Georgia Tech Procurement Assistance Center

Can small, innovative companies break into D.C. contracting scene?

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Sharath Mekala’s two-person tech startup isn’t a textbook government contractor.

Village Defense, spawned through a startup incubator called 1776, develops a free app that lets neighbors send real-time alerts to one another if they notice suspicious activity. A premium version, which costs $125 a month, is designed for homeowners associations.

technologyA Washington area native, Mekala recently uprooted from Atlanta and returned to D.C., in part to market Village Defense to behemoth potential customers: the Defense Department, the Federal Emergency Management Agency, and the Education Department. He says President Obama’s public safety initiative, which includes a blueprint for improved community policing, creates an opportunity for apps like Village Defense.

“I think the government is trying to keep up with [technology]… earlier on you’d have to push your way in,” Mekala says.

Federal procurement, once largely unapproachable by startups, could be transforming to let small, creative tech companies in.

Keep reading this article at: http://www.nextgov.com/cio-briefing/2015/07/startup-shakeup-can-small-innovative-companies-break-dc-contracting-scene/117640/

This story appears in the July-August issue of Government Executive magazine. 

IG says contractor tried to influence DOE to receive no-bid contract extension

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A contractor working at the Energy Department’s Sandia National Laboratories sought help from federal officials to receive a no-bid contract extension at the lab worth about $2.4 billion, a Nov. 7 DOE inspector general report says.

The report says Sandia Corporation, a subsidiary of Lockheed Martin that runs the lab, campaigned aggressively to convince then Energy Secretary Steven Chu to extend it’s contract without any competition.

Keep reading this article at: http://www.fiercegovernment.com/story/ig-contractor-tried-influence-doe-receive-no-bid-contract-extension/2014-11-13

GAO: Emailed proposal in agency’s possession was not “late”

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In a victory for common sense, the GAO has held that a proposal that was in the agency’s possession before the due date was not “late,” even though the offeror emailed the proposal to the agency instead of submitting it through an online portal.

The agency’s attempt to reject the proposal was particularly egregious because the agency told the protester that the proposal could be submitted by email — then rejected the proposal when the protester did just that.

The GAO’s decision in ICI Services, Inc., B-409231.2 (Apr. 23, 2014) involved a Navy task order solicitation for engineering support services.  The solicitation stated that offerors were required to submit their proposals through the Navy’s online Seaport-e portal.  However, the solicitation stated that if the Seaport-e portal was inaccessible, offerors were to immediately notify the agency.

After receipt of initial proposals, the agency opened discussions and asked offerors to submit final proposal revisions.  Because the Navy was having difficulty with its own Seaport-e portal, its email notice to offerors stated “[i]f you have any difficulties uploading your response in the Seaport-e portal, please email me the documentation.”

Keep reading this article at: http://smallgovcon.com/gaobidprotests/gao-emailed-proposal-in-agencys-possession-was-not-late/

 

Tensions brew between government and contractors over intellectual property

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Tensions are brewing in the defense contracting business over government efforts to secure rights to manufacturers’ intellectual property. The clash pits military buyers who want to break up suppliers’ monopolies against companies whose livelihood depends on keeping tight control over their designs.

With the Defense Department under pressure to slash costs as budgets shrink, officials are targeting weapons programs for potential savings. They are particularly keen on reducing the cost of weapons maintenance and production by opening up the market to new competitors.

To do that in a market that is dominated by single-source manufacturers, the Defense Department needs what is known as “rights in technical data.” When the Pentagon buys a weapon system, it retains unlimited rights to the data if the item was designed with government funds. But when a product is financed by a private company, the firm keeps full control of the intellectual property and the government is simply a buyer.

Except in limited circumstances, contracting officials cannot disclose a private company’s proprietary data outside the government.

As the Pentagon in recent decades has become more dependent on the private sector for high-tech equipment, it now realizes that many of the existing arrangements restrict the government from seeking competing bids for maintenance or production of that equipment unless the manufacturers grant data rights. For most suppliers, that equates to killing the goose that lays the golden eggs.

Keep reading this article at: http://www.nationaldefensemagazine.org/archive/2014/January/Pages/DoDClashesWithSuppliersOverDataRights.aspx 

How to reduce the growing number of bid protests

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With bid protests increasing by almost 50 percent since 2008, many industry observers and policymakers may be tempted to place the blame for procurement slowdown — particularly in the defense industry — squarely on the contractors. Yet to do so to the exclusion of the other key player in this equation — the Defense Department — ignores that bid protests have proliferated largely as a result of the way government does business.

It may be the case that some government contractors file frivolous protests in order to hang onto a contract they once held but subsequently lost, or in an effort to extract concessions from the government, such as the opportunity to start or continue work while the protest is resolved. However, bid protests are a game of high-stakes poker for most contractors. Protests are expensive, and protestors are prohibited from billing their protest costs against their contracts.

Even if the Government Accountability Office (GAO) sustains a protest (and awards the successful protestor its protest costs), a contractor may still need to go through the bidding process all over again, and there is no guarantee that it will win the second time around. In addition, the GAO retains the power to summarily dismiss a protest it deems frivolous, ultimately rendering any effort put into filing a protest a waste of resources. In other words, bid protests do not just slow down the government; they also slow down business for contractors.

