Short tenures at OFPP hurt acquisition initiatives

Experts say a short tenure has

a tendency to stall initiatives

The Office of Federal Procurement Policy is losing another administrator relatively soon after his confirmation, which may be an impediment to advancing policies, according to one former OFPP official.

Since the late 1990s, administrators have stayed at OFPP for roughly two years. Steve Kelman was the last administrator to stay at OFPP for longer than that, from 1993 to 1997. Kelman is now a Harvard University professor and columnist for Federal Computer Week.

Dan Gordon, the current administrator, will leave at the end of the year for the George Washington University law school, where he will be associate dean of government procurement law studies.

When he leaves his office for the final time, he will have been administrator for about 25 months. Gordon was confirmed in November 2009.

A result of such short terms as administrator is that the office staff is pulled away from their inherently governmental functions of working on governmentwide procurement policies that affect agencies and industry.

“Unfortunately, the news of Dan leaving is that it disrupts the office and the focus on current initiatives,” said Robert Burton, former deputy OFPP administrator, who spent several years in the 2000s as acting administrator. He now is a partner at the Venable law firm.

Confirmation process

As Gordon leaves, the Barack Obama administration will once again have to find a suitable nominee. Once the next nominee is chosen, the White House staff will have to prepare the nominee for the Senate confirmation hearings, along with a crash course in the ongoing initiatives.

“It’s a lot of work,” Burton said.

While that's disruptive enough, Burton said it's also difficult for the office when leaders come and go so frequently. Consistent leadership is good to have, but hard to attain under those circumstances. And it's detrimental to the office-holder himself, Burton added, because accomplishing anything of note in just a couple of years in office is unlikely.

Gordon, however, was one who did manage to make some progress on initiatives during a brief tenure, Burton said.

Gordon's initiatives

One of his most significant initiatives was that Gordon worked to rebuild the federal acquisition workforce.

He gathered support to provide funding for more employee training, and he updated the certification standards for contracting officers. Gordon's reforms also increased training standards for contracting officer's representatives and program managers, both of which are considered part of the acquisition workforce.

Gordon also pushed agencies to think strategically when buying commodities. He encouraged strategic sourcing and getting agencies to take advantage of the government’s size.

“We are—finally—leveraging the federal government’s purchasing power as the world’s largest customer to deliver a better value for the American taxpayers,” Jacob Lew, director of the Office of Management and Budget, wrote on the OMBlog Nov. 2.

Gordon also brought attention to innovative methods to purchasing, such as electronic reverse auctions and interagency contracting.

The listening ear, the reasoned mind

In addition, Gordon was someone that government officials and industry leaders felt like they could talk to.

“Perhaps his most important contribution was his tireless efforts to bring open, reasoned debate and discussion back to federal acquisition,” said Stan Soloway, president and CEO of the Professional Services Council.

Gordon sought to mitigate the hyperbole and rhetoric of the procurement world with a Myth-Busters Campaign, Soloway said.

Steve Schooner, a procurement law professor at the George Washington University law school, said Gordon deserves a lot of credit for reviving the Front Line Forum, which was instituted by Kelman and had largely fallen away in recent years.

The forum let the procurement policy leaders hear from the workers dealing daily with government purchasing.

“It's hard to quantify how important this outreach is—not just engaging with the operational community, but actually listening to the concerns and suggestions and aspirations of the people upon whom the entire process depends,” Schooner said.

He said he’s hopeful that future OFPP administrators will recognize the importance of being “the acquisition workforce’s cheerleader-in-chief.”

Schooner said a major difference between Gordon and Kelman is the workforce. Kelman faced trend in the 1990s to decrease the size of the acquisition workforce, which he could not stop. Gordon inherited a far more starved acquisition workforce. One of his high-profile initiatives was rebuilding the workforce, and he had kept it on everyone’s radar screen.

It will be “one that will pay dividends to the government and the taxpayers for years to come,” Schooner said.

Kelman too said the government will benefit from the emphasis on the workforce.

“Dan did a good job fighting for increasing the numbers in the depleted contracting workforce,” he said.

What the next administrator needs

As the search will begin for the next administrator, the nominee needs the know-how understand the procurement world and the skills to see what in that world needs attention, experts say. Decisions and policy initiatives have far-reaching effects, such as rebuilding the acquisition workforce and insourcing government work.

Burton said it’s a very technical field and not merely a management position.

“And with only two years, you don’t want to spend the first six months helping the new administrator understand the Federal Acquisition Regulation, he said.

Gordon brought significant expertise from his 17-year stint at the Government Accountability Office, where he served in several legal roles, finishing as acting general counsel.

“Dan has brought a mixture of great substantive procurement knowledge and great interpersonal skills to this job—exactly the mix of skills you want in an OFPP administrator,” Kelman said.

Gordon set the bar high for the next political appointee to have technical knowledge, according to experts.

And so the search for a new administrator begins.

Read the story: FCW.com - Short tenures at OFPP hurt acquisition initiatives

DHS requires 'Hi, I'm a contractor' intro

Could the requirement undermine the teamwork
that's essential in a workforce?

Homeland Security Department officials want to draw a bright and shiny line between the two teams that work inside a federal department: the federal employees and the contractors.

Under DHS’ FirstSource II draft request for proposals, officials are telling contractor employees to announce in all interactions that they are not federal employees but are, instead, contractors.

For example, contractor employees must introduce themselves, in person and in voicemails, as employees of their companies. They cannot try to elide the difference by saying they work for DHS. And if they're employed by a subcontractor, they have to identify the company, not say they are employees of their prime contractor.

And federal Homeland Security Department officials—not to be confused with contractors—are suggestion that these announcements aren’t something for people to laugh about over lunch.

“Failure to adhere to this requirement may constitute grounds for termination for default of the base FirstSource II contract,” the draft states. Serious stuff.

The Defense Department has a similar rule. Contractors must announce, wherever they go, that they are contractor, not a federal employee. Officials instituted the rule in 2010.

The “Hi, I’m a contractor” rule may show who’s who in a conversation or meeting. But it won’t help in blending the workforce, some readers have said.

Contractors fear that the rule could undermine the teamwork that’s essential in that type of workforce.

“How do you maintain unity of community when segregation is forced?” a reader asked.

Read the Acquisitive Mind blog: FCW.com - DHS requires 'Hi, I'm a contractor' introduction

Surviving the Darwinian world of federal contracting

Federal programs aimed at aiding the growth of small businesses through federal contracting are not a good investment if they simply set up those firms to fail, some experts say.

The problem is that when small businesses become midsize businesses, they lose access to set-aside contracting programs and end up struggling to survive in the eat-or-be-eaten world of federal contracting. Some firms find a way to get by, but others end up selling out to bigger competitors.

That is not necessarily a good return on the federal government's investment. But help might be on the way.

Rep. Gerry Connolly (D-Va.), who has many IT contractors in his district, is pushing a pilot program to help ease newly graduated small businesses into full-and-open competitions against the biggest contractors.

In his plan, only the General Services Administration could award contracts through the set-aside program. As important, the midtier company could win a set-aside contract only if GSA officials believe a small business likely would not have received it. In addition, the midtier company must mentor a smaller company.

Connolly’s goal is to continue helping the once-small contractors that the government has invested in and nurtured through the years after they become midtier competitors.

He said he questioned the benefit to taxpayers if small companies are sent “into a Darwinian world where they are, on Day One, expected to compete with the big guys.”

Others have reached a similar conclusion — and have come up with their own solutions.

At a hearing Sept. 14, Rep. Nydia Velázquez (D-N.Y.), ranking member of the Small Business Committee, pointed out that GSA already has the Business Breakthrough program, which prepares small companies for the next level.

The program is available to a range of companies, and officials envision it being particularly useful to companies that are too large to qualify for small-business advantages but not large enough to successfully compete with the nation’s largest corporations. It's just want Connolly wants with his proposal.

GSA also has its mentor/protégé program. There are 81 active agreements between businesses of all sorts, from large companies to a variety of small-business types. The agreements can result in lasting business relationships and prepare the smaller firms to enter the bigger market.

Any of those programs might help, but only if federal agencies are willing to support them.

However, one industry executive said that for the most part, agencies aren’t looking beyond the small-business credit.

“No matter how well a small business does in support of an agency, it seems that once that business has outgrown the specific small-business program, the agency just turns to the next small business for support,” said Randy Slager, CEO of Catapult Technology, a mentor in GSA’s program.

