Friday Flash, 09.27.13

September 27, 2013

FAR and Beyond Blog

This week the Coalition provided Defense Procurement and Acquisition Policy (DPAP) with “Myth-Busters” feedback regarding the policies, goals and objectives for Economy Act and non-Economy Act Interagency Acquisitions. Our feedback can be found here. As you know, DPAP is currently conducting a review of the rules and regulations governing interagency acquisition acquisitions across the Department. A review that was prompted by recent statutory and regulatory changes to an already complex labyrinth of rules governing interagency acquisitions. As currently structured, the complex rules governing interagency acquisitions make it unnecessarily difficult for customer agencies to leverage pre-existing government-wide contract vehicles and assisted services organizations to support mission needs.

For example the regulatory language at Federal Acquisition Regulation (FAR) 17.502-1 requires a written “determination of best procurement approach” by a customer agency prior to utilizing another agency to conduct an acquisition on its behalf (i.e. assisted services) and/or prior to placing an order against another agency’s IDIQ contract (includes all GWACs orders and MAC orders regardless of dollar value as well as Federal Supply Schedules (FSS) orders exceeding $500,000). There is no similar requirement for open market procurements. As such, the requirement for a “best procurement approach” determination for interagency acquisition creates a presumption in favor of open market procurements that fosters unnecessary contract duplication. Contract duplication increases costs to customer agencies, contractors and ultimately the American taxpayer. Duplicative open market contracts also dilute the government’s buying power. Rebalancing FAR 17.502-1 to eliminate the presumption in favor of open market procurements is a great opportunity to reduce unnecessary contract duplication.

DPAP is to be commended for embarking on a review of the policies, procedures and rules governing the Department’s interagency acquisitions. The Coalition’s feedback focuses on reducing unnecessary procedural burdens and streamlining the decision making process when using interagency acquisitions. Government-wide contracting vehicles like the FSS program and the IT GWACs save time and money by providing a common platform for customer agencies to effectively compete and acquire solutions, services, and products to support mission needs. Our feedback to DPAP regarding interagency acquisition is part of a continuing “Myth-Busters” dialogue with stakeholders across the procurement community. It is a dialogue that seeks to improve the efficiency and effectiveness of the procurement system.

To that end, the Coalition has developed a list of “Government Procurement Practices that Add Costs without Enhancing Value.” The list can be found here. The list is a living document! We look forward to your feedback and comments regarding the list as well as real examples of practices that increase costs without additional value. Your feedback, comments and examples can be provided to me at rwaldron@thecgp.org. We will use your input to periodically update and share the list across the procurement community. Our goal is to foster a focused conversation that leads to improved procurement practices that save time, money and resources for government, the American people and contractors.

We look forward to your feedback!

Roger Waldron

President

Preparations for a Government Shutdown

With the House and Senate still unable to agree on a continuing resolution (CR), the Federal Government is stepping up its preparations for a potential shutdown on October 1. The latest the Coalition has heard regarding the status of the CR is that the Senate is expected to pass short-term funding legislation this afternoon. However, there is no guarantee that the House will pass it without changes. Without agreement between the House and Senate before the end of FY2013, a shutdown could very well occur next Tuesday.

The Coalition has received letters from both the Departments of Defense and Homeland Security on contract actions in the event there is a lapse in appropriations.

DoD Frank Kendall Letter to the Coalition

Undersecretary of Defense for Acquisition, Technology and Logistics sent a letter to the Coalition’s membership on how a potential shutdown would affect contracting at the Department. Vendors working on contracts with funds already appropriated (FY 2013 or prior year) should continue to work unless directed otherwise by their contracting officer. Kendall warns that although contractors may generally be paid for work done on contracts with funds that are available without an FY 2014 appropriation, delays or disruptions in payments could occur. Members should also note that until FY14 funds are appropriated, new government obligations (including extensions or options to existing contracts or new contracts) may only be initiated for activities necessary to support approved military operations or to address emergency circumstances.

