Friday Flash 02.12.21

GSA’s Procurement Programs and the Administration’s Domestic Sourcing Priorities: Creating Opportunities and Closing Loopholes

As the central procurement arm of the Federal government, the General Services Administration (GSA) plays a strategic role in implementing the Biden Administration’s policy priorities, including, among others, supporting small businesses, green procurement, improving access to commercial innovation, and increasing domestic sourcing. Over the coming weeks, the FAR & Beyond blog will focus on these and other key priorities and how GSA makes a difference. 

GSA’s procurement programs, managed by the Federal Acquisition Service (FAS), play a critical role in supporting customer agencies, accounting for $75 billion in mission support annually. Chief among FAS’s procurement programs are the Multiple Award Schedule program (MAS), Assisted Acquisition Services, IT GWACs, OASIS, and Global Supplies and Services (GSS). These programs are complementary, bringing a full solution offering approach to GSA’s customer agencies. A key feature among these programs is consistency in the application and implementation of core federal procurement requirements. For example, contracts and orders under these FAS programs apply, as appropriate, domestic and foreign sourcing requirements, including the Buy American Act (BAA), Free Trade Agreements (FTAs), and the Trade Agreements Act (TAA). Needless to say, these major programs play a major role in creating opportunities for domestic products and services. 

Significantly, the Administration’s focus on domestic sourcing can serve as an impetus for reexamining GSA’s commercial e-commerce pilot program vis-a-vis domestic and foreign sourcing. Awarded in June of 2020, the e-commerce pilot targets $6 billion (GSA’s estimated addressable market) in open market purchase card spending by the federal government. The pilot seeks to channel orders through three e-commerce platforms. 

Unlike GSA’s other major procurement programs, the e-commerce pilot program has been structured in a manner that essentially creates a loophole, whereby the BAA and the TAA do not apply. As orders are limited to the Micro-Purchase Threshold and each order is considered a separate contract, GSA has structured the program so that the BAA and TAA will never apply. It is the only major Federal commercial contracting program of its size and scope ($6 billion addressable market annually, according to GSA’s RFP, and potentially $18 billion over the life of the pilot) where neither the BAA nor the TAA apply. The unintended consequence of this structure, in part, is that 100 percent of the products purchased via the pilot could be manufactured in China. In contrast, the MAS program applies the TAA, whereby products that are made in China are ineligible for purchase. 

Timing is everything. As we move towards the end of the first year of the e-commerce pilot, GSA has a wonderful opportunity now to re-examine the applicability of domestic and foreign sourcing requirements. How can, consistent with applicable law, GSA promote opportunities for domestic products in the context of e-commerce? What changes can be made to the pilot program’s framework to close the loophole and create a level playing field among GSA’s key procurement programs? How can GSA leverage e-commerce technologies/platforms to support the MAS program?   

The Coalition looks forward to working with GSA and all stakeholders across the procurement community on this and other key Administration priorities. 

CRS Report on Current Use of Defense Production Act

The Congressional Research Service (CRS) published a report on the Defense Production Act (DPA) and the Biden Administration’s plan to use the DPA to respond to the COVID-19 pandemic. The report reviews five Executive Orders (EO) that relate to the use of the DPA, including EO 14001, “A Sustainable Public Health Supply Chain,” which directs agencies to use the DPA as necessary to purchase personal protective equipment and vaccines. The report also highlights the Biden Administration’s plans to implement the DPA directives and the potential role of Congress. To access the report, click here 

 

Senate Approves Denis McDonough as VA Secretary

On February 8, the Senate confirmed Denis McDonough, with an 87-7 margin, as the next Secretary of the Department of Veterans Affairs (VA). Secretary McDonough previously served as White House Chief of Staff under President Obama. His top priority will be “getting our veterans through this pandemic.” McDonough will lead a department with a budget of $243 billion and over 400,000 employees. Another priority for Secretary McDonough will be to ensure that veterans have world-class healthcare. In a recent statement, the Secretary said that each decision he makes will be guided by one simple principle, “that it increases Veterans’ access to care and benefits and improves outcomes for them.” 

Secretary McDonough also said that the “[a]ssessments of our efforts will be measured by the outcomes we generate for Veterans and by listening to what Veterans have to say about their experiences. We will be strengthened by the advice and support of Veterans service organizations and by hearing from our partners and respected organizations who share our mission of improving Veterans’ lives.”  To read the Secretary’s full statement, click here.