Without a diversified set of customer agencies, a newly minted midtier company can quickly lose its customer base — a major factor in the high rate of failure among small businesses, he said.

Bill Jaffe, senior vice president and general manager of Tape, a service-disabled veteran-owned/woman-owned small engineering firm, said the 8-year-old company will cross the threshold into the full-and-open competition marketplace by December, and he’s going to face off for work against the Lockheed Martins and Northrop Grummans of the world.

“Companies do go through the process and survive,” Jaffe said, “but many of them do not survive.”

He is one of the leaders of a new industry group called Mid-Tier Advocacy that seeks to support such companies in a tightening market. But overall, it’s the company’s responsibility, Slager said. Businesses must plan and strategize well before the growth begins.

“I don’t think that this is a factor that is government-dependent,” Slager said. “It rests with the senior management of the small business.”

Another businessman has a different idea: Why make growth the main goal in the first place?

A reader calling himself Stay-Still-Stan recently commented on an “Acquisitive Mind” blog post by advising his peers to bask in the small-business perks. Most government contracting companies, including his own, strive to grow but are rarely happy when they do, he wrote.

His advice? “To be most profitable, government contractor: Find a niche, become the best, be a ‘disadvantaged’ company for special perks, stay not-for-profit and employee-owned, and keep company size under one of the government-defined limits to minimize the paperwork you need to do,” he wrote. “Do this, and everyone in the company will retire quite wealthy and happily.”

Read the rest of the story: FCW.com - A new push to rethink the small-biz contracting payoff

The ghost of small businesses past

In June, many agencies proudly tweeted that they had received an A from the Small Business Administration because they did such a good job of awarding contracts to small companies in fiscal 2010.

And although SBA shared their enthusiasm, many critics say the recognition is unfounded because the program is fundamentally flawed.

The government awarded nearly $98 billion in federal contracts to small businesses last year, or 22.7 percent of eligible contracting dollars, according to SBA. The goal was 23 percent. It was the second year in a row that the money going to small businesses went up, and it was the largest two-year increase in more than a decade.

“We’re obviously excited about the progress we’ve made,” said Joe Jordan, associate administrator of government contracting and business development at SBA, during a conference call June 23, the day before the score cards were released.

Ten of the 24 agencies that SBA evaluated received a higher grade in 2010 than they did in 2009, while 10 agencies’ grades stayed the same. SBA gave 13 As, five Bs, four Cs and two Ds. SBA received a B, as did the government as a whole.

However, many experts say the grades aren’t accurate because the businesses that are winning the contracts often aren’t small.

Agencies routinely get credit for awarding contracts to small businesses that have outgrown that status or been bought by large corporations. Therefore, in many cases, a small business is no longer doing the work.

So are the scores correct?

“I think the answer is no,” said Sen. Rob Portman (R-Ohio), ranking member of the Homeland Security and Governmental Affairs Committee’s Contracting Oversight Subcommittee.

Likewise, Sen. Claire McCaskill (D-Mo.), the subcommittee’s chairwoman, went so far as to call the 23 percent small-business goal “an empty achievement.”

She told Jordan during a recent hearing that “by taking the position you’re taking, you’re essentially saying to the public, ‘By the way, we’re saying 22.7, but don’t believe it.’”

However,Jordan said agencies are doing exactly what the program was designed to help them do: Award contracts to small businesses and watch the companies grow big.

Federal rules allow a company to maintain its small status for as long as five years before it must recertify its size. At that point, any small-business contracts it holds either maintain their classification or are reclassified based on the company’s new status.

That approach is an improvement, Jordan said. The policy used to be “once a small-business contract, always a small-business contract.” It didn’t matter who bought the company or how large it grew.

Nevertheless, some acquisition experts see the issue as Portman and McCaskill do. And they see the scoring as shady.

Sure, the program follows the rules and might be technically correct, said Jaime Gracia, president and CEO of Seville Government Consulting, a federal acquisition and program management consulting firm. But there’s plenty of room for tougher standards and clarity about a company’s size.

He said federal officials should require companies to certify their size every year to get a true picture of small-business contracting. That’s not happening now, which means “SBA is asleep at the switch,” Gracia said.

Guy Timberlake, co-founder and chief visionary officer at the American Small Business Coalition, said there should be changes in how agencies set aside contracts and how officials oversee them. And the government must enforce size standards so that small companies can reap the benefits.

He said a program that encourages subcontracting with small companies would help. When a small business that holds a set-aside contract grows too large, it should award a certain percentage of subcontracts to small firms for each upcoming option year of the contract. Agencies should make that expectation clear when they award the set-aside contracts and get a firm commitment from the companies.

Without such changes, “doing business as a true small business in the federal sector will continue to be — at least in part — an aggravating exercise,” Timberlake said.

Read the story: FCW.com - The ghost of small businesses past

Hey, small business, ready to leave the 8(a) world?

To survive graduation, small businesses need to prepare for tougher competition

Kathy Carrier’s office overlooks the Eagle Marsh Woods, a 41-acre nature preserve in Fort Wayne, Ind. The woods are home to all sorts of birds and animals, such as the black-crowned night heron and blue-spotted salamander.

But there’s another preserve that Carrier, president and CEO of Briljent LLC, and other small-business executives like her are overlooking. It’s home to ferocious other-than-small businesses and corporations. Her company is ranked No. 15 on Washington Technology's 2010 list of the top 25 8(a) small businesses. The list ranks the most successful 8(a) small businesses according to their overall government contracts.

“We’re going into the lion’s den,” said Paresh Ghelani, CEO of 2020 Company LLC, ranked No. 10 on the list. “And I would be lying if I said it doesn’t make me nervous.”

Briljent and 2020 Company, both professional services contractors, are graduating from the Small Business Administration’s 8(a) Business Development Program within a year. From there, they head from the protected world of small-business set-aside contracts into the wild world of full-time, full-and-open competitions with other companies, including the biggest government contractors.

While in the 8(a) program, they’ve done all they could to prepare for their launch into the full-and-open world. They have set up strong business infrastructures, such as accounting systems that meet government standards and company ethics rules, and they’ve received numerous certifications to meet federal regulations. Further, they’ve hired employees who know the ropes of the federal procurement system, and they worked to develop relationships throughout the contracting community.

“We spent so much time and money, I was hell-bent on getting a contract,” Carrier said. And the Centers for Medicare and Medicaid Services awarded Briljent its first contract, which was worth $139 million.

SBA’s 8(a) program helps socially and economically disadvantaged small businesses gain access to federal contracts. To participate, firms must be at least 51 percent owned and controlled by someone who meets the criteria of being disadvantaged. The firms must also qualify as small businesses. Once certified, 8(a) firms are eligible to receive sole-source and set-aside contracts of various sizes for as long as nine years.

To succeed in the program, company executives had to do much more than get a contract. They had to look into the heart of their firms. Executives repeatedly emphasized that companies must live by a certain creed to prepare for what’s ahead for growing small companies.

A small business cannot think of itself as small, experts say. Instead, its leadership needs to present the company as what it intends to become next: a successful, midtier business.

For instance, a company needs to be flexible like only small ones can be but move forward with a different frame of mind.

“You’ve got to be nimble like you’re small but act like you’re big,” Ghelani said.

Leading firms also said 8(a) companies should not live on 8(a) set-asides alone. Companies must stretch beyond SBA’s program before they even leave the program. They must prove to themselves and the agencies and prime contractors that they will be dealing with that they can survive in the lion’s den.

However, many 8(a) companies see dollar signs and contracts galore because they’re in the program, experts say. But that thinking will be their downfall. Businesses need to work hard to get contracts, even if they’re competing for contracts that are set aside only for small businesses.

Consequently, some companies give up when they’re hit with the reality of how much work goes into winning a contract, or they simply take in no extra business, many executives say.

“It’s not welfare; you’ve got to work,” said Pete Von Jess, owner and CEO of USfalcon Inc., a national security company, ranked No. 3 on this year's list.

To help with the work, companies ask employees to canvass the community, develop partnerships and relationships, and learn about that marketplace. Business development is at the core of earning contracts. Companies need to play all sides by talking to people inside agencies that are potential customers. And they should also scout prime contractors to find companies that are in need of particular services.

While building potential business relationships, a small business needs to find its niche.

When Ghelani was developing those partnerships and seeking opportunities, “we simply said we can add value,” he said.

The program does its part by attempting to match small businesses with big companies that can help them survive in the bigger and tougher contracting world.

“It’s a marriage, but it’s a marriage that is not going to last forever,” said Von Jess, a retired Army colonel.

