When Clint Boulton wrote about the competition for the cloud services proposals that have gone to the General Services Administration, he correctly pointed out that Google, IBM and Microsoft all have products that are essentially similar.
The three companies are proposing to provide Web mail and other office applications in a cloud-based environment. All of them will cost about the same, and all will provide federal workers pretty much the same thing. But that doesn’t mean that these companies have an equal chance of winning. It doesn’t even mean that any of them will win.
The GSA has great latitude in awarding contracts, and the companies have great latitude in what they propose to deliver. In addition, it’s a certainty that whoever eventually does win the contract award will find the decision being appealed. So any move to cloud services will happen only when something final comes out of the process. But there’s no guarantee that the end result will resemble the initial proposals.
First, it’s important to remember that federal government contracting is rife with rules that attempt to make sure that the government gets the best overall deal, that no unfair practices are taking place and that a number of Congressionally mandated requirements are met. Second, it’s not unusual for the GSA to ask for modifications to a proposal to reflect changes in technology, the products in question or to meet emerging requirements that weren’t in the original RFP.
It’s also not unusual for one-time competitors to decide to team up to win a contract so they can provide a capability at a price that no one else can offer. And, of course, it’s possible that the GSA will decide that all of the proposals are deficient, and not award the contract to anyone. All of these things happen routinely in government contracting.
In the case of IT contracts, there’s a big advantage in being the incumbent contractor providing a service. You already know exactly what’s going on; you already know the people awarding the contract; and you know exactly how you’ll do the migration. Because of this, you might be able to propose a solution that has the best credibility. It also helps a lot if you have long experience in crafting winning proposals. You know exactly how to present your products and solutions so that they meet the requirements, stated and implied, of the procurement.
If there’s one company that leads in this group, it’s IBM. Despite the fact that IBM is primarily a computer hardware, software and services vendor, this company is good enough at federal contracting that it’s won systems integration contracts for everything from helicopters to spacecraft. The fact that IBM is also the incumbent, that federal employees are already used to IBM’s Lotus product line, and that IBM should have the easiest time in migrating existing Lotus users to Lotus-in-the-cloud won’t be lost on the people evaluating the proposal.
But that doesn’t mean that IBM will have an automatic win. The GSA does pay attention to the proposed cost, and if a company proposes a credible solution that’s significantly more cost effective than the company with what might be seen as the best technical solution, they might win anyway. As unlikely as it may seem, the GSA really does try to keep a tight hand on the purse strings, and has been known to be flexible about technical requirements if it will substantially lower the price.
But to win, the proposed solution will have to be credible. IBM probably can demonstrate that it can meet the government’s needs in terms of responsiveness, security (even if this product isn’t yet FISMA certified) and the ability to meet the needs of very large organizations. Microsoft, which has a long history in government contracting, although not as long as IBM which won its first government contract in the 19th century, can point to vast installations of desktop, server and Web software throughout the government. But Google might have problems in this area. In addition, all of those Gmail outages, the occasional security breach and the Google cloud’s growing pains could give the government evaluators pause.
Or they might not. Google might be able to convince the GSA that it can deliver everything the federal government wants, and the GSA might be in a mood to take a break from IBM and Microsoft. But whatever solution gets chosen will have to be justified, and that’s where we’ll see exactly what made the difference. And then if anyone is still paying attention, we’ll learn more during the appeals. Or we might not.
The only thing you can really count on with the GSA cloud services contract is that it won’t really be over at the end of September. There’s no assurance that whatever company gets the win will really be the winner. There may not even be one winner or even a winner at all. The arbiter of what’s best for the government is the GSA, and ultimately they’ll decide using their own criteria what’s best for the federal government. Unless, of course, Congress gets involved.
– by Wayne Rash – eWeek – Sept. 23, 2010
In the span of just two days last week, three government offices issued advice about improving the $550 billion per year federal procurement system long plagued by waste and inefficiency.
On Sept. 14, the Office of Management and Budget outlined in a memo ideas about how to “save money, reduce risk and get better results” from government contracts. On the same day, the Defense Department released guidance for “obtaining greater efficiency and productivity in defense spending.” On Sept. 15, a presidential task force published its recommendations for improving federal contracting opportunities for small businesses.
