State Dept. IG issues alert over $6 billion in contracting money unaccounted for

The State Department’s inspector general has warned the department that $6 billion in contracting money over the past six years cannot be properly accounted for and cited “significant financial risk and . . . a lack of internal control.”

The warning was the second “management alert” in State Department history, both issued by new Inspector General Steve Linick. Linick took over the job in late September, after it had been vacant for nearly six years.

oth the alert, dated March 20, and the department’s response a week later, were made public Thursday, April 3, 2014.

The department said it concurred in all recommendations and outlined steps it will take to address what it agreed is a “vulnerability.”

Linick initiated the alert format to report on problems that remain unaddressed despite repeatedly being identified in IG audits and investigations. The first alert, released in January in partly classified form, cited “significant and recurring weaknesses in the Department of State Information System Security Program.”

Keep reading this article at: http://www.washingtonpost.com/world/national-security/state-department-inspector-general-issues-alert-over-6-billion-in-contracting-money/2014/04/03/8ebf465c-bb73-11e3-9a05-c739f29ccb08_story.html 

Watchdog taps contractors for lessons on rebuilding Afghanistan

U.S. contractors on the front lines of the mission know better than “the happy talk coming out” of Afghanistan, said John Sopko, the special inspector general for Afghanistan reconstruction.

On Tuesday (Feb. 18, 2014), Sopko tasked a major contractors group with supplying lessons learned and best practices to help the U.S. effort to rebuild and stabilize the country against terrorism. A similar request to the Pentagon, State Department and U.S. Agency for International Development produced a “shocking result,” he said. “I asked for their top 10 successful programs and their 10 least successful, and none offered anything but general improvements—with no specifics or direct causal links,” he said. “In an era of declining funding, we have to know what works and what doesn’t.”

Speaking at a lunch put on the Professional Services Council, an Arlington-Va.-based association of major contractors, Sopko praised the role of contractors in U.S. government work from supplying Revolutionary War troops to helping invent the atomic bomb.

In Afghanistan, they are expected to play a continuing role after most U.S. troops officially depart at the end of 2014, and “many have made the ultimate sacrifice,” Sopko said, citing three contractors who died earlier this month from a suicide bombing in Kabul. After the September 2013 truck bomb attack on the U.S. consulate in Herat, Sopko’s representative there told him that contractors were the first to engage in a one-hour gun fight that prevented further enemy penetration of the complex — a fact not reported at the time, he said.

The U.S. total investment in Afghanistan of more than $100 billion since 2002 is the “most costly effort to rebuild a nation in U.S. history — more than what we give to Israel, Egypt and Pakistan combined,” Sopko said. The U.S. will leave when the funds fall to $250 million, but with $20 billion still in the pipeline, U.S. agencies will be there for some time, he said. Only 20 percent of the country, however, is currently accessible to SIGAR’s 50 auditors there on the ground due to continuing combat, he said, a drop from 50 percent in 2009.

Keep reading this article at: http://www.govexec.com/contracting/2014/02/watchdog-taps-contractors-lessons-rebuilding-afghanistan/78989/

Senators spar with agencies over war-zone contracting reforms

Officials of three agencies running contracting operations in war-torn Afghanistan and Iraq on Tuesday defended their progress on implementing reforms required in the last defense authorization bill.  Topics ranged from white-elephant construction projects to contractor suspensions to the politically disputed September 2012 fatalities at the U.S. outpost in Benghazi.

Representatives from the Defense and State departments and the U.S. Agency for International Development highlighted their own “proactive” initiatives to curb contractor corruption, save money and better protect U.S. personnel facing danger.

Sen. Claire McCaskill, D-Mo., called the oversight hearing of the Homeland Security and Governmental Affairs Committee to gauge progress on reforms she was instrumental in passing as part of the 2013 National Defense Authorization Act.  “It is much better than it was in 2007 in every single one of your agencies,” McCaskill said. “Everyone is making progress.”

But she lamented that the majority of the reforms implemented after a bipartisan commission recommended them “apply only to future contingencies, not Iraq or Afghanistan,” she said.

