Friday Flash, 04.30.2012

1. Comment of the Week

This week’s final April Comment addresses the last and most important of the four fundamentals underpinning an efficient and effective procurement system, sound requirements development Sound requirements development is vital to delivering best value outcomes for government and the taxpayer.   Sound requirements development increases competition and creates the framework for efficient and effective contractor performance.  It is a fundamental commercial practice.  The Services Acquisition Reform Act (SARA) Acquisition Advisory Panel found that,

Commercial organizations invest the time and resources necessary to understand and define requirements.  They use multidisciplinary teams to plan their procurements, conduct competitions for award, and monitor contract performance. They rely on well-defined 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 the Report of the Acquisition Advisory Panel to the Office of Federal Procurement Policy and the United States Congress, at page 87.

The current focus on oversight and transparency as the perceived cure all for the procurement system misses the mark.  Oversight and transparency initiatives focus on the post award environment.  As such, audit and new contractor reporting regimes merely produce data regarding ongoing contract performance.  On the other hand, successful contract performance is fundamentally contingent on what has come before—requirements development, competition, negotiation and award of contracts.  Sound requirements effectively communicated to industry reduce risk in contractor performance.  Reduced risk leads to more efficient and effective contractor performance and pricing.

If the government (Congress and the Administration) really want to improve contract outcomes and save the taxpayer money, sound requirements development is the key.  Make no mistake, it is not easy.  Creating a government infrastructure that delivers sound requirements development will take discipline, sustained effort, time, training and investment to improve government requirements development.  It will not grab headlines, but it will make a positive difference for government, industry and the taxpayer.

At the Coalition’s Spring Conference, Shay Assad, Director of Pricing, Department of Defense (DoD), discussed DoD’s training of program managers and the critical role of requirements development.  The Coalition strongly supports DoD’s ongoing work in improving requirements development.   Along these lines, the Coalition supports the creation of a center of excellence for market research, requirements development and acquisition planning within the General Services Administration (GSA).  This center of excellence would leverage government resources and provide support to customer agencies using GSA contract vehicles to meet their needs.   

Finally, as you know from previous Comments, the Coalition strongly supports the Administration’s efforts to improve government-industry communications via the “Myth-Busters” campaign.   Central to the “Myth-Busters” campaign is the imperative of effective communication between government and industry during the requirements development phase.   Effective government-industry communications improve SOWs, RFQs and RFPs which, in turn, leads to increased competition and positive contract performance.  As OFPP’s February 2, 2011 memorandum observed,

            Access to current market information is critical for agency program managers as they define requirements and for contracting officers as they develop acquisition strategies, seek opportunities for small business, and negotiate contract terms.  Our industry partners are often the best source of this information, so productive interactions between   federal agencies and our industry partners should be encouraged to ensure that the government clearly understands the marketplace and can award a contract or order for an effective solution at a reasonable price. Early, frequent and constructive engagement with industry is especially important for complex, high-risk procurements, including (but not limited to) those for large information technology (IT) projects. 

Industry exhibits at the upcoming GSA Expo are an excellent source of market information for agency program managers.  The Expo also provides over 12,000 hours of professional training for government and industry contracting professionals.

The Coalition looks forward to continuing our “Myth-Busters” dialogue with GSA, the VA, OFPP and DoD regarding key procurement issues, including the challenge of sound requirements development.  To that end, the upcoming May 4th Comment will highlight the Coalition’s “to do” list resulting from the acquisition dialogue during last week’s Spring Conference.

2. Thank You to Our Spring Conference Speakers & Sponsors

The Coalition for Government Procurement would like to thank our distinguished speakers from government and industry for an informative and insightful 2012 Spring Conference. We thank Congressman Jeff Denham (R-CA-19) for his thought provoking remarks regarding the General Services Administration and his invitation for the audience to provide recommendations for improving government acquisition. The Coalition firmly believes that a strong and vibrant GSA is central to a procurement system that provides best value to government, industry and the taxpayer.

