Energy Dept. | The Contracting Education Academy

July 26, 2011 By AMK

Homeland Security relying more on fixed-price contracts, report says

The share of Homeland Security Department contracts that fulfill the Obama administration’s preference for fixed-price awards rose steadily over the past four years to reach 10.3 percent, or $7.5 billion in fiscal 2010, a new think tank study reports.

That rise followed an earlier hike in dependence on time-and-materials or cost-reimbursement contracts in the wake of natural disasters such as Hurricane Katrina in 2005, according the Center for Strategic and International Studies. Its study, “DHS Contract Spending and the Supporting Industrial Base,” released Thursday, analyzed federal data from from fiscal 2004 to fiscal 2010, dealing primarily with service contracts. It incorporated input from DHS officials.

Homeland Security’s move toward fixed-price awards coincided with reduced use of purchase orders and contracts awarded without competition, the report noted. David Berteau, the project’s director who runs CSIS’ defense-industrial initiatives group, applauded efforts by the Office of Management and Budget to “require agencies for the first time to use the Federal Procurement Data System as a management tool to track improvements and enhance competition.”

The report also noted a doubling in the use of multiple-contract awards at Homeland Security and a 10.6 percent yearly decline in single-contract awards. “Multiple awards not only help create competition,” Berteau said, “they help the agency decide what it is seeking in the contract’s requirements.” The value of contracts awarded without competition shrunk from a high of $7 billion in 2006 to $1.6 billion in 2010, the report said.

Homeland Security has been successfully adhering to Small Business Administration guidelines for awarding contracts to small firms. “Unlike the Defense Department, which has a growing share going to large companies, DHS has a broad diversity of companies, which also emphasizes competition,” Berteau said.

The agency controls about half the contracts dealing with homeland security, with the Pentagon running a quarter and the remainder coming out of the Justice, State, Energy and Health and Human Services departments.

The portion of contracts run out of the Office of the Secretary at Homeland Security rose 900 percent and in 2010 accounted for the largest share of contract spending, the report noted. The bulk of this increase reflects the recent transfer of the Federal Protective Service, which supervises many private contractors, from Immigration and Customs Enforcement to Homeland Security’s Office of Procurement Operations, within the secretary’s office, the report said. Berteau said the growth is not necessarily a reflection of the management approach of Homeland Security leadership.

The report’s list of the top 20 Homeland Security contractors indicated a flip in priorities, noted project co-director Guy Ben-Ari. “It shows the dynamic nature of DHS contracting, with less emphasis today on disaster response and more on the rise of IT and defense awards,” he said.

In 2005, the top five DHS contracting companies were Circle B, Integrated Coast Guard Systems, Fairmont Homes, Unisys and Graham. In 2010, the top five in were IBM, Lockheed Martin, Integrated Coast Guard Systems, Unisys and Accenture.

Established in 2002, Homeland Security is the only national security agency whose budget was not significantly increased in the years after the Sept. 11 terrorist attacks, Berteau said. Hence Homeland Security planners must remain aware that they don’t have “the same cushion for the looming drawdown” in federal spending as do other agencies.

— by Charles S. Clark – GovExec.com – July 21, 2011 – at http://www.govexec.com/story_page.cfm?articleid=48312&printerfriendlyvers=1

July 8, 2011 By AMK

Cut contracting costs by 15 percent, agencies are told

Federal agencies are being directed to achieve a 15 percent reduction in costs for managing contracts over the next year under a new component of the Obama administration’s Campaign to Cut Government Waste, Office of Management and Budget officials announced Thursday. The goal is to save $6 billion governmentwide by the end of fiscal 2012.

Jeffrey Zients, federal chief performance officer and deputy OMB director, told an audience of primarily agency officials at the White House Forum on Accountability in Federal Contracting that costs for management support services quadrupled between 2000 and 2010, from $10 billion to $40 billion. “Agency productivity as a whole is relatively flat, and we can’t tolerate that, particularly in this fiscal situation,” he said.

The new approach will “still look to contractors for a wide range of professional and technical needs, but in a more prudent, cost-effective manner,” Zients said. Agency managers “will analyze their spending patterns and buy only what they can afford. They will seek out contractors with good past performance and end relationships with firms who are proven bad actors. They will also keep a watchful eye out for situations where reliance on a contractor’s expertise has gone beyond what is appropriate for the agency to maintain control of its mission and operations.”