Keep reading this article at: http://www.govexec.com/contracting/2013/07/senators-spar-agencies-over-war-zone-contracting-reforms/66827

Reverse auctions: A bid for budget-conscious business

Sometimes a good idea gets even better with the passage of time.

Ten years ago, shaving nearly 15 percent off the cost of a procurement by using a novel approach to the bidding process was a good idea. A decade later, as agencies across the government are seeing programs cut and discretionary funding dry up, it seems like a great idea.

In 2002, Cathy Read, director of acquisitions management at the State Department, gathered her most forward-thinking contracting specialists — the ones who “were always looking for a better way to save money and do it faster” — and asked them to try a new approach to buying commercial IT products.

Rather than soliciting quotes from companies and then picking the one with the best value, the department invited companies to bid against one another, driving the price lower and lower until one bidder emerged as the winner. It’s like an auction, except instead of bidding to buy products, companies are bidding to sell them — hence the name “reverse auction.”

The approach has paid off. State officials estimate they saved $33 million on more than 3,000 purchases in fiscal 2011, based on an independent government estimate. That’s a savings of more than 14 percent.

Proponents say other agencies could achieve similar savings, for a governmentwide total of billions of dollars a year. Given the current budget crisis, those experts say reverse auctions deserve a closer look.

“You can’t always do things the way you’ve always done them,” Read said. “You have to be lean on your feet, and you have to make do with what you have.”

Start small, think big

Reverse auctions are appealing because it’s easy to test the approach and see immediate savings — and imagine how much more savings they could bring to bigger projects.

In the beginning, Read had State auction off a few items to test the new method, and when she consistently found that the approach was saving money, she turned to reverse auctions more often over the years and with a wider array of commodities.

As time went on, the savings continued to increase and the competition for solicitations improved.

Even the department’s inspector general took note of the savings from reverse auctions in a report on spending under the American Recovery and Reinvestment Act of 2009. After reviewing a $13 million program to replace desktop workstations, the IG estimated that the reverse-auction approach had saved the department 7 percent, with greater savings being seen on other projects.

David Wyld, professor of management at Southeastern Louisiana University, has done extensive research into the benefits of reverse auctions. He has determined that $74.5 billion in federal acquisitions could be competed through reverse auctions, and his analysis of auctions conducted across the government demonstrated a savings of 11.9 percent. That means the auctions could bring an annual savings of $8.9 billion across the federal government, with $6.1 billion saved on Defense Department spending alone.

“To me, the real-world benefit is the cliché ‘faster, better, cheaper’ way of doing business,” said Wyld, whose findings were published by the IBM Center for the Business of Government in a report titled “Reverse Auctioning: Saving Money and Increasing Transparency.”

Saving more than money

However, this isn’t just about saving money.

Time is an equally precious commodity in government offices, and many federal officials and acquisition experts say the acquisition workforce doesn’t have enough hours in a day to do all that it needs to do. Both Wyld and Read said reverse auctions save employees the non-renewable resource of time.

Wyld studied how much time State saved by using reverse auctions and found that the department shaved off nearly a full workday from each procurement it conducted using reverse auctions. Specifically, the department saved an average of 475 minutes — or 7.92 hours — whenever it conducted an acquisition through reverse auctions rather than traditional procurement methods.

“If you’re going to be a buying shop today when budgets are being cut by 15 to 20 percent because money is an issue, then as a buyer, you have to look for better, faster, more creative ways to get your program office what it needs,” Read said.

Agency officials must consider tools like reverse auctions or they won’t be able to adjust to the ongoing need to reduce the cost of government operations, she added.

Nevertheless, the auctions are not simply a way to save a little time and money here and there. The approach also streamlines the negotiation process. Reverse auctions simplify communication and collaboration between buyers and sellers, Wyld wrote in his report. “The competitive bidding processes that took weeks or even months to complete can be compressed into days or even hours,” he said.

All those factors help increase competition and bring agencies closer to the true fair-market value of a purchase. State’s IG wrote that reverse auctions “have been found to be significantly less expensive per item than buying the items from comparable General Services Administration schedules.”

