Boeing, EADS spend $125 million lobbying for AF tanker contract; submit 8,000-page bids
July 19, 2010 by cs
In order to snatch the lucrative U.S. Air Force tanker contract, Boeing and its European rival EADS have spent nearly $125 million on lobbying in the past years.
Boeing and European Aeronautic Defense and Space Co., the parent of European plane maker Airbus, have been locked in a 9-year battle over a $40 billion contract to outfit the Air Force with 179 in-flight refueling tankers. For EADS, winning the contract could mean gaining a stronger foothold in the world’s largest military market. Naturally, Boeing wants to prevent that.
In a bid to increase chances for their respective bids, the companies have spent more than $100 million on lobbying U.S. decision makers, figures from OpenSecrets.org, which tracks lobbying in U.S. politics, indicate.
Boeing during the past four years spent $54 million on lobbying efforts. EADS and its U.S. partner Northrop Grumman in the same period spent nearly $70 million on lobbying, OpenSecrets.org says. Northrop Grumman pulled out of the bidding in March, arguing the bidding conditions clearly favor rival Boeing.
Moreover, the companies spent several millions touting their planes in ads in newspapers, magazines and broadcast outlets.
Both Boeing and EADS this week submitted their official bids for the contract, a move that is linked to even more costs. The Hill, a Washington newspaper, reports that EADS North America spent $75,000 on printing its bidding materials. The company printed 50,000 pages — six copies of its bid of more than 8,000 pages. Each set weighs around 100 pounds, the newspaper reports.
The Air Force has been eager to replace its Eisenhower-era tankers and is to announce a bid winner this fall.
The Europeans are throwing their KC-45 tanker, a large plane based on the Airbus A330, in the race. Boeing is bidding with an altered version of its 767, called New Generation Tanker.
The Generation Tanker is slightly smaller and probably cheaper than the KC-45; the European plane has logged more flight testing hours and is closer to serial production, experts say.
Both companies have argued that winning the contract would create and support thousands of U.S. jobs, in a bidding war that goes back several years.
The KC-45 won the contract in February 2008 but the decision was overturned four months later by the Government Accountability Office after Boeing challenged it. The GAO said it found problems with the bidding and the contract is up for grabs.
Moreover, both sides are accusing each other of profiting from illegal government subsidies.
– Published: July 14, 2010 at 8:45 AM © 2010 United Press International, Inc. All Rights Reserved.
Small minority businesses aim for gov’t tech contracts
July 6, 2010 by cs
Twenty-three small, minority owned information technology companies have teamed up to form a consortium aimed at winning $7.06 billion in technology related government contracts from the United States Air Force.
Called the Minority Information Technology Consortium (MITC), the group wants to give opportunities to companies that traditionally do not get them. Harith Razaa, chief executive officer of the MITC, said when large military technology contracts are dished out, many smaller owned companies are left behind.
“We looked for smaller minority businesses that have past performance but don’t get any opportunities by the very nature of how contracts are scoped. What I wanted to do is find a process or a methodology that would allow small businesses to team up and pool their resources, get great bandwidth and more money. We want them to get together to go after some of these larger contracts,” Razaa said.
The companies in the MITC are all minority-owned. Razaa says such businesses are typically small, earning $3-$10 million in revenue. On top of lacking financial wherewithal to compete for prominent military contracts, the companies lack the proper security clearances. “You can’t apply to get a security clearance, it has to be conferred by someone who already has one. This is hard to get when you’re a small company,” Razaa said.
Razaa’s group will attempt to win government contracts from the Air Force’s NETCENTS 2 program, which will procure hardware and software for voice and data networking. The project has $7.06 billion allocated for small businesses, cut up into three sections: net operations, applications and IT services. He said he hopes the second NETCENTS will go a lot better for small, minority companies than the first.
“For the first NETCENTS project the Air Force decided it’d give out contracts to four large businesses and four small businesses. Well, the contract was so large that half of the four small businesses became large companies. The others got bought out by bigger companies. They all got to keep their contracts, even though they weren’t small anymore,” Razaa said.
