Friday Flash, 10.12.12

Comment of the Week

The Coalition for Government Procurement is pleased to announce the 2012 Acquisition Excellence Lifetime Achievement Honoree: Daniel I. Gordon, Associate Dean for Government Procurement Law Studies at The George Washington University Law School.  Dan’s procurement career symbolizes the very best in public service for the common good.

As you all know, before joining The George Washington University Law School Dan served as Administrator for Federal Procurement Policy in the Office of Management and Budget (OMB).  As Administrator for Federal Procurement Policy, Dan brought a thoughtful, balanced and positive approach to the development of guidance for improving the efficiency and effectiveness of the federal procurement system.   His openness and willingness to engage all stakeholders is reflected in his authorship of the “Myth-Busters” guidance for the acquisition workforce.  As the driving force behind the Myth-Busters campaign, Dan identified and emphasized the vital importance of quality government-industry communications during the requirements development phase in ensuring best values outcome during contract performance.   The Coalition believes that the Myth-Busters campaign will have a long-lasting positive impact on government-industry communications—and ultimately the taxpayer will be the winner through a more effective procurement system.

By seeking out various viewpoints and asking the right questions, Dan changed the tone around procurement.  Most importantly, Dan reached out to the acquisition workforce, reestablishing the “Frontline Forum” where contracting professionals on the frontline of procurement have the opportunity to meet with the Administrator for Federal Procurement Policy and discuss key operational challenges.   As I have previously noted, the “Frontline Forum” is just another form of “Myth-Busting.”  It provided the acquisition workforce with the opportunity to share its views  with the Office of Federal Procurement Policy (OFPP) while giving the workforce an an opportunity to gain  insight into key policy initiatives.

Dan also focused on contract duplication, an issue of great concern across industry and within government.  Dan established new procurement business case guidance that instructed contracting officers to consider pre-existing contract vehicles before creating new standalone contracts.  This guidance was a vital first step in reducing costly, unnecessary contract duplication and laid a foundation for future measures to control the growth of overlapping contract vehicles.   Reducing overlapping, duplicative contracts will reduce costs to government and industry thereby saving the taxpayer money.

Dan’s outstanding career in the Government Accountability Office’s (GAO’s) Office of General Counsel laid the foundation for his success as Administrator for Federal Procurement Policy.  Dan spent 17 years in the Office of General Counsel rising to ultimately serve as Deputy General Counsel and Acting General Counsel.  As a GSA attorney I first met Dan during his tenure heading up GAO’s bid protest unit.  Dan’s balanced, thoughtful leadership of that unit is reflected in a body of common sense bid protest case law that still provides sound procurement guideposts for contracting activities and contractors alike.  From prior personal experience working as a GSA procurement attorney, lessons learned from GAO bid protest case law often contributed to sound, cost-effective procurement decision making.  In Dan’s current position as Associate Dean for Government Procurement Law Studies at George Washington University Law School he continues to influence procurement decision making as he shapes the thinking of future government contract attorneys.

Dan, thank you for your public service!

The 2012 Acquisition Excellence Lifetime Achievement Award will be presented to Dan during our Excellence in Partnership Recognition Luncheon on October 24th.  We are also honored that Dan will be our featured speaker for the Luncheon.  The Excellence in Partnership Luncheon is just part of our 2012 Fall Training Conference:  Continuing the Dialogue—Understanding Acquisition Policy; Understanding the Federal Market; Honoring Excellence in Partnership.  For information regarding the conference please click here.  We look forward to seeing you there!       

Roger Waldron

President

 

Impact of the Safeguarding Contractor Information Systems Rule on Contractors

This week, Elizabeth Ferrell with McKenna Long & Aldridge provided an overview of the Basic Safeguarding Contractor Information Systems proposed rule to the Coalition’s Joint IT/Services Committee.  The rule proposes to add a new FAR subpart and a new contract clause.  According to McKenna Long, the rule requires that contractors take substantive steps to safeguard non-public information provided by or generated for the Government that resides or transits through their systems.  In the presentation, Coalition members were advised that nearly all government contractors who receive or generate non-public information on behalf of the Government would be affected and that the requirements of the rule must be flowed down in certain subcontracts.  The safeguarding requirements of the rule cover public computers and websites, the transmission of electronic information, voice and fax transmissions, physical and electronic barriers, media sanitization, intrusion protection, and transfers to subcontractors.  Contractors will have to pay particular attention to the ability of subcontractors to comply with requirements that, as proposed, are ambiguous in many respects.

