Democrats call for investigation of Defense subcontracting
October 28, 2010 by cs
Five House Democrats have called on the Government Accountability Office to investigate a little-known Defense Department program designed to increase subcontracting opportunities for small businesses.
The lawmakers, led by Rep. Yvette Clarke of New York, said the Pentagon’s Comprehensive Subcontracting Plan Test Program has not been formally reviewed since it was established 20 years ago.
“Until the program is evaluated and audited there is no way of knowing whether these small businesses actually received their due contracts, or whether the money went to other large contractors,” Clarke said.
The investigation would determine if the program has led to an increase in small business opportunities and whether prime contractors are meeting the annual goals they establish. It also would include a detailed accounting of the use of small firms on these contracts, according to the GAO request letter.
Reps. Bennie Thompson of Mississippi, Carolyn Maloney of New York, Lynn Woolsey of California, and Chellie Pingree of Maine also signed on.
The Defense Department said it is in process of conducting its own study of the effectiveness of the subcontracting program. “At this point, it would be premature to discuss a still ongoing and incomplete study,” spokeswoman Cheryl Irwin said. “The study should be complete in about 12 months.”
The program allows 14 large Defense contractors, including industry goliaths such as BAE Systems, Boeing Co., Lockheed Martin Corp., Northrop Grumman Corp. and Raytheon Co., to consolidate their small business subcontracting plans into one companywide document, rather than submitting them on a contract-by-contract basis.
Typically, prime contractors are required to submit an Individual Subcontracting Report for every contract over a certain dollar threshold. The report, which includes the company’s small business subcontracting plans and dollar goals, allows the government to track a company’s progress in meeting those objectives.
Under the program, however, participants need to turn in only a Summary Subcontracting Report once every six months. Critics suggest the diminished reporting makes it more difficult to determine if the large prime contractors are meeting their small business subcontracting goals.
“Federal contracting data calls into question whether the 14 large prime contractors who are participants in the CSPTP are actually meeting their small business subcontracting goals,” the letter stated.
The goal of the program is to increase the overall percentage of subcontracts awarded to small businesses, specifically to small disadvantaged businesses. But, some small business advocates suggest it actually serves as a loophole for participating firms to circumvent small business subcontracting goals.
“Clearly this program wasn’t designed to help small businesses; it was designed to help prime contractors avoid paying liquidated damages for noncompliance with their small business subcontracting goals,” said Lloyd Chapman, president of the California-based American Small Business League. “The elimination of this program would force prime contractors to award billions more in subcontracts to small businesses and create jobs across the country.”
Chapman said ASBL has requested numerous documents on the subcontracting program through the Freedom of Information Act, but Defense has yet to provide them.
To be eligible for the program, a prime contractor must have performed at least three Defense contracts worth more than a combined $5 million in the preceding year and have achieved a small disadvantaged business subcontracting rate of 5 percent or more.
Participants must offer a broad range of subcontracting opportunities and accept — or at least work toward — a small disadvantaged business goal of 5 percent or more every fiscal year. The Defense Contract Management Agency must approve the plans annually.
Congress first authorized the Comprehensive Subcontracting Plan Test Program in October 1990, and it has been reauthorized three times since.
– By Robert Brodsky – GovernmentExecutive.com – October 27, 2010
Albany’s recent small business program kick-off successful; more events planned
October 25, 2010 by cs
You can view Fox 31′s report of the event by clicking right here.
The kick-off event came as a result of the recent adoption of a small business program by the City Commissioners of Albany. The program is designed to increase the number of City contract awards, and other procurements, to local small businesses, and thereby build business capacity, create jobs, and strengthen the local economy.
To be eligible to participate in the City’s program, a business must be located in the city limits of Albany or in Dougherty County.
Businesses located outside the Albany area can realize benefits from the program by utilizing Albany-area businesses as partners, subcontractors and suppliers.
There are many benefits that Albany-area businesses will realize by participating in the new Small Business Procurement Program, including:
• Customized training on how to do business with the City of Albany, including instruction on how to prepare bids and proposals.
• Instruction and counseling on all aspects of government contracting, including how to effectively market your business in the government arena.
