Should contractors fear sequestration?

January 24, 2012 by

If sequestration of federal funds kicks in, agencies will face making deep cuts to programs and that pain will flow down to contractors, experts say.

A sequestration causes automatic, indiscriminate, across-the-board budget cuts. The failure of the so-called supercommittee to find $1.2 trillion dollars in savings over a decade triggered the cuts. They’re set to take effect Jan. 2, 2013.

As a result, contractors too “are hostages in a showdown between the president and Congress over fundamental decisions on taxing and spending,” said John Cooney, former general counsel at the Office of Management and Budget and now a partner at the Venable law firm.

He spoke Jan. 17 at a panel discussion hosted by the Professional Services Council that looked at sequestration in detail. Cooney broke down the possible routes federal officials may take to deal with the cuts.

Cooney expects agencies to:

  • Try to avoid terminating contracts. Instead, officials will reduce the amount of money obligated under their contracts.
  • Become less willing to extend contracts into their option years.
  • Obligate money for one fiscal year at a time on task order and services contracts.
  • Possibly use the prospect of the sequester’s cuts to renegotiate contracts.

He also said agency officials will more often decide to not award new contracts.

“This will be a common agency practice in year one of a sequester. Procurements that can be put off will be put off,” he said during the discussion.

With available money, agency officials will maximize contracts that meet their agency’s core duties, said Alan Chvotkin, executive vice president and counsel for the Professional Services Council, who spoke on the panel as well.

Meanwhile he expects agencies to look for more flexibility to avoid hard-and-fast commitments, such as fixed-price contracts and minimum revenue guarantees. And on the other hand, officials may use more time-and-materials contracts, which are based on labor hours and materials.

However, Chvotkin said there are some policy constraints as the Obama administration has railed against this type of contract, which places a lot of risk on the government.

IDIQs and the General Services Administration’s Multiple Award Schedules program may become more attractive to agencies. They allow for more negotiations at the task order level, he said.

Cooney had several suggestions for companies in light of what may happen. Advocate for the importance of a program and stay in close contact with a contracting officer. Realize though that the officer may not know the fate of a program until very late in the process.

Businesses should also emphasize what they can do for the agency, including the options the company is willing to agree to that may even decrease its revenue, Chvotkin said.

He recommended checking the Past Performance Information Retrieval System (PPIRS) and the Federal Awardee Performance and Integrity Information System (FAPIIS). The information needs to be correct, and it should reflect as favorably as possible on the company’s performance.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article appeared Jan. 19, 2012 at http://washingtontechnology.com/articles/2012/01/18/sequestration-effects-contracts.aspx?s=wtdaily_200112.

Public release of contractor data delayed

January 18, 2012 by

Contractors can still challenge information tjat goes into the Federal Awardee Performance and Integrity System, but they have just a two-week window before the information becomes public.

The new provision takes affect Jan. 17, 2012. The start date was missing when the final rule was published Jan. 3.

Any information that agencies enter into database from Jan. 17 onward will be subject to a two-week delay before it is transferred to the publicly available part of FAPIIS. Past performance information won’t be published at all. Contractors will receive notice when new information about their company goes into FAPIIS, and they will have 7 days to point out information that should be exempt under the Freedom of Information Act.

In the new Federal Register notice, officials wrote that the delay until Jan. 17 will give agencies time to complete necessary system changes to support the two-week waiting period before contractors’ information goes live.

The current system is designed to automatically transfer information to the publicly available part of FAPIIS. Until officials make the change, companies would not have an opportunity to request withholding the information, the notice states.

FAPIIS is a one-stop website for contracting officers and federal employees to look at the history of companies’ work with the federal government. It includes data from the Performance Information Retrieval System, as well as information from other databases, including the Excluded Parties List System, which cites companies that are suspended or debarred from federal contracting.

The final rule gives companies seven days to find any information that should not be disclosed because it should be considered exempt. In such a case, officials will remove the information from FAPIIS to resolve the issue.

If the government official does not remove the item, it will be automatically released to the public website within 14 days after beginning entered into FAPIIS, according to the notice.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article appeared Jan. 11, 2012 at http://washingtontechnology.com/articles/2012/01/10/fapiis-contractor-information.aspx?s=wtdaily_120112.

Jan. 10 deadline set for fighting disclosure of contractor work history

January 6, 2012 by

The Obama administration solidified an interim rule that requires agency officials to post a government contractor’s work history in a publicly accessible website.

The Federal Awardee Performance and Integrity Information System (FAPIIS) is a one-stop web site for contracting officers and federal employees to look at the history of companies’ work with the federal government.

