1. Notice to Coalition Members
I want to update you on some recent changes that have a positive impact for all members.
The first is that Carolyn Alston is our new Executive Vice President & General Counsel. No one matches her background and domain expertise. She has already had an immediate positive impact for all Coalition members. Please take time to read one of her initial efforts, her comment of the week below!
Carolyn is also freeing me up to focus on expanding member services to include GWACs, MACs and Enterprise Contracting. This leads to our next exciting change. In response to member demand, the Coalition is establishing a GWAC/MAC and enterprise contracting committee focusing on inter-agency multiple contracting programs across government.
July 18,2012, is our new GWAC/MAC/Enterprise Contracting Committee’s first event. This is a great business development event for our members. Speakers include representatives from DHS, FAS OASIS, FAS ITS, NIH, NASA (invited), and Navy (invited). There will be an update on their acquisition vehicles and the future of their multi-billion dollar programs.
The exciting news for all of our members is that with the addition of this new GWAC/MAC/enterprise contracting committee, the Coalition’s policy and program reach has grown from $50b (GSA/VA schedules) to over $200b (GWAC/MAC and the GSA/VA schedules). This should be very important to our members for their strategic business planning sessions.
We will continue to communicate changes to help members stay abreast of federal acquisition policies and their impact on contracting, compliance, and the marketplace.
Please take advantage of these new changes and let your Member Services Executive Sandy Arce (sarce@thecgp.org) know if you need additional information. And, as always you can feel free to contact me directly any time!
Also, please don’t miss next week’s Off the Shelf on 1500 Federal News Radio where the guest will be Jim Ghiloni, Director of the OASIS program!
Roger
Comment of the Week
By Carolyn Alston, Executive Vice President and General Counsel
I read with interest Steve Kempf’s, testimony before the Small Business Subcommittee on Contracting and Workforce. Kempf, who is GSA’s Commissioner for the Federal Acquisition Service (FAS) acknowledged that GSA needs greater agility, federal agencies need faster access to emerging solutions, and GSA needs to find better ways of using its work force. I was encouraged by the testimony because the Commissioner states “[a]s we look to the future FAS is developing a Supplier Relationship Management Program focused on lowering government’s cost of doing business by enhancing our relationship with our critical contractors.” The statement is encouraging because it suggests that GSA may target an area that seems to have slipped to the backburner, the relationship between business partners.
For a while the government procurement community, not just GSA, has unwaveringly focused on oversight to avoid abuses and leveraging the government’s volume to lower prices. The regulatory process has become more complex; assessment of monetary fines to enforce contract provisions is routine and we regularly see requests for proposals with large demands and few commitments. The government concerns are legitimate. Despite a heavy handed approach, however, the results do not appear to have dramatic improvements to the procurement process. If low cost, agility, access to innovation and better use of the work force are the goals, a different approach may be more effective.
A Supplier Relationship Management Program with an objective of enhancing contractor relationships may just be that way. Particularly in our current economy, some commercial enterprises have turned to supplier relationship management as a method of both enhancing performance and improving their bottom lines. Those strategies start with discussions of collaboration and strengthening supplier relationships. A contract, whether in the government or commercial market, is an agreement where each party has its own economic realities, expected outcomes and organizational integrity. The deal works best when the interest of all parties are known, understood and to the extent possible, accommodated.
GSA has been a leader in providing information on its programs to the contracting community using online systems, industry meetings and its annual Expo. We hope that any supplier relationship management program that FAS develops will provide an opportunity for GSA to now gather intelligence about the commercial market that will enhance the ability of MAS contractors to provide better and even more cost effective services to federal customers.
We believe there are significant opportunities for GSA to lower contactor cost of doing business and thereby lower the prices that the government pays. Similarly, there are opportunities for GSA to allow more rapid introduction of innovative services and products into the Schedules program. To achieve these results, there are a few items that are high on the list of contractor priorities. We hope that GSA will address these topics under the umbrella of any supplier relationship management program that it pursues. Particularly,
- Eliminate any unnecessary government unique provisions contained in its GSA Schedule contracts and BPAs. The GSA Schedule is constructed to facilitate the acquisition of commercial services and products. The ability of commercial contractors to use standard commercial terms and processes eliminates costs and improves their ability to deliver high quality products and innovative solutions. Schedule contracts that successfully integrate government requirements and commercial practices benefit federal customers and taxpayers.