 

Technology Modernization Funding Status on the Hill

On February 8, Fedscoop reported that lawmakers removed a $9 billion increase to the Technology Modernization Fund (TMF) for the next COVID-19 relief package. The proposed TMF boost would have been the largest increase for the TMF since its creation in 2017. Congress has allocated $150 million total to the fund over its lifespan. According to a congressional source, there are discussions to include the $9 billion boost in upcoming legislation. The COVID-19 relief package includes $1.2 billion for other provisions related to IT and cybersecurity, including shared security services from the Cybersecurity and Infrastructure Security Agency, and projects from the Technology Transformation Services within the General Services Administration. 

 

DoD Anticipates CMMC Certification for All DoD Contractors by Fiscal Year 2026 

Meritalk recently published an update on the Cybersecurity Maturity Model Certification (CMMC) program from Katie Arrington, Department of Defense’s (DoD) Chief Information Security Officer for Acquisition and Sustainment. According to Arrington, every contractor looking to do business with DoD will be required to have at least Level 1 CMMC by Fiscal Year 2026.  

By the end of Fiscal Year 2021, the Department plans to have 1,500 CMMC accredited contractors. DoD is aiming to have 899 contractors Level 1 certified, 149 contractors Level 2 certified, and 452 contractors Level 3 certified. Over the first seven years of the program, DoD hopes to have a total of 220,966 contractors certified. DoD is currently working on its first 10 pilot programs and plans to finish the year with 15 prime contracts, including the CMMC requirement. According to Arrington, the pilot programs remain on schedule, and DoD plans to begin releasing Requests for Proposals in mid-March. 

 

beta.SAM.gov to Remove “Beta” in May 

The General Services Administration (GSA) announced that beta.SAM.gov will be updated on Monday, April 26 to receive a new look and feel. Next, on Monday, May 24, GSA will migrate the current SAM.gov functionality onto beta.SAM.gov and officially drop the “beta” from the environment. The revised SAM.gov website will maintain the updated design and current functionalities of beta.SAM, including contract opportunities and contract data. 

 

FedMall Updates Procedures for PPE Purchases

On February 1, the Department of Defense (DoD) released a memo which updates the procedures that DoD small business contractors can use to acquire non-medical Personal Protective Equipment (PPE) through FedMall. Contracting officers and small businesses must request a Department of Defense Activity Address Code (DoDAAC), which is needed to obtain the PPE using FedMall. The Defense Logistics Agency (DLA) created a Contingency Corridor inside the FedMall Marketplace so small business contractors can purchase non-medical PPE and other materials to provide a safe workplace from commercial vendors. The Corridor has a catalog of over 200 items, including hand sanitizer, non-medical PPE, temperature devices, disinfectant wipes, and items to support social distancing. Purchases on FedMall are limited to $10,000 per purchase. 

 

DoD Increases Use of Fixed-Price Contracts 

Since 2010, the Department of Defense (DoD) has encouraged the use of fixed-price incentive (FPI) contracts through DoD’s Better Buying Power initiative. The Government Accountability Office (GAO) reported that from fiscal years (FY) 2010 through 2019, use of FPI contracts increased from $1.3 billion, or 17 percent of spending in FY10, to $32 billion, or 49 percent of spending in FY19. GAO examined six FPI contracts and six firm fixed-price contracts to review the way DoD assesses the use of fixed-price contracts.  

The study found that DoD does not assess FPI contracts to accomplish desired cost and schedule performance outcomes. Defense Pricing and Contracting (DPC) stated that there has not been any assessment of FPI contracts to see if anticipated outcomes have been achieved. GAO recommends that DoD assess its use of FPI contracts. The assessments should include the extent to which share lines and other contract elements contributed to achieving desired cost and schedule performance outcomes. See the full GAO report here.    

 

Upcoming Webinar, Onshoring: the Intersections of National Security, COVID Response, Biden’s Buy American and the TAA, Feb. 18

The Coalition is pleased to host Stephen Ruscus and Katelyn Hilferty of Morgan, Lewis & Bockius LLP for a webinar on February 18 at noon EST for a discussion of the Biden Administration’s early actions with respect to onshoring and domestic sourcing, including an analysis of important previous administration executive orders and regulations that the new president has left in place.

In 2020, calls for onshoring, federal purchases from domestic sources, and the creation of domestic supply chains arose from every corner of the government – from Republicans, Democrats, the House, the Senate and the President, arising from at least two separate sets of considerations: COVID-19 and a broad spectrum of national security concerns. Many of these were expressed in proposed or final legislation, the issuance of numerous executive orders and the promulgation of regulations through formal notice and comment rulemaking. Meanwhile, the Federal Circuit issued a landmark decision interpreting the FAR procurement regulations implementing the Buy American and Trade Agreements Acts. Where does that leave us now?

