Friday Flash, 09.07.12

Comment of the Week

Welcome back everyone! I hope you all had a wonderful long weekend. Labor Day marks the end of summer, the beginning of school (at least in Virginia) as well as the final countdown to the end of the fiscal year. This means one thing for all of us. Things are going to get really busy! The next few months at the Coalition will be no exception. We are pumped up to provide a Fall/Winter schedule of events and training for our members and the procurement community as a whole.  These events will focus on key procurement policy issues, market trends and budget outlook as well as training on MAS contracting compliance.  Here’s a look at what we have on tap.

As you know, next Tuesday we are holding a morning forum featuring the OFPP Administrator Joe Jordan sponsored by Staples. Administrator Jordan will outline his priorities including buying smarter through strategic sourcing, building the right supplier relationships and strengthening the acquisition workforce.   Also next Tuesday the Coalition will launch the first in a series of educational webinars on key contracting compliance procedures and issues.  This webinar will be presented by Cherry Bekaert & Holland and will focus on Limited Scope Audits and will highlight contractor personnel compliance with labor category qualification requirements.

On September 26 the Coalition will host a forum with the Department of Homeland Security (DHS).  The program will outline DHS’s strategic plan for acquisition over the coming years.   In addition to the strategic plan, the event will comprehensively cover strategic sourcing, small business, procurement operations and DHS plans to enhance government-industry communication. This event is a great opportunity for a “Myth-Busters” dialogue regarding DHS procurement processes, procedures and priorities.

On October 9th and November 13th Baker Tilly will be presenting a two-part educational webinar series on negotiated contracting under FAR Part 15.  This webinar series will address the key contracting and pricing compliance issues and requirements when agencies conduct FAR Part 15 procurements.  On October 16th, the Coalition will present our half day Advanced MAS Training seminar focusing on MAS pricing, audits and the Civil False Claims Act.   This seminar will be presented by McKenna Long and Aldridge LLP and Mayer Brown LLP.

The week of October 22nd highlights our 2012 Fall Training Conference,    “Understanding Federal AcquisitionUnderstanding the Federal Market – Honoring Excellence in Partnership,” will provide training on the MAS ordering procedures including teaming arrangements, an update on GWACs and MACs including OMB’s new business case policy for creation of contract vehicles;  training on MAS compliance issues for in-house counsel,  analysis and commentary on the budget and what it means for contractors.  Also as part of the Fall Conference we will be holding our traditional, Myth-Buster breakout sessions providing an opportunity for attendees to discuss key operational contracting issues with their GSA counterparts—demonstrating the importance of partnership in providing best value to customer agencies and savings for the taxpayer.  I also want to direct you to our website for the submission of nominations for this year’s Excellence in Partnership Awards.  Now more than ever, given the budgetary and operational challenges the federal government faces, it is vital to identify and honor those outstanding individual and organizations in the procurement community (government and industry) who are supporting the mission and making a positive difference for the taxpayer!

On October 30th, the Coalition will launch our Small Business Committee with a Small Business Forum featuring speakers from both SBA and GSA have been invited to address their initiatives and priorities for utilization of small business concerns.

On November 8th and 9th, the Coalition will be presenting our MAS Basic Training course hosted by McKenna Long & Aldridge LLP.  This introductory course presents the fundamentals of MAS contracting.  In November the Coalition will also host a post-election event focusing on what the outcome means for federal procurement policy and the federal marketplace—the date and time are to be determined so watch for an announcement!  Finally, the first week in December will mark the launch of our MAS Training for In-house counsel presented by Carolyn Alston, Executive Vice President and General Counsel of the Coalition and Jason Workmaster from McKenna Long & Aldridge LLP.  This training reflects the unique challenges in-house counsel deal with regarding MAS contracting.

The Coalition has a great line up for the Fall and we look forward to seeing you at our event!  Next week I will begin a series of comments that will debunk acquisition policy “Urban Myths” regarding GSA’s MAS program. For a full list of our events please link here!

