Over the next several weeks, I will be focusing on the “Thirteen Thoughts for 2013” set forth in the January 11th Comment of the Week. This week the focus is on Thought No. 1: “Is GSA’s Mission Impossible Possible?”
On January 14th Acting Administrator Dan Tangherlini issued a Memorandum announcing a new mission statement and priorities for GSA. As Acting Administrator Tangherlini noted in the memorandum, at a time of fiscal challenges and shrinking budgets, GSA’ role as the central procurement agency for the federal government has never been more important.
The new mission statement sets forth a simple, yet powerful business case: “The mission of GSA is to deliver the best value in real estate, acquisition, and technology services to government and the American people.” Indeed, one can’t imagine a clearer, more focused vision regarding GSA’s role. Moreover, the six priorities identified in the memorandum provide a sound framework for GSA to fulfill its mission statement. The priorities are: (1) Delivering Better Value and Savings; (2) Serving our Partners; (3) Expanding Opportunities for Small Business; (4) Making a More Sustainable Government; (5) Leading with Innovation; and (6) Building a Stronger GSA. At the same time, the new mission statement is the first step on the journey. The Coalition looks forward to working with GSA towards common sense solutions that improve the efficiency and effectiveness of GSA’s acquisition programs.
Commercial best practices inform us that the key metric in measuring and delivering best value in procurement/logistics operations is total ownership cost. In government terms, let’s use the term, “total acquisition cost (TAC).” Many elements go into determining “TAC.” Direct and indirect costs must be measured. Any structural, operational and/or organizational efficiencies resulting from an acquisition must be measured. Cycle time to acquire the service or product also must be measured. Contract duplication costs have to be identified as cost components of TAC. Costs associated with government unique requirements that are inconsistent with commercial practice must be considered. The costs of data reporting and management must be identified. Indeed, a strategic approach to TAC means that all identifiable and appropriate acquisition costs are considered and reported to the key stakeholders. Focusing merely on prices provides a “placebo effect” and does not provide a total cost to the taxpayer because pricing alone is not TAC.
By keeping a full, clear focus on the identification and measurement of TAC, GSA can set operational goals that reflect the mission of delivering “best value in real estate, acquisition, and technology services to government and the American people.” Such an approach can be the impetus for a top down review of GSA’s government-wide acquisition programs. Identifying and reducing government unique requirements whose costs outweigh the benefits is central to reducing TAC. In particular, streamlining the acquisition process by reinvigorating commercial item contracting will be a huge multiplier in improving the efficiency and effectiveness of the procurement system. Moreover, as the manager of the government’s largest commercial item contracting program, the Multiple Award Schedule program, GSA is uniquely positioned to bring increased efficiencies to the procurement of commercial services and products.
The Coalition looks forward to working with GSA to ensure that the taxpayer’s money is obligated using sound business opportunities that deliver best value for customer agencies and the American people.
The Administrator’s new Mission Statement positions the agency to make GSA’s mission possible!
The General Services Administration (GSA) appointed Thomas Sharpe to be the new Commissioner of the Federal Acquisition Service (FAS) this week. In this role, Sharpe will set the strategic direction and oversee the delivery of more than $55 billion of best-value products, services and solutions to federal customers. Sharpe comes to GSA from the Department of Treasury where he was responsible for department-wide procurement policy, procurement career management and oversight of bureau procurement operations. Before joining Treasury, Sharpe served as a consulting principal with IBM Business Consulting Services responsible for the marketing, sales and delivery of procurement transformation engagements with commercial and government customers. He also held senior procurement and managerial roles at the Department of Defense and the Environmental Protection Agency. The Coalition welcomes Thomas Sharpe as FAS Commissioner and looks forward to engaging in a myth-buster’s dialogue with him to improve the efficiency and effectiveness of the procurement system for government, industry, and the American taxpayer.
GSA released a redacted version of the business case for the OASIS acquisition this week. The business case proposes OASIS as a solution to government-wide contract duplication for professional services. According to the report, professional services accounted for $70.7B in Federal spending in FY 2010 and 77.8B in FY 2011.