The Coalition sincerely thanks…

  • Ted Carter of CBRE, Patty Stolnacker-Koch of Siemens Government Technologies, and Don Bathurst of the Department of Homeland Security for their discussion on real property.
  • Jan Frye of the VA for remarks on Department of Veterans Affairs acquisition.
  • The Honorable Tom Davis for his thoughts on the current political climate and upcoming election in November.
  • Jim Ghiloni of GSA’s OASIS program for a dialogue concerning development of the new professional services contract vehicle.
  • Steve Kempf of the Federal Acquisition Service at GSA and Carolyn Alston of Deltek/WMG for updates on the Next Generation of Schedules.
  • Shay Assad of the Department of Defense for information on initiatives in Defense acquisition and to Ray Bjorklund of Deltek for analysis of the President’s FY2013 budget request.

Our legal panel including Jason Workmaster of McKenna Long & Aldridge, Jonathan Aronie of Sheppard Mullin Richter & Howe and David Dowd of Mayer Brown for an update on recent cases in the procurement arena.

The Coalition would like to extend a special thank you to all our Keystone members: Allsteel, Booz Allen Hamilton, General Dynamics Information Technology, HON, L-3, McKenna Long & Aldridge LLP, and Northrop Grumman. Also a special thank you to our lunch sponsors, CBRE and Deloitte.

Finally, thank you to all of our members and non-members for attending the conference, engaging in great discussions and posing thoughtful questions to our speakers throughout the two day period. As always we appreciate you support and efforts to engage in a dialogue with the government to enhance acquisition while providing best value to the American taxpayer.

3. Survey on Contract Duplication

During last week’s Spring Conference, DoD Director of Pricing, Shay Assad, expressed interest in the results of the Coalition’s Contract Duplication Survey.  Therefore, we are extending the deadline for members to take the survey through Friday, May 18th.

The purpose of the Contract Duplication Survey is to collect data on the costs and impacts associated with duplicative government contracts for the same or similar services. Note: Members will need their Coalition Login information in order to access the survey. If you do not know your login information, please contact Roy Dicharry at (202) 331-0975 or rdicharry@thecgp.org.

Take the Contract Duplication Survey!

Please respond by COB Friday, May 18.

Survey responses will be used to develop a white paper that will serve as the foundation for a dialogue with acquisition leadership, including the Department of Defense, on the impact of contract duplication.

4. 2012 Spring Conference: Government Acquisition Market

The Coalition’s annual Spring Conference was held last week at the Westin Tysons Corner. This year’s theme was the Government Acquisition Market: How Do You Grow Your Slice of the Pie? and featured guests from Capitol Hill, the General Services Administration (GSA), Department of Defense (DoD), the Department of Veterans Affairs (VA).

The event kicked off with a keynote from Congressman Jeff Denham (R-CA) who is the Chairman of the House Subcommittee on Economic Development, Public Buildings and Emergency Management. Congressman Denham sponsored the Civilian Property Realignment Act, otherwise known as the Civilian BRAC, which would create an independent commission to review federal properties and make recommendations for consolidation, redevelopment, or sale of this property. Congressman Denham’s objective is to cut waste and achieve savings in the federal buildings market and through GSA, much like he achieved in his home state of California.

Sessions throughout the conference provided attendees with the latest intelligence about the government market from upcoming changes to federal workspace and buildings, evolving DoD pricing policies, to the Next Generation of Schedules and the federal budget. The following is a snapshot of these sessions:

Let’s Talk Real Property explored the latest trends in federal buildings which are largely being determined by agency efforts to save taxpayer dollars. Energy Savings Performance Contracts now guarantee that agencies will save on their energy investments. The federal real estate foot print is also decreasing with more adaptable smaller spaces for employees and more telework opportunities. From a contracts perspective, federal agencies are purchasing less through more well-developed technical requirements.

o Speakers: Don Bathurst of the Department of Homeland Security and Patty Stolnacker-Koch of Siemens Government Technologies
o Moderator: Ted Carter of CBRE

The Growing Role of the VA in the Federal Market discussion covered a number of topics in VA Schedules acquisition including the use of resellers, policies on reverse auction, a reinvigorated focus on customer service at the VA National Acquisition Center and an upcoming national Help Desk and a Strategic Acquisition Center in Fredricksburg focused on strategic sourcing. According to Jan Frye, Deputy Assistant Secretary of the VA Office of Acquisition and Logistics, growth in the VA Schedules will be through strategic sourcing.

