Georgia Tech Procurement Assistance Center

DoD makes supply chain risk management a permanent performance metric

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On Sept. 19, 2018, the U.S. Department of Defense (DoD) issued a corrected Class Deviation 2018-O0020, to remove the sunset provision in DFARS 239.73, “Requirements for Information Relating to Supply Chain Risk,” that was due to expire on Sept. 30, 2018. The deviation is effective immediately.

This new deviation implements Section 881 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019. Section 881 made the requirements for supply chain risk management under DFARS 239.73 permanent by placing its authority under a statute (10 U.S.C. § 2239a). This reauthorization reflects the continual efforts by Congress and the DoD to increase oversight on contractors supply chain and use risk management as a metric for contract performance.

DFARS Subpart 239.73, along with its contract clauses DFARS 252.239-7017 and DFARS 252.239-7018, places a significant onus on contractors to investigate its own supply chain to minimize and mitigate any perceived security risks. Failure to meet the requirements of the regulations creates significant risk to a contractor.

  • First, there is an explicit requirement in DFARS 252.239-7018 requiring contractors to actively mitigate supply chain risk during performance of the contract. However, the clause provides no additional information or standard to what is considered adequate mitigation.
  • Second, there is an implicit incentive for contractors to ensure that their supply chain is risk-free because the contractor is not the only entity to investigate risks in its supply chain. DFARS 252.239-7018 provides the government with an incredible oversight capability by permitting it to consult both public and non-public information, including all-source intelligence, to determine whether a contractor’s supply chain creates a risk.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=743224

Companies barely had to compete for half of the federal contracts awarded in Puerto Rico so far

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Now that Puerto Rico is moving into recovery and rebuilding after the Hurricane Maria disaster, billions of dollars in federal disaster spending are flowing to the island.  Estimates put hurricane damage at $95 billion, and Puerto Rican Gov. Ricardo Rosselló is asking various federal agencies for $94 billion in grants.

With this much public money on the line, monitoring how U.S. tax dollars are spent in the recovery will be crucial to prevent waste, fraud, and shoddy work. The best way to do that is by awarding contracts through the open bidding process, which allows the largest number of businesses a chance to compete to offer the best deal. These types of contracts generally require more scrutiny and oversight than no-bid deals.

So far, competitive bidding hasn’t been a top priority for federal agencies responding to Hurricane Maria. Nearly half of the 540 federal contracts signed so far (as of November 16), totaling $252 million, were awarded outside the open bidding process, according to federal procurement data.

Keep reading this article at: https://www.vox.com/policy-and-politics/2017/11/17/16618476/puerto-rico-federal-contracts

Lax oversight allows women-only contracts to go to men

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Jennifer Dickerson spent more than 40 hours of work over three months to get her Orlando environmental consulting company certified as a women-owned business, a designation that would help her win federal contracts intended to go to disadvantaged businesses. She and her assistant assembled legal documents and tax records, responded to multiple questions, and paid a $275 processing fee to a third-party agency to prove that her small company is majority woman-owned and operated.

“It was important to me to make sure I adhered to all the requirements” of the federal program established in 2000 to set aside a percentage of government contracts for women-owned small businesses, Dickerson says.

Not every business owner shares Dickerson’s sense of responsibility. A recent report critical of the U.S. Small Business Administration’s program revealed that more than 40 percent of companies that got government contracts as women-owned businesses in the last two years were not actually eligible.

Keep reading this article at: http://www.businessweek.com/articles/2014-11-20/lax-oversight-lets-men-pose-as-women-to-win-government-contracts

DoD acquisition heroes during Iraq, Afghanistan? Small biz, universities and DARPA

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You didn’t hear much about them during the wars in Iraq and Afghanistan but DARPA, small businesses, and universities were the people who most impressed retired Gen. Hoss Cartwright when he was vice chairman of the Joint Chiefs of Staff, as he and the services scrambled to find weapons to give American troops a combat edge.

“DARPA was incredible to our ability to gain advantage. Small businesses and universities were hotbeds of innovation for us,”  Cartwright said during a panel at the Center for Strategic and International Studies on lessons learned from the last dozen years of war. He made no mention of Lockheed Martin, Boeing, or BAE Systems — or any of the other large defense companies.