While reaching out to mentors, small businesses should not forget about their own. Businesses can join with other small businesses in joint ventures and other teaming arrangements to get larger contracts, such as the National Institutes of Health’s Chief Information Officer Solutions and Partners 3 governmentwide acquisition contract. The indefinite-delivery, indefinite-quantity IT GWAC will have a set-aside for small businesses.

Jess put the canvassing into perspective.

Developing business doesn’t mean simply going out to lunch with a few clients, he said. “It means swapping invoices.”

With their relationships, new companies should tap into their customers' and partners’ knowledge and experience to learn more about the complexities of the procurement world and its many continual legislative and regulatory changes.

“A major roadblock for us is our own ignorance,” Carrier said. “We didn’t know what we didn’t know.”

In the past two years, Congress and the Obama administration have changed many parts of small-business contracting. A new law, signed in September, might allay concerns that prime contractors won't stick to their subcontracting plans and send business to their small partners.

Some executives have a less optimistic view on those changes. First, the changes are not likely to concern small businesses for several years. They said the regulatory process is slow. Second, some experts say any oversight changes largely depend on how well and tenaciously federal officials enforce the programs and regulations.

As successful small businesses leave the program, they are moving into a tough world that is already feeling pressure on both sides. Executives at midtier companies have said they are stuck between small businesses and big corporations, two strong and growing forces in the marketplace.

But leading 8(a) companies are striding proudly into the middle. One of the Top 25 8(a) companies, which graduated from the program in March, turned down an interview request because, as a spokesman said, it didn’t want to be seen as a small business any longer. It had instead turned its attention to the issues that midtier companies are dealing with and was done with the past.

Despite competition and other pressures, many small-business owners are not afraid to go to the next level.

Carrier’s Briljent is prepared to leave the small-business nature preserve for a harsher world.

“We’ve had significant federal work,” she said. “The program worked.”

Read the story: Washington Technology - Hey, small business, ready to leave the 8(a) world?

GSA acquisition team gets down to business

Steve Kempf wants FAS to be the No. 1 brand in acquisition

Some agency leaders can inspire employees with a vision of the future and motivate them to work hard to achieve it. Those leaders enter as if they rode in on a white stallion.

Other leaders arrive on a workhorse. They aren’t hailed with cheers or thunderous applause. Instead, they make people realize that it’s time to get down to business.

Steve Kempf has been commissioner of the General Services Administration’s Federal Acquisition Service since July, and he arrived leading a workhorse. In an interview before taking on that role, Kempf said his strategy “will largely be in the context of this administration, GSA’s current thinking and then finally where FAS wants to take the [Multiple Award] Schedules program.”

Kempf gave his first speech as commissioner Nov. 2 at the Coalition for Government Procurement’s annual Fall Conference. The gathering lacked an atmosphere of excitement or lavish praise for Kempf.

“He’s not making a lot of waves, and there are no big steps,” said John Howell, a partner at the Sullivan and Worcester law firm, after the speech.

It seems that the leaders on white stallions are already here and have cast their grand visions. Kempf specifically referenced Obama administration officials “who see GSA as an asset” and GSA Administrator Martha Johnson. Johnson has enthused GSA employees since 2009 with her vision of customer intimacy, innovation and operational excellence.

Kempf’s vision is simple, and it’s about work. “It’s very important for us to meet our obligations and our commitments” to make FAS the No. 1 brand, he said.

He said that in the next decade, FAS will become agencies’ first choice when they need to make a purchase because FAS will offer easy-to-use tools, fast service and a wealth of options.

Kempf is moving ahead on many fronts by taking the infrastructure that was already in place and making it work. He is launching new Web-based tools, including eOffer/eMod, which allows companies to electronically submit new offers and requested modifications to their schedule contracts. Early in 2011, GSA officials plan to enable government customers to manage their contracts online with such tools.

Kempf also said he recognizes the growing importance of data in this era of transparency. He said FAS customers need to have easy access to data about sales and pricing so they can see whether they’re getting the best deal for their money. And he plans to get that information for them.

A Knack for Getting Things Done

Roger Waldron, new president of the Coalition for Government Procurement and a retired GSA official, said Kempf is working on projects that started during Waldron’s tenure at the agency.

“He’s carrying them to fruition,” Waldron said, adding that the projects are important building blocks.

Although Kempf is not making waves, Howell and others are quick to say he was a good choice for FAS commissioner.

A GSA employee who attended the conference said Kempf knows FAS well. He joined GSA in 1992 as a marketing coordinator at the Office of Technology Assistance and has since held leadership positions at the Federal Systems Integration and Management Center, the Office of Integrated Technology Services and FAS.

Kempf knows FAS' challenges because he has been on the front lines for years and has worked on the operational and strategic sides, said the employee, who spoke on condition of anonymity.

The employee added that Kempf couples experience with research. Kempf marshals his resources well and can often point employees to research that is relevant to their particular projects.

Kempf’s success as FAS commissioner will likely center on collecting more data about pricing and transparency. He will also be a leader in the emerging world of green procurement, the employee said.

Furthermore, Kempf is down to earth and doesn’t think of himself as above everyone else. “He’s not in an ivory tower or on a high horse,” the employee said.

Read the story: FCW.com - GSA acquisition team gets down to business

DOD drives deeper wedge between feds and contractors

Defense contractors worry about maintaining the delicate balance of the federal workforce

Federal employees probably wouldn't be surprised to see a contractor arrive at the office in an orange jumpsuit. Nor would a contractor blink if feds were to show up in Tommy Bahama shirts from the new Tropical Temptation collection.

The outfits would match the image that each holds of the other: Contractors are greedy enough to shoot their mother for a dollar, and feds treat work like a day at the beach.

As funny as those old stereotypes might sound, they reflect the often-bitter cultural divide between contractors and feds that, depending on whom you ask, is about to get wider.

Under a Defense Department rule that went into effect in September, contractor employees are required to identify themselves as such in all forms of communications, whether in person, on the phone or in e-mail messages.

At a time when contractors outnumber feds in some offices, the rule is intended to ensure that DOD managers do not inadvertently involve contractors in sensitive work that should be set aside for feds. The rule, in short, will show who’s on which side.

But some contractors fear that the rule could undermine the teamwork that's essential in a blended workforce, in which feds and contractors must work side by side on a daily basis. “How do you maintain unity of community when segregation is forced?” a reader named Skully asked in a comment posted at FCW.com.

It’s a tough question, especially given the existing distrust between feds and contractors in many government offices.

Bob Woods, a retired federal official and now president of Topside Consulting, said the rule only exacerbates the situation. Worse yet, it’s not even necessary, because feds know who the contractors are. If not, they’re not being diligent, he said. “The rule creates an awkward situation for everybody,” he said.

Another reader commenting on the story pointed out that the pink badges contractors wear are already pretty conspicuous. The lack of identification is not the problem — it is the “cries of ‘unclean!’ when the contractors pass through federal workspace that is distracting.”

As some contractors see it, DOD might just as well post a scarlet letter on their foreheads, marking them as people whose loyalties are not to the customer or the mission but to the bottom line.

But as touchy as the issue might be, contract employees know who is writing their checks.

“Some people would be very offended by that statement,” but it’s true, said Peter Tuttle, a former Army contracting officer and now senior procurement policy analyst at Distributed Solutions. He also said federal employees need that “healthy bit of skepticism.”

The rule isn’t bad, said Kevin Carroll, retired program executive officer of DOD’s Enterprise Information Systems office and now president of the Kevin Carroll Group, a consulting company. It will let other contractors and officials know whom they’re talking to.

The identity question is especially a problem outside federal offices — where badges are not required —in e-mail, and on the phone.

The lack of identification by contractors “clouds the water on a daily basis and causes delays and delivery of substandard technology and products to the DOD,” a federal employee wrote, adding: “Anyone not seeing this as a problem with the current procurement system is a victim of ‘.mil’ envy.”

There are ways to curtail segregation.

When Carroll worked in government, he included contractors in all of his office’s work and even invited them to social events. Overall, he tried to make them teammates. Over time, contractors usually became more loyal to the office than their companies, he said.

“It is just a matter of leadership and inclusion, with a careful eye on preventing conflicts within the workplace,” Carroll said.

Likewise, the mutual stereotypes need not be a problem.

Many people are good workers, and managers need to attend first to the motivated people in the office, Woods said. Then managers should deal separately with the select few who match the contractor and federal employee stereotypes. They'll soon find their motivated employees will want the unproductive people out of the office.