o Speakers: Jan Frye, Deputy Assistant Secretary, Office of Acquisition and Logistics, Department of Veterans Affairs and Bill Gormley, Chairman of The Coalition for Government Procurement

The Keys to the Election lunch keynote was provided by Former Congressman Tom Davis. He highlighted the factors driving the political polarization on Capitol Hill and the economic and demographic trends that will greatly impact the results of the upcoming Presidential and Congressional elections. Tom Davis’ insights were very well-received by the audience.

o Speaker: The Honorable Tom Davis, Former Virginia Congressman and Chairman of the House Government Reform Committee, currently the Director of Federal Government Affairs, Deloitte LLP

Update on OASIS provided the latest on one of the most anticipated federal service contracts, the One Acquisition Solution for Integrated Services (OASIS). This session covered the purpose and scope of the contract, the specific customer needs that OASIS is designed to meet, and the upcoming acquisition schedule including an anticipated draft RFP release date in the summer of 2012.

o Speaker: Jim Ghiloni, Director, OASIS Program Management Office, GSA
o Moderator: Roger Waldron, President, The Coalition for Government Procurement

Next Generation of Schedules was a discussion with Steve Kempf, FAS Commissioner and Carolyn Alston, General Counsel of Deltek/WMG. The Next Generation of Schedules is a formal project being pursued by a cross Schedules team at GSA which is looking at how the MAS program will be enhanced in the future through increased service delivery, updated Terms and Conditions, more data driven pricing, increased mobile apps and templates, and ease of use.

o Speaker: Steve Kempf, Commissioner of FAS, GSA
o Moderator: Carolyn Alston, General Counsel, Deltek/WMG

DoD Defense Pricing was the topic of the Day 2 keynote provided by Mr. Shay Assad, DoD Director of Defense Pricing. Mr. Assad covered DoD’s commitment to the MAS program and the additional features DoD would like to see in the Schedules to increase their use in the department. He also addressed best value vs. low price technically acceptable, commercial “of a type”, “should cost”, contract duplication and other matters relevant to Defense acquisition and pricing policy.

Budget Analysis: What Ingredients are in the Pie focused on the Federal budget and what the numbers show about the government market in upcoming years. Expect slow growth with variations up and down based on the sector. Growth areas include federal buildings due to the Civilian BRAC, cybersecurity, defense spending, program integrity, and energy services. In short, contractors are advised to be patient and to pay attention to what “addressable” aspects of the budget indicate about federal spending in the coming years.

o Speaker: Ray Bjorklund, Chief Knowledge Officer, Deltek
o Moderator: Bill Gormley, Chairman, The Coalition for Government Procurement

Recent Developments in Acquisition Case Law and Regulations featured the “Rogers” awards for the second year in a row. The panel gave awards related to the Trade Agreements Act, small business subcontracting plans, and commercial item determinations and walked the audience through recent cases and scenarios relevant to acquisition case law and regulations.

o Speakers: Jason Workmaster, Partner, McKenna Long & Aldridge, LLP; Jonathan Aronie, Partner, Sheppard Mullin Richter & Howe, LLP; David Dowd, Partner, Mayer Brown

Thank you to all of the 2012 Spring Conference speakers for making this year’s event so informative and engaging.

5. House passes DATA Act

On April 27th  the House approved the DATA Act (HR 2146), a measure that would establish the Federal Accountability & Spending Transparency (FAST) Board to track all federal spending including grants, contracts, and loans to prevent fraud, waste, and abuse. The FAST Board would be comprised of federal inspector generals and deputy secretaries of a number of agencies including OMB.  Notably, federal acquisition authorities are not included.  In addition, the legislation would establish new government-wide reporting standards requiring Federal agencies to provide on a centralized website a detailed list of all projects or activities for which Federal funds were expended or obligated.  Co-sponsored by Congressman Darrell Issa (R-CA), the bill also includes provisions that slash spending by federal agencies on conferences by 20% from levels set in 2010 and caps spending on individual conferences at $500,000.

