Friday Flash, 11.15.13

FAR and Beyond Blog 

GAO hits the bull’s eye in identifying commercial best practices as the key to successful information technology investments. 

Earlier this week the Government Accountability Office (GAO) testified before the House Oversight and Government Reform Committee regarding “Leveraging Best Practices to Help Ensure Successful Major Acquisitions.”   The testimony can be found here.  The focus of the testimony was a presentation of nine common “critical success factors” that GAO identified in examining seven successful federal information technology procurements.   As GAO explains in its testimony, agency officials from the seven successful procurement investments identified nine common factors that were critical to the success of three or more of the seven investments.   The nine common factors and number of agencies reporting the factors are as follows:

These seven factors are standard commercial best practices.  As this blog has repeatedly noted, requirements development is the “blocking and tackling” of procurement.  As “blocking and tackling” are the keys to winning football, sound requirements development is the key to ensuring best value outcomes for information technology investments on behalf of the American people.  It is the foundation for success in ensuring best value outcomes Commercial firms focus significant management time, effort and technical resources on ensuring sound requirements development when seeking to acquire information technology solutions.

Sound requirements development is the foundation for all procurement and contract performance success both in the private sector and the federal sector.  The keys to sound requirements development are the seven critical success factors (i.e. commercial best practices) identified by GAO.  Most importantly, these factors have remained consistent over time!  Once again, as  the Services Acquisition Reform Act (SARA) 2007 Acquisition Advisory Panel Report observed regarding best commercial practices:

Commercial organizations invest the time and resources necessary to understand and define their requirements.  They use multi-disciplinary teams to plan their requirements, conduct competitions forward, and monitor contract performance.  They rely on well-define requirements and competitive awards to reduce prices and obtain innovative, high quality goods and services.  Procurements with clear requirements are far more likely to meet customer needs and be successful in execution.

See page 31, Chapter 1, of the Report.

As noted in my October 25^th FAR and Beyond blog, in response to the above finding the SARA Panel recommended that:

Current policies mandating acquisition planning should be better enforced.  Agencies must place greater emphasis on defining requirements, structuring solicitations to facilitate competition and fixed price offers, and monitoring contract performance.  Agencies should support requirements development by developing centers of expertise in requirements analysis and development.  Agencies should then ensure that no acquisition of complex services (e.g. information technology or management) occurs without express advance approval of requirements by the program manager or user and the contracting officer, regardless of which type of acquisition vehicle is used.

This SARA Panel recommendation essentially mirrors the seven factors that GAO identified.  The recommendation essentially translates commercial best practices into a federal procurement context.  To improve procurement outcomes for information technology solutions  the federal government must demonstrate the determination, discipline, and drive to address the fundamentals of requirements development!

Great job GAO!  Next week—five steps toward improving requirements development and procurement outcomes for the American people.

Roger Waldron

President

 

NITAAC Readying CIO-CS Contract

National Institutes of Health’s Information Technology Acquisition and Assessment Center (NITAAC) is preparing its Chief Information Officer-Commodities and Solutions (CIO-CS) contract vehicle for release, according to a report in the Washington Post. The program is worth up to $20 billion over 10 years and will provide customers with technology hardware, software and other infrastructure. NITAAC plans to award about 50 contracts, both to manufacturers and resellers. The acting director of CIO-SP3, CIO-SP3 Small Business and ECS III GWAC Programs at NITAAC, Rob Coen, says the program has garnered a high level of interest from industry, with NIH receiving more than 300 responses to its draft solicitations. The timeline for the vehicle has yet to be released.  The current vehicle expires in November 2014.

 

DISA Altering Cloud Plans

According to Federal Times, the Defense Information Systems Agency is considering canceling its planned $450 million commercial cloud contract, due to lower than expected demand for the services. In a notice posted on FedbizOpps.gov, DISA writes that “initial indications are the demand will not require a contract with the ceiling estimated in this draft solicitation.” They are currently revising their acquisition strategy necessary for hosting public non-sensitive data in commercial cloud environments. DISA also notes that their efforts “may result in a solicitation for a new contract at a significantly lowered ceiling.”

