Now it is Cronyism and Corruption

The assault on the federal procurement process continues.

The Center for American Progress, a progressive think tank, uses the words, "cronyism" and "corruption" as the headline of their press release about an "event" featuring Rep. Henry Waxman, the chairman of the House Oversight and Government Reform Committee as its keynote speaker.

Both Federal Computer Week (FCW.com) and Government Executive (GovExec.com) reported on this event and neither one used those words. In fact, the text of the organization's release talked of Rep. Waxman's vision of increasing the size of the government acquisition workforce. The release says that,

He cited the need for more contract managers and government overseers and proposed that 1 percent of federal procurement spending be set aside for
procurement management and oversight.

That doesn't sound like everyone in the federal contracting profession are on the take. However, his remark that,

While government contractors are getting richer, taxpayers are getting soaked

sounds a little more inflammatory.

We must redouble our efforts, as federal contracting professionals to keep our eyes on the goal of being good stewards of the taxpayer's money and earning their continuing confidence on a daily basis.

House passes Small Business Fairness in Contracting Act

Sorry for the delay between posts at this important time for small business issues.

The reports are true, this bill (HR 1873) passed the House and heads for the Senate. An amendment that increased the percent of federal contracting dollars earmarked for small businesses from the current 23 percent to 30 percent was added to the final package sent forward.

The House Small Business Committee chair (Chairwoman Rep. Nydia Velazquez (D-N.Y.) believes that the government understated its compliance with this goal over the past few years.

There is little in this bill to help achieve a 30 percent higher goal.

Small Business Fairness in Contracting Act moves out of committee with changes

The House Oversight and Government Reform Committee passed a revised Small Business Fairness in Contracting Act (HR 1873) on May 1, 2007. This bill, originating in the House Small Business Committee, has the primary effect of limiting small business bundling and upping the small business participation goals. The bill as passed will up the small business goal from 23 to 28 percent, according the the GovExec article and waters down the original from virtually eliminating all bundling to those requirements that were originally satisfied by two or more small businesses.

For a discussion of the original bill, click here, here, and here. For the text of the original bill, click here. The amended bill is not yet available online and will be posted when it is available.

Will keep you up to date on the latest changes.

Reps. Moran and Davis comment on Acquisition Reform

Check it out...both of Northern Virginia's representatives have a vision for acquisition reform. Rep. Davis believes

(Y)ou get the best acquisition officials you can find. If you give them a tool box of different contracting vehicles so that they can decide what’s best for the government, and you train them well and allow them to do their job, if you do that right — they will make a mistake once in a while — but most of
the time you’re going to get a good outcome.

Rep. Moran is taking a slightly different tack. According to this article, he believes that

Government contracting desperately needs oversight and reform, especially regarding the contracting workforce and small-business support.

He also says that more government employees should be scrutinizing contracts.

We have got, as far as I am concerned, to move people from the private sector into the public sector to provide those inherently governmental
functions

I guess we have a lot of reform to look forward to.

Proposed rule looks at small business and subcontractors

Here is a collection of articles that deal with a proposed FAR rule. As the introduction to the rule states,

Federal Funding Accountability and Transparency Act of 2006 (FFATA) (Pub. L. 109-282) requires the existence and operation of a searchable website that provides public access to information about Federal expenditures

This proposed rule puts into place the FAR requirements to make this happen. Among the issues this raises is the public access to subcontractor information that has not be available in the past. This information will eventually be captured and searchable at federalspending.gov.

A secondary issue is that small businesses, which have received a pass on a lot of accountability issues, will be faced with the government wanting- and getting- more details about how they do business.

Emily Murphy, the General Services Administration’s former chief acquisition officer, says that the government will have more information than ever on small businesses, so they need to better manage their government contracts.

Murphy said many small businesses have not mastered the intricacies of their contracts. For example, FAR small-business set-aside provisions limit how much of the contract’s subcontracting work can go to large businesses.

That means more work for them, reducing their ability to be fully functioning business partners.

[Note: Rep. Jim Moran says that about "ninety percent of the companies receiving small-business set-aside contracts will go out of business." Another encouraging word.]

2008 Defense Appropriations Bill fills up, but not with money...

I wrote earlier about Rep. Jim Moran (D-VA) wanting to reform acquisition in the 2008 Defense Appropriations Bill to be considered when Congress gets back to work soon. Now, Rep. Ike Skelton (D-MO) has his own ideas and is readying them for the same legislation. He hopes to form a Defense-Industry partnership that can solve some tough procurement issues- getting the military's equipment stocks built up and able to reinforce troops heading into harm's way.

To help take advantage of the country's industrial capacity, Rep. Skelton hope to use this council to "mobilize this nation and its industrial base" and "bold action is needed" to do that.

Rhetoric aside, we may need some sort of group to help, but adding to the appropriations bill in such a way just adds to the procurement confusion.

Contracting becomes a political issue

Using contractors to perform the government's work has become a political issue. Mrs. Clinton is calling on cutting 500,000 government contractor jobs. According to the article, this ups John Kerry's call to cut 100,000 contractors during the last election cycle.

Based on the reports, there wasn't a discussion of which, if any, government functions would be cut or if the federal workforce would increase to account for the lost contractor support.

Regardless, contracting issues are becoming issues of interest in political arenas. Stay tuned...

More acquisition reforms coming in defense spending bill

The operative word is more! This article says that there will be more attention to contracting and subcontracting contained in the 2008 Defense Appropriations bill, just now being staffed on Capitol Hill.

That is in addition to the other "reforms" that the "new" Congress has in mind.