6. Congressional Research Service Analyzes FY2013 Defense Budget Request

The Congressional Research Service (CRS) has recently released a paper entitled FY2013 Defense Budget Request: Overview and Context. The report analyzes President Obama’s FY2013 defense budget request within the context of long-term deficit reduction. Currently the budget request for DoD stands at $525.4 billion plus an additional $88.5 billion for Overseas Contingency Operations (OCO), totaling $613.9 billion. The amount is $31.8 billion less than the DoD budget appropriations for FY2012. Most of the reduction is accounted for in the decrease in costs for OCO in Afghanistan and Iraq. The reduction mirrors the spending caps required by the Budget Control Act of 2011, which reduces government spending by more than $900 billion from FY2012 through FY2021. The request is also consistent with the new strategic guidance and budget prioritiesreleased in January of this year. Cuts in “overhead and support costs” including contracting for FY2013, equal $9.6 billion.

The report also touches on the issue of sequestration, which requires automatic defense cuts of an additional $600 billion through FY2021. The report states that it’s unclear how DOD would manage a reduction in funding for procurement programs as in many cases the funds are already legally obligated. As a result, DoD will likely begin scaling back acquisition programs near FY2013 in preparation for the sequestration. The Coalition will closely watch the budget debate in Congress, keeping members informed through the committees and the Friday Flash.

7. April Legal Corner

It’s Getting Complicated – The MAS Program’s “Simplified” Acquisition Process

By Phil Seckman, Partner, McKenna Long & Aldridge

A March 2, 2012, final rule requiring competition for certain orders placed under Federal Supply Schedule (“FSS”) contracts increases the burdens on agencies before schedule orders can be placed.  The trend toward increased complexity is eroding GSA’s ability to legitimately tout the MAS program as a simplified acquisition process.  These developments may not all be bad for contractors, however.  With increased competition, the basis for the Price Reduction Clause (PRC) is arguably similarly eroding.

The final rule implements Section 863 of the NDAA for 2009 (Pub. L. 110-417) as well as a March 4, 2009, memorandum issued by President Barack Obama, and makes changes that are reminiscent of the DOD specific changes required by the 2002 NDAA (Pub. L. 107-107 § 803).  While these changes reflect the government’s commitment to the fundamental procurement policy that views competition as the best means of ensuring the government is paying fair and reasonable prices and achieving best value outcomes for each tax-payer dollar, the changes ignore that in the MAS context schedule contracts are awarded with prices that have already been found fair and reasonable, based upon the contractor’s disclosure of its commercial sales practices, and orders placed against those contracts were alreadyconsidered competitive.

Under the new rule (with limited exceptions), the government must publicize each intended purchase under a multiple-award contract that will exceed the simplified acquisition threshold (including a work description and bases for selection) on e-Buy or FedBizOpps.gov. The notice must be provided either to every contractor under the multiple-award contract offering the supplies or services, or to at least “as many contractors as practicable.” See § 8.405-1(d); 16.505(b)(2)(ii)(D). If fewer than all contractors are notified, no purchase can be made unless three qualified contractors submit offers or the contracting officer determines that no additional qualified contractors can be identified. Additionally, all contractors responding to the notice must be afforded a fair opportunity to make an offer and have that offer considered by the purchaser. Id. Such consideration must be documented as part of the award decision. See § 8.405-1(f)-(g).

These FAR changes are applicable to task and delivery orders placed against multiple-award contracts–including FSS contracts and Blanket Purchase Agreements (“BPAs”) awarded under FSS contracts pursuant to FAR subpart 8.4. The changes are also applicable to indefinite-delivery/indefinite-quantity contracts awarded pursuant to subpart 16.5. They do not, however, apply to BPAs awarded pursuant to FAR part 13.

Agencies traditionally have used the schedules to expedite acquisition, free of many of the requirements of a typical procurement action (i.e., developing the statement of work, publication, competition, etc.).  In response to concerns raised by the GAO in November 2000, and in recognition of the shift in federal procurement from supplies to services, a number of changes were made to FAR subpart 8.4 to establish additional procedures when the government acquired services that necessitated the development of a statement of work.  See69 Fed. Reg. 34231 (Jun. 18, 2004).  These changes ensured that the MAS program’s simplified acquisition procedures for supplies and many definite scope services would be reasonably balanced against the need for additional protections for services acquisitions where a fixed price or clear scope T&M arrangement was not yet available.