 

CBO: DATA Act to cost $395 million

The Congressional Budget Office (CBO) released its cost estimate for the Digital Accountability and Transparency (DATA) Act this week.  The bill aims to make information for all Federal expenditures more easily available and transparent through the Department of Treasury’s USASpending.gov.  The CBO estimates that the DATA Act would cost $395 million to implement between 2014 and 2018, assuming that the bill is passed near the end of 2013.  The majority of the cost, $285 million, would cover the collection and reporting of Federal financial data.  Currently, the Federal government uses multiple databases such as GSA’s Federal Procurement Data System (FPDS) and the U.S. Department of Health and Human Services’ Grants website to collect information about Federal contracts and grants.

The DATA Act would transfer responsibility for collecting this data to the Department of Treasury’s USASpending.gov.  The CBO acknowledges that the government currently collects much of the information that would be required to create a comprehensive database on federal spending proposed by the bill.

CBO expects that improving the government’s data collection efforts under the DATA Act would involve the coordinated efforts of 26 Federal agencies.  They estimate these agencies would need to modify numerous computer systems and also further standardize Federal financial data, train personnel, conduct a pilot program, and improve communications between agencies and the recipients of Federal funds.  CBO estimates that these activities would cost each agency $2 million per year for a total of $285 million between 2014 and 2018.

 

GSA IG: Procurement Issues in GSA’s National Capital Region

GSA’s Office of Inspector General (OIG) published a report this week on what they identified as recurring procurement issues in the National Capital Region between FY 2007 and 2012. The OIG found contract award, administration, funding, and documentation issues within the Federal Acquisition Service and Public Buildings Service for both large and small dollar value procurements.  The IG suggested that management address internal control weaknesses in order to maintain the integrity of the procurement process within the National Capital Region.  For the full report, visit www.gsaig.gov/?LinkServID=0441E63D-D9A8-4BBF-ADB7A48C3A336689&showMeta=0.

 

Deputy Secretary of Defense Urges Better Buying Over Sequestration

In an article published in Defense One, Deputy Secretary of Defense Ashton Carter urges the continued use of the Better Buying Power initiative to deal with the current tight budget environment at the Department of Defense (DoD).

“Better Buying Power” was first introduced in September 2010 under then-Secretary of Defense Bob Gates.  According to Carter, it was originally launched as a department-wide efficiency initiative to ensure that the department wasn’t forced to sacrifice one ounce more force structure than was absolutely necessary.  Directed at the approximately $400 billion that the department spends annually on goods and services, Better Buying Power initially directed 23 principal actions in five major areas.

1. Target affordability and eliminate cost-growth in our programs;
2. Incentivize productivity and innovation in industry by aligning their profits with performance and reinvigorating their partnership with the Defense Department.
3. Promote real competition: head-to-head competition where there was more than one supplier, and competition for profit via contract structure where there was a sole supplier.
4. Improve DoD’s tradecraft in the acquisition of services.
5. Reduce nonproductive processes and bureaucracy in the government as well as in industry.

The April release of Better Buying Power saw the addition of a sixth major area, improving the professionalism of the total acquisition workforce. Carter notes the challenge that DoD faces with sequestration and how Better Buying Power can aid the Department’s buying trends. “If sequestration holds, the department will be driven to make inefficient and unsound near term funding choices that will reduce our buying power. The central tenets of Better Buying Power remain not just valid, but more important than ever.”

 

Green Proving Ground RFI

GSA’s Public Buildings Service has issued its annual Request for Information (RFI) for innovative green technologies to test in Federal buildings.  GSA’s Green Proving Ground program is seeking information from industry and other stakeholders on technologies that have the potential to improve the economic and environmental performance of Federal buildings.

Based on the RFI submissions, GSA will select technologies to test as part of Green Proving Ground’s 2014 program.  The technologies tested in Federal buildings as part of the program will be donated or provided via testing agreements.  For more information, see the RFI posted on FedBizOpps and the Green Proving Ground page at www.gsa.gov/gpg.  Submissions are due December 9, 2013.