The business case proposes two OASIS contracts that incorporate certain strategic sourcing principles. The first is an OASIS solicitation with full and open competition with a 50% small business component. The second is an OASIS Small Business contract that is 100% small business set-aside with the ability to target certain socioeconomic subsets. The strategic sourcing components include standardized labor categories and data reporting as summarized in GSA’s chart below:
Source: Federal Acquisition Service OASIS Business Case, December 2012
GSA plans to reduce high risk contracting by including mechanisms in the OASIS vehicles to assist with the conversion of non-fixed price task orders to fixed price, where appropriate. They would also like to encourage the use of performance-based statements of work.
According to Jim Ghiloni, OASIS Program Manager, the business case is being shared with industry in order to communicate what the government hopes to achieve through OASIS. GSA is not, however, receiving comments on the business case at this time.
March 18th has been set as the date for the Annual DHS Industry Day to be held at the Washington Convention Center. DHS is proposing to change things around this year so that the event is more informative for the vendor community. First, they would like to hear from Coalition members about what the “Perfect Industry Day Format” would be. Please send your suggestions about what topics are of most value to hear about during the DHS industry day to Roger Waldron at firstname.lastname@example.org.
DHS will have a Vendor’s Exhibit Room available during the event. Members should view the pre-registration notice at FedBizOpps. If you have any questions concerning event logistics, please contact Bob Namejko with DHS at email@example.com.
The House Committee on Oversight and Government Reform held a hearing this week on IT acquisition reform. The hearing was titled, Wasting Information Technology Dollars: How Can the Federal Government Reform its IT Investment Strategy? In the opening statement, Chairman Darrell Issa (R-CA), cited program failures and cost overruns in three-quarters of large federal IT programs as major incentives for reform. During the hearing, testimony about how the procurement of Federal IT could be improved was provided by the Honorable Tom Davis, Former Member of Congress and Chairman of the Government Reform Committee; Steven VanRoekel, Federal CIO with the Office of Management and Budget; and David Powner, Director of IT Management Issues at the Government Accountability Office. Representatives from Microsoft, VMware, and Brocade Communications Systems also provided testimony before the committee.
The House Committee on Oversight and Government Reform has also requested input on IT acquisition reform draft legislation from the Coalition and other industry associations. We are currently coordinating with the Business Software Alliance, Information Technology Industry Council, TechAmerica, and the U.S. Chamber of Commerce in submitting our recommendations to the committee.
Congressman Jason Chaffetz (R-UT) reintroduced the Excess Federal Building and Property Disposal Act (H.R. 328) this week. The bill would establish a pilot program for the expedited disposal of Federal real property. The pilot program would last five years and be managed by the GSA Administrator and the Director of OMB. GSA and OMB would develop a list of 15 Federal real properties “that are excess or surplus and have the highest fair market value and the greatest potential to sell.” These properties would be disposed of through public auction. The head of each executive agency would recommend properties to OMB. Then GSA and OMB are to “select properties for disposal under the pilot program and notify the recommending executive agency accordingly.” The bill, originally introduced last year, is identical to the FY2012 version.
A GAO report released this week found that the Department of Transportation (DOT) lacks sufficient and reliable data to fully identify its acquisition workforce needs and assess progress in addressing shortfalls over time. GAO studied DOT’s efforts to identify its acquisition workforce needs, and the Office of the Secretary of Transportation’s role in providing oversight and support for acquisition workforce planning and management. The report also found that the DOT “lacks the strategic focus and oversight needed to ensure that the department can meet its acquisition workforce goals.” The GAO recommends that the Secretary of Transportation “take steps to improve DOT’s ability to address workforce needs, such as improving internal controls for acquisition workforce data and providing guidance to ensure that each internal operation administration collect and report workforce data consistently.” As part of GAO’s research, they reviewed DOT’s acquisition workforce plans for 2010, 2011, and 2012.
Senate Majority Leader Harry Reid (D-NV) has introduced legislation that would direct defense and civilian agencies to give favorable consideration to contractors whose workforce is comprised of at least 5 percent veterans. It would apply to contracts and task or delivery orders valued at or above $25 million. The Putting Our Veterans Back to Work Act of 2013 (S. 6) would also require the suspension and debarment of contractors that violate the employment and reemployment rights of service members. The bill has been referred to the Veterans Affairs Committee.
What Does 2013 Have In Store for Government Contractors and Their Lawyers?
