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Friday Flash 08/16/2024

Celebrating a Dedicated Procurement Leader: Wishing Tom Sisti a Happy Retirement!

It is with mixed emotions that The Coalition for Government Procurement announces the retirement of Executive Vice President & General Counsel, Tom Sisti. The Coalition welcomed Tom to the team in 2019, where he immediately enhanced our domain expertise through his strategic insights and comprehensive knowledge of procurement issues. Prior to joining the Coalition, Tom served as Vice President & Chief Legislative Counsel for SAP America. We were fortunate to leverage Tom’s expertise as a member while he worked at SAP, where he tirelessly showcased his commitment to supporting the Coalition’s mission of advancing “common sense in government procurement.” Tom’s illustrious career in the private sector also includes working with the Washington Management Group as Vice President for Law and Policy and with AT&T Government Solutions, where, as Senior Counsel, he supported civilian and defense business teams and served as a subject matter expert on government procurement policy issues.

In addition to his private sector experience, Tom also holds a distinguished career with the government. He began with the Government Accountability Office before serving as Chief Counsel to the then-GSA Board of Contract Appeals. Tom also was Counsel to the U.S. Senate Committee on Governmental Affairs (now Homeland Security and Governmental Affairs), chaired by John Glenn (D-OH), where he was lead staff counsel responsible for the Federal Acquisition Streamlining Act of 1994 and oversight counsel on major IT initiatives. Furthermore, he worked as Procurement Counsel detailed to the U.S. House of Representatives Committee on Government Operations (now Oversight and Reform), chaired by Jack Brooks (D-TX), where he supported the committee on IT oversight and legislative initiatives, such as the Procurement Integrity Act. 

Tom’s list of achievements is extensive, as he has been recognized on numerous occasions for his work to advance public policy. He is a four-time recipient of the prestigious Federal Computer Week Federal 100 Award, which honors individuals from government, industry, and academia who go above and beyond to support federal IT missions. Tom has also been selected to serve on several procurement panels and in leadership positions for multiple industry associations, including the Coalition.

Tom’s contributions to advancing the federal procurement system are truly invaluable. His deep understanding of the intricacies of government procurement, combined with his forward-thinking approach, has played a crucial role in promoting fair and efficient procurement practices. Below are thoughts from Coalition President Roger Waldron and Chairman Bill Gormley.

Roger Waldron, Coalition President:

“As Executive Vice President & General Counsel, Tom has played a vital role in the Coalition’s continued success. His expertise as a lawyer and policy professional has been instrumental in shaping many of the organization’s strategies and advocating on behalf of our members. But beyond his professional contributions, I am happy to call Tom a true friend. For the better part of the last 15 years, I have been able to turn to Tom to provide not only keen analysis on procurement issues, but also support and friendship. His ability to offer both professional insights and personal encouragement has been invaluable to the Coalition, and his kindness, integrity, and positivity will leave a lasting impact on our professional and personal lives. I will miss Tom greatly and wish him the very best in his retirement.”

Bill Gormley, Coalition Chairman and President of The Gormley Group:

“As Chairman of the Coalition, I have had the pleasure of working with Tom over the past several years. From the outset, Tom’s dedication and skillset were evident in every aspect of his work. It was clear that he always had the best interest of the Coalition’s members in mind and worked diligently to serve their needs and effectively communicate with government and industry stakeholders. Tom’s contributions to the Coalition and government procurement community are truly inspiring. Moreover, Tom has set a remarkable example for procurement professionals everywhere, embodying the highest standards of honesty, morality, and professionalism. I am grateful to know Tom both professionally and personally, and wish him the best in the next chapter of his life.”

Tom’s unwavering support for the Coalition has always been evident, through his time as a member and as Executive Vice President & General Counsel. His commitment, wisdom, and passion have left a lasting impact on our organization. As we bid farewell to Tom in his professional capacity, the Coalition extends our heartfelt gratitude for his years of service and wish him all the best in his well-deserved retirement. Please join us in congratulating Tom on an outstanding career!

DoD Publishes DFARS Rule Implementing CMMC  

On August 15, the Department of Defense (DoD) published a proposed rule titled, “Assessing Contractor Implementation of Cybersecurity Requirements,” to amend the Defense Acquisition Regulations Supplement (DFARS) to incorporate contractual requirements for the Cybersecurity Maturation Model Certification (CMMC) 2.0 program.  