The Coalition plans to comment on the proposed rule, especially in terms of the need for clarity in the rule, such as what constitutes the “best level of security and privacy available.” Comments are due October 23, 2012.  If you have any input or concerns regarding the rule, please contact Carolyn Alston at calston@thecgp.org.

Source: Proposed Rule on Safeguarding Contractor Information Systems presentation by Elizabeth Ferrell and Erin Sheppard, McKenna Long & Aldridge

 

Presidential Board Reviewing Strategic Sourcing

The President’s Management Advisory Board (PMAB) is meeting today to discuss a number of topics, including increasing strategic sourcing governmentwide to generate more savings for the American taxpayer and better leverage the buying power of the Federal Government.  The PMAB provides advice and recommendations to the President and the President’s Management Council on best practices to improve Federal Government management and operation.  The specific strategic sourcing recommendations that are being considered were generated by the PMAB’s Strategic Sourcing Subcommittee.  The recommendations are to:

1.       Ensure that government-wide policy directives include the following key attributes:

  • Mandate the use of government-wide strategic sourcing vehicles where appropriate
  • Set ambitious, government-wide goals for creation and adoption of vehicles
  • Assign accountable senior official within each agency

2.       Enhance data collection and utilization in the decision-making process

  • Determine the right level of data needed for effective analysis and conclusions
  • Consider the use of requests for information on cost data from the vendors as a pre-requisite to solicitations
  • Develop and employ standardized performance tracking and reporting

3.       Design an effective communication strategy to ensure that the message is understood at all levels of the organization

  • Syndicate the message top-down and bottom-up through both written communication and collaborative events (e.g. town hall, video conferences) and validate that the message was properly received
  • Celebrate all successes, even the small ones, early and often
  • Engage agency’s senior-most leaders by highlighting progress through the President’s Management Council

The Coalition submitted comments and our BPA Best Practices recommendations to the PMAB in advance of the meeting which addressed our suggestions to improve strategic sourcing and contract duplication. Materials from the PMAB meeting will be posted on the President’s Management Advisory Board website.

 

Don’t Miss the 2012 Fall Training Conference!

2012 Fall Training Conference: Continuing the Dialogue — Understanding Acquisition Policy; Understanding the Federal Market; Recognizing Excellence in Partnership

Join The Coalition on October 24 and 25 for its two day Fall Training Conference, Continuing the Dialogue.  This training conference will address acquisition policy, the federal market and Excellence in Partnership.  Thought leaders from government, industry and academia will give us their perspectives on changes that have occurred and are expected in the federal government’s $200 billion multiple awards contracting program.  Well recognized federal contracting attorneys will cover major cases affecting government contractors.  Contracting officials from all Government-wide Acquisition Contracts (GWACs) and the General Services Administration/Department of Veterans Affairs Multiple Awards Schedules programs will be present to explain their latest initiatives and to participate in break out session to discuss the specifics of their programs.  Hear how sequestration, declining budgets and strategic sourcing may affect what the government buys and how they buy it.   This training conference represents the best in communications between government and industry to improve the delivery of services to the U.S. taxpayer.  A unique aspect the conference will be the presentation of Excellence in Partnership recognitions to individuals and organizations from government and industry that have achieved significant cost savings while providing superior service or that has provided outstanding support to returning veterans.  You do not want to miss this training opportunity.

 

DoD Withholds $42 Million for Business System Deficiencies

In the past year, the DoD has withheld $42 million from contractors with flawed business systems reports Federal Times. In February of this year, the Department of Defense released a final rule to implement a clause allowing contracting officers to withhold a percentage of payments under certain conditions when a vendor’s business system operates with significant deficiencies. The Defense Contract Audit Agency (DCAA) and Defense Contract Management Agency (DCMA) are responsible for evaluating a contractor’s business systems for potential problems. The rule, applying only to contracts awarded since the rule took effect, allows the Pentagon to withhold up to 5% of contract payments if there is a deficient business system and up to 10% if there are problems in multiple systems.

