Contractors oppose plan to centralize Pentagon commercial purchasing

The largest contractors trade organization has asked the House Armed Services Committee to rethink several components of its bill to reform the Pentagon’s acquisition process, opposing in particular a plan to centralize decision-making on whether to buy products on the existing commercial market.

pentagon-sealThe 400-company Professional Services Council on April 17 sent a letter to committee Chairman Rep. Mac Thornberry, R-Texas, and top Democrat Rep. Adam Smith, D-Wash., calling their bill (H.R. 1597) a step in the right direction, but raising several objections over provisions they said might place contractors at a disadvantage while complicating acquisition management.

Thornberry’s Agile Acquisition to Retain Technological Edge Act is designed to streamline the acquisition process, modernize military technology and enhance workforce training.

But the bill’s plan to have the Defense secretary designate an individual to make determinations on whether an item sought by a Pentagon unit is commercially available “would likely result in actions contrary to Congress’ desire to foster greater reliance on commercial items and, at the same time, reduce competition,” said the letter from council President and CEO Stan Soloway, who served as an undersecretary of Defense during the Clinton administration.

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Contractor alert: Suspensions and debarments keep climbing

The 2014 numbers are in – and they confirm that Federal marketplace remains volatile for government contractors.

Suspensions - FY 2010-2014

Debarments - FY2010-2014

According to the Interagency Suspension and Debarment Committee (ISDC), Federal agencies saw an uptick of about 14% in suspension and debarment proceedings.  Such exclusion proceedings remain among the chief tactics for combating alleged instances of fraud and misconduct in government contracting.  Overall, the ISDC reports that debarment actions rose from 1,696 in 2013 to 1,929 debarment actions in 2014.

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GAO doubles down on FedBid ruling

The GAO has sustained a second protest based upon FedBid’s suspension of a contractor from its system.

For the second time in less than one week, the GAO held that the contractor’s suspension from FedBid–and resulting inability to bid on a contract–was improper because the matter was not referred to the SBA under the SBA’s Certificate of Competency procedures.

GAO-GovernmentAccountabilityOffice-SealThe GAO’s decision in Latvian Connection, LLC, B-410981 (April 6, 2015) involved a Department of the Interior RFQ for the fabrication and installation of mobile shelving system components.  The procurement was conducted through FedBid’s electronic reverse auction system.

Latvian Connection, LLC, wished to compete for the award.  However, in July 2014, FedBid suspended Latvian Connection’s FedBid user account.  The FedBid suspension notice stated, in part: “System and Business Integrity: Latvian Connection has taken actions to repeatedly and purposely interfere with FedBid’s business relationships.”

Since Latvian Connection’s FedBid account was suspended, it was unable to compete for the procurement.  Latvian Connection filed a GAO protest.  It argued, in part, that its exclusion from the competition was a negative responsibility determination, which should have been referred to the SBA.

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Florida company pays $250K to resolve alleged False Claims Act violations involving HUBZone status

Florida-based Air Ideal Inc. and its majority owner, Kim Amkraut, have agreed to pay the United States $250,000 to resolve allegations that they made false statements to the Small Business Administration (SBA) to obtain certification as a Historically Underutilized Business Zone (HUBZone) company, the Justice Department announced April 8, 2015.  Under the settlement, the defendants must also pay five percent of Air Ideal’s gross revenues over the next five years.

“When companies falsely claim eligibility for government contracts set aside for HUBZone businesses, they not only misuse taxpayer funds, but they also deprive HUBZone communities of the benefits of the program,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “This settlement shows that there is a stiff price to pay for obtaining government contracts through false statements.”

“The HUBZone program is an important tool in the government’s effort to strengthen our economy by encouraging businesses to grow in underutilized and disadvantaged areas,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “We will not tolerate contractors who use deception to undermine its objectives and effectiveness.”

The purpose of the HUBZone program is to stimulate job growth in areas that have historically had low business investment.  Under the HUBZone program, companies that maintain their principal office in a designated HUBZone and meet certain other requirements can apply to the SBA for certification as a HUBZone small business company.  HUBZone companies can then use this certification when bidding on government contracts.  In certain cases, government agencies will restrict competition for a contract to HUBZone-certified companies.

The United States’ complaint alleged that Air Ideal and Amkraut originally applied to the HUBZone program in 2010 by claiming that Air Ideal’s principal office was located in a designated HUBZone.  The complaint further alleged that, in fact, this location was a “virtual office” where no Air Ideal employees worked, and that Air Ideal was actually located in a non-HUBZone location.  Allegedly, the defendants not only misrepresented the location of Air Ideal’s principal office to the SBA, but also submitted to the SBA a fabricated lease agreement and other fabricated documents for its purported HUBZone office.  The complaint further alleged that during the government’s investigation of this case, the defendants fabricated another version of its agreement for the virtual office and submitted that false document to the government.

The complaint alleged that Air Ideal used its fraudulently-procured HUBZone certification to obtain contracts from the U.S. Coast Guard, U.S. Army, U.S. Army Corps of Engineers and the U.S. Department of the Interior.  Each of those contracts had been set aside exclusively for HUBZone companies.  The government’s complaint asserted claims against Air Ideal and Amkraut under the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act of 1989.

The settlement resolves allegations brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act by Patricia Hopson, who is employed in the construction industry.  Under the act, a private citizen can sue on behalf of the United States and share in any recovery.  The United States is entitled to intervene in the lawsuit, as it did here.  As part of the resolution, Ms. Hopson will receive $42,500.

This matter was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the Middle District of Florida, in conjunction with the SBA’s Office of Inspector General (OIG) and Office of General Counsel, the Department of Homeland Security’s Office of Inspector General, and the Defense Criminal Investigative Service.