The CMMC Program requirements apply to all DoD solicitations and contracts pursuant to which a defense contractor or subcontractor will process, store, or transmit Federal Contract Information (FCI) or Controlled Unclassified Information (CUI) on unclassified contractor information systems, including those for the acquisition of commercial items (except those for commercially available off-the-shelf (COTS) items) valued at greater than the micropurchase threshold (MPT). 

The proposed changes to the DFARS are primarily to: 

  • Add references to the CMMC 2.0 program requirements proposed at 32 CFR part 170; 
  • Add definitions for controlled unclassified information (CUI) and DoD unique identifier (DoD UID) to the subpart; 
  • Establish a solicitation provision and prescription; and 
  • Revise the existing clause language and prescription. 

According to the proposed rule, DoD plans to implement a phased rollout of CMMC. DFARS clause 252.204-7021, Contractor Compliance with the CMMC Requirements, will be used in solicitations and contracts that require contractors to have a specific CMMC level, including those using FAR Part 12 for commercial products and commercial services, with the exception of COTS items. In the first three years following publication of the CMMC 2.0 final rule (which is still pending), DoD program offices and requiring activities will determine whether to use clause DFARS 252.204-7021 in contracts and solicitations. In the fourth year, CMMC will apply to all DoD solicitations and contracts, including those for the acquisition of commercial products and commercial services (except for COTS items), valued at greater than the MPT. The required CMMC level will be identified by DoD in the solicitation or contract. 

The proposed rule includes a new DFARS provision, 252.204-7YYY, Notice of Cybersecurity Maturity Model Certification Level Requirements, and amends clause 252.204-7021, Cybersecurity Maturity Model Certification Requirements. A future article in the Friday Flash will provide more details on the requirements in these DFARS clauses. 

Comments on the proposed rule are due on or before October 15, 2024. The Coalition is currently reviewing the proposed rule and considering submitting comments. If you have any feedback on the proposed rule, please contact Greg Waldron at gwaldron@thecgp.org.  

Nominations Now Open for the 2024 Excellence in Partnership Awards! 

The Coalition for Government Procurement is excited to announce that nominations are now open for the 2024 Excellence in Partnership (EIP) Awards! 

The EIP Awards recognize individuals and organizations in the Federal procurement community who make significant contributions to the acquisition system. The awards recognize individuals and programs from the Department of Defense, civilian agencies, and industry. Throughout the years, the EIP Awards have highlighted a number of outstanding efforts, programs, and initiatives led by procurement professionals who are dedicated to meeting the mission critical needs of agencies and the American people. 

2024 EIP Awards categories: 

Lifetime Acquisition Excellence Award – Presented to an individual in the contracting community (government or industry) for demonstrating a life-long commitment to advancing “common sense in government procurement.” 

Acquisition Excellence Award – Presented to an organization or individual (government or contractor) for outstanding performance over the year in meeting the mission-critical needs of a Federal agency. 

Sustainable Excellence Award – Presented to a government agency or contractor that has made outstanding contributions that meet the Federal Government’s sustainability goals. 

Advocating for Veterans Award – Presented to an organization or individual (government or contractor) for promoting and executing a successful program or policy that supports veterans. 

We strongly encourage you to nominate a deserving colleague or collaborator who has demonstrated their commitment and expertise in the Federal procurement space. The nomination deadline is October 4, 2024. 

To submit a nomination, click here.  
 
If you have any questions regarding the EIP Awards or nomination process, please contact our EIP Award team at nominations@thecgp.org.  

Last Call to Join Next Week’s Joseph P. Caggiano Memorial Golf Tournament 

Last Call to Register! Don’t miss your chance to participate in the Joseph P. Caggiano Memorial Golf Tournament on August 21 at the Whiskey Creek Golf Club in Ijamsville, Maryland. Join us for a day of golf, camaraderie, and charitable giving as we support veterans through Paws for Purple Hearts and The Coalition for Government Procurement Endowed Scholarship Fund. Secure your spot today! 

You can register below for a foursome, as an individual golfer, or to enjoy the scenic views from the veranda club and meet our scholarship awardee, Kristin Wolford Gillooly, and Paws for Purple Hearts here.