• Detailed information about upcoming contract opportunities with the City, other local governments in the area, the State of Georgia, and federal agencies – as often as daily.
• An on-line vendor directory for use by the City, other local governments, prime contractors and local small businesses to identify business sources and develop relationships.
• Exclusive access to bid on City contracts valued at less than $50,000, through the City’s sheltered market program.
• A purchasing preference on City contracts involving requests for proposals and other solicitations involving proposal evaluation factors.
• Invitations to attend matchmaking and networking events, exclusively designed to help Albany-area businesses build business relationships and partnerships.
To participate, a company first must be certified as an Albany Small Business Enterprise (ASBE). Help is available to assist Albany businesses with this application process. There will be a one-time $25 fee to cover the City’s cost of program administration.
The City of Albany recently partnered with Georgia Tech to provide management and administrative support to the Small Business Procurement Program. Experienced government contracting experts from Georgia Tech will providing the training, instruction, and counseling to the Albany-area small businesses participating in the program.
If you missed the Oct. 18th kick-off event, it’s not too late to enroll in the program. You can do so by one of two ways:
- You can attend the next orientation session. They are scheduled on Nov. 17, 2011, and Jan. 5, Feb. 9, and Mar. 16, 2011. To register to attend any of these free orientations, simply click here.
- You can apply to participate in the City of Albany’s Small Business Procurement Program by downloading an application form here.
For more information or assistance, contact Clovia Hamilton at chamilton.gatech@gmail.com.
Recession makes innovation more critical than ever for competitiveness
October 25, 2010 by cs
That’s one conclusion of the 2010 Georgia Manufacturing Survey, which also found that companies are preparing for post-recession growth, expanding export capabilities, addressing sustainability issues — and still dealing with out-sourcing and in-sourcing. The survey, which included nearly 500 manufacturers, was conducted by Georgia Tech’s Enterprise Innovation Institute, the Georgia Tech School of Public Policy, and Kennesaw State University, with support from the Georgia Department of Labor and accounting firm Habif, Arogeti & Wynne, LLP.
Georgia has approximately 10,000 manufacturers that provide nearly 350,000 jobs and account for 11 percent of the gross state product. Workers in manufacturing companies earn wages averaging nearly twice those of workers in retail companies.
The survey found a widening profitability gap between manufacturers that compete on the basis of innovation compared to those that use other competitive strategies. That gap has grown in each survey conducted since 2002.
“Companies that compete on the basis of innovation are much more profitable, pay higher wages and more likely to benefit from in-sourcing opportunities than firms that compete on low price,” said Jan Youtie, the survey’s director and a principal research associate in Georgia Tech’s Enterprise Innovation Institute. “Adoption of an innovation strategy can be useful to manufacturers regardless of industrial segment, and is especially important during difficult economic times.”
As part of the survey, companies were asked to rank six competitive strategies for their importance to winning sales. More than half of the respondents mentioned “high quality,” while approximately 20 percent chose “low price” or “adapting to customer needs.” Fewer than 10 percent reported “innovation/new technology” as a primary competitive strategy.
Across all six strategies, innovation was associated with the highest mean return on sales: 14 percent, compared to just six percent for the low-price strategy. And those financial benefits extended to workers, whose annual salaries averaged $10,000 per year more at innovative manufacturers than at other companies.
The top five innovative tactics reported by respondents were (1) working with customers to create or design a product, process or other innovation, (2) signing a confidentiality agreement to access a new product or process, (3) working with suppliers to create or design a product, process or other innovation, (4) purchasing new equipment, and (5) conducting research and development activities in-house.
While manufacturers of technology products are most often associated with the strategy, innovative companies can be found in all industrial segments, said Philip Shapira, co-director of the survey and professor in the Georgia Tech School of Public Policy.
“Many people think that innovation is something that has to be done in a lab, but our results show that innovation occurs more broadly, particularly as companies partner with customers and suppliers to take into account their needs for a new product or process,” he explained. “While high technology companies tend to be innovative by their nature, innovation occurs across all segments, and every firm has opportunities to be innovative.”
Companies often cite cost as a reason for not innovating, but Shapira noted that only 10 percent of companies take advantage of R&D tax credits; fewer still use investment tax credits. “While financial incentives can assist innovation, there is a greater need to build awareness and capabilities among more of the state’s firms to undertake innovation,” he said.
