This new federal database is one contractors will want to avoid
January 18, 2011 by cs
The FY2011 defense act puts a contractor’s reckless behavior to the Web.
On the heels of an interim rule to withhold award fees for putting a government employee’s health or safety in danger, a new law will put that information in a database of contractor work history.
In November, the Defense Department amended its own acquisition regulations to require contracting officers to consider reducing or even denying a company’s award fee if it jeopardizes a federal employee. A company also possibly can lose award money for a subcontractor’s negligent behavior.
The interim rule was required by the fiscal 2010 National Defense Authorization Act, which became law Oct. 28, 2009.
Now though, the fiscal 2011 defense authorization act, which became law Jan. 7, takes the reckless behavior to the Web.
If DOD officials conclude a contractor put a federal worker’s life in harm’s way, the information can be added to the Federal Awardee Performance and Integrity Information System, or FAPIIS.
It’s a database of specific information about a contractors’ past work with the government. Contracting officers are required to look at the work history in FAPIIS and to factor it into an award decision. The new law calls for officials to add a final determination of contractor fault to the database.
Meanwhile, as more information detailing companies’ past performances is added to the database, FAPIIS may be the frontier of new bid protests, one procurement lawyer said.
Companies might object to an agency’s inappropriate consideration of a past performance when selecting an awardee, Puja Satiani, an associate at Crowell and Moring law firm, said this week in a webinar on contracting trends in 2011.
Companies might also say there was no meaningful consideration or disclosure of a company’s past performance history before a contract was awarded.
Other government contracting attorneys say 2011 is going to be a tough year for contractors as oversight gets tougher.
“There will be no rest of the weary,” said Dan Forman, a partner at the law firm.
Report finds IRS does business with tax delinquents
January 17, 2011 by cs
The Internal Revenue Service in recent years has awarded contracts to at least 20 companies with delinquent taxes totaling $5.2 million, according to a new watchdog report.
The Treasury Inspector General for Tax Administration found IRS procurement officials often fail to verify if agency contractors have paid federal corporate and payroll taxes. And, even when officials discover the tax delinquencies, a loophole in federal acquisition law prevents the IRS from terminating the contract, the report said.
“Although IRS contractors are not considered employees, they are conducting business and doing work on behalf of the agency whose mission is to ensure taxpayers meet their tax responsibilities,” Inspector General J. Russell George wrote. “As a result, we believe IRS contractors should be held to the same ethical standards as IRS employees and paid preparers concerning their compliance with the nation’s tax laws.”
The IG reviewed 135 current IRS contactors with awards of at least $250,000 issued between October 2006 and December 2008, and determined that 20 of the firms owed federal taxes. Six of the companies had delinquent tax liabilities totaling $943,000 when they first won the contracts. As of March 2009, the amount the six companies owed had increased to $4.9 million.
In 13 cases, an IRS contracting official conducted a tax check, as required by federal acquisition law. But the reviews shed relatively little light on the significance of the tax liabilities, failing to distinguish the type of taxes owed, the age of the debt, or if the contractors had established a plan to repay the funds.
IRS procurement officials failed to conduct a tax check for the seven other firms. But, it’s unclear whether the checks would have prevented the businesses from winning the awards. Federal guidelines bar the IRS from using tax-indebtedness to exclude a company from obtaining a contract. Regulations permit the agency to verify a bidder’s tax record only at the time of the initial award to determine if the debt could jeopardize the performance of the contract.
Federal acquisition guidelines also do not require the IRS to conduct a tax check when contracts are being considered for renewal, allowing companies to continue receiving federal payments without having to answer for their debt, the IG said. The IRS renewed the contracts of 17 of the 20 companies with delinquencies.
IRS employees, meanwhile, face disciplinary action, including termination, if they fail to file accurate and timely income taxes.