Keep reading this article at: http://www.defenseone.com/management/2013/08/how-reduce-growing-number-bid-protests/68582/ 

Despite push for competition, no-bid contracts increase and small business awards decline

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President Obama in 2009 told federal agencies that no-bid contracts were “wasteful’’ and “inefficient.’’ Four years later, his administration spent more money on non-competitive contracts than ever before.

Federal agencies awarded $115.2 billion in no-bid contracts in fiscal year 2012, an 8.9 increase from $105.8 billion from 2009, according to government data. The jump unfolded even as total contract spending decreased by about 5 percent. Lockheed Martin, Boeing and Raytheon were top recipients of sole-source contracts.

Those top Pentagon vendors and other large contractors can draw on established relationships with procurement officers to claim a greater share of non-competitive work, said Robert Burton, former acting administrator of the Office of Federal Procurement Policy under George W. Bush.

“It highlights a growing problem in the procurement system,’’ said Burton, who represents contractors as a partner at Venable in Washington. “The pie is shrinking, but at the same time, the number of non-competitive awards has increased. That’s a bad combination.”

Keep reading this article at: http://www.washingtonpost.com/business/economy/no-bid-us-government-contracts-jump-9-percent-despite-push-for-competition/2013/03/17/9f6708fc-8da0-11e2-b63f-f53fb9f2fcb4_print.html 

Reverse auctions become mandatory for DLA’s competitive, high-cost contracts

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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#

Fraud continues in small business preference programs

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Contractor fraud in small business set-aside programs is difficult to detect and prove, but its annual costs to government are significant in dollars and damage to legitimate business that deserve the work, two federal watchdogs told a House panel Thursday.

In fulfilling the Obama administration’s goal of giving 23 percent of prime federal contracts to small business, agencies need to do better at making a public example of “bad actors” and at vetting contractors that misrepresent their qualifications for minority advantages through self-certification, according to Peggy Gustafson, inspector general for the Small Business Administration, and Brian Miller, IG for the General Services Administration.

They spoke at a hearing of the House Small Business Subcommittee on Investigations, Oversight and Regulations called by Chairman Mike Coffman, R-Colo., who sought to learn why much contractor fraud goes unpunished and unprosecuted.

“Just as we all benefit from small business prime contracting, we all suffer when fraud rears its ugly head,” Coffman said. “Legitimate small businesses lose the ability to perform when contracts go to firms that do not qualify for, or who are not following the rules associated with, the small business contracting program. The government suffers from this fraud because bad actors give all small businesses a bad name, so contacting officers are more reluctant to use the small business programs, which in turn results in less competition and a less vibrant industrial base.”

The set-aside programs consist chiefly of preferences for section 8(a) business development, Historically Underutilized Business Zones, women-owned businesses and the service-disabled veteran-owned program. Both inspectors general testified that their own agencies had fallen victim to fraud. SBA and the HUBZone certification program played a role in the sensational case exposed with the arrests earlier this month involving $20 million in fraud allegedly committed by contractors and two employees of the Army Corps of Engineers, Gustafson noted.

Miller described a recent $6 million contract awarded to a company that claimed to be run by a disabled veteran whose documents said he served three tours of duty during the Vietnam War and received medals and citations. It turned out, Miller said, he was a mechanical engineer serving stateside in the National Guard.

“It’s difficult to prove a monetary loss to the government because it did receive the goods and services,” Miller said. “But the real loss is to program integrity, to the legitimate small businesses that didn’t get the contract.” He added that fraudulent self-certification is difficult to detect and agencies rely on such information in the majority of the preference contract awards because their resources are limited.

“Strong penalties are needed to deter” the fraud, he said. “The tougher it is to detect, the tougher penalties must be,” though the rules should avoid punishing innocent companies simply because of a clerical error, he said.

Gustafson said each type of set-aside has its own level of vetting and the Section 8 program is the hardest for contractors to qualify for. She agreed that agencies could deter more fraud by publicizing their reviews of such programs, which in one instance prompted “contractors to drop out in droves.” It is acknowledged by all IGs, she added, “that the federal government doesn’t use suspension and debarment enough — that hits contractors in the pocketbook.”

Miller noted that GSA has an interactive map on its website providing other agencies with links to state databases reporting contractors that have been suspended or debarred.

Coffman asked whether agencies should take more responsibility for policing fraud. “It’s hard to draw simple rules,” Gustafson said. “Overburdened” agencies focused on awarding contracts are “not expected to know all the ins and outs” of the set-aside programs. Also, “the more difficult the rules are to administer, the harder it is to present the case to a jury,” she said.

But the issue “needs more discussion in the executive branch and guidance from Congress since it’s not always clear who’s minding the store,” she said. “If the programs don’t have integrity, we might as well throw them open to open competition.”

— by Charles S. Clark – Government Executive – October 27, 2011 – http://www.govexec.com/story_page.cfm?articleid=49156&dcn=e_gvet

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