The flip side of reverse auctions

Reverse auctions do have their limitations. For one thing, “the expedited form of procurement won’t work without oversight,” said Robert Burton, former deputy administrator of the Office of Federal Procurement Policy (OFPP) and now a partner at Venable law firm.

Furthermore, procurement offices cannot turn over all solicitations to reverse auctions. The approach only works when the terms of the contract are clearly defined and there is little — or no — room for flexibility. In other words, it is best for common products. Burton warned against buying services through a reverse auction because such contracts have far too many variables.

However, Read said she believed it was possible to buy certain basic services through reverse auctions.

Furthermore, Wyld said the auctions could change the nature of the relationship between buyers and suppliers. Instead of establishing long-term partnerships, relationships might only last until the next competition. The potential for switching suppliers is a cost of doing business, and for basic items, it won’t matter much, he said.

“Copy paper is copy paper,” Wyld said. “Toilet paper is toilet paper.”

However, a reverse auction also might affect the dynamic between buyers and suppliers, with the suppliers feeling coerced into lowering their prices in order to join an auction, Wyld wrote.

Jaime Gracia, president and CEO of Seville Government Consulting, said the reduction in procurement spending has the potential to make competition fierce, which, in turn, forces companies to lower their prices to win contracts.

To succeed with reverse auctions, Gracia said agency officials must determine which procurements are appropriate for reverse auctions — and which are not — and they must make sure that those solicitations have very clear requirements.

Making the case for innovation

Experts say now is the time to sell agencies on reverse auctioning because senior officials are desperate to find ways to conserve their resources.

“Agencies are looking under trees and in the couch for any spare change,” Gracia said.

OFPP has issued memos calling for agencies to use innovative procurement tools, including reverse auctions. Recently Dan Gordon, outgoing OFPP administrator, urged agencies to consider the approach.

To make the case to their bosses, Read said procurement officials should start small and document the results. From the beginning, she kept detailed notes on the reverse auctions that State conducted. She can cite dollar amounts, volumes and percentages by fiscal year.

“You can see the metrics are very important to really understand if we have savings and success,” she said.

However, she said that although innovative contracting specialists will likely embrace reverse auctions, instituting the approach agencywide will take time. “Change management issues in a federal government agency are always a bit of a challenge,” Read said.

Wyld, too, said reverse auctions should be implemented with care. However, he added, “hill by hill, staffer by staffer, people will change after hearing firsthand stories of savings.”

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. Published Dec. 12, 2011 at http://fcw.com/articles/2011/12/12/feat-reverse-auctions.aspx.

House subpoenas four agencies for small-business noncompliance

Four federal agencies were issued subpoenas by the House Small Business Committee on Oct. 20 for not complying with the Small Business Act’s procurement policies, according to a committee staffer.

The departments of Justice, Agriculture, Treasury and State were summoned to appear before the the Small Business subcommittee on contracting and workforce on Nov. 1 to testify why they are in noncompliance.

At issue is the “structure” of these agencies’ Small and Disadvantaged Business Utilization Offices (OSDBU) and “the fact that they are not reporting to the agency head or deputy head,” wrote Darrell Jordon, house committee spokesman, in an e-mail to Washington Technology.

OSDBUs were conceived in 1978 with the purpose of having federal agencies set aside contracts for small and disadvantaged businesses. The Small Business Act also has requirements that agencies report their procurement activities with small and disadvantaged businesses.

Justice, Agriculture, Treasury and State were warned of their missteps and given a chance to remedy the situation after a June Government Accountability Office small business contracting report found seven agencies not in compliance.

Following that report, letters to agencies were sent by subcommittee Chairman Mick Mulvaney (R-SC). As a result, the Interior Department and Social Security Administration are now in compliance, and a third, the Commerce Department, was pardoned due to an administrative issue.

In September, agencies were reminded of their noncompliance by memo and a hearing was held on Sept. 15 by the subcommittee to examine the GAO report and the economic impact of noncompliance.

As part of the subpoena procedure, the four agencies must produce a number of documents, including paperwork relating to their small business procurement programs, attainment of small business goals or challenges to decisions not to restrict competition to small business between Jan. 20, 2009, and Sept. 30, 2011.