For instance, the Accountability in Contracting Act is already in play (the Supplemental Appropriations bill- with it attached- is in the hands of the Senate). Now Rep. Jim Moran (D-VA) on the House Appropriations Committee’s Defense Subcommittee wants more oversight. According to the article, his aim is

(m)ore government employees should be scrutinizing contracts

That should be good new for us, but I can't believe that means more people to do the scrutinizing. Maybe even more contractors to help with the scrutinizing.

Regardless, we need to watch for new developments.

Accountability in Contracting Act tacked onto Supplemental Appropriations bill

Chairman of the House Oversight and Government Reform Committee, Rep. Henry Waxman (D-Calif.), gained House passage of his contracting bill but had no companion Senate bill to create a law. So, he used the important-to-our-troops supplemental appropriations bill to get it in position to become a law.

If it stays stapled to this bill, along with the other earmarks used to gain passage in the House of their controversial version, this will become law. All in the name of supporting our soldiers, sailors, airmen and marines.

If only I had a project I wanted to get passed. This looks like the gravy train to put it on. Such are our stakeholders up North in the domed building.

Flunking Subcontracting Limitation is a proposal acceptability issue, not responsibility issue

The Governement Accountability Office sustained (Case B-298364.6; B-298364.7, TYBRIN Corporation, March 13, 2007) the protest of a total small business set aside contract where the apparent winner did not meet the limitations on subcontracting. The Air Force tried twice to get that contractor qualified (note: adding the work actually performed by the contractor with the work of small business subcontractors does not count), eventually getting an SBA Certificate of Competency.

The GAO's response to that was:

[the] Air Force’s determination that [the apparent winner's] proposal failed to comply with a material term of the solicitation (the subcontracting limitation) and, [thus] could not form the basis for award under the RFP, the agency should have found [their] proposal to be unacceptable, rather than finding [them] nonresponsible and forwarding the matter to the SBA for its consideration.

The SBA disagreed. It believes that whether or not a small business contractor will perform the contract is a responsibility issue. However, the GAO's "final" comment is:

the issue here does not concern whether a bidder or offeror can or will comply with the subcontracting limitation requirement during performance of the contract (where we recognize that the matter is one of responsibility) ...but
rather, whether the bidder or offeror has specifically taken exception to the subcontracting limitation requirement on the face of its bid or proposal.
Given that [this] circumstance involves the evaluation of a bid or proposal for compliance with a material term of the solicitation, the determination is one of responsiveness or acceptability, rather than responsibility.

It is simply a matter of the contractor meeting the requirements in the RFP.

Agencies need a plan to validate FPDS-NG data

No kidding! OFPP expects the agencies to come up with a plan to ensure the information in FPDS is accurate and up-to-date. If that happens, all the taskers we normally get should go away and we can get back to the business of buying stuff.

We all need goals and dreams.

Accountability in Contracting Act gathers contractor opposition

This earlier article has been replaced by news that the House "marked up" a version and later passed a similar version of this bill (HR 1362). What is it about?

Its primary purpose is to limit abuse-prone contracts- primarily sole source and cost-reimbursable. How? By:

Restricting the length of any contract over [originally SAP] $1,000,000 and using "other than competitive" procedures to the minimum period necessary [originally 240 days, as passed 1 year].

• to meet the urgent and compelling requirements of the work to be performed and
• to enter into another contract through use of competitive requirements

Also, the originally introduced and passed bills:

• Require plans for reducing the use of sole source and cost-reimbursable contracts, including measurable goals.
• Increase contract oversight, by publicly disclosing J and As and disclosing audits and other reports that describe contractor costs over [Originally $1 million] $10 million that are unsupported, questioned or unreasonable.

[The bill as introduced added funding contract oversight by increasing amounts for hiring, training, contract planning, contract administration,oversight and audits by an amount equal to one percent of the aggregate amount of contracts awarded during that fiscal year. (my emphasis)]

FInally, the bill hopes to close what it perceives as legislative "loopholes" and will deter corruption in contracting by further restricting the time for a federal employee to start working for a contractor.

Check out the articles and bill to see what is coming down the pike. This has to go to the Senate as well, so it is not a done deal, yet.

Size standards, burdensome regulation top complaints to House panel

The House Small Business Committee, chaired by Rep. Nydia Velazquez (D-N.Y.) is looking into how to make the federal government more responsive to the needs of small businesses. I have already chronicled the complaints of those multi-million dollar companies complaining they cannot compete with "larger" companies, so want to continue to be "small" businesses.

While I am a big believer in eliminating regulations, especially "burdensome" ones, and I agree that taxation is a big problem to small businesses (as is the minimum wage issue, social security, unemployment taxes and others) I think that in many cases federal oversight of small businesses is heavy-handed and often hampers innovation and the flexibility that small businesses need.

Perhaps we need a "Mom and Pop Business Administration" to help those businesses that are truly small and deserving of assistance in getting government contracts.

Small business gets own team on FAR council

As reported on FCW.com, the FAR Council has added a sixth team for small business. The Administrator of the Office of Management and Budget, Paul Denett, issued a memo creating this new team to:

focus on small business issues and to coordinate with the Small Business Administration (SBA) on concurrent SBA and FAR rulemaking

With the new legislative agendas, this may be a preemptive strike to ensure small business issues are included in executive department decision-making. The House Small Business Committee Chairwoman Rep. Nydia Velazquez (D-N.Y.) is busy working on her favorite pet peeve- the Small Business Adminstration. I'll have to cover that separately.

The three approaches to logistics

Earlier, I posted about the British attempts to create weapon systems maintenance/service contracts based on availability. The British have expanded their use of "through life" contracts. In fact, the US Air Force awarded a maintenance contract for similar type of arrangement for their B-2 stealth bomber.

