‘Reverse Auctions’ draw scrutiny

It is like an eBay of Washington, a well-appointed and well-connected online marketplace for lucrative government contracts.

Deals for everything from pens to pesticides, from painting offices to performing autopsies — all that and more is up for grabs on FedBid, a fast-growing private company that has positioned itself at the profitable nexus of government and business.

Financed by an investment company connected to Stephen M. Case, of AOL fame, and Ted Leonsis, majority owner of the Washington Wizards, FedBid has assembled a roster of Beltway insiders to promote an unusual approach to how contracts are meted out. Its latest big hire is Joseph Jordan, who was until recently head of procurement policy for the Obama administration.

Through FedBid, government agencies use “reverse auctions” — in which the lowest bid wins, rather than the highest — to decide who is awarded contracts. In theory, the process can save money for taxpayers by encouraging businesses to offer the best possible prices. In practice, it also makes a lot of money for FedBid, which can collect fees from the winning bidders who, in turn, pass those costs to the government.

At issue is whether FedBid encourages competition, as its proponents argue, or simply prompts companies to submit unrealistically low bids to outmaneuver business rivals. Detractors contend that awarding contracts based solely on price means that the government risks ending up with inferior products or services, though this is a risk even when the government does not use reverse auctions. A recent government study, which reviewed reverse auctions at top agencies, found that roughly a third of all FedBid auctions involved a single bidder, meaning that they were closer to no-bid contracts than true auctions.

Keep reading this article at: http://www.nytimes.com/2014/04/07/business/reverse-auctions-draw-scrutiny.html?nl=todaysheadlines&emc=edit_th_20140407&_r=1 

GAO issues annual anti-deficiency report

Each year, the Government Accountability Office (GAO) produces a report that identifies instances where federal agencies obligated or spent funds in advance or in excess of appropriate approval of funding.  This reporting is conducted in accordance with the Antideficiency Act which prohibits such expenditures.

GAO’s summary of agency Antideficiency Act Reports for fiscal year 2013 includes unaudited information extracted from agency Antideficiency Act reports filed with GAO, as required by section 1401 of the Consolidated Appropriations Act, 2005, Pub. L. No. 108-447, 118 Stat. 2809, 3192 (Dec. 8, 2004).  Each report entry includes a brief description of the violation, remedial actions taken, and links to individual agency reporting letters. For more information on individual violations and actions taken, contact the agencies filing the reports.

The latest report can be found here.

Per 31 U.S.C. §§ 1341, 1517(a), the Antideficiency Act prohibits federal agencies from obligating or expending federal funds in advance or in excess of an appropriation, apportionment, or certain administrative subdivisions of those funds.  The act also prohibits agencies from accepting voluntary services (31 U.S.C. §§ 1342).

Specifically, the Antideficiency Act requires agencies violating its proscriptions to:

  • Report to the President and Congress all relevant facts and a statement of actions taken, and
  • Transmit a copy of each report to the Comptroller General on the same date the report is transmitted to the President and Congress.

GAO compiles and presents unaudited information from reports filed each fiscal year, including copies of the agency’s cover letters transmitting reports of violations.

GAO: USDA improperly awarded $141 million sole source contract

The U.S. Department of Agriculture improperly awarded a $141 million sole source contract in exchange for the contractor’s agreement to withdraw a GAO bid protest.

According to a recent GAO bid protest decision, the award violated the Competition in Contracting Act, which does not permit an agency to award a sole source contract in exchange for a contractor’s promise to terminate litigation against the agency.

The GAO’s decision in Coulson Aviation (USA), Inc., et al., B-409356.2 et al.(Mar. 31, 2014) involved the USDA’s procurement of next generation (“NextGen”) large airtanker services for wildland firefighting support.  The Air Force initially issued a solicitation for the NextGen airtanker services in 2011.  After corrective action taken in response to a GAO bid protest, the USDA awarded NextGen contracts to four companies.  Neptune Aviation Services, Inc., which had initially been identified as an awardee before the protest, was not awarded a NextGen contract.

Keep reading this article at: http://smallgovcon.com/gaobidprotests/gao-usda-improperly-awarded-141-million-sole-source-contract/ 

F-35’s operating cost to decline, says DoD acquisition chief

The Pentagon will decrease its $1.1 trillion estimate for the cost of supporting Lockheed Martin Corp. (LMT)’s F-35 fighter jet over a 55-year lifespan, the top U.S. weapons buyer said.

“It will drop to a number that’s not trivial but is not as much” a reduction “as I would like,” Frank Kendall, the Defense Department’s undersecretary for acquisition, said April 3, 2014 at a Bloomberg Government breakfast in Washington.