Read the story: FCW.com DOD drives deeper wedge between feds and contractors

6 small-business issues too important to ignore

Small businesses face a tough market, but there are a few bright spot

It's rough out there for contractors. Everyone is holding on to pennies when they would have willingly spent dollars a few years ago.

For federal contractors, agencies are also adjusting to the tough times, double-checking costs against necessity before spending the slightest bit of money. And small businesses might be getting the worst of it. On top of the recession, government officials are cutting out contractors whenever possible.

And more problems exist for small businesses that already must scale a mountain of issues when trying to win government contracts. But don’t get depressed. There are at least a few bright spots. Some changes might make life at least more bearable for small businesses.

The Efficiency Squeeze

Agency officials face tighter budgets. Their goal is to spend less money while squeezing as much out of contractors as they previously received. Some agencies are considering chopping programs that don’t advance core priorities.

Defense Secretary Robert Gates recently announced a plan to make the Defense Department more efficient. Although insourcing hasn’t produced the savings that the Obama administration imagined, Gates said he’s taking another approach. He plans to hit contractors in the pocketbook.

“The problem with contractors is — and what we’ve learned over the past year — you really don’t get at contractors by cutting people,” Gates said in August. “So the only way, we’ve decided, that you get at the contractor base is to cut the dollars.”

Gates’ overall goal is to cut DOD’s spending by $100 billion in the next five years, while cutting contractor support by 10 percent per year for the next three years.

Some programs will dodge the bullet; others won’t. Programs that avoid elimination will support critical needs, although DOD officials have not identified those programs, according to Deltek, a research and consulting company.

In the same way, some contractors will emerge unscathed, Deltek said in a white paper released in September. Larger firms invest heavily in advocacy in an attempt to influence decisions such as budget and program cuts, the white paper states.

“To the extent those efforts are successful in deflecting funding cuts, smaller firms will be left to absorb the impact,” Deltek writes.

Insourcing Threats

Administration officials also are taking a stand against the private sector’s influence in agencies.

Officials say contractors are getting too close to agencies’ inherently governmental work and influencing decisions toward their advantage. The result is a push for insourcing. Procurement officials have proposed guidelines on inherently governmental work and closely associated tasks. They also created a new category of work, called critical functions, which applies to jobs that aren't inherently governmental but are sensitive enough that agency officials want federal employees to do the work. In short, agencies don't want to rely on the private sector.

Small businesses fear that initiative because they feel they are in the cross hairs. In September, the Interagency Task Force on Federal Contracting Opportunities for Small Businesses, a group of senior government officials, heard small businesses’ outcry against the insourcing initiative.

The “rebalancing efforts will not only limit new opportunities for small businesses but also take existing contracts away from them,” the task force wrote in its report to the president.

Some companies already have had their contracts brought in-house. Robert Burton, former deputy administrator of the Office of Federal Procurement Policy, said the government has insourced some work that isn't inherently governmental or considered to be a critical function.

Burton and other industry groups say the government is secretive about its process for deciding which jobs to insource, and without transparency, no one can be sure about the validity of decisions.

In addition, some federal agencies, such as DOD, must be aggressively pushed before they hand over their calculations and comparisons on pricing, experts say. Small businesses have done that, but it took time and a lot of persistence.

Poached Employees

Related to insourcing, businesses have complained that government agencies are also taking their employees when they move jobs in-house. One official said in September that DOD, for instance, went to the open marketplace to find employees.

Ashton Carter, undersecretary of Defense for acquisition, technology and logistics, denied that characterization. However, he said DOD is seeking employees in places where they can be found. He added that people are interested in joining DOD because it offers the opportunity to play a role in protecting the United States, which is a unique job with a unique mission.

But let’s not get bogged down in the difficulties. There are a few positive trends.

Unwrapped Bundles

Agencies can combine several smaller procurements into one large contract, a process called bundling. The technique puts less pressure on an agency’s employees because there are fewer contracts to manage. However, those bundled contracts are often out of small businesses’ reach.

The interagency task force said officials should tighten regulations to prevent unjustified bundling. And when there’s no way around a bundled contract, agencies need to find other ways to incorporate small businesses into the mix.

In addition, the Small Business Jobs and Credit Act, which became law in September, lowers the governmentwide bundling limit for contracts to $2 million, down from the $10 million limit. It also creates a five-year small-business teaming pilot program to assist small businesses in forming teams and joint ventures to help them compete for larger or bundled contracts.

HUBZone Equality

With President Barack Obama's signature, that new law simply changed a “shall” to a “may” regarding small-business set-asides. In effect, it ended the battle over one small-business program having an advantage over other small-business programs for set-aside contracts.

The new law puts all the Small Business Administration’s small-business programs on equal footing. SBA programs let agencies set aside contracts and compete them among certain types of small businesses, such as those owned by service-disabled veterans or minorities.

Until Sept. 27, companies in economically depressed regions, or Historically Underutilized Business Zones, had priority over other types of businesses because the law that created HUBZones said the government shall use businesses in HUBZones, while other small-business laws used the word "may." The Government Accountability Office and several federal judges ruled numerous times that HUBZones should get the priority because "shall" meant agencies had to use them, while "may" in the other laws meant the use of those small businesses was optional. Now the new law replaces the "shall" with "may." A contracting officer who wants to set aside a contract may choose which category of small companies to use.

Subcontracting Scrutiny

That same law also puts pressure on prime contractors to pay attention to their subcontracting plans or risk a bad mark on their public record.

The statute requires prime contractors to provide a written explanation when they fail to use subcontractors as they describe in their subcontracting plans. The reason had better be good, too. If the explanation doesn’t satisfy a contracting officer, a low grade could hurt the prime contractor’s performance evaluation, which agencies use when awarding new work.

A contractor with a history of failing to meet its subcontracting plan would be identified as such in the Federal Awardee Performance Integrity Information System.

So although business is bad, there are bright spots — at least a few.

Read the story: Washington Technology 6 small-business issues too important to ignore

The Highly Visible Invisible OFPP Administrator

Obama is reforming contracting with no administrator, and he doesn't seem to mind

Just four weeks after being sworn in as president, Barack Obama signed into law the massive stimulus legislation, complete with $787 billion to spend and significant changes to the government’s contracting regulations.

Two weeks later, Obama declared contracting reform to be a top priority for his administration and issued a memo on some of the changes he had in mind. Since then, he has frequently stated what he sees as a dire need for reforms and oversight of contractors.

Obama signed another bill in May that changed the rules for the Defense Department's procurement of major weapons systems.

Through all of this, he seems to be missing a key player: the administrator of the Office of Federal Procurement Policy.

Obama has chosen a national chief information officer — Vivek Kundra — and picked Aneesh Chopra to be chief technology officer. They quickly became prominent figures, and Kundra has pushed technology as an important part of acquisition reform.

But the president has no procurement policy chief.

The Office of Management and Budget has issued guidance on how agencies are supposed to spend the stimulus money, approved numerous new regulations and nearly completed a definition of inherently governmental functions.

But no chief.

In theory, the OFPP administrator is a key player in anything to do with government acquisition and is downright essential during times of major reform. Nevertheless, the changes are apparently moving along without an administrator. Some experts have started to wonder if the role is as important as others had assumed.

However, the push to find a nominee is building now that OMB’s deputy director for management, Jeff Zients, has been confirmed, said Kundra, who is involved in the search for an OFPP leader.

Even so, the administrator’s desk remains empty, while outside, the acquisition and contracting world is spinning faster than ever.

“There’s something to be said for somebody who knows how to grab on to things that are already in motion,” said Allan Burman, president of Jefferson Solutions, a division of Jefferson Consulting Group.

As the world turns

The government is witnessing some of the biggest changes in contracting in more than a decade. Obama took an about-face from President George W. Bush in a memo issued March 4 that comments on the troubled area of contracting and indicates how important he considers reforming the system.

Experts say the OFPP leader will be in a powerful position. He or she will have the president’s ear and a big agenda to tackle — bigger than in many past administrations.

“This is going to be a highly visible job with senior-level interest in what’s going on,” said Burman, who was acting administrator of OFPP starting in 1988 and confirmed in that role in 1990.

Obama wants tighter oversight of noncompetitive contracts and those without fixed prices. He wants an acquisition workforce that is capable of overseeing contractors. He has also told agencies to use outsourcing only when it’s absolutely necessary so the government can wean itself off its dependence on the private sector.