While examining that issue, I came across this effort to explain the three ways to accomplish logistics for a weapon system. Scroll down the page to the "BAE Systems" logo. Here, former British Air Vice Marshal and current BAE Director of Military Aircraft System Support Steve Nicoll discussed his take on the 3 approaches to logistics.

1) The Forrest Gump approach is based on the movie's famous line that "My momma always said, 'Life was like a box of chocolates. You never know what you're gonna get.' " It can be rephrased more briefly as "stuff happens," and links to a well tried, 2,000 year-old military philosophy: because stuff
happens, take lots of spares etc. with you.
(2) Then there's the Scotty approach, based on the famous Star Trek engineer...where knowing initial conditions well enough lets you predict what will happen next. In short, a linear investigation/ statistical approach.
(3) Then there's Dirk Gently of "Dirk Gently's Holistic Detective Agency". This is more of a systems approach that believes everything to be interconnected.

What a great analogy. Read the rest of the article to find out how the "Dirk Gently" approach seems to be catching on among logisticians and program managers.

Yahoo (the exclamation not website)!! Law maker says give us money, give us bonuses.

At last, someone on Capitol Hill is talking sense. Rep. Tom Davis, speaking before the Association of Government Accountants, told the group that trained, effective contracting professionals are very important to the whole procurement process.

In the article, he said,

You've got a lot of good [acquisition] people in government, but if you're not training them on an ongoing basis, you're losing out," Davis told the
auditors. "I would pay them, I would bonus them." [I added the italics]

He also blasted last congressional session's Clean Contracting Act (see my post here regarding Rep. Henry Waxman's current iteration of that legislation ) as creating too much oversight for the effort involved and potential savings.

On the subject of Government Purchase Cards (GPC), he said that efforts to restrict them are detrimental to the procurement process. He points to a:

misguided focus on the relatively small downside of abuse, rather than the large
administrative savings the cards generate

Read the whole article for more interesting details. Considering it is a group of accountants, that turned out to be a good meeting to have attended.

Ending revolving doors of contracting officers- again

Lately. there has been a lot of attention on

1. the "problems" with contracting officials' ethics
2. the trouble ahead when all the contracting officers retire (at once, presumably)

Here are two different attempts to correct these problems. The first, Rep. Henry Waxman's (D-Calif) Executive Branch Reform Act extends the amount of time- from one to two years- before you can award a contract to a former employer or work for the same part of a company you had dealings with as a "procurement official."

The second, I posted about the other day. I didn't notice anything in that bill, but Paul Denett, the OFPP administrator, is still looking at it.

Still, if you a big, influential government procurement official (like a military service secretary), you still have options. You could still get a job as a "consultant" with one of the big companies and do work on "big picture" stuff (providing policy analysis-type input to the board, for instance) or work in some division of the firm that is totally unrelated to what your expertise is. You can still ride the "rubber chicken" speaking tour, expounding on the good things or bad things that you saw/did while working in government (depending on what you saw/did would determine the payday for each speech).

Under this proposed legislation, you'll still have income and you will stay busy. The only difference (as I see it) is that you just have to do it for two years instead of one. Your pals will still be your pals. If they "owe you," they will still owe you.

A better strategy might be to run for Congress and change it all again. Better save that discussion for another time.

To the point here, the "famous" contracting ethics problems will not be solved by waiting an extra year. One problem was with a high-level official still in her job. She got caught and did the time. New laws would not have prevented this.

If they are still jealous of Mr. Cheney, it has been way more than two years since he left Halliburton. That is besides the point that he probably has kept a great distance away just to avoid this sort of fallout.

It is not a problem of insufficient legislation. It is in treating everyone with sufficient respect they will 1) want to work for the government and 2) not be tempted to violate the public's trust in them. Is this too much to expect? Maybe, but there are plenty of laws out there now. Especially on this topic.

New bill introduced to fix federal contracting problems

The latest attempt to legislate good contracting practices was recently introduced. Senate bill S-680 has quite a few changes in store for our profession, many of which are outlined in the GovExec article. See the article for such new twists as:

Requiring agencies to publicly announce large sole source contracts shortly after they are awarded

Expand and improve the training of the federal acquisition workforce.

Expand contract award protest rights to allow challenges of large task and delivery awards under multiple award IDIQ contracts.

Have the Office of Management and Budget study the use of interagency contracts

Limit the value of task and delivery orders for services under larger contracts to $100 million.

Include a requirement that prime contractors
subcontract no more than 65 percent of the work on any given contract.

Includes some provisions that resemble recommendations made by the Services Acquisition Reform Act Advisory Committee (see these)

One provision of that bill that would impact our world the most, in my opinion, is the requirement to publish all Justifications and Approvals (J&As) on FEDBIZOPPS and the agency's internal website (such as the Army's Single Face to Industry website).

I am of two minds on this one.

Based on comments from procurement analysts that I know, the quality of J&As may increase exponentially if they were to be published and subject to the same scrutiny of everything else that is published in the contracting world.

Initially, there would be a firestorm of comments and concerns. However, contracting officers would get better at crafting J&As that meet both the federal procurement requirements and the public's requirements. This could be a good thing, long term.

Secondly, though, anything that is published creates an opportunity to be second-guessed by those outside the process and by those trying to influence the process. Soon, there would be a protest procedure for J&As, including some time period for public comments, and there may never be an award made for other than full competition. This would certainly tie the hands (and feet?) of contracting officers simply trying to provide our soldiers, sailors, airmen, marines and other government agencies with what they need to accomplish this monumental task that is running the federal government.