Click here to register.

 

MSPV 2.0 Briefing with the VAFeb. 23 

The Medical/Surgical Subcommittee will have its first meeting of 2021 on February 23 at 2 pm EST. We are pleased to announce that our guest speakers will be from the U.S. Department of Veterans Affairs and they will be joining us to discuss the MSPV program. Our guest speakers will be: 

  • Rick Lemmon, Executive Director of Procurement, Office of Procurement & Logistics, VHA 
  • Katie Hulse, Director (acting), Acquisition Services 3, Medical/Surgical Prime Vendor Program, Chief, Acquisition Services 3B, VA SAC 
  • Amanda Anderson, Chief, Acquisition Services 3D, Medical / Surgical Prime Vendor Program, VA SAC 
  • Fredrick Hilliard, Lead CO, MSPV 2.0, VHA 

The VA’s briefing will cover the latest on the MSPV 2.0 BPA awards and the MSPV-NG program.

Please send your questions on the MSPV 2.0 program to Aubrey Woolley at awoolley@thecgp.org by COB February 16, and we will share them with the VA in advance of the meeting.

To RSVP to attend the virtual meeting, please email Michael Hanafin atmhanafin@thecgp.org. 

 

BIC MAC MeetingFeb. 23 

The Coalition will be hosting a joint IT/Services and GWAC/MAC Committee Meeting on Tuesday, February 23 at 10 am EST. The focus of the meeting will be on GSA’s new BIC MAC contract. During this internal meeting, the Coalition will share information on the program and collect member feedback for GSA. 

GSA anticipates the release of an RFI on BIC MAC in early March, and they plan speak to members about the acquisition strategy for BIC MAC after the RFI is released.  

If you would like to attend the meeting, please RSVP to Michael Hanafin at MHanafin@thecgp.org to receive the dial-in information. 

Webinar on Section 889: Compliance Strategies and Risk Mitigation for Commercial Contractors, Feb. 25

The Coalition is pleased to host David Fletcher and Alexander Canizares of Perkins Coie LLP for webinar on February 25 at noon EST regarding Section 889: Compliance Strategies and Risk Mitigation for Commercial Contractors. 

Section 889 of the Fiscal Year (FY) 2019 National Defense Authorization Act has imposed significant new compliance burdens on government contractors, including commercial companies. Numerous questions remain about what steps contractors can or must take to fulfill their obligations to represent, on an ongoing basis, that they do not use certain telecommunications equipment or services in any part of their business.  Numerous interpretive issues in the interim rule remain unanswered.  The interim rule is expected to become a final rule in 2021, highlighting the importance of a robust compliance policy and approach to enforcement risks.

This webinar will:

  • Provide a practical overview of emerging legal issues arising out of Section 889 and its impact on commercial contractors that provide goods or services to the federal government, in particular
  • Provide several steps that companies can take to stay compliant and navigate difficult issues arising out of Section 889, such as subcontractor management and the scope of the “reasonable inquiry” required under the rule
  • Highlight False Claims Act enforcement risks and other issues

Click here to register.

 

Legal Corner: Biden Leaves in Place Key Portions of Buy American Act Changes, Targets New Domestic End Product Test and Services

Authors: Jacqueline Unger and Anna Sullivan; PilieroMazza PLLC

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

President Biden signed an executive order (EO) on January 25, 2021, titled “Ensuring the Future Is Made in All of America by All of America’s Workers.” Referring broadly to all statutes, regulations, rules, and executive orders that relate to Buy America, Buy American, or domestic sourcing requirements as “Made in America Laws,” the EO expresses the new administration’s policy that the U.S. government should maximize the use of domestic products and services and “should, whenever possible, procure goods, products, materials, and services from sources that will help American businesses compete in strategic industries and help America’s workers thrive.” This new EO was issued just days after the Federal Acquisition Regulatory Council (FAR Council) finalized a rule to increase the Buy American Act (BAA) domestic content requirements. With the EO directing significant changes to federal procurement practices under the Made in America Laws, we have highlighted key implications for government contractors below.

Strengthening BAA Domestic Content Requirements

The EO proposes significant changes to promote the enforcement of the BAA’s preference for domestic end products. The EO directs the FAR Council to, within 180 days, consider proposing for notice and public comment amendments to the Federal Acquisition Regulation (FAR) provisions implementing the BAA to replace the “component test” used to identify domestic end products and construction materials with a “value added” test. Under the new proposed test, domestic content would be measured by the value added to the product through U.S.-based production or U.S. job-supporting economic activity—though the EO does not explain how such value would be calculated.