The American Recovery and Reinvestment Act, which Obama signed into law in February, is disbursing billions of dollars to save the economy, and the law dictates how agencies can spend that money and what contractors must report on when they get the cash. Experts say those rules have set a new standard for acquisition transparency and reporting and thus will spread to all government contracting in the near future. They say a leader needs to guide those changes appropriately.

A few blocks from the empty OFPP administrator’s office, Congress is passing reform legislation. Members are changing small-business set-aside rules and thinking about ways to revamp DOD’s acquisition system so the department can buy information technology faster. Many acquisition experts believe Congress makes rules without really understanding the issues. And that’s another reason it’s important to have an OFPP administrator.

All this activity is happening while the government remains on a fast track to spend $600 billion a year.

Then there’s the acquisition workforce. It’s overworked and demoralized. Employees are waiting for a strong leader to offer them some relief. For several years, they have felt battered by intense scrutiny by Congress, inspectors general and the Government Accountability Office. They want a leader high in the Obama administration’s ranks to protect them.

Catching up

When finally confirmed by the Senate, the administrator will need to sprint to catch up with what’s been happening in the acquisition field, said Angela Styles, OFPP administrator from 2001 to 2003 and now a partner at Crowell and Moring’s Government Contracts Group.

The White House has been working for months to draw up memos and craft a strategy. Most important for OFPP, Obama has brought the traditionally back-office duties of negotiating and signing contracts to the forefront of his agenda.

“We’ll have to break bad habits that have built up over many years,” he said. “But we can’t keep spending good money after bad.”

The first test of the new OFPP administrator’s authority will be how far he or she can stray from the goals Obama outlined in his March 4 memo, according to one expert.

Steve Kelman, administrator of the Office of Federal Procurement Policy from 1993 to 1997 and now a Harvard University professor and Federal Computer Week columnist, said the memo reads more like something written by lawmakers than a document crafted by experts in contracting.

He said the OFPP administrator must wrestle with nitty-gritty acquisition issues, such as how to navigate performance-based contracting and improve the use of contractors’ past-performance information in making awards. The administrator also has to continue melding contracting officers, their technical representatives and program managers into a team as they manage millions of contracts.

Kundra, who is pushing for a speedier, simpler acquisition process, said the OFPP administrator must understand the challenges of government procurement while also believing that the government needs to find faster ways to buy ever-evolving IT.

The administrator should “recognize we can’t treat technology procurements in the same way we do buying buildings,” Kundra said.

Furthermore, a report from industry and government experts urges the administrator to compel agencies to approach acquisitions holistically when they write contract requirements. The administrator will need to improve communication between agencies and industry, the said, and he or she will need to convince employees that technological innovations can improve the acquisition process.

Unfortunately, the delay in naming an OFPP administrator means “people are always going to know you weren’t the one who wrote the agenda,” Styles said. Therefore, the administrator will need to find a way to embrace and personalize the administration's priorities.

Styles said she received her priority — competitive sourcing — from Bush administration officials, but she was involved in drafting the procurement policy from the start because she was nominated in March 2001 and confirmed three months later. Her role was to implement the ideas of her bosses. The same will be true for the next administrator, she added.

When a key position remains vacant while other officials lack deep knowledge of an issue, it can result in a misguided — if not directionless — agenda, said Bob Woods, commissioner of the General Services Administration’s Federal Technology Service from 1994 to 1997 and now president of Topside Consulting. That’s the sort of situation the new OFPP administrator will face.

"You don't want to be the last wolf to the feast," he said. "There’s been a lot of chewing going on since you've not been there."

Missing person

The longer the position remains unfilled, the more some experts question its importance. Congress and the administration seem to be setting policies just fine without an OFPP administrator, they say.

“Here we are in August, and we don’t have a nominee yet,” said Robert Burton, former OFPP deputy administrator and now a partner at Venable law firm. “It’s obviously not a priority yet.”

Burton pointed out that Lesley Field is doing a fine job as acting OFPP administrator, and he questioned the urgency of choosing a permanent administrator. “It’s not like the initiatives don’t go forward,” Burton said. “It’s not like the career people don’t talk with other offices.”

OFPP would work just as well with a career employee in charge, who would likely stay longer than the typical two-year tenure of most OFPP administrators, Burton said [tk: ok?]. Plus, he or she would have the added benefit of understanding the issues involved after having risen through the office’s ranks.

“Acquisition is nothing but a lot of rules and regulations,” and it demands a strong legal background, not a political connection, Burton said. Deputy administrators work on many aspects of reforms, and they’re often dealing with agency leaders on regulations. Burton also ran OFPP during many of his years there as administrators came and went.

Kelman said there are benefits to appointing a retired career acquisition official to be OFPP administrator because that person wouldn't need a crash-course in what’s happening and why.

In the meantime, highly visible officials are talking about innovative acquisition reforms. For example, Kundra is calling for saving money through an IT storefront, cloud computing and software-as-a-service initiatives. He wants to use technology to speed the slow and deliberate acquisition process. And the tech-savvy Obama administration is putting a lot of weight behind Kundra.

“The administration is making that post very visible,” Burton said. Kundra’s prominence might suggest the decline of the OFPP administrator’s role as a leader in acquisition reform, Burton added.

However, Deidre Lee, OFPP administrator from 1998 to 2000 and now executive vice president of federal affairs and operations at the Professional Services Council, said Kundra could be a strong ally of the OFPP administrator.

“Two or three people at that high of a position with like minds can do a lot,” she said.

Although neither of them has much statutory authority or budget control, “one of the most important things anyone can have is a bully pulpit,” Kelman said. The two leaders could inspire people and soothe an anxious acquisition workforce, he added.

Only a few people are capable of doing that. Lee said that when acquisition employees make a mistake, the administration’s “leadership has got to step up there and say, 'Yep, we tried it, made a mistake, noted [it] and moved on. Let’s try again.'”

Everything is in place to move the workforce forward with the innovations that technology allows, experts say, but people are waiting for leaders to show them the way.

“I think the lion’s share is ready, but it’s going to take a lot of courage,” said John Nyce, associate director of the Acquisition Services Directorate at the Interior Department’s National Business Center. He added that they’re looking for someone to stand up for them.

Lee said the workforce is in huddle mode. Employees have learned that they can avoid attention by not moving forward. “That’s why leadership is so critical,” she said.

And employees understand that a political appointee has more access to key decision-makers. “The better the relationships, the better job you do,” Styles said, mentioning Kelman and David Safavian, who was OFPP administrator from 2004 to 2005 until he resigned during a scandal.

Some experts believe the administrator should remain a political appointee, even if a career person is just as capable. That approach ensures respect from other appointees throughout the government and shows that the administrator shares the president’s goals and agenda.

Furthermore, the president’s support for the administrator will make employees listen to what he or she has to say and pay attention to the direction they’re headed.

“A lot of the workforce longs for good leadership,” Kelman said. “And it’s up to that person to show he’s willing to go out of his way to work for them.”

Read the story: FCW.com News - Acquisition reforms rush forward while top OFPP seat remains empty

Kundra aids search for procurement leader

Top IT official believes procurement policy must be flexible

Six months have passed since President Barack Obama took office, and the chair reserved for the leader of the Office of Federal Procurement Policy remains empty. Now Vivek Kundra, the federal chief information officer, is helping the administration look for a suitable nominee.

Kundra is drawing on his information technology expertise and mandate to seek an OFPP administrator who will “recognize we can’t treat technology procurements in the same way we do buying buildings,” he said.

Jeffrey Zients, deputy director for management at the Office of Management and Budget, is the point man for the quest. Finding the next OFPP administrator has been a top priority for Zients since his Senate confirmation on June 19. No one has been nominated for the OFPP post, and there are few rumors about whom the candidates might be.

However, experts expressed surprise that CIO Kundra is so actively involved in the search.

Bob Woods, president of Topside Consulting and former commissioner of the General Services Administration’s Federal Technology Service, said agencies conduct a broad array of procurements. Buying battleships and buying large quantities of paper are different kinds of procurements, and Kundra's involvement might signal an over-emphasis on IT, Woods said.

Nevertheless, Kundra has campaigned vigorously for simplifying the buying process. “Everyone in government shouldn’t have to have a Ph.D. in procurement,” he said. “Why is it so complex?”

During a discussion July 27 with reporters and editors from the 1105 Government Information Group, parent company of Federal Computer Week, Kundra said the government needs to do a better job of using technology to make the whole process easier.