- Maintain a flexible pricing policy that leverages the government’s volume while setting reasonable pricing objectives. GSA’s current Multiple Award Schedule (MAS) pricing policy has provided a platform for contract negotiations for more than 20 years. After 20 years, however, we believe it’s time for government and industry to take another look. GSA has indicated that it will reexamine the GSAR provisions on MAS pricing. The Coalition has the domain credibility that can provide an important voice for industry on this matter. In anticipation of a new rulemaking the Coalition has established a working group to review and propose changes to the policy. The objectives of the working group are to suggest MAS pricing techniques that:
- Better reflect the current commercial market and contractor industry practices
- Provide clarity so contractors can enhance compliance efficiently and reduce costs to taxpayer
- Better balance the risks and rewards of government and industry
- Accommodate services and solutions based pricing
I look forward to chairing the MAS Pricing Policy working group and will update you as the project as develops.
- Reduce contract duplication. Roger has commented on this issue several times and it remains a priority of the Coalition. Our members report that the number of times that they must compete for similar services and products continues to grow thus driving up their costs. A solution for buying “other direct costs” (ODC) would go a long way towards reducing the need for agencies to establish contracts that compete with GSA’s schedule program. An ODC solution would also enhance the ability of contractors to offer flexible and innovative solutions to federal customers. The Coalition will soon provide feedback to GSA regarding its contract duplication survey and hope that it will be useful to GSA in tackling this significant issue.
I feel privileged for the opportunity to work with Coalition members, GSA and other members of the procurement community to continuously improve the government’s premier commercial acquisition vehicle.
Carolyn
2. Threat of Defense Sequestration Prompts Speculation
The looming possibility of sequestration in January 2013 continues to push Defense officials and Congress to prepare for the potential consequences of steep budget cuts. Federal officials want to avoid automatic, across-the-board cuts that would result from an automatic sequestration, which was negotiated as part of the deficit negotiations last year.
DoD has benefitted from an expanded budget and relative fiscal freedom for the last decade, and is still transitioning to become a more budget conscious operation. There is concern that sequestration could severely affect the department’s ability to carry out its mission, putting national security at risk. Martin Dempsey, chairman of the Joint Chiefs of Staff, has predicted that if sequestration were to happen, the cuts would have to come from military operations, maintenance, training and modernization. DoD would have to adjust its budgeting to continue to fund programs that need to be operational and foster sharp cut-backs in other places. Without a solution, DoD could start to layoff civilian and industry employees this year in preparation for the possibility of sequestration.
Sen. Carl Levin (D-Mich.), chairman of the Senate Armed Services Committee, is hopeful that an agreement will be reached before January 2013. However, if an agreement is reached too late, there still could be negative impacts. As a result, Levin is urging Congress to announce a budget agreement before the November election. Levin is adamant that any agreement reached must include some Defense cuts, but that any reductions should be targeted and less severe than sequestration.
3. GAO: DoD Acquisition Workforce Funding Lacks Guidance
On Thursday, the GAO released a report seeking clarified guidance on the availability and use of acquisition workforce funds to improve the Defense Department’s execution of workforce program initiatives. The Defense Acquisition Workforce Development Fund (DAWDF) was developed in 2008 to provide support and funding for the expansion of DoD’s acquisition workforce. DAWDF funds are used for recruitment, hiring and training of personnel. The fund is a critical part of DOD’s efforts to maintain a strong workforce that can efficiently and effectively help DoD meet its acquisition needs. However, GAO found that there are no clear guidelines on the collection and availability of funds, which has resulted in a delay in the distribution and use of funds to improve the workforce. According to GAO, there is also a lack of cohesion between the strategy for DAWDF use and the plan for workforce development. The GAO recommended that DoD officials: 1) revise the existing DAWDF strategy and establish when and how funds will be collected and used and 2) create measures to ensure that the fund’s use supports workforce goals. The DoD Acquisition, Technology and Logistics office plans to submit a revised funding report and human capital plan this month.
GSA would like to remind all 871 LOGWORLD vendors to respond to the survey issued by the Management Services Center on Friday, June 15th.
GSA is in the early stages of evaluating the concept of creating a Special Item Number (SIN) for cost reimbursable items on GSA Schedule Contracts, such as other direct costs. The purpose of the survey is to gather information to decide whether to move forward with a pilot project on the LOGWORLD Schedule to test the concept.