Additionally, the EO states that the FAR Council should consider FAR amendments that would increase the numerical threshold for domestic content requirements for end products and construction materials and increase the price preferences for domestic end products and domestic construction materials. The FAR Council is also directed to promptly review any existing constraints on the extension of the Made in America Laws to information technology that is a commercial item and develop recommendations to lift these constraints to further the EO’s policy.

Importantly, the FAR Council recently published a final rule on January 19, 2021, which increases the BAA domestic content requirements and pricing preferences to implement President Trump’s EO 13881, “Maximizing Use of American-Made Goods, Products, and Materials.” The final rule makes three critical changes: (1) it increases the domestic content requirement to 55% for most products and to 95% for products consisting “wholly or predominantly” of iron or steel (or a combination of both), (2) it removes the commercially available-off-the-shelf exception for products consisting “wholly or predominantly” of iron or steel (or a combination of both), and (3) it increases price preferences for domestic products to 20% for large businesses and 30% for small businesses. This final rule applies to solicitations issued on or after February 22, 2021.

Though Biden’s EO does not invalidate this final rule, it remains to be seen whether these changes will be kept as is or further modified as a result of the new EO.

Increasing Scrutiny of Requests for Waivers of Made in America Laws

Next, Biden’s EO indicates that it may become harder to obtain a waiver of Made in American Laws in the future. The EO directs the Director of the Office of Management and Budget to establish a Made in America Office, headed by a Made in America Director. Before an agency grants a waiver, and unless the OMB Director provides otherwise, the agency will be required to provide the Made in America Director with a description of its proposed waiver and a detailed justification for the use of goods, products, or materials that have not been mined, produced, or manufactured in the U.S. The Made in America Director will review all proposed agency waivers and make a determination as to whether the waiver is justified. Any disagreements between the Director and the agency would be resolved through administrative procedures. Additionally, in order to increase transparency, the General Services Administration is to develop a public website that includes information on proposed waivers and whether those waivers are granted.

Assisting Contractors with Supplier Scouting

The EO also directs agencies to take action to identify suppliers of American-made products, which may be helpful to prime contractors looking for domestic sources for their supply chains. Pursuant to the EO, agencies are to partner with the Hollings Manufacturing Extension Partnership to conduct supplier scouting to identify American companies that can produce goods, products, and materials in the U.S. that meet the federal government’s procurement needs.

Imposing Agency Reporting Requirements

Lastly, the EO imposes new reporting requirements on agencies. It directs federal agencies to, as soon as practicable, consider “suspending, revising, or rescinding” any agency actions that are inconsistent with the aforementioned policy and to consider any additional action necessary to enforce it. More specifically, agencies are directed to submit a report to the newly created Made in America Director within the 180-day window detailing their implementation and compliance with Made in America Laws, a description of any waivers to Made in America laws, and any recommendations on how to further effectuate the EO’s policy. Agencies are thereafter to submit biannual reports on implementation and compliance with Made in America Laws, with analysis on any applicable waivers.

The EO shows the intent of the Biden Administration to prioritize American industry, but it remains to be seen how its directives will play out among federal agencies and their procurements. Contractors subject to the BAA or other Made in America Laws should be cognizant of agency implementation of the EO.

We will continue to monitor developments as they become available. If you have questions about the EO and what it could mean for your business, please contact Jackie Unger or Anna Sullivan, the authors of this blog, or another member of PilieroMazzaGovernment Contracts Group.

 

Healthcare Spotlight: Biden Signs “Sustainable Public Health Supply Chain” Executive Order

On January 21, the President signed an Executive Order (EO) to secure the supplies needed for the Federal government (and State, Local, Tribal and Territorial authorities) to respond to the COVID-19 national pandemic.  In short, the EO requires that:

  • The Secretaries of Defense, Health and Human Services, and Homeland Security take immediate inventory of the critical materials, treatments, and supplies (including personal protective equipment (PPE)) needed to combat COVID-19
    • Where shortages exist, all legal authorities available, including the Defense Production Act, should be used to fill these shortages through additional stockpiles, improving distribution systems, building market capacity or expanding the industrial base
  • The status of the Strategic National Stockpile be provided to the President
  • The Secretaries of the Defense, HHS, State, Homeland Security (and other agencies) provide:
    • An inventory of pandemic response supplies
    • An analysis of their agency’s capacity to produce, provide and distribute pandemic response supplies
    • An assessment of their agency’s procurement of such supplies and their availability on the open market
    • An assessment of any gaps and recommendations to address them
  • Depending on the above agencies’ inventory assessments, the COVID-19 Response Coordinator is to recommend to the President whether additional use of the Defense Production Act would be useful

The EO also addresses the pricing of pandemic response supplies by requiring the Secretaries of Defense, HHS, and Homeland Security to make recommendations for how to address the pricing of pandemic supplies, “including whether and how to direct the use of reasonable pricing clauses in Federal contracts.”  It also asks these agencies to assess “whether to use the GSA Schedules to facilitate State, local, Tribal, and territorial government buyers… in purchasing pandemic response supplies using Federal Supply Schedules.”