About the Author: Alysha Sideman is an online content producer with 1105 Government Information Group. Published by Washington Technology – Oct. 21, 2011 at http://washingtontechnology.com/articles/2011/10/21/small-biz-committee-subpoenas.aspx

Agencies can improve suspension and debarment process, says GAO

Too many federal agencies are insufficiently protecting against contractor fraud or incompetence by using the suspension and debarment process, the Government Accountability Office reported Thursday. Agencies with records of scant use of the practice should beef up dedicated staff and commit to greater use of the interagency committee designed for this purpose, the auditors said.

“Agencies that fail to devote sufficient attention to suspension and debarment issues likely will continue to have limited levels of activity and risk fostering a perception that they are not serious about holding the entities they deal with accountable,” William Woods, GAO’s director of acquisition and sourcing management, told a hearing of the House Oversight and Government Reform Subcommittee on Technology, Information Policy, Intergovernmental Relations and Procurement Reform. But “we need to keep the process informal to avoid red tape, because agencies need to move quickly to protect the government’s interest,” he added.

GAO examined the number of suspensions and debarments imposed under the Federal Acquisition Regulation of 10 major contracting agencies over five fiscal years. Most active were the Defense Logistics Agency, the Navy, the General Services Administration and Homeland Security Department’s Immigration and Customs Enforcement.

Agencies with little or no use of the procedure were the Commerce, Health and Human Services, Justice, State and Treasury departments, as well as DHS’ Federal Emergency Management Agency.

“The mountains of federal forms are frustrating” for many good contractors, said panel chairman Rep. James Lankford, R-Okla., “but certain contractors try to defraud, or are chronically poor performers. We need to find out why some agencies uncover the abuse and others don’t” so the government can enforce a process that “strengthens the integrity of overall contract system.”

The Defense Department has far and away the highest raw number of suspensions and debarments (1,616 over five years), but when viewed as a percentage of contracting dollars, as ranking member Rep. Gerry Connolly, D-Va. noted, the Environmental Protection Agency has a far higher rate.

HHS, Connolly and Republican members pointed out, did not post a single contractor suspension or debarment in the past five years, despite a 2010 budget that included $368 billion in grants and $19 billion in contracts.

GAO’s Woods said he was surprised by the numbers at HHS. His report does not recommend any new legislation on suspensions (which are temporary) and debarments (which are long term), but calls for the agencies deemed inactive to mimic the organizational approaches of the active ones. That means assigning full-time dedicated staff and resources, developing detailed implementation guidance, and promoting a case referral process.

In addition, GAO recommends that the administrator of the Office of Federal Procurement Policy issue governmentwide guidance to ensure that agencies are aware of the elements of an active suspension and debarment program and the importance of cooperating with the Interagency Suspension and Debarment Committee. Witnesses at the hearing suggested that many agencies lack full commitment to that panel, which was created in 1986.

Under the Federal Acquisition Regulation and a parallel set of rules for nonprocurement contracting, agencies are responsible for examining contractors and uncovering fraud or nonperformance and then posting the companies on the website of the Excluded Parties List System maintained by the General Services Administration. Contractors’ rights are supposed to be protected through established procedures for challenging the listing through a timely meeting with top agency officials and a “mini trial” in which they can present evidence defending their record.

Nearly 84 percent of suspensions and debarments are required by statute — such as past violators of the 1970 Clean Air or 1972 Clean Water acts — according to GAO, which focused its study on the 16 percent that are discretionary.

The agencies deemed inactive generally accepted GAO’s conclusions. Nick Nyack, chief procurement official at Homeland Security Department, said, “We get this. We’re going to get it right and will be a best practices agency in short order.” Under questioning, he said it could be done within three months.

Three months was also the estimate for making changes the members elicited from Nancy Gunderson, suspension and debarment official at HHS. She said the department had terminated numerous grants and contracts for reasons such as questionable scientific integrity. But HHS efforts thus far on the issue have focused on promoting an electronic desk reference, staff training and looking at other agencies’ procedures, she said.

Agencies considered models were represented by Richard Pelletier, a suspension and department official at EPA, who said his agency since 1981 has maintained a “robust” approach that involves two offices with full-time staff.