“If the IRS continues to conduct business with contractors that do not comply with the nation’s tax laws, an adverse message will be sent to the American taxpayers as to the fairness of the tax administration system,” George wrote. The problems TIGTA identified are not new in federal contracting. In February 2004, the Government Accountability Office reported that about 27,000 Defense Department contractors owed nearly $3 billion in federal taxes. In June 2005, an audit of 33,000 civilian agency contractors identified $3.3 billion in delinquent federal taxes. And, in March 2006, GAO found that 3,800 General Services Administration contractors owed $1.4 billion in federal taxes.
A 2009 bill that former Rep. Brad Ellsworth, D-Ind., sponsored would have prevented any company with “a seriously delinquent tax debt” from winning a government contract or grant. The legislation cleared the House, but not the Senate.
In January 2010, President Obama issued a governmentwide memorandum directing the IRS commissioner to review the certifications that firms bidding on federal contracts submit to demonstrate they are up-to-date on their taxes. The memo also required the Office of Management and Budget director to issue recommendations on ensuring tax delinquent contractors are not awarded new contracts, and to develop plans to make contractor tax certifications available in a governmentwide procurement database. Those plans have not yet been announced.
The IG recommended the IRS ensure that all required tax checks are conducted before contracts are awarded and that senior agency executives meet and review Obama’s 2010 memorandum. The IRS concurred with those recommendations but disagreed with another IG suggestion that would require an annual tax check on all IRS contractors.
David Grant, chief of agencywide shared services at the IRS, wrote in his response that there is no justification in federal law or regulation for annual tax verifications. “A tax check is cursory,” Grant wrote. “Unverified that is not actionable as the contractor has had no due process in regard to the tax check information and the tax liability has not been finally determined.”
– by Robert Brodsky - GovExec.com – January 10, 2011
IT programs among the targets for DOD budget cuts
January 14, 2011 by cs
Defense Secretary Robert Gates’ updated proposal to shift $100 billion in the Defense Department budget to help fund the dual-front war, has identified an additional $78 billion in cuts that will be put toward the federal deficit, including some from IT.
Gates’ plan is the first stage of a three-year effort to carve away 10 percent of the staff-support contractors that DOD employs, slash $10 billion from IT expenditures and cancel some expensive weapons systems. The moves come as the Pentagon faces $13 billion less than initially planned for in the fiscal 2012 budget.
Gates hopes to compensate for some of the cuts with organizational changes so that services can be delivered for lower costs. For example, Gates, who detailed the plan in a briefing Jan. 6, said the Army expects to achieve $500 million in savings by consolidating data centers and moving to an enterprise e-mail system. Gates also said that IT costs DOD about $37 billion with all bases and headquarters having their own IT infrastructures, which will be consolidated to enterprise systems to save more than $1 billion per year.
Still, Gates will have to swing an axe to achieve some of his goals. He said 270 contractor positions will be eliminated from the Office of Secretary of Defense’s policy arm and the acquisition, technology and logistics office; 780 contractor positions from the Army TRICARE military health program; and 360 contractor positions from the Missile Defense Agency.
Those cuts will be part of a 10 percent annual reduction in the use of contractors in staff support positions over the next three years and will save more than $6 billion, he said.
As expected, Gates said he is canceling the Marine Corp’s Expeditionary Fighting Vehicle program and the Army’s non-line-of-sight surface-launched missile system, which was part of the previously closed Future Combat Systems program. The Marines’ variant of the F-35 joint strike fighter program, which Gates said has had trouble in testing, will be put on a two-year probation period after which it could face cancellation if it doesn’t prove to be efficient and cost-effective. The Air Force F-35 variant will not face cancellation.
Gates also said the Navy 2nd Fleet headquarters, located in Norfolk, Va., will have its primary training and preparation responsibilities transferred to Fleet Forces Command. Joint Forces Command, also headquartered in Norfolk, will face closing despite significant pushback from Capitol Hill since the move was initially announced.
Gates said that in identifying areas that could yield savings, special attention was paid to support elements outside the four services. He announced a DOD-wide freeze on civilian positions, and projected roughly $54 billion would be saved in personnel cuts when combined with the recent federal pay freeze.