GSA has had several bouncebacks sending the LOGWORLD survey due to inaccurate email addresses, so if a LOGWORLD vendor did not receive the email, please check the POC info in GSA E-Library and make sure it is correct. If vendors have any questions, please contact Kelly Bailey at 253-931-7712 or kelly.bailey@gsa.gov.
5. Denham Scrutinizes Waste in Federal Property
Rep. Jeff Denham and Rep. John Mica scrutinized the efficiency of GSA’s property management at a House Subcommittee on Economic Development, Public Buildings and Emergency Management hearing on Tuesday. The hearing was held off-site at the Georgetown West Heating Plant, a property that GSA plans to put up for auction in September 2012. The field hearings are a part of a recent “Stop Sitting on Our Assets” campaign, targeted to speed up the government’s effort to dispose of buildings that have been vacant for years. The committee representatives continued to emphasize that the government is not doing enough to sell unused property, which is wasting billions in taxpayer money. They urged the passage of the Civilian Property Realignment Act, which was passed in the House in February, but remains in the Senate. Flavio Peres, deputy assistant commissioner for real property utilization at the Public Building Service, testified on behalf of GSA. He stated that GSA is ahead of the Administration’s goal for property savings, $8B for FY 2012. While many of the buildings are in the process of being sold, Mr. Perez went on to explain that properties must go through a screening process that takes time to complete. Despite the perceived “slow-down” in property sale, GSA is working hard with agencies and private sector brokers to identify, market and dispose of underutilized buildings.
6. GAO Report on Federal Real Property
On June 20, the Government Accountability Office (GAO) released a report entitled National Strategy and Better Data Needed to Improve Management of Excess and Underutilized Property (GAO-12-645). The study was conducted in response to a request for GAO to determine the extent to which (1) the FRPP (Federal Real Property Profile) database accurately describes the nature, use, and extent of excess and underutilized federal real property, and (2) progress is being made toward more effective management of these properties. In order to better manage federal real property, the government established the FRPC (Federal Real Property Council), chaired by OMB, which created the FRPP database managed by GSA. GAO found that the FRPC “has not followed sound data collection practices in designing and maintaining the FRPP database, raising concern that the database is not a useful tool for describing the nature, use, and extent of excess and underutilized federal real property. GAO identified inconsistencies and inaccuracies at 23 of the 26 locations visited related to these data elements.” In addition, GAO notes that some previously undertaken efforts to enhance management of real property “have been discontinued and potential savings for others are unclear.” The report cites that while GSA claims to have achieved lease cost savings resulting from four new construction projects, the buildings are unoccupied and would achieve savings over a 30-year period, well outside the parameters of a recent Presidential memorandum. In conclusion, GAO recommends that, in consultation with FRPC, GSA develop a plan to improve the FRPP and that OMB develop a national strategy for managing federal excess and underutilized real property.
7. Federal Agencies Report Green Progress
Federal agencies released their annual Office of Management and Budget (OMB) Sustainability and Energy Scorecards on June 15, 2012. The scorecards provide a snapshot of agency energy and sustainability performance. Each agency has set their own performance goals based on their unique mission and structure in areas such as greenhouse gases (GHGs), green buildings, energy use, and petroleum and water use. The General Services Administration (GSA) scored the highest level, green, in all areas of their scorecard— which shows that their progress is in alignment with the goals outlined in their sustainability report. Two areas of GSA’s scorecard are of particular interest. First, GSA achieved a 6.6% reduction in Scope 3 GHGs in FY2011, which includes the supply chain. The long-term target is a 44% reduction in Scope 3 GHGs by 2020. GSA may be taking a closer look at the supply chain in the future as one means of reaching this goal. Secondly, GSA has made significant progress in meeting its green buildings goals. GSA reports that 8% of federal buildings are “sustainable” in alignment with the Guiding Principles for Federal Leadership in High Performance and Sustainable Buildings.
8. Thank you to our MAS Basic Trainers
The Coalition would like to thank all the trainers who participated in the June 2012 MAS Basic Training workshop. We sincerely value the time and efforts put into each presentation, and appreciate your enthusiasm to share your expertise with others. The June 2012 MAS Trainers were an integral part to the success of workshop, and we thank you for providing exceptional content and presentations for the course.
