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January 3, 2011 By AMK

Feds offer peeks at companies’ subcontract relationships

The federal government is the newest occupant in the peep-show district of the business world.

It has moved in with its business partners peep show, a place where anyone — no matter their age — can get a glimpse of what’s happening between government contractors and their partners.

The place where everything’s transparent — the USAspending.gov website — is giving intimate peeks into business relationships with its new subcontracting award information, which went online in December.

To grab people’s attention, the government can advertise that it’s the only place where people have an opportunity to watch company relationships grow closer and then apart as business changes.

The government’s massive website of contracting data posted its first subcontracting award information in December, wrote Jacob Lew, director of the Office of Management and Budget, on the OMB Blog last month. It’s another step toward the ultimate goal of the Federal Funding Accountability and Transparency Act. For the first time, the public can track a government agency’s payments to a contractor and the contractor’s payments to its subcontractors.

Until now, two companies’ relationship was for the two companies alone. Government officials had regarded the details of relationships between contractors and subcontractors as something they shouldn’t release, said Kevin Plexico, senior vice president for research and analysis services at Input.

That has changed now, though, as officials pull back the curtain on companies’ partnerships.

In early December, Lew wrote that USAspending.gov had roughly 930 subcontracting awards posted, accounting to about $750 million in federal funding.

“We expect this number to increase significantly over time, but it represents a critical milestone in our efforts [to provide] the public with unprecedented transparency into how and where tax dollars are spent,” he wrote.

The show will include some veterans who are used to having their spending figures available for all to see. As prime contractors, they’ve had to do it for years. It comes with being a federal contractor. However, there will be some companies who’ve never shown that much information before.

The transparency requirements “may be uncomfortable for the subcontractors, who, by the way, are not typically exposed to this kind of reporting,” Plexico said.

Nevertheless, the data might be good. The peeks at companies could impress other businesses interested in potential partnerships.

As the amount of subcontractor data increases, “it should be a useful tool for companies and agencies to gain insight into partner relationships and patterns,” Plexico said. The data could also help companies find qualified subcontractors and give more insight into their past performance.

– by Matthew Weigelt – Jan. 03, 2011 – Federal Computer Week

Filed Under: Government Contracting News Tagged With: awards, payment, small business, subcontracting

December 16, 2010 By AMK

New Congress could put the brakes on insourcing

The 112th Congress is unlikely to let the Obama administration move full-speed ahead on its initiative to bring contractor jobs back in-house, a consultant and a Republican Senate staff member said on Thursday.

Jonathan Etherton, president and owner of the consultancy Etherton and Associates Inc. and a former Senate Armed Services Committee staffer, told an audience of contractors at a Coalition for Government Procurement breakfast he has heard at least three congressional panels plan to look at whether insourcing is being implemented strategically and whether agencies are focusing on critical positions.

Bill Wright, Republican staff director for the Senate Homeland Security and Governmental Affairs Ad Hoc Subcommittee on Contracting Oversight, noted insourcing is on the radar of ranking member Sen. Scott Brown, R-Mass. Brown is concerned the initiative is moving forward too quickly and without enough consideration of its effect on small businesses, Wright said during the breakfast discussion.

More generally, Brown is looking for ways to improve efficiency during times of mounting national debt, Wright said. The senator is developing an acquisition savings plan that could include expanding strategic sourcing, an approach in which agencies analyze purchasing trends and buy common commodities and services in bulk; rewarding high-performing acquisition teams; and promoting a more specialized acquisition workforce by requiring officials to obtain certifications in certain areas of expertise.

New Congress could put the brakes on insourcing  Much of the subcommittee’s oversight work to date has been bipartisan, Wright added, and Brown is working with the administration on the efficiency initiatives.

Etherton noted, however, that Congress’ overall relationship with the executive branch is likely to grow more adversarial in 2011 with Republicans in control of the House and lawmakers aggressively scheduling oversight hearings.