FAPIIS includes data from the Performance Information Retrieval System, as well as information from other databases, including the Excluded Parties List System, which lists companies that are suspended or debarred from federal contracting. The overall purpose of FAPIIS is to make it easier for contracting officers to get an overall assessment of a company before awarding a contract by not having to search numerous databases.

A year ago, acquisition officials issued an interim rule making all the information public, except for past performance reviews by agencies.

The final rule took effect Jan. 3.

In the Federal Register notice about the rule, officials recognized the risks about the information going public though.

The final rule gives companies seven days to find any information that should not be disclosed because it should be considered exempt from disclosure. In such a case, officials will remove the information from FAPIIS to resolve the issue.

If the government official does not remove the item, it will be automatically released to the public site within two weeks after the review period began, according to the notice.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week.  This article was published Jan. 4, 2012 at http://washingtontechnology.com/articles/2012/01/04/fapiis-public-disclosure-objections.aspx?s=wtdaily_050112.

Move over, FAPIIS – POGO freshens up its contractor database

October 3, 2011 by

The federal government’s largest contractors have paid $25.3 billion in fines and penalties for everything from A to Z: from improper accounting practices to selling the government defective Zylon body armor. These and more than 1,400 other misconduct instances can be found in the Federal Contractor Misconduct Database (FCMD), which has now been updated with fiscal year 2010′s top 100 ranking.  [Note: The FCMD is published by the Project On Government Oversight (POGO), a nonprofit watchdog group.]

The top 100 features 7 new contractors, including international accounting firm Deloitte LLP, package delivery company United Parcel Service (UPS), and linguistic services provider Mission Essential Personnel. The FCMD now includes misconduct information on 160 of the federal government’s largest suppliers of goods and services.

The top 100 contractors received $276 billion in contracts last fiscal year,
accounting for slightly more than half of the $536 billion in contracts awarded
that year. As of today, these 100 contractors have accumulated 821 misconduct
instances. Thirty-eight of the top 100 have zero or one instance, a reminder
that misconduct need not be accepted as a cost of doing business with the
federal government.

As has occurred in the past, the USAspending.gov data on which the top 100 ranking is based
contains errors. Therefore, you will see double listings for Booz Allen
Hamilton, Lockheed Martin, and Northrop Grumman.

Among the instances you will find in the FCMD:

POGO’s FCMD complements the federal government’s contractor responsibility
database, the Federal Awardee Performance and Integrity Information System, or
FAPIIS. POGO was pleased to discover the recent addition of several new useful
features to FAPIIS, which is on its way to becoming an indispensable resource
that strengthens accountability over the more than $1 trillion in taxpayer money
spent each year on federal contracts and grants.

– Neil Gordon is a POGO Investigator.  Published Sept. 29, 2011 at http://pogoblog.typepad.com/pogo/2011/09/move-over-fapiis-pogo-freshens-up-its-contractor-misconduct-database.html.

DoD contracts went to excluded vendors

February 4, 2011 by

The Pentagon obligated millions of dollars in payments to contractors that were on lists of “excluded parties” because of previous fraud, a report made public Wednesday said.

The report, produced by the Defense Department’s office of the undersecretary of defense for acquisition, technology and logistics, found that between 2007 and 2009, DoD did business with at least 16 vendors who were either suspended or debarred at the time the funds were obligated. Congress mandated the report in the 2010 Defense appropriations bill.

The spending included nearly $3.4 million to five vendors who were suspended and almost $2 million to 11 debarred vendors.

DoD’s report explained that in some cases, contracting officers knowingly continued ordering from the excluded vendors “to ensure mission accomplishment and for safety and mission requirements.” In others, however, Defense officials failed to check the vendors against the governmentwide Excluded Parties Listing System.

“The Federal Acquisition Regulation was misinterpreted and/or training was inadequate with regard to EPLS – an issue subsequently addressed by commanders,” the report stated.

The report found that DoD and the justice system have adequate remedies to pursue and prosecute contractor wrongdoing, but said the review that led up to the report revealed the need for new guidance on EPLS within the DoD contracting community.

The report stated that the director of Defense Procurement and Acquisition Policy’s new guidance also will include instructions for using the new Federal Awardee Performance and Integrity Information System (FAPIIS).

Sen. Bernie Sanders (I-Vt.), who inserted language into the 2010 Defense spending bill mandating the report, made the information public. He seized on the report’s broader revelation that DoD had continued contracting with companies who had been subject to criminal or civil fraud judgments at some point.