While debate over the aircraft, the costliest U.S. weapons system, has focused mostly on the price to develop and build the fighter, Pentagon agencies also have disputed its long-term operating costs, from spare parts to repairs.

Kendall declined to elaborate on the reduced 55-year estimate by the department’s independent cost-assessment office. The figure will be released later this month in its next unclassified Selected Acquisition Report. Until then, the official projection is the $1.1 trillion formulated by that office three years ago.

By contrast, the Pentagon’s F-35 program office estimates that the fleet will cost $857 billion to operate and support over its lifetime.

On the separate cost of developing and producing a planned fleet of 2,443 F-35s, the U.S. Government Accountability Office said in February that its projection is $390.4 billion, as adjusted for inflation over the years the plane is produced. The Pentagon’s latest estimate by the same measure is $391.2 billion, about a 1.1 percent reduction from an earlier calculation.

Keep reading this article at: http://www.bloomberg.com/news/2014-04-03/lockheed-f-35-s-operating-cost-estimate-to-decline.html 

What went wrong with GSA’s Networx transition?

A pair of internal analyses by the General Services Administration finds much to criticize in the structure of federal telecommunications contract Networx, portraying it as too complex, inflexible and mismatched to the way agencies buy telecom services.

The Government Accountability Office has estimated that a protracted agency transition to Networx from the predecessor governmentwide telecommunications contract caused agencies to miss out on $329 million worth of savings and GSA to spend an extra $66.4 million on supporting it. In the end, the transition took three years longer than anticipated.

GSA provided the two reports – one from July 2012, another from September 2012 – after FierceGovernmentIT submitted a Freedom of Information Act request for them. Agency officials decided to release the documents independently of FOIA, and we withdrew the request after being promised the reports.

Among the observations the analyses make is that while GSA initially defined more than 50 telecom services for Networx, only six services account for more than 80 percent of business volume.

“Networx has thousands of contract line items and millions of service permutations,” the July 2012 report says. “It is no surprise that agencies indicate the Networx program is too complex.”

Keep reading this article at: http://www.fiercegovernmentit.com/story/what-went-wrong-networx-transition/2014-03-10

Acquisition infrastructure takes a village

Problems in government contracting today include complex issues of pricing, staffing, and outcomes. Solutions are often arrived at quickly; new legislation or regulation, adopting commercial practices, adding or reducing staff and oversight. Wherever we lie on the oversight or streamlining continuum, we always seem to want to get to the other side. Short term actions result in winners and losers, but long-term results don’t significantly change.

Government agencies are now largely dependent upon contract support to meet their mission. Yet, their organizational structure doesn’t reflect this new dependence. A robust contracting infrastructure in both the public and private sectors is necessary and must include the knowledge and experience embodied in professional competencies in program management, system engineering, finance, quality assurance, property, logistics, information technology, etc. to positively impact program outcomes and reflect organizational leadership and culture. These core competencies are necessary to plan and execute a mission that reliant on contracted support of products and services. GAO’s acquisition framework includes an analysis of organizational structure and placement when reviewing risk factors for agency success.

Keep reading this article at: http://www.federaltimes.com/article/20140303/BLG06/303030008/Acquisition-infrastructure-takes-village 

Strategic sourcing’s impact on small biz needs measurement and monitoring, GAO says

“Strategic sourcing” is a method used by the federal government to improve procurement efficiency by moving away from numerous individual procurements toward a broader aggregate approach.   Since 2005, the Office of Management and Budget (OMB) has encouraged federal agencies to use strategic sourcing.

Now, the Government Accountability Office (GAO) has issued a report on how strategic sourcing affects small businesses, including small disadvantaged businesses. The report discusses: (1) how OMB, GSA, and selected agencies have considered small businesses in their strategic sourcing efforts, and (2) the extent to which data and performance measures are available on the inclusion of small businesses in strategic sourcing initiatives.

In its review, GAO found that OMB and the General Services Administration (GSA) have developed guidance on strategic sourcing that stresses the importance of including small businesses.  GAO’s review of documentation for three ongoing government-wide strategic sourcing initiatives showed that GSA considered the inclusion of small businesses in the strategic sourcing process. For example, when developing strategic sourcing initiatives for office supplies and print management, GSA identified the current market share of small businesses with these products and also set aside specific contracts for various categories of small businesses, such as service-disabled veteran-owned small businesses. In addition, GAO’s review of agency-wide strategic sourcing initiatives at each of five agencies — Departments of Defense (DOD), specifically Army and the Defense Logistics Agency; Homeland Security (DHS); Housing and Urban Development (HUD); and the Interior and the National Aeronautics and Space Administration (NASA) — showed that the agencies generally considered the inclusion of small businesses.