The flurry of top-level attention is a welcome sign that the Obama administration is serious about reforming procurement at a time of fiscal constraint and budget deficits.
But the recent directives also unintentionally underscore the immediate need for better coordination among agencies and a more coherent reform agenda. Examined side by side, they reveal conflicting guidance that could sow even more confusion in a world so complex it vexes the most sophisticated lawyers and accountants. “The rule set becomes further confusing through these many efforts, and makes me worry what exactly will be the ‘real’ rules as those leading these initiatives depart and new ones arrive,” former Air Force Secretary Michael Wynne said in an interview.
Consider, for example, last week’s guidance about how the government should go about finding the best vendors and suppliers. The OMB memo recommended “pooling the federal government’s buying power” in pursuit of strategic sourcing. The president’s small business task force, on the other hand, urged “strategies to prevent unjustified contract bundling,” or aggregating in one contract supplies or services “previously provided or performed under separate smaller contracts.”
So what should a procurement official do? Create efficiencies and drive cost savings through pooling, or create more opportunities for small business by eschewing bundling?
To be sure, there could be scenarios in which these two policies actually can complement each other, but that’s not necessarily self-evident to procurement officers and others involved in government contracts on a day-to-day basis.
There are other potential conflicts in the directives. All three documents urge data standardization, for example. But the small business task force focuses on a coding system called the North American Industry Classification System while the Defense memo prefers the Product Service Code. And there are other standards out there, such as the United Nations Standard Products and Services Code used in two governmentwide systems. The documents’ diverging guidance on competition and contract types also could confound government contracting officers.
To avoid such confusion there must be better coordination among the offices entrusted with the important work of reducing costs and eliminating waste in federal acquisitions. Here are some suggestions:
- Governmentwide procurement reform should be centrally coordinated, preferably at OMB. That doesn’t mean every initiative must be run from the White House, but there should be enough central oversight to identify and address potential conflicts.
- The implementation of reform initiatives should be formally designed with other efforts in mind. “With the plethora of rules that govern the procurement system, it is important that we provide adequate implementation guidance to avoid creating more confusion on the part of the workforce,” says Steven Kelman, a public policy professor at Harvard University’s John F. Kennedy School of Government and a former administrator of the Office of Federal Procurement Policy.
- The reform must speak in a unified voice. Ultimately, the success of these initiatives rests in the hands of thousands of government professionals, as well as the vendor community. Leadership across all agencies must commit to and deliver the same message with as little ambiguity as possible.
These communication problems are not insoluble, but left unaddressed they could hamper the administration’s admirable and intense focus on improving procurement. The stars do seem to be aligned, for the first time in years, in support of meaningful reform. We must not miss this opportunity.
By Raj Sharma – GovernmentExecutive.com – September 24, 2010 – Raj Sharma is a visiting fellow at the Center for American Progress who focuses on improving government procurement and supply chain management practices.
The Pentagon’s top acquisition executive told an Air Force audience Wednesday that implementing the set of sweeping acquisition reforms was essential because without them, the nation could not give the troops the capabilities they need as defense budgets get tighter.
And to the Air Force officers and industry representatives in the audience, Ashton Carter said those who hope the department will be unable to achieve the proposed reforms, “you have to consider the alternatives.”
Carter listed as potential consequences: broken or canceled programs, “uncertainty and turbulence in the budget, market uncertainty, difficulty for industry, erosion in the confidence of the taxpayer that they are getting value for their dollars … and foregone military capabilities.”
But on the positive side, Carter said part of the acquisition improvement effort was to “incentivize productivity and innovation in industry” and that “profit is a perfectly appropriate topic” for the defense acquisition executives.
The day after he and Defense Secretary Robert Gates outlined the 23 changes to the contracting process at a Pentagon news briefing, Carter, the undersecretary for acquisition, technology and logistics, told the Air Force Association conference at the National Harbor convention center that the challenge would be implementation.
The acquisition reforms had received a generally favorable review earlier in the day from Aerospace Industry Association President Marion Blakey, who told the AFA audience that many of the initiatives matched the industry’s recommendations.
