Friday Flash 05.15.20

FAR & Beyond:  Unpriced Schedule…Now(?)!

This week marks the first in a series of blogs outlining a Commercial Innovation Strategy (CIS) for the GSA’s Multiple Award Schedule (MAS) program. CIS focuses on reforming the lagging MAS pricing policies that emphasize process, oversight, and audit over competition, best value, and innovation driven by commercial market dynamics. GSA has a wonderful opportunity to take the MAS program to the next level, bringing 21st century solutions to the federal customer. To do so means reforming a MAS pricing policy that is stuck in the 1980’s, a time when products represented the vast majority of sales under the MAS program. Professional services of all types/structures were not on schedule.

GSA’s Federal Marketplace Strategy (FMS) continues apace, with real progress being made on Schedules Consolidation. This progress lays a foundation for fundamental pricing reform that will align pricing policies with the consolidated contract structures (think solutions-based offerings) and improved e-tools to enhance transparency and task order competition for commercial solutions. Pricing reform is the next logical step in transforming the MAS program to increase access to, and streamline the delivery of, innovative commercial solutions to customer agencies.

The first step in MAS pricing reform is immediate implementation of the “unpriced schedule” for services priced on an hourly basis. It has now been 21 months since GSA was authorized to establish an “unpriced schedule” pursuant to Section 876 of the 2019 National Defense Authorization Act (NDAA). The title of Section 876 says it all, “Increasing Competition at the Task Order Level.” The title reflects the operational reality of the MAS program:  best value solutions are driven by competition for agency specific requirements at the task order level. Approximately two-thirds of the service orders under the MAS program are fixed price. This reality is consistent with the FAR 8.4’s ordering procedures which promote/encourage use of performance-based, firm-fixed price orders for services. The burdensome, costly, and time-consuming negotiation of contract level pricing is a disconnected drain on the market, hindering access to innovative commercial solutions that serve the federal customer.

Now is the time, and simplicity is the key. For example, GSA could take a straightforward approach by negotiating contracts to establish the basic terms, conditions, and offerings.  Price would not be negotiated.  Rather, contractors would be allowed to post/submit rates that would be available for customer agencies conducting market research. Then, consistent with the ordering procedures, customer agencies would seek competitive quotes for their SOW-requirements. Such an approach would reduce unnecessary, burdensome processes that create barriers to entry for new and continually evolving commercial solutions, services, and innovations. It also would focus pricing identification at a meaningful point in the acquisition process: the order level. This approach would also render the anti-competitive Price Reduction Clause (PRC) inoperable. As a result, contractors would no longer be penalized for fully competing in the private commercial market.

GSA not moving forward to implement the “unpriced schedule” has held back the ultimate benefits of the FMS. The success of the Schedules Consolidation and Catalog Management initiatives, however, is dependent upon access to the commercial market, and pricing reform is central to maintaining and increasing that access for customer agencies. Congress’ specific authorization of GSA’s “unpriced schedule” was a significant step forward. GSA needs to take the next step and implement the policy for an “unpriced MAS schedule.” It can and should be accomplished now. In this regard, the Coalition is here to help by working with all stakeholders towards the goal of MAS pricing reform.

Congress Releases Draft of Next COVID Relief Package 

The House of Representatives has released the text for the next COVID-19 relief package, the Health and Economic Recovery Omnibus Emergency Solutions Act or HEROES Act. The HEROES Act contains several provisions that impact Federal contractors including: 

  • Section 70401 Mandatory Telework which would mandate that agencies allow contractor personnel to telework during the national emergency if the work can be conducted remotely 
  • Section 70402 Guidance on Section 3610 that would require OMB to issue uniform guidance governmentwide with an effective date for contractor reimbursement of Jan 31, 2020 and clarification of ‘minimum applicable 13 contract billing rates 
  • Section 70403 Past Performance Ratings would ensure that contractors are not penalized by adverse performance ratings due to contract disruptions caused by the crisis 
  • Section 70404 Accelerated Payments would require contracting officers to pay prime contractors within 15 days of the submission of an invoice. 

A summary of the Bill can be found here. 