If Razaa’s group gets awarded the contract, it has worked out a deal where everyone will get a piece of the pie. Some member companies will be the prime beneficiary while others will work as te prime sub-contractors. Either way, “We’re trying to go after as many contracts that make sure everyone can get something,” Razaa says.
To ensure involvement at a collegiate level, the MITC has partnered with three historically black colleges, Hampton University, North Carolina Agriculture and Technical University, and Tennessee State University.
– by Gabriel Perna – International Business Times – Tuesday, June 29, 2010 8:27 AM EDT
Why Do Corporate Giants Land Federal Contracts Meant for Small Businesses?
April 13, 2010 by cs
Few would disagree that federal contracts set aside for small businesses should go to small businesses — not corporate behemoths.
And yet it seems to happen again and again. Take one recent example: in late December, an IT company named QSS, a subsidiary of Dell Inc., landed a small-business contract for nearly $21 million from the U.S. Coast Guard.
What’s more, QSS — which in 2006 was purchased by Ross Perot’s “Perot Systems” before Perot was gobbled up by Dell last year — is listed in a federal database as a “self-certified small disadvantaged business.”
How can this be? After all, Dell employs some 76,000 people, and the government’s definition of a small business is one that, in this particular industry, employs no more than 1,000.
The answer depends on whom you ask. The most vocal small business activists insist that the government is acting negligently, even nefariously. Regulators in the federal Small Business Administration counter that the issue is mostly the byproduct of coding mistakes and mergers — human errors that the agency purports to be addressing aggressively under the Obama administration.
Whatever the case, the example with QSS — which Hispanic Business Magazine found through a simple search in the federal contracting database FedMine.Us — isn’t an isolated event. [GTPAC note: fedmine.us is a privately-operated, not government-operated web site.]
Other companies that have landed small-business contracts include General Dynamics — the fifth largest defense contractor in the world — Xerox, Office Depot, John Deere and McGraw Hill, according to a 2008 report from the Department of Interior’s Office of Inspector General. As for QSS, in 2008 it was the nation’s 28th largest recipient of small business federal contracts, according to FedMine.Us.
The 2008 report found that large corporations received $5.7 million in awards that should have gone to small businesses. But that was just within the Department of Interior. The total amount of small business contracts getting diverted to large corporations every year is difficult to ascertain, given the inherent murkiness of the issue. Some activists say it is well into the billions.
In October, the government organization in charge of watching over the SBA — that is, the SBA’s Office of Inspector General — said this issue is among the SBA’s most serious problems.
“Audits and other governmental studies have shown widespread misreporting by procuring agencies,” the report said. “Many contract awards recorded as going to small firms have actually been performed by larger companies.”
The issue is drawing more and more attention as politicians, economists and pundits talk about boosting small businesses in an effort to create jobs, reduce the unemployment rate and stimulate the lagging economy.
At least two bills are working their way through Congress to address this issue. One is co-authored by a duo of Senate moderates, Democrat Mary Landrieu of Louisiana and Republican Olympia Snowe of Maine; the other, by the lesser-known Congressman Henry Johnson, a Georgia Democrat.
By law, the federal government must strive to spend 23 percent of its entire purchasing budget for goods and services on small businesses. That’s a lot of money, seeing how the federal government spends more than half a trillion dollars every year. But by the government’s own admission, it hasn’t been meeting that mark.
It claims to come close. The federal government says it hit 21.5 percent in 2008. (The official report for 2009 hasn’t come out.)
But the American Small Business League, perhaps the nation’s most vocal critic on this issue, scoffs at this contention. Chris Gunn, ASBL’s communications director, insists the true amount is somewhere between 5 and 10 percent.
“The numbers speak to a very different reality,” he told Hispanic Business Magazine.
For starters, he said, the government exempts about a fifth of its purchasing budget from the goal, with the explanation that some contracts are too large for small businesses to handle. This alone, Mr. Gunn said, brings the true percentage down to 17.5 percent.
