Industry leaders express concern about impacts of Defense sequestration

September 12, 2012 by

U.S. Senator John McCain wrote in a blog post on Sept. 10, 2012 that many defense contractors believe that impending sequestration could lead to serious problems both in national security and employment rates.

(Sequestration is the formal term for mandatory cuts to federal programs – the process of cordoning off money that may have been authorized by Congress but is now prohibited from being spent.   Literally, the money is being “sequestered” – taken away from the federal agencies affected.   As things now stand, a $1.3 trillion sequester will go into effect in January 2013– slashing more than $500 billion from the military alone.)

McCain, together with Senators Joe Lieberman, Jim Inhofe, Saxby Chambliss, Kelly Ayotte, Lindsey Graham, and John Cornyn asked 13 defense contractors to join them in their appeal to stop the automatic budget cuts.

The Arizona Senator said 12 defense contractors replied and said that sequestration could “devastate the readiness of our armed forces to meet current and future threats to our nation’s security, will eliminate high-paying jobs in the industry, and will have a negative and long-lasting impact on the defense industrial base.”

McCain also stated that George Mason University professor Dr. Steven Fuller estimates that sequestration could cost 1.1 million lost jobs.

He added that many contractors are delaying hiring and capital investments.

Companies who responded to the senators’ letter include Northrop Grumman, Boeing, EADS, Lockheed Martin, Raytheon Company, SAIC, and General Dynamics.

Key selling tactics as the curtain comes down on FY 2012

September 7, 2012 by

Savvy contractors and vendors know that right now, before Sept. 30, during the  federal government’s fourth quarter, is a great time to land government  business.

And the federal market is huge. Federal government purchases  of goods and services will total $1.22 trillion in 2012, according to Waltham,  Mass.-based economic forecaster IHS Global Insight. The federal purchases data  was reported in a recent article.

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Fourth-quarter spending rush may be larger than last year

September 6, 2012 by

For government procurement officials, right about now is when the rubber meets the road.

The fiscal year follows a predictable — but not easy — pattern for procurement officials. Early in the year, they face significant uncertainty about how much money Congress will appropriate for them and when.

And then over the course of the year, program managers may hold back on sending in requirements and contracting officials at times hold back on purchases. Politicians may argue over funding.

By the fourth quarter, there’s pent-up demand and a rush to spend. One-third of government spending typically happens in the fourth quarter.

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Federal programs to aid entrepreneurs overlap

September 5, 2012 by

Agency efforts to support private entrepreneurs are ineffectual and fragmented, according to Government Accountability Office research on 52 programs in such departments as Agriculture, Commerce and Housing and Urban Development.

In a paper dated Aug. 23, auditors identified overlap among initiatives to offer grants, loans and technical training to businesses and found that too few agencies track the assistance they provide, resulting in a failure of 19 programs to meet performance goals.

The report said Agriculture and the Small Business Administration, for instance, “entered into a formal agreement in 2010 to coordinate their efforts to support businesses in rural areas; however, the agencies’ programs that can support startup businesses — such as USDA’s Rural Business Enterprise Grant program and SBA’s Small Business Development Centers — have yet to determine roles and responsibilities, find ways to leverage each other’s resources, or establish compatible policies and procedures.”

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GSA targets small businesses for new IT contracts

August 30, 2012 by

The General Services Administration is leaning toward splitting its next major  multiple award IT contract into two parts: one that would be unrestricted and one for small businesses.

Jim Ghiloni, the program manager for the One Acquisition  Solution for Integrated Services (OASIS)  contract, wrote in a   blog postthat this is GSA’s “current thinking.”

“GSA believes this approach affords the opportunity for the broadest participation  by all small businesses in the industry and will provide a vehicle that will  facilitate agencies’ ability to comply with the small business set-aside  procedures and manage their small business program goals,” Ghiloni wrote in the  blog.

The small business set-aside would be for firms who qualify as 8(a), service- disabled veteran owned, Historically Underutilized Business Zone and women-owned.  The unrestricted contract would be open to all vendors.

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Defense cut’s full effect years away, analyst finds

August 29, 2012 by

Defense contractors wouldn’t feel the full effect of automatic budget cuts for three or four years as weapons programs are facing only a 3.5 percent reduction next year, according to an independent research group.

While most defense programs would be reduced by 10.3 percent under the cuts, known as sequestration, they would take time to implement, budget analyst Todd Harrison said in a report released today by the Center for Strategic and Budgetary Assessments.

“It will be three or four years before defense companies feel the full impact of sequestration,” Harrison said. “This gives industry more time to adjust employment levels through natural attrition and early retirements, rather than forcing immediate layoffs.”

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VA health care contractor charged with using phony veteran-owned businesses

August 23, 2012 by

Health Net Inc., a large company with revenues of $11.9 billion in 2011, encouraged a Veterans Affairs Department employee to set up a service-disabled veteran-owned small business in 2006 so Health Net could increase its own business with the department that involved re-pricing health care claims, a VA inspector general review found.

The veteran-owned business, Enterprise Technology Solutions, performed little work under its contracts with VA and instead subcontracted the work to Health Net in violation of contracting rules, according to an investigation by the VA inspector general released Monday.

The IG staff reviewed five contracts held by Enterprise Technology Solutions valued at $82 million over a two-year period.

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DoD orders expedited payments to small subcontractors

August 22, 2012 by

Contracting officers within the Department of Defense (DoD) have been ordered to modify existing contracts and establish new contracts in such a way that small business subcontractors are paid on an accelerated basis.

Richard Ginman, director of defense procurement and acquisition policy, issued this order on Aug. 15, 2012 in response to a policy announced by the Office of Management and Budget (OMB) in mid-July.

The DoD directive sets forth a “class deviation” so that all new solicitations and contracts contain a clause that requires prime contractors to pay small business subcontractors on an accelerated timetable.  In addition, existing solicitations and contracts are to be modified, if possible, to include the new accelerated payment clause.

To facilitate the prompt payments to subcontractors, DoD is to provide accelerated payments to its prime contractors after receipt of a proper invoice and appropriate documentation.

The OMB policy is a temporary, one-year policy.

A copy of DoD’s Aug. 15, 2012 class deviation can be found here: DoD Class Deviation – Accelerated Payment to SB Subs 08.15.2012

A copy of OMB’s July 11, 2012 policy memorandum can be found here: OMB Policy Memo – Prompt Payment to SB Subs 07.11.2012


Deltek: One tool could help agencies meet small-business targets

August 21, 2012 by

The federal government didn’t meet its small-business goals in fiscal 2011, but Deltek analysts expect that agencies might get closer in 2012, thanks to renewed focus by procurement officials.

The Simplified Acquisition Threshold, a government procurement method used for purchases between $3,000 and $150,000, is receiving attention from the Office of Federal Procurement Policy, which recently had an independent party analyze contracts equal to or below the threshold.

The investigation found a lack of consistency in reporting this level of contract spending and made clear that many contracting opportunities and dollars are not going to small businesses.

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Factory owners: Federal prisoners stealing our business

August 16, 2012 by

Just hearing the word Unicor is enough to make Kurt Wilson see red.

Unicor is a government-run enterprise that employs over 13,000 inmates — at wages as low as 23 cents an hour — to make goods for the Pentagon and other federal agencies.

With some exceptions, Unicor gets first dibs on federal contracts over private companies as long as its bid is comparable in price, quantity and delivery. In other words: If Unicor wants a contract, it gets it.

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