Steven Shaw, deputy general counsel of the Air Force, stressed the importance protecting contractors’ rights by having officials who aren’t in the procurement chain “examine evidence, not just the fact of an indictment.” He favors a carrot-and-stick approach that includes regular meetings with important contractors and not mandatory debarments. The overall dollar figures, rather than the number of suspensions or debarments, he added, might be a better metric on agency activity than raw numbers.

–  by Charles S. Clark - Government Executive - October 6, 2011 – http://www.govexec.com/story_page.cfm?articleid=49011&dcn=e_tma

Four departments resist call to comply with Small Business Act

Conflicting interpretations of agency internal reporting requirements in the Small Business Act have prompted a stalemate between four departments and congressional overseers examining the performance of programs designed to assure that small businesses get a fair share of federal contracting.

The Government Accountability Office in a report had found that seven agencies were not complying with the law’s requirement that the Offices of Small and Disadvantaged Business Utilization in every department except Defense must report directly to the agency.

At a hearing Thursday with the House Small Business Subcommittee on Contracting and the Workforce, a GAO specialist reported that the State, Commerce, Treasury and Justice departments recently had declined requests that they comply.

Subcommittee Chairman Mick Mulvaney, R-S.C., told the hearing that a failure to comply presents a clear conflict of interest and is “completely unacceptable . . . President Obama says that ‘small business contracting should always be a high priority in the procurement process,’ but his administration disregards the basic protections for small business contractors,” Mulvaney said. “Instead of just lip service, he should make sure his administration is following the law in regards to small business requirements.”

OSDBUs were created in 1978 to help reserve some federal contracts for for-profit small business concerns in which socially and economically disadvantaged individuals own at least a 51 percent interest and manage and control daily business operations. Concretely, they seek to make sure that the tendency of contracting officers to bundle contracts for larger contractors does not exclude the disadvantaged. Reporting directly to an agency’s leader rather than only to its contracting officers is considered essential to fair consideration of contract awards, and more than half the agencies GAO surveyed said their OSDBUs report only to the agency head.

On Sept. 9, Small Business Administrator Karen Mills sent a memo to all agency heads asking them to comply. “Open and direct communication between the OSDBU director and the secretary, deputy secretary or their equivalent is paramount to ensure that small businesses receive the maximum practicable opportunity to compete for and win federal contracts that allow them to grow their businesses and create jobs,” she wrote.

GAO’s June report said seven noncomplying agencies also were out of compliance in 2003. They include Agriculture, Commerce, Interior, Justice, State, Treasury and the Social Security Administration. In August, Mulvaney sent letters to the noncomplying agencies asking them to respond by Aug. 31 about how they “intend to rectify the reporting relationship.”

William Shear, director of financial markets and community investments at GAO, explained at the hearing that Commerce and Justice disagreed that they’re not in compliance, while State and Treasury made a legal argument that they are free to delegate the authority for how OSDBUs report.

Shear told Government Executive that Agriculture didn’t reply, Interior sent a letter saying it will comply, and SSA promised to comply but hasn’t followed up with documentation.

Claims by Commerce and Justice that they are in compliance, Shear said at the hearing, “don’t fit the fact pattern” obtained when auditors interviewed the OSDBUs about interaction with agency heads. He said GAO found evidence of tension and frustration at OSDBUs in agencies that were not complying because contracting offices are not always fulfilling their needs. “But some tension is healthy,” Shear said. He noted that there are no sanctions for noncomplying agencies.

Ranking member Judy Chu, D-Calif., agreed with the call for compliance at the hearing, which also dealt with mentor-protégé programs and SBA’s performance on data on its procurement center representatives. “Failure to comply with this requirement not only shows a callous disregard for the law, but also shortchanges small businesses that end up suffering the consequences of OSDBU’s diminished agency standing,” she said.

A spokesman for Commerce, Kevin Griffis, told Government Executive that “the department is in compliance with the law, and both its record and the progress being made to continue to improve its performance speak for themselves. In 2010, the Small Business Administration, in its Small Business procurement score card, awarded the department a grade of ‘A’ for its procurement practices — up from the previous year’s ‘C.’