Kundra has proposed creating a virtual storefront where agencies could quickly buy services, such as cloud computing. Although he said GSA’s Multiple Award Schedules program and GSA Advantage Web site have many benefits, he said there are even faster ways to work. Each time an agency wants to buy IT, it shouldn’t have to start a two-year procurement process, he said, adding that by the time the contract is awarded, the technology is outdated.

However, many experts say the process isn’t always that time-consuming.

Kundra said his intent is to make buying IT easier and more intuitive via his proposed virtual storefront, which would mirror systems in the commercial marketplace, such as Amazon.com and eBay.

That approach may not fly, say critics. “At some point, he’s going to have to come to terms with the fact that the government is built to be inefficient,” said one government official, who spoke on condition of anonymity. Companies such as Amazon and eBay don’t contract with the government because they don’t want to have to abide by the government's rules, the official added.

Read the story: FCW.com News - Kundra aids search for procurement leader

Senate passes bill with HUBZone change

Bill deals with small-business equality issue


The Senate has passed its fiscal 2010 National Defense Authorization Act (S. 1390) with a provision that would remove the “shall” in the law that some government attorneys say gives small businesses in historically underutilized business zones (HUBZones) first preference when a contracting officer considers setting aside a contract for small businesses.

The mandatory “shall” would become a “may,” which would give the officers more discretion in awarding the contracts.

Since May, the Government Accountability Office, the Small Business Administration and the Office of Management and Budget have been debating whether HUBZone businesses should get priority over service-disabled veteran-owned small businesses and firms in SBA's 8(a) program. Read the story. The Senate passed the legislation July 23.

Rep. Roscoe Bartlett (R-Md.), co-chairman of the HUBZone Caucus, today said he supports the statutory change.

“Small-business owners from these three categories endure different types of disadvantages, but they all create invaluable opportunities and magnified benefits in our communities. They deserve equal priority consideration for federal government small-business contracts,” he said.

The Senate passed the legislation July 23.

Also regarding acquisition reforms, the bill would require a Defense Department contracting officer to justify why a contract worth more than $20 million should be awarded on a sole-source basis. For example, the officer would have to show that the anticipated costs are fair and reasonable. The bill would also tighten restrictions on public/private competitions for government work. The competitions pit the two sectors against each other to see who can do the work best for the lowest price.

The House passed its version of the bill in June. A conference committee of senators and House members will work out the differences before sending the legislation to the president.

Read the story: FCW.com News - Senate passes bill with HUBZone change

Senate deal will level small-business contract preferences

HUBZone companies would not get priority over 8(a) companies and service-disabled veteran business owners

Senate leaders have agreed to include a provision in the next defense authorization bill to do away with the current debate over which categories of small businesses should be given priority in federal contracting.

The amendment, introduced by Sen. Mary Landrieu (D-La.), would remove the special preference given to small businesses in historically underutilized business zones (HUBZones), putting those firms on a par with companies owned by service-disabled veterans and those in the Small Business Administration’s 8(a) program.

“All small businesses should be given an equal opportunity to succeed,” said Landrieu, chairwoman of the Small Business and Entrepreneurship Committee.

The Senate is currently considering the fiscal 2010 National Defense Authorization Act ( S. 1390 ). The House passed its version in June.

Landrieu said her amendment is in response to a May ruling by the Government Accountability Office that HUBZone companies had to be considered before other categories of business when conducting a set-aside procurement. She said the ruling has caused contractors to pull back business from 8(a) and service-disabled veterans programs.

In its decision, GAO said the Army made a mistake when it didn’t consider whether at least two HUBZone businesses would bid on an information technology contract. Mission Critical Solutions, a HUBZone company, protested the award after the Army awarded a one-year, $3.45 million sole-source contract to Copper River Information Technology, a company owned by Alaska Natives.

SBA and administration officials also object to GAO’s decision. They say it conflicts with SBA's long-standing regulations and its view that 8(a) companies and those owned by service-disabled veterans and HUBZone companies are all equals. On July 10, OMB told agencies to disregard GAO’s decision.

“If agencies were to follow the GAO decisions, the federal government’s efforts to procure goods and services from 8(a) small businesses and from [service-disabled, veteran-owned small businesses] through the other statutory programs may be negatively impacted,” Office of Management and Budget Director Peter Orszag wrote on July 10.

Read the story: WashingtonTechnology.com News - Senate deal will level small-business contract preferences

Congress, administration move into protected territory

The governmnent is having an ongoing debate about certain small businesses with big advantages

Congress and the Obama administration have stepped into a well-guarded territory of small-business contracting: special advantages.

The Senate Homeland Security and Governmental Affairs Committee’s ad hoc Contracting Oversight Subcommittee has questioned whether the explosive growth in Alaska Native Corporations’ (ANCs) contracting dollars in the last eight years through unique set-aside rules has given ANCs too much of an advantage. The subcommittee held a hearing July 16 that has become part of an ongoing debate about some categories of small businesses that live by special rules.

“The current situation is out of balance, and it may be time to swing the pendulum back the other way,” said Mark Lumber, senior vice president for federal program for Cirrus Technology, a historically underutilized business zone (HUBZone) small business in Huntsville, Ala.

Sen. Claire McCaskill (D-Mo.), the subcommittee chairwoman, asked several representatives for ANCs if they would agree with changes to make ANCs abide by the same rules as Indian tribes and other socially and economically disadvantaged companies.

If there is no difference between them, she said, “Then I hope that you would accept a change in the law that would make sure that you are on completely equal footing."

The ANC representatives at the hearing remained neutral. “We are not in a position today, through our organizations, to negotiate on behalf of our people. We need to go through an extensive tribal consultant process,” said Susan Lukin, executive director of Native American Contractors Association.

Officials believe ANCs are getting a disproportionate amount of money compared to other small businesses, according to reports. Because of ANCs’ rules, the amount of contracting dollars going to ANCs have grown by 1,386 percent since fiscal 2000 and have tripled from $1.1 billion in 2004 to $3.9 billion in 2008, according to the Small Business Administration’s inspector general. In SBA’s 8(a) small business program in 2008, ANCs were awarded 26 percent of the total dollars flowing into the program, although they are only 2 percent of the total number of companies in the program, according the IG’s July 10 report.

Similarly, McCaskill’s subcommittee analyzed information from 19 ANCs and found similar results. ANCs received $6.6 billion in 8(a) multi-million-dollar sole-source contracts between 2000 and 2008, according to its report.

The increases are a result of agencies’ small-business contracting goals and, more importantly, a quick way to award a contract, officials say. Rules that are unique to only ANCs allow agencies to award them sole-source contracts of any size without competition, and no fear of bid protests.

Sen. Susan Collins (R-Maine), the subcommittee’s ranking member, said Congress needs to carefully consider whether the 8(a) program rules offer too many benefits to ANCs at the expense of the others.

In the private sector, many business owners are upset by the set-aside partiality ANCs receive. Lumber said few people would object to ANCs having some type of procurement preference, but not that allows for this much advantage.

At the same time, HUBZone businesses get a deal that upsets many other business owners and the Obama administration. It’s a difference of a word: "Shall" versus "may."

Office of Management and Budget Director Peter Orszag on July 10 told agencies to disregard the Government Accountability Office’s (GAO) May 4 bid protest ruling that said HUBZone small businesses get first crack at a contract set-aside. GAO rejected SBA's request to reconsider its rulings.

Because of language in a 1997 authorization law, GAO sustained two bid protests in favor of HUBZone businesses. As a result, GAO ruled that those companies get priority over all 8(a) small businesses and companies owned by service-disabled veterans.

“You’ve got to live by the ‘shall,’ ” said Robert Burton, former deputy administrator of the Office of Federal Procurement Policy and now a partner at the Venable law firm.

While GAO believes the “shall” in the law is a mandate, SBA officials said the 8(a) companies, service-disabled veterans, and HUBZone companies should all be equal to each other.

John Moliere, an advocate service-disabled veteran contractors and president of Standard Communications, said, "I envision the lawyers at GAO smugly pleased with their decision."

Meanwhile, the HUBZone Contractors National Council isn't talking about the disagreement between GAO and OMB.

If Congress or the administration tries to make any changes to these sensitive areas, Burton said it won’t be an easy legislative fix. There are members of Congress who will fight to keep things as they are. Both of Alaska’s senators, who weren't members of McCaskill's subcommittee, took advantage of the special privilege to question witnesses at the ANC hearing. They both also thrust their strong support behind the Alaska Natives.

Over all, Moliere said, “This is not the end of this skirmish. It will erupt in a full-fledged battle.”