By Louis Victorino, Partner, Sheppard Mullin and Jonathan Aronie, Partner, Sheppard Mullin (originally published in the San Diego Business Journal)
It has been noted, the more things change, the more they stay the same. In the world of Government Contracts Law, however, the more things change, the more the phone rings. And while we’re only a month into 2013, the phone has been ringing off the hook. Here are a few of the reasons why.
The Government’s anti-contractor bias continues unabated. From the moment President Obama stepped into office, his executive team made clear their distrust of defense contractors. Indeed, one of OMB’s first public pronouncements focused on curbing perceived rampant contractor fraud. Shortly thereafter, Congress passed the Close The Contractor Fraud Loophole Act, certainly not the title one gives to an Act intended to extoll the virtues of the long and critical partnership between Government and industry. In late 2008, the Government continued down the anti-contractor path when it created what is known as the Mandatory Disclosure Rule, a regulation that requires contractors to self-report “credible evidence” of an extremely broad list of potential wrongdoing. The purported rationale for the rule? The Government’s belief that contractors were affirmatively hiding their fraudulent activities from the Government. Putting aside for a moment the many flaws in the Government’s apparent view that contractors generally are not to be trusted, the fact is the anti-contractor bias remains strong in 2013 and shows no signs of abating.
Increased enforcement activities. Tied closely to the Government’s view that contractors are not to be trusted, is the Government’s ever-increasing efforts to police those contractors more aggressively. Like 2012 before it, 2013 is poised to see increases in federal audits, investigations, and False Claims Act lawsuits. DCAA, the Defense Department’s primary audit watchdog, for example, continues to reach new levels of aggressiveness. As one commentator put it not long ago, the DCAA “is out of control.” Suspensions and debarments also are likely to increase in 2013. The President has directed federal agencies to make better use of the suspension/debarment process, and the OMB is making sure the President’s direction is implemented. It would be naïve, of course, to think this increase in enforcement activity is due solely to a mistrust of contractors. The Government’s collection of $4.9 Billion (yes, that’s Billion with a B) in False Claims Act settlements and recoveries in 2012 no doubt feeds the Government’s view that contractors need more policing, and fuels the arguments of the enforcement community that they need to be more, not less, aggressive.
Shrinking pots of money mean more bid protests. The number of bid protests (that is, disputes between a contractor and an agency over the non-award of a federal contract) has increased every year since 2008. In 2008, 1,652 actions were filed with the General Accountability Office (GAO), the primary arbiter of procurement award disputes. That number steadily increased to 2,475 in 2012. Whether or not that number will rise again in 2013 remains to be seen, but the likelihood that larger award decisions will be protested by a disappointed bidder will increase. As federal opportunities become fewer, the competition for those that remain almost certainly will heat up. In short, some companies simply cannot afford not to protest.
The Government will take more work in-house. With shrinking budgets and the elimination of programs, the Government will bring more work in-house in 2013 to maintain their internal funding levels and workforce headcounts. The move to in-sourcing will be advocated by Government labor “unions” and supported by the Democratic administration. See, e.g., Subtitle C of Title III of the National Defense Authorization Act for Fiscal Year 2012. This won’t just be in-sourcing of traditional Systems Engineering and Technical Assistance (SETA) work and weapons depot work, but will extend to major weapon systems repairs and overhaul, as well as design, development, and implementation of major Government software system upgrades. We also likely will see that Government engineering centers and laboratories will move to keep in-house significant research and development funding and activities. These efforts will have an obvious significant impact on contracting opportunities available to private companies, large and small.
The Government will become more aggressive with respect to securing intellectual property. As a consequence of bringing more work in-house, the Government will need the intellectual property necessary to perform that newly in-sourced work. As a result, 2013 likely will manifest an acceleration of recent trends to a more confiscatory Government policy regarding rights in data, including patents and copyright. Regardless of the standard rights in data delineated in applicable regulations and contract clauses, in connection with the solicitation of contracts for major programs, the Government will seek to obtain, at a minimum, a Government Purpose Rights License not only to data first produced or developed under the contract but also to a significant portion of all data used in the performance of the contract. Definitions of “Commercial Items” will be narrowed, expanding the Government’s rights in data, including software. Formal challenges to current contractor claims of data rights will increase. And, unfortunately, in some instances, contractor intellectual property simply will be used by the Government, with the propriety of the use left to be determined by years of litigation.