Other methods being pursued include lowering labor rates, helping agencies groom a cadre of information technology acquisition specialists and boosting efforts to cease engaging contractors that have tax delinquencies. Among the problems with contracting, Zients said, is that too often “it is hard to distinguish who is the contractor and who is the federal employee” and some contractors today are actually managing other contractors, which is “unacceptable.”

In framing the contract management initiative as part of the larger anti-waste campaign, he said the administration is on track to achieve its dollar goals in the areas of reducing improper payments, selling off unneeded federal real estate and improving efficiency of IT purchasing. Government spending on contractors declined by $80 billion in fiscal 2010, the first such reduction in 13 years, Zients added.

Dan Gordon, administrator of the Office of Federal Procurement Policy, said the process “will be transparent so that the Government Accountability Office and industry can follow it [and successes] will be shared across government.” When asked by a contracting professional how agencies could prioritize contracts strategically, Gordon said the process should be “thoughtful, not mechanical. It is not a call for insourcing and not a numbers game.”

The Professional Services Council, an Arlington, Va.-based industry group, welcomed OMB’s efforts to reduce waste, but took issue with setting a dollar target.

“Although this is not an insourcing initiative, telling agencies to cut 15 percent of their support contracts by the end of next year could create the same kind of undisciplined process that has marked much of the Defense Department’s insourcing initiatives,” PSC President and Chief Executive Officer Stan Soloway said. “This puts significant responsibility on OMB and agency leadership to ensure that does not happen.”

Gordon has targeted 15 federal product service codes that are of special interest because they are high risk to government and taxpayers. “That’s where the money is,” he said. These 15 areas currently have a high proportion of cost-plus or time-and-materials contracts, as opposed to fixed-price contracts. “The focus on management support services is to get closer to inherently government functions,” Gordon said. “Contractors are still valuable to management support services, but we’re saying we need to spend less money.”

He added he’d like an acquisition force that is better trained, receives more attention and meets more frequently with White House leaders. He praised the Education Department, for example, for developing a network of junior acquisition professionals. He also said contract managers should focus more on pre- and post-award planning, particularly as it affects set-asides for small businesses.

He praised the General Services Administration for encouraging more governmentwide contracts. “There’s a communications problem and we must change the culture,” he said, dismissing a long-standing assumption that talking to industry was improper. Finally, contract managers under the new approach will better document companies’ past performance and will share that information with other agencies.

Presenting at the forum were representatives from agencies whose successes in improving contract management OMB wanted to highlight. The Homeland Security Department official described savings from a strategic sourcing of office supplies and other purchasing. A U.S. Agency for International Development official described procurement reforms for that agency’s work in often remote and dangerous locations overseas, which include a new executive-level suspension and debarment team to track performance on contracts by local businesses and nongovernmental agencies. A representative described the Navy’s negotiation of a continuity of services contract that saved $1 billion by retaining rights to intellectual property created under the contract.

One specific way to achieve savings, Gordon said, is working with “vendors you use so much, you can negotiate lower prices.” He cautioned agencies to avoid duplicate agreements by checking before putting out a contract to see if a suitable one already exists. And agency contract managers looking for efficiencies, he added, should “include in their meetings people from outside the contracting shops.”

— by Charles S. Clark – GovExec.com – July 7, 2011 at http://www.govexec.com/story_page.cfm?articleid=48199&dcn=e_gvet

December 17, 2010 By AMK

Energy Department announces contractor pay freeze

Energy Secretary Steven Chu announced Friday the department would freeze salaries and bonus payments for its site and facility management contractor employees.

The move came after President Obama proposed a two-year pay freeze for civilian federal employees.

“As our nation continues to recover from these challenging economic times, households and small businesses across the country are making sacrifices,” said Chu. “In this spirit, we are asking our contractor employees, who are doing important research, operations and environmental cleanup work, to join the federal workforce in playing a part.”

Energy’s freeze would affect people who manage day-to-day operations at 28 sites and facilities, including the department’s famed national laboratories.

The freeze would affect about 75,000 contract workers. Energy is one of government’s largest employers of contractors, with an outsourced workforce much bigger than its own staff.

The freeze takes effect Jan. 1, 2011. For sites that already have approved contractor salary increases for next year, it would take effect at the beginning of the next pay increase cycle and last for the following two years.

Katherine McIntire Peters reported in the December issue of Government Executive that Energy’s management of its contracts has been on the Government Accountability Office’s list of high-risk federal programs since the list was created in 1990. Cleanup of nuclear weapons sites, which comprises much of the department’s work, is a highly technical process requiring a skilled workforce on both the government and contractor side.

