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June 8, 2017 By AMK

The reality of risk in third-party contract relationships

Government organizations rely on outside third-parties to provide the goods and services they need to operate effectively.  Contracting with an outside third-party exposes these organizations to significant risks.

Picture these scenarios:

  • A contractor prepared and submitted inflated invoices and false change orders for labor and materials on a project to build a water treatment plant for a State agency resulting in overbilling of $4.8 million.
  • A municipal government contracted with a fire safety company to annually inspect and re-size firefighter safety equipment. However, the company failed to perform this critical function, putting the safety of firefighters in jeopardy.
  • A freight merchant submitted false fuel and weight claims to the U.S. Government totaling $13 million for oversized air shipments when the standard load was actually delivered via ground transport.

Scenarios like these are just a few of the many risks affecting organizations that work with third-party vendors. As Government organizations continue to rely on outside suppliers or service providers, their exposure to risk and fraud increases.

You might be asking, “What measures could these organizations have taken to prevent and detect these scenarios?”

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=596650

Filed Under: Government Contracting News Tagged With: audit, change order, claims, compliance, contract administration, fraud, internal control, monitoring, oversight, risk, surveillance

May 15, 2017 By AMK

Bidders question handling of border-wall project

The federal government has said it will narrow this week the list of companies in the running to build prototypes of a U.S.-Mexico border wall.

But some bidders expressed skepticism about the process, if the government’s goal — as President Trump promised — is to build a wall along the 1,900-mile border.

“From the beginning it’s not a serious process, it’s not going to get the wall built,” Michael Hari said of the process. His Illinois-based company, Crisis Resolution Security Services, submitted a design inspired by the Great Wall of China.

“Right from the get-go there were conflicts, there was not enough time given to it, to develop a reasonable process that would result in a wall getting built,” he said.

The bumps along the way have been documented.

U.S. Customs and Border Protection extended the initial deadline to submit designs three times. It also amended seven times the two requests for proposals in order to fix errors and elaborate on aspects of the project.

Keep reading this article at: https://www.usatoday.com/story/news/nation-now/2017/05/09/not-serious-process-bidders-question-handling-border-wall-project/315253001/

Filed Under: Government Contracting News Tagged With: addenda, border wall, change order, Customs and Border Protection, design, design-build, fast track, prototyping

October 21, 2015 By AMK

To contract better, does government need more in-house experts?

I was recently interviewed by Raj Sharma, CEO of Censeo, which provides consulting services on procurement management in the public and non-profit sectors, in connection with a project he was working on talking with various procurement luminaries inside and outside government about key competencies government procurement officials need.

Prominent on my list was the ability to evaluate and negotiate contract modifications, known colloquially as “change orders.” For any major contract, mods are a way of life, and a staple of contract management.  For longer-term contracts, the modified contract often ends up bearing only a small relationship to what originally was signed.

And the content of those modifications has a huge influence on a contract’s success. For example, does the mod water down the original terms of the contract due to the contractor contending performance was impossible?  How is the modification priced? (There is a widespread view, captured in the phrase “buy in and get well,” that aggressive pricing during source selection is often counteracted by generously priced mods.)  And  though I didn’t mention it in the interview, I also should have added that an analogous key competency is evaluating the product or service the contractor submits — since problems in that area can often lead to major modifications.

I was taken aback when Sharma told me I was the first interviewee to mention the ability to manage mods as a key competency.

Keep reading this article at: https://fcw.com/blogs/lectern/2015/10/kelman-contracting-expertise.aspx

Filed Under: Government Contracting News Tagged With: acquisition strategy, acquisition workforce, change order, contract management, modification, SME, source selection

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