Greater competition for fewer dollars will prompt industry consolidation. The reduced number of contracting opportunities will have many collateral impacts on the Government contracting community and their legal advisors. As occurred with the end of the “cold war,” there likely will be an upswing in industry consolidation. With a reduction in funding and new programs available to contractors, the industry base will need to shrink. Some commercial and “dual use” companies simply will abandon the market. Others, with shrinking backlogs, will seek strength and economies through corporate combinations or “spin-offs.” Some companies, particularly smaller companies, will be targets of acquisition because of their success in winning large or significant program contracts. A business that wishes to be the leader in a particular technology may well need to acquire the winning competitor of the next and only large, long term contract involving that technology.
The increased pressure that comes with increased competition will cause some to stray. While the federal contracting community is, far and away, one of the most self-policed industries in the country, every industry has its exceptions. While most contractors will assess the new environment and adapt their business strategy accordingly, some will bend to the new fiscal pressures and adapt their strategies in more reckless ways. When contractor managers and employees see their livelihoods hitched to the success of the next proposal submission, some will do foolish things – some will seek inside information regarding the procurement, seek proprietary information about their competitors, provide false information to support their offer such as “inflated” resumes or product performance claims, and any number of other prohibited activities. In short, some people do pretty stupid things when they are under pressure. Fortunately, these events are the exception rather than the rule, but companies cannot afford to take any chances. If contractor leadership is not extremely vigilant and committed to internal integrity and compliance, the increased audits and investigations described above may well negate all efforts to be successful in the new smaller, Government contracting market.
Contractors continue to embrace ethics and compliance as a core element of success. Years ago, the implementation of an in-house ethics and compliance program was viewed by many contractors as a necessary evil; something needed to keep the lawyers happy, but rarely embraced by the “revenue generators.” Over the last 5-10 years, however, there has been a cultural shift among contractors. Contractors now embrace the benefits of an effective ethics and compliance program. Codes of Conduct are the rule rather than the exception. Training programs are standard fare for Government contractors. While the Government can take some credit for this evolution – there is nothing like a few multi-million dollar False Claims Act settlements in your industry to highlight the importance of compliance – contractors also deserve much of the credit for embracing the benefits of such programs. As the Government’s enforcement activities become more and more aggressive, one can expect to see a continued increase in the roster of Company’s embracing the benefits of an effective internal control system and ethics/compliance program.
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In short, we are reminded of an observation provided by an astute securities law school professor who noted: When the stock price of a company goes up, stock sellers will sue the buyers. When the stock price goes down, the buyers will sue the sellers. When the stock price remains the same, each will sue the other. Government contracting is a challenging market. Challenges exists in up-times and they exist in down-times. They likely will be different challenges from year to year, but challenges always are present. The astute contractor understands this and guides the organization accordingly.
The 2013 market clearly counsels in favor of enhanced care in the pursuit of new business. With respect to new solicitations, assure that the proposed terms and conditions and the statement of work/specifications are reviewed carefully and risks identified. Assure decisions to accept risk are fully informed and made at an appropriate level within the company. Finally, refresh your internal personnel training regarding Government and company rules delineating what are prohibited activities in connection with the submittal of a proposal. And, if all else fails, pick up the phone and give your friendly Government Contracts lawyer a call. You won’t be alone.
This article formed the basis, in part, for an article appearing in the January 21-27 issue of the San Diego Business Journal (www.sdbj.com) and special thanks to the editors of that publication for permission for its re-use.
On January 23, Senators Jay Rockefeller, Tom Carper and Dianne Feinstein introduced the Cybersecurity and American Cyber Competitiveness Act of 2013. The introduction of this bill marks the first step to pass cybersecurity legislation since last year. According to the bill, the Federal Government plans to secure US cyber systems by enhancing the security and resiliency of public and private communications and information networks and increasing opportunities for sharing cyber threats and vulnerability information between the government and the private sector. It also seeks to promote cybersecurity and information technology training and increase the effectiveness of enforcement against identity theft and cybercrimes.
On January 23rd, NASA announced it plans to issue a draft request for proposals for the follow-on to NASA SEWP (Solutions for Enterprise-Wide Procurement) IV Procurement. The draft RFP for SEWP V is expected by February 8th, and comments will be due April 12th. SEWP contracts offer a wide range of advanced technology including tablets, desktops and servers; storage systems; security tools; software products, and cloud based services. As a Government-Wide Acquisition Contract, SEWP contracts are utilized by all federal agencies. NASA anticipates issuing a final RFP early this summer with proposals due in late summer. The estimated award timeframe is by May 2014. For more information on the upcoming SEWP V procurement, please see the presolicitation notice.