Roger Waldron

President

 

VA Small Business Letter

In a recent letter, W. Scott Gould, Deputy Secretary of the Department of Veterans Affairs, explains actions that will be taken immediately in order for the department to meet its FY2012 small business goals. With regard to small business goals, the document explains that “with only two months left in the fiscal year to achieve our goal, we must take extraordinary measures to ensure success. To maximize our opportunity to achieve our goal, effective immediately, VA contracting officials’ authority is limited to awarding contracts to small businesses. No contracts to large businesses, other than our Prime Vendors, will be awarded unless approved by VA Central Office (VACO).” The VA’s exceptions to this notice are listed below:

  1. Federal Supply Schedules awarded by VA National Acquisition Center;
  2. Orders placed against enterprise-wide prime vendor contracts (pharmaceuticals, medical/surgical, and subsistence), and;
  3. This memorandum also does not apply when using the government purchase card
    for requirements within the micro purchase limits of $3,000 and less; however, purchase card holders should make every effort to seek a small business that can support their requirement.

For more information please refer to the letter, which is hyperlinked above.

 

September 11 Forum:  What’s to come in FY2013 – A Conversation with Joe Jordan

Join the Coalition for a dialogue with new OFPP Administrator, Joe Jordan, on September 11 for an in-depth look at the Office of Federal Procurement Policy’s initiatives for FY 2013 and a conversation about the potential impact on contractors.

After being appointed as Administrator, Office of Federal Procurement Policy in May, Joe Jordan introduced a set of agency goals to buy smarter, lead the federal government in strategic sourcing, provide small business opportunities and streamline the procurement process.

Become part of the conversation and learn more about how OFPP plans to address the challenges facing Federal agencies in the upcoming fiscal year and what that means for agencies, contractors and acquisition stakeholders.

Register here!

 

Proposed Rule: Prioritizing Sources of Supply

On September 6, a proposed rule was published to the Federal Register that corrects the preamble to a proposed rule published in the Federal Register of June 14, 2011, regarding Prioritizing Sources of Supplies and Services for Use by the Government. This document adds an Initial Regulatory Flexibility Analysis which has been determined to be necessary since the initial publication of the proposed rule. As first published, the rule amends FAR part 8, which requires Federal agencies to satisfy their requirements for supplies and services from or through a list of sources in order of priority. The proposed rule would amend FAR part 8 by revising FAR 8.000, 8.002, 8.003, and 8.004, eliminating outdated categories, and distinguishing between mandatory sources and non-mandatory sources for consideration. Comments from the public are due by October 9, 2012.

 

DoD’s Better Buying Power to be Updated

On September 5, Defense News reported that the Defense Department will be releasing a new version of its important Better Buying Power initiative. As the department looks to a future with tighter budgets and searches for new efficiencies, Better Buying Power will be updated, explained Frank Kendall Undersecretary of Defense for Acquisition, Technology and Logistics. At the ComDef 2012 conference in Washington DC, Kendall spoke about the updates that the new version will include. According to Defense News, Kendall did not deliver any specifics on the program but claimed the new version will share some of the same aspects as the original. The Better Buying Power initiative was originally released in September of 2010 as a memorandum. Kendall went on to say, “I’m going to be rolling out a new version here shortly. We’ve learned from the experience of the last couple of years that some of those things worked very well, some of them have not turned out to be all that productive, others have been difficult to implement.” Members should note that Kendall did describe some changes in the new version. According to Defense News, he highlighted the removal of bureaucratic hurdles and increased competition as aspects that will be similar to the older version.

 

DISA Releases Strategic Plan

On September 4, the Defense Information Systems Agency (DISA) issued its strategic plan for 2013-2018. The new plan will take into account not only the constrained budget environment but also adjusts agency programs in accordance with the DoD’s recently released strategic guidance for 21st century defense. IT priorities will include a focus on cyber operations, enterprise capabilities, and cloud services mobility. According to Federal Computer Week (FCW), “agile acquisition” is a top priority. Also delineated in the plan are four “strategic goals”

1.      Evolve the joint information environment

2.      Provide joint command and control and leadership support

3.      Operate and assure the enterprise

4.      Optimize department investments.

In addition to the principal role that cybersecurity plays in the document, efficiency and savings are also pointed out as objectives of the plan. This includes the expansion of DISA’s collaborative Forge.mil platform. FCW reported that DISA will be looking to improve on the agency’s testing, evaluation and deployment processes. This will include automating testing and certification and making the system more efficient and responsive. Additionally, the strategic plan also calls for on-demand infrastructure-as-a-service and platform-as-a-service capabilities integration with Forge.mil.