But Mr. Gunn says the bigger problem is that examples like the case of QSS are happening all the time. And those contracts, like QSS’s $20 million job with the U.S. Coast Guard for homeland security, count towards that 23 percent goal, he said.
In October, the ASBL ran a report, and found that eight of the top 10 small business contract awardees in 2008 were large businesses coded “small.” The ASBL further estimates that at least half of the $93 billion the government says is going to small businesses is actually being diverted to large businesses.
Officials with the federal Small Business Administration, which helps regulate federal contracting to small businesses, say the ASBL’s claims are exaggerated.
“We’re not going to stand for any large business that masquerades as a small business and tries to engage in any malfeasance,” Joe Jordan, the SBA’s associate administrator for government contracting, told Hispanic Business Magazine.
The problem, he said, has more to do with human error. For instance, he said, oftentimes a small business working on a small business contract gets consumed by a corporate giant, and the contracting officer forgets to go back into the database and re-code the business as “other than small.”
Also, after 2012, the problem should abate at least somewhat. That’s because, in July of 2007, a law passed forbidding large corporations from keeping the small business contracts of the small companies swallowed up in acquisitions. But the law grandfathered in, for five years, merger deals made prior to that date. This is what happened with QSS group, which, despite what the federal database says, no longer even exists as a company. (It is really just “Dell.”) That company’s five-year contract with the Coast Guard — which has been renewed every year — expires in late May, said Frank Islam, QSS’s founder and former owner, speaking to Hispanic Business Magazine.
Nonetheless, the phenomenon is a widely recognized problem, and reform efforts have thus far failed to catch hold. This owes in no small part to how the reform advocates themselves are divided. In short, the most vocal and visible activists — such as the ASBL — are out of synch with the most powerful and influential lawmakers putting forth their proposed solutions, such as Senators Landrieu and Snowe.
Ms. Landrieu and Ms. Snowe are the chair and ranking member of the Senate Committee on Small Business and Entrepreneurship.
When introducing their Small Business Contracting Improvements Act in February, Ms. Landrieu said it would create at least 163,000 jobs.
“In this past year, small businesses accounted for more than 85 percent of job losses,” she said on the floor. “When large businesses get new work they typically spread the work among existing employees. When small businesses get these contracts they must staff up to meet the increased demand.”
But where ASBL is often knocked for being too extreme, Sen. Landrieu’s effort is being criticized by some for being too mild.
Most notably, although the bill includes strong language about the illegality of large companies landing small-business contracts through misrepresentation, it exempts the Department of Defense, which by many accounts has the worst record on this matter.
“DOD is seriously challenged in its contracting to minority and small enterprises,” David Ferreira, vice president of government affairs for the U.S. Hispanic Chamber of Commerce, told HispanicBusiness Magazine. “They often rely on very large businesses and award them small-business contracts because of loopholes in the law.”
However, Mr. Ferreira said the U.S. Hispanic Chamber is pleased with some aspects of the bill, such as its focus on reducing a phenomenon known as contract bundling. This is when the federal government, for the sake of efficiency, will consolidate several contracts into one super-contract. This often precludes small businesses from competing because they lack the resources for such large jobs.
One particularly unsavory practice related to this is known as “bait and switch” sub-contracting. The term refers to when large corporations, under mandate from the feds, promise to hire, on bundled contracts, sub-contractors that are small businesses or minority-owned, and then renege after winning the job.
It’s a tactic with which Bill Miera, owner of a Hispanic-owned engineering and IT firm in New Mexico with 50 employees, is all too familiar.
For years, Mr. Miera’s Fiore Industries had been winning bids and working on two separate contracts with the U.S. Air Force, worth between $5 million and $10 million a year each.
About 10 years ago, the Air Force bundled one of the contracts into a mega-contract worth around $50 million — far too big for Miera’s firm to handle.
A Fortune 500 company put in for the bid, and in its proposal told the federal government it would be hiring a minority-owned small business — Fiore Industries — as a sub-contractor. (Mr. Miera declined to name the company, citing a reluctance to burn bridges in what is a relatively small industry.)