Justice spokeswoman Gina Talamona said in an email that the department “fully supports the mission of the Office of Small and Disadvantaged Business Utilization. Consistent with the Small Business Act, department regulations provide that the director report directly to the deputy attorney general. Although OSDBU is located within the department’s Justice management division for administrative purposes, the director still reports to the deputy attorney general on substantive matters.”

Mulvaney said he plans to hold another hearing on OSDBUs and invite agency heads or senior officials from noncomplying agencies, adding, “They won’t enjoy it.”

– by Charles S. Clark - Government Executive – September 16, 2011 at http://www.govexec.com/story_page.cfm?articleid=48818&dcn=e_gvet

How Sept. 11 changed government contracting forever

When terrorists hijacked four planes to use them as weapons and killed thousands of innocent people in the process, a chain reaction started that quickly swept across the country.

Today we live with many of those changes, from heightened security checkpoints at airports to more requirements to get a driver’s license.

Government contractors saw their market changed overnight, with a rush of government spending on new security priorities, creating an abundance of business opportunities.

Ten years later, contractors still feel the impact, including the types of business opportunities available, the role of the financial markets and the relationship between contractors and government agencies.

But other changes have been at work as well. Some are counteractions to the reaction to the Sept. 11 attacks. Others would have happened anyway.

Either way, contractors have been in a near-constant state of evolution over the past decade. That condition is likely to extend well into the next decade.

A need for speed

The biggest game-changer was the sudden awareness of the security vulnerabilities that threatened the United States and the need to address those vulnerabilities.

“We weren’t naive anymore,” said Tony Jimenez, founder and CEO of MicroTech LLC.

Before the attacks, terrorism was thought of as something that happened somewhere else.

“What Sept. 11 brought home was that we were vulnerable,” said Cyril Draffin, vice president of homeland security at Northrop Grumman Corp.

The government reaction was to rapidly start addressing security issues, which meant the allocation of funds and the awarding of contracts. First, there was the creation of the Transportation Security Administration and then the Homeland Security Department.

Other agencies such as the Justice and State departments increased their spending on security. More money also began flowing to state and local governments in the form of grants.

The heightened security concerns also led the United States to launch the wars in Afghanistan and Iraq, and supporting those efforts also helped fuel an explosion of spending with government contractors.

In fiscal 2000, the contractors on Washington Technology’s Top 100 rankings had an aggregate of $26.8 billion in prime contracts. In fiscal 2010, the number had climbed to $132 billion. Much of that growth was driven by the need to support warfighters and to support intelligence and homeland security initiatives.

“The clock speed of contracts and task orders increased significantly,” said Paul Leslie, CEO of Dovel Technologies. “With 9/11, money moved very quickly, and companies had to adjust and modify their business development efforts and response times.”

The government wholly embraced the use of indefinite-delivery, indefinite-quantity contracts because agencies could move quickly to address a need. That trend has become a fact of life in the government market as these large task-order contracts have become the vehicle of choice for buying services and products.

“The increased use of IDIQ contracts and the quicker turnaround of those activities has changed how we do contracting,” said David Zolet, president of business development for Computer Sciences Corp.’s North American public-sector business.

Security concerns also changed how contractors and customers interacted.

“You used to be able to move on and off military facilities,” Jimenez said. “The only place they seemed to check your ID was the PX.”

The current lockdown state of many government agencies, military and otherwise, creates challenges for contractors. “It limits the ability to market your company,” Jimenez added.

There was also less need for security clearances pre-Sept. 11.

“But a lot of the changes are good because it separates the wheat from the chaff and you have to be a much more professional organization today,” he said.

Wall Street wakes up

As the market exploded in terms of spending, companies grew rapidly and, unlike the 1990s and the dot-com era, Wall Street began to notice the government market’s growth potential, said Jerry Grossman, a managing director with the investment bank Houlihan Lokey.

“You had this migration of interest to the government,” he said.

And the market lived up to its potential, with spending on IT services between 2002 and 2006 growing at 10 to 15 percent a year. The earnings of many public and private government contractors during that time were growing at 20 to 25 percent a year.