 

OMB Announces $4 Billion in Savings in the First Two Quarters of 2012

Jeffrey Zients, Acting Director of Office of Management and Budget (OMB), announced in a blog post that agencies achieved over $2 billion in reduced costs in the first quarter of 2012 compared to the same period of time in 2010. Another $2 billion in savings was achieved in the second quarter of 2012. According to Zients, these savings were achieved under the Administration’s Campaign to Cut Waste in response to Executive Order 13589, “Promoting Efficient Spending,” where the President charged Federal agencies with tightening their belts to find efficiencies and savings in areas such as printing, fleet, and travel.

The blog post explains that these savings are indicative of innovative management practices Federal agencies are implementing to get the most out of every dollar. “We are spending less money, and we’re spending it smarter in order to get the most bang for our buck,” said Zients. “In addition to identifying savings by rethinking our technology footprint, Federal agencies are using technology to work smarter.” With $4 billion dollars in savings in the first two quarters and additional savings expected in the next quarter, OMB believes that the Federal Government is well on track to meet and exceed its goal of $8 billion by the end of FY 2013.

 

Accepting Nominations for 2012 EIP Awards
The EIP Awards honor acquisition officials who have made significant strides in promoting and utilizing multiple award contracting vehicles. Awards will be given to individuals, organizations and contractors involved in procurement with GSA, VA, DHS, DoD and other government agencies. This highly anticipated event historically draws high-ranking government agency executives, industry partners, and many others.  Take this opportunity to recognize an individual or organization that is deserving of an EIP Award. A list of nomination categories can be found a long with links to submit your nominations can be found here. Nominations along with a short rationale of approx. 100 words is sufficient. Nominations will be accepted through October 1.

 

Legal Corner 

The Budget Control Act of 2011, Sequestration, and Government Contractors

Jim Schweiter, Partner, McKenna Long & Aldridge LLP

Last August, Congress passed the Budget Control Act of 2011 (“BCA”)(Pub. L. 112-25).  This law authorized raising the debt ceiling, established caps on discretionary spending, and put a process in place to reduce the federal deficit.  The provisions to raise the debt ceiling have been triggered, so that the federal borrowing limit now stands at $16.4 trillion.  In brief, the BCA:

  • Imposed caps on discretionary spending beginning in October 2011 that will generate $917 billion in savings over the next ten years.  The Department of Defense (“DOD”) portion of these savings is approximately $487 billion.
  • Created a bipartisan, bicameral committee to identify up to $1.5 trillion of additional deficit reduction (the Joint Select Committee on Deficit Reduction).  This “Super Committee” failed to reach agreement.
  • Required Congress to vote on a Balanced Budget Amendment to the Constitution.  The amendment failed in both houses.
  • Imposed a budgetary process known as sequestration to implement a total of $1.2 trillion in automatic spending cuts through fiscal year 2021 which will begin January 2, 2013, unless Congress passes a bill which the president signs to avert such a result.

Senior Executive Branch officials, members of Congress and industry leaders all predict catastrophe if sequestration is implemented.  For companies doing business with the federal Government, it is therefore important to understand what sequestration is and how it would operate.  Congress recently passed and President Obama signed the Sequestration Transparency Act of 2012.[1]  Although this law requires the Administration to report to Congress within 30 days about how sequestration would be implemented by federal agencies, few expect this report to provide much useful detail.

Budget Sequestration

Sequestration is a process of automatic, largely across-the-board spending reductions under which budgetary resources are permanently canceled to enforce certain budget policy goals.[2]  This process was first established in the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA).[3]  Sequestration involves the permanent cancellation of budgetary resources by a uniform percentage, which is applied to all non-exempt programs, projects and activities within a budget account[4] in order to achieve required savings.

Under the BCA, there are two situations in which sequestration could occur—

  • If Congress appropriates more money in any year than is allowed under the annual discretionary spending limits established in the BCA, the automatic process of sequestration would result in the cancellation of the excess amount.  The President would issue an order canceling any excess budget authority.
  • Because Congress failed to enact legislation developed by the Joint Select Committee on Deficit Reduction to reduce the deficit by at least $1.2 trillion by January 15, 2012, the BCA provides for a series of automatic spending reductions in both discretionary and direct (mandatory) spending[5] to make up for the shortfall in savings.