DHS Nick Nayak Letter to Industry

DHS Chief Procurement Officer Nick Nayak released a letter to industry partners on FedBizOpps.gov. The letter concerns contract actions that may be necessary in the event contract funding is affected by a lapse in appropriations. Nayak notes that as a consequence of the lapse, certain planned procurements may be cancelled and certain existing contracts may be stopped, reduced in scope, terminated or partially terminated. If any of these actions are to be taken DHS contacting officers will provide prompt appropriate notice to the contractor in accordance with the terms and conditions of the affected contract. Members should note that if a contract will not be affected by the lapse in appropriations, DHS does not plan to provide any separate notifications or communications.

Additional resources for members are this week’s Legal Corner by Elizabeth Ferrell with McKenna Long and guidance from Mayer Brown. The Office of Management and Budget also recently released a list of FAQs about how agencies should handle contract matters if appropriations lapse.

For the latest information on the potential government shutdown, follow the Coalition on Twitter!

DoD Issues Internal Shutdown Guidance

On Monday, the Department of Defense issued a memorandum detailing guidance to its employees on the potential for a government shutdown, should Congress fail to pass a continuing resolution (CR). The memo explains that should fiscal year end without a CR, portions of the government funded via appropriated funds will be forced to close. “While military personnel would continue in a normal duty status, a large number of our civilian employees would be temporarily furloughed,” Deputy Defense Secretary Ashton Carter said. The DoD is updating their contingency plans for executing an orderly shutdown of activities that would be affected by a lapse in appropriations. Carter went on to say that the shutdown would “impose hardships on many employees and disrupt important national security projects.” The memo includes an attachment from the Office of Personnel Management, which answers some initial questions individuals might have about the process.

EIP Awards – Last Call for Nominations!

DHS Representatives Jose Arrieta and Bob Namejko with Coalition President Roger Waldron, EIP Awards 2012

Nominate a deserving acquisition official for an EIP Award today! The Excellence in Partnership (EIP) Awards honor acquisition officials who have made significant strides in promoting and utilizing multiple award contracts, saving taxpayer dollars and contributing to veterans hiring and green initiatives. Awards will be given to individuals, organizations and contractors involved in procurement with GSA, VA, DoD, DHS and other government agencies. EIP Award nominations for 2013 are being accepted in the following categories:

Nominations will be accepted through October 1. Please provide a brief description of why your nominee should be recognized with an EIP award with your nomination. Submit your nomination here. If you have any questions, please contact Aubrey Woolley at awoolley@thecgp.org or (202) 315-1053.

2013 Fall Training Conference—The New Federal Market

October 30, 2013

How has the federal market changed in the wake of sequestration? How will you succeed in FY 2014? How will changing Agency budget priorities and changes on the Hill impact your business? Learn the answers to these questions and more from Federal Acquisition Leaders, Agency CFOs, government leaders and industry experts at The Coalition’s 2013 Fall Training Conference – The New Federal Market. Breakout sessions will address new developments in government-wide acquisition programs including Strategic Sourcing, GSA Acquisition Center Initiatives, Veterans Affairs, GSA e-marketing, Professional Services and more.

masiello

Confirmed Speakers include

Frank Kendall, Under Secretary of Defense for Acquisition, Technology and Logistics – Department of Defense
Major General Wendy M. Masiello, Director of Contracting—Air Force
Peggy Sherry, Chief Financial Officer, Dept. of Homeland Security
Emily Murphy, Senior Counsel, House Committee on Small Business
Norman Dong, Deputy Controller— Office of Management and Budget
Kathleen Turco, Chief Financial Officer—Veterans Health Administration
Anne Rung, Chief Acquisition Officer—General Services Association
Troy Cribb, Chief Counsel for Government Affairs—Senate Homeland Security & Government Affairs Committee

Click here for more information, a full agenda and to register.

Sunday- Watch Roger Waldron on Government Contracting Weekly

Don’t miss Coalition President Roger Waldron this Sunday, September 29 at 7am on Government Contracting Weekly! Roger will be on a panel with Bill Gormley of the Gormley Group; David Drabkin with Northrop Grumman, and Angela Styles of Crowell & Moring. They will discuss the current procurement challenges industry faces including the potential consequences of strategic sourcing, the costliness of contract duplication, the need for requirements development, bid protests and more. The show will air Sunday on the DC Metro CBS affiliate WUSA9.

GSA Launches Total Workplace Initiative

This week the General Services Administration (GSA) launched a new program for Federal agencies called the Total Workplace Initiative. The program provides resources and expertise to help federal agencies reduce office space, foster collaboration, better manage IT spending, and increase energy efficiency. According to GSA Administrator Dan Tangherlini, “The kind of open office space that Total Workplace creates encourages collaboration and cooperation that in turn leads to better services for the American people.”

The Department of Homeland Security (DHS), the US Department of Agriculture (USDA), and Health and Human Services (HHS) are already using the program. According to GSA, these agencies are using the Total Workplace Initiative in the following ways.

DHS is reducing rented space through subleasing and increasing telework. The agency estimates that it will achieve $55 million in real estate savings.
USDA’s National Agricultural Statistics Service is reducing its real estate footprint moving from 43 state offices to 12 regional locations. USDA estimates that through the efforts-to-date, they will save more than $700,000 annually.
HHS estimates that it will save more than $15 million in real estate costs over a 10 year lease by improving space efficiencies and reducing the agencies footprint.

As part of the program, GSA launched a Total Workplace Initiative webpage with information for Federal agencies including a GSA case study on their headquarters relocation.

Source: GSA Transforming the Government Workplace, Saving Agencies Millions (9/19/2013)

Air Force Empowers the CIO

The US Air Force is strengthening the oversight role of its chief information officer (CIO), reports Federal News Radio. The move plans to give the CIO more say in decisions about IT acquisition, planning and funding, in an attempt to cut down on duplicative spending and increase commoditization. Air Force CIO Lt. Gen. Michael Basla and his office are starting to outline guidance that specifically explains the CIO’s role in IT acquisition processes and help align the service’s technology investment portfolios. At the Air Force Association’s annual air and space exposition at National Harbor, MD, Basla said the basic idea is to reaffirm the intent of the 1996 Clinger-Cohen Act. “We are developing processes in requirements review, acquisition and budgeting, and we’re asking where it makes sense for the CIO’s office to inject itself,” he said. Basla believes Air Force guidance should include a portion from the CIO that describes planning and programming guidance with regard to our investments in IT capabilities.

Legal Corner

Déjà vu: Preparing (Again) for a Possible Government Shutdown

By: Elizabeth Ferrell, Partner, McKenna Long & Aldridge LLP

At the beginning of September, pundits were predicting that a Continuing Resolution would be enacted by the September 30 deadline for FY2014 appropriations. Now political wrangling over Obamacare threatens to derail the appropriations process and create a funding gap beginning on October 1. Absent appropriations to fund their operations, federal agencies simply may not operate. Unfortunately, the political rhetoric has become increasingly strident, and it seems more likely that Congress will not be able to agree on federal funding in a timely fashion. The consequences for Government contractors that flow from a Government shutdown can be significant. Several key points bear mention.

It is first important to understand the effect of a shutdown on Government employees and facilities. First, The Office of Management and Budget (OMB) provides agencies with guidance regarding how to proceed during a shutdown in OMB Circular No. A-11. In brief, agencies may not incur any obligations unless authorized by law. Agencies may incur obligations “as necessary for orderly termination of an agency’s functions,” but no disbursements may be made. During an absence of appropriations, agency heads must limit obligations to those needed to maintain the minimum level of essential activities necessary to protect life and property. Agency heads are required to develop and keep on hand shutdown plans, which are approved and monitored by OMB. Earlier this week, OMB issued a Memorandum for the Heads of Executive Departments and Agencies on “Planning for Agency Operations during a Potential Lapse in Appropriations,” asking agencies to update their plans for operations in the absence of appropriations.

For federal employees, an immediate shutdown effect is the “shutdown furlough.” Generally only those employees who are performing emergency work involving the safety of human life or the protection of property, those who are involved in suspending agency operations, or who fall in other specified categories (such as members of Congress and the President) are not subject to furlough. As the OMB Memorandum makes clear, federal employees who supervise or support contract performance (such as C.O.’s and COTR’s) are not excepted from furlough, and ongoing operational and administrative activities relating to contract administration (including oversight, inspection, accounting and payment) cannot continue when there is a lapse of funding.

A lapse of appropriations also generally means that there are no additional funds made available for contracts – -either the award of new contracts or the obligation of funds to existing contracts. While contractors can continue performing existing contracts within the limits of obligated funding, performance may be delayed or disrupted by the lack of Government personnel for contract administration or by the shuttering of non-essential Government facilities.

There are steps that contractors can take now to position themselves to weather the storm and survive a shutdown with minimum adverse impact. Among the key factors for contractors to consider in developing a shutdown contingency plan are:

Determine Nature of Contract Work:

Has agency identified your contract as providing an essential activity necessary to protect life and property (and excepted from “shutdown”)?
Document any shutdown exception and get clarification of which Government personnel will be available for contract administration and payment.

Assess Cash flow:

Plan for a disruption of cash flow.
Ask C.O. whether outstanding invoices can be paid by the Government before October 1.
Determine if payments to subcontractors be deferred (e.g., when there is a pay when paid clause).

Review Contract type and Funding status:

Determine if contracts are fixed price or cost reimbursement and incrementally funded or fully funded.
For incrementally funded contracts, determine funding status (and whether additional funding is needed in the near term).
Review options set for exercise in the next few months.

Assess Impact of Furloughs on Performance:

Communicate with C.O. on status of Government personnel and Government facilities necessary for your performance.
Communicate with the C.O. on whether a stop work order will be issued.
Determine what work can be performed in the absence of Government employees.
Consider whether work-arounds will ease the disruption caused by the furloughs.
Communicate with subcontractors on shutdown plans.

Prepare for Claims:

Document adverse impact on performance (written narrative, project logs, daily reports).
Establish separate charge lines to capture increased costs flowing from shutdown.
Notify the C.O. of any performance issues caused by the shutdown (even if the C.O. is furloughed).
Advise subcontractors to document impact in the same fashion.

The bottom line is that a Government shutdown of even relatively brief duration can have significant consequences for contractors if they have not anticipated the ways in which contract performance may be disrupted and considered how to best protect themselves. The shutdown process is complex, but with prudent planning, affirmative steps can be taken to create the greatest likelihood that a contractor will be made whole once Congress gets its act together and Government funding is resumed.

Audit the Pentagon Act of 2013

Late last week, Senators Tom Coburn, M.D. (R-OK) and Joe Manchin (D-WV) introduced the Audit of the Pentagon Act of 2013 (S. 1510). According to a press release on Senator Coburn’s website, the bill provides incentives for the Department of Defense to meet its audit schedule while also instituting consequences for further failure to follow the law. “A full and complete audit is the only way the department will be able to make better decisions about how it uses valuable taxpayer dollars. This bill helps the Pentagon help itself by simply requiring the Pentagon to meet its own deadlines,” says Senator Coburn. Senator Manchin concludes that, “we must ensure that we’re using our limited resources most efficiently to support the men and women in uniform.” Specifically the bill would require the following:

The Pentagon will not be able to enter into engineering and manufacturing development on a new weapon system until it passed a clean audit in 2018.
The Department of Defense is mandated to prohibit the purchase of any “off-the-shelf” IT system that will take longer than three years to install and include contract provisions for termination if an IT system is not delivered on schedule.