Though more than two-thirds of Georgia’s manufacturers have cut jobs or lost sales in the recession, many of these companies are now looking toward the future with plans for locating new customers, boosting capital investment, expanding research and development and continuing to reduce costs.
“When we look at their plans, Georgia manufacturers are in an expansive mood, looking for new customers and getting ready for the next phase of economic growth,” Youtie said.
The survey found that 70 percent of respondents were looking for new customers, 20 percent planned to expand capital investment, and 15 percent planned to increase expenditures on research and development. At the same time, 60 percent of respondents said they still planned to cut costs.
Another trend studied was growth in the number companies selling to international markets. More than half of the responding manufacturers said they were exporters — and those manufacturers reported 50 percent higher profitability than non-exporters. Some 22 percent of respondents had increased their export sales since the last survey in 2008.
“We don’t find much difference between exporting companies when comparing them by the amount they export,” Youtie noted. “What seems to be important is the capability to export. We think there is some learning that takes place, and some capability that a company develops to become an exporter. That capability translates into improved performance across the board, in addition to creating new markets and different margins.”
The survey also found that out-sourcing of work has leveled off, with approximately 16 percent of manufacturers affected by the loss of business in 2010. At the same time, the percentage of firms benefitting from in-sourcing — movement of work to Georgia — has grown to nearly 15 percent.
“Out-sourcing isn’t going away, but it has stabilized,” Youtie said. “In-sourcing appears to be growing, which creates opportunities for good manufacturers to benefit from consolidation of production from other U.S. facilities or even from overseas.”
The study also looked at sustainability issues, and found that 60 percent of companies recycle and attempt to reduce waste — one form of sustainability. However, just 11 percent of respondents had inventoried their carbon footprints or emissions, and fewer than five percent were using renewable energy.
The bottom line for manufacturers?
“The results of our survey can point manufacturers to a way forward for getting ready for the next phase,” said Youtie. “Companies can develop innovation capabilities; they can look into exporting and they can collaborate more with suppliers and customers.”
___________________________________
Research News & Publications Office
Enterprise Innovation Institute
Georgia Institute of Technology
75 Fifth Street, N.W., Suite 314
Atlanta, Georgia 30308 USA
Media Relations Contacts: John Toon (404-894-6986) (jtoon@gatech.edu) or Nancy Fullbright (912-963-2509) (nancy.fullbright@innovate.gatech.edu).
Writer: John Toon - October 18, 2010
SDB set-aside contract was illegal, violated SBA regulations
October 25, 2010 by cs
Ostensible Subcontractor
However, a court cannot enforce an illegal contract, and the loan servicing support contract was an “agreement conceived in fraud.” The parties deliberately procured a government contract that violated applicable federal regulations, including SBA 121.103 and SBA 125.6(a), and they were not eligible for the contract under those regulations. Under SBA 121.103(h)(4), “[a] contractor and its ostensible subcontractor are treated as joint venturers, and therefore affiliates, for size determination purposes.” The Small Business Administration uses a seven-part test to determine whether a small business is unusually reliant on its subcontractors, and here, six of those factors weighed heavily in favor of a finding of undue reliance. The subcontractor had equal management rights; it had the requisite background and expertise to carry out the contract; it was the party that “chased the contract”; the parties collaborated on the bid; the parties contemplated a relationship where the subcontractor would perform a relatively large share of the contract; and the subcontractor was the party that would perform the more complex and costly contract functions. A review of SBA precedent confirmed that the loan servicing support contract violated the “ostensible subcontractor” rule, and as a result, the parties were affiliates and ineligible for award.