 

Join PBS Kevin Kampschroer on Federal Green Buildings, Dec 3

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

Federal Green Buildings Certification Meeting

with Kevin Kampschroer

Tuesday, Dec 3

2:00pm

Washington D.C. (specific location to be announced)

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

 

Legal Corner

Gratuities  – Cautionary Tales for Contractors and Government Employees

By: Tom Barletta, Partner, Steptoe & Johnson LLP; Fred Geldon, Senior Counsel, Steptoe & Johnson LLP;  & Mike Navarre, Special Counsel, Steptoe & Johnson LLP 

Recent events demonstrate that government investigators and prosecutors are taking more seriously the ethical regulations that govern gratuities.  Cases in point:

• On April 25, 2013, the U.S. Department of Justice issued a press release announcing that a Bureau of Prisons (BOP) employee had pled guilty to a charge of receiving unlawful gratuities.  The BOP employee, a supervisory traffic management specialist in the BOP Relocation Services section, was responsible for giving relocating BOP employees a list of approved movers and then referring their move to agents of the chosen carrier.  While performing these duties the employee received spa and salon gift cards in the amount of $1,007 and $790 from one carrier’s agent, as well as free moving services from moving companies.  The BOP employee was subsequently assessed a fine of $1,500 and placed on probation for 18 months.
• On June 5, 2013, the Washington Post reported that the Internal Revenue Service (IRS) had placed two managers on administrative leave for accepting free food and other gifts in violation of government ethics rules.  These violations were discovered during an audit of a years-old conference, at which the managers “allegedly held an after-hours party in their private hotel suites.”  It apparently was not clear who gave the managers the food, worth $1,162.  Acting Commissioner Danny Werfel said in a statement to the Post that the IRS has started the process of firing the managers.

The basic rules applicable to government employees regarding gratuities are set forth in the Standards of Ethical Conduct for Employees of the Executive Branch (“Standards”), which are codified at 5 C.F.R. § 2635.  The Standards generally prohibit federal government employees from accepting gifts[1] from “prohibited sources,” a category that includes, among others, contractors (and employees of contractors) doing business with or seeking to do business with the federal government employee’s agency.  5 C.F.R. §§ 2635.102(k), 2635.203(d).

There are some exceptions, however.  For example, under the Standards, federal employees may accept, even from “prohibited sources,” items worth $20 or less, as long as the total value of the gifts from the same source is not more than $50 in a single calendar year (calculated by including a contractor and its employees as a single source).  5 C.F.R. § 2635.204(a).  The Standards also include other limited exceptions, such as gifts motivated by family relationships.

The size of the gratuities in the two recent examples discussed above far exceeds these thresholds.  In the case prosecuted by the Justice Department, however, the amount at issue was significantly less than amounts usually cited in large corruption cases, and demonstrates that even these (relatively) small violations are attracting the attention of auditors, investigators, and prosecutors.

Although the Standards apply only to government employees who receive gratuities rather than to contractor employees who offer gratuities, contractors can face potential liability in relation to gratuities as well.

The federal criminal gratuities statute, 18 U.S.C. § 201, provides for fines or imprisonment for anyone who, for example,

directly or indirectly gives, offers, or promises anything of value to any public official, former public official, or person selected to be a public official, for or because of any official act performed or to be performed by such public official, former public official or person selected to be a public official.

18 U.S.C. § 201(c)(1)(A).

Unlike a bribe, an illegal gratuity does not require an intent to influence; rather, the illegal gratuity only need be given “for or because of” an official act.  An illegal gratuity “may constitute merely a reward for some future act that the public official will take (and may already have determined to take), or for a past act that he has already taken.”  United States v. Sun-Diamond Growers of California, 526 U.S. 398, 404-405 (1999).  There must, however, be a connection, i.e., the government must prove “a link between a thing of value conferred upon a public official and a specific ‘official act’ for or because of which it was given.”[2]  Id. at 414.

The risk to contractors is heightened, however, because the line between an acceptable gift and an illegal gratuity is nuanced.    For example, in  United States v. Hoffmann, 556 F.3d 871, 877 (8th Cir. 2009), the court rejected the defendant’s contention that the Government had failed to prove that he violated the gratuities statute because he did not reasonably believe that the government employee would take an official action and because the government employee never did so.  Rather, the court upheld the conviction finding that a “reasonable juror could conclude” that the contractor gave the government project manager a set of golf clubs “to . . . reward future performance.”

The risk to contractors is demonstrated by yet another recent Justice Department announcement in a whistleblower “qui tam” case that included gratuities allegations.  On March 7, 2013, DOJ announced that three CIA contractors (American Systems Corporation, Anixter International Inc., and Corning Cable Systems LLC) had agreed to pay $3 million to settle allegations they violated the False Claims Act and Anti-Kickback Act.  The announcement included allegations[3]  that in pursuit of a 2009 contract the companies had provided gratuities (meals, entertainment, gifts, and tickets to sporting and other events) to CIA employees.