And as Carter was speaking, the two leaders of the House Armed Services Committee’s acquisition reform panel issued a statement endorsing the new effort.
“We applaud Secretary Gates and Dr. Carter for tackling acquisition reform and for embracing many of the reforms identified in our panel’s report and in the House-passed IMPROVE Acquisition Act to meet this end,” said Reps. Robert Andrews, D-N.J., and Mike Conaway, R-Texas. They said the Pentagon initiatives made it even more important that the Senate pass the House-approved bill.
Carter told the AFA audience that an improved acquisition was necessary because the defense budget was expected to rise only slightly in real terms in future years.
With an end to the double-digit annual increases of the last nine years, he said, the Pentagon leaders concluded “we can’t support the troops with the capabilities they need unless we learn to deliver better value for the defense dollars and thereby achieve the programs we need with the dollars that the taxpayers can afford to give us.”
Carter expressed confidence they could achieve their objectives to save $100 billion over five years from “low value-added activities” so the funds could be shifted to the needs of the warfighters.
He said he was confident of success because they are “reasonable objectives, come at end of a decade of very rapid growth” and have the support of the president, the secretary and Congress.
Carter praised the Air Force secretary, chief of staff and acquisition executive for leading the way on procurement reform, citing their improvements in maintaining the nation’s nuclear weapons system and the effort to build a long-range strike capability at an affordable price.
Addressing a program of high interest for the Air Force, Carter said he could not tell them when officials would announce a winner of the competition to build a new refueling tanker.
“It’s not a secret; it’s unknown. It will be done when it’s done. We’re working very hard to get it right,” he said, reflecting a decade of mistakes and scandal surrounding the program.
– by Otto Kreisher – Congress Daily – September 16, 2010
Ignoring calls to scrutinize troubled contractors, the U.S. military has awarded a portion of a $490 million contract to an American corporation that’s under investigation for possible fraud.
The Army Corps of Engineers awarded the contract to Louis Berger Group, a New Jersey-based company that federal prosecutors have acknowledged is being investigated for allegedly overbilling the U.S. government.
The contract will be shared with Cummins Power Generation and is for providing generators, building power plants and installing high-voltage transmission systems in “conflict and disaster response locations worldwide,” according to a news release posted last week on Louis Berger’s website.
The decision to continue doing business with Louis Berger has fueled criticism that the Obama administration is willing to overlook criminal allegations in its zeal to rebuild Afghanistan and Iraq. Louis Berger is handling some of the most important U.S. projects in Afghanistan, and it and Cummins also have a seven-year contract with the Army to provide emergency power operations and maintenance in Iraq.
Cummins isn’t under scrutiny in the investigation of Louis Berger.
The overbilling allegations arise from a 2006 whistleblower lawsuit that accused Louis Berger of manipulating overhead cost data and overhead rate proposals submitted to the U.S. government and several states, including Massachusetts, Nevada and Virginia, McClatchy reported Sunday.
Two months after the government learned of the employee’s allegations, the U.S. Agency for International Development tapped Louis Berger to oversee another $1.4 billion in reconstruction contracts in Afghanistan.
Court documents reveal that the Justice Department is negotiating a deal that could “aid in preserving the company’s continuing eligibility to participate” in federal contracting in Afghanistan and elsewhere.
Louis Berger officials have declined to respond to questions about the investigation, but they say it shouldn’t taint their work for the government.
A power plant project in Kabul overseen by Louis Berger and another U.S. firm, Black & Veatch, is $40 million over budget and a year behind schedule because of missteps by the American contractors and the U.S. government, according to an audit by the Office of the Special Inspector General for Afghanistan Reconstruction.
The special inspector general’s office questioned the wisdom of building a diesel and heavy fuel plant that the Afghan government may not have the capacity to sustain.
Officials with the Army confirmed the award of the latest contract but didn’t immediately respond to questions about the investigation or the rationale for granting the contract to Louis Berger.
– McClatchy Newspapers – Sept. 20, 2010
A presidential panel is calling for major reforms of the government’s small business contracting guidelines, procedures and regulations.
The Task Force on Federal Contracting Opportunities for Small Businesses on Wednesday released its suggestions for helping undersized firms break into the government marketplace and win federal contracts, strengthening procurement policies, enhancing training for acquisition officials and improving contracting data on federal websites.