Sequestration is thus a budget enforcement mechanism that is intended to prevent enactment of legislation that would increase the federal deficit.  Under the BCA, the automatic sequestration procedures will affect both mandatory and discretionary spending programs, and the reductions will affect defense and non-defense spending categories equally in each of fiscal years 2013 through 2021.

Under the BCA, the Department of Defense (DoD) would have to absorb half the cuts required by sequestration, a total of $492 billion.  Non-defense accounts would absorb an equal share. Because the cut would be spread over nine years (2013-2021), both the defense and non-defense portions of the federal budget would be subject to annual reductions of about $54.7 billion.[6]

Implementation of Sequestration 

The process by which sequestration would be implemented is different in 2013 than in 2014 and the out years.  In 2013, there would be across-the-board, proportional reductions in programs, projects and activities funded by annual appropriations and in non-exempt mandatory programs.[7]  In 2014 through 2021, the required sequestration cuts would be achieved by reducing the statutory spending limit specified in the law for each year.  How this “top line” cut would be implemented at the agency level would be governed by the appropriations process.   The Office of Management and Budget would direct agencies to implement cuts to available appropriations based on apportionment guidance issued pursuant to OMB Circular A-11.[8]

Sequestration would not begin until January 2, 2013, so the funding reductions would be spread over only three quarters of that fiscal year.  Appropriated funds that have been obligated to contracts are not subject to the sequestration process.  Appropriated fund balances that remain unobligated as of January 2, 2013 may be subject to sequestration.  If, as now appears likely, the federal government will be funded by continuing appropriations resolution (a “CR”)[9] during the first half of fiscal year 2013,[10] the ability of agencies to enter into new contracts, issue new task orders on existing multiple award contracts or exercise contract options that would obligate funds before sequestration begins will be constrained.  Guidance from OMB also could limit agency spending in advance of sequestration.  Because the baseline for fiscal year 2013 funding has not been established, and because there are so many variables that may affect how sequestration would be implemented, contractors of all stripes must closely examine their contracts and funding status in making judgments about how to prepare for sequestration.

Conclusion

“The president [and] the secretary of Defense said it would be catastrophic to our national defense, but we still haven’t found a way through it,”  Arizona Senator John McCain said recently about sequestration. “Everybody says it’s not going to happen, but so far, it’s going to happen.”[11]  If the worst occurs, it is imperative to understand the magnitude of the funding cuts that would occur if sequestration as provided in the Budget Control Act is implemented and for contractors to plan accordingly.

 


[1] H.R. 5872 was signed into law by President Obama on August 7, 2012.

[2] OMB Circular A-11, sec. 20, at 8 (Aug. 2011); see also 2 USC 900(c)(2).

[3] Title II of Pub. L. 99-177, sometimes referred to as the Gramm, Rudman, Hollings Act.

[4] See 2 USC 906(k)(2); Under the BCA, many mandatory spending programs would be exempt from sequestration cuts, including Social Security, other federal retirement programs, Medicaid, and other programs benefiting low-income people.  Medicare cuts would be limited to no more than two percent.  See sections 255 and 256 of the BBEDCA (codified at 2 USC 905, 906).

[5] “Discretionary spending” refers to outlays from budget authority that is provided and controlled

by appropriation acts. “Mandatory spending” refers to outlays from budget authority that is provided

by laws other than appropriation acts.  Congressional Budget Office, Estimated Impact of Automatic Budget Enforcement Procedures Specified in the Budget Control Act, n. 2, at 1 (Sept. 12, 2011).

[6] For the mechanics of the calculations, see BBEDCA sec. 251A(3), as added by BCA, Pub. L. 112-25, sec. 302(a), (Aug. 2, 2011).

[7] The Budget Control Act provides that certain programs are exempt from sequestration funding cuts.  These include Social Security, Medicaid, certain Medicare payments, federal retired pay, and VA programs.  In addition, the White House recently announced that the President has decided to exempt the military personnel accounts from sequestration, although this will mean a proportional increase in the size of the cuts to other non-exempt defense accounts in order to achieve the required level of deficit reduction.