“The third leg of the equation was that the government was outsourcing more,” Grossman said. “Companies really saw their growth rates get turbo-charged.”

Wall Street’s interest sparked the initial public offerings of a slew of companies such as ManTech International, SI International SRA International, Veridian Corp., Anteon International, MTC Technologies, Sciences Applications International Corp., ICF International, NCI Inc. and DigitalNet.

The window on IPOs came to a close for the most part by 2006 as the market cooled and growth rates returned to more traditional levels.

But Grossman doesn’t expect Wall Street to walk away from those as budget cuts hit the government. “Sept. 11 planted in people’s minds — the public, the taxpayers, investors — the continuing importance of defense, national security, intelligence and homeland security,” he said.

Strategy shifts

For some companies the rapid growth in the market created a management dilemma: how to balance the pursuit of short-term business opportunities with more sustainable business.

SAIC won a contract to install and integrate the communications, electronics and other command and control equipment on mine-resistant, ambush-protected vehicles known as MRAPs. The military needed a lot of them and needed them fast in Iraq and Afghanistan. The program delivered thousands of vehicles and was up and running in less than a year. But as the wars wind down, those kinds of projects won’t continue.

“That’s an example of a near-term opportunity but not something that is sustainable,” said Deborah James, executive vice president for communications and government affairs for SAIC. She ran the program, based out of Charleston, S.C., for the company. “But I certainly hope and believe that the speed and agility we gained will stay with us.”

At the same time it is critical that companies focus on more sustainable business areas, particularly in light of the current budget and economic environment. For example, cybersecurity is an area James and other executives consider a sustainable market.

“I don’t care what business you are in, cyber is important to you,” she said.

While threats to people and property remain real, cyber threats have increased in their frequency and ferocity in recent years.

In today’s current budget environment, which some executives said the boom in homeland security spending caused, cybersecurity is seen as an areas that will continue to be funded.

“Cyber would have evolved even without Sept. 11,” Draffin said. “But it is a reminder that people want to do us harm on our own territory.”

A lasting legacy

The aftermath of the terrorist attacks ushered in a new relationship between contractors and government agencies.

“We had this massive growth the first four or five years after Sept. 11, but that’s just the numbers,” said Stan Soloway, president of the Professional Services Council, an industry group, and a Washington Technology columnist.

“What has so dramatically changed in the last decade is that the government’s highest-priority missions require sophisticated technology and related skills, and that’s where the government really struggles to compete for people,” he added.

The government doesn’t have the resources to hire enough people with the high-end technology skills in areas such as cybersecurity, counterterrorism and data analytics to meet the needs of the government mission.

People with those skills can command a salary more than twice what the government can pay. “It’s not greed by contractors; it is what the commercial market dictates,” he said.

It doesn’t mean the government can’t hire any of these people, but it can’t hire enough, so the question is more of balance, Soloway said.

“How that mission-critical work is performed by the government has changed permanently,” he said. “Sept. 11 really kicked that off, and that’s the biggest fundamental change to the market of the last decade. And there is no indication that it is going to change over the next decade.”

About the Author: Nick Wakeman is the editor-in-chief of Washington Technology.  Published 9/7/2011 at http://washingtontechnology.com/articles/2011/08/29/cover-sept-11-legacy.aspx?s=wtdaily_080911 

Pentagon contracting policy faulted in two reports

Defense Department contractors in war zones wasted more than $30 billion during the past decade through poor planning and management, the chairs of the Commission on Wartime Contracting in Iraq and Afghanistan said on Monday in an op-ed previewing a report due out this week.

During those same 10 years, the value of Pentagon contracts awarded without competitive bidding tripled, from $50 billion in 2001 to more than $140 billion in 2010, according to a report the nonprofit Center for Public Integrity released Monday.

In a critique titled “Reducing Waste in War Contracts” published in The Washington Post, former Rep. Christopher Shays, R-Conn., and Mark Thibault, former deputy director of the Defense Contract Audit Agency, wrote that all eight members of the wartime commission “agree that major changes in law and policy are needed to avoid confusion and waste in the next contingency, whether it involves armed struggle overseas or response to disasters at home.”