Read the story: FCW.com News - Congress, administration move into protected territory

GAO rejects request to review HUBZone decisions

SBA and OMB contend GAO overreached its authority in ruling that HUBZone businesses have priority

The Government Accountability Office today denied Small Business Administration officials’ request to reconsider recent bid protest decisions that give some small businesses priority over others.

SBA’s request “is denied where newly raised information fails to show that our prior decision contains any errors of fact or law,” GAO’s Acting General Counsel Daniel Gordon wrote in a decision released today.

SBA and the Office of Management and Budget Director Peter Orszag contended GAO overreached its authority when it ruled that firms in historically underutilized business zones (HUBZones) should get priority over small businesses in the SBA’s 8(a) program or service-disabled, veteran-owned small businesses.

GAO’s rulings are not binding on federal agencies and are contrary to SBA regulations, Orszag wrote in a memo released to agencies July 10.

“If agencies were to follow the GAO decisions, the federal government’s efforts to procure goods and services from 8(a) small businesses and from [service-disabled, veteran-owned small businesses] through the other statutory programs may be negatively impacted,” Orszag wrote.

He also wrote that the rulings remove contracting officers' discretion to set aside a contract. Until administration attorneys finish their legal review, Orszag wrote that contracting officers should continue using SBA's view of the three types of small businesses. Federal agencies should not “prioritize HUBZone small businesses over” 8(a) or veteran-owned companies, he wrote.

The administration’s concerns come from a May 4 ruling on a protest by Mission Critical Solutions, a HUBZone company. GAO ruled that the Army made a mistake and didn’t consider whether at least two HUBZone businesses would bid on an information technology contract. Instead, the Army awarded the one-year, $3.45 million sole-source contract to Copper River Information Technology, a company owned by Alaska Natives. Law allows Alaska Native corporations to receive sole-source contracts of any size.

GAO based its decision on the Small Business Reauthorization Act of 1997. The legislation states that “a contract opportunity shall be awarded” on the basis of a set-aside competition among HUBZone companies. Meanwhile, Congress didn’t afford companies in SBA’s 8(a) program or companies owned by service-disabled veterans the same mandate. The law only says contracting officers may set aside a contract to those types of companies.

“We do not think SBA’s regulatory implementation of HUBZone and 8(a) statutes is reasonable since it fails to give effect to mandatory language of the HUBZone statute,” the decision in the Mission Critical Solutions case states.

GAO reached a similar conclusion in September 2008, when it considered a bid protest from International Program Group, another HUBZone company. The Marine Corps set aside a contract for service-disabled veterans before considering whether a HUBZone set-aside would be appropriate. GAO ruled against the Marines.

Read the story: Washingtontechnology.com News - GAO rejects request to review HUBZone decisions

DOD’s use of services contracts gets congressional scrutiny

The House version of the 2010 National Defense Authorization Act would require the Defense Department to hire an outside organization to assess its use and oversight of services contracts.

The House Armed Services Committee believes DOD doesn't have a strategic approach to managing its service contracts, according to the committee’s June 18 report on the authorization bill (H.R. 2637).

As a result, “the department is at risk of being unable to identify and correct poor contractor performance in a timely manner and is at risk of paying contractors more than the value of the services they performed,” the committee wrote.

The House passed the bill June 25 by a vote of 389-22. The Senate committee has marked up its version of the bill, but the committee has yet to approve it.

Under the House bill, the assessment would be conducted by a federally funded research and development center. The center would look at the guidance DOD provides its acquisition workforce on how to develop a services contract, including how to define requirements and the associated performance metrics.

The center also would look at whether or not DOD has enough people in its acquisition workforce to do the work appropriately. The report would be due in March 2010.

Rep. Ike Skelton (D-Mo.), chairman of the House Armed Services Committee, said the legislation supports the Defense Secretary Robert Gates' plan to increase the civilian acquisition workforce’s size and to reduce DOD’s reliance on contractors for critical acquisition duties. DOD officials want to hire 9,000 new government employees and convert 11,000 contractor jobs to DOD civilian personnel.

“Defense acquisition reform is a top priority for our committee,” Skelton said in statement June 17 after his committee approved the legislation.

In another acquisition reform, the committee wants to find ways for DOD to buy IT more quickly.

IT systems require regular updates, because of changes in technology, which affects critical parts of the DOD infrastructure. But DOD’s process for buying IT makes it difficult for the department to keep up, according to a DOD task force.

The acquisition process is time-consuming and cumbersome, the task force wrote in a March report. "The process should be agile and geared to delivering meaningful increments of capability in approximately 18 months or less."

The House bill would allow DOD to pick 10 IT programs every year in which to test new procurement processes.Acquisition reforms in the House's fiscal 2010 National Defense Authorization Act concentrate on oversight of service contracts and buying information technology quickly.

Read the story: FCW.com News - DOD’s use of services contracts gets congressional scrutiny

GSA contract expiration reflects market needs, experts say

GSA official says many GWACs won't be renewed as GSA markets its Alliant and Alliant Small Business contracts

The General Services Administration's plan to let many of its governmentwide information technology contracts expire, largely ending the era of big governmentwide acquisition contracts (GWACs), reflects the evolving needs of the market, experts say.

They say the federal IT market’s sales have been driving GSA to end and merge GWACs for several years now. There are too many GWACs, causing too much overlap of services. The result is scattered sales while the cost of running the contracts still dips deeply into GSA’s pockets.

GSA will continue to support only Alliant, its small-business companion contract and a few GWACs targeted to companies in specific socioeconomic categories, said Ed O’Hare, assistant commissioner of the Office of Integrated Technology Services at GSA’s Federal Acquisition Service.

For the long term, though, GSA will likely merge the GWAC program with the widely used Multiple Award Schedules program. “But that will take years, not months,” O’Hare said.

Before ending the GWAC program, GSA will first winnow down the number of marginally performing GWACs, such as Commerce Information Technology Solutions-NexGen, said Larry Allen, president of the Coalition for Government Procurement. In recent years, GSA has taken over several GWACs, such as COMMITS from the Commerce Department, and now the agency needs to streamline its efforts, he added.

GSA has said for more than a year that the overlapping GWACs are expensive for government and industry and should be pared down, said Bill Perlowitz, vice president of advanced technology at Apptis. No one should be surprised that the agency is saying it won’t renew many GWACs, particularly given the Obama administration’s desire for a more efficient government.

“GSA would be streamlining things” to close down or merge GWACs into its schedules program, said Hope Lane, officer of government contracts consulting at Aronson and Co.

Total IT sales figures have slipped slightly in the past several years. The fallout in 2004 over GSA’s mishandling of the Defense Department’s money has caused some DOD customers to turn to other IT contracts, such as the Navy Department’s SeaPort-e, Lane said.

Meanwhile, sales on GSA’s massive Schedule 70 have remained relatively flat at about $17 billion annually for the past three years, according to government figures.

The recently awarded Alliant and Alliant Small Business GWACs, which were delayed for two years, have a wide choice of services, which makes many other GWACs unnecessary, experts say.

"You can get pretty much anything you want from Alliant," Lane said.

Courtney Fairchild, president of Global Services, said GSA’s Alliant contracts, which were awarded earlier this year, were always meant to replace the expiring GWACs.

“I suppose the real question for industry is whether or not government agencies have enough faith in the Alliant contract to switch over,” she said.

Agencies that shy away from Alliant will still have the option to work with one of more than 15,000 companies in the schedules program.

GWACs offer options to agencies that the schedules program can’t, such as cost-reimbursement contracts. Unless GSA can tweak the schedules program’s rules to change that, GWACs will always have a place, Allen said.

In addition, GSA would have a tough time closing the socioeconomic-based GWACs, such as the 8(a) small-business Streamlined Technology Acquisition Resources for Services and the Veterans Technology Services GWACs.

“Would you want to stand before Congress and try to explain why you ended those contracts?” Allen asked.

On the other hand, any attempt to merge the GWAC and schedules programs would be “consistent with the spirit and message of the creation of the recent Federal Acquisition Service,” Fairchild said.

The reorganization of the Federal Technology Service and the Federal Supply Service into FAS allowed GSA to scrap dueling and repetitive contracts that might confuse customers.

Read the story: Washingtontechnology.com News - GSA contract expiration reflects market needs, experts say

Acquisition workforce: Social media could be big draw

The government acquisition community ought to take a cue from President Barack Obama’s campaign strategy and use social media technology to bolster its ranks, one lawmaker says.