The case is U.S. ex rel. Hopson v. Air Ideal, Inc. and Kim Amkraut, No. 6:13-cv-775-Orl-37GJK (M.D. Fla.).


Agencies gave SBA the wrong data for small business research contract spending

Most agencies submitted incorrect data about Small Business Innovation Research programs for fiscal 2013, so the Small Business Administration can’t fully determine compliance with spending requirements for the programs, says an April 15 Government Accountability Office report.

Agencies are required to submit the actual amount obligated for research and development, which is generally conducted by nonfederal employees outside of federal facilities. Those obligations are the basis for calculating the agencies’ spending requirements for small business programs, the report says.

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GSA issues RFP for new leasing support services contract

The General Services Administration (GSA) has issued a Request for Proposal (RFP) for the third generation of its broker and leasing support services contract — formerly the National Broker Contract Program (NBC program), now GSA Leasing Support Services (GLS).  The new contract provides broker and leasing support services (i.e., market surveys, site visits, document preparation, negotiation) for GSA’s contracting officers, and is expected to generate approximately $100 million in rent credits to tenant agencies and significantly reduce lease cycle times by eliminating workload redundancy.

In November, GSA issued a draft solicitation for Leasing Support Services, which resulted in nearly 300 comments and questions from stakeholders. As a result of these comments, GSA revised the following components of the contract.

  • Strategic Planning Services: Revised strategic planning services language to give contractors more flexibility in reporting information about changes in market conditions, renegotiation opportunities, or changes in ownership rights within the shared portfolio.
  • Commission Agreements: Revised commission agreement language to make it more in line with normal broker industry practices.
  • Small Business: Added an additional evaluation factor so contractors who qualify as small businesses have more opportunities to compete.
  • Training: Clarified training language to specify who is required to take training, what type of training is required, and how the training will be offered.

“The stakeholder feedback we received on the draft solicitation was used to make GLS an even better contract for both the government and contractors,” comments GSA’s Assistant Commissioner for Leasing Chris Wisner.  “In addition to previous improvements made to GLS, contractors will now have even more flexibility when it comes to providing strategic planning services and commission agreements will be structured in accordance with normal broker industry practices. Small businesses will also have more opportunities to compete for prime awards.”

To submit a proposal, click here to find details.   The deadline for submitting proposals is Thursday, May 21, 2015. More information about previous improvements made to GLS can be found here.

Former Colonel at Redstone Arsenal pleads guilty to federal charges related to inflated contract payments

A former colonel at Redstone Arsenal pleaded guilty April 20th to federal charges stemming from inflated contract payments for work on Russian-made helicopters bound for Afghanistan to be used by Afghan forces.

Now-retired Army Col. Norbert Vergez pleaded guilty today to two counts of false statements and one count of conflict of interest, in federal court in Tuscaloosa. No sentencing date has been set, the U.S. Attorney’s Office in Birmingham said today.

U.S. Attorney Joyce White Vance said Vergez “placed his own financial ambitions and personal loyalties above his duties as a member of the armed forces.

“In doing so, he betrayed the U.S. Army values of honesty, integrity and selfless service, which are hallmarks of military service,” Vance said. “This prosecution highlights our commitment to hold responsible those who, by word and deed, corrupt the government contracting process.”

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GSA moves forward with overhaul of Multiple Award Schedules

The General Services Administration is moving forward with its plan to overhaul the Multiple Award Schedules, putting into action recommendations from the agency’s 2010 Multiple Award Schedules Advisory Panel, says an April 13 blog post by GSA Senior Procurement Executive Jeffrey Koses.

“The $33 billion program now demands transformation in order to maintain its status as a best acquisition solution in a fast-changing marketplace,” Koses says.

The transformation will include reducing price variability, minimizing burdensome regulations and processes and introducing additional flexibilities, the GSA blog post says.

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Order banning federal contractor LGBT workplace discrimination goes into effect

An executive order banning federal contractors from workplace discrimination against lesbian, gay, bisexual and transgender workers went into effect April 8, 2015.

The order prohibits federal contractors from discriminating on the basis of sexual orientation or gender identity in federal employment, and prohibits all companies that receive a contract from the federal government from discriminating against their LGBT employees, says an Office of Federal Procurement Policy (OFPP) statement.

“Citizens expect contracting professionals to provide these services on a superior scale while serving as responsible business models with respect to 21st century workplace equality,” says OFPP Administrator Anne Rung in the statement.

Though the order acts as a blanket safeguard, of the largest 50 federal contractors, which represent nearly half of all federal contracting dollars, 86 percent already prohibit sexual orientation discrimination and 61 percent prohibit discrimination based on gender identity.

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Pentagon strives for even better buying power

The Defense Department (DoD) on Thursday, April 9 released the third update of its Better Buying Power acquisition strategy in five years, aiming to preserve U.S. technological superiority by protecting budgets for long-term research and development while enhancing cybersecurity.

“We want to identify the weapons, in the systems in the force today, that we can use in more innovative ways, and we’re looking for these promising technologies that we can pull forward,” Deputy Defense Secretary Robert Work told a Pentagon press conference Thursday. The goal is to reverse “a steady erosion of our technological superiority that we have relied upon for so long in all of our defense strategies.”

Frank Kendall, undersecretary of defense for acquisition, technology and logistics, in releasing a memo to top management outlining Better Buying Power 3.0, said that flat budgets and sequestration have required the department to raid modernization dollars to pay for readiness. “Our technological superiority is dependent on the effectiveness of our research and development efforts that span science and technology, component development, early prototyping, full-scale development, and technology insertion into fielded products,” Kendall wrote.

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