The MAS Basic Training brings together both government and industry experts to speak about relevant issues in federal procurement. The workshop provides attendees with a foundational knowledge of the GSA Schedules program and the basics of managing federal contracts.
Trainers for the June 2012 MAS Basic Training were:
GSA
Tim Dempsey, Systems Chief, MAS Program Office, FAS Office of Acquisition
Denise Alley, Procurement Analyst, GSA MAS Program Management Office
McKenna Long & Aldridge
Alison Doyle, Partner, McKenna Long & Aldridge LLP
Jack Horan, Partner, McKenna Long & Aldridge LLP
Jason Workmaster, Partner, McKenna Long & Aldridge LLP
Coalition Members
Jeff Clayton, Director, Baker Tilly Virchow Krause, LLP
Dave Goins, Manager Federal Contracts, Xerox Corporation
Kitty Klaus, Program Manager, HP Enterprise Services
WMG/Deltek
Jack Mackey, Principal Consultant, WMG/Deltek
Sonia Kessler, Consultant, WMG/ Deltek
Patrick Morrison, Director of Client Services, WMG/Deltek
Peter Weishaar, Consultant, WMG/Deltek
The Coalition looks forward to continuing the tradition of delivering outstanding content at future MAS Basic Trainings!
Proposed Rule Would Create SBIR and STTR Opportunities For Investment Companies
Guest Bloggers: Richard Oliver and Agustin Orozco, McKenna Long & Aldridge LLP
The Small Business Administration (“SBA”) recently issued a proposed rule which, for the first time, would allow venture capital operating companies, hedge funds and private equity firms (“investment companies”) to meaningfully participate in the Small Business Innovation Research (“SBIR”) and Small Business Technology Transfer (“STTR”) programs. This proposed rule would implement provisions of the National Defense Authorization Act for Fiscal Year 2012. Specifically, the proposed rule would revise the affiliation rules for participants in the SBIR and STTR programs to permit participation by concerns that are majority-owned by multiple investment companies. See 77 Fed. Reg. 28520-30, May 15, 2012.
Access to the SBIR and STTR programs would be a significant funding opportunity for small businesses that are largely owned by investment companies. The SBIR and STTR programs were created to award federal research grants to small businesses. Specifically, the purpose of the SBIR program is to stimulate technology innovation by strengthening the role of innovative small business concerns in federally-funded research and development. Federal agencies may award up to $150,000 for a Phase I SBIR contract and up to $1,000,000 for a Phase II contract. Agencies also will have discretion to exceed the SBIR contract award amounts by up to 50 percent and even to award a second Phase II contract. Similarly, the STTR program requires certain federal agencies to enter into funding agreements with small business concerns that engage in a collaborative relationship with research institutions.
The proposed rule would allow investment companies to participate in the SBIR and STTR programs, as long as no single investment company owns more than 50 percent of the concern. The proposed rule would modify the affiliation rules solely for the SBIR and STTR programs. Currently, such concerns would not be eligible, because the concern would be considered to be affiliated with not only the investment companies, but also the other companies owned by these investment companies. SBA’s general principles of affiliation state that if two or more persons own, control or have the power to control less than 50 percent of the concern’s voting stock, but the blocks of stock are equal or approximately equal in size, the SBA presumes each person to control the business concern. By contrast, SBA’s proposed rule provides that where an SBIR or STTR applicant’s voting stock is widely held or where two or more persons (including investment companies) hold large blocks of voting stock but no one person owns more than 50 percent of the stock, the board of directors controls the applicant. The investment companies, therefore, would not be affiliated with the SBIR or STTR applicant.
The proposed rule would also amend the current affiliation rules with respect to an investment company’s portfolio companies. Under the proposed rule, an SBIR or STTR applicant would not be affiliated with a portfolio company of an investment company solely on the basis of shared investors. Additionally, the proposed rule states that if an investment company is determined to be affiliated with an SBIR or STTR applicant, the applicant will not be affiliated with a portfolio company of the investment company, unless: (1) the investment company owns a majority interest in the portfolio company; or (2) the investment company holds a majority of the seats of the board of directors of the portfolio company.
There are several aspects of the proposed rule that may be addressed during the public comment period. While the proposed regulation references stock ownership by “multiple” investment companies, it does not address the allowable percentage amount of minority ownership. Thus, two investment companies could each own 49 percent of the concern. The proposed rule also does not require that the multiple investment companies not be affiliated. Two “sister” investment companies could each own 49 percent of the stock, with the small business being 98 percent owned by two related investment companies.