The report found that DoD spent $345 million on payments to vendors that had been criminally convicted during the three-year period, $4.9 billion to vendors with civil judgments against them during that time and nearly $46 million to contractors that had reached out-of-court settlements related to fraud.

“With the country running a $14 trillion national debt, my goal is to provide as much transparency as possible about what is happening with taxpayer money,” Sanders said in a statement. “The sad truth is that virtually all of the major defense contractors in this country for years have been engaged in systemic fraudulent behavior, while receiving hundreds of billions of dollars of taxpayer money.”

The government in recent years has been aggressive in combating fraud. The Small Business Administration suspended GTSI for small business contracting violations.

The Environmental Protection Agency suspended IBM in 2008 as well for alleged procurement integrity violations.

DoD said its Panel on Contracting Integrity would examine the new report and make further recommendations to Defense leadership based on their review.

– By Jared Serbu, Feb. 2, 2011, Federal News Radio

Contractor performance database goes public in April

January 26, 2011 by

A new government database that tracks contractor misconduct and performance, previously available only to federal officials, is expected to be made public by April 15, Government Executive has learned.

In one of the most dramatic steps to date in shining a light on the conduct of firms that do business with the government, the General Services Administration will open its Federal Awardee Performance and Integrity Information System — otherwise known as FAPIIS — to public scrutiny within the next three months, GSA’s Senior Procurement Executive Joseph Neurauter said in an interview on Thursday.

A provision in the wartime supplemental appropriations bill, sponsored by Sen. Bernie Sanders, I-Vt., and signed into law by President Obama in July 2010, mandated that GSA disclose on a public website all information in FAPIIS, with the exception of past performance evaluations.

The bill did not provide a deadline for publicizing the information, which now is accessible only to a handful of government officials, lawmakers and contractors that are listed in the database.

“This is a good thing because it gives more transparency,” said Neurauter, who also serves as GSA’s suspension and debarment official. “That’s really what we are about. The more information that you can legally and within reason make available to the public, the better.”

FAPIIS, used by federal contracting officials since April, culls information dating back five years from a number of disparate federal databases and government records.

The database includes criminal, civil and administrative proceedings against suppliers in connection with federal awards; past performance evaluations; records of suspensions and debarments; administrative agreements issued in lieu of suspension or debarment; nonresponsibility determinations; contracts that were terminated for fault and defective price determinations.

And in a new development, the database also will include instances when a company’s behavior might have put its employees in harm’s way.

A provision in the fiscal 2011 Defense Authorization Act requires department contracting officials to publicly disclose cases when a procurement official denied or reduced a contractor’s award fee because of a company’s reckless or negligent behavior. The database also will include a determination of fault by Defense Department leadership.

For contracts above the simplified acquisition threshold of $150,000, federal contracting and grant officers are required to check FAPIIS before making a responsibility determination. The new public site, Neurauter said, will be searchable and user-friendly.

While much of the information available in FAPIIS is already publicly available on myriad federal websites, the data has never before been comprehensively assembled for public viewing.

On Monday, Jan. 24, an interim rule is expected to be published in the Federal Register informing the contractor community that FAPIIS data soon will be made public, Neurauter said. The public will have 60 days to comment on the notice.

But contractor officials already are raising concerns that opening the database to the public could jeopardize the integrity of the acquisition process and potentially risk the disclosure of private information.

“Making this data public opens the door to all kinds of misperceptions, misunderstandings and even mischief,” said Stan Soloway, president of the Professional Services Council, an industry trade association.

GSA officials are aware of industry’s concerns and are taking steps to redact data prohibited by the 1974 Privacy Act or that concerns a contractor’s proprietary information. Other information also could be withheld based on pending litigation, according to Neurauter.

“We can’t mindlessly put things in there,” he said. “We have to give it thought and consideration and understand there is a balance of competing regulatory and statutory interests that we have to be mindful of.”

Soloway, however, is concerned that the administration has yet to develop governmentwide business rules spelling out how contracting officials should use the information in FAPIIS. For example, the government has not provided guidance to procurement officials regarding how much weight a years-old tax discrepancy or equal employment violation should have in a company’s post-award responsibility determination.

“We are looking for clarity on how this information is going to be used,” Soloway said.

The Federal Acquisition Institute has developed a tutorial detailing the purpose of FAPIIS and the types of data it will include. The site is available at http://www.fai.gov/FAPIIS/trailer/module.htm.

 – By Robert Brodsky – GovExec.com – January 21, 2011

This new federal database is one contractors will want to avoid

January 18, 2011 by

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.