The resulting glacial pace of procurement (if it isn't already)would be due to adding another layer of public hysteria-induced confusion and CYA-induced oversight. I am sure that is not the intent of this proposed legislation.

DFAR keeps up with T&M and Labor Hour changes

This Defense Federal Acquisition Regulation Supplement (DFARS) case is an update to payment options brought on by the the new FAR change (see below) to allow Time and Material (T&M) and Labor Hour contracts for commercial services.

There were three payment options specified in the FAR rule. The Defense Department narrows them to one. Here is how the DFAR case explained it:

DoD believes it is in the best interests of the Department to select, and make mandatory... requiring separate fixed hourly rates that include profit for each category of labor performed by the contractor and each subcontractor, and for each category of labor transferred between divisions, subsidiaries, or affiliates of the contractor under a common control.

That is the way DoD hopes to keep the final outcome of T&M and Labor Hour contracts to be as predictable and controllable (manageable???) as possible.

The DoD head of procurement has a good overview of this change on their DFARS site. There is even a chart comparing before and after use of T&M and labor hour contracts. Just scroll down the page a little to the heading, "Labor Reimbursement on DoD Non-Commercial Time-and-Materials and Labor-Hour Contracts (DFARS Case 2006-D030)."

Rules expand Time and Materials (T&M) plus Labor Hour contracts to commercial services

[This post includes an addition of information regarding T&M and Labor Hour contract D&Fs for contracts over 3 years]
Perhaps you noticed that the FAR got a revision (FAC 2005-15 dated Dec. 12, 2006) to allow T&M and Labor Hour contracts for commercial services. In their deliberations, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council worked to implement the Services Acquisition Report Act of 2003 (SARA). One of the provisions of SARA was to allow using T&M and Labor Hour contracts to purchase services that are commercial in nature.

This new change to the FAR keeps a decided preference for fixed price contacts for services.

Briefly, here is how to use these contract types to buy services (new FAR Part 12.207):

First, the contracting officer needs a determination and finding (D&F) that states a T&M or Labor Hour contract is the only type of contract appropriate for this requirement. Also, for IDIQ contracts, a similar D&F is needed for each task order. [The D&F has some specific requirements that need to be included, so be certain to check them out (FAR 12.207(b)(2)). Also, the D&F authority is HCA for contracts longer than 3 years (FAR 16.601(d)(1)(ii))]

Next, there must be a ceiling price beyond which another determination must be made.

Further:

• The contract must be a competitive award (or small business set aside)
• If using an "other than full and open competition" Justification and Approval (J&A), must have 2 or more offers/proposals or are placing an order under the fair opportunity procedures of a multiple award delivery order contract.

Keep this type of contract arrangement in mind and remember to properly justify its use and make the proper determinations.

Consolidated site to find rules, regs and regs awaiting public comment

There is a new "one face to government regulation" website. It is now the only place where Federal Acquisition Circulars will be posted. In addition, all the Federal Register notices will be at this one spot too.

One point (you probably will not have a problem with it)...When searching for a rule or FAC, click the "All Documents" radio button. Otherwise, the only results that you will see are those items that are still awaiting public comments. If you are looking for something that is already a rule, it will not show in your results list.

Go to it and bookmark it.

Remember to type the "http" before procurementanalyst.blogspot.com

Government spending website coming soon

The Federal Funding Accountability and Transparency Act of 2006 calls for a single searchable website to allow access to information regarding all federal awards. It defines federal awards as:

grants, subgrants, loans, awards,cooperative agreements, and other forms of financial assistance; [and includes] contracts, subcontracts,
purchase orders, task orders, and delivery orders [but] does not include individual transactions below $25,000; and...before October 1, 2008, does not include credit card transactions.

The linked article is a good overview of the proposed system, describing it as a "Google-like search engine and database."

There are two interesting aspects to this. First is trying to get all the data that this calls for and to keep it updated (there is a requriement all information is updated within 30 days of award). The Federal Procurement Data System-New Generation is supposed to have that, at least for federal contract information, but doesn't. Good luck integrating that data.

The other interesting part to me is the emphasis on subcontracts. Since the focus lately on the sub-sub-sub-contracts of the Army's LOGCAP contracts, this could be quite an expansive system. Of course, the bill calls for contractors to charge for this reporting effort.

This upside, though, is that if it increases the visibility of how important federal procurement is to the U.S. economy, it may be a good thing.

Do you use criminal background checks for contractor responsibility determinations?

The Government Accountability Office (GAO) was asked (by the Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs) to comment on whether criminal background investigations were used to determine contractor responsibility before contract award.

In a nutshell, the GAO said, "no" and that the FAR doesn't say to do that. Then, as part of their discussion, GAO mentioned that the only use of them in the contracting world is when allowing access to military bases or for security clearances.

Perhaps this is another of the "oversight" categories that the current session of Congress will be focusing on. The "good" news is that all the focus on the failings of contractors will mean more emphasis on government employees doing that work.

Until we all retire and go away.

GSA IG to do pre-award audits and surveys

The GSA budget includes funding authority (my recently acquired fiscal law knowledge tells me that means there is no real dollars here, just "permission") to perform pre-award audits and surveys. They will be performing them on a reimbursable basis, so I assume the costs will be included in the service fee charged to their customers.

No comment, just the facts.

Army raked over coals for third tier subcontractor actions

A subcontractor for a subcontractor for a subcontractor to the Army's Logistics Civil Augmentation Program, or LOGCAP, contract turns out to be a private military contractor (PMC). The "news" is that this company used armed guards to protect the transportation of cash used to pay vendors and employees and were part of a contract that does not allow contracting for armed security.

Since the prime contractor is a Halliburton subsidiary (KBR) and the security firm is Blackwater, Inc, from Moyock, NC, it makes headlines and a congressional hearing.

What is interesting to me is that the KBR contract administrator recognized the problem with this and understood his firm's role in flowing the proper clauses down to the subcontracts. He recommended not following the direction that the eventual sub-sub-subcontract went.

Of course, he wrote all this in an email and for some reason "top officials" at KBR were unaware of it. It seems logical that all email traffic is not forwarded to the senior officials at this company that has 57,000 employees.

That happens to me all the time. No one at the Pentagon ever reads these important postings nor my emails and nor takes my opinion seriously. I can't understand why KBR doesn't do a better job with far fewer employees.

I am not sure what the true issue is here. Is it the numbers of contractor personnel in Iraq? Is it the number of contractors that are needed to protect other contractors? Or is this something not contract-related at all- perhaps an issue of rules of "behavior" in-theater- or maybe it is just politics.

FEMA searching for contracting expertise

The Federal Emergency Management Agency is having a job fair to fill 50 positions, 41 of which are for their Procurement Division. This Homeland Security agency is seeking to get up to a 95 percent hiring level, but has fallen short in the past.

Their procurement division has had its challenges. They hired a contractor to help in the short term right after Hurricanes Rita and Katrina, had to justify themselves before Congress, and were even impersonated by thieves.

They have a dynamic leader in Deidre Lee and are trying to get themselves together. Now, it seems, if you need a change, this might be a great time to move to FEMA.

DHS procurement woes and opportunity for improvements- Part 2

The second article I saw about the challenges facing the Department of Homeland Security (DHS) addressed improving the professionalism of their acquisition workforce. While this is an oft-used solution to procurement issues, perhaps in the case of DHS, it is an appropriate step.

Legislation has been introduced (DHS Procurement Improvement Act (H.R. 803)) to create specific curriculum and training programs, plus stregthens policies that will improve the quality of contracts. This bill, if approved will

require a new Council on Procurement Training, to be headed by the deputy chief procurement officer (CPO) at DHS, to advise and make policy recommendations to the CPO.

These steps may be important to DHS. In testimony before the the House Oversight and Government Reform hearing last week, the Comptroller General, David Walker, stated that the acquisition workforce of DHS has not changed much since the merger of all the agencies that created DHS following the attack on America, Sept 11, 2001.

Part of the challenge, he says is that

Of the 22 components that initially joined DHS from other agencies, only 7 came with their own procurement support. An eighth office, the Office of Procurement Operations, was created anew to provide support to a variety of DHS entities—but not until January 2004, almost a year after the department was created.

Add to this the fact that these 7 agencies have essentially the same people now as before the merger, he feels there needs to be a change.

Now, with this bill, getting a better-educated procurement workforce may make it easier to get world class procurement solutions and lessons-learned throughout the organization.

DHS procurement woes and opportunity for improvements- Part 1

Two separate news articles came through this past week that underscores the challenges at the Department of Homeland Security. The first describes the House Oversight and Government Reform Committee conducting a series of hearings last week on the general topic of fraud, waste and abuse. During those hearings, they focused on administrative oversight and, in particular, looked at DHS contracts for the Coast Guard's Deep Water Program and their Secure Border Initiative.

Both programs use "system integrators" and have had problems with costs being higher that expected.

The comment of interest (to me) from this hearing is from the Comptroller General (the head of GAO), David Walker, who said

We ought to be able to pull the plug (for poor performance) and taxpayers shouldn't have to pay a dime

Certainly, DHS uses termination for default clauses. Perhaps they just need better contract administration.

Small business update

Check out the updated post on small business.

DoD Moves toward Procurement Competency

This GovExec article expresses interest in the Director of Defense Procurement's model to

help gauge the capabilities of its acquisition workforce and determine what areas need strengthening or realignment

The competency models are explained at the DPAP website. There should be a final compentency report early this year with the models to roll out Department-wide by June 2007. They will be used to assess the workforce, identify skill gaps and work to close those gaps.

Everyday, someone comes out with accusations about the poor job contracting has done, whether in Iraq or for some weapon system or another. The Defense contracting community has worked the hardest to put trained and effective professionals into the field. Its training scheme is now being used to train the rest of the contracting community as the Federal Acquisition Institute is now co-located with the Defense Acquisition University at Fort Belvoir, VA.

This competency model concept seems to me to be another tool to ensure we are as effective as we can be. Let's keep an open mind and be objective about it when it is announced.

The GAO's high risk concerns in the news again.

You may have seen the headlines about the GAO's high risk series. There is not a lot of new issues here. This report contains a good bibliography of GAO products that address issues of contract management and transformation. The areas of high risk (out of a total of 27) that are of interest to DoD procurement people and when they made "the list:"

Area Year designated high risk
DOD Supply Chain Management 1990
DOD Weapon Systems Acquisition 1990
DOE Contract Management 1990
NASA Contract Management 1990
DOD Contract Management 1992
DOD Financial Management 1995
DOD Business Systems Modernization 1995
DOD Support Infrastructure Management 1997
DOD Approach to Business Transformation 2005
Management of Interagency Contracting 2005

Read the report, look at the references and get ready for more oversight.

Small business that become "large" complain about no preferences

[Updated on Feb. 6, 2007- The SBA has decided to re-look the size standards for IT manufacturers. This should take care of the complainers for now. I don't know about you but a $23 million company is pretty big. If our store made that much money you would be reading about the health benefits of dark chocolate written by me from some resort somewhere.]

This article bemoans the reality that when small businesses grow too large, they lose their preferences and must compete against other large businesses. One company says,

If you have a company that has just won a new contract and its revenue is
over $23 million, then SBA believes that [the company] can compete on the
same level as multibillion international companies,” said Matt Hoffman, vice
president and corporate counsel for Maryland-based IT provider CNSI. “The
difference between $23 million and $5 billion is enormous.

Maybe I am getting cold and cruel in my old age, but small business preferences in government contracting should not replace the marketplace nor create an endless supply of business to companies. Instead, they should allow small businesses to get their feet under themselves and become competitive and dynamic organizations. Yes, they will face competition. That is life in business. Yes, they may have compete against really big companies. They will have to compete against small ones, too (who will have preferences in the government marketplace).

However, those companies that have a viable business concept- a real market-based reason for existence- will be helped by the small business program and be ready for success when they graduate. They will identify their particular niche in the marketplace and find ways to exploit it.

They may even wish to graduate faster because success is measured in how much business you do, not the number of government contracts you have.

That is what the role of the Small Business Administration and its programs should be.

On the lighter side: Its Phantom Flu and other rare disease season

Just thought you'd like to read how some people get time off to do their personal business during the middle of the day.

Read and enjoy...

Looking for federal case law to back up your "hunch?"

Here is a great website find federal court decisions. Featuring Supreme Court, Courts of Appeal and others, if you need to find it, it seems to be here.

Good luck on your search for answers.

Acquisition schools standardize coursework

Standardizing the curriculums of both the Federal Acquisition Institute (FAI) and Defense Acquisition University (DAU) are will result in a common level of training across the federal government. In the past, for non-DoD contracting officers to move to DoD jobs, they often had to go through more scrutiny. DoD contracting folks going to other agencies were welcomed with open arms.

Now, maybe there won't be an "us versus them" mentality when hiring federal contracting professionals.

Interagency contracts once again fail procurement regulation test

Both the Department of Defense Inspector General (IG) and Department of Interior IG office issued a report this month detailing the work accomplished by DOI on behalf of DoD. The reports detailed the shortcomings of the GovWorks office in Northern Virginia and the Southwest Acquisition Branch located at Fort Huachucha, AZ. Some of the findings include lack of competition and lack of documentation regarding the price reasonableness of the awarded contracts.

There is also a big issue regarding use of expried funds. There were almost $400 million in "potentially expired" funds parked at the GovWorks office.

Like previous interagency contract reports recently handed down, the DoDIG keeps bandying around the bona fide need rule. As if anyone pays attention to that- at least outside of contracting.

For more, check out the report. Also, the DoD IG site and the DOI IG website are good places to find reports related to contracting.

Modernization, force protection and the environment also get House attention.

This post wraps up our review of The Oversight Plan of the House Armed Services Committee for the 110th Congress. Looking at Congressional oversight plans can give us insights into procurement issues for the coming year.

Military Modernization
The committees seeks to ensure that that the

highest priority requirements of the nation’s active, guard and reserve land,
sea, and air forces are properly resourced.

Force Protection
The HASC plans to pay significant attention to personnel body armor, tactical wheeled vehicle armor protection and countermeasures to improvised explosive devices (IED) in Iraq and Afghanistan.

In something that should be a good thing for our community, the committee will explore innovative acquisition policies and procedures in an effort to provide sufficient flexibility in support of:

• requirement identification [more requirement focus],
• research and development,
• immediate procurement, and
• rapid operational testing and fielding of additional capabilities.

Environmental Programs
Directly impacting installations and installation contracting, the committee will significantly increase its oversight of the Department and military services’ environmental management. Perhaps the increased emphasis is directly due to the new composition of the committee (and Congress).

Cost growth in weapons systems gets HASC laser vision

More on the priorities of the current House Armed Services Committee.

A recurring issue throughout their Oversight Plan is controlling costs. So it comes as no surprise that they plan to conduct hearings and briefings to look at how weapons systems procurements get out of hand. They believe that the causes of cost growth, schedule delays, and/or performance degradation from envisioned capabilities include:

• too many programs competing for too few resources;
• requirements determination, definition, and growth [second notice that requirements determination is a focus];
• failures of cost estimation;
• unrealistic program schedules related to immature technology and insufficient funding;
• instability in funding profiles;
• labor and material cost increases; and
• management shortfalls.

That is an ambitious goal. It seems that the operational side of this process- those of us who are "in the field"- have long known that requirement generation is an issues that needs addressed. Perhaps Congressional attention to it in the weapon systems arena may bring changes all the way to the supplies and services contracting done at local installations around the world.

Acquisition issues come into the view of the HASC

Continuing our look at the priorities of the House Armed Services Committee for the 110th Congress...

There are many issues that the committee could have chosen in the area of Department of Defense procurement/acquisition. Here is what they are going to pay most attention to.

In their role of oversight and management, the committee intends to pay particular attention to the Acquisition System and Acquisition Policy. They plan to:

• Oversee “…the defense acquisition system and address growing concerns about cost growth [Note this area] in major defense acquisition programs and the responsiveness of the system to compelling military needs.”
• Examine in depth [my emphasis] the "military requirements process [Note this area, too- you will see it again]… (that) continues to produce outcomes which do not reflect the jointness that the military has achieved at the operating level.”
• Monitor revisions to laws concerning the reporting of cost growth [Here it is again] in weapons systems, controlling the government’s interest in technical data rights, and governing the management structure for contracting for services to recommend further revisions where necessary.
• Continue to push for accountability and integrity in contracting with the Panel on Contracting Integrity and working in part through the reconstituted Subcommittee on Oversight and Investigations, to identify and eliminate as many contracting vulnerabilities as possible (my emphasis).

Cost growth and requirements generation are certainly areas of concern to the committee.

In addition to acquisition policy, the committee wants to improve the Defense Industrial Base and Technology Transfers. They plan to:

• Give close examination to the health of the defense industrial base and those suppliers (which) appear to be struggling to generate profit margins large enough to justify long-term investments in infrastructure and technology. These long-term investments are vital to the health of the defense industrial base.

[Helping companies that are struggling with profit margins and controlling cost growth seem to be conflicting goals and should bear watching.]

• Examine the effects of mergers, acquisitions, and consolidation of second and third tier suppliers on competition and “the extent to which contractors may be taking on management roles previously performed by the government.
• Continue to review issues surrounding contractors on the battlefield and the outsourcing of inherently governmental operational functions.

[Here is another look at how the "contractorization" of government is being examined.]

The HASC focus on financial/resource management will include examining the “causes of the DOD’s inability to consolidate its financial information and monitor closely the … dollars being spent on business systems modernization programs … proposed to address [DoD’s] financial management problems.”

HASC looks at military readiness and civilian personnel

Focusing on the readiness of military forces, the House Armed Services Committee plans to

• Increase their oversight in the “service’s readiness programs to ensure that military units possess the required resources and training to complete their assigned full-spectrum combat mission.”
• Conduct “vigorous oversight [my emphasis] of all of the Department of Defense’s (DOD) readiness plans and programs to ensure military units are fully trained and equipped for combat.”

Such emphasis on readiness is important as we continue an extended war on terrorism and other actions around the globe. For us in the procurement community, that is welcome news.

Since many of us are government employees, it is helpful to learn of the approach the committee intends to take toward civilian personnel. The committee plans to:

• Significantly increase oversight of civilian personnel pay and policies…(paying) close attention to implementation of the pay for performance system, and developments with the DOD attempt to modify the collective bargaining and employee appeal rights portions of NSPS.
• “…increase its oversight of the Department's use of authorities such as A-76 to contract out DOD activities... and will closely examine the cost-benefit analyses of the existing and future contracting out of functions done by DOD employees or military members.”

A close look as NSPS was not unanticipated, regardless who had won in November. However, I suspect the closer scrutiny of the collective bargaining provisions of NSPS is a result of the new members of Congress.

Some in government have said that the A-76 process may have gone too far. This is against what the President's direction has been during thepast 6 years. Perhaps it is due a closer look.

House Armed Services Committee sets their priorities

The new Congress has begun its work, releasing its priorities for federal procurement. As I become aware of them, I will try to help you follow them here. Thanks to Debbie Emerson for passing this one on to me.

The House Armed Services Committee (HASC) has issued their Oversight Plan for the 110th Congress (current session). If you are not aware, this committee has oversight over the entire Department of Defense and its activities, so is particularly important to us in DoD procurement. In addition, the House of Representatives is responsible for all appropriations legislation, so the findings and priorities of this committee find their way to funding bills.

They have oversight over everything DoD, but this influential group plans specific focus areas for this coming year. This topic will be examined in several posts today to break up the topic and perhaps improve the discussion.

DoD IG says requiring activity should justify cost of going to non-DoD contract

The acting DoD IG, Thomas Gimble, appeared before the Senate Armed Services Readiness and Management Sub-committee last week. He listed a lot of reasons that DoD program officials (he really didn't blame DoD contracting folks) went to non-DoD contracts. Among the reasons are:

the non-DoD agency processed the purchases faster than DoD and they could generally get the contractor they wanted

He went on to say that by going to non-DoD contracts, contracting and funding issues were a big problem. Contracting problems such as insufficient competition, failure to determine price fairness and reasonableness, and inadequate contract surveillance. The biggest funding issue is that GSA and Department of Interior helped DoD "park" money that was expiring. According to the report,

Most of the contracting and funding problems were driven by three factors: the desire to hire a particular contractor, the desire to obligate expiring funds, and the inability of the DoD contracting workforce to timely respond to its customers.

Finally, the IG said that DoD requiring activities spent $23 million in surcharges to GSA and DOI for

for purchases that could have been routinely handled by junior DoD contracting personnel. DoD often paid surcharges for GSA and the Department of the Interior to purchase low-cost military equipment or commercial items that could have been obtained from existing DoD contracts.

Finally, the report recognized that the requiring activity shouldered much of the responsibility for correcting this. It also says that when the requirement was initiated, the requiring activity

...did not determine whether it was in DoD’s best interest to make the purchase through a DoD contracting office or pay a 2 to 5 percent fee for assistance from a non-DoD agency.

"Gray pallor" to be cast over small businesses due to new certification rules...sure

The new SBA recertification rules (see my post from late last year) are creating a stir because they may make some small businesses less attractive to be purchased by large businesses. I can see where this might be a problem, especially for those folks who create a small company strictly to win a portfolio of lucrative contracts and then sell the whole thing to a large company and take the money and run.

Supporting that type of activity is really in the spirit of helping small businesses grow and expand the industrial base (isn't that the original goal of SBA preferences?)- NOT.

Is British concept to "contract for availability" an idea for BASOPS?

Based on Britain's Defence (it's spelled "defence" there) Industrial Strategy, procurement is taking a real turn for performance based contracting. In their strategic document, they state that

(they) also recognise that the bedrock of (their)procurement policy has to be long-term value for money.

This is a principle that we in U.S. federal procurement also believe in.

In fact, they are taking this to great lengths by contracting for aircraft availability, rather than for spare parts or maintenance. The outcome contracted for, then, is having each aircraft available to fly missions.

