Friday Flash 07.06.12

1. Comment of the Week

The Coalition hopes everyone had a wonderful Independence Day!  July 4th reminds me that it is time to start thinking about the Coalition’s annual fundraiser, the Wounded Veterans Fund Golf Tournament.  This year’s tournament will be held on August 29th at Whiskey Creek Golf Course (back by popular demand).

Due to the generous support from our members, last year we were able to donate over $10,000  to two organizations that assist returning veterans:  Operation Second Chance and Hope For The Warriors.  Coincidently, I was thumbing through the July 5th Wall Street Journal when I came upon an article focusing on the leading role military wives have volunteering to assist veterans from Iraq and Afghanistan.  The article features, in part, Robin Kelleher and Shannon Maxwell, military wives who co-founded Hope For The Warriors.  Coincidence or not, the article reinforces the importance of this year’s Golf Tournament and making it an even bigger success!

Golf Tournament to Benefit the Wounded Veterans Fund, August 29

Please take a moment to consider sponsorships or round up a foursome today. The “Title Sponsorship”, only one available, is $5,000.  The sponsorship includes eight playing spots among other valuable marketing opportunities and additional golf vouchers.  However, the Lunch & Reception sponsorships are already sold out!   The Coalition thanks our Lunch & Reception Sponsors, Bridgeborn Inc. and Cachendo, a Globecomm Company, for their support.   We also thank Corporate Care, Dynanet, and our Keystone Members for their participation.  But there are still many sponsorship opportunities available, including two Beverage Sponsorships for $1,500 each.  Finally, please give special attention to the HONOR AMERICANS Hole Sponsorship, which will pair you and two playing partners with a disabled veteran golfer.  Even if you can’t play, you can support this great event with a Hole Sponsorship for just $350.  Please consider doing this right now.  For the full list of sponsorship opportunities and to register to play, visit us at 2012 CGP Golf Tournament.

The Future of Multiple Award Contracting, July 18

On July 18th  the Coalition launches the GWAC, MAC and Enterprise Contracts Committee with a forum on “The Future of Multiple Award Contracting.”  The Coalition thanks Bloomberg for its support of the forum.  Accounting for over $200 billion in annual federal purchases of services and products, multiple award contracts are central to the federal procurement system.  The Forum will have the latest information regarding key contracting, market and policy trends in the world of multiple award contracting.

Market, Statutory & Regulatory Panel

The first panel discussion during the event will focus on the key market, statutory and regulatory forces shaping multiple award contracting.

Featured Speakers:

David Drabkin, Director, Acquisition Policy, Northrop Grumman

Jon Etherton, President, Etherton and Associates

Brian Friel, Federal Business Analyst, Bloomberg Government

Tom Sisti, Director and Chief Legislative Counsel, SAP

Topics covered-

  • What are prospects for further statutory, regulatory or other policy changes?  
  • How is the budget impacting these contracts? 
  • Why and how were multiple award contracts authorized and implemented?  
  • How are the current policies and procedures governing multiple award contracts working?  What are the key policy/operational challenges? 
  • What does OMB’s business case memorandum mean for government and industry? 

Acquisition Leadership Panel

The second panel will feature a Myth-Busters conversation with key government acquisition leaders regarding major GWACs, MACs and Enterprise contracting vehicles.

Featured Speakers:

Robert Coen, Deputy Program Director, NIH Information Technology Acquisition and Assessment Center (NITAAC) GWAC Program, NIH

Jeff Koses, Director, Office of Acquisition Operations, GSA FAS

Mike Smith, Director, Strategic Sourcing Program Office, DHS

Casey Kelly, Director, FAS Enterprise Government Acquisition Contract (GWAC) Center, GSA

Elliott Branch, Deputy Assistant Secretary, Navy (Acquisition and Procurement) in the Office of the Assistant Secretary of the Navy (Research, Development and Acquisition), US Navy [Invited]

Joanne Woytek, Program Manager/CoTR, NASA SEWP [Invited]

Topics covered-

  • Are there key purchasing trends that are shaping the current market? 
  • What are key trends regarding volume, competition and requirements at the task order level?  
  • What are the key management and procurement issues facing these contracting vehicles? 
  • How are these leaders responding to the budgetary challenges facing the federal government? 
  • How do customer agencies select the right MAC or GWAC? 
  • What will OASIS bring to the market? What does OASIS mean for government customers and industry?
  • How do these contract vehicles deliver greater flexibility for customer agencies dealing with fiscal constraints? 
  • How are these contracting vehicles addressing and accessing small businesses? 
  • What are the strategic goals, performance measures for these contracting vehicles? 