Within OSD, Gates said 80 billets would be eliminated or downgraded, and roughly 200 civilian executive positions face similar fate. “The savings here will be relatively modest, but will create fewer, flatter and more efficient organizations,” he said.
Additionally, force structure will shrink under the budgetary measures, with up to 47,000 troops potentially being cut beginning in 2015.
U.S. intelligence operations won’t escape the cuts, either.
“Since [the terrorist attacks of] Sept. 11, we have seen a proliferation of intelligence operations,” Gates said, noting that new intelligence offices centered around combatant commands would be downsized, and in place of a large, organic intelligence apparatus would come smaller-level capabilities to surge intelligence operations on an ad-hoc basis.
The Defense Intelligence Agency will see consolidation of two redundant task forces as well, Gates added.
However, increased investment will go toward certain capabilities, according to the secretary. Intelligence, surveillance and reconnaissance programs will be moved from the temporary war budget to the permanent DOD budget, and some investments will include modified radar capabilities for the Air Force’s F-15 tactical fighter aircraft and more simulators for the F-35 joint strike fighter.
A new long-range, nuclear-capable, remotely piloted bomber will also be developed, Gates added.
Gates rejected previous reports that said $100 billion would be removed from the DOD budget over the next five years. “We’re not cutting the defense budget, we’re moving [wasteful] spending. The budget will be bigger in dollars than it was in years before,” he said.
Today’s announcements, like those related and similar that have preceded them, will likely continue to face controversy throughout Washington.
“There are two ends to this – one end says that we’ve gone too far, the other says we haven’t gone nearly far enough. My view is we got it about right,” Gates said.
Joint Chiefs of Staff Chairman Navy Adm. Mike Mullen, also speaking at briefing, backed Gates’ proposed budget measures.
“The chiefs and I are in great support of these decisions,” he said.
The decisions were announced following a day of meetings at the Capitol with prominent members of the House and Senate armed forces committees. When asked to characterize the Capitol Hill meeting, Gates said, “There were a number of questions, but very little editorial comment.”
Gates: Pentagon not exempt from overall pressure to cut spending
January 13, 2011 by cs
In his four years at the helm, Defense Secretary Robert Gates has fired scores of underperforming generals, helped turn the tide in Iraq, and persuaded a reluctant President Obama to double down on the flagging war in Afghanistan.
But Gates has finally come up against an enemy he cannot overcome: the nation’s worsening fiscal picture, which has forced the Defense chief to accept budget cuts he once vowed to resist.
The about-face was an important, but little-noticed, aspect of Gates’s press conference on Thursday, where he announced $78 billion in Pentagon budget cuts over the next five years. In addition to the outright funding reductions, the secretary also announced plans to free up $100 billion for reinvestment elsewhere within the Pentagon by eliminating weapons systems such as the Marine Corps’ Expeditionary Fighting Vehicle.
Defense and other administration officials had said in recent interviews that Gates was locked in a fairly fierce debate with the White House over the size of the Pentagon’s budget. Last year, the Pentagon projected its fiscal year 2012 budget would be $566 billion, or about 3 percent above its 2011 budget of $549 billion.
In recent weeks, according to people familiar with the matter, the Office of Management and Budget told Gates to cut that figure by $20 billion. Gates made several personal appeals to the White House to reverse or shrink the reduction. In the end, the White House agreed to give the Pentagon $553 billion next year, which means the department’s budget will grow by less than 1 percent, one of the smallest increases since the start of the long wars in Iraq and Afghanistan.
That is precisely the type of minimal budget growth the Defense chief used to routinely – and vocally – warn against.
In April 2009, for instance, Gates told a crowd at the Navy War College that the United States needed to avoid repeating its historical pattern of slashing military spending as wars wind down.
“Every time we have come to the end of a conflict, somehow we have persuaded ourselves that the nature of mankind and the nature of the world have changed on an enduring basis, and so we have dismantled our military and intelligence capabilities,” he said at the time. “My hope is that as we wind down in Iraq and whatever the level of our commitment in Afghanistan, that we not forget the basic nature of humankind has not changed.”