What made them special? “Their willingness to take risks… made a huge difference and saved countless lives on the battlefield,” Cartwright said. And he said that in Afghanistan and (previously) Iraq, “[the] battlefield is not driven by platforms” — tanks, ships, planes — which take so long to design, build, and deploy.

Another avenue of innovation at the Pentagon sprang from the acquisition processes of Special Operations Command (SOCOM), which has the right to just buy things in small quantities if it really needs them.

Keep reading this article at: http://breakingdefense.com/2013/11/dod-acquisition-heroes-during-iraq-afghanistan-small-biz-and-darpa/

How to manage a Federal contract during the Government shutdown

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In the wake of the Government’s October 1, 2013 shutdown, clients of the Georgia Tech Procurement Assistance Center (GTPAC) have been asking our counselors a lot of questions about the implications.  Here is a summary of the advice we are giving:

  • Generally, if you are competing for a Federal contract, everything is on hold.  Watch FedBizOpps (www.fbo.gov) where a majority of Federal solicitations are posted to see updates on the status of anything you are bidding on, or have bid on recently.  Don’t expect up-to-the-minute information since so many Federal employees are on furlough, but that’s the best place to check on the status of most Federal procurements.  If you discover that the procurement official assigned to managing the solicitation in which you are interested is not on furlough, an inquiry by email is permissible.  Be patient in waiting for a reply — remember that literally hundreds of thousands of Federal employees are on furlough status at the moment.
  • Some procurements, related to essential Government functions, are proceeding with minimal disruption, but expect delays.
  • If you have an active Federal contract, it is imperative that you comply with all contractual terms and conditions, and that accurate records of shutdown-related impacts be maintained.  Knowing the terms and conditions of your contract inside-out will pay-off right now.  Be sure to read the rest of this article for tips on managing an active Federal contract.

Specific contractual actions to protect your company’s interest will vary by contract type and contract terms.  All have to do with the specific provisions contained in your contract.   Some things to consider include:

Cost-Type/Fixed Price-Type (incrementally funded) Contracts

  • Ensure compliance with the notification requirements of the “Limitation of Cost” or “Limitation of Funds” provision of the contract (cost-type contracts).
  • Develop plans to minimize the impact to the customer (the end-user within the Government) and your firm (i.e., curtail non-essential program elements to stretch program funding) and request a Stop Work be issued by the Government’s Procurement Contracting Officer (PCO or just CO) for the non-essential elements.
  • If a Stop Work is not issued, notify the PCO/CO of potential delays under “Government Delay” and/or “Excusable Delay” provisions. (fixed price-type contracts).
  • Provide direction to your supplier base consistent with the PCO/CO’s direction.
  • Ensure Government payments reflect any adjustments due you under “Prompt Payment” provisions.
  • Segregate costs as documentation for a potential delay and disruption under the Request for Equitable Adjustment (REA) provision of your contact.

Fixed-Price Type Contracts (fully funded)

  • The Government shutdown does not have an immediate impact on contract performance but, over time, the unavailability of Government inspectors or support could lead to delays and disruptions and should be documented for future Request for Equitable Adjustment (REA) consideration.
  • Ensure Government payments reflect any adjustments due you under “Prompt Payment” provisions.

Other Items to Consider

  • Proposals and unexercised options could expire during an extended shutdown period.  If it is in the best interest of your firm, a non-solicited proposal extension/option exercise date extension could be provided to the Government.
  • The Government may not be able to provide inspectors (e.g., Defense Contract Management Agency) under a shutdown and delay, so disruption impacts should be captured and documented for a future Request for Equitable Adjustment (REA).
  • The Anti-Deficiency Act (ADA) does not allow the government to spend money that is not obligated, therefore and firms should be leery of      non-warranted individuals requesting you to work and get paid later; e.g., contracting officer representatives (CORs) or other Government officials.  Only COs and PCOs can make binding commitments.
  • Be mindful of mission creep, where the Government requests you to perform additional contract tasks due to Government personnel unavailability.
  • The Government shutdown potentially impacts to your rates and long-range plans based on prolonged funding gaps and/or stop work orders, so alert your accounting staff to document all impacts of the shutdown.

As always, feel free to contact a GTPAC procurement counselor if you have questions or need guidance.  All contact information is posted at: http://gtpac.org/team-directory.

 

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