However, data and performance measures that would provide a more precise understanding of the inclusion of small and disadvantaged businesses in strategic sourcing initiatives are limited.  GAO’s specific findings include:

  • Although GSA has collected baseline data on proposed government-wide initiatives, it has not developed a performance measure to determine changes in small business participation going forward.
  • DHS has collected some data on contracts awarded to small businesses under strategic sourcing initiatives, but it and the other agencies in GAO’s review generally did not have baseline data and performance measures to determine how small businesses were affected by strategic sourcing.  OMB guidance requires agencies to establish baselines for small business participation prior to implementing strategic sourcing and set goals for small business participation.
  • In addition, federal internal control standards state that information is needed to determine whether the agency is achieving its compliance requirements under various laws and regulations.  Without baseline data and performance measures, the effect of strategic sourcing initiatives on small businesses will be difficult to determine.
  • Moreover, OMB has not monitored agencies’ compliance in reporting baseline data and performance measures on the inclusion of small businesses in government-wide and agency-wide strategic sourcing initiatives. OMB required agencies to submit annual reports on the implementation of strategic sourcing from fiscal years 2005 through 2007 and prepare information for acquisition status sessions from fiscal years 2010 through 2012. (No reporting was in place for fiscal years 2008 or 2009.)  However, virtually none of this information included baseline data or measures of the effect of strategic sourcing on small businesses.
  • Federal internal control standards state that effective monitoring should assess the quality of performance over time.  Without effective monitoring, it will be difficult for OMB to help ensure that agencies are tracking the impact of strategic sourcing on small businesses.

As a part of its report, GAO made recommendations to GSA, selected agencies, and OMB to improve data collection and performance measures related to the inclusion of small businesses in strategic sourcing. DOD, DHS, GSA, HUD, and OMB agreed with GAO’s recommendation. Interior partially agreed, suggesting that a more effective approach would be to work with OMB and other agencies to develop common approaches. NASA disagreed, stating it already tracks related spending for the agency. GAO believes its recommendations remain valid as discussed in the report.

To download the complete report, click here.

GSA acquisition database integration pushed back to 2018

The General Services Administration (GSA) pushed back the planned completion date of an integrated acquisition database to 2018 because of development problems and cost overruns, GSA Assistant Commissioner Kevin Youel Page told a Senate panel March 6.

“We’ve suffered our own missteps,” Page said during a hearing of the Senate Homeland Security and Governmental Affairs Committee subcommittee on financial and contracting oversight.

Plans were made in 2001 to combine governmentwide acquisition databases into a single system called the Integrated Acquisition Environment.

But the project has been plagued with problems.

A March 2012 Government Accountability Office report says cost overruns, which grew by 89 percent, were largely due to mistakes GSA has made. GAO initially estimated it would cost about $95.7 million, but the 2012 estimate came in at $181.1 million.

Keep reading this article at: http://www.fiercegovernment.com/story/gsa-acquisition-database-integration-pushed-back-2018/2014-03-07 


Unauditable DoD, interagency activity are key financial issues

Major financial management problems kept the Government Accountability Office from providing an audit opinion on the federal government’s financial statements for fiscals 2013 and 2012.

“The federal government is not able to demonstrate the reliability of significant portions” of its consolidated financial statements for those years, the GAO says in a Feb. 27 report, citing material weaknesses in internal controls.

The Defense Department’s continued failure to produce auditable financial statements is one of the main reasons that GAO can’t offer an audit opinion, the report says. Another is the government’s inability to accurately reconcile activity between federal agencies.

Improper payments, and the inability of federal agencies to know their full extent, also represent a material weakness, the report says.

Keep reading this article at: http://www.fiercegovernment.com/story/unauditable-dod-interagency-activity-are-key-financial-issues/2014-03-04 

GSA’s Networx contracts not as effective as they might have been

Although GSA officials say the agency’s Networx contracting vehicles have put significant dents in the federal government’s telecommunications bills, a GAO study says the road to those savings wasn’t nearly as smooth as it could have been.

The Government Accountability Office said complex acquisition processes and weaknesses in project planning contributed to delays transitioning to Networx from the GSA’s old FTS2001 contracts, resulting in cost increases and missed savings for federal users.

According to the GAO study, under Networx, federal agencies tended to transition easier items first to demonstrate progress, before they turned to work on items such as data networks and international services that needed longer lead times. As a result of the delays, it said, GSA’s estimated cost to complete the transition increased by $66.4 million, 44 percent over the baseline estimate.

Keep reading this article at: http://fcw.com/articles/2014/01/07/gao-networx-study.aspx