Last August, meanwhile, Gates said, “Pressure will undoubtedly be great to repeat that mistake and to reduce our spending on defense.”
On Thursday, however, Gates said that the nation’s darkening fiscal picture meant that the Defense Department budget wouldn’t be able to grow as much as he once felt that it needed to – and would instead flatline within the next couple of years.
“Ever since taking this post, now more than four years ago, I have called for protecting force structure and for maintaining modest but real growth in the Defense top line over the long term,” he said. “I would prefer that continue to be the case. But this country’s dire fiscal situation – and the threat it poses to America’s influence and credibility around the world – will only get worse unless the U.S. government gets its finances in order.”
The Pentagon, the secretary added, “cannot presume to exempt itself from the scrutiny and pressure faced by the rest of the government.” Paradoxically, there is a real prospect that the budget cuts that Gates announced will be just big enough to outrage many pro-military lawmakers and just small enough to anger deficit hawks pressing for much deeper cuts.
In a sign of that discord, House Armed Services Committee Chairman Buck McKeon, R-Calif., released a blistering statement on Thursday deriding the proposed cuts as “dangerous.”
“I will not stand idly by and watch the White House gut defense,” he said.
On the other side of the spectrum, an array of think-tank analysts have published detailed monographs in recent weeks calling for far deeper spending cuts. A new report by Gordon Adams and Matthew Leatherman of American University’s Stimson Center called for reducing the military budget by 14 percent over the next seven years and thinning the active-duty military by 275,000.
Gates, whose placid and soft-spoken manner hides an occasionally acerbic wit, expressed little patience for such recommendations.
“As far as I’m concerned,” he said at the end of Thursday’s lengthy news conference, “that’s math, not strategy.”
– By Yochi J. Dreazen – National Journal – January 7, 2011
Gates takes ax to Defense programs to end ‘culture of endless money’
January 12, 2011 by cs
Defense Secretary Robert Gates unveiled steep cuts to several pricey and deeply entrenched weapons programs last Thursday as part of sweeping reforms to the department’s budget planned during the next half-decade.
During an afternoon news conference at the Pentagon, Gates announced the Defense Department had identified a total of $154 billion in efficiencies over the next five years through cuts to overhead, improving business practices and eliminating troubled programs.
The service agencies will be allowed to keep and reinvest roughly $70 billion, though $28 billion from those funds would be directed to higher-than-expected operating expenses, including fuel, maintenance, health care and training costs.
The department also announced it would bring down the overall size of the U.S. fighting force by trimming the Army by 49,000 soldiers and the Marines by 20,000 starting in fiscal 2015. That decrease would be first for the armed forces since the start of the wars in Iraq and Afghanistan.
The secretary stressed that the program decisions amounted to a reduction in the overall rate of growth at the department rather than a decline in total defense spending. “My hope is what had been a culture of endless money . . . will become a culture of savings and restraint,” Gates said.
On the chopping block is the Expeditionary Fighting Vehicle, an armored, high-speed amphibious assault vehicle that has been in the planning stages since the Reagan administration. The $14 billion program has experienced multiple testing delays and cost increases. Thus far, Defense has spent $3 billion on the project.
The Marines had expected to purchase 573 of the floating tanks, but on Thursday Gates terminated the program altogether in his planned 2012 Defense budget. Gates acknowledged this was a “controversial decision,” but he noted the department could not afford a program that would “essentially swallow the entire Marine vehicle budget.” Rather, the Marines will upgrade their existing fleet of amphibious vehicles.
“Despite the critical amphibious and warfighting capability the EFV represents, the program is simply not affordable given likely Marine Corps procurement budgets,” said Marine Corps Gen. James Amos. “The procurement and operations-maintenance costs of this vehicle are onerous.”
