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Federal contractors now find opportunities for growth in healing, not war

December 10, 2014 By ei2admin

Two years ago General Dynamics, one of the biggest federal contractors, reported a quarterly loss of $2 billion. An “eye-watering” result, one analyst called it.

Diminishing wars and plunging defense spending had slashed the weapons maker’s revenue and left some subsidiaries worth far less than it had paid for them. But the company was already pushing in a new direction.

Soon after Congress passed the landmark Affordable Care Act, the maker of submarines and tanks decided to expand its business related to health care. Its 2011 purchase of health-data firm Vangent instantly made it the largest contractor to Medicare and Medicaid, the huge government health plans for seniors and the poor.

“They saw that their legacy defense market was going to be taking a hit,” said Sebastian Lagana, an analyst with Technology Business Research, a market research firm. “And they knew legislation was coming up that was going to inject funds into the health-care market.”

Keep reading this article at: http://www.washingtonpost.com/business/federal-contractors-now-find-opportunities-for-growth-in-healing-not-war/2014/12/04/3ed2ff08-7a63-11e4-9a27-6fdbc612bff8_story.html

Filed Under: Contracting News Tagged With: Affordable Care Act, cost plus, DoD, health care, Health IT, health records, HHS, medical records

Navy drops $2.5 billion in contracts to update shipboard networks

August 2, 2014 By ei2admin

The Navy has awarded five companies eight-year contracts valued at $2.5 billion to install standardized shipboard networks.

The Space and Naval Warfare Systems Command tapped BAE Systems Technology Solutions & Services, General Dynamics C4 Systems, Global Technical Systems, Northrop Grumman Systems Corp. and Serco, Inc. for the indefinite-delivery, indefinite-quantity, firm-fixed-price, cost-plus-fixed-fee contracts for the Navy’s Consolidated Afloat Networks and Enterprise Services.

The CANES program is intended to equip every ship in the fleet with a standards-based network.

Keep reading this article at: http://www.nextgov.com/defense/2014/08/navy-drops-25-billion-contracts-update-shipboard-networks/92006

Filed Under: Contracting News Tagged With: contract awards, cost plus, DoD, fixed price, IDIQ, multiple award contract, Navy

New NASA priorities open billions in new opportunities

June 10, 2011 By ei2admin

NASA might be cutting $1 billion from its space operations budget but a new study claims there are billions in opportunities in science and technology areas.

“As NASA shifts priorities for human spaceflight from shuttle operations to human exploration capabilities and commercial spaceflight, the budget will be redirected to a range of technology development programs,” said Steve Bochinger, president of Euroconsult North America.

The firm and its partner Omnis Inc. have released a new study, NASA Spending Outlook: Trends to 2016, which analyzes NASA’s budget.

As space operations shrink, the science budget will be redistributed among NASA centers, Bochinger said.

Among the findings:

  • The Science Mission Directorate saw an 11 percent bump in 2011 and will have a $5 billion through 2016. Goddard Space Flight Center and Langley Research Center will benefit because of the work on Earth science projects.
  • The Exploration Systems Mission Directorate will hold steady at about $3.9 billion but funds will shift away from human exploration activities.
  • The new Space Technology Directorate will get $1 billion a year from 2012 to 2016. Langley, Glenn and Ames research centers will benefit because of their work on new technologies for exploration and robotic spaceflight.
  • NASA is restructuring the Aeronautics Research Mission Directorate to focus on fundamental aeronautics and development of technologies for the Next Generation Air Transportation System.

The study also predicts that NASA’s business practices will have to change with a shift from cost-plus contracting to more fixed-price contracting.

About the Author: Nick Wakeman is the editor of Washington Technology. Article appeared June 8, 2011 at http://washingtontechnology.com/articles/2011/06/08/nasa-budget-priorities-shift.aspx?s=wtdaily_090611

Filed Under: Contracting News Tagged With: budget, cost plus, fixed price, NASA, technology development

Army skeptical of fixed-price contracts

March 11, 2011 By ei2admin

The Obama administration might be embracing fixed-priced contracts as the preferred method for purchasing goods and services from the private sector, but that strategy is not necessarily being implemented by the Army.

During a speech on Wednesday to service contractors, Malcolm O’Neill, assistant Army secretary for acquisition, logistics and technology, offered a surprisingly frank critique of fixed-price contracts.

“There is risk when you take something fixed-price,” O’Neill told members of the Professional Services Council, an industry trade association. “But my experience has been that when you offer a fixed-price bid, it’s 10 percent to 15 percent more than you need.”

O’Neill’s office often has argued against using fixed-price awards because of the belief that contractors build a cushion into their bids to compensate for the potential risks that occur during the length of a contract.

The Army wants the contractor to share the risk using more cost-plus, incentive-based contracts in which the vendor is rewarded for coming in ahead of schedule and potentially punished, through the loss of award fees, for delays. Cost-type contracts also can be more easily modified if the government’s requirements change, O’Neill said.

The Obama administration has repeatedly classified cost-plus contracts as “high risk,” lumping them in with time-and-materials contracts and sole-source awards. The Office of Federal Procurement Policy has encouraged agencies to cut by 10 percent their use of each of the three contract types.

Recent data, however, suggest that agencies’ use of cost-plus contracts actually has gone up. While agencies have cut their spending on time-and-materials contracts — considered the highest risk to taxpayers because of the potential for escalating costs — most of those contracts were converted to cost-reimbursement vehicles rather than fixed-price contracts, OFPP Administrator Daniel Gordon said last month.

O’Neill said he has received no direction from the Pentagon or the White House to use fixed-price contracting when he thinks it’s inappropriate. In some instances, he has counseled against fixed-price contracts because the Army’s estimated costs were 20 percent less than the lowest offer. He described the dichotomy as “should cost versus would cost.”

In a brief presentation, O’Neill stressed the principles of the Defense Department’s ongoing efficiency initiative to save money through reducing overhead costs, improving business practices — including more contract competition — and eliminating troubled programs.

“We have every reason to do our jobs better,” O’Neill said. “If I can do the job of 10 people with eight people, that makes me feel good.”

The funds saved from the efficiency initiative will largely be reinvested in the warfighter, Defense officials have said. The ultimate goal is a 2 percent-to-3 percent net annual growth in warfighting capability without a commensurate budget increase.

O’Neill said contractors will play a critical role in helping reach that goal. “You have got to play shortstop on our team,” he said.

The Army, for its part, recently completed a study that looked at contract requirements, overall funding and acquisition policies. The resulting plan, which eventually will be made public, now is being reviewed by Pentagon leadership.

— by Robert Brodsky – GovExec.com –  March 9, 2011

Filed Under: Contracting News Tagged With: acquisition, Army, cost plus, fixed price, incentive, sole-source, time and material

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