Paws for Purple Hearts 

Proceeds from this year’s golf tournament will once again support Paws for Purple Hearts (PPH). Paws for Purple Hearts improves the lives of veterans and wounded service members facing mobility challenges and trauma-related conditions through assistance dogs and canine-assisted therapeutic programs. To date, PPH has supported over 10,000 veterans and wounded service members across the country. 

Recently, we had the opportunity to interview Danielle Stockbridge, the Southeast Regional Director of PPH, to learn more about the organization’s background, goals, challenges, and impacts on the lives of veterans. Read the interview to learn more about PPH and its mission here. We are thrilled to have representatives from PPH join us at the tournament, including service dog Scotty! 

CGP Endowed Scholarship Fund 

Proceeds will also support The Coalition for Government Procurement Endowed Scholarship Fund for a deserving veteran studying U.S. government procurement at The George Washington University Law School.  Kristin Wolford Gillooly is this year’s recipient of the scholarship. Kristin is pursuing a Masters degree in Government Procurement and Cybersecurity Law at the GW Law School. She is a Lieutenant for the Office of the Chief of Naval Operations and has received a Joint Commendation Medal for meritorious service in Afghanistan, as well as a Navy Commendation Medal for meritorious service in response to the war in Ukraine.   

Thank You to Our Tournament Sponsors

NASA Pauses SEWP VI RFP 

On August 8, NASA announced a strategic pause on the SEWP VI Request for Proposals (RFP). The due date for proposals will be extended at a future date. NASA anticipates completing the following activities and intends to communicate updates via SAM.gov and the SEWP website: 

  • A future amendment will be published after NASA completes a review of its RFP and Q&A received to determine if substantive clarifications or changes are required.  This activity is anticipated to take a few weeks. 
  • An Industry Day will be scheduled to discuss any substantive changes to the RFP prior to proposal receipt. 
  • The new proposal receipt date will be communicated after the above activities and will allow time for industry to submit proposals.   

GSA Delays OASIS+ Awards 

On August 15, the General Service Administration’s (GSA) Office of Professional Services and Human Capital Categories announced a delay to the award of the OASIS+ Small Business contracts “as a result of protests filed in response to the apparent awardee announcements posted on SAM.GOV and the unsuccessful offeror notifications issued on July 30.” 

Contract awards and Notices to Proceed (NTP) were scheduled to be issued on or around August 12. However, as a result of the protests, the contract awards/NTP dates are delayed. 

GSA will share updates on the status of the OASIS+ awards as soon as possible.  

Unlock Cybersecurity Success: Join The Cyberside Chat for Expert Insights & Solutions! 

The Coalition for Government Procurement is proud to present its first-ever Cybersecurity Symposium: The Cyberside Chat™ on September 12! The Cyberside Chat will feature three distinct panels of subject matter experts from government and industry. The panels will provide deep insights on the latest programs and policies as well as practical solutions for professionals involved in cybersecurity procurement and compliance.   

Why Attend? 

  • Gain valuable insights from leading government and industry cybersecurity and procurement professionals.  
  • Enhance your understanding of cybersecurity trends, regulations, challenges, and solutions.  
  • Network with peers from government and industry. 

Agenda Highlights  

Cyber Side Chat Panel: Engage in discussion with Department of Defense (DoD) cybersecurity executives on the department’s latest trends and programs, such as the Cybersecurity Maturity Model Certification (CMMC) Program, the protection of Controlled Unclassified Information (CUI), and the importance of securing the Defense Industrial Base (DIB) and networks.   

  • Moderator: Robert Metzger, Shareholder at Rogers Joseph O’Donnell 
  • Jeff Spinnanger, Director, Information and Acquisition Protection, Office of the Under Secretary of Defense for Intelligence & Security (invited) 
  • Stacy Bostjanick, Chief Defense Industrial Base Cybersecurity, Office of the DoD Chief Information Officer and CMMC Director (invited) 

The Dynamics of Cybersecurity Procurement Management: Explore the complexities of cybersecurity procurement during this panel, where General Services Administration (GSA) officials will discuss the evolving challenges and strategies in managing the procurement of cybersecurity solutions.    

  • Moderator: Omid Ghaffari-Tabrizi, Head of Federal Civilian Policy, Google 
  • Bo Berlas, Chief Information Security Officer, GSA (invited)
  • Kevin Funk, Cybersecurity & Technology Senior Advisor, GSA (invited)
  • Darrick Early, Client Executive, AAS Civilian, GSA (invited)

The Black, White, and Grey of Cybersecurity Compliance: Navigate the challenging terrain of cybersecurity compliance with a focus on best practices, regulatory requirements, and ethical considerations. This panel of government and industry experts will provide a comprehensive overview of cybersecurity compliance issues and how to address them effectively.  

  • Townsend Bourne, Partner, Sheppard Mullin  
  • Sara McLean, Assistant Director, Commercial Litigation Branch, Department of Justice  
  • Michael Gruden, Counsel, Crowell & Moring  
  • Leah Schloss, Senior Counsel, CISA (invited)  

View the full agenda here.   

Date & Location  

Date: September 12, 2024  
Time: 8:00 AM – 12:30 PM (ET)  
Location: Offices of Google – 25 Massachusetts Ave NW, Washington DC 20001. Virtual attendance is also available.    

Don’t miss this opportunity to stay ahead in cybersecurity!  

To register, click here. For any assistance with registration, please contact Madyson Whiting at mwhiting@thecgp.org. 

DoD Publishes Sustainable Procurement Final Rule

On August 15, the Department of Defense (DoD) published its final rule on Sustainable Procurement. The rule aligns the Defense Federal Acquisition Regulation Supplement (DFARS) consistent with the Federal Acquisition Regulation Sustainable Procurement Rule. The final rule reorganizes existing sustainable procurement requirements in the DFARS and does not create any new solicitation provisions or contract clauses. The rule is effective immediately.

GSA Announces PRISM Contract Supporting DoD 

On August 9, GSA announced its new Personnel and Readiness Infrastructure Support Management (PRISM) Multiple Award Task Order Contract to support DoD. PRISM offers the Office of the Undersecretary of Defense for Personnel and Readiness (OUSD P&R) and its strategic partners with innovative and cost-effective enterprise platforms and professional services “through the use of Streamline Task Order Ordering Procedures (STOOP).” STOOP results in a reduction in acquisition lead time and increased flexibility throughout the procurement process. 

PRISM consists of two pools—a Personnel and Readiness (P&R) Pool and a Major Department of Defense Systems (MDoDS) Pool. PRISM has a $1.8 billion ceiling and a one-year base period with four option years. 

DoD Exploring Portfolio-Based Acquisition  

Federal News Network reports that lawmakers are urging DoD to explore a portfolio-based acquisition approach that would allow the Department to invest in modern technologies more rapidly. Under the Department’s current approach, funds are tied to specific programs, limiting DoD’s ability to quickly acquire commercial technologies. DoD Acquisition & Sustainment has currently been utilizing the Adaptive Acquisition Framework to give the military branches more flexibility in their procurement processes.  

The Navy’s Program Executive Office for Digital and Enterprise Services (PEO Digital) moved to a portfolio-based management approach in 2021. The Atlantic Council Commission on Defense Innovation Adoption highlighted PEO Digital’s acquisition strategy as an example of how the portfolio-based approach can lead to streamlined procurement. The Commission on Planning, Programming, and Execution Reform also recommended that DoD transition to the portfolio-based approach. 

OIG Urges GSA to Strengthen Robotic Process Automation Program 

On August 6, the GSA Office of the Inspector General (OIG) reported that GSA’s robotic process automation (RPA) program did not meet IT security requirements. GSA established its RPA program in 2018 to reduce administrative burden by automating low-value, routine tasks through the use of bots. The OIG found that GSA needs to strengthen the security of the program and ensure that bots are operating properly. The OIG noted that GSA failed to update security plans for bot access, did not manage bot-related security issues effectively, and lacked proper monitoring of bot activities. In addition, decommissioned bots were not removed in a timely manner, placing GSA systems and data at risk of exposure.  

The OIG concluded GSA did not follow set guidelines for secure RPA operations, including baseline monitoring, weekly log reviews, and annual bot reviews. The report also noted that security plans for systems accessed by bots were outdated or incomplete, with some not mentioning bots at all. The OIG made seven recommendations to GSA, including developing oversight mechanisms to enforce compliance with RPA policies and updating system security plans. In response, the GSA leadership agreed with the OIG’s recommendations and is working on a corrective action plan. However, GSA also issued some factual clarifications which are covered in Appendix D of the report. 

Authored by Evan C. Williams, Luke Levasseur, Jason C. Coffey, and Michael E. Lackey; Mayer Brown

On July 16, 2024, the Court of Federal Claims (“COFC” or “Court”) published an opinion, Independent Rough Terrain Center, LLC v. United States, exercising jurisdiction to consider a bid protest involving Other Transaction (“OT”) authority.1 Addressing an issue of first impression, the Court held that a challenge to an OT solicitation for the follow-on production of goods and services is within the purview of the COFC’s bid protest jurisdiction.

This Legal Update summarizes the Court’s decision and highlights important takeaways for federal contractors that pursue OT opportunities.

BACKGROUND

The protest involved the US Army Materiel Command’s efforts to modernize its Rough Terrain Container Handler vehicles, which the Army uses to lift and move shipping containers. In an earlier phase of the acquisition, the Army conducted an OT prototype competition.

Following the prototype phase, the Army issued the solicitation that was later protested. The solicitation, issued pursuant to the Army’s OT authority under 10 U.S.C. §§ 4021 and 4022, contemplated award of a follow-on production contract to one of the two vendors that submitted successful protypes. On September 20, 2023, the Army awarded the follow-on production contract to Taylor Defense Products, LLC.

Then, the other vendor, Independent Rough Terrain Center, LLC (“IRTC”), filed an agency-level protest contesting the Army’s award decision. On January 22, 2024, the Army announced that it would take corrective action in response to the protest. On January 31, 2024, IRTC filed a pre-award protest at the COFC in which it challenged various actions taken by the Army in connection with the OT acquisition, including the scope of the Army’s proposed corrective action.

The government moved to dismiss the IRTC’s complaint for lack of subject matter jurisdiction.2 In essence, the government argued that acquisitions executed under an agency’s OT authority are not procurements and therefore fall outside the COFC’s bid protest jurisdiction under the Tucker Act.3

ANALYSIS

The Court concluded that it possessed Tucker Act jurisdiction to hear the protest. First, citing Supreme Court precedent, the Court noted that there is a strong (but rebuttable) presumption of judicial review of agency action and that the presumption is overcome only when a statute’s language or structure demonstrates that Congress wanted to preclude judicial review.4 The Court rejected the government’s contention that because OTs are not procurement contracts subject to the Federal Acquisition Regulation (“FAR”), they are necessarily removed from the Court’s bid protest jurisdiction. Examining the text and legislative history of the OT statutes at issue (i.e., 10 U.S.C. §§ 4021-4022), the Court held that judicial review of OT acquisitions was not precluded by the relevant statutes.

The Court acknowledged that the OT statutes afford the military flexibility in conducting acquisitions by exempting the transactions from certain federal statutes and regulations, including the FAR. But the Court pointed out that although most government procurement contracts fall under the authority of the FAR, the Court’s bid protest jurisdiction is not limited to FAR-based contracts.5 On this point, the Court also noted that the Court of Appeals for the Federal Circuit has found the COFC’s protest jurisdiction to be broad.

Next, the Court addressed the government’s argument that follow-on production OTs are not procurements for purposes of Tucker Act jurisdiction. The Court explained that even though the Tucker Act itself does not define “procurement,” the Federal Circuit relies on 41 U.S.C. § 111, which broadly defines the term as including “all stages of the process of acquiring property or services, beginning with the process for determining a need for property or services and ending with contract completion and closeout.” Using this definition, the Court reasoned that a follow-on production OT solicitation is a procurement because it seeks to acquire property or services for the government, whether the agency accomplishes that acquisition using its OT authority or the authority under the FAR.

Ultimately, the Court denied the government’s motion to dismiss.6 The Court concluded that it possessed jurisdiction over the protest because the solicitation concerned the acquisition of goods and services, thus falling under the broad definition of a procurement, and because nothing in the OT statutes expressly removed OT follow-on contracts from review under the Tucker Act.

TAKEAWAYS

Federal contractors interested in OT solicitations should note these key points from the Independent Rough Terrain Center decision:

  • The decision appears to resolve a previously open question about whether the COFC had protest jurisdiction over follow-on production OT acquisitions. Accordingly, contractors competing under OT solicitations (as well as government contracting personnel) should be aware of the potential for judicial review of these kinds of acquisitions.
  • The Court’s reasoning in this decision is significant in that it could have a substantial effect on agencies that choose to acquire goods and services via OTs. Rather than focusing on whether the acquisition in question was conducted under OT authority or FAR authority, the Court focused on the broader question of whether the government was acquiring goods or services. Framing the issue in this way effectively dispels the commonly held notion that acquisitions conducted under OT authority are generally “non-protestable.” If this approach is accepted by other judges on the Court (or the Federal Circuit), the decision could have a serious impact on the incentives for agencies to use OT authority.
  • This ruling follows the Court’s August 2022 decision in Hydraulics Int’l (discussed in a previous Legal Update) finding jurisdiction over a prototype OT competition when a follow-on production contract was contemplated. The Independent Rough Terrain Center decision provides an additional signal that members of the Court may be more inclined to review decisions made with respect to OT acquisitions.

CONCLUSION

As the Federal Circuit has yet to consider the issue of OT protest jurisdiction under the Tucker Act, it remains unclear whether other COFC judges will follow the reasoning of both Hydraulics Int’l and Independent Rough Terrain Center in future cases. But, for now, these recent decisions indicate that the Court will exercise broad jurisdiction over bid protests involving a government acquisition for goods or services, regardless of whether the acquisition is FAR-based.

1 No. 24-160 (July 16, 2024).

2 Importantly, when the COFC lacks bid protest jurisdiction, a disappointed vendor generally may pursue an action in federal district court pursuant to the Administrative Procedure Act (“APA”). For instance, when the COFC dismissed a protest of a prototype OT award for lack of jurisdiction, Space Expl. Techs. Corp. v. United States, 144 Fed. Cl. 433 (2019), the disappointed offeror was able to bring a suit in federal district court, which reviewed the prototype OT award under the APA as a “final agency action.” Space Exl. Techs. v. United States, 2020 WL 7344615 (C.D. Cal. Sept. 24, 2020).

3 The Tucker Act grants the COFC “jurisdiction to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.” 28 U.S.C. § 1491(b)(1) (emphasis added).

4 No. 24-160 at 9 (discussing Mach Mining, LLC v. E.E.O.C., 575 U.S. 480, 486 (2015)).

5 Id. at 11 (citing Emery Worldwide Airlines, Inc. v. United States, 264 F.3d 1071, 1079 n.7, 1084 (Fed. Cir. 2001), which concluded that the COFC has bid protest jurisdiction over United States Postal Service procurements despite that the Postal Service being exempt from the FAR).

6 This Legal Update focuses on the Court’s analysis of its jurisdiction under the Tucker Act. Of note, later in the opinion, the Court found that IRTC lacked standing because it was ineligible for award due to a lapse in its System for Award Management (“SAM”) registration.

Healthcare Spotlight: HHS Announces Medicare Part D Negotiated Prices 

This week, the Department of Health and Human Services (HHS) released the final drug prices negotiated through its Medicare Drug Price Negotiation Program established under the Inflation Reduction Act of 2022 (IRA). The first group of negotiated prices are for 10 Medicare Part D drugs that treat a variety of conditions including cardiovascular disease, diabetes, autoimmune diseases and cancer. According to the Centers for Medicare and Medicaid Services (CMS), “[t]hese selected drugs accounted for $56.2 billion in Part D gross covered prescription drug costs, or about 20% of total Part D gross covered prescription drug costs during 2023.” The new prices will be effective Jan 1, 2026. 

CMS has published a Fact Sheet that includes a list of the covered Medicare Part D drugs and negotiated prices, also referred to as “Maximum Fair Prices (MFPs),” under the IRA. 

The negotiated pricing is the first in a series that will be conducted through the Medicare Drug Price Negotiation Program. According to CMS, 15 more Part D drugs will be selected for negotiation for 2027 by February 1, 2025. CMS will then “select up to 15 more drugs covered by Part B or Part D for 2028, and up to 20 more Part B or Part D drugs for each year after that, as required by the [IRA].” 