In addition to insourcing, Etherton said, the next Congress is likely to examine implementation of the 2009 Weapons System Acquisition Reform Act; the relationship between the Defense Contract Audit Agency and the Defense Contract Management Agency; the definition of inherently governmental work; how to best ensure adequate contractor controls against waste, fraud and abuse; and how Defense Department savings initiatives will affect the industrial base.

Wright predicted lawmakers also would focus on transparency surrounding contractor profit incentives and subcontractor performance; tracking contract-related earmarks; and enhancing competition and limiting risk through fixed-price arrangements.

– by Amelia Gruber –  Government Executive – December 16, 2010

Filed Under: Government Contracting News Tagged With: DCAA, DCMA, fixed price, inherently governmental functions, insourcing, performance, strategic sourcing, subcontracting, transparency

December 1, 2010 By AMK

Obama administration begins publishing names of federal subcontractors on Web

The U.S. government is giving the public new details about how it is spending taxpayer money on government business.

Starting Wednesday, the Obama administration began publicizing the names of subcontractors – the companies that get the majority of federal contracts – along with the dollar amounts they receive.

For years, the government reported only the companies that won major, or prime, government contracts – even if those companies then hired subcontractors to do most of the job. Now taxpayers can follow more accurately where their dollars are going, tracing public money to the specific companies and communities that share in multimillion- and billion-dollar federal work.

The previous dearth of information about government subcontracts led to incomplete and sometimes misleading conclusions about Uncle Sam’s impact on communities.

For example, an agency may have boasted of awarding a $100 million prime contract for debris removal after Hurricane Katrina to a homegrown Louisiana company. But that company may have lacked the equipment to tackle the work, and then hired two hauling companies based in Virginia and Texas to do most of the job.

The new subcontractor details are available on the Office of Management and Budget’s Web site, USASpending.gov. Recipients of all federal contracts and grants larger than $25,000 will be required to report the names of companies they hire.

The subcontractors’ names are being made public as required by the Federal Funding Accountability and Transparency Act, which became law in 2006 under President George W. Bush. The informations’ release is two years behind schedule. A smaller portion of subcontractor information – for contracts larger than $20 million – was made public in October.

Both the Bush and Obama administrations faulted technical obstacles for preventing accurate reporting and Web site publication of subcontractor information. After the Obama administration spent tens of millions of dollars in 2009 to create a public Web site, FederalReporting.gov, to track money spent on stimulus projects – including subcontractor details – it cleared the way for the same information to be published on standard government contracts.

Moira Mack, an OMB spokeswoman, said resources also factored into the delay. Contracting spending dramatically increased under the Bush administration but the number of contracting employees remained stagnant, Mack said.

Because of the law, the public will now learn if a huge contract won by a fledgling minority- or female-owned company helped that firm or instead flowed to a well-heeled contracting firm founded and run by a white man. The records also would reveal whether defense work that was meant to help shore up an electronics company in recession-plagued rural Pennsylvania was instead largely being done by a powerful defense giant in Arlington County.

Craig Jennings, director of federal fiscal policy at OMB Watch, an advocate for government transparency, said the public may learn good and bad news about government spending with the new initiative.

“You really have to follow the chain [of a contract] to the end, or you just don’t know where the dollars are going,” Jennings said. “Before this, sometimes a city is listed as the primary recipient of a grant or contract. We wouldn’t know prior to this that the brother-in-law of the mayor is receiving those subcontracts.”

In an April letter setting reporting deadlines for senior federal managers, Jeffrey Zients, then the acting OMB director, stressed the importance of the transparency effort. “Full and easy access to information on government spending promotes accountability by allowing . . . both the public and public officials to gauge the effectiveness of expenditures,” he wrote. “Transparency also gives the public confidence that we are properly managing its funds.”

