DoD: $178.8 billion for acquisitions, $109.1 billion for procurement, $67.9 billion for R&D

February 17, 2012 by

President Obama’s defense budget of $613.9 billion for fiscal 2013 reflects the downsizing of America’s wars abroad and the size of its military, as well as its plans to increase and entrench smaller counter terrorism, special operations and high-tech capabilities globally.

The cut — a reduction of $40 billion, or six percent, from current year spending — includes a 20 percent slash in Afghanistan war spending, increasing weaponry intended for Asian-Pacific security, while deferring legacy weapons purchases and personnel costs into future years.

“We are redoubling our efforts to make better use of the taxpayer’s defense dollar,” Defense Secretary Leon Panetta said, in a statement released with budget documents at the Pentagon on Monday. Panetta is not expected to appear Monday, going instead to three hearings scheduled before Congress this week.

The White House wants $525.4 billion for the regular defense budget and $88.5 billion for the separate war account. The war request includes $85.6 billion for Afghanistan, which is down from $105 billion in 2012, and $2.5 billion for Iraq. Most of the decline in Afghan war spending reflects the operational savings from pulling out the remaining 23,000 surge forces by September.

DOD also requests $178.8 billion for acquisitions, or $109.1 billion for procurement and $67.9 billion for research and development, a crucial account for the nervous defense industry.

A greater total spending cut is forecast for 2014, appearing to come entirely from war accounts. But the Pentagon forecasts its base spending will increase by roughly $10 billion in each of the following four years after 2013. That’s a 0.3 percent decrease in spending for the next five years.

There were no surprises in the increased budgets for U.S. priority accounts, include special operations forces, at $10.4 billion next year, as well as drones, cybersecurity, and missile defense. DOD slashed $15 billion from the still-breathing Joint Strike Fighter’s development, due to forced delays in planned purchases. The Army’s search for a next generation ground combat vehicle and Navy shipbuilding also were cut.

Cutting 72,000 soldiers, 20,000 Marines and thousands more sailors and airmen accounts for $50 billion savings over five years.

The Pentagon claims $60 billion of its total savings next year will come from “efficiencies”, an ongoing DOD effort to trim its own expenses and waste that watchdogs have complained was hard to track and verify.

– by Kevin Baron, National Journal, February 13, 2012, at http://www.govexec.com/defense/2012/02/president-requests-more-disciplined-613-billion-defense-budget/41179/.

Budget requests, agency by agency

February 16, 2012 by

The theme of President Obama’s fiscal 2013 budget plan is to spend less but make targeted investments in education initiatives and programs that will put people to work.

“The main idea in the budget is this: At a time when our economy is growing and creating jobs at a faster clip, we’ve got to do everything in our power to keep this recovery on track,” the president said during a speech Monday at Northern Virginia Community College in Annandale, Va.

The Commerce Department and Small Business Administration would see the biggest relative discretionary spending increases over fiscal 2011 actual spending — up 41.9 percent and 30 percent, respectively. Combined, the departments’ total proposed expenditures for fiscal 2013 amount to a little less than $9 billion.

The biggest reduction in spending by a wide margin will be absorbed by the Justice Department, where the president is proposing a 33.4 percent cut, from $26.9 billion to $17.9 billion. The next-largest cut goes to the Health and Human Services Department, which would see an 8.8 percent reduction in total discretionary authority.

View our chart below to see how the major agencies fared in Obama’s proposal. We looked at total discretionary authority for each agency.

Discretionary budget authority (billions of dollars)
Departments 2011
Actual
2013
Request
Percent
Change
Agriculture 23.2 23 -0.9%
Commerce 5.6 8 41.9%
Defense (DoD — Excluding Overseas
Contingency Operations)
528.3 525.4 -0.5%
Education 68.3 69.8 2.2%
Energy (Excluding National Nuclear
Security Administration)
15.2 15.6 2.8%
Health and Human Services 76.5 69.7 -8.8%
Homeland Security 41.9 39.5 -5.8%
Housing and Urban Development 37.1 35.3 -4.8%
Interior 11.7 11.4 -2.7%
Justice 26.9 17.9 -33.4%
Labor 12.5 12 -4%
State and Other International Programs
(Excluding Non-Security Funding)
48.8 54.8 12.3%
Transportation 13.7 13.8 0.6%
Treasury 13.5 12.6 -7%
Veterans Affairs 56.4 61 8.1%
Major Agencies
Corps of Engineers — Civil Works 4.9 4.7 -4.3%
Environmental Protection Agency 8.7 8.3 -3.90%
National Aeronautics and Space Administration 18.4 17.7 -4%
National Science Foundation 6.8 7.4 8.3%
Small Business Administration 0.7 0.9 30.2%
Social Security Administration 10.7 11.0 2.8%
Corporation for National and Community Service 1.1 1.1 -1%

– by Andrew Lapin and Caitlin Fairchild, Government Executive, February 13, 2012 at http://www.govexec.com/management/2012/02/discretionary-budget-authority-billions-dollars/41189/.

DHS plans industry day to highlight IT priorities

February 16, 2012 by

The Homeland Security Department is planning an industry day Feb. 28 in Washington that explore priorities in five mission areas.

The day-long event at the Ronald Regan Building in downtown D.C. also includes a DHS CIO Council meeting that will be open to the public and cover fiscal 2012 initiatives.

The five mission areas are:

  • Preventing terrorism and enhancing security
  • Securing and managing borders
  • Enforcing and administrating immigration laws
  • Safeguarding and securing cyberspace
  • Ensuring resilience to disasters

Each mission area will have its own breakout sessions that include more details on specific initiatives. For example, under preventing terrorism, there will be information presented on Secure Flight, a Transportation Security Administration program. The ensuring resilience to disasters will have breakouts on the Homeland Security Information Network and the Integrated Public Alert and Warning System.

The agency said that acquisition information on specific program areas will be presented.

DHS has a $39.6 billion 2012 budget and the budget request for fiscal 2013 is $39.5 billion.

About the Author: Nick Wakeman is the editor-in-chief of Washington Technology.    This article was published on Feb. 14, 2012 at http://washingtontechnology.com/articles/2012/02/14/dhs-industry-day.aspx?s=wtdaily_150212.

SBA’s loan system troubles could complicate reorganization

February 15, 2012 by

The Small Business Administration is behind schedule on five of six planned improvements to its Loan Management and Accounting Systems and costs for the overall project have risen about 20 percent since 2010 to $28 million, a recent Government Accountability Office report said.

That’s a common story with federal information technology acquisitions, which often run behind schedule and over budget. President Obama’s planned consolidation of SBA with several other business and trade agencies inside the Commerce Department could throw another cog in the wheels.

Major government reorganizations have a mixed track record of success, but one common feature, experts told Nextgov, is while the reorganization is in process, uncertainty rises.

“Often the [reorganization] process takes a lengthy period of time and during that period it’s difficult to deal with real issues and challenges in the agencies,” said Alan Balutis, a former chief information officer at the Commerce Department and now a director at Cisco’s Internet Business Solutions Group.

“It’s almost like you bifurcate staff and resources,” Balutis said. “One group works on the reorganization and integration and another group goes along doing their daily business and waiting for the day when someone pulls the switch and everything changes.”

During that transition period problems that already exist with a project or system can “linger and fester,” he said, because employees managing the project are unsure where the system will fit in the new organizational structure. Often those staffers also are unsure where they’ll fit in the new structure and, as a result, hesitant to make major decisions, he said.

“They’re working under uncertainty about ‘Where am I going to end up? Who am I going to be working for? How is this going to affect my grade and responsibilities?’ ” Balutis said. “And all of that is a distraction when you’re trying to carry on your regular duties.”

That’s not to say all acquisitions and projects will fare equally poorly during a bureaucratic transition.

“If you have [information technology] systems that are more enterprisewide, that support an agency function like, say, supply chain management or finance, those are likely to be more affected by reorganization,” said Raj Sharma, president of the Federal Acquisition Innovation and Reform Institute and author of a report on IT acquisition reform.

“If you’re looking at a mission-specific system, something that supports a critical program but we know it won’t be affected by reorganization, then there’s a higher degree of certainty,” Sharma said.

Programs also are less likely to fall into reorganizational paralysis if they’re being closely monitored by government leaders or the public, Sharma said.

That may bode well for SBA as Obama and Republican House leaders have spoken at length about the importance of small businesses to an economic recovery.

GAO’s review of SBA’s loan system was performed from February 2011 through January 2012, almost entirely before Obama announced his reorganization plan, Jan. 13. That plan will require congressional approval to be enacted, which may be tough to come by. It also involved elevating SBA to a Cabinet-level agency while the transition is in process.

A GAO spokesman declined to comment Thursday on how the proposed reorganization would affect problems with SBA’s Loan Management System saying it was beyond the scope of what the agency had looked at.

In its report, GAO criticized SBA officials for failing to validate that certain technical requirements had been met and for not identifying potential risks or taking steps to mitigate them. The agency also didn’t identify skills gaps on the project teams and didn’t get firm baselines from all contractors for how long the projects would take, GAO said.

“These weaknesses in basic management practices make it less likely that SBA will be able to complete the projects within the time, budget and scope parameters originally planned,” GAO said.

While Balutis is skeptical that major problems will be solved during the proposed SBA-Commerce reorganization, he supports the reorganization itself, which he said has been discussed for years in different forms. If done right, he said, the reorganization could save money and create useful cooperation between SBA and some units of Commerce that do similar work, such as the Minority Business Development Agency.

Balutis is cautiously optimistic that the reorganization can win congressional approval.

“There certainly hasn’t been much the White House and the Republican-controlled House has been able to agree upon over this last year and a half and probably the range of issues on which they agree is only going to narrow as we roll up to the election in November,” he said. “On the other hand, this does seem to strike the right chord. One thing a number of people agree on today is that we ought to rationalize the government. We ought to make it smaller and tighter to achieve savings. And that was a major premise of the White House announcement.”

Contractors respond warily to Pentagon vow to preserve industrial base

February 14, 2012 by

Just days before the expected Feb. 13, 2012 release of President Obama’s fiscal 2013 budget, the Defense Department’s top weapons buyer sought to reassure nervous contractors that the White House will protect vital industries even as it implements major cuts in procurement and personnel spending.

Frank Kendall, acting undersecretary of Defense for acquisitions, technology and logistics, told a Monday (Jan. 6, 2012) forum at the Center for Strategic and International Studies his highest priorities include beefing up the federal acquisition workforce, strengthening the military industrial base, preserving technical superiority, and buying into only affordable and dependable programs.

He also suggested that the Pentagon might intervene to help key contractors that are struggling in the current economy. “When people see that there’s a supplier who is in trouble, or they’re in trouble themselves, they need to come let us know,” he said, according to an account in National Journal . “When they look out and see their business base eroding, or see that they’re not going to be viable for whatever reason, we need to know that. Then we can do assessments that look at whether we need to maintain competition there, whether it is a nice capability that we need to continue to support — how we might intervene.”

Fred Downey, vice president of national security at the Aerospace Industries Association, told Government Executive that “ongoing reductions in defense spending coupled with the threat of sequestration cuts are causing a great deal of concern among smaller companies in the supply chain. Many of these companies have unique capabilities that could be lost if their workflow is interrupted by cancellations and delays.” He added, “Kendall’s comments could lead to positive action to sustain critical small suppliers. We look forward to more discussion about how the Pentagon would go about executing such support.”

Alan Chvotkin, executive vice president and counsel of the Professional Services Council, which represents contractors, said the comments were “reassuring in that they demonstrate renewed attention at high levels. But a bailout, for lack of a better word, should not be counted on as a strategy by companies as the Pentagon takes steps to make sure the supply chain is not disrupted.”

Both the budget cuts now being prepared by Obama defense strategists and the additional reductions that could be mandated next year under the 2011 Budget Control Act have fueled concern about long-term dwindling of the nation’s defense-related industrial infrastructure.

House Armed Services Committee Chairman Howard “Buck” McKeon, R-Calif., sounded the alarm in January after the Pentagon released its latest strategic guidance. A fact sheet his committee released warned that “industry cannot be turned on and off like a light switch [and] requires a steady, enduring partnership that allows for innovation, expertise and growth.”

It said the Pentagon’s planned cuts would result in delays or a shutdown of production lines that would cost highly skilled manufacturing jobs.

Two defense analysts who spoke to reporters Wednesday at the Center for Strategic and Budgetary Assessments expressed similar worries. “The industrial base is not like Wal-Mart, where you can count on things being on the shelves when you walk in,” said Andrew Krepinevich, CSBA’s president. “The industrial base is a strategic asset, a weapon” that imposes enormous planning problems on potential enemies, he added, noting the British allowed their air and maritime industrial base to decline in the 1930s and again in the 1990s. “These companies trade on Wall Street, and eventually the money will go somewhere else.”

Todd Harrison, a senior fellow in budget studies at CSBA, said the number of prime defense contractors has shrunk from about 30 in the 1990s to five or so today, creating a near-monopoly in the industry. He predicted that severe cuts would prompt some companies to “get out of the defense business or consolidate, and you may see a reduction in capacity, in the number of factories.”

Kendall stressed the importance of leadership to create a cost-conscious acquisition workforce. But both defense analysts said they were skeptical that the Pentagon will succeed in its goals of achieving $60 billion over 10 years in savings through “efficiencies” in areas such as operations and maintenance. “It’s long been tried, but they don’t end up getting anywhere near what they’d hope for,” Krepinevich said.

The Pentagon’s initiative to insource more contractor work and build up the acquisition workforce, Harrison said, was a priority of former Defense Secretary Robert Gates, and might well become unworkable because of coming budget cuts. “We’re likely to see significant reductions in the DoD civilian workforce,” he said. “It’s hard to bring contractor expertise in-house when contractors have higher paying jobs.”


– y Charles S. Clark, Government Executive, February 8, 2012 at http://www.govexec.com/contracting/2012/02/contractors-respond-warily-pentagon-vow-preserve-industrial-base/41138

SBA adjusts small business revenue standards

February 13, 2012 by

The Small Business Administration issued a final ruling Friday (Feb. 10, 2012) that adjusts the agency’s standards in determining what revenue sizes constitute small businesses.

In a Federal Register notice, the SBA said it is increasing 37 small business standards for 34 industries and three sub-industries.

SBA will continue to review size standards sector-by-sector, according to the notice.

The SBA now says small businesses providing engineering services can average revenues of $14 million over three years, up from $4.5 million.

The SBA says this will expand contracting opportunities for small businesses now included under the new standard, according to the notice.

The SBA considers areas of military and aerospace equipment, military weapons, marine engineering and naval architecture as exceptions from the general engineering standard.

For those areas, the SBA adopted $35.5 million over three years as the standard, up from $27 million.

The geospatial, surveying and mapping sector cap was increased to $14 million over three years, up from $4.5 million.

To see the full list of sectors that received an adjusted revenue definition and SBA’s justifications, see the list here.

– by Katelyn Noland, ExecutiveGov, Feb. 10, 2012 at http://www.executivegov.com/2012/02/sba-adjusts-small-business-revenue-standards/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+execgov+%28Executive+Gov%29.

USDA backs off controversial labor rule targeting contractors

February 10, 2012 by

In a win for federal contractors and contracting officers alike, Agriculture Department officials decided on Jan. 30 to withdraw a new final rule requiring companies to keep their subcontractors and suppliers in line with federal labor laws, a department spokesman told Washington Technology on Jan. 31.

Under USDA’s rule, companies contracting with the department would have to certify that they comply with labor laws and that their subcontractors of any tier and their suppliers also comply. It would have included reporting requirements for violations and the threat of tough action by the department if there were violations.

Officials took a unique approach to rule-making and added it as a direct final rule to the Agriculture Acquisition Regulation on Dec. 1. It was set to take effect Feb. 29. However, they said if the rule garnered any adverse comments, they would withdraw the rule in part or in whole.

The Council of Defense and Space Industry Associations, a group of six industry groups, objected to the rule in a letter to the USDA last week. The council said the rule overlapped more than 180 federal labor laws and regulations to implement the laws. The rule would also add additional work to both the prime contractors, which would have to monitor their subcontractors and suppliers, and the contracting officers who would review reports on compliance. Further, USDA could possibly bump heads with the Labor Department in the case of a labor law violation.

The council’s letter pushed USDA to withdraw the whole rule.

“Yesterday, USDA withdrew the Dec. 1, 2011, direct final rule adding a new clause to the Agriculture Acquisition Regulation,” the USDA spokesman said.

Alan Chvotkin, executive vice president and counsel for the Professional Services Council, a member of the overarching-industry group objecting the rule, said the USDA did well to withdraw its rule after receiving the letter from the council about the rule’s ambiguities and overlap with other standing laws.

“I’m pleased USDA acted promptly in light of well-reasoned comments from the council,” he said.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article appeared on Jan. 31, 2012 at http://washingtontechnology.com/articles/2012/01/31/usda-withdraws-labor-law-rule.aspx?s=wtdaily_010212.

House members introduce flood of small-business legislation

February 8, 2012 by

Small business advocates in the House continue to introduce bills in support of small federal contractors. The latest bill would bring into the light the process by which agencies insource work and give firms standing to challenge an insourcing decision in court.

Rep. Mick Mulvaney (R-S.C.) introduced the Subcontracting Transparency And Reliability (STAR) Act on Feb. 2.

Under the bill, agency officials would have to allow the public to comment on the agency’s procedures for bringing in-house work that a small business has been doing. The small business advocates within a department, such as Office of Small and Disadvantaged Business Utilization (OSDBU) officials, would have to review the procedures as well.

The bill would also give small businesses the opportunity to challenge insourcing decisions in court.

Mulvaney tackles subcontracting problems as well in the bill. A small business could not subcontract more than 50 percent of what the government pays it for a contract. There would be a penalty for violating the rule, including a possible three-year suspension from contracting, a fine or jail.

The legislation is designed to ensure that small businesses that get the contracts are doing the bulk of the work. It would make it easier to crack down on deceptive large businesses hiding behind small businesses.

“The STAR Act will help provide an even playing field for many small contractors who otherwise would not have the resources to fight deceitful subcontracting and unjustified insourcing within the federal procurement system,” said Mulvaney, chairman of the Small Business Committee’s Contracting and Workforce Subcommittee.

Mulvaney’s legislation was introduced two days after the Small Business Committee chairman, Rep. Sam Graves (R-Mo.), introduced two bills. One bill would pressure agencies to meet their small business contracting goals or take bonuses away from senior federal officials. The Government Efficiency through Small Business Contracting Act (H.R. 3850) also raises the governmentwide contracting goal from 23 percent to 25 percent.

Graves introduced the Small Business Advocate Act (H.R. 3851) the same day. It would make the OSDBU director a senior executive position and “report directly and exclusively” to the agency head. The Small Business Committee wrangled with agency officials in 2011 about the access their OSDBU directors had to the top-ranking official.

In addition to these three bills, Rep. Bill Owens (D-N.Y.), member of the Small Business Committee, introduced a bill that would cut an agency’s budget by 10 percent in the following fiscal year if that agency missed the set small-business contracting goal.

Each of the bills has been referred to the Small Business Committee for further consideration.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article appeared on Feb. 2, 2012 at http://washingtontechnology.com/articles/2012/02/02/small-business-legislation-house.aspx?s=wtdaily_030212.

26 primes named to $1.9B Air Force support contract

February 6, 2012 by

Twenty-six companies and research entities have won prime spots on the Air Force’s Design and Engineering Support Program (DESP III), a seven-year, $1.9 billion indefinite-delivery, indefinite-quantity award that covers the acquisition of engineering and technical services.

Managed by the Air Force Materiel Command, DESP III is a follow-on IDIQ to DESP I and DESP II, and covers technology insertion, reliability and maintainability, deployability improvements, environmental and safety compliance, improvement of depot manufacturing and/or repair processes, and development of information management systems and process models.

The 26 named prime awardees are:

  • Aerospace Engineering Spectrum
  • Arinc Engineering Services LLC
  • Battelle Memorial Institute
  • Booz Allen Hamilton
  • Dynamics Research Corp.
  • DRS C3 & Aviation Co.
  • Global Consulting International Inc.
  • General Dynamics Information Technology
  • Gauss Management Research & Engineering
  • Hebco Inc.
  • Jacobs Engineering Group Inc.
  • Ki Ho Military Acquisition Consulting Inc.
  • Lockheed Martin Corp.
  • MI Support Services LP
  • Maden Tech Consulting
  • NCI Information Systems Inc.
  • Northrop Grumman Corp.
  • Science Applications International Corp.
  • Scientific Research Corp.
  • System Sustainment Alliance JV
  • Support Systems Associates Inc.
  • Standard Aero Redesign Services Inc.
  • Sumaria Systems Inc.
  • University of Dayton Research Institute
  • VSE Corp.
  • Wyle Laboratories Inc.

As with its predecessors, the DESP III contract vehicle is available to all other Air Force commands, Defense Department agencies including the Army, the Navy and the Marines, and by other government entities having similar systems or needs.

About the Author: David Hubler is senior editor of Washington Technology.  This article appeared Jan. 31, 2012 at http://washingtontechnology.com/articles/2012/01/31/af-desp-iii-winners.aspx?s=wtdaily_010212.

Lawmaker pushes to boost small business contract work

February 3, 2012 by

House Small Business Committee Chairman Sam Graves, R-Mo., on Tuesday (Jan. 31, 2012) introduced legislation to encourage a higher percentage of federal contracts to go to small business, along with a separate bill to elevate agency Offices of Small and Disadvantaged Business Utilization.

Graves’ GET Small Business Contracting Act would raise the small business prime contracting goal from the current 23 percent to 25 percent, while withholding bonuses from agency managers who fail to meet the goal. He estimates the 2 percent increase would bring $11 billion in new federal contracts to small businesses. The government spent about $535 billion in contracting in fiscal 2010, according to the Office of Management and Budget.

“Because the federal government spends half a trillion dollars on contracted goods and services, we owe it to the taxpayers to make sure their money is used wisely and efficiently,” Graves said in a statement. “Government contracting offers a unique opportunity to invest in small businesses while also stimulating our economy, considering small businesses create the majority of jobs — 65 percent over the last 17 years. Small businesses have proved time and time again that they can perform a service or produce goods for the government cheaper and often quicker than their larger counterparts; however, various bureaucratic impediments remain for small contractors.”

The Obama administration missed its small business contracting goal by 3 percent in 2010, according to Graves. His bill also would seek to use more small businesses as subcontractors, raising the goal from the current 35 percent of subcontracted dollars to 40 percent.

Graves is also offering a second bill, the Small Business Advocate Act, that would promote greater use of contractors, prime and sub, at each agency’s Office of Small and Disadvantaged Business Utilization.

OSDBUs were created in 1978 to reserve some federal contracts for for-profit small business concerns in which socially and economically disadvantaged individuals own at least a 51 percent interest and manage and control daily business operations. Their director’s place in the hierarchy has varied by agency.

The Graves bill would elevate those directors to senior acquisition leaders and prohibit them from holding any other position “so they can concentrate on their advocacy responsibilities,” a statement said. “This legislation makes it easier for the OSDBU to advocate for small business contracts, focus on acquisition assistance, and fight insourcing and unjustified contract bundling.”

This bill would require directors to be GS-15s or members of the Senior Executive Service and their performance reviews to be done by agency heads. “Acting as the OSDBU director,” Graves said, “is often simply another assigned duty for a senior official that lacks the authority to challenge decisions made by the chief acquisition officer or senior procurement executive.”

In April 2010, President Obama set up a task force to boost small business contracting opportunities.

The Graves bills come on a day when President Obama is releasing a package of proposed tax breaks for small businesses, including elimination of taxes on capital gains for investments in small businesses.


– by Charles S. Clark, Government Executive, January 31, 2012, at http://www.govexec.com/contracting/2012/01/lawmaker-pushes-boost-contractor-work/41045