “this online tool will make the process more efficient and promote greater contractor attention to their responsibility to evaluate employment practices and remove barriers to opportunity.”

GSA Issues 5G Acquisition Guidance for Federal Agencies

On March 30, GSA posted guidance to help Federal agencies purchase 5G wireless technology through Best-in-Class acquisition vehicles. The guidance, which was drafted by GSA’s Wireless Mobility Solutions Program, supports the governmentwide effort to share best practices for the use of 5G. In March 2020, Congress passed the Secure 5G and Beyond Act of 2020, which required the Federal Government to “develop a four-pronged strategy to ensure the security of next generation mobile telecommunications systems and infrastructure.” This led to the development of the National Strategy to Secure 5G, which tasked GSA with “establishing acquisition processes to facilitate 5G infrastructure for classified information requirements.”

Federal Acquisition Service Commissioner Sonny Hashmi stated the following about the guidance, “We’re pleased to be issuing this guidance to ensure that government can make the most of secure 5G in its efforts to deliver for the American people.”

Laura Stanton, Assistant Commissioner for the Office of Information Technology Category, added that GSA has “confidence that it will go a long way toward helping federal IT managers, contracting offices, and their industry partners work together to build secure 5G systems.” To read a blog post on the guidance, click here.

Registration Open for Annual QPC Meeting

GSA’s Integrated Workplace Acquisition Center team has opened registration for this year’s meeting of the Quality Partnership Council (QPC). Open to all GSA Multiple Award Schedule holders with Furniture and Furnishings and/or Office Relocation and Reconfiguration SINs, the QPC is GSA’s forum to improve industry–buyer relations (organizations may join here).

This year’s event will take place in person on May 10 in Washington, DC, from 12:30–4:30 PM ET and will also be simultaneously broadcast virtually. For in-person attendees, the QPC team will coordinate tours on May 9 and 10 of GSA’s Workplace Innovation Lab, the Federal Government’s proving ground for new workplace furnishings and technology.
To register for the event as an in-person or virtual attendee, click here.
Per the announcement, the tentative agenda for the event is as follows:

• Doors Open at 11:30AM (No entry before 11:30AM)
• 12:00 Check-in and Networking
• 12:30 Opening Remarks
• 12:40 IWAC Updates
• 1:10 Air Force Updates, AFICC 773 Enterprise Sourcing
• 1:45 The Future of the Office and Federal Work, GSA Public Buildings Service
• 2:10 NAVFAC Furniture Project Outlook
• 2:35 GSA/SBA The 8(a) Partnership Agreement
• 3:10 USACE Huntsville Furnishings Program Updates
• 3:35 Closing Remarks – QPC Board Acknowledgements and Election Plans
• 3:45 Breakout Sessions
• 4:30 QPC Ends