– by Matthew Weigelt, acquisition editor for Federal Computer Week- Jan. 14, 2011  

Contractors resist US disclosure effort

September 9, 2010 by

Defense companies and other major industries are hoping to block disclosure of their own fraudulent or substandard performance in federal contracts, despite a mandate this year by Congress that such potentially embarrassing information be released to the public.

Sensitive to concerns raised by the companies, the White House has delayed enacting the little-known disclosure provision while it studies the issue, officials said.

The controversy highlights the extent to which efforts to make the government more transparent often garner bipartisan support but then stall in the face of powerful interests seeking to limit public disclosure.

The White House, in a statement, acknowledged that “there will be legal and practical issues’’ that have to be addressed before the new law can be implemented.

“But we intend to do that as quickly as possible, in keeping with the administration’s commitment to increasing transparency in government contracting,’’ said Meg Reilly, a spokeswoman for the White House Office of Management and Budget.

At issue is a database that is cur rently kept secret, called the Federal Awardee Performance and Integrity Information System. Companies are required to fill the database with information about their failures on federal contracts, including civil, criminal, and administrative findings against them.

The database was established in 2008 for the private use of government officials who oversee contracts, but was not intended to be made public.

Contractors complain that disclosing all that information could lead to the unfair use of damaging information by watchdog groups, the media, and their rivals.

But Senator Bernard Sanders of Vermont, an independent who managed this summer to win a disclosure provision in a war spending bill that was signed by President Obama, said the public has a right to know when taxpayer dollars are improperly used or criminally misspent.

“We hand out over $500 billion a year to federal contractors, many of which have well-established histories of systemic illegal, fraudulent, and incompetent behavior,’’ Sanders said in a statement. “We cannot let these corporations continue to rip off American taxpayers. I strongly expect that this new public awareness will go a long way toward putting an end to handing out taxpayer-financed contracts to corporations with a history of fraud.’’

The disclosure requirement marks a major victory for government watchdog groups, which have long maintained that billions are lost to fraud or shoddy work. One group, the Project on Government Oversight, identified $12 billion paid in fines by federal contractors between 1995 and 2006, an indication of serious problems with many contracts.

More than a dozen groups, in a letter to congressional committees, hailed the provision “as a major advance in contractor accountability and transparency.’’ The groups have also lauded Sanders, who identifies himself as the only socialist in Congress and often has difficulty getting congressional backing for his proposals.

“This is one area where he has succeeded in forcing open the government,’’ said Danielle Brian, executive director of the Project on Government Oversight. “This is a major achievement.’’

In March, before the measure was passed, Obama supported the concept. “We’ll be able to see, before any new contract is awarded, whether a company plays by the rules, how well they’ve performed in the past,’’ Obama said at the time. “Did they finish the job on time? Did the company provide good value? Did the company blow their budget?’’

Within days of Obama signing the war funding bill, industry groups began urging the administration to exclude some information they contend could be damaging.

For example, they fear that data on criminal or civil proceedings for contract violations or private agreements they reached to avoid being suspended for lack of performance could give their competitors an unfair advantage or spark public pressure to blacklist vendors that should otherwise be qualified bidders.

Companies are required to submit information about civil, criminal, or administrative proceedings connected to a government grant or contract or a finding of liability of more than $5,000. They have to identify each federal contract or grant that was terminated for default and report any agreements reached to avoid a possible suspension or other action for violations.

“There is an incredibly broad category of information being collected,’’ said Peter Eyre, a contract attorney at Crowell Moring, a Washington lobbying firm that represents companies as diverse as Diebold, Oracle, Dow Chemical, and Industrial Defender in Foxborough.

For example, the database is supposed to include information such as a construction company’s workers’ compensation claims, something that may have no relationship to the firm’s ability to complete a contract but could sway the outcome of a government bidding competition, especially if that information is made public.

Others argue contractors should not have to reveal potentially self-incriminating information, such as explanations for alleged contract violations.

“Companies don’t have a Fifth Amendment right against self incrimination,’’ said John Chierichella, a contract attorney at the lobbying firm Sheppard, Mullin, Richter, & Hampton, which represents defense contractor General Dynamics and oil shipping conglomerate United Maritime Group, among other clients. He also said the government has multiple agencies responsible for investigating contractor fraud and abuse. “This is just the government asking contractors to do its job.’’

Alan Chvotkin, executive vice president of the Professional Services Council, a trade association that represents government contractors, believes the database will make “factoids available out of context’’ that could be unfairly used to bar a prospective bidder.

Other powerful industry voices opposed the creation of the database in the first place, including the National Defense Industrial Association, whose president told lawmakers this year that the information required for the database “appears to undermine the fundamental principles of due process.’’