They call it "through-life support" or lifetime support. They are using it to improve their industrial capabilities. Perhaps, that is a practice we could employ with our vehicle maintenance practices- oh that's right, AMC will be taking that over. How about some of our other recurring contracts.

Let's think about how that might work out by improving our installation capabilities, as well.

It is getting to be time for political appointees to move on

Emily Murphy, the head of GSA procurement, is leaving her position to take a new private sector job. Why?

"On Jan. 20, 2009 ... I turn into a pumpkin."

I guess we will see more of that in the next 24 months. Hang on!

P.S.- [Looking at the silver lining to all of this...] Anyone want an interim position to add to your resume? Might be some short-term openings...

Best consultant company name that should be an Army organization verb

I found this company's name- SiloSmashers- in an article about one of the government contracts they recently won. I like the name and think maybe we should borrow it for when we reorganize/transformize ourselves during the next half decade or so.

In addition to smashing those silos, remember to shatter rice bowls and barbecue those sacred cows.

Small PC manufacturers exist- SBA says to use them

[Another of an occasion series of items resurrected from the past for your attention.]

Effective Nov. 28, 2006, PC's are required to be purchased from small businesses (and service disabled veteran-owned small businesses, or 8(a) BusinessDevelopment Program contractors). This is a change and according to the Federal Register notice, it is in response to receiving comments from small businesses that they have provided PC's to the government.

I guess that means keep your eyes peeled for small business vendors of PCs, especially at fiscal year-end. I haven't checked, but maybe they will be on an ITEC4 or GSA schedule somewhere.

And speaking of more oversight...

The GovExec.com blog and FCW.com (Federal Computer Weekly's daily news report) reports that the House Government Reform Committee has a new name: the Committee on Oversight and Government Reform.

The GovExec article includes a brief history on that committee and how it has transformed since its founding in 1927.

Returning "oversight" to its name means there will be probably more attention to micromanaging what we do.

Project on Government Oversight seeks allies with new Congress

This traditional adversary of government contracting is looking for allies within the newly elected congressional delgations.

Today, POGO wants Congress hold hearings on enforcing debarrments and suspensions (these are some of the same issues in the SARA report) while reducing the "revolving door" of military and government officials working for contractors.

Once again, following the policies and procedures that are already in place- and including effective contract administration- would eliminate many of the problems that POGO traditionally follows and reports to the Washington Post.

Bill targets wartime contracting fraud

Just another in the continuing saga of contracting in Iraq. Of course, increasing the visibility and priority on contract administration would fight this.

Issue sole source J&As before presolicitation notice? GAO says to think about it!

The results of this GAO protest includes an interesting thought. Should a sole-source J&A be approved before the results of a pre-solicitation notice are known? According to the decision,

We think agencies undercut their credibility when they prepare and execute
sole‑source J&As on the basis that there is only one responsible source
available, before the time they have received expressions of interest and
capability from potential offerors.

The writers of the decision admit that it is probably not a violation of procurement law but, doing the J&A first

...may increase the risk that an agency’s market survey, and other bases for its
sole-source decision, will ultimately be shown to be unreasonable.

It makes sense. It would seem less than fair to say there was only one source before using all the tools of market research, including the presolicitation notice.

More trouble for non-DoD contracts

The DoD IG has recently issued two reports regarding use of non-DoD contracts. Both showed that there is a great potential for Anti-Deficiency Act (ADA) violations. The first report focuses on DoD use of Treasury FedSource contracts. According a GovExec.com article, the IG found 21 potential ADA violations, including

funds being kept after the end of the year for which they were appropriated, and spending from the wrong accounts for particular projects.

The next report is an excellent review of ADA guidance and a good reference on potentially deficient practices. Focused on non-DoD contracts, it is a good resource to review (skip down to the section on potential violations- about page 13- for better explanations on ADA and how to avoid a violation).

This report is examining 38 potential violations by GSA and then an additional 69 by other agencies, including NASA and Treasury (all of these were for FY 2005). The report does not reference the other report's 21 for the Treasury. Its count was 25.

How did they fail? According to the report, the majority of failures of ADA were for violations of the bona fide need rule- severable services are covered here- (24 of the 38 and 60 of the 69 were for bona fide need).

Check this out for its potential as a good resource on ADA.

More from the Acquisition Advisory Panel draft report

Two more articles provide more information about the SARA panel's decisions. First, the panel believes that by using commercial business practices, competition will increase. Here how the article puts it

...move away from time-and-materials contracts because they take too much effort to oversee. Instead, the panel favors performance-based acquisitions. But other significant recommendations include setting up a new General Services Administration schedule for professional services, redefining stand-alone commercial services, applying the three-bid minimum requirement for Defense Department services over the simplified acquisition threshold governmentwide, and amending the Federal Acquisition Regulation (FAR) to improve transparency in government contracting.

The second article says the panel believes that the acquisition workforce doesn't know who it is and that they are not being sufficiently trained. In addition, they will conduct a study to see, among other things, whether there should be a government-wide version of DAU.

Of course, since DAU has an organic "systems acquisition" leaning (notice who their Defense AT&L Magazine is aimed at), they are missing helping those of us who spend the other 60% of federal procurement dollars!

From their writer's guidelines at the end of the magazine:

The purpose of Defense AT&L magazine is to instruct members of the DoD acquisition, technology & logistics (AT&L) workforce and defense industry on policies, trends, legislation, senior leadership changes, events, and current thinking affecting program management and defense systems acquisition [my italics], and to disseminate other information pertinent to the professional development and education of the DoD Acquisition Workforce.

Perhaps a services acquisition university might be a good thing. Let's see what they propose.