– by Tom Shoop – GovExec.com – December 17, 2010

November 8, 2010 By AMK

Agencies slow to respond to requests for contractor data

Some federal procurement officers are refusing to publicly release contractor ratings data that may show agencies are not properly evaluating the performance of vendors who receive billion-dollar contracts, according to a consulting practice that regularly files Freedom of Information Act requests for the data.

In June, Jeff Stachewicz, founder of the FOIA Group, tried to obtain contractor evaluations from several agencies, including the departments of Defense, Energy and Interior, the Environmental Protection Agency and NASA. Interior and NASA released their contractor performance ratings, a move that Stachewicz applauds and attributes to President Obama’s push for greater transparency.

But it took months for FOIA officers to respond to the requests. Stachewicz believes that’s because some contracting officials did not want the public to see incomplete ratings contained in the Past Performance Information Retrieval System, and the application used to capture the information, the Contractor Performance Assessment Reporting System. Some agencies, such as the Defense, Homeland Security and Justice departments, denied his requests. Several of his other inquiries are still pending.

To better understand what was holding up his inquiries, Stachewicz filed a FOIA request to obtain e-mail correspondence between various agencies and Defense, which controls the databases. Two weeks ago, Energy provided him nearly 30-pages of redacted e-mails to and from Defense officials, including one exchange of messages indicating Energy had trouble obtaining its information from Defense.

In that exchange, an Energy official asked, “Is there someone within DOD that can or will release DOE performance data?” In reply, a Defense official in the database’s program office stated that a senior procurement analyst at the Pentagon had advised that the office “will not provide any ratings information in electronic or other format. DOD has not released this information in the past.”

Stachewicz says the e-mail indicates Defense was trying to block the information from consideration for release under FOIA at other agencies.

“That was the smoking gun. That one response was, ‘We don’t want to give that data out.’ In my opinion, that’s not proper. They were deliberately trying to avoid the FOIA by not giving it to the agencies to make a decision,” he said. “This flies in the face of the Obama transparency doctrine. It’s a report card . . . Let them kind of man up to their score.”

Stachewicz said while contractors are accountable for their scores, procurement officials who manage the scoring systems also are responsible for maintaining up-to-date, accurate and complete assessments. The procurement officials “are not trying to hide what’s there. They are trying to hide what’s not there,” he said.

In the past, federal auditors have sharply criticized agencies for filing insufficient evaluations of contractors that failed to provide project managers with information necessary to pick the best suppliers. Part of the difficulty is that the Office of Federal Procurement Policy has not established a way to standardize ratings scales across agencies nor made thorough documentation a priority, according to a 2009 Government Accountability Office report. Until such problems are resolved, the report said, the Past Performance Information Retrieval System “will likely remain an inadequate information source for contracting officers. More importantly, the government cannot be assured that it has adequate performance information needed to make sound contract award decisions and investments.”

Energy officials did not respond to several requests for comment.

Defense officials said it is not true that anyone stopped the department’s employees from releasing ratings information to the agencies. “If an agency has come to the CPARS or PPIRS program offices and requested a copy of the data they have submitted for their own review for potential FOIA release, we have provided it,” Defense spokesperson Cheryl Irwin said.

But “there are additional factors,” she said, listing several issues that have caused delays in distributing the ratings. Historically, for example, Defense has not released certain evaluations because of concerns about disclosing vendors’ competitive and confidential information. In addition, Stachewicz’s group submitted requests to many agencies, all of which landed in the Defense program’s office simultaneously.

“DoD coordinated with the Office of Federal Procurement Policy to understand if they wanted to make a governmentwide decision about releasability of the data,” Irwin said. The office, which is part of the Office of Management and Budget, has not done so, but has held conference calls with several agencies to gain an understanding of how each is handling the requests, she said.

Because there is no governmentwide policy on publicly releasing data from the contractor ratings systems, Defense is sending the information to the agencies for them to make decisions about disclosure, Irwin added.

“It has taken a couple of weeks to clear up some of the confusion from [such issues] and accomplish the necessary coordination with OFPP,” she said.

OMB officials confirmed that OFPP is convening conference calls with certain agencies about providing contractor ratings in response to FOIA requests. But each agency has discretion in choosing whether to publicly release its own data. Officials added they are unaware of any cases in which Defense has not provided agencies with their own ratings data or pressured agencies not to disclose their data.

The Office of Government Information Services, a new organization within the National Archives and Records Administration responsible for resolving FOIA disputes, said it is working with OMB and several federal agencies to examine procedures for consistently responding to FOIA requests for access to contractor performance ratings.

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