One day after being sworn into office, President Obama pledged that his administration would be the most open in history – a vow made in the wake of steady complaints that the Bush administration was too secretive. Although the current administration has made significant progress in releasing public information, it has faced its share of criticism that – like the previous White House – it has been loath to release public information that may cast its team in an unflattering light or hamper its agenda.

Jennings said taxpayers could end up feeling more comfortable about government contracts when they know the nitty-gritty details. Instead of reading on a government Web site about a vague $14 million transportation grant given to a state government, taxpayers now can see how the state split those funds among 20 different road and bridge projects in different locations, and which subcontractors did the jobs.

“All we hear about is stupid, wasteful government spending,” he said. “But this will likely show us how the money is actually coming to your city, even your neighborhood.”

– by Carol D. Leonnig, Washington Post Staff Writer, Wednesday, December 1, 2010

Filed Under: Government Contracting News Tagged With: OMB, small business, small disadvantaged business, subcontracting, transparency, WOSB

November 19, 2010 By AMK

Two small businesses suspended in set-aside probe

The Small Business Administration has suspended two more firms in its expanding probe of small business contracts that might be illegally passed through to large companies.

On Thursday, SBA announced the suspension of EG Solutions and MultimaxArray FirstSource based on allegations the firms misrepresented themselves on a large Homeland Security Department information technology contract.

Both firms won multimillion-dollar task orders, reserved exclusively for small businesses, on DHS’ $3 billion FirstSource contract for IT hardware, software and services. But, according to letters SBA sent to the firms on Thursday, much of the contract work actually was passed through to a larger company.

“Further evidence shows that the subcontractor in fact performed most if not all of the work required to be performed in connection with the subject contract opportunities,” SBA suspension and debarment official Michael Chodos wrote. “There is also evidence that [MultimaxArray FirstSource] and its subcontractor attempted to conceal the nature of this relationship from the government and their competitors, after concerns were raised about MAF and its subcontractor’s conduct.”

While the letters do not mention the subcontractor by name, in October SBA suspended GTSI Corp., a systems integrator in Herndon, Va., based on allegations it was performing virtually all the work on a $165 million delivery order that was awarded to MultimaxArray. GTSI also served as a subcontractor to EG Solutions on the FirstSource contract. SBA later allowed GTSI to resume most of its government work pending the results of an investigation and subject to strict oversight criteria.

Chodos wrote there is evidence EG Solutions and MultimaxArray also “committed fraud or a criminal offense in obtaining and attempting to obtain contracts and in its performance of those contracts, and that there is adequate evidence of a lack of business integrity or business honesty.”

A spokesman for MultimaxArray did not respond to a request for comment on Friday. The firm is a joint venture of Multimax and Array Information Technology.

EG Solutions, based in Dulles, Va., is a subsidiary of Eyak Corp., an Alaska native corporation. In a statement, Eyak said it takes “seriously the obligation to provide the federal government with quality contracting services in an ethical and responsible manner.”

The two firms have 30 days to formally respond to the suspension.

– by Robert Brodsky – GovExec.com – November 19, 2010

Filed Under: Government Contracting News Tagged With: fraud, SBA, small business, subcontracting

August 18, 2010 By AMK

DOD, Army Corps of Engineers falter on subcontracting metrics

As the Pentagon and the Army Corps of Engineers awarded money to Gulf Coast small businesses in the aftermath of Hurricanes Katrina and Rita in 2005, they failed to closely monitor whether contractors adhered to their subcontracting plans, according to the Government Accountability Office.

The Federal Acquisition Regulation requires contracting officials to check on how prime contractors are doling out their large contracts as planned, but officials with the Corps and the Defense Department could not show that they consistently scrutinized prime contractors, the Government Accountability Office concluded in its Aug. 17 report.

Subcontracting plans include a description of the types of work the prime contractor believes it’s likely to award to subcontractors and a percentage of total planned subcontracting dollars for small businesses.

The Corps and DOD were two of four agencies that awarded the most money in federal contracