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This earlier article has been replaced by news that the House "marked up" a version and later passed a similar version of this bill (HR 1362).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