Some industry analysts believe the department is being short-sighted with the EFV decision. Loren Thompson, who runs the Virginia-based Lexington Institute, a defense think tank, argued there is no safer way to get Marines ashore than the Expeditionary Fighting Vehicle. “The bottom line is the Marine Corps either gets EFV or it loses a lot of men doing the mission the old fashioned way,” said Thompson, who serves as an adviser to several major defense contractors.
Gates also announced plans to delay by two years the Marine Corps’ version of the F-35 fighter jet because of significant testing problems. The secretary said the program, run by Lockheed Martin Corp., would be reviewed for the next two years to see whether it demonstrates increased reliability. If the program does not show improvements, it could face termination, Gates said.
The Army also canceled plans to purchase a surface-to-air missile defense system being developed by Massachusetts-based Raytheon Co.
Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, stressed that the program cuts actually would “improve our readiness. We can do things smarter and more efficiently.”
The department also on Thursday elaborated on previously announced plans to eliminate $100 billion in overhead costs and inefficiencies from the Defense budget. The Air Force identified $34 billion in proposed efficiencies, while the Army and Navy found $29 billion and $35 billion, respectively, in potential savings.
Nonservice agency offices, including the Office of the Secretary of Defense, identified $54 billion in potential cuts through consolidating information technology support; a hiring and salary freeze; a reduction in generals, admirals and civilian executives; the elimination of hundreds of nonmandatory reports; and an increase in TRICARE health premiums for military retirees. In addition, a 10 percent reduction for each of the next three years in service support contracting is expected to save the department $6 billion, Gates said.
To take effect, the program cuts must still be approved by Congress, and top Republicans already are expressing skepticism.
These proposed cuts “are being made without any commitment to restore modest future growth, which is the only way to prevent deep reductions in force structure that will leave our military less capable and less ready to fight,” said Rep. Howard “Buck” McKeon, R-Calif., chairman of the House Armed Services Committee. “This is a dramatic shift for a nation at war and a dangerous signal from the commander in chief.”
Sen. Carl Levin, D-Mich., chairman of the Senate Armed Services Committee, said the Defense proposals would be discussed as part of the normal budgeting hearing process. But he stressed the need for a new Expeditionary Fighting Vehicle. “The Marine Corps needs a next-generation amphibious vehicle,” Levin said. “The nation needs us to build and buy that vehicle at a reasonable cost.”
Gates briefed the leaders of the House and Senate Armed Services and Defense Appropriations committees on Thursday morning.
The Pentagon’s proposed budget for 2012, which includes funding for the wars, is expected to be $553 billion, or about $13 billion less than it had expected.
– By Robert Brodsky – GovExec.com – January 6, 2011
Feds offer peeks at companies’ subcontract relationships
January 11, 2011 by cs
The federal government is the newest occupant in the peep-show district of the business world.
It has moved in with its business partners peep show, a place where anyone — no matter their age — can get a glimpse of what’s happening between government contractors and their partners.
The place where everything’s transparent — the USAspending.gov website — is giving intimate peeks into business relationships with its new subcontracting award information, which went online in December.
To grab people’s attention, the government can advertise that it’s the only place where people have an opportunity to watch company relationships grow closer and then apart as business changes.
The government’s massive website of contracting data posted its first subcontracting award information in December, wrote Jacob Lew, director of the Office of Management and Budget, on the OMB Blog last month. It’s another step toward the ultimate goal of the Federal Funding Accountability and Transparency Act. For the first time, the public can track a government agency’s payments to a contractor and the contractor’s payments to its subcontractors.
Until now, two companies’ relationship was for the two companies alone. Government officials had regarded the details of relationships between contractors and subcontractors as something they shouldn’t release, said Kevin Plexico, senior vice president for research and analysis services at Input.
That has changed now, though, as officials pull back the curtain on companies’ partnerships.
In early December, Lew wrote that USAspending.gov had roughly 930 subcontracting awards posted, accounting to about $750 million in federal funding.
“We expect this number to increase significantly over time, but it represents a critical milestone in our efforts [to provide] the public with unprecedented transparency into how and where tax dollars are spent,” he wrote.