View from Main Street: HUBZone Evaluation; Present Effect Rule; NAICS Code Appeal

Updates on Timely Topics Impacting the Government Contracting Industry from the Coalition’s Vice President of Acquisition Policy, Ken Dodds

HUBZone Evaluation

An unsuccessful offeror challenging a multiple award solicitation with set-aside “pools” for various socioeconomic categories. Offerors for the HUBZone “pool” would receive points under the experience and past performance subfactor for HUBZone set-aside contracts and could also include contracts performed under other socioeconomic set-aside categories. The protester alleged this violated Small Business Administration (SBA) regulations which prohibit a procuring agency from issuing a combination set-aside requiring multiple socioeconomic certifications, e.g., limiting competition to firms that are both 8(a) and HUBZone certified.[1] The Government Accountability Office denied the protest. Offerors with more than one certification did not receive extra points or receive an evaluation preference, they simply had an inherent advantage under the experience and past performance subfactor, which was not prohibited by SBA’s regulation.[2]

Present Effect Rule

SBA’s affiliation rules provide that stock options, convertible securities, agreements to be acquired or merge, including agreements in principle, will be given present effect.[3] In a recent size appeal, SBA’s Office of Hearings and Appeals (OHA) upheld an Area Office size determination giving present effect to an acquisition based on a term sheet signed by the parties, with an agreed upon price and an expected closing date.[4] The due diligence required by the term sheet was confirmatory, not extensive, and there was no indication that the deal was conditional based on the due diligence. Although the term sheet provided that a few issues remained to be resolved, they were minor, and it was clear that the deal was not contingent on resolving those issues. While the buyer had not secured financing when the term sheet was signed, the term sheet was not conditioned on obtaining financing nor does it appear that financing was in doubt. The fact that the term sheet and the ultimate final agreement differed in some respects had no bearing on whether an agreement in principle existed at the time size was determined. This case was distinguishable from other OHA size appeal decisions, where a price had not been agreed upon or where a potential purchase was conditioned on the seller reaching financial targets.    

NAICS Code Appeal

The Department of Veterans Affairs (VA) issued a solicitation for a weapons detection system and set it aside for Service-Disabled Veteran-Owned small business concerns, under North American Industry Classification System (NAICS) code 561621, Security Systems Services (except Locksmiths), with a corresponding size standard of $25 million average annual receipts. An appellant filed a NAICS appeal at SBA’s OHA, arguing that the principal purpose of the acquisition was for a product, not services. The appellant maintained that the solicitation should have a manufacturing NAICS code with an employee-based size standard. The solicitation was for a name-brand weapons detection system made by a large business. The contractor would be responsible for installation and training, but the system would be operated by VA personnel. The contractor would provide a software subscription from the large business manufacturer, which would provide updates and support. The VA argued that services accounted for over 10% of the dollar value of the acquisition, but that meant that the vast majority of the acquisition was for supplies. Moreover, the services would be mainly provided by a large business through the software subscription. OHA agreed that the solicitation was misclassified as a service, and held that NAICS code 334290, Other Communications Equipment Manufacturing, with a size standard of 800 employees, best described the principal purpose of the procurement.[5]

[1] 13 CFR 126.609.

[2] Competitive Innovations LLC, B-422500, Jun. 27, 2024.

[3] 13 CFR 121.103(d).

[4] Size Appeal of FRM Socks, LLC, SBA No. SIZ-6281 (2024).

[5] NAICS Appeal of Cynergy Professional Systems, LLC, SBA No. NAICS-6286 (2024).

Now Available: Pharmaceutical Pricing Fun in the Sun Summer Webinar Series

The Coalition for Government Procurement would like to thank presenters Stephen Ruscus, Partner at BakerHostetler, and Greg Madden, Managing Member at Orlaithe Consulting, for an outstanding “Fun in the Sun Summer Webinar Series” on pharmaceutical pricing. This five-part webinar series explored the intricate and dynamic world of pharmaceutical contracts and pricing, offering invaluable insights into pricing strategies, regulations, market trends, and much more.

Recordings now available! The recordings are now available for download on the Member Portal here. More information on the webinars can be found below.