Who should come? Business Development staff; Contracting and other Acquisition Professionals; Program/Contract Vehicle Managers and In-house Counsel.

We look forward to seeing you on July 18th for a thoughtful and engaging dialogue on “The Future of Multiple Award Contracting!” Register now!

2.  Attention All Committee Members

The Coalition Committees are a vital tool to communicate information to association members.  We are happy to  launch two new committees, the GWAC/MAC/Enterprise Contracts Committee in July and a Small Business Committee in October.  These committees expand the scope of procurement methods and types covered by the CGP.  To accommodate the addition of the new committees, we are reassigning primary points of contact to the committees as follows:

Federal Buildings Committee

Coalition Contact:  Aubrey Woolley

Furniture and Furnishings Committee

Coalition Contact:  Carolyn Alston

General Products/Office Supplies Committee

Coalition Contact:  Aubrey Woolley

Green Committee

Coalition Contact:  Aubrey Woolley

GWAC/MAC/Enterprise Committee

Coalition Contact:  Roger Waldron

Healthcare Committee

Coalition Contact:  Roger Waldron/Carolyn Alston

IT/Services Committee

Coalition Contact:  Roger Waldron

Imaging Equipment Committee

Coalition Contact:  Aubrey Woolley

Small Business Committee

Coalition Contact:  Carolyn Alston

MAS Pricing Working Group

Coalition Contact:  Carolyn Alston

3. CGP Member Feedback for DPAP

The Coalition recently engaged in a mythbuster’s dialogue with Defense Procurement and Acquisition Policy (DPAP) on acquisition issues important to the membership.  DPAP has requested that the Coalition provide feedback regarding how to make acquisition within DoD more competitive.  In particular, they are interested in hearing about DoD activities that do not increase value for the Department, but add to costs.  Please contact Aubrey Woolley at awoolley@thecgp.org if you have any suggestions.

4. Bill Seeks to Remove UNICOR Source Preference

Rep. Bill Huizenga (R-MI), introduced a bill last Thursday to the House Small Business contracting and workforce subcommittee that would require Federal Prison Industries (FPI) to compete for federal contracts. The legislation aims to lift the mandatory source preference given to UNICOR. Before 2008, when Congress limited UNICOR’s source preference, all agencies were required to buy furniture products produced by FPI. The current restrictions lift the source preference for DoD if UNICOR has a 5% market share, and for all other agencies if it has a 20% market share. However, UNICOR can still compete for contracts once it reaches its market share threshold. Thus, many lawmakers and small business advocates argue that the preference negatively impacts businesses because UNICOR is able to outbid other competitors due to FPI’s exemption from minimum wage, employee benefits and tax regulations. The new bill would help to increase fair competition by ending the mandatory preference and requiring FPI to increase wages and comply with certain health and safety standards.

5. Alternative Workplace Strategies in the Government

With downward pressure on the Federal budget, agencies are adopting innovative means of reducing their property footprint and the workplace itself for many government employees.  Learn more about this trend at the upcoming Alternative Workplace Strategies forum on July 24th hosted by the Federal Buildings Committee.

Alternative Workplace Strategies Forum 

July 24th, 10 a.m. – 12 p.m.

Mayer Brown

1999 K Street, NW, Washington, DC

The event will feature a public/private sector dialogue on alternative workplace requirements and trends in the Federal market. Commercial best practices will also be presented as a model for Federal agencies as they transition to a more flexible mobile workplace and achieve their missions in the current budget environment.

Government Speakers:

Larry Melton, Assistant Commissioner for Facilities Management, GSA Public Buildings Service (PBS)

Donald Bathurst, Chief Administrative Officer, Department of Homeland Security

Bart Bush, Assistant Commissioner, Portfolio, PBS [Invited]

Industry Speakers:

Chris Hood, Managing Director, Workplace Innovation, CBRE

Jim Reidy, Director, Capital and Real Estate Transformations, Deloitte

If you would like to attend the Alternative Workplace Strategies forum, please RSVP to Roy Dicharry at rdicharry@thecgp.org.

6CRS Assesses Progress Streamlining .GOV Websites

In a June memo addressed to Sen. Tom Colburn (R-OK) the Congressional Research Service (CRS) reported on OMB’s progress towards eliminating excess websites. Under the Administration’s “Campaign to Cut Waste,” OMB was tasked with identifying and shutting down unneeded agency websites. The initiative also put in place a “no new domain policy,” which prohibits agencies from creating any new domains. In early June, Sen. Coburn asked the CRS to look at OMB’s website consolidation progress, under the assumption that OMB had not met the Administration’s expectations.