Among its most significant proposals, the task force recommended the White House require agencies to reserve work on task-and-delivery order contracts or Multiple Award Schedule contracts for small businesses. Under existing policies, considerations for small business set-asides are made prior to the award of a contract. But acquisition policy officials have been reluctant to apply set-asides for individual orders, despite a 2008 legal opinion by the Government Accountability Office, which supported the policy change.
“Existing tools that might help direct additional work toward small businesses, such as the consideration of socioeconomic status for schedule orders and partial set-asides for contracts, appear to be underutilized and misunderstood,” the report said. “Many public comments offered to the task force voiced frustration over the continued failure of policy officials to tackle these issues.”
The panel also suggested the Small Business Administration and the Office of Management and Budget’s Office of Federal Procurement Policy issue guidance to prevent unjustified contract bundling; clarify rules for small business teaming; strengthen the requirements for developing small business subcontracting plans; review the quality of small business contracting data; and assess the impact of insourcing on small business contractors.
“While some work performed by small business contractors may need to be insourced if it is inherently governmental or is of a critical nature and the agency is at risk of losing control of its operations, the task force believes much of the work will continue to be performed by contractors, including small businesses,” the report said.
President Obama created the task force in April. Several agencies, including OMB and SBA, co-chaired the group.
“When a small business gets a federal contract, it’s a win-win,” SBA Administrator Karen Mills wrote Wednesday on the White House blog. “The business gets the revenue it needs to grow and create jobs, and at the same time, the government benefits from working with some of the most diligent, innovative and responsive people in the world.”
The task force also addressed concerns about the skills and capabilities of the acquisition workforce to implement small business guidelines. The report recommends revising core certification for procurement officials and requiring for the first time mandatory training on small business policies and regulations.
Industry has complained that the government’s small business contracting goals have no teeth. For the past several years, the government has missed its goal of awarding 23 percent of all prime contracting dollars to small businesses, but little to no enforcement was taken against underperforming agencies.
The task force encouraged the Obama administration to adopt a system of carrots and sticks, rewarding agencies and employees who successfully promote small business contracting with awards and recognition, and holding officials accountable when they fall short of their goals. The report does not, however, suggest repercussions for poor-performing agencies.
Industry officials credited the task force for addressing many top concerns, but some remain skeptical. “As long as the barriers to contracting with small businesses are allowed to exist and the laws that protect their rights are not enforced, agencies will continue to fail in their efforts at contracting with them,” said Henry Thomas, co-founder of a think tank operated by the Fairness in Procurement Alliance, an association that advocates for small business contractors.
Among its most ambitious recommendations, the task force called for a systematic reorganizing and refunctioning of two leading government procurement websites. The panel suggested making FedBizOpps, which provides industry with notice of upcoming contracts, a one-stop source for annual requirements forecasting, the posting of subcontracting opportunities, the outreach calendar of all federal agency matchmaking and training events and a directory of online agency small business resources.
The much-maligned Federal Procurement Data System, which tracks all contracts, would receive an upgrade to enhance the use of its small business information. SBA unveiled on Wednesday its new Small Business Contracting Dashboard, which breaks down spending by small business category from fiscal 2000 through fiscal 2009.
“Implementing these new tools and recommendations won’t be easy,” Mills said in the blog post. “But our message today is clear: We’re going to build on what works in small business contracting. We’re going to implement new tools to help more small businesses compete and win.”
The task force will report to White House by the end of the year on progress with implementing the recommendations.
– by Robert Brodsky – GovExec.com – September 15, 2010
Recent settlements of allegations brought under the False Claims Act of defective pricing serve as reminder to companies doing business with the government to tighten up their procedures around pricing.
Cisco Systems and Westcon Group North America agreed to pay $48 million to settle claims they made misrepresentations to the General Services Administration and other federal agencies in violation of the False Claims Act.
The civil settlement announced by the Justice Department Sept. 7 resolves allegations that that Cisco and Westcon knowingly provided incomplete information to GSA contracting officers during negotiations related to Westcon’s contract with the GSA, resulting in defective pricing of Cisco products and submission of false claims to the government, according to the DOJ press release.