The government needs to be brave enough to draw on the younger generation’s new ways of interacting to help attract them to government service and to simply improve how agencies run, said Rep. Brian Bilbray (R-Calif.), speaking at a congressional hearing last week.

Many older federal employees may not be as comfortable with that technology, but the up-and-coming employees live by it. “This is their primary way of thinking,” he said.

Obama’s campaign captured young people’s attention like no other presidential candidate has before. It created Change.gov, a hip Web site describing Obama’s agenda. But Obama also sent out text messages and had a presence on Facebook, MySpace and numerous other social networking sites. Obama posted videos on YouTube. He even tweeted.

As a candidate, Obama was “a socially enabled, socially connected, socially aware, socially conscious leader,” Barry Libert, author of “Barack, Inc.: Winning Business Lessons of the Obama Campaign,” said in a recent speech.

At the hearing, Bilbray said the older generations that didn’t grow up with this technology will always be somewhat blind to it, unlike the younger people who have never known life without that technology.

“First of all, it intimidates us to some degree, and we may not understand it. But the potential is huge,” he said.

The next generation is heading toward more Web 2.0 tools and collaboration from the crowd.

The General Services Administration already has a technology-rich culture, said David Drabkin, acting chief acquisition officer at GSA, who testified at the hearing. The agency is adopting cloud computing and Web 2.0 collaboration tools internally and using social networking sites such as Facebook to interact with the public.

“We are on the edge,” he said.

Mary Davie, assistant Federal Acquisition Service commissioner for assisted acquisition services at GSA, is already thinking about the application of social media to acquisition. In a column in this week’s print edition of Federal Computer Week, Davie suggests opening the process of defining an acquisition’s requirements to get insight from a community of experts, inside or outside of the government.

“Using the wisdom of the crowd to define requirements and the best development process, participants could propose ideas based on experience, good practices, and standards, question and weed out bad ideas, build on one another’s ideas, and float the best to the top,” she writes.

Like Bilbray, Davie sees an opportunity not only to improve procurement but to appeal to younger recruits.

“Imagine what this might do to attract and retain the Net Generation workforce we are always seeking out,” Davie wrote.

At the hearing, Shay Assad, acting deputy undersecretary of defense for acquisition and technology, said technology will bring major changes in acquisition during the next two years.

The department is developing a database that will give Defense Department contracting officials quick access to information on business deals across the department, such as how the department negotiates with certain contractors, what they buy, and how much they may.

The system will be based on information collected by the Defense Contract Management Agency, which is the hub for analysis of the value and costs of DOD’s procurements.

At present, the individual services often don’t share information and know little about what the other services are buying, even from the same contractor, Assad said. “The fact of the matter is that we are not as capable as a number of organizations in terms of being able to share that information, but we are getting there,” he said.

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GSA looks to corral former customers

Procurement agency tries to win back lost business

Good news hasn't come very often to the embattled General Services Administration in recent years. So when some positive attention does come its way, GSA officials are eager to wave the results in front of its old go-it-alone customers — if only to show them that the agency has left its bad habits in the past.

Auditors from the Defense Department and GSA have been examining GSA’s books, and agency officials are confident the outcome will reveal that GSA can toe the regulatory line, said Ed O’Hare, new assistant commissioner for integrated technology services at GSA’s Federal Acquisition Service.

“We are confident we made the changes we needed to make, and we’ll fly through,” he said in a speech delivered in May.

Meanwhile, his marketing people are gathering a list of multiagency contracts and indefinite-delivery, indefinite-quantity contracts that other agencies launched around the same time GSA was found to be assisting the Defense Department with illegal purchases. O’Hare is targeting his message of repentance to the officers in the agencies whose own IDIQs are about to expire. The contracts often last for five to 10 years.

He wants to convince those agencies that GSA is ready to take over the other IDIQs, relieving other agencies of the maintenance burdens that come with running a large contracting program.

His question is simply: “Do you really want to do this again?”

For added emphasis, O’Hare also intends to highlight GSA’s inexpensive usage fees. Agencies pay a 0.75 percent service fee to use the Alliant GWAC, and GSA is capping that fee at $150,000 a year.

“I defy anyone to do a GWAC less expensively than that,” O’Hare said.

GSA’s ‘come to Jesus’ moment

Although GSA says it has moved past the scandal that rocked it five years ago, the memories — and history — linger. On Jan. 8, 2004, the GSA inspector general reported a pervasive problem of improper task orders and contract awards by the agency’s client support centers (CSCs), which served DOD. The IG found that some GSA employees were using the Information Technology Fund for purchases of goods and services that were well outside the fund’s scope. As a result, DOD officials banned use of GSA for major purchases.

The list of GSA’s sins grew long, according to the IG: improper sole-source awards, allowing work outside the scope of contracts, and inappropriately using time-and-materials task orders. Although the IT fund is authorized only for acquiring IT equipment, software and related services, investigators found that CSCs were dipping into it to pay for a wide variety of inappropriate things, such as marine barriers, pathogen detection devices, and construction of classrooms and office buildings.

The GSA IG attributed the problems to a culture that emphasized revenue growth instead of adhering to proper procurement procedures.

“I think every organization has to have a ‘come to Jesus’ moment,” said David Drabkin, GSA’s chief acquisition officer. That IG report was GSA’s moment.

Although the problems applied only to one small piece of GSA’s operation, the public perception was that the agency was more broadly compromised. “One part of your business does badly, and it hurts everybody,” Drabkin said.

DOD customers were frustrated with GSA and showed it in 2004 and 2005. Sales in the multiple-award schedules program slowed, but the program kept GSA from losing money year over year, Drabkin said.

But O’Hare and Drabkin said the agency has reorganized and revamped its operations. GSA is a new place compared to several years ago. And with the problems solved, GSA is ready to work. This latest round of audits, as required by the fiscal 2007 National Defense Authorization Act, should close the file on GSA as a poor broker of procurement dollars, O’Hare said.

Good news

Kevin Carroll, former program executive officer for the Army’s enterprise information systems who was in charge of the Information Technology Enabled Services-2S contract, said the new audit results can only help GSA rebuild its image and agencies’ trust in it.

“They’re showing responsibility,” said Carroll, president of the Kevin Carroll Group. But, he said, GSA also must continue to re-establish and develop its business relationship with DOD. Just showing good audit results won’t be enough.

Greg Rothwell, former chief procurement officer at the Homeland Security Department and president of Everymay Consulting Group, said there’s a deeper issue that might be too tough for GSA to surmount with a good audit: Agencies have become accustomed to doing their own contracting, and they aren’t likely to dump their contracts just to return to GSA.

Martha Johnson, President Barack Obama's nominee to be GSA administrator, said the agency has suffered its decline largely because of new freedom for agencies. Legislative changes in the 1990s, such as the Clinger-Cohen Act, removed many of the rules that required agencies to use GSA. It’s now one option among many.

“If you own it, you can control it,” said Rothwell, who helped to launch DHS’ Enterprise Acquisition Gateway for Leading Edge Solutions (EAGLE) contract and the Internal Revenue Service’s first two iterations of the Total Information Processing Support Services (TIPSS) contracts. “If you can’t control it, it can’t be as responsive to the agency’s mission.”

Faster, better, cheaper

The reality of control and GSA’s rough times forced it to cater to its customers and listen to them, experts say. For instance, GSA is letting agencies use contracts other than its own when GSA assists a customer agency.

GSA is scrambling to get started on launching ways for agencies to get on board with the Obama administration’s emphasis on cloud computing. Chief Information Officer Vivek Kundra and Chief Technology Officer Aneesh Chopra are advancing the administration’s policy, while GSA’s role could be to make it easy for agencies to use cloud computing services.

“We see the administration’s requirements, we respond by initiating some kind of contract action and make it fast and easy for government agencies to use,” O’Hare said.

He even wants to make cloud computing services available to agencies using a credit card, especially when they’re in a pinch for time.

“You don’t have to go to the CIO, you don’t have to go plan it, you don’t have to go buy servers or digital maps or do a [certification and accreditation]," he said. O'Hare envisions an agency employee logging on to a Web site, answering a few questions, and “boom, check out, you got it.”

O’Hare’s Office of Integrated Technology Services has awarded all of its major contracts, such as Alliant and Networx, and they’re ready for business. "I’ve got to get out there and talk to people and try to convince them we’ve already got it,” he said.

And he wants to make GSA work “faster, better and cheaper” than other agencies can offer. “My job is to make it work,” he said.

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