The show will include some veterans who are used to having their spending figures available for all to see. As prime contractors, they’ve had to do it for years. It comes with being a federal contractor. However, there will be some companies who’ve never shown that much information before.
The transparency requirements “may be uncomfortable for the subcontractors, who, by the way, are not typically exposed to this kind of reporting,” Plexico said.
Nevertheless, the data might be good. The peeks at companies could impress other businesses interested in potential partnerships.
As the amount of subcontractor data increases, “it should be a useful tool for companies and agencies to gain insight into partner relationships and patterns,” Plexico said. The data could also help companies find qualified subcontractors and give more insight into their past performance.
– Posted on Federal Computer Week website, http://fcw.com, by Matthew Weigelt on Jan 03, 2011
Study hails use of online reverse auctions
January 10, 2011 by cs
The expanded use of online reverse auctions is creating significant cost savings for taxpayers and major efficiency improvements for federal contracting officials, according to a survey released in late December 2010.
The study, the first of its kind, examined the recent expansion of reverse auctions — a process in which contractors bid against one another by offering lower bids to drive down prices — at the Customs and Border Protection bureau. Reverse Auction Research Center, an online research site, carried out the survey, which was funded by FedBid, Inc., the reverse auction marketplace CBP uses.
Conducted in the summer of 2010, the survey interviewed 37 contracting officials at CBP, among the most active federal agencies in utilizing reverse auctions. More than 90 percent of participants gave the tool high marks, citing lower acquisition costs, greater competition and a more streamlined buying process.
“Online reverse auctions offer a simple tool for government buyers to clear their desks of simple purchases for commodities and basic services, so they can focus their time and energy on more complicated purchases, direct interaction with their customers and sellers, and other value-added efforts,” said David Wyld, a professor of management at Southeastern Louisiana University and the study’s author.
The study found that CBP has spent more than $500 million in purchases through FedBid during the past four years. Direct savings on those purchases averaged roughly 10 percent annually during that time, peaking in fiscal 2009 when the bureau saved more than $19 million using the technique, the study concluded. Small and disadvantaged businesses won more than 90 percent of the CBP auctions during this period, the report said.
Diane Sahakian, assistant director of contracting operations at CBP, expects reverse auctions to “revolutionize” aspects of the federal procurement system. “This will change the way buying is done for commodities and simple services,” she said. “Within two years, this will be the norm and the way things are done.”
In each of the 15 categories surveyed, the contracting official said they preferred reverse auction to traditional procurement methods. Some of the highest grades were for categories such as time savings, managing questions from sellers and ease of use.
“The hidden value from most reverse auctions may not be the savings in money but the savings in time,” Wyld said. “With flat staffing and ever-increasing responsibilities, most government procurement offices are being squeezed in a productivity vise, without enough hours in the day to manage the needs of the agency.”
The survey asked respondents to quantify the time spent on certain aspects of the procurement process, including collecting bids and amending solicitations. In most cases, reverse auctions made the steps quicker and more efficient, allowing contracting officials to spend more time communicating with sellers and providing pre- and post-award support, the survey found.
“While not necessarily a ‘bottom line’ savings, the value … for the agency, for its procurement operations and its staff, and ultimately for the taxpayer, is the time freed-up to be repurposed in a better way,” the study said.
The survey found that CBP used the auctions to purchase commodities such as information technology, vehicles and communications equipment. CBP also used reverse auctions to buy custodial services, administrative support, and maintenance and repair work.
Some procurement experts, including Dan Gordon, administrator of the Office of Federal Procurement Policy at the Office of Management and Budget, advise against using reverse auctions to procure services. In December, Gordon said reverse auctions often work best when price is the only evaluation factor, which is not always the case when purchasing complex services.
Other procurement observers argued agencies should expand their use of reverse auctions as part of their larger strategic sourcing initiatives.