The Coalition’s Committee Meeting Schedule has been set for 2013. Please take a look at our website for dates and locations. All Coalition members are encouraged to participate as these meetings offer great opportunities to network and discuss contracting issues with government officials and fellow industry members. If you have not signed up for a Committee and/or have questions regarding how to attend in person or via conference call, please contact Sandy Arce at firstname.lastname@example.org.
The Coalition is excited to formally announce the combined association event, The Strategic Sourcing of Professional Services: Is it the Next Step? Is it the Right Step?. The event will take place on Thursday, January 31 from 1 – 3:15 p.m. at the NRECA Conference Center in Arlington, VA. The event will feature a discussion of the key challenges and opportunities associated with strategic sourcing. OFPP Administrator Joe Jordan will provide a keynote address. Mary Davie of the Federal Acquisition Service along with other senior government officials will conduct a panel discussion on strategic sourcing in federal acquisition and other issues. In addition to a government panel, The Coalition for Government Procurement’s Roger Waldron will participate in an industry panel on behalf of the Coalition and its members. To conclude the event, the government and industry panels will join each other for a “Superpanel” discussion and open Question & Answer with GSA, industry, and OFPP Representatives.
The event will include discussions on an overarching strategy for the acquisition of services, GSA’s vision for the anticipated OASIS contract vehicle and the future of strategic sourcing. The link above includes registration information and other details regarding the event. If you have any questions please contact Roger Waldron at email@example.com.
MAS Basic Training – February 14, McKenna Long & Aldridge, Washington D.C.
The intensive, one day training workshop teaches the basics of utilizing the Multiple Award Schedules program. Over the course of the workshop 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 Adavantage! and GSA eLibrary. Other material covered will include of structuring your contract to address the schedule compliance requirements while retaining flexibility to compete in the federal and commercial market place, as well as training on the new FAR 8.4 ordering procedures. The courses 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. REGISTER HERE!
Strategic Sourcing Industry Day for JanSan/MRO
GSA has announced a GSA Listen to Industry Day on FSSI Janitorial & Sanitation (JanSan) and Maintenance, Repair, & Operations Products (MRO). Current FSSI commodity solutions include: Express and Ground Delivery services, Wireless Telecommunications Expense Management Services, Office Supplies, and Print Management. Two new solutions are now in development: 1) Janitorial and Sanitation Products and 2) Maintenance, Repair, and Operations Products (MRO). Specifically, GSA would like to hear from industry about commercial best practices that save money, provide for more efficient business activities, and educate GSA on ways the commercial sector procures these products more efficiently than the government. Attendees will have the opportunity to share best practices, help scope these two vehicles appropriately, identify key requirements, and be prepared to compete. GSA notes that seats are limited so please Register Here! If you have questions about this event, please contact FSSI.JanSan@gsa.gov or FSSI.MRO@gsa.gov.
Fairfax Chamber 2013 GovCon Symposium: Thriving in the Innovation Era
Tuesday, February 19, 2013
7:30 – 11:30 a.m.
Hilton McLean Tysons Corner
The uncertainty in the government contracting industry has existed for so long that it has in many ways become the “new normal.” Yet, this dynamic industry, which includes the most technological and innovative businesses in the nation, churns on. Join the Fairfax Chamber and its GovCon Council for the annual GovCon Symposium, which will focus on best practices for “doing more with less” and thriving in the “Innovation Era.” This half day program will kick off with a keynote address providing the outlook for the industry and will be followed by four breakouts in two concurrent sessions addressing the industry’s top trends. You’ll walk away with the tools and insights you need for the next year – whatever it may bring.
Panelists include prominent industry innovators and leaders like:
- Greg Baroni, Chairman & CEO, Attain, LLC
- Guy Filippelli, Chairman and Co-Founder, Berico Technologies
- Fred Funk, Co-founder and Vice President, KEYW Corporation
- Joe Martore, President & CEO, CALIBRE Systems, Inc.
- Kymm McCabe, President & CEO, ASI Government
- Peter Schuster, Vice President, Mergers & Acquisitions, SAIC