DoD Sustains Defense Industrial Base Through COVID-19

The Department of Defense (DoD) released an article, on May 5, about the tools DoD is using to sustain the Defense Industrial Base. DoD is promoting modernization and aims to maintain readiness by having multiple industry calls a week. To assist small business, DoD has ensured that large prime contractors are pushing down the extra government funding to their smaller suppliers. There have been changes as to what is allowed within a “request for equitable adjustment,” through Section 3610 of the Coronavirus Aid, Relief and Economic Security Act (CARES Act). While there have been a number of companies that have closed due to the coronavirus pandemic, DoD is trying its best to support its contractors due to concerns about completing work or acquiring materials that DoD needs when companies permanently shutdown. 

VA Releases Plan to Return to Pre-Coronavirus Operations 

The Department of Veterans Affairs (VA) has released a framework for the VA to return to pre-coronavirus operations, in accordance with the White House National Guidelines, “Opening Up America Again”, and guidance from the Office of Management and Budget (OMB) and Office of Personnel Management (OPM) memorandum M-20-23, Aligning Federal Agency Operations with the National Guidelines for Opening Up America Again. The VA’s framework contains three phases. The first phase is resuming the pre-coronavirus operations that support veterans. Phase 2 will include operations that support the families of veterans. Then Phase 3 will be almost near normal pre-coronavirus operations. The Secretary for Veterans Affairs will make the determination for starting the reopening process. The transition to pre-coronavirus operations will be determined by the ability to minimize and control exposure and infection levels and to maintain a constant decrease over time.  

The VA will follow the personnel guidelines given in the OMB/OPM memorandum. The VA also plans to address staffing shortages. There will be a maintenance of the current IT capacity to ensure access and security of the VA’s information and information systems. The VA will also consider the following before allowing employees to return to work: 

  • Availability of PPE and face coverings 
  • Capabilities of laboratory testing for COVID-19 
  • Availability of pharmaceuticals 
  • Availability of sanitizer gel and disinfection wipes for employees’ use 
  • Capacity to test and screen employees prior to accessing facilities 
  • Availabilities of facility cleaning supplies 
  • Status of schools and daycares 
  • Functionality of mass transit and parking availability 
  • Required space alterations needed to ensure appropriate physical distancing 
  • Specific VA business line requirements 

 

Delayed Transition from FPDS.gov to beta.SAM.gov 

On May 12, General Services Administration (GSA) announced on GSA Interact that the Federal Procurement Data System (FPDS) will continue to be the authoritative source for reports data. The transition period has been extended and GSA will announce the final transition date to beta.SAM.gov later in the year. During this transition period, GSA recommends industry test the capabilities on beta.SAM.gov and provide feedback to support the Integrated Award Environment (IAE) team. 

 

NITAAC Ready to Fill 8(a) STARS Gap 

Federal Computer Week reported that the National Institutes of Health’s Information Technology Acquisition and Assessment Center (NITAAC) can help agencies meet 8(a) set aside requirementsGSA’s 8(a) Streamlined Technology Acquisition Resource for Services (STARS II) contract has reached its ordering obligation ceiling of $15 billion, which could make it more difficult for agencies to meet their small business contracting goals 

The STARS II contract was initially set to last until August 30, 2021. NITAAC’s CIO-SP3 and CIO-CS contracts can be used in place of the STARS II contract, according to CIO-SP3 Contracting Officer Keith Johnson. Johnson stated that the shift for federal agencies to these contracts would be relatively straightforward. 

 

Agency-Level Protest of JEDI Cloud Contract 

Last week, Federal News Network reported that AWS filed a new protest alleging that the Department of Defense’s (DoD) new revisions to the JEDI solicitation were ambiguous and did not allow for accurate pricing on revised bids. This protest was issued at the agency level, not through the Government Accountability Office or Court of Federal Claims. Details of agency-level protests are not made publicly available.  

The part of the contract that is of issue deals with problems relating to the evaluation of AWS and Microsoft’s bids for data storage. AWS requested that DoD reevaluate all six factors used to decide the award in court, however a judge ruled that the department can choose how it would like to reevaluate.  Under the current court order, the Defense Department has until August 17 to evaluate the companies’ revised bids, however this process may be extended to a later date. 