[8] See OMB Circular A-11, Part 4, sec. 120.1 et. seq. (Nov. 2011).  As of this writing, OMB has not yet issued apportionment guidance to federal agencies regarding sequestration.

[9] A continuing resolution is “an appropriation act that provides budget authority for federal agencies to continue in operation when Congress and the President have not completed action on regular appropriation acts by the beginning of the fiscal year.”  Government Accountability Office (GAO), A Glossary of Terms Used in the Federal Budget Process, GAO-05-734SP, September 2005, pp. 35-36.

[10]  See, Rosalind S. Helderman, John Boehner, Harry Reid Reach Early Deal to Avert Shutdown,  Wash. Post, July 31, 2012, at http://www.washingtonpost.com/boehner-reid-reach-early-deal-to-avert-shutdown/2012/07/31/gJQAKVLENX_story.html.

[11] Nancy Cook, High Anxiety, National Journal, June 30, 2012.

 

GSA Names Dorothy Robyn as the New PBS Commissioner

On September 4, the General Services Administration named Dorothy Robyn as its new commissioner of the Public Buildings Service (PBS), the agency in charge of overseeing the Federal Government’s real estate portfolio. For the past three years, Robyn served as the Pentagon’s Deputy Undersecretary for Installations and Environment and oversaw the Defense Base Closure and Realignment (BRAC) process. She will start at PBS later this month. The Coalition looks forward to working with Dorothy Robyn towards the mutual goal of common sense acquisition.

 

Save the Date – CGP Small Business Forum

The Coalition for Government Procurement is pleased to launch its Small Business Committee.   As a kick off for the new committee we will have a Small Business Forum on October 30 from 8 to 10:00 a.m. in Washington DC.  Speakers from both SBA and GSA have been invited to address their initiatives and priorities for utilization of small business concerns.  Watch the Friday Flash and www.cgp.org for additional information.  If you are interested in being a member of the small business committee please e-mail your contact information to Roy Dicharry at rdicharry@thecgp.org.

 

Join the “Limited Scope Audits, with a Focus on Labor” Webinar Sept 11

Join Cherry, Bekaert & Holland for an educational webinar on Tuesday September 11 at 12:30 PM.

Join Cherry, Bekaert & Holland for an educational webinar to discuss Limited Scope Audits, with a focus on compliance with labor categories, to include a summary discussion of:

  • Overview of GSA IG audits of MAS contractor compliance with contract labor qualification requirements
  • Compliance techniques and tips for handling limited scope audits
  • Key areas and the reasons why auditors launch limited scope audits
  • Potential impacts of Limited Scope Audits on your business and business systems

Brad Smith, CPA and Chris Wade, PMP, CFCM from Cherry, Bekaert & Holland’s Government Contractor Services Group will be presenting.

This event will be held from 12:30 – 1:30 on September 11th Click Here to register.  We look forward to your participation.

 

Upcoming Regulatory Comments

The Coalition regularly provides public comments on rules that impact the membership.  The following is a list of upcoming rules.  We ask that members note the proposed rule on Basic Safeguarding of Contractor Information Systems which was published in the Federal Register last week.  The Coalition plans to submit comments on this proposed rule and will provide further analysis on it in an upcoming edition of the Friday Flash.

Federal Acquisition Regulation; Basic Safeguarding of Contractor Information Systems

Proposed Rule       

Summary: DoD, GSA, and NASA are proposing to amend the FAR to add a new subpart and contract clause for the basic safeguarding of contractor information systems that contain information provided by or generated for the Government that will be resident on or transiting through contractor information systems.

Due October 23, 2012.  If you have any comments regarding this proposed rule, please contact Aubrey Woolley.

Federal Acquisition Regulation; Prioritizing Sources of Supplies and Services for Use by the Government

Proposed Rule

Summary: On September 6, a proposed rule was published to the Federal Register that corrects the preamble to a proposed rule published in the Federal Register of June 14, 2011, regarding Prioritizing Sources of Supplies and Services for Use by the Government.This document adds an Initial Regulatory Flexibility Analysis which has been determined to be necessary since the initial publication of the proposed rule. As first published, the rule amends FAR part 8, which requires Federal agencies to satisfy their requirements for supplies and services from or through a list of sources in order of priority.