The settlement is part of a continued trend by DoJ to crack down on defective pricing by contractors. Federal contracts generally require companies to give the government the best price they give any customer. Failure to do so violates the False Claims Act. Under the Act, whistleblowers who report fraud against the government can become qui tam relators and collect a piece of any recovery, which can sometimes be worth millions of dollars.
In announcing the settlement, Tony West, Assistant Attorney General for the DoJ’s Civil Division, warned that, “When contractors provide incomplete and untruthful information to the government, we will take action to restore the integrity of the procurement process and protect taxpayer dollars.”
Likewise, GSA Inspector General Brian Miller said the agency’s auditors and special agents “keep vigilant watch to ensure contractors stay honest.”
Joseph Warin, a partner in the law firm Gibson, Dunn & Crutcher, says the type of settlement announced by Cisco and Westcon ”is not new, but it certainly is consistent” with past FCA enforcement activity.
In August, Hewlett-Packard agreed to pay DoJ $55 million to settle claims it defrauded the GSA and other federal agencies. That settlement resolved FCA allegations that HP knowingly paid kickbacks, or “influencer fees,” to systems integrator companies in return for recommendations that federal agencies purchase its products, and claims that HP’s 2002 contract with the GSA was defectively priced because HP provided incomplete information to GSA contracting officers during contract negotiations. EMC Corp. agreed to pay $87.5 million to settle similar claims in May.
Warin says it’s not hard for companies with large sales forces selling various products and services around the world to inadvertently fly afoul of the GSA regulations.
“As the sophistication and diversity of the products, add-ons and services become more varied, it becomes harder for companies to provide an apples-to-apples pricing comparison,” he says. “It’s a reminder that corporations with huge sales forces located in all four corners of the globe need to have an internal controls system that centralizes pricing and doesn’t allow for exceptions and variations.”
As a part of the Cisco Westcon settlement, the government agreed to dismiss a whistleblower lawsuit filed in 2004 in an Arkansas District Court, United States ex rel. Rille. v. Cisco Systems, Inc.
– Sept. 9, 2010 – ComplianceWeek.com
Defense Department plans to increase competition and cut overhead costs and red tape associated with procuring goods and services have mainly met with praise from industry leaders and lawmakers — the two constituencies most able to derail reform. But full support will depend on implementation details that Pentagon officials are still working out.
Reps. Rob Andrews, D-N.J., and Mike Conaway, R-Texas, longtime proponents of acquisition reform at the Pentagon, praised Defense Secretary Robert Gates and his top acquisition official Ashton B. Carter for issuing guidance earlier this week aimed at increasing productivity and efficiency in spending.
“We applaud Secretary Gates and Dr. Carter for tackling acquisition reform and for embracing many of the reforms identified in our panel’s report and in the House-passed IMPROVE Acquisition Act to meet this end,” they said in a joint statement, adding, “We must learn more about the department’s plans in the weeks ahead, but we look forward to working with DoD on these efforts.”
Likewise, Aerospace Industries President Marion Blakey welcomed the initiative and the department’s outreach to industry in developing the new objectives. “While we have questions regarding some of the proposals, we are confident that the cooperation between government and industry as these initiatives are developed and implemented will produce results that will benefit all stakeholders — most importantly, the warfighter and taxpayer.”
“I don’t think there’s much objection to the objective,” said Stan Soloway, president and chief executive of the Professional Services Council, an industry trade group. “The message has been they want to be collaborative. The message has been this is not about arbitrarily cutting; it’s about finding better ways to do business.”
Nonetheless, industry officials are concerned about some aspects of the reforms. “One area where I do have concern, not covered in [Carter's] memo, is you have the secretary’s directive to lop off 10 percent of at least some category of service contracting. That seems to run contrary to the strategic approach of the Carter guidance,” Soloway said.
Another issue of concern to service contractors is the question of competition. Carter noted that 28 percent of competitive awards for service contracts had only a single bidder and department officials believe they need to inject more competition into those procurements.
“I don’t disagree that they ought to be doing whatever they can to maximize the competition. That is clearly the right objective,” Soloway said. But it’s not unexpected that some percentage of contracts, especially for work that is being rebid, would not attract more than one bidder if the incumbent contractor is understood to be performing well.