 

GSA COVID-19 Training Slides  

The General Services Administration (GSA) has released training materials on GSA’s response to COVID-19. The slides include links and summaries of GSA’s policy changes related to COVID-19, including the class deviation to allow procurement of non-TAA compliant products and temporary exceptions for essentially the same products. The slides also cover GSA acquisition system extensions, special procurement authorities, and more.  Click here to access the slides.  

 

Coalition BRIC/Cyber Meeting: CMMC and Congressional Update, May 15 

The Coalition will be hosting a joint BRIC and Cyber Committee meeting on Friday, May 15th at 1:30 PM. Our guest speaker will be Ms. Katie Arrington, Chief Information Security Officer for the Department of Defense’s Acquisition and Sustainment Office. She will be providing an update on CMMC implementation. Following Ms. Arrington, Tim Cook, Executive Director of the Center for Procurement Advocacy, will provide a brief update on the legislative process. If you would like to attend the virtual meeting, please RSVP to Michael Hanafin at MHanafin@thecgp.org. 

 

GSA AAS to Meet with IT/Services and GWAC Committees, May 19  

The Coalition will host a joint IT/Services Committee and GWAC/MAC Committee meeting on Tuesday, May 19 at 10:00 AM. Chris Bennethum, GSA’s Acting Assistant Commissioner for Assisted Acquisition Services, will talk about the current state of AAS (including consistency in acquisition practices among the AAS regions) and will have a list of upcoming business opportunities. 

Joint IT/Services and GWAC/MAC Committee
Tuesday, May 19 at 10:00 AM
To RSVP and receive the dial-in information, email Michael Hanafin at mhanafin@thecgp.org.    

If you have any questions for Chris to address during the meeting, please email Sean Nulty at snulty@thecgp.org by Friday, May 15.  

 

VA Reports Progress in Response to COVID-19

On May 13, the Department of Veterans Affairs (VA) posted the following press release on their progress in response to COVID-19.

VA reports rising patient capacity, stable supplies and staffing 8 weeks into COVID-19 emergency

WASHINGTON – Today, the U.S. Department of Veterans Affairs (VA) announced it has maintained an increasing supply of beds for both Veterans and COVID-19 patients, steady supplies across the nation and a stable staffing situation in the vast majority of VA locations nearly two months into the national emergency.

As of late April, VA had the capacity to take in 12,215 critical and non-critical patients, up from 9,840 in March.

That increase was the result of a decision to defer elective surgeries in anticipation of a rising number of patients infected with COVID-19. It created capacity that has allowed VA to take in non-Veteran patients across the country.

This early preparation has allowed VA’s overall occupancy rates to remain steady at 35-40% nationwide in both acute care and intensive care units (ICUs), well below the crisis capacity levels that some feared as the virus spread.

“VA’s team has managed its resources wisely during this crisis,” said VA Secretary Robert Wilkie. “By deferring elective surgeries, the department opened ample space for COVID-19 patients and has been able to serve its ‘Fourth Mission’ of caring for all Americans during this crisis.”

VA’s stock of medical supplies remains robust with millions of N95 masks on hand, along with plenty supplies of hand sanitizer, gloves, gowns and eye protection. April 30 VA took possession of another 4.5 million masks the department purchased with the aid of New Hampshire Gov. Chris Sununu and inventor Dean Kamen who helped facilitate the medical supplies being flown to his home state in the face of this crisis.

VA also had 1,943 ICU ventilators on hand as of April 24, along with 826 transport ventilators and 1,218 anesthesia machines.

VA has been testing more and more people as America’s overall testing capacity has increased. As of late April, VA tested more than 132,900 people, resulting in more than 92,000 negative tests and about 9,400 positive tests. The remainder are pending results.

About 63% of the Veterans who tested positive are now at least 14 days from that test result and most of them are recuperating at home.

While about 2,200 VA employees had tested positive for the coronavirus in late April, VA is still able to provide care to Veterans across the country, while helping 38 states and territories care for COVID-19 patients, either through missions assigned by the Federal Emergency Management Agency or by working directly with state officials.

Additionally, VA has been bringing on new personnel at a record pace to bolster staff at its facilities. Between March 29 and April 28, VA hired 9,338 medical staff, including 2,147 registered nurses and thousands of additional staff are expected to join VA into early May.

 

Social Distancing Requirements Delay CMMC Rule Change 

Federal Computer Week reported that the Department of Defense (DoD) has not been able to hold a public hearing on the Cybersecurity Maturity Model Certification (CMMC) program. DoD has continued to implement the training program for CMMC, but the COVID-19 social distancing requirements have impeded the public hearing required for the Defense Federal Acquisition Regulation Supplement (DFARS) rule change to implement the new CMMC requirements for contractors. Katie Arrington, DoD’s chief information security office for acquisition, stated that DoD is monitoring the reopening of the government to evaluate when the public meeting will be able to occur. 

 

FDA Joins GSA’s Center of Excellence 

GSA announced last week that the Food and Drug Administration (FDA) would be joining its Centers of Excellence (CoE) modernization program. The CoE will work with the agency’s Office of Management and Technology to bring new technology and processes to help FDA’s regulatory work. FDA is the ninth agency to join the CoE modernization initiative. GSA’s CoE also announced its partnership with the National Institutes of Health (NIH) just days earlier. 

 

CISA to Begin Work as Shared Service Center 

The Department of Homeland Security’s (DHS) Cybersecurity and Infrastructure Security Agency (CISA) has been designated as a cybersecurity shared service center. OMB designated DHS as the interim shared service provider in April of 2019 under their revamped strategy. Under the Quality Service Management Office (QSMO), DHS will provide Security Operations Center standardization, Vulnerability Management standardization, and Domain Name Service (DNS) resolver service in the beginning. More services, potentially including network defense, incident management, and threat intelligence, will come later.  

Suzette Kent, OMB’s Federal Chief Information Officer, said OMB, the CIO Council, and the shared service governance board will create one oversight mechanism to ensure that QSMO is progressing. Kent stated that there will be a senior accountable point of contact for each agency who will be responsible for the adoption all shared services.  

 

GAO Reports on DHS Service Contract Oversight  

On May 7, the Government Accountability Office (GAO) published a report on Department of Homeland Security (DHS) service contracts, particularly how DHS uses, oversees, and budgets for these contracts. DHS’s spending on services represents over 75 percent of its annual contract obligations. The Office of Management and Budget recognized that some service contracts require extra management. GAO analyzed data from the Federal Procurement Data System-Next Generation (FPDS-NG) from fiscal years 2013-2018 of four components with high service contract obligations and eight services contracts that required heightened management.  

GAO found that between those years, DHS increased its reliance on service contracts, particularly in areas where heightened management attention may be needed. If performed by contractors lacking proper oversight from government officials, the government could be put at risk of losing control of its mission. GAO found that there was not consistent planning for the level of federal oversight needed for these contracts due to lack of guidance. In their review, GAO also found that six out of eight contracts did not identify specific oversight activities that were conducted to mitigate risks.  

GAO made six recommendations, including providing guidance for documenting and updating the federal workforce needed to oversee certain service contracts, and reporting service contract requirement costs in budget documentation. To read the full report, click here. 

 

Legal Corner: FAR Council Rulemaking Error Requires GSA Contractors to Qualify As Small at Time of Award for Certain Orders

By PilieroMazza PLLC’s Samuel Finnerty

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. 

As we recently wrote, the FAR Council published a final rule (Rule) on February 27, 2020 that amends the Federal Acquisition Regulation (FAR) to capture regulatory changes made by the Small Business Administration (SBA) in 2013, including those pertaining to size representation/certification. However, in drafting the Rule, the FAR Council made a critical change that not only deviate from SBA regulations, but also run counter to everything we know about when the size status of a contractor is determined. All small business concerns should be aware of this Rule change and should consult with counsel regarding their small business representation duties.

Specifically, the FAR Council amended FAR 19.301–1(c) (Representation by the offeror) to provide that in order to be eligible for award of an order set aside for small business under a Basic Ordering Agreement (BOA) or Blanket Purchase Agreement (BPA) issued pursuant to FAR Part 13, the offeror must be a small business at the time of award of the order.