When the large company got the job, it dropped Fiore Industries and went with another firm, which was Caucasian-owned.
Mr. Miera, a former board member on the U.S. Hispanic Chamber, was forced to lay off five employees. A few years later, it happened again, with another Fortune 500 company, which went even further.
“They started hiring our people to work for them,” he told Hispanic Business Magazine. “They said, ‘If you want to keep your job, you’ve got to work for us.’”
As a result of these two bait-and-switch examples, Fiore Industries’s annual revenues dropped to about $5 million from $8.4 million. It lost about 10 of 50 employees.
Thanks in part to a contract with NASA, Fiore’s revenues have since climbed back to $6.5 million. But the company’s original plan was to be earning $50 million annually by now.
“That hurts, especially when you’ve done good work, and then lose your contract, but not because you’ve done a bad job or your prices are too high,” he told Hispanic Business Magazine.
Mr. Miera said the problem is that the law, as written, has no teeth to punish those who engage in such tactics.
“The large businesses know that,” he said.
For the entirety of the Bush administration, the ASBL, headed up by its colorful leader, Lloyd Chapman — a frequent pundit on cable news networks such as Fox, MSNBC and CNN — carped on the federal government on these issues. It also filed — and won — several lawsuits.
Mr. Chapman claims the Obama administration has been no better.
“I say it’s getting worse, because Obama has refused to close the existing loopholes that all Fortune 500 firms use to get small business contracts,” he told Hispanic Business Magazine.
Mr. Chapman is advocating the federal contracting bill sponsored by Rep. Johnson of Georgia. Mr. Chapman says he helped write the bill, and typically refers to it as his own.
“My bill has 20 co-sponsors,” he told HispanicBusiness Magazine. (They are mostly House Democrats, but the list does include two Republicans: Ralph Hall of Texas and Ileana Ros-Lehtinen of Florida.) “It will solve a 10-year-old contracting scandal, won’t increase the deficit and it’s permanent.”
Mr. Chapman and the ASBL are also highly critical of almost every other advocate on this issue. Senator Landrieu’s bill, they say, while well intentioned, gives recalcitrant corporate giants “a pass.” The U.S. Hispanic Chamber of Commerce is “backed by Fortune 500 companies.” But Mr. Chapman is particularly critical of U.S. Rep. Nydia Velazquez, (D-NY) — chair of the House Small Business Committee, whom he believes has done nothing to address the issue.
“She has chaired the small business committee for three or four years,” he said. “How come she hasn’t proposed legislation to address it?”
He added that Boeing, the world’s largest global aircraft manufacturer, is a major campaign donor to Velazquez and other small business committee members.
“My bill will take $100 million a year in federal small business contracts away from Boeing,” he said.
(Ms. Velazquez’s office did not provide a comment for this story, despite repeated requests from Hispanic Business Magazine.)
For its part, the federal SBA insists that it is working aggressively to fix the problems. By March, of the eight top awardees of small-business contracts that ASBL had highlighted in October, most had been re-coded as “small.”
Also, President Obama has proposed doubling the budget of the SBA, bringing it back to about $1 billion — which is where it was at the start of the Bush administration.
But despite their contention that the problem is most attributable to human error, SBA officials don’t deny that fraud is a factor.
“The U.S. Small Business Administration is making a tremendous effort to combat abuses in the federal contracting program,” SBA spokeswoman Hayley Matz told Hispanic Business Magazine in an email. “SBA recognizes the significant benefits of the program, but also acknowledges that instances of errors and potential abuse have occurred and resulted in negative consequences.”
Source: HispanicBusiness.com. All Rights Reserved – April 8, 2010 – by Rob Kuznia, Staff Writer
2010′s Top 10 contracts (so far)
April 10, 2010 by cs
From huge multiple award contracts to significant awards to single winners, we look at the largest contract awards announced during the first three months of 2010.
Contracts announced during January, February and March had values that ranged from $266 million to $2.8 billion.