“You’re not going to spend your bid and proposal dollars to compete for something where the chances of winning and unseating the incumbent are really extreme. But that pressure is nonetheless always on the incumbent because they know if they stumble there’s any number of predators ready to pounce,” Soloway said.
Contracting officials should make sure their requirements and performance work statements invite innovation, and thereby attract increased competition, he said. “The government talks about innovation, but it’s not at all clear at the end of the day if that’s what’s they’re rewarding,” he said.
Soloway worries budget pressure is driving many contract awards away from best value bidders to lowest-cost bidders.
“In a tight budget environment, the tendency is to squeeze every nickel you can out of something, but that doesn’t necessarily go along with looking for more innovation and better value,” he said.
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– By Katherine McIntire Peters – GovExec.com – September 16, 2010 – (C) 2010 BY NATIONAL JOURNAL GROUP, INC. ALL RIGHTS RESERVED.
The Naval Sea Systems Command decided it didn’t make sense to create one set of contract specifications for lawn mowing services at a base on the East Coast and another set to cut the grass on the West coast, when in fact one contract would work for both places.
Now the leadership at the Defense Department wants to extend this simple concept departmentwide.
Defense spends $200 billion a year, half its annual budget, on services ranging from lawn mowing to software maintenance. Ashton B. Carter, undersecretary of Defense for acquisition, technology and logistics, wants to rein in that spending as part of an overall plan Defense Secretary Robert Gates announced on Tuesday to cut $100 billion from the Pentagon budget during the next five years.
In a memo to Defense acquisition managers issued on Tuesday, Carter said an ever-expanding set of requirements and missions — “missions-requirements creep,” he called it — for services has contributed to an increase in spending during the past decade. “These requirements often require the same function or service to be provided, but are written uniquely so that competition is limited,” he said in his memo.
Carter directed acquisition managers to develop templates for performance work statements, or definitions for what a unit wants to buy that are included in every solicitation. He cited as an example NAVSEA’s SeaPort-e electronic marketplace, which was created to purchase a variety of services from 2,217 vendors — including lawn mowing services. The platform provides a standard way for a diverse group of large and small businesses to bid on solicitations.
Cindy Shaver, SeaPort-e program manager, said NAVSEA’s experience since the buying platform began in 2001 shows standard work statements enhance competition and save the Navy and vendors time and money.
Officials originally developed SeaPort-e to serve only NAVSEA, but it now manages acquisitions for all the systems’ commands, including the Marine Corps and the Defense Threat Reduction Agency.
SeaPort-e first issued the work statements for the acquisition of basic services needed to maintain bases — such as lawn mowing or maintenance — because these could be easily standardized. Potential bidders then could develop standard responses, which would cut bid and proposal costs. The contractors passed those savings on to the Navy, Shaver said.
In addition, the templates for similar services eliminated potential bidders’ concerns that a work statement was developed with a specific vendor in mind, she added.
NAVSEA plans to develop templates for program management support services. Although support for a ship-building program might seem quite different than the support required for a missile program, the services are the same, Shaver said. Preparation of a budget for a ship project is similar to the budget for a weapons program, and by looking for commonality rather than differences, the Navy can enhance competition and save money, she said.
Carter also directed acquisition managers to award more services contracts to small businesses because they provide Defense with “an important degree of agility and innovation,” with lower overhead costs. SeaPort-e has a high percentage of awards going to small businesses. So far in fiscal 2010, it has issued 4,692 task orders with a total potential value of $6.8 billion, with small businesses taking home 85 percent of the awards.
Shaver said increased competition has been the primary reason it has saved money. The Navy’s goal is to have 100 percent competition on every SeaPort-e task order, a goal that will be met more easily with standard work statements, she said.
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– By Bob Brewin - 09/16/10 – NextGov.com – © 2010 BY NATIONAL JOURNAL GROUP, INC. ALL RIGHTS RESERVED
President Obama proposed a new set of programs and plans to stimulate the economy — but there aren’t enough federal employees to oversee the money and programs from the previous stimulus. American Public Media’s Marketplace reporter John Dimsdale takes a look at the hold up.