 

Legislation to Curb Charge Card Abuse Becomes Law

Late last week, President Obama signed into law the Government Charge Card Abuse Prevention Act of 2012 (S. 300). The law is aimed at preventing waste, fraud and abuse of government charge cards given to Federal employees. It requires agencies to “establish and maintain safeguards and internal controls” to ensure accountability and supervision while stepping up enforcement against waste, fraud and abuse. According to ASI Government, much of the language in the bill was inspired by recommendations made by the Government Accountability Office.

 

DoD OIG: Oversight, Planning Needed for Single-Bid Offers

Recently the DoD Office of Inspector General released a report entitled, Improvement Needed With DoD Single-Bid Program to Increase Effective Competition for Contracts. The report cites that the Services “did not s did not follow applicable single-bid guidance when awarding approximately $656.1 million in contracts, and did not verify that modifications were only made within the 3-year limitation from base contract award.” As such the Department of Defense has “not realized potential cost savings associated with increased competition for 31 of the 78 single-bid contracts and with re-competing 39 of the 47 contract modifications reviewed.”

The audit’s objective was to determine whether DoD followed the applicable guidance when awarding competitive contracts after receiving a single offer. The report recommends that DPAP (Defense Procurement and Acquisition Policy) review the Services’ competition reports; direct the Services’ Competition Advocates to develop a plan related to the length of contract modifications; and modify the DoD Effective Competition Report. Among others, they recommend that the “Services’ Competition Advocates develop procedures to adequately monitor their commands’ implementation of the single-bid guidance.”

 

First GWAC/MAC Committee Meeting Nov 7

The inaugural GWAC/MAC Committee meeting has been announced! The meeting will take place on Wednesday, November 7th at 10:00am at Deloitte (1750 Tysons Blvd, Mclean, VA). One of the topics that will be discussed in the first meeting will be contract duplication. Members who have suggestions for additional agenda items, please contact Roy Dicharry at rdicharry@thecgp.org.

 

Legal Corner 

Budget Sequestration, the WARN Act and Compliance Costs—Implications for Contractors

Jim Schweiter, Partner, McKenna Long & Aldridge LLP

Last August, Congress passed the Budget Control Act of 2011 (Pub. L. 112-25). This law authorized raising the debt ceiling, established caps on discretionary spending, and put in place a process known as sequestration to implement a total of $1.2 trillion in automatic spending cuts through fiscal year 2021, unless Congress passes a bill which the president signs to avert such a result. Sequestration is a process of automatic, largely across-the-board spending reductions under which budgetary resources are permanently canceled in order to achieve compulsory deficit reduction.

Much has been written about the draconian effects sequestration will have on the programs, projects and activities of executive branch agencies.   Senior executive branch officials, members of Congress and industry leaders all predict catastrophe if sequestration is implemented.  In the case of government contractors, the decline in new government work caused by funding reductions, or the truncation of existing government work through contract terminations, changes, or other mechanisms, may cause employers to consider terminating or laying off employees.  As a result, it is important for employers to understand their rights and obligations under the Worker Adjustment and Retraining Notification (WARN) Act.[1]

Notification Requirements under the WARN Act

The primary purpose of the WARN Act is to require certain employers to provide at least 60 days advance notice to employees who are impacted by a “plant closing” or “mass layoff.” Each of these terms has a lengthy statutory and regulatory definition but, in brief, a “plant closing” refers to a shutdown of a site of employment resulting in an employment loss for at least 50 employees, while a “mass layoff” means a reduction in force at a single site of employment impacting at least (1) 50 employees and 33 percent of the active employees at that site, or (2) 500 employees.

As a general rule, whenever an employer foresees that 50 or more employees could lose employment at a site of employment within a 90-day period, that employer should carefully analyze whether the definition of a “plant closing” or “mass layoff” may have been met, and thus whether WARN notice requirements have been triggered.  If the WARN notice requirements are triggered, the employer must provide written notice of the anticipated employment loss to (1) the affected employees (or to their representative if unionized), (2) a designated state official, and (3) the chief elected official of the unit of local government within which the layoff or plant closing will occur.  If the employer provides less than 60 days’ notice before the employment action, it may be subject to paying wages and benefits to the affected employees for the portion of the 60-day period in which notice was not given, in addition to other potential penalties.