Finally, the order requires a strategy be established to design, build and sustain a long-term capability for the U.S. to manufacture supplies for future pandemics and biological threats including an analysis of the roles of the Strategic National Stockpile and other Federal and military stockpiles.  Certain Tribal governments, Indian Health Service healthcare providers, Tribal health authorities and others are also to be given access to the National Stockpile. 

The Coalition will continue to follow policy developments from the current Administration and update members as new information becomes available.  To access the full EO, click here.

DoD Requiring Masks on Military Installations 

On February 4, Secretary of Defense Lloyd Austin signed a memo that requires all individuals performing duties from any location outside of one’s home on behalf of the Department of Defense (DoD) and all individuals on military instillations to wear masks in accordance with the most current Centers for Disease Control and Prevention (CDC) guidelines. The memo is effective immediately. Individuals must wear masks while on military instillations with the following exceptions: 

  • when an individual is alone in an office with floor-to-ceiling walls with a closed door;  
  • for brief periods of time when eating and drinking while maintaining distancing in accordance with CDC guidelines and instructions from commanders and supervisors;  
  • when the mask is required to be lowered briefly for identification or security purposes; and  
  • when necessary to reasonably accommodate an individual with a disability. 

 

SBA Extends 8(a) Program Participation by One Year 

On January 13, the Small Business Administration (SBA) released an interim final rule which allows 8(a) Program participants to choose a one-year program extension of the SBA’s 8(a) program due to COVID-19. To be eligible for the extension, firms must have participated in the 8(a) Program between March 13, 2020 and September 9, 2020. Firms that graduated from the Program before January 13, 2021, but were participating in the Program as of March 13, 2020, are eligible for extension. These firms must notify SBA no later than March 15, 2021 for readmittance into the Program. Firms that participated in the 8(a) Program on January 13, 2021 will be given an automatic one-year extension unless the firm declines the extension in writing. The interim final rule went into effect on January 13, 2021, and SBA is accepting comments through March 15, 2021. See the full SBA press release here.   

 

NIST Releases New Cybersecurity Guidelines 

According to Fedscoop, the National Institute for Standards and Technology (NIST) released a special publication, NIST SP 800-172. The publication outlines steps the system administrators should take to secure their networks by providing security practices that could protect against advanced persistent threats (ATPs), including cyber-attacks from adversarial nation-states.  

The document contains practices that contractors should already have in place, including multi-factor authentication and automated tracking of unauthorized users on networks. It also suggests that contractors maintain cyber-response teams. The publication builds on NIST’s SP 800-171, which provides requirements for federal contractors that deal with controlled unclassified information. The NIST SP 800-172 document likely will appear in contracts which handle sensitive information that could be vulnerable to ATPs. 

 

Off the Shelf: The Civil False Claims Act: Key Trends in 2021

This week on Off the Shelf, Jason Workmaster from Miller & Chevalier provided an update on key trends in the Civil False Claims Act (FCA). 

Workmaster pointed out the decline in FCA recovers over the last decade and predicted an upswing in FCA activity on the part of the government and the Justice Department. In particular, he highlighted a growing set of compliance requirements (e.g. Section 889, CARES Act Section 3610, the Paycheck Protection Program, and DCMA’s Defective Pricing Pilot Program) as potential areas of risk for government contractors.

Additionally, a change in administrations will likely lead to greater interest in enforcement activities.

Finally, Workmaster provided insights on the FAC’s legal framework and how a more conservative judiciary may impact FCA litigation. Click here to listen.

 

AFCEA Bethesda’s 2021 Monthly Breakfast Webinar Series        

The Coalition is proud to sponsor AFCEA Bethesda’s 2021 Monthly Breakfast Webinar Series. Join AFCEA Bethesda on February 23 as federal IT security leaders discuss innovative ways to defend their infrastructures from threats. This webinar will address how organizations can implement TIC 3.0 and Zero Trust, as well as apply supply chain security, into a modern landscape where the network perimeter has become more difficult and costly to defend. Connect with speakers during the video networking session following the panel discussion. Coalition members who would like to attend, can register here.