The foregoing Rule deviates from two well-established principles of law regarding size representation. First, the Rule ignores the fact that size is generally determined as of the date a concern submits its initial offer, including price—and not at the time of award. In fact, apart from a few narrow exceptions that do not apply in the present context, size is never determined at the time of award. As it relates here, it is important to note that because agreements, like BOAs and BPAs, are not contracts, offerors cannot rely on their size representations made in connection with the same when pursuing set-aside orders issued thereunder; but, rather, must rerepresent their size in connection with each order. Critically, however, under SBA regulations, such offerors represent their size at the time of their offer for any such order—not at the time of award.[1] Thus, by requiring such offers to also qualify as small at the time of award, the Rule imposes a new requirement that is inconsistent with SBA regulations.

Second, the Rule fails to recognize SBA’s regulations pertaining to BPAs established under FAR Part 13 with General Services Administration (GSA) Federal Supply Schedule (FSS) contractors. Indeed, because GSA schedules are contracts, and offerors represent their size status at the time of offer for the same, SBA regulations expressly provide that such contractors are not required to rerepresent their size status in connection with orders under BPAs issued against GSA schedule contracts. In others words, SBA rules, after which the new FAR Rule was purportedly modeled, do not require a concern to qualify as small at the time of offer, much less award, for a FAR Part 13 GSA Schedule order issued against a BPA.

In sum, the FAR amendment outlined above is significant because, unlike SBA regulations, it requires all GSA schedule contractors to qualify as small at the time of award for any BPA orders issued under their schedule contracts. Since GSA schedules can extend for a number of years, and, subject to certain exceptions, a contractor maintains its size status for the life of a contract, this Rule could have major consequences for schedule contractors wishing to pursue set-aside orders issued against BPAs.

Unfortunately, those in the industry that are impacted by this rule change had no opportunity to comment on the same before it was enacted, because the FAR amendment discussed herein was not included in the Rule, as first proposed in 2016. And, because this new FAR provision is not explained in the final Rule’s preamble, we can only guess what the FAR Council’s intent was in enacting this conspicuous regulation. While it is possible the FAR Council intended to model FAR 19.301–1(c) after SBA’s regulations pertaining to FAR Part 13 agreements[2], the Rule, as drafted, falls short of that goal and creates a number of questions that will create headaches for federal contractors.

 

Legal Corner: Emergency Government Contracting: FEMA Issues Regulation Implementing Defense Production Act

By Hogan Lovells: Joy Sturm, Dave Burgett, Allison Pugsley, Annie Vanselow, and Stacy Hadeka

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. 

The U.S. Federal Emergency Management Agency (FEMA) issued an interim final rule (the “Rule”) on May 13 to implement standards and procedures for use of the priorities and allocations authority under the Defense Production Act (DPA). The DPA is a statute that gives the President emergency procurement and manufacture allocation authority. DPA authority may be delegated to Federal agencies, which are required to issue rules to govern agency-specific use of DPA authority.

In the wake of the COVID-19 pandemic, the President delegated DPA authority to the Secretary of Homeland Security, who then re-delegated it to FEMA. On April 7, FEMA used this authority to issue a temporary final rule that effectively imposes domestic allocation requirements for certain personal protective equipment, and prohibits its export without FEMA authorization. A summary of the impact of the temporary final rule can be found here.

In the May 13 Rule, FEMA establishes the Emergency Management Priorities and Allocations System (EMPAS), which will be the FEMA-specific regulations that will become part of the Federal Priorities and Allocations System (FPAS)­­­­ — the body of regulations that governs the President’s authority under the DPA. Although FEMA’s current authority extends to health and medical resources needed to respond to the spread of COVID-19 within the U.S., the Rule is not limited to the COVID-19 response.

The EMPAS borrow significantly from existing regulations, such the Department of Commerce’s Defense Priorities and Allocations System (DPAS) regulations, which are the most commonly used FPAS regulations, and the Department of Health and Human Services’ Health Resources Priorities and Allocations System (HRPAS) regulations. The EMPAS, however, differ in one key aspect. With respect to rated order authority, they authorize FEMA to place priority orders not only on behalf of the Federal government, but also for the benefit of third parties.

Given that this is an interim final rule, it goes into effect immediately. The agency is required to issue a final rule after seeking comment on the interim rule. Comments are due by June 12, 2020.