Due October 9, 2012. If you have any comments regarding this proposed rule, please contact Aubrey Woolley.

FAR Price Analysis Techniques

Proposed Rule

Summary:  DoD, GSA, and NASA are proposing to amend the Federal Acquisition Regulation (FAR) to clarify the use of a price analysis technique in order to establish a fair and reasonable price.

Due September 10, 2012.  If you have any feedback on this proposed rule, please contact Carolyn Alston.

Improving Contracting Officers’ Access to Relevant Integrity Information

Notice of Request for Comment

Summary: The Office of Federal Procurement Policy (OFPP) has developed a Request for Comment asking whether changes to current regulations and other guidance might improve contracting officers’ access to relevant information about contractor business ethics in the Federal Awardee Performance and Integrity Information System (FAPIIS).

Due September 17, 2012.  If you have any feedback on this notice, please contact Carolyn Alston.

Revision of Department of Homeland Security Acquisition Regulation; Contractor Billing and Subcontractor Labor Hour Rates Under Time and Materials Contracts

Notice of Proposed Rulemaking            

Summary: DHS is proposing to amend its Homeland Security Acquisition Regulation to require contracts for time and material or labor hours to include separate labor hour rates for subcontractors and a description of the method that will be used to record and bill for labor hours for both contractors and subcontractors.

Due October 22, 2012.  Please contact Carolyn Alston if you would like to contribute to the Coalition’s comments on this issue.

Department of Treasury Acquisition Regulations; Contract Clause on Minority and Women Inclusion in Contractor Workforce

Notice of Proposed Rulemaking

Summary: The Department of the Treasury is proposing to amend the Department of the Treasury Acquisition Regulation (DTAR) to include a contract clause on minority and women inclusion, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act).

Due October 22, 2012.  Please contact Carolyn Alston if you have any feedback on this notice.

 

ACI Events: Forum on Government Subcontract Management and Audits!

Attend the Premier Forum for Subcontract Compliance Training

Extensive research has been done by our attorneys to put together this unique compliance program for Managers, Directors, and VP’s of Contracts, Subcontracts and those responsible for issues including flowdown provisions, False Claims Act defense, reporting and disclosure requirements, scope of access obligations, and procurement procedures.

View Full Agenda

Ask About our Group Rates!

CGP members are entitled to a discount when referencing the code: CGP 200

Enhance your learning and networking at interactive Pre-Forum Working Groups- October 1, 2012

A: The Ins and Outs of Crafting a Small Business Subcontracting Plan under the Small Business Jobs Act and FAR Part 19: How to Reduce Penalties for False Certifications, Fraud and Non-Compliance with Set-Aside Requirements

B: Implementing the Most Contentious Mandatory Flowdown Provisions: From Data Rights to Defective Pricing – The Biggest Pitfalls to Avoid When Managing and Allocating Responsibilities and Risks

25% off for groups of 3 or more.  Call 888.224.2480 or visit www.AmericanConference.com/Subcontracting for more information.

 


DCAA Audits
Strategic Insights on How to Resolve Highly Complex, Costly Audit Challenges Impacting Your Business
Monday, November 12 to Tuesday, November 13, 2012
Hilton Arlington, Arlington, VA

American Conference Institute’s highly anticipated 4th National Forum on DCAA Audits is regarded as the go-to industry event of the year.  Meet and learn from  Directors, Managers, General Counsel, CFO’s and other cost and pricing professionals on how to manage the most complex, hot button DCAA audit challenges threatening your bottom line.   Once again, this sophisticated, practical forum will bring together industry, private practice experts and government agency decision-makers for in-depth discussion and Q & A on pressing audit issues affecting the future of your business.

Topics will include: Lessons learned for incurred cost audits, DCAA’s implementation of the Business Systems Rule, contractor purchasing system reviews, responding to DCAA record requests,  defective pricing audits, and DCAA scrutiny of contractor ethics compliance programs.

CGP members are entitled to a discount when referencing the code: CGP 200

For more information, please visit our website: www.americanconference.com/DCAA

Association Partners: