The New York Times is a small business???

Lately, there has been an increased emphasis on correctly entering the Contracting Officer Determination of Business Size and how incorrectly entering the data can create headaches down the road. While not on the front page of the Washington Post (a contracting officer's greatest nightmare), here is a lengthy article in The New York Times blog's business section that points out how important it is in the Big Scheme of Things to accurately complete the Contract Action Report.

While the article does not go so far as to say that awarding contracts reserved for small businesses to large businesses is a catastrophe, it does say that critics have long reported that the government's efforts are not as much as reported. Also, government efforts might diminish if mandatory goals appeared to be met.

Regardless, a quote from the article shows what others outside our profession believe about the federal procurement process, as a result of errors like this:

“Contract error and mismanagement amounts to tens of billions of dollars’ worth of contracts a year being diverted away from small business,” [Elliott Rosenfeld of the American Small Business League] added. “With such faulty standards of oversight, accountability and transparency, we wonder how easy it must be to hide fraud in the federal contracting process.”

This article also correctly points out that the "official" size standards to be used as a reference at time of award found in the Online Representations and Certifications Application (ORCA), not the Central Contactor Registry (CCR). See DFARS 219.3 (you'll need scroll down or click the link for the subpart) for details and for the OUSD(AT&L) memo detailing how to correctly report the contractor's business size.

One more reminder to be careful, accurate and timely in reporting contract actions and that the additional care and time you take will reflect well on our profession.

Reforming Government Contracting- deadlines loom

In March 2009, President Obama sent a memorandum to the Heads of the Executive Department and Agencies outlining his plan to reform government contracting. Here is a link to a presidential press/media fact sheet on this memo. The intent of his memo is to call attention to the use of sole source and limited source contracting vehicles (that would include multiple award task/delivery order contracts), the need for greater contract management and oversight and the need to define "inherently governmental activities" that should not be outsourced.

Within the memo is a call to action for the Office of Management and Budget to issue guidance on how to award better contracts by July 1, 2009. That dealine is fast approaching. It would be great to be able to solve the government contracting problem with a piece of guidance written in less than 4 months.

September 30, 2009 is the date we will get the answers to these age-old contracting dilemmas (the answers are both basic and complicated, to say the least):

• How to use and manage sole-source and other types of noncompetitive contracts and to maximize the use of full and open competition and other competitive procurement processes;
• How to use and oversee all contract types, in full consideration of the agency’s needs, and to minimize risk and maximize the value of government contracts generally;
• Is there sufficient capacity and ability of the Federal acquisition workforce to develop, manage, and oversee acquisitions appropriately; and
• When is (or is not) governmental outsourcing for services appropriate.

Can't wait for the answers. Stay tuned.

Best expense account around- your government contract

We, in the the contracting community have been slammed for mismanaging contracts once awarded. The big magnifying glass from above (this week) is on those award fees paid when the contractor is not a good performer. However, in this case involving a pair of contracts (almost $600 million in value) to help Iraq improve their local governing processes, contract payments were made in a curious turn of events:

"On August 19, 2004, Research Triangle Institute physically lost $185,481 in Local Governance Project cash," the report [by the Special Inspector General for Iraq Reconstruction] said. "It reported the loss to USAID, and on October 3, 2004, the USAID Iraq contracting officer issued a letter" stating the loss was "unforeseen" and not the institute's fault. [Inspector General Stuart] Bowen's office said it had no details on how or where the money was lost and the institute and USAID didn't immediately provide an explanation on Tuesday. But Bowen said USAID approved the payment of more than $242,000 to the institute in the case — including the $185,481 in lost cash and an additional $57,000 in "general and administrative expenses" and a "fixed fee."

I guess we need to be more careful out there. If cash is involved, I would hope it's security (and potential loss) would have been "foreseen" and appropriate protections taken.

Maybe next time.

Comments??

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.

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.

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.

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.

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.

Effective contract administration methods

Much has been said about ensuring contractors properly perform on their contracts during the Iraq War. Check out how they improved contractor performance during the Civil War.

Keep a watchful eye- careful contract administration is still important

Every once in a while, it is good to remember that we are responsible for and entrusted to protect our nation's resources. The best way we can is to create business relationships based on sound, ethical practices.

This website is about those business relationships that contractors and sometimes government employees (there is even a contracting officer listed here) made that were not sound nor ethical.

Come back to this site occasionally to keep in mind the ways that others can commit procurement fraud and erode the trust that the rest of us have been trying to build through our actions day-to-day.

Another report saying "contract administration first!"

Once again, GAO manages to state the obvious, that contract administration is lacking in contracts for forward deployed contractors. One of the issues that GAO thinks is important is how many contractors and their employees there are.

There seems to be two issues here. First is a micro issue of how many employees need to be housed/fed/cared for at forward deployed installations. If this is an issue, perhaps something more than an annual report should be required.

Secondly, since we are buying performance and outcomes (FAR Part 37.1 says performance based contracting is still the method of choice), it is not relevant to the buying decision, so we don't require the contractor to report it anywhere, except for the Army's annual contractor manpower report.

There seems to be some sort of agenda in the Beltway about how many contractors are doing government work.

[Note: of course, some proposals have work breakdowns that include labor projections, however, contractors are not bound by them in most cases.]

The purpose of the A-76 and performance based contracting, as I understand it, was not to decrease or increase the workforce, but to save the government money. That should be the measure, not the number of employees.

Send me your comments. Post them right down here at the bottom of the post.

Hundreds of interagency contracts available for use

According to the results of a recent survey, there are over 250 interagency contracts. In case you didn't know, using interagency contracts is "not well understood."

While the chief of OFPP thinks 12 Government Wide Acquisition Contracts (GWACs) is not too many, but his deputy doesn't think so.

If someone comes up with a good contracting solution, why should we re-invent the wheel? Just need to get the details sorted out so we have better contract administration.