Key elements of the EMPAS

The following are key similarities and differences between the EMPAS and the DPAS and HRPAS:

  • Procedures for use of “rated orders,” which are priority ratings that are assigned to certain government contracts.
    • The EMPAS adds certain new definitions. For example, in contrast to other FPAS regulations, FEMA has chosen to specifically define “written” and “in writing” to make clear that FEMA will accept either hard copy or electronic documents as “written” communications or records under this rule. FEMA indicates that it wishes to allow electronic communication to the greatest extent possible, for more efficient operations.
    • The rating symbols remain the same for both DPAS and EMPAS.
    • The EMPAS includes additional detail regarding the time limits for accepting or rejecting orders.
    • As discussed further below, as part of the COVID-19 response, FEMA is coordinating efforts to assist third parties in obtaining critical health and medical resource supplies. The DPAS does not include corresponding provisions.
  • Standards for “allocation” orders, which may be placed when there is insufficient supply of a material, service, or facility to satisfy national defense supply requirements.
    • Like the DPAS and HRPAS, the EMPAS enumerates the three types of allocation orders, including “set-aside,” “directive,” and “allotment.”
    • The EMPAS clarifies that an allocations directive takes precedence over all priorities directives, rated orders, and unrated orders previously or subsequently received, unless a contrary instruction appears in the directive.
    • FEMA recognizes that, with respect to the present COVID-19 emergency, the President has already established the criteria necessary for FEMA to invoke allocation authority.

New authority under the EMPAS

Noting “the unique circumstances faced in the COVID-19 pandemic,” the Rule explains that “it may be necessary or appropriate for FEMA to use its priority rating authority under section 101(a)(1) of the DPA to facilitate the sale of health and medical resources to third parties.” Accordingly, Section 333.19 of the EMPAS includes a provision that permits FEMA to use its rated order authority to assist private parties in obtaining critical health and medical resources as part of the current response for COVID-19 and other emergency circumstances.

Under the new regulatory provision, FEMA places an order to facilitate the sale to a third party, and the third party is responsible for satisfying the applicable terms of sale and payment. The regulations specifically provide that the Federal government will not be liable for any failure to meet the terms of sale or payment for rated orders to facilitate sales to third parties. DPA immunity from breach of contract claims that may result from delay or nonperformance of commercial contracts resulting from prioritization of a rated order appears to continue to apply in the context of third party orders.

FEMA requires that these rated orders include language making clear that the order is being placed to facilitate a sale to a third party. FEMA states that “the additional required language in these rated orders will ensure those receiving the order clearly understand that the order is for the facilitation of a sale to a third party, and may help avoid any confusion or delay that might otherwise occur.”

*         *         *

If you have any questions about how use of these expanded procurement tools may affect your company or would like assistance with submitting comments, please do not hesitate to contact our Government Contracts team.

 

DFARS Proposed Rule: Expediting Contract Closeout 

On April 8, the Department of Defense (DoD) published a proposed rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to expedite contract closeout. DoD is proposing that both the contractor and the Government waive entitlement to any residual dollar amounts that are due to either party at the time of final contract closeout. The change is intended to save administrative costs for both the contractor and the Government.  The proposed DFARS clause 252.204-70XX, Expediting Contract Closeout, would be prescribed at DFARS 204.804-70 for use in solicitations and contracts, including those under FAR part 12 procedures for the acquisition of commercial items. 

The Coalition plans to submit comments on the proposed rule, which are due June 8, 2020.  If you have any feedback or questions, please send them to Aubrey at awoolley@thecgp.org by May 27. 

 

SBA Amends its WOSB and EDWOSB Certification Requirements 

The Small Business Administration (SBA) released a final rule, on May 11, to amend its regulations to put in place a statutory requirement to certify Women-Owned Small Business Concerns (WOSB) and Economically Disadvantaged Women-Owned Small Business Concerns (EDWOSB) participating in the WOSB Procurement Program. This requirement will only apply to businesses that want to compete for set-aside or sole source contracts under the Procurement Program, and those looking to be awarded multiple award contracts for pools reserved for WOSB and EDWOSB. Other women-owned small business concerns that do not participate in the Procurement Program can continue to self-certify their status, receive contract awards outside the Procurement Program, and count toward an agency’s goal for awards to WOSB. For additional details, read the final rule here.