“Reverse auctions are an effective and efficient means of realizing large savings on purchases of not only commodities, but highly defined services as well,” said Jaime Gracia, president and chief executive officer of Seville Government Consulting. “Although current initiatives exist such as the General Services Administration’s Federal Strategic Sourcing Initiative, which encourages adoption of industry best practices, federal buyers are simply not going far enough in leveraging their buying power to maximize price savings.”
– By Robert Brodsky – GovExec.com – January 3, 2011
DoD auditors fault Northrop Grumman for BAMS invoices
January 7, 2011 by cs
The Navy gave Northrop Grumman as much as $300,000 in profit for filling out $3 million worth of travel expense forms–and some of those expenses should have never been approved, says the Defense Department inspector general.
In a Dec. 23 report on the Navy’s $1.8 billion Broad Area Maritime Surveillance system development and demonstration cost plus contract, auditors find that Northrop Grumman submitted at least $206,000 worth of travel vouchers for trips to golf outings and air shows in Washington, D.C., Paris and Singapore. While the Defense Department recovered that money from Northrop Grumman, a company official told auditors that they have not reviewed all travel vouchers or other charges related to the BAMS contract.
“There is a potential for additional unallowable expenses charged and paid to the BAMS contractor,” the report warns. BAMS is a unmanned aircraft system based on the Global Hawk meant to perform persistent intelligence, surveillance and reconnaissance within a range of 2,000 nautical miles. Naval Air Systems Command awarded in April 2008 Northrop a BAMS development contract with a fixed base award fee of 3 percent with an additional 7 percent award fee tied to performance. A “fee” is often how the government dubs “profit.”
Although legitimate travel is an allowable cost under cost plus contracts, auditors say they question giving contractors any fee at all tied to travel expenses, since “it is difficult to evaluate the contractor’s performance on travel.” But in the case of Northrop’s BAMS travel vouchers, the performance was arguably bad enough to preclude it from receiving any award fee, the report says. NAVAIR officials told auditors they’ll consider making travel just a cost reimbursement line item in future procurements.
The report also faults Navy personnel for not reviewing Northrop Grumman bills or going through the government acceptance process before issuing payment. Invoices from the company didn’t itemize amounts billed by labor hour, materials and other costs. For example, one invoice for $22.6 million simply stated that it was a bill for a “cost plus item” and that the unit of measure was “each” with a quantity of “one.”
For more: download the report, D-2011-028 (.pdf)
– Jan. 3, 2010, posted at www.fiercegovernmentit.com
Security contract could top $1 billion; should contain small business opportunities
January 6, 2011 by cs
The State Department is opening a competition potentially worth more than $1 billion to provide a variety of security services, from screening for explosives to improving the protection of technical equipment.
The department’s Bureau of Diplomatic Security is overseeing the initiative, which would take the place of a contract awarded to Siemens Government Services in 2005. That deal expires in 2011.
Ashley Bergander, manager of federal programs with government contracting market analysis company FedSources, said she anticipates an aggressive competition.
Siemens “obviously has an advantage because they’re the incumbent,” she said. “But just in the kind of [tight budgetary] environment the government’s in right now . . . I think that it’s kind of a fair game for anyone.”
Though the actual contract value will depend on awards, Bergander said looking to the past contract suggests the new version could very well be worth more than $1 billion. The original contract was initially capped at $550 million, she said, but that total was adjusted and current spending on the contract has topped $1 billion.
Alexander Rossino, a principal analyst with Input, a firm that studies the government contracting market, said it’s likely — but not yet fully clarified — that the program will be split into several contracts, providing more shots for contractors. Some work could be set aside for small businesses, and there will certainly be subcontractor opportunities for smaller companies.
Hundreds of companies that use Input have marked the program of interest, according to Rossino.
“It looks like it’s going to end up being a contract that combines standard security operations — [like] setting up security barriers — [with] also implementing security systems,” said Rossino, who added that the contract could have a cybersecurity element. However, he cautioned that State Department officials have been tight-lipped about the initiative.
The security market — and particularly providing security services overseas — is considered less susceptible to budget cuts.