TEXT OF STORY
Kai Ryssdal: The White House is studiously not calling its latest economic package a new stimulus plan. Might be just as well: Getting money from earlier federal programs out into the economy has run into a bottleneck. There aren’t enough federal workers to award and manage all those government contracts.
Our Washington bureau chief John Dimsdale reports.
John Dimsdale: The problem, says Allison Stanger, the author of “One Nation Under Contract,” is the number of federal employees today is the same as it was in 1963.
Allison Stanger: Yet the federal budget in real terms in that the same period of time has more than tripled. And that enormous gap is filled by contractors.
The government was short of people to oversee contracts from nuclear waste disposal to the space program, even before the wars in Iraq and Afghanistan, which rely heavily on contractors. Now, add another $275 billion in stimulus contracts and monitoring all of them for waste and fraud is almost impossible, says Don Kettl, dean of the school of public policy at the University of Maryland.
Don Kettl: We’ve so vastly increased the amount of spending in such a short time, government employees are really struggling to keep up with the oversight burdens that have come along with the recovery program.
In some cases, government agencies have had to contract out oversight of their own contracts.
Richard Skinner: Matter of fact, we’ve experienced that here in DHS.
Richard Skinner, the inspector general at the Department of Homeland Security, says that’s fraught with potential conflicts of interest.
Skinner: These contractors may not have the government’s best interest in play here. I do not believe it’s healthy to have contractors managing other contractors.
Skinner says the government needs more skilled managers. And in fact, President Obama wants to boost the government’s contract work force by 5 percent. Author Alison Stanger has another suggestion.
Stanger: My solution is what I call “radical transparency.”
She means let the public track all governments contracts right on the Internet.
In Washington, I’m John Dimsdale for Marketplace.
– Thursday, September 9, 2010 – American Public Media – http://marketplace.publicradio.org/display/web/2010/09/09/pm-federal-workers-overwhelmed-by-contracts/?refid=0#
In 1998, the outcome of a legal case changed the course of Barry Bennett’s life. Bennett, who was working for a geotechnical and environmental engineering firm in Atlanta at the time, had provided expert testimony for a family-owned company that was suing a large manufacturer for non-payment.
“After several months, the small company finally prevailed and we celebrated that evening in Buckhead. The owner of the company said I did a great job and asked why I didn’t do this for myself,” recalled Bennett, now president of Metals & Materials Engineers, LLC (MME). “I told him I had a one-income family with four small children, and I couldn’t afford to start a business and put all of these people at risk. He looked at me and said, ‘Barry, all of the reasons you just gave me for not starting a business are the reasons you should.’ I went home that night and couldn’t sleep.”
It was at that pivotal moment that the idea started for MME, an Atlanta-based, minority-owned engineering firm that has been providing technical experience in metallurgy, civil engineering, engineering sciences and utility services since 2001. Today the company has two major divisions – materials engineering/metallurgy studies and civil engineering/infrastructure analysis – and employs 70 people across three locations. MME’s customers run the gamut from law firms to municipalities to large manufacturers.
“Over the past five years, the emphasis has been on the infrastructure side because that’s where the growth was. Approximately 75 percent of our company is focused on the civil and infrastructure arena,” Bennett noted. “Part of my business plan and long-term goal is to create a 50-50 split between the two operations. Currently, the growth is on the metallurgy side because municipalities are struggling with lost revenues and a decreased tax base.”
Because of the company’s relatively young age and shift in focus, Bennett was intent on taking advantage of any and all opportunities available to his SBA 8(a) certified company, a designation that means the company meets the requirements of being a small business, is unconditionally owned and controlled by one or more socially and economically disadvantaged people who are U.S. citizens, and demonstrates potential for success. Most importantly, having 8(a) certification means a business can bid on government projects not available to uncertified companies.
“About two years ago, we had an opportunity to enter into a mentor-protégé relationship with Atlanta Gas Light, and through that relationship, the Georgia Minority Business Enterprise Center was brought in to provide some guidance and counseling to the minority businesses that participated in that program,” said Bennett. “I had some one-on-one conversations with Donna Ennis, the project director, and Maria Mar Hill, a business advisor, and I realized they provided additional services.”