Our rankings are based on the ceiling value of the contract, and not the actual value of any work performed to date.
Readers are expected to supply their own drum roll and Lettermanesque quips, so on with the countdown…
No. 10. General Atomics wins Air Force UAS support contract
General Atomics Aeronautical Systems Inc. won a $266 million contract for program and technical support for the MQ-1 Predator and MQ-9 Reaper unmanned aerial systems.
Work will include program and configuration management, logistics, technical services, flight and operations, software maintenance and data collection.
General Atomics also will handle urgent and depot repairs, inventory control and spare part management.
9. SAIC captures $351M Navy contract for technical and engineering support
Under a five-year, $351 million Navy contract, Science Applications International Corp. will support the Naval Surface Warfare Center-Crane Division and the Joint Special Operations Response Department.
The department provides the Defense and Homeland Security departments with training and support involving sensors, communications, mobility and special munitions and weapons.
8. General Dynamics wins $387M Army contract
General Dynamics Corp. will provide a variety of technical support and training advisory services to the Army under a five-year contract that could be worth as much as $387 million.
The Army’s Program Executive Office for Simulation, Training and Instrumentation, needs technical, management and professional engineering support services for the procurement and fielding of constructive training systems.
Services to be performed by General Dynamics consist of engineering, integration, exercise and experimentation support; gaming, materiel purchases, maintenance, supply support and post-fielding support.
7. CGI Federal wins $395M follow-on State Department contract
Under a $395 million, 10-year blanket purchasing agreement, CGI Federal Inc. will provide systems integration and consulting services and support for more than 5,000 State Department and U.S. Agency for International Development users of the Joint Financial Management System at more than 300 posts and missions around the world.
CGI has three goals under the contract – modernize systems, provide business information and financial data and lower the total cost of ownership for its customers.
6. SRA wins $500M contract to modernize farm programs
SRA International will work with the Agriculture Department under a $500 million contract to help the agency modernize the technology and business processes it uses to serve farmers across the country.
The Application Transformation and Modernization Systems Integrator blanket purchase agreement was awarded through the General Services Administration schedule and will tap into Recovery Act funds.
The contract will be used to modernize how farm benefit programs and services are delivered. Goals include streamlining business processes, rapidly implementing new farm programs, modernizing technology platforms, and improving access and convenience for producers, ranchers and farmers.
5. SAIC secures $625M Navy award
Science Applications International Corp. won a $625 million contract from the Navy’s Program Executive Office of Command, Control, Communications, Computers and Intelligence. The contract calls for the company to develop software as well as modify and enhance existing C2 systems.
SAIC will provide software engineering, design, development, integration and modification, as well as test and evaluation services. The company also will provide integrated logistics support, and configuration and program management services as required, SAIC said in a statement.
4. Raytheon wins $886M award to boost GPS accuracy
Raytheon Co. has won a contract from the Air Force worth $886 million to develop a new element of the Global Positioning System that will improve the accuracy of information from GPS satellites.
The contract is the first of two development blocks of the advanced control segment (OCX), which should have a significant effect on GPS capabilities.
The OCX system will include anti-jam capabilities and improved security, accuracy and reliability and will be based on a modern service-oriented architecture to integrate government and industry open-system standards.
3. Lockheed scores $940M anti-IED award/p>
Lockheed Martin Corp. will produce Improvised Explosive Device jammers for the Navy under a indefinite-delivery, indefinite-quantity contract that has a ceiling value of $940 million.
In the first task order, Lockheed will build Symphony Radio Controlled Improvised Explosive Device Defeat jammer systems. The Symphony systems are approved by the U.S. government for sale through the Foreign Military Sales program to allied, coalition and partner nations for operations in Iraq, Afghanistan and in other nations.
Symphony is programmable and designed for easy installation, operation and maintenance on diverse platforms used by security forces worldwide. It also is compatible and interoperable with other communications systems and jamming devices, the statement said.