The WARN Act recognizes that plant closings and mass layoffs cannot always be anticipated months in advance, and certain exceptions to the 60-day notice requirement exist.  The “unforeseeable business circumstances” exception is the relevant exception that would be associated with layoffs or plant closings resulting from the January 2, 2013 onset of sequestration.  This exception encompasses a “sudden, dramatic, and unexpected action or condition outside the employer’s control.”[2]  The Labor Department’s interpretive guidance[3] noted that although budget sequestration can be seen months in advance, the actual impact on a particular contractor may be unknown until much later.  Therefore, an abrupt termination of a particular contract might qualify under the “unforeseeable business circumstances” exception.  If contractors must lay off or separate their employees in less than 60 days, such announcements would be sudden and dramatic and therefore consistent with the WARN Act.  According to the Labor Department, in such cases employers would not have to provide the full 60-day notice.

Contractor Costs and the WARN Act

The Office of Management and Budget (OMB) just issued new guidance that certain liability and litigation costs associated with WARN Act compliance will be allowable costs under government contracts.[4]  Under the OMB memorandum, if sequestration occurs and an agency terminates or modifies a contract which causes the contractor to order a plant closing or layoffs subject to the WARN Act’s notification requirements, and that contractor has followed the Labor Department’s guidance, then any resulting court-determined, WARN Act-based employee compensation costs, attorneys fees and other litigation costs would qualify as allowable costs which would be reimbursable by the contracting agency, regardless of the litigation outcome.  Such costs would also have to be both allocable to the contract in question and reasonable in accordance with existing FAR principles.

This new OMB memorandum has prompted several large defense contractors to announce that they will not issue WARN Act notices before January 2, 2013.[5]  However, the guidance has exacerbated partisan tensions.[6]  Senators Charles Grassley (R-IA) and Kelly Ayotte (R-NH) announced jointly that they had sent a letter of inquiry “asking under what authority the administration is using to say it is okay to disregard the law,” and then promise contractors “a taxpayer funded bailout for their legal expenses if they do so.”[7]

Regardless of the seemingly inevitable partisanship that accompanies the run up to a presidential election, there are several points about the most recent OMB memorandum for contractors to bear in mind.  First, the implementation of sequestration alone does not portend layoffs or plant closings triggering WARN Act notice requirements.  There must be some adverse contract action flowing from sequestration’s funding reductions which affects an employer.  In addition, the OMB guidance clearly contemplates a court determination of both employee compensation costs, as well as attorneys fees and other litigation costs.  However, employers may incur substantial costs associated with the publication and dissemination of WARN Act notices or employee negotiations and settlements not resulting in litigation.  Under the OMB guidance, these costs would not seem to be allowable.  Contractors who anticipate potential WARN Act liability should seek guidance from contracting officers about the extent to which their WARN Act-related costs will be allowable.  Awareness of the OMB memorandum by DCAA and DCMA personnel will almost certainly also take time, and ignorance of the OMB guidance could complicate audits.  Finally, before allowable costs may be reimbursed, the Government must have funds available to do so.  If sequestration occurs, agencies may not have sufficient funding to reimburse WARN Act-related costs.  Even if litigation resulted from a WARN Act dispute, the Judgment Fund[8] would not be available for such purposes because the litigation would not involve the United States.

Prudent employers should prepare for various scenarios and have contingency plans in place to provide appropriate notice as soon as it becomes clear that a particular contract action will cause a WARN-triggering employment loss. Some companies are considering “provisional notices,” which communicate to all employees that federal budgetary issues could result in an employment loss.  However, because they do not indicate which specific employees will be impacted and the specific date on which the employment loss will occur, such provisional notices may be “better than nothing” (and may show the employer’s good faith efforts to try to comply with WARN) but are still unlikely to fully satisfy the requirements of WARN.  Finally, employers should be aware that several states have their own plant closing laws (sometimes referred to as “mini-WARN” statutes), and some of these laws have more stringent requirements that the federal law. Employers should thus analyze relevant state laws in states in which a significant employment loss may occur.