Prohibitions on gratuities applicable to contractors are also incorporated into various FAR provisions.  For example, FAR 52.203-13(b)(3) (Contractor Code of Business Ethics and Conduct) requires that contractors “timely disclose, in writing, to the agency Office of the Inspector General, with a copy to the Contracting Officer, whenever, in connection with the award, performance, or closeout of this contract or any subcontract thereunder, the Contractor has credible evidence that a principal, employee, agent, or subcontractor of the Contractor has committed . . . [a] violation of Federal criminal law involving . . . gratuity violations found in Title 18 U.S.C.”  In addition, FAR 52.203-3(a) allows the government to terminate a contract if a contractor or contractor employee “[o]ffered or gave a gratuity (e.g., an entertainment or gift) to an officer, official, or employee of the Government; and [i]ntended, by the gratuity, to obtain a contract or favorable treatment under a contract.”  The government also may recover damages and/or suspend or debar a contractor from federal contracting for violations of this clause.  See FAR 3.204(c).

Finally, in addition to potential criminal penalties and suspension and debarment, providing gratuities to government employees can also result in other adverse effects for a contractor, such as negative past performance ratings that could affect current and future business.

In sum, to maintain healthy relationships with their government customers and to protect government employees and themselves from potential liability, contractors should understand the laws and regulations applicable to gratuities to government employees, have a clear policy regarding gratuities (which, for many contractors includes a prohibition on giving gratuities) and provide appropriate education and training to their employees.

Of course, contractors should also be aware of laws and prohibitions that apply in related contexts, including anti-kickback laws that prohibit certain improper payments between prime contractors and subcontractors, the Foreign Corrupt Practices Act, which prohibits certain types of payments to foreign officials, and laws and regulations that regulate payments that can be made to members of Congress and staff.

 

Veterans Healthcare Improvement Act

Senate minority leader Mitch McConnell (R-KY) has introduced the Veterans Healthcare Improvement Act (S. 1662), a new plan for contractors that provide healthcare services to the VA. The plan requires the VA to include pay-for-performance compensation mechanisms in contracts awarded to entities that deliver healthcare services through community-based outpatient clinics (CBOCs). The bill states that currently, “some contracts for CBOCs may create an incentive for contractors to enroll as many veterans as possible, without ensuring timely access to high quality health care for veterans.” According to ASI Government, the bill would require VA to implement its plan 60 days following enactment of the legislation, and would allow the department to first establish one or more pilot programs to determine the practicality of mechanisms under the plan.

 

December 2013 MAS Basic Training

Join the Coalition December 5 for an intensive, one day training workshop that teaches the basics of utilizing the General Services Administration (GSA) Multiple Award Schedules (MAS) program. Over the course of the MAS Basic Training you will learn how to obtain and manage your GSA schedule, market GSA contracts, comply with Federal procurement requirements, follow policy changes, and prepare for MAS audits. A highlight of the course is training on GSA’s electronic tools including eBuy, GSA Advantage! and GSA eLibrary. Other materials covered will include structuring your contract to address compliance requirements while retaining flexibility to compete in the federal and commercial market place. Training will also cover the FAR 8.4 ordering procedures. The course will be taught by those on the front lines of GSA schedule negotiations and contract management. Attendees are eligible to earn up to 8 CLP credits with submission of an attendance certificate and course training packet available for pick-up after the event. The training begins at 8:15am on December 5 at McKenna Long & Aldridge LLP in Washington DC. Register Here!

 

Ethics Webinar Coming in January!

“Fundamentals of Ethics and Compliance”

Overview:

• Provide an understanding of the ethical and compliance rules that apply when dealing with customers and suppliers in the federal government marketplace.
• Emphasize to contractors and employees the importance of ethical  conduct when doing business with the federal government.
• Help contractors and employees recognize ethical issues and compliance risks associated with doing business in the federal marketplace and know when to seek guidance.

Topics to be covered include:

• Bribery and Gratuities
• Kickbacks and Contingent Fees
• Procurement Integrity Rules
• Organizational Conflicts of Interest

*The material is aimed at government-facing contractor employees (not just attorneys and compliance experts) and may also be of interest to government employees who deal with contractors.