50% Rule
Further, the parties did not comply with the “50% Rule” of SBA 125.6(a), which requires the SDB to perform at least 50 percent of the cost of the contract incurred for personnel with its own employees. A letter from a Certified Public Accountant stated the actual costs incurred by the parties did not meet “either the intent or letter” of the 50% Rule, and the parties’ expense reports showed the subcontractor incurred approximately 62 percent of the parties’ labor costs in one fiscal year and approximately 59 percent of the labor costs in another fiscal year. Since the prime was affiliated with the subcontractor under SBA 121.103, it was an other-than-small business concern, and because the prime’s certification that it was a small business concern was false, the parties’ bid was fraudulent at the time it was made. The court also held the parties’ subcontract was unenforceable and the requested relief was barred by the doctrine of unclean hands. (Morris-Griffin Corp. v. C & L Service Corp., DC ED Va, 54 CCF ¶79,415)
– October 18, 2010 – Walters Kluwer Law and Business
Defense must ramp up recruitment of IT acquisition workforce, consultant says
October 25, 2010 by cs
The briefing by Thomas Hickok, a consultant to the Defense Chief Information Officer, said the Pentagon also should establish critical positions in all IT disciplines throughout the military departments and agencies and target superior program and project managers for recruitment. He also suggested Defense creates an exchange program with industry for IT professionals.
The department budgeted $68.9 billion for IT spending in 2010, but the Defense Science Board noted in a March 2009 report that “IT expertise is scarce and the competition for talent is increasing.” That report also stated the Pentagon and the military services need IT acquisition staff with extensive experience in large-scale, embedded and commercial IT.
In addition, the House Armed Services Committee called for a beefed up and more skilled IT workforce in its March report on Defense acquisition reform and said the Pentagon should “develop a plan for how to strengthen the IT acquisition workforce as it increases the size of the overall acquisition workforce in the coming years.”
The 2010 Defense Authorization Act in a section on IT acquisition called on the Pentagon to develop an acquisition process for IT systems based on the Defense Science Board report and directed the process be outlined in a report due this past July. That report has not been submitted yet, but the Hickok briefing is a draft of the language Defense plans to present in its report to Congress. The Pentagon did not respond to queries on the status of the report and plans for the IT acquisition workforce.
Trey Hodgkins, vice president for national security and procurement policy for the IT industry association TechAmerica, said Defense definitely needs to boost the skills of its IT acquisition workforce, which lacks comprehensive understanding of commercial IT trends and technology.
To recruit highly skilled IT acquisition professionals, Defense should provide incentives such as bonuses and entry into the workforce at a high grade, he said. Beyond that, Hodgkins said Defense should design a clear career path for these professionals — something the Pentagon currently lacks, which diminishes its ability to recruit the people needed to manage the IT systems key to the operation of networked forces.
Hodgkins endorsed the idea of an exchange program between industry and the Pentagon, suggesting that it start at the National Defense University and the Defense Acquisition University.
The Pentagon and Congress also need to dust off and ramp up the formal Information Technology Exchange Program, Hodgkins said. Only one person, John Moore, director of global strategic development, global security solutions at Lockheed Martin Corp., went through that program before authorizing legislation expired in 2008.
– By Bob Brewin – NextGov.com - 10/15/2010
Aerospace Annual Requirements Symposium Nov. 16-18 in Perry, GA
October 24, 2010 by cs
The Warner Robins Chamber of Commerce Aerospace Industry Committee (AIC) 8th Annual Requirements Symposium is being held November 16 – 18, 2010 at the Georgia National Fairgrounds & Agricenter in Perry, Georgia.
The “Requirements Symposium” is a unique 3-day event where senior leaders and managers at Robins Air Force Base share their current and future requirements and organizational vision of the future. This insight into requirements at Robins AFB and the Air Logistics Center allows aerospace industries and businesses to appropriately plan for capabilities to meet the needs at Robins AFB and the Warfighters they service, today and tomorrow.
You can find registration links to this event — and to many more upcoming events of interest to government contractors — at http://gtpac.org/2010/09/upcoming-vendor-conferences-valuable-if-you-do-your-homework. This same link contains many tips to consider when preparing to attend vendor events.
GSA hosts annual veterans business event Nov. 10th in Atlanta
October 24, 2010 by cs
The Region IV Office of the General Services Administration (GSA) is holding its 6th Annual Service Disabled Veteran Owned Small Business (SDVOSB) Forum in Atlanta on Nov. 10, 2010.
This half-day event focuses on bringing local buyers and agency small business experts to meet, greet and share information about their respective agency’s FY2011 award opportunities, and how to gain access to same. The targeted audience is the Service Disabled Veteran-Owned Small Businesses community.
