A Federal Highway Administration investigation has determined that three Oregon contracting firms worked together to exploit a federal minority contracting program, and the Oregon Department of Transportation never noticed.
The firms – Bud Construction LLC, Emery and Sons Inc., and Salt and Pepper Construction Co. – “contrived a relationship” to meet Diversity Business Enterprise program requirements for a $35 million ODOT project on Oregon Route 217 that was completed in February, according to FHWA officials.
Emery and Sons used Salt and Pepper’s project involvement, which included supervision of trucking operations, to reach the project’s 6 percent DBE goal. But Bud Construction handled those operations instead, according to the FHWA. As a result, Salt and Pepper’s contribution was nullified, and Emery failed to meet DBE project requirements, the investigation concluded.
“It was pretty obvious what was going on,” FHWA spokesman Doug Hecox said. “Everyone around (the project) was pretty up front about it.”
Keep reading this article at: http://djcoregon.com/news/2012/09/12/federal-agency-finds-misuse-of-dbe-program-on-odot-project/
An online negotiation tool that’s proven to reduce material costs is now the Defense Logistics Agency’s preferred method for price negotiations on all competitive contracts valued at more than $150,000.
DLA Director Navy Vice Adm. Mark Harnitchek directed that reverse auctions be used for new procurements in a memorandum sent to the agency’s primary-level field activities in June. DLA recently awarded a new contract for an updated online reverse auction tool provided by Procurex.
The agency has saved more than $34 million through reverse auctions since fiscal 2010, when contracting officers began tracking savings from reverse auctions. Most of the savings stems from about 400 auctions held so far in fiscal 2012, said Charles Howerton, a procurement and systems analyst for the DLA Acquisition Programs and Industrial Capabilities Division.
The tool is one of several expected to drive DLA toward Harnitchek’s goal of saving $8.6 billion in material costs by the end of fiscal 2018.
“The current fiscal environment, where we have to do more with less, forces DLA and a lot of other folks to be very careful with how we spend public funds. A big chunk of the savings we’re expecting to achieve in the next five years will come from reverse auctions,” Howerton said.
Unlike traditional bidding, where suppliers don’t know who is competing for a contract or how much they’re bidding, reverse auctions allow suppliers to see what others are bidding, thereby encouraging them to propose a lower figure. The actual bidding process only takes about 30 minutes to an hour.
Reverse auctions were designed specifically to increase competition and reduce government costs, Howerton said, adding that contractors who say the tool diminishes profits are wrong. Rather, it forces contractors to be more efficient and offer items and services at the best possible price.
“Reverse auctions provide incentive for suppliers who are able to restructure their internal operating procedures and costs,” he said. It can help them make their operations more efficient and cost effective. It’s a win-win.”
Enabling contractors to see the amount others are bidding often leads to tough decisions on the contractor’s end, Howerton continued. For example, a contractor that’s been doing business with DLA for several years and sees another contractor bidding for the same business at a lower cost will have to reconsider everything from production processes to prices.
“That contractor will have to ask, ‘Can I make money selling my product at the same price as the lowest bidder or not?’ If they’re thinking long-term and strategically, they’ll make the best choice to get their internal operations as efficient as possible if it means keeping their business,” he said.
Reverse auctions are better suited for commercial and competitive items such as pens and light bulbs, but also for new long-term contracts because of the economies of scale they produce. Only commanders and directors of primary-level field activities have the authority to make exceptions for not using the tool on procurements above $150,000.
“In those cases, the field activity commander must approve the exception, and documentation will be required to explain why a reverse auction was not used,” Howerton said.
– by Beth Reece, Sept. 11, 2012, Defense Logistics Agency news at http://www.dla.mil/dla_media_center/Pages/newsarticle201209111049.aspx#
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.
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 GovPro.com article.
Keep reading this article at: http://govpro.com/federal/content/Use-It_Bjork-20120905/
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.
Keep reading this article at http://www.washingtonpost.com/business/capitalbusiness/deltek-fourth-quarter-spending-rush-may-be-larger-than-last-year/2012/08/05/3da818c4-d81d-11e1-b8ce-16e9caa8b86a_story.html.
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.”
Keep reading this article at: http://www.govexec.com/contracting/2012/08/federal-programs-aid-entrepreneurs-overlap/57677/
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.
Keep reading this article at http://www.federalnewsradio.com/?nid=445&sid=3000121.
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.”
Keep reading this article at: http://www.bloomberg.com/news/2012-08-24/defense-cut-s-full-effect-years-away-analyst-finds.html.
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.
Keep reading this article at: http://www.nextgov.com/health/2012/08/ig-health-care-contractor-benefited-sham-veteran-owned-businesses/57575/?oref=nextgov_today_nl.
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