[1] Pub. L. 100-379, codified at 29 USC 2101 et. seq.

[2] 20 C.F.R. 639.9(b)(1); see also, 29 USC 2102(b)(2).

[3] Department of Labor, Training and Employment Guidance Letter No. 3-12, July 30, 2012.

[4] Office of Management and Budget, Guidance on Allowable Contracting Costs Associated with the Worker Adjustment and Retraining Notification (WARN) Act, Memorandum for the Chief Financial Officers and Senior Procurement Executives of Executive Departments and Agencies, Sept. 28, 2012.

[5] Sara Sorcher, White House Moves to Head Off Sequester Layoffs, National Journal, Sept. 29, 2012, at http://www.nationaljournal.com/nationalsecurity/white-house-moves-to-head-off-sequester-layoffs-20120928.

[6] Senators John McCain, R-Ariz., and Lindsey Graham, R-S.C., called the guidance “politically motivated” and said they’d block any contractor payments by the Pentagon to cover failure of issuing WARN Act notices.  Joyce Tsai, Partisan Debate Deepens over Layoff Notices Before Sequestration, Stars and Stripes, Oct. 5, 2012, at http://www.stripes.com/partisan-debate-deepens-over-layoff-notices-before-sequestration-1.192039.

[7] Letter from Senators Charles Grassley and Kelly Ayotte to Jeffrey Zients, Acting Director, Office of Management and Budget, (Oct. 1, 2012), at http://www.grassley.senate.gov/about/upload/100220121.pdf.

[8] 31 USC 1304.

 

Small Business Forum & New CGP Committee

Increased small business utilization is a high a priority for the Federal Government.  As a result, regulatory, legislative and agency level changes that  -impact the Federal market are all possible.

On October 30, the Coalition will host a small business forum to gain insight into significant changes to the small business rules and how they will impact sales to federal agencies.

SBA Keynote:

Small Business Administration – Looking Ahead at Federal Acquisition  Priorities and Changes

A. John Shoraka, Associate Administrator of Government Contracting and Business Development, SBA

Industry Panel:

Small and Large Business Collaboration in the Federal Market – What Works and What Needs to Work Better.

Panel Moderator – Joseph Hornyak, Partner, Holland and Knight

James Connal, Vice President, Red River Computer

Tom Walker, Government Manager, Nucraft Furniture

Wayne Pizer, Vice President, L-3 National Security Solutions

Who Should Attend:

Industry                                                                                                       Government

Small Businesses that sell to Federal  Agencies                                                     Federal OSDBU Directors

Large businesses that subcontract to, team with,                                                Federal Buying Officials

or sells indirectly through small businesses

 

Thank you Fall Conference Sponsors

Thank you to our Continuing the Dialogue Sponsors

The Excellence in Partnership Awards and Continuing the Dialogue – our 2012 Fall Training Conference – could not be possible without the support of our Sponsors.  The Fall Training conference, Continuing the Dialogue, addresses acquisition policy, the federal market and constructive dialogue between government and industry.  Sponsorship of this event demonstrates your support for quality training of acquisition professionals and robust communication between government and industry with the goal of acquisition excellence.

Join your industry peers with this heightened exposure by becoming a sponsor!  If you would like to reserve one of our sponsorship opportunities, please contact Athena Oliff at aoliff@thecgp.org or 202-315-1052.

MAS Basic Training – November 29, McKenna Long & Aldridge, Washington D.C.

The intensive, one day training workshop teaches the basics of utilizing the Multiple Award Schedules program. Over the course of the workshop you will learn how to obtain and manage your GSA schedule, market GSA contracts, comply with Federal procurement requirements, follow policy changes, and prepare for MAS audits. A highlight of the course is training on GSA’s electronic tools including eBuy, GSA Adavantage! and GSA eLibrary. Other material covered will include of structuring your contract to address the schedule compliance requirements while retaining flexibility to compete in the federal and commercial market place, as well as training on the new FAR 8.4 ordering procedures.  The courses will be taught by those on the front lines of GSA schedule negotiations and contract management.

Attendees are eligible to earn up to 8 CLP credits with submission of an attendance certificate and course training packet available for pick-up after the event.

 

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.

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.