In fact, the great success of the MAS program that began in the late 1990s and that has resulted in the very significant growth in procurement dollars flowing through the schedules is, in large part, a product of the ease with which acquisition outcomes could be achieved while still ensuring the government was receiving a fair and reasonable price.  The March 2, 2012, final rule, however, further erodes purchaser flexibility, could prompt agencies to reassess the value proposition of using the schedules, and is very likely to increase bid protests and disputes.  These outcomes are antithetical to a simplified acquisition process.

On the other hand, there is a potentially positive development from the Final Rule.  The shift toward increased competition for all schedule orders over the simplified acquisition threshold gives new viability to the long-running effort to remove the Price Reduction Clause from schedule contracts.

As noted in the response to comments in the Final Rule, one of arguments advanced was that the old FAR subpart 8.4 ordering procedures and the PRC reflected the balance between competition and price reductions for orders above the maximum order threshold (MOT).  Specifically, the PRC recognizes that price reduction remedies are not necessary above the MOT because competition and requests for price reductions were required by the old FAR subpart 8.4.  Importantly, the new FAR subpart 8.4 ordering procedures have replaced the MOT with the simplified acquisition threshold and, as such, the PRC should be revised and, indeed, largely eliminated. Thus, Contractors and industry organizations could have a viable new basis to push for regulatory change.

In light of the Final Rule, schedule holders will be well served by carefully assessing how these new notice and competition requirements present new risks but also new opportunities to secure agency orders.  The notice requirements could have significant impacts on relationships that schedule vendors have established over many years of successful contract performance.  On the other hand, vendors that have traditionally not enjoyed significant market share would be wise to carefully consider how to best leverage this new opportunity to compete for agency requirements that are fulfilled through the MAS program.

8. Contractor Political Disclosure Update

The House Oversight and Government Reform Committee has approved a bill originally introduced by Congressman Darrell Issa called the Keeping Politics Out of Federal Contracting Act (H.R. 2008). The bill would not allow the government to require contractors to disclose political contributions about the company or any of its employees. The bill is in response to the Administration’s draft executive order, released last April, that would require contractors to submit such political information when submitting bids for contracts.  The issue has been a hot topic with the White House continuing to push for the disclosure of political contributions and the Congress taking action to oppose such requirements.  In December 2011, it appeared that the matter was finally put to rest through a provision added to the National Defense Authorization Act (NDAA) for FY2012.  However, the debate was revived once again when the White House included political disclosure language in the President’s Budget for FY2013 released in February.

9. House Cyber Bills Pass

Last week was House Cybersecurity Week.  All four cyber bills that went to the floor were approved by the House and will be heading to the Senate. The Coalition has been following two of the four cyber bills that passed last week, the controversial Cyber Intelligence Sharing and Protection Act (CISPA, H.R. 3523), which has recently drawn a veto threat from the Administration, and Congressman Darrell Issa’s Federal Information Security Amendments Act (FISAA, H.R. 4257).  In addition to CISPA and FISAA, the following two bills were also passed:

  • Cybersecurity Enhancement Act (H.R. 2096).  Introduced by Congressman Michael McCaul, the Cybersecurity Enhancement Act requires federal agencies that participate in the National High-Performance Computing Program to submit to Congress a strategic plan based on an assessment of cybersecurity risk to guide the overall direction of cybersecurity research and development for information technology and networking systems. In addition, the bill appropriates funds for the National Science Foundation to offer grants for cybersecurity research and directs the Administration to submit to Congress a report addressing the cybersecurity workforce needs of the Federal Government. Also, research and development programs would be established including a collaborative program between the private sector and higher education.
  • Advancing America’s Networking and Information Technology Research and Development (NITRD) Act  (H.R. 3834). Introduced by Congressman Ralph Hall, the NITRD Act changes the name of the National High-Performance Computing Program to the Networking and Information Technology Research and Development Program, focusing on cyber research and development efforts. The bill also directs the White House Office of Science and Technology Policy to coordinate and track agency funding and efforts for cyber research and development.