For contractors, “it would be good to get your foot in the door with the Department of State because there is going to be more growth in that kind of area,” said Bergander.
– by Marjorie Censer – The Washington Post - January 3, 2011
Defense scales back organizational conflict-of-interest rule
January 5, 2011 by cs
Industry officials scored a major regulatory victory at the end of December when the Defense Department agreed to scale back its final rule on organizational conflicts of interests, removing a host of controversial provisions that had drawn the ire of contracting organizations.
On Wednesday, the department published in the Federal Register final regulations detailing the steps contracting officers should take to manage circumstances in which a prospective bidder could have an unfair advantage over competitors. Nearly two years in the planning, the rule implements a provision in the 2009 Weapons Systems Acquisition Reform Act.
The change to the Defense Federal Acquisition Regulation still requires companies to voluntarily disclose any possible organizational conflicts of interest before bidding on projects, and also implements several changes recommended by industry, which narrow the scope of the rule.
For example, the proposed draft rule, published in April, applied to all Defense contracts, including task and delivery orders, with the exception of those for commercially available off-the-shelf items.
Critics argued the proposal applied an unwise “one-size-fits-all” approach to Defense procurements. The amended version released in December limits its application to major defense weapons systems programs and systems engineering and technical assistance contracting.
“The department’s final rule provides much-needed clarity and focus,” said Stan Soloway, president of the Professional Services Council, an industry trade association that had been highly critical of the proposed rule. “As Undersecretary of Defense Ash Carter told PSC, his goals for this regulation were to address conflict-of-interest risks to the department in major systems and to ‘rule with reason.’ This final DFARS rule accomplishes both of those goals.”
In a surprise to some legal observers, the final rule avoids altogether a host of proposed revisions, included in the draft notice, that would have overhauled the larger federal organizational conflict-of-interest statute. Defense said the policy changes could cause confusion, delays and require possible changes to the Federal Acquisition Regulation. The Federal Acquisition Regulation Council is expected soon to issue its own organizational conflict-of-interest modification for civilian agencies.
Organizational conflicts of interest occur when a firm has access to nonpublic information that would give it a leg up in competing for work. Conflicts also could crop up when a contractor is performing tasks that are subjective and could have an impact on its bottom line. These situations would include a company helping to prepare a statement of work and then bidding on the same project.
The rule would mandate that bidders voluntarily disclose facts that could relate to an organizational conflict of interest both prior to the award and on a continuing basis during performance of the contract.
But in its final rule the department made a significant change in how contracting officials should attempt to resolve potential conflicts of interest, backing off its original mandate that mitigation — such as institutional firewalls or delegating certain tasks to a subcontractor — was the preferred option. Industry officials said the mitigation strategy was not practical.
Rather, the revised notice instructs contracting officers to “not impose across-the-board restrictions, or limitations on the use of particular resolution methods” unless they are required for a particular acquisition. Resolution strategies also should not restrict the pool of potential offerors and must “promote competition and, to the extent possible, preserve DoD access to the expertise and experience of highly qualified contractors,” the notice said. If the resolution method does not work, then contracting officials could select another offeror, or request a waiver, according to the rule.
Thomas Papson, a partner at the Washington law firm of McKenna Long & Aldridge, said the final rule recognizes that it’s in government’s best interest “to retain the discretion of contracting officers to deal appropriately with particular procurements. You want to avoid handcuffing contracting officers.”
Despite some of the major changes, Papson argued the rule still accomplishes its core intention: forcing early disclosure of conflicts that could call into question the integrity and fairness of the competitive procurement process. Companies now recognize that if they don’t come forward to disclose these issues, their competitors will raise them likely with a high degree of success, during a contract bid protest, he said.
“Over time, companies have taken a more sophisticated approach to conflicts of interest,” Papson said. “They understand it’s short-sighted not to put these issues on the table upfront and bring them to government’s attention rather than hoping no one will notice them.”
– By Robert Brodsky - December 30, 2010 – FedExec.com