The Georgia Minority Business Enterprise Center (GMBEC) is operated by the Georgia Tech Enterprise Innovation Institute, providing business and technical assistance that helps emerging and existing minority business enterprises (MBEs) experience significant growth and sustainability, and have long-term economic impact through the creation of jobs and revenue. Part of a national network of centers established to increase the number of MBEs and strengthen existing ones, GMBEC provides services in business assessment, access to capital and finance management, access to markets, strategic business consulting and business process improvement. Bennett says that his interactions with GMBEC have proven to be invaluable to his business.
“I’m an engineer by training. Prior to that I had limited management training, so I knew that was one of the areas I could use some help in, certainly on the accounting side. They started talking to me, showing me how I could improve on this shortcoming,” he said. “We entered into a contractual agreement for them to just give me guidance on some of my procurement or banking issues, how to improve on our certification packages – just a full array of executive business counseling that I never had before.”
Working with Hill, Bennett began to examine MME’s banking issues and re-structured some of the company’s loans for a monthly savings of $30,000. She also encouraged him to purchase the company’s 10,500-square-foot headquarters building in Suwanee – which he had been renting since 2001 – resulting in a more lucrative credit line and a savings of $4,000 a month.
“There’s not a single major transaction that I undertake without Maria’s counseling, guidance and support,” Bennett said. “I really believe that if I hadn’t had this service from Georgia Tech, it would have been very difficult to survive under these terrible economic circumstances.”
Hill also assisted Bennett with his application to the Governor’s Mentor Protégé Connection program, a unique opportunity for a select group of Georgia’s emerging businesses to improve business practices, develop relationships and promote business growth. The program partners a small business with a leading Georgia-based corporation to focus on areas such as new markets and global expansion; professional development, business training and networking; business operations improvements; and cutting-edge business practices and mentoring. In February, MME was partnered with Southern Company for the year-long program.
“Barry and his staff are extremely talented professionals,” said Melissa Evans, Georgia Power’s staff supplier diversity consultant. “It is always exciting and rewarding for us at Georgia Power to identify a top performing minority-owned business.”
Currently, Bennett is in the process of putting together a master service agreement with Southern Company to provide non-destructive testing and metallurgical services throughout all Southern Company plants. MME will begin with the Georgia and Alabama plants, and then take advantage of other opportunities in Florida and Mississippi as the project progresses, giving them tremendous opportunities to grow. Hill, described by Bennett as someone he “trusts exclusively,” agrees that MME is well-poised for growth and long-term success.
“MME is the type of company that allows the GMBEC to fulfill its mission of successfully growing businesses and creating employment in the state of Georgia. The company has been very successful leveraging internal and external resources and relationships resulting in significant growth,” she said. “MME has the capacity, capability and dedicated staff to continue to achieve great business success.”
GMBEC celebrated its sixth year at Georgia Tech in 2009, and over that time it helped clients secure more than $232 million in procurement contracts, financing, and sales; assisted minority companies with creating more than 3,000 jobs; and provided one-on-one technical assistance to some 450 firms and advice, guidance, and resources to thousands of others. The program received the 2010 Special Recognition Award from the Georgia Hispanic Chamber of Commerce, 2006 Institution Award from the Greater Atlanta Economic Alliance and has been recognized by its federal sponsor as an outstanding performance center since 2005.
GMBEC works with existing high-impact firms in manufacturing, construction, warehousing, transportation, technology and professional services. Assistance ranges from identification of funding sources to process and infrastructure improvement to securing new business. To qualify for GMBEC assistance, companies must have 51 percent minority ownership and minimum annual revenues of $500,000.
About Enterprise Innovation Institute:
The Georgia Tech Enterprise Innovation Institute helps companies, entrepreneurs, economic developers and communities improve their competitiveness through the application of science, technology and innovation. It is one of the most comprehensive university-based programs of business and industry assistance, technology commercialization and economic development in the nation.
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Media Relations Contacts: Nancy Fullbright (912-963-2509); E-mail: (nancy.fullbright@innovate.gatech.edu) or John Toon (404-894-6986); E-mail (john.toon@innovate.gatech.edu).
Writer: Nancy Fullbright