The panel chairmen said taxpayer dollars have been “wasted through poor planning, vague and shifting requirements, inadequate competition, substandard contract management and oversight, lax accountability, weak interagency coordination, and subpar performance or outright misconduct by some contractors and federal employees.”

As solutions, they recommended:

  • Designating a dual-hatted official to coordinate contracting at the Office of Management and Budget who would participate in meetings of the National Security Council;
  • Using risk analysis more in deciding whether a function not inherently governmental should be outsourced;
  • Reviewing current and pending projects for evidence of unsustainability, with an eye toward canceling those that don’t appear promising;
  • Creating a permanent inspector general for operations during contingencies.

Meanwhile, the Center for Public Integrity’s research findings, which it will unfold daily this week in a series called “Windfalls of War,” include an analysis of federal data concluding that “the Pentagon’s competed contracts, based on dollar figures, fell to 55 percent in the first two quarters of 2011, a number lower than any point in the last 10 years since the terrorist attacks of 9/11.” The center noted that the issue of noncompetitive contracting practices has been examined many times by the Government Accountability Office, the Defense Department’s inspector general and the Commission on Wartime Contracting.

President Obama weighed in on the problem both as a candidate in 2008 and in a presidential memo in 2009. The center also cited a memo promising efforts at greater use of “multisource, continuously competitively bid” contracts issued in 2010 by Defense Undersecretary Ashton B. Carter, the Pentagon’s senior procurement chief.

But “campaign pledges and memos have made little headway in combating the problem,” wrote analyst Sharon Weinberger, whose team studied a dozen government reports and investigations and interviewed eight former government officials and experts.

Coming installments in the series will examine no-bid contracting at the Energy, Homeland Security and State departments, as well as the Federal Emergency Management Agency, all of which, the center says, have better records on the issue than does the Pentagon.

The final report of the wartime commission, chartered by Congress in 2008, is scheduled for release on Wednesday.

 – by Charles S. Clark – Government Executive – August 29, 2011 at http://www.govexec.com/story_page.cfm?articleid=48650&dcn=e_tma 

Report: Contractor waste in war zones could grow

As President Obama nears his decision on reducing U.S. troop presence in Afghanistan, a new report warns of prospects for massive new waste in contractor projects in both Iraq and Afghanistan.

Newly built power plants that sit idle, water treatment plants that produce nonpotable water and facilities constructed for security forces that could potentially exceed $11 billion in costs are some examples given in the report released June 3 by the federal Commission on Wartime Contracting in Iraq and Afghanistan.

Titled “Sustainability: Hidden Costs Risk New Waste,” the fifth special report from the congressionally chartered panel set up in 2008 says many of the programs and projects carried out under federal contracts in the war zones “lack plans for staffing, technical support and funding for the long term” in such projects as health clinics and road building. As a result, said commission co-chairman Michael Thibault, billions could be wasted if projects are turned “over to a host government that can’t supply trained people to run it, pay for supplies, or perform essential maintenance.”

“A paradigm example stands in Kabul,” the report said. “American taxpayers’ dollars paid for building the $300 million Tarakhil Power Plant, also known as the Kabul Power Plant. The plant is completed. But it is little used, and the cost to operate and maintain it is too great for the Afghan government to sustain from its own resources.”

The report asks the Pentagon, State Department and U.S. Agency for International Development to examine the projects, make a detailed assessment of the host nations’ ability to complete the projects, cancel or redesign projects as warranted, and report results to Congress by the end of 2011.

On Monday, Undersecretary of State for Management Patrick Kennedy told a hearing of the Wartime Contracting Commission that the State Department will be ready to take over responsibilities in Iraq from the Defense Department on Oct. 1, as scheduled. “As the military draws down, and the [State] department’s plans are implemented to increase the civilian presence in Iraq, the department is relying on the use of contractors for certain functions which are not inherently governmental,” Kennedy said in prepared testimony. “We use contractors in contingency operations when it makes sense and is cost-efficient, as opposed to building up permanent, U.S. direct-hire staff.”

–by Charles S. Clark – Government Executive – June 6, 2011 – http://www.govexec.com/story_page_pf.cfm?articleid=47948&printerfriendlyvers=1