Individual Webinars:

Now Available: Webinar – Supply Chain Risk Management Plans (SCRM): From Government Requirement to Competitive Differentiator

This Wednesday, the Coalition hosted Baker Tilly’s Leo Alvarez, Principal, and Molly Menoni, Senior Consultant, for a webinar on Supply Chain Risk Management (SCRM) Plans. During the webinar, they discussed:

  • Regulatory activity related to supply chain risk;
  • Recent supply chain-related security breaches;
  • Biden’s cyber and supply chain Executive Order;
  • Federal contract clause requirements related to supply chain oversight;
  • The use of SCRM Plans in Key Federal Acquisitions;
  • How an organization should evaluate its SCRM practices;
  • The use of all-source intelligence platforms (“Supply Chain Illumination”); and
  • Practical guidance on SCRM Plan preparation and structure.

The Coalition and its members sincerely appreciate Leo Alvarez and Molly Menoni with Baker Tilly for sharing their expertise on SCRM as it applies to the Federal market.

To access the recording, click here.

VA Launches Website to Combat Veteran Fraud 

Meritalk reports the White House and the Department of Veterans Affairs (VA) launched VSAFE.gov, a new website to protect veterans and their families from scams and fraud. The site was created in response to an increase in fraud and scam attacks targeting veterans, resulting in over $350 million lost last year. Fraud targeting veterans increased as a result of the PACT Act of 2022, which expanded VA healthcare and benefits to millions of veterans. VSAFE.gov offers tools for veterans to protect themselves, report fraud, and access support. The site consolidates Federal agency resources and includes a centralized call line that connects users with the appropriate agency for assistance.  

DoD Highlights Innovative Pathways and Investment in Emerging Technologies 

Last week, DoD released a report, “Structuring Change to Last: An Update on Innovation at the Department of Defense.” The report highlights DoD’s efforts to support investments in critical technologies and to engage with industry to increase access to innovative emerging technologies. The report also explains how DoD assists small businesses as they transition prototypes to products. For example, DoD has invested $300 million in several Accelerate the Procurement and Fielding of Innovative Technologies Pilot (APFIT) projects.  

DoD outlines its increased use of more flexible acquisition pathways, including the Middle-Tier of Acquisition Pathway for prototyping and fielding new systems, and the Software Acquisition Pathway for the delivery of software capabilities. DoD has also ramped up its efforts to invest in data and AI through new guidance and organizational support. Finally, DoD has made significant investments in cloud. Under the Joint Warfighting Cloud Capability contract, $969 million task order awards have been made. 

“Coalition Consults” on VA Contracting Programs

The Coalition is proud to offer our latest new resource for our healthcare members, called Coalition Consults. The first set of consults address key contracting programs at the US Department of Veterans Affairs (VA) for medical/surgical supply and medical device companies. They provide basic information about the product scope of each contract and how companies can pursue these contracts including the appropriate VA contacts. Coalition Consults are currently available for the following VA contracts:  

  • New! VA Durable Medical Equipment (DME) program 
  • VA Med-Surg Prime Vendor (MSPV) program   
  • VA & DoD High Tech Medical Equipment (HTME) program  
  • VA Medical Device Implant program  
  • VA Non-Expendable (NX) Program  

To access the Coalition Consults, click here. For any questions, please contact Aubrey Woolley at awoolley@thecgp.org. 

VA Data for Healthcare Members 

To increase the number of valuable tools available for members, the Coalition has compiled several data sets pertaining to VA Medical Centers’ procedures, diagnoses, and product spend. Below is a description of the different VA data reports that the Coalition can provide to healthcare members based on areas of interest to their business:    

  • Diagnosis data by each VA Medical Center: Members can request a report by providing the relevant International Classification of Diseases (ICD)-10 codes of interest to their business.   
  • Procedure data by each VA Medical Center: Members can request a report by providing the relevant Current Procedural Terminology (CPT) codes of interest to their business.   
  • Prosthetic (medical implants, DME) product spend by VA Medical Center: members can request a report by providing the relevant Healthcare Common Procedure Coding System (HCPCS) codes of interest to their business for items managed by VHA Prosthetics.   

For any data requests or related questions, please contact Michael Hanafin at mhanafin@thecgp.org. 

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