2. Lockheed, Northrop win CANES contracts worth nearly $1B
Defense contracting giants Northrop Grumman Corp. and Lockheed Martin Corp. will assist the Navy with its Consolidated Afloat Networks and Enterprise Services program known as CANES. Each won separate contracts. Lockheed Martin’s has a ceiling of $937 million and Northrop’s is worth $775 million.
The contract is designed to streamline and consolidate Navy information technology networks aboard its ships, and will help the Navy deploy new technologies.
The Navy wants next-generation command and control systems and wants to integrate shipboard servers, workstations, and networking systems with the Navy’s shore-based Next Generation Enterprise Network (NGEN) and the naval portion of the Global Information Grid.
1. CSC, Stanley share $2.8B State Department contract
Computer Sciences Corp. and Stanley Inc. each won a prime contract to run non-immigrant visa application processing for the State Department. The Global Services Strategy contract is worth $2.8 billion over 10 years and the two companies will compete for task orders for work around the world.
The contract builds off a pilot program CSC ran in Mexico to process non-immigrant visa applications. Non-immigrant visas are for tourists, business visitors, students and others who wish to come to the United States, but aren’t planning to become immigrants.
During 2008, 8 million visa applications were processed, according to an industry source close to the competition.
By Nick Wakeman – Washington Technology – Apr. 09, 2010 – About the Author: Nick Wakeman is the editor of Washington Technology.
Officials still hope firms will compete for tanker deal
February 25, 2010 by llyons
By Megan Scully CongressDaily February 25, 2010
Senior Pentagon officials on Wednesday said they hoped the final request for proposals on the Air Force’s high-stakes tanker program would spur competition between two aerospace giants, sidestepping questions about their strategy should one of the bidders drop out.
Speaking at the Pentagon after several briefings to lawmakers and aircraft manufacturers on the final request for proposals for a fleet of aerial refueling tankers, officials said they believed they had laid the groundwork for a fair, open and transparent competition.
“We hope and expect to have a good competition,” Air Force Secretary Michael Donley said.
But the reaction on Capitol Hill set a different tone, with concerns from Alabama’s congressional delegation raising questions about whether there will be two bidders for the program.
Northrop Grumman Corp., which has teamed up with EADS, the European consortium behind Airbus, has planned to compete for the contract and, if successful, would build the planes at a new facility in Mobile, Ala.
But Northrop officials have threatened to pull out of the competition for the procurement program — worth as much as $40 billion — amid concerns that an initial draft RFP favored a smaller-body Boeing 767 aircraft over their offering of a modified Airbus 330.
Northrop’s initial reaction Tuesday to the final RFP was lukewarm, acknowledging receipt of the document.
“Northrop Grumman will analyze the RFP and defer further public comments until its review of the document has been completed,” spokesman Randy Belote said in a prepared statement.
Sen. Jeff Sessions, R-Ala., said he would urge the Northrop Grumman-EADS team to compete but said there had been few changes to the draft RFP.
Sessions said he is worried the team would opt out of the bidding. “They’ll have to do what is in their best interest,” he said.
At the Pentagon, Deputy Defense Secretary Bill Lynn said he believes it is in Northrop’s interest to bid for the contract to provide the Air Force with state-of-the-art tankers to replace Eisenhower-era KC-135s still in heavy use.
“Northrop has a choice to make,” Lynn said. “We’re hoping Northrop chooses, with its European partner, to bid. … We have options that we could pursue if they don’t.”
Lynn would not discuss in further detail the Pentagon’s options in the case Boeing becomes a candidate for a sole-source contract. Instead, the Pentagon’s No. 2 official emphasized his hope that there will be a competition.
For its part, Boeing released a statement from Jean Chamberlain, general manager of its tanker program, stating that it has begun the process of “closely studying the details” of the final RFP.
“We’ve said consistently that it is up to the Air Force to determine the KC-X requirements for a new generation of tankers,” Chamberlain said, referring to the current designation of the next-generation tankers. “It’s our responsibility to respond to those requirements.”
(C) 2010 BY NATIONAL JOURNAL GROUP, INC. ALL RIGHTS RESERVED.