The CRS reported that 300 of the 1,759 identified domains had been taken down. In response to the report, OMB stated that 600 more websites are in the process of being eliminated, and that two Cabinet level meetings were held in late 2011 and early 2012 to discuss progress and offer assistance in moving forward. The CRS offered that quarterly updates on Performance.gov and monthly reports from agencies on the progress towards these goals would help agencies stay on schedule with consolidation efforts. In the report, CRS cautioned that the information gathered may not be complete because their research was conducted only using information and resources available in the public domain.

7. Legal Corner 

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.

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9. Congress Pushes to Know More about Sequestration Impact

Congress is pushing for more information on the impact of sequestration on defense and non-defense budgets for FY 2013.  Sen. John Thune (R- SD) and Rep. Jeb Hensarling (R- TX) have both introduced sequestration transparency legislation that would require the President to provide a detailed report to Congress within 30 days of enactment regarding the across-the-board spending cuts.  These cuts are scheduled to go into effect on January 2, 2013 per the Budget Control Act of 2011 unless Congress acts to prevent them.  According to the Congressional Research Service, there will be $0.8 trillion in cuts to defense programs and $0.7 trillion in cuts to non-defense programs from FY 2013 to FY 2023.  The Sequestration Transparency Act is an effort to better identify which government initiatives and programs would be most impacted by the automatic cuts.  To date, both the Administration and the Department of Defense have provided little information to Congress about its plans to implement sequestration.  According to The Hill, the White House is instead urging Congress to find a legislative solution to avoid the cuts.

10.  Appropriations Update

On Wednesday, June 29, the House Committee on Appropriations passed the FY2013 funding bill (H.R 5972) for the Departments of Transportation, Housing and Urban Development. The bill, which provides $51.6 billion in discretionary spending, would also fund related agencies. The amount appropriated for this year is $3.9 billion less than last year’s bill and $1.9 billion below the Administration’s budget request.

In addition, The Hill reported that the Senate does not plan to take up any of the spending bills that have been passed by the House. The Republican controlled House has passed six of the twelve annual spending bills for FY2013. According to The Hill, the Senate would likely choose not to mark up all 12 appropriations bills but rather create a giant omnibus that would fund the entire federal government. Be sure to follow us on Twitter for all the latest updates!

11. DLA to Maintain Workforce Levels

As the war in Afghanistan draws down, the Defense Logistics Agency (DLA) is expecting a large reduction in business but is not planning to reduce the DLA workforce. Federal Times reported that Vice Admiral Mark Harnitchek expects the workforce to remain stable at around 27,000. DLA sees a potential drop in sales to the military by a quarter of its record $46 billion last year. Additionally, DLA plans to cut operating and material costs by 10 percent or about $10 billion by 2018. According to Harnitchek, because the bulk of spending is allocated for supply purchases, not operations, a majority of savings will be derived from supply purchases. Also noted, DLA is increasing its use of reverse auctions, estimating that they executed 653 auctions, saving close to $27 million in FY 2012.

12. SBA Rulemaking on Multiple Award Contracting

The Small Business Administration (SBA) issued a notice of proposed rulemaking on May 16 implementing the Small Business Jobs Act of 2010.  The proposed rule further encourages the use of set-asides and reserves under multiple award contracts and task and delivery orders to increase small business opportunities in the federal market.  The rule-

1) Further defines partial set-asides, contract reserves, and order set-asides and puts processes in place for agencies to utilize these tools,

2) Encourages agencies to use “Section 1331 tools” which provide agencies with the discretion to issue set-asides against multiple award contracts,

3) Allows agencies to assign multiple NAICS codes with corresponding size standards to multiple award contracts so that coding for orders more accurately reflects the size of the business for the work being performed,

4) Discourages the use of consolidated contracts by prohibiting agencies from consolidating contract requirements unless the senior procurement executive or chief acquisition officer identifies the negative impact on small business and justifies the consolidation by demonstrating that the benefits of doing so exceed the benefits of other acquisition approaches,

5) Increases transparency on bundled contracts by encouraging agencies to post a list of bundled contracts on a public website and their rationale before soliciting offers.

The Coalition is interested in hearing member feedback or concerns regarding the rule.  If you have any input for the Coalition’s comments, please contact Aubrey Woolley at awoolley@thecgp.org by Wednesday, July 11. We will submit comments by July 16.