acquisition | The Contracting Education Academy

April 4, 2012 By AMK

DOD needs simpler contracting processes, lawmakers told

Congress and the Defense Department need to simplify the department’s confusing and burdensome acquisition regulations in order to make the jobs of the acquisition workforce and contractors easier, the House Armed Services Committee recommended in a new report.

In one recommendation, the report says DOD and Congress should embark on a comprehensive review of laws and regulations related to procurement. They then should attempt to amend or even repeal outdated regulations. In doing so, officials should consider whether a rule has had unintended consequences that outweigh its original purpose.

“This effort should be undertaken with an eye to simplifying and streamlining all aspects of the acquisition process and reducing the negative cost and schedule impacts,” according to the report released March 20.

The House committee’s Panel on Business Challenges Within the Defense Industry released the report after discussing acquisition issues with more than 150 people from government, industry, think tanks and academia.

The panel learned in those discussions that the acquisition rules are constantly changing and are extremely complicated. The result is unnecessary complexity, confusion, and poor execution, which only furthers challenges for the acquisition workforce, according to the report.

The Office of Management and Budget urged agencies on March 20 to take similar steps in an effort to avoid duplication among regulations. It even urged agency officials to talk to contractors and other experts before they issue a proposed rule.

DOD’s acquisition rules are off-putting to some companies, the panel wrote in its report.

“The plethora of regulations specific to government and defense contracting dissuades many companies from competing for government contracts,” the panel found.

The complexities also make it tough for the department’s acquisition workforce, which is going through a slow rebuilding process. Employees need a lot of training to understand the ins and outs of the acquisitions regulations and manage complex procurements, the panel wrote.

The workforce took a hit in the 1990s with a major reduction in its numbers. Nowadays, defense officials are attempting to rebuild it. They have hired a lot of new employees, dubbed by the panel as a “new-hire bulge.” Meanwhile many senior members are eligible for retirement.

“These parallel bulges constitute a ‘bathtub effect’ as mid-career personnel are not abundant enough to adequately replace the retirement bulge, nor provide for enough on-hands mentorship to the new-hire bulge,” the panel wrote.

DOD’s training now is very important, the panel added. Maturity in the job and higher education are keys to a strong workforce. It’s more than numbers.

Higher education equips acquisition workers with complex skill sets in finance, systems engineering, logistics, and operations management needed to administer large contracts and manage long-term technology projects.

In President Barack Obama’s fiscal 2013 budget proposal, DOD requested $374 million in its acquisition workforce development fund for recruiting and hiring acquisition and only $120 million, or less than a third, for training and development of the workforce, the panel points out.

“Just as it takes many years to develop a military leader capable of commanding at the senior ranks of the operational force, it takes a similar amount of time to develop an acquisition professional with the knowledge, skills, and experience needed to manage large defense acquisition efforts,” the panel wrote.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article appeared Mar. 22, 2012 at http://washingtontechnology.com/articles/2012/03/22/regulatory-reform-dod-acquisition.aspx?s=wtdaily_230312.

March 24, 2011 By AMK

Audit credits DHS with dramatic improvement in acquisition process

A recent audit by the DHS Inspector General found that the department had dramatically improved its oversight of contracts and reduced the number of noncompetitive contracts awarded by 60 percent last year; in 2010 DHS awarded $1.3 billion in no compete contracts compared to $3.4 billion in 2009 and $3.5 billion in 2008; the inspector general reviewed forty noncompetitive contracts worth roughly $100 million dollars and found that the rate of deficiencies was only 7 percent; while the report found marked improvements, it also recognized that there were still gaps in DHS’ acquisition process

In 2010 DHS awarded $1.3 billion in no compete contracts compared to $3.4 billion in 2009 and $3.5 billion in 2008.

The report also stated that procurement officials at DHS had improved their oversight of noncompetitive contracts, maintaining sufficient documentation and research to justify noncompetitive contracts.

The inspector general reviewed forty noncompetitive contracts worth roughly $100 million dollars and found that the rate of deficiencies was only 7 percent. In 2008 similar reviews found that 76 percent of files had deficiencies, while in 2009 that number was 79 percent.

While the report found marked improvements, it also recognized that there were still gaps in DHS’ acquisition process.

Anne Richards, assistant inspector general for audits, wrote, “Acquisition personnel did not always document consideration of contractor past performance when performing background research of eligible vendors. As a result, the department cannot be sure that it received the best possible value on the goods and services acquired through these contracts, or that acquisition personnel awarded government contracts to eligible and qualified vendors.”

The report recommended that DHS improve its documentation of contracts. More than 40 percent of the contracts that were examined lacked proper documentation, while eleven of the forty contracts examined lacked research to show that past performance had been taken into account.

“The department needs to continue its emphasis on better planning and documenting its acquisitions and decision-making processes,” Richards wrote.

To that end, Homeland Security Secretary Janet Napolitano has requested $24.2 million in its 2012 budget to hire an additional 150 people for its acquisitions workforce.

Before the House Homeland Security committee last week, Napolitano testified that improving the acquisition process had contributed to her department’s overall identification of more than $800 million in cost savings.

“We are preserving essential front-line operations and bolstering our operational strength by decreasing administration and overhead,” she said.

— Published March 15, 2011 by Homeland Security Newswire at http://homelandsecuritynewswire.com/audit-finds-dhs-dramatically-improved-its-acquisition-process

March 21, 2011 By AMK

Tax delinquency no impediment to contracts with IRS

File this one with the government’s irony department.

The Internal Revenue Service and other federal agencies paid nearly a dozen federal contractors almost $3.7 billion in procurement awards, despite the fact the companies owe millions in back taxes, according to a new report by the Treasury Inspector General for Tax Administration.

In every case, the IRS failed to take enforcement actions because the contractor was disputing the tax liability. It took the IRS an average of eight months — and in some instances as long as 22 months — to determine whether the information provided by the company was enough to adjust the outstanding balance, TIGTA said in a report dated Feb. 4 but released on Monday.

While the IRS was reviewing the contractors’ accounts, collection efforts were suspended and the firms received contract payments of $356 million from the IRS and $3.6 billion from other government agencies, the report found. If the accounts had not been blocked, the treasury would have received more than $3.7 million in taxes from the firms.

“All federal contractors, and particularly those that do business with the IRS, must meet their obligations to pay federal taxes,” said J. Russell George, the Treasury Inspector General for Tax Administration. “Although the IRS has the responsibility to investigate the merit of a taxpayer’s claim before initiating enforced collection activity, it should improve its practices to expedite the timely resolution of federal contractor accounts that are in dispute.”

According to IRS procurement data, of the 535 companies with contracts at the agency, 61– or more than 11 percent — had delinquent federal tax accounts totaling some $10.6 million. Most of these companies are receiving reminder notices, are in litigation, or are working with the IRS to resolve the delinquency through a payment solution, TIGTA said.

The report identified eight contractors, however, with delinquent taxes totaling $4.2 million that were challenging the IRS assessments and were therefore blocked from inclusion in the Federal Payment Levy Program. The automated program collects delinquent federal taxes by issuing levies of up to 15 percent on a variety of federal payments, including contract awards.

From fiscal 2000 through 2009, nearly $2.4 billion was levied on behalf of the IRS and about $430 million was imposed on delinquent federal contractors.

Although a delinquent tax case can indicate the existence of serious issues that can jeopardize contract performance, it alone rarely precludes a company from winning a contract, George said.

The IG recommended the IRS expedite its review of federal contractor cases in a blocked status. “TIGTA believes the IRS could improve the timeliness of these cases by taking a more active enforcement approach to suspend payments to contractors if they are not making attempts to resolve their tax liability within a reasonable time period,” the report said.

The IRS agreed with TIGTA’s recommendations, but noted it has a responsibility to investigate companies’ claims before beginning collection actions.

“If the IRS determines that the underlying tax assessment is accurate, the taxpayer’s account is adjusted to the correct amount,” wrote Christopher Wagner, commissioner of the small business/self-employed division at the IRS. “If the IRS denies the taxpayer’s claim, the account is returned to the collection stream for appropriate action.”

In January 2010, President Obama issued a governmentwide memorandum directing the IRS commissioner to review the certifications that firms bidding on federal contracts submit to demonstrate they are up-to-date on their taxes. The memo also required the Office of Management and Budget director to issue recommendations on ensuring tax delinquent contractors are not awarded new contracts, and to develop plans to make contractor tax certifications available in a governmentwide procurement database.

Earlier this month, Rep. Jason Chaffetz, R-Utah, introduced a pair of bills that would prevent contractors and federal employees with “seriously delinquent” tax debt from working for the government.

— by Robert Brodsky – GovExec.com – March 14, 2011

March 18, 2011 By AMK

New GSA acquisition chief calls for government-contractor cooperation

The General Services Administration’s new acquisition chief is calling for greater cooperation and communication between the government and its industry contractors, echoing a familiar refrain from members of the Obama administration’s procurement team in recent months.

In an interview last week with Government Executive, new GSA Chief Acquisition Officer Mindy Connolly said the two sides should have better dialogue in the lead-up to contract awards and during the process of implementing Federal Acquisition Regulations. GSA, like all contracting agencies, is required to develop a vendor communication plan for its workforce and the public by June 30.

“If we want to have a government that is leaner and more transparent and ready for the 21st century, anything we can do to reduce that burden on industry is really to our advantage,” said Connolly, whose first day on the job at GSA was Feb. 28.

The administration has made it a priority of late to myth-bust the perception that contracting officers should not meet with vendors for fear of causing contract delays, or committing potential ethical violations.

Last month, Dan Gordon, administrator of federal procurement policy at the Office of Management and Budget issued a 13-page memorandum that addresses 10 of the most widely held misconceptions, including communicating with a bidder could result in a competing firm filing a protest.

Connolly has experienced the often arcane world of federal contracting from two perspectives, administering awards in both the public and private sectors. She has awarded contracts at NASA, Customs and Borders Protection, and the Treasury Department and was the Transportation Security Agency’s first contracting officer. She previously served as chief of contracting for Bureau of Land Management’s Western Region and held similar roles in industry, most notably as a contracting manager for Honeywell Defense and Space Electronics.

At GSA, Connolly plans to work with industry to clarify the impact of FAR rules so that industry is not left struggling for answers.

“Because of my experience both in government acquisition and in industry acquisition as the government customer, my interest is that it works better,” she said. “It works pretty well, but there are opportunities for it to work better through communications and doing a little different planning in our rule-making.”

Most recently, Connolly served as a senior procurement policy analyst at OFPP, where she led the office’s natural resources’ division on contracting policy matters, including implementing White House requirements for sustainable procurements and green building design.

She helped draft Obama’s October 2009 executive order requiring agencies to set a 2020 greenhouse gas emissions reduction target, increase energy efficiency, reduce fleet petroleum consumption, and “leverage federal purchasing power to promote environmentally responsible products and technologies.”

The order states 95 percent of all new nonweapons contracts meet sustainability requirements, including being water and energy-efficient and safe for the environment, and containing recycled materials.

Connolly’s job is to take the broad-ranging policy for environmentally preferable products and services and sustainable technologies and make it executable through regulations in the FAR.

“Each agency would be able to look at how they can put [directives] into their specifications, or requirements for products,” she explained. “Some things are easy, like office paper. Other things are more challenging like a building, or a lease.”

– By Robert Brodsky – GovExec.com – March 14, 2011

March 14, 2011 By AMK

Army skeptical of fixed-price contracts

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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