DOL Final Rules on Hiring Veterans and People with Disabilities

The Department of Labor published two final rules this week on the hiring of veterans and people with disabilities. The rules strengthen existing requirements for contractors and impose new recruitment and data reporting requirements.

Hiring Veterans

The Department of Labor is making changes to the Vietnam Era Veteran’s Readjustment Assistance Act (VEVRAA) at 41 CFR Part 60-300. The final rule strengthens existing affirmative action provisions in VEVRAA and also requires that contractors:

Establish annual hiring benchmarks for protected veterans
Document the number of veterans who apply for jobs and the number of veterans hired
Invite applicants to self-identify as veterans
Incorporate the equal opportunity clause in subcontracts
Follow certain job listing requirements
Allow OFCCP access to documentation showing contractor compliance

Hiring Individuals with Disabilities

The Department of Labor will update regulations in Section 503 of the Rehabilitation Act of 1973, as amended at 41 CFR Part 60-741. The final rule strengthens existing affirmative action requirements for contractors to improve the hiring and recruitment of individuals with disabilities. Specifically, the rule requires contractors to:

Apply a 7% utilization goal for qualified individuals with disabilities to each of their job groups, or to their entire workforce if there are fewer than 100 employees
Document the number of people with disabilities who apply for jobs versus the number hired
Invite applicants to self-identify as having a disability
Incorporate the equal opportunity clause in subcontracts
Follow certain job listing requirements
Allow OFCCP access to documentation showing contractor compliance

The Department of Labor plans to release guidance and materials for contractors to assist in complying with the final rule and the Americans with Disabilities Act.

Both rules will go into effect March 24, 2014. Contractors with a written affirmative action plan in place as of the effective date will have additional time to comply.

The Coalition will have a webinar in the coming months covering these new Affirmative Action requirements. Look for more details about the training in the Friday Flash.

Proposed Rule on Past Performance

A proposed rule was released in the Federal Register on August 7 that would reduce the amount of time contractors have to submit responses to past performance evaluations, making the evaluations available to source selection officials sooner. The revision would allow contractors up to 14 calendar days from the date of delivery of past performance evaluations to submit comments, rebuttals, or additional information pertaining to past performance. In addition, past performance evaluations are to be made available to source selection officials not later than 14 days after the evaluation was provided to the contractor, whether or not the contractor has responded. These changes to the FAR are being proposed in accordance with the FY12 and FY13 National Defense Authorization Acts.

Comments on the proposed rule are due October 7, 2013. Please contact Carolyn Alston at calston@thecgp.org or (202) 600-2915 if you have any feedback you would like included in the Coalition’s comments.

DPAP Issues Class Deviation on Past Performance Reporting

On September 24, Defense Procurement and Acquisition Policy (DPAP) director Richard Ginman issued a class deviation updating the thresholds for when contracting officers must evaluate a contractor’s performance. Effective immediately, in lieu of the thresholds at Federal Acquisition Regulation (FAR) 15.304(c)(3)(i) and 42.1502, contracting officers are to evaluate past performance for systems and operations support acquisitions and contracts that exceed $5 million; services and information technology acquisitions and contracts that exceed $1 million; and ship repair and overhaul acquisitions and contracts that exceed $500,000. Ginman also explained that the Department includes health care under the services “business” sector and includes “fuels” under the operations support business sector.

Service Contract Act (Webinar), Oct 3, 2013

Join The Coalition and Baker Tilly for a 1-hour webinar about The Service Contract Act and its application to Multiple Award Schedule Contracting. This session will provide an overview of the Service Contract Act and the nuances of the regulation that make it particularly cumbersome for contractors to comply with. We will explore the added complexity that is presented with the inclusion of this regulation in Multiple Award Schedule contracts.

Attendees will hear examples of challenges contractors face when vehicles, such as the GSA Schedule, apply the Act. This course will offer a unique perspective regarding how to best approach these issues in order to mitigate liability during award. Click here for more information and to register.