In order to participate in the SBIR and STTR programs, these small businesses must qualify as a “domestic business concern.” The proposed rule would revise the definition of domestic business concern in anticipation of the participation of small businesses owned by multiple investment companies. The new definition would continue to use the SBA’s definition of “business concern or concern,” however, it would also require the business concern to be created or organized in the United States, or under the law of the United States or of any State.
The proposed rule would amend the time at which SBA makes size and eligibility determinations for SBIR and STTR contracts. Currently, size and eligibility are determined at the time of award for both Phase I and Phase II awards. The proposed rule, however, would require the SBIR or STTR applicant to meet the size and eligibility requirements both at the time of submission of the application and at award.
Finally, with respect to certification, the proposed rule would require concerns that are majority-owned by multiple investment companies to register with SBA on or before the date they submit a response to an SBIR solicitation. In addition, these concerns would be required to indicate in their SBIR proposals that they have completed this registration.
Comments on the proposed rule are due on or before July 16, 2012.
LA:17954701.3
10. Data Reporting Meeting with GSA
In a recent letter to GSA, the Coalition expressed member concerns with recent data reporting requirements. Reporting requirements under the recent Point of Sale and Transactional Data (PoST) pilot program and the UPC codes were specifically addressed in the letter. In response, the Office of Acquisition Management has agreed to meet with the Coalition regarding the purpose of data collection and to hear vendor suggestions about how the Government’s goals of transparency and value can best be achieved. The meeting will take place July 16. If you have any feedback regarding data reporting in general, level 3 data or UPC codes, please contact Aubrey Woolley at awoolley@thecgp.org.
11. NDAA Update: The National Defense Authorization Act for FY2013 has reached the Senate with some relevant provisions for contractors. Members should note that there are two different versions of the bill; one passed the House of Representatives on May 18, while the other is currently being worked on in the Senate. Below is a breakdown of the relevant provisions for contractors:
House Version
- Mandatory suspension or debarment for a contractor misrepresenting itself as a small business.
- Increased small business goals from 23 to 25% overall, and 35.9 to 40% for subcontracting.
- $8 Billion more than the Administration’s DOD budget proposal. $4 billion more than Senate version.
- Withhold 20% of appropriated funds from the Navy, Air Force, and the Office of the Secretary of Defense until certification by the Defense Secretary is submitted to Congress stating that service contract inventories have begun.
- More rules on contract bundling and a broader definition of bundled contracts.
- Prohibitions on insourcing from small business unless the procedures and methods for making the decision are made publicly available.
Senate Version
- Save $5 billion by cutting 5% in spending on both DOD civilians and service contractors over the next 5 years.
- Tasks Pentagon with writing a report by Aug. 15 on the impact of sequestration on military readiness, industry and employment.
- Contractor pay reimbursement cap lowered from $763,029 to $230,700.
12. GSA Blog – Future of Government IT
On June 18, Assistant Commissioner for the Office of Integrated Technology Services, Mary Davie, posted an article entitled, Defining the Future of Government IT to her blog. The post summarizes developments and topics that were discussed at a recent roundtable in Washington, DC that “brought together federal CIOs, CTOs, and thought leaders in technology from the public and private sectors.” Topics discussed at the roundtable included the government’s strategy to increase efficiency in the face of budget cuts. Davie wrote that the current situation provides “a significant challenge and a unique opportunity for GSA to bring agencies together to identify major IT challenges, share industry best practices, and develop innovative acquisition solutions to move government IT forward.” As the need for “mission-enhancing” technologies like mobility, cloud, video and agency-specific mobile applications grow, the Office of Management and Budget (OMB) has recently released the 25-point IT reform plan, “cloud-first” and “shared-first”policies, and the Digital Government Strategy. At the recent roundtable, Federal CIOs claimed that infrastructure requirements are more common than dissimilar across the government. This notion will support GSA’s position in reducing the government’s costs and increasing operational efficiencies through efforts like the Federal Risk and Authorization Management Program (FedRAMP). GSA has also helped agencies save “about $7.7 billion through its Networx contract since 1999, as compared to commercial telecommunications prices,” wrote Mary Davie.