– by Bryan Bender, Boston Globe, August 30, 2010

Contractors raise concerns about making public government database on firms’ performance

August 26, 2010 by

A new law will make public a database on contractors’ past behavior that is now available only to the government, and some contracting groups worry the information could be misinterpreted.

The Federal Awardee Performance and Integrity Information System, dubbed FAPIIS, was established through 2008 legislation to ensure the government, before making major awards to contractors, is aware of past problems such as criminal convictions, fines, suspensions and contracts terminated due to default.

Supplemental war funding legislation signed by President Obama earlier this summer mandated that all of the information — with the exception of past performance reviews — be made publicly available on a Web site.

The Project on Government Oversight, a nonprofit organization that has operated its own contractor misconduct database since 2002, lauded the decision. Neil Gordon, an investigator with the organization, said the public database will provide a window into the government’s decision-making processes.

“We’ve always thought that a database that contains information about federal contractors will, first of all, help the government make more responsible contracting decisions, but also help the public be able to better track how the money is spent,” Gordon said.

But the Professional Services Council, an industry trade group, said the data might be misinterpreted by users unfamiliar with contracting, including Congress, reporters and public interest groups.

“Government officials, contracting officers and source selection people have experience evaluating past-performance information and making judgments about data,” said Alan Chvotkin, executive vice president and counsel at the PSC. “The database will be used for a lot of purposes having nothing to do with what it’s originally intended to do.”

Gordon dismissed those concerns, noting that a lot of the information is already public. The database, he said, just gathers it together to be more accessible.

The law tasks the General Services Administration with making the database available. The GSA said it does not yet have a date for the public site’s rollout, but is working with the administration on implementation.

By Marjorie Censer, Monday, August 23, 2010, The Washington Post  

Industry group fears publicizing contractor database could backfire

August 11, 2010 by

Industry officials are concerned that a new law providing the public with access to a federal contractor database could have the unintended consequence of creating a politically motivated blacklist of vendors.

A provision in the wartime supplemental appropriations bill President Obama signed into law on July 29 would amend the 2008 Clean Contracting Act by requiring the Office of Management and Budget to disclose on a public website all information, with the exception of past performance reviews, included in the Federal Awardee Performance and Integrity Information System. The information now is accessible only to a handful of government officials, lawmakers and contractors that are listed in the database.

FAPIIS was designed to provide contracting officials with a single source to verify a vendor’s conduct and past performance. The database includes criminal and civil proceedings against suppliers in connection with federal awards, and lists vendors whose contracts were terminated and those banned from doing business with the government.

But, Alan Chvotkin, executive vice president and counsel for the Professional Services Council, a contractor association, said he worries opening up the site to public scrutiny could jeopardize the integrity of the acquisition process.

“While firms are accountable for their past performance, opening portions of the database that are not now already publicly available elsewhere could risk improperly influencing the evaluation and selection of otherwise qualified bidders because of public pressure to blacklist certain vendors,” Chvotkin said. “Furthermore, public posting risks the inappropriate and potentially damaging disclosure of company proprietary information while doing nothing to further government oversight or decision-making.”

The General Services Administration, which is in charge of FAPIIS, said it was working to implement the statute while also addressing contractors’ apprehensions and complaints. “We are aware of some industry concerns regarding the disclosure of proprietary data and will address those,” agency spokeswoman Diane Merriett said on Thursday. There is no timetable yet for opening the database to the public, she said.

The FAPIIS ammendment, which was sponsored by Sen. Bernie Sanders, I-Vt., came as a surprise to many in the government marketplace. The language had garnered almost no media attention prior to last week and was not the subject of a congressional hearing or public debate.

In fact, until recently it appeared there was little hope the long-sought after database would be made public. Last week, the Defense Department rejected a Freedom of Information Act request by the Project on Government Oversight — a federal watchdog group that has advocated for publicly posting contractor performance data — for information in FAPIIS, on the grounds that internal decisions on contract awards are sensitive and exempt from public release.

“There was never any valid reason to keep this database from the public in the first place,” Scott Amey, POGO’s general counsel, said this week.

Sanders agreed, arguing the public has a right to the same data as contracting officials. To receive enough support for his amendment, the senator offered to exempt past performance reviews from public disclosure.

“The American people have every reason to expect that their tax dollars are well-spent,” Sanders said in a statement to Government Executive. “For this reason, I am pleased that with this new legislation every contractor’s history of illegal behavior will be posted on a publicly accessible online database. I strongly expect that this new public awareness will put an end to handing out taxpayer-financed contracts to corporations with a history of fraud.”

–  By Robert Brodsky – GovExec.com – August 6, 2010