Representatives of several federal agencies — including the US Dept. of Labor, Housing & Urban Development, the Environmental Protection Agency, the Federal Emergency Management Agency, the Small Business Administration, and Fort McPherson — are scheduled to be in attendance. Prime contractors like IBM and Skanska also will be there.
This event will be held in the Sam Nunn Conference Center; 61 Forsyth Street, Atlanta from 8:00 a.m. until noon. The conference rooms are on the second level.
Registration details and the agenda may be found right here: SDVOSB Forum 11.10.2010
“Contacts & Contracts” event scheduled Oct. 27 in Atlanta
October 24, 2010 by cs
The Georgia Supplier Council of the National Association of Small Business Contractors and the U.S. Women’s Chamber of Commerce are presenting a full day of connections to federal contracting opportunities. The event is scheduled for Wednesday, Oct. 27, 2010 and is being held at the Georgia Tech Research Institute.
There is a fee for registration: $45 for members, $90 for non-members. Registration can be accomplished by going to http://www.nasbcmembers.org/memberarea/EventPackages.aspx?eventId=5.
“Contacts & Contracts” is totally focused on bringing businesses up to date on current contracting opportunities and connecting businesses with federal agency and prime contractor representatives. During the morning session, a focused overview of opportunities in the region is planned. The afternoon session is matchmaking between small businesses and representatives from federal agencies and prime contractors.
DoD industry day on Nov. 9 in Biloxi to focus on shipbuilding industry
October 23, 2010 by cs
The Department of Defense (DoD) is planning an “Industry Day” focusing on the shipbuilding industry along the Gulf Coast.
This event will be held Novemeber 9, 2010 in Biloxi, Mississippi and will afford companies with the opportunity to meet and network with both government officials and other businesses.
It’s important to note that even though the focus of this event is shipbuilding, there will be exhibitors from government agencies and prime contractors available.
Attendees will have the opportunity to network with an anticipated 30-40 government agencies and prime exhibitors, plus as many as 400 attendees.
Details and registartion information may be found at: http://gtpac.org/wp-content/uploads/2010/09/3rd-Annual-DoD-Shipbuilding-Industry-Day-Nov-9-2010.pdf.
SBA lifts suspension of technology contractor
October 21, 2010 by cs
The Small Business Administration has reached an agreement with recently suspended technology contractor GTSI Corp. that will allow the systems integrator to resume most of its business with the federal government during an ongoing investigation, subject to strict oversight.
According to the pact announced Tuesday, GTSI will once again be eligible to compete for non-small business contracts. The Herndon, Va., company will remain temporarily barred from SBA’s mentor-protege program, joint ventures with small firms and circumstances where it serves as a subcontractor to a small business.
The agreement lifts SBA’s Oct. 1 temporary suspension of GTSI amid allegations the company manipulated small business set-aside rules to inappropriately win government work. The deal is contingent on GTSI’s cooperation with the SBA inspector general’s ongoing investigation of those allegations, and will remain in effect for a maximum of three years. It will end earlier if the IG completes the probe sooner, or if SBA proposes debarring GTSI.
The company also must adhere to several oversight requirements. For example, an independent, SBA-approved monitor will track GTSI’s business practices and ensure it is fulfilling the requirements of the agreement. GTSI also must institute SBA-approved ethics and contracting rules training.
“The lifting of the suspension gives GTSI, its vendors and clients the ability to move forward,” John Toups, chairman of the contractor’s board of directors, said in a statement. “The cloud of uncertainty that was hanging over our employees, creditors, shareholders and partners has been removed, and we can get back to the business of serving our government clients.”
Toups noted the company — which has about 525 employees and ranked 106 on Government Executive‘s list of top 200 contractors for fiscal 2009, with nearly $540 million in prime contract awards — in recent years has earned less than 15 percent of its annual revenue from working with small businesses serving as prime contractors.
The agreement with the government did take a toll on the contractor’s leadership team. It required GTSI’s chief executive officer and general counsel to step down; several other high-ranking company officials will be suspended while the pact is in effect.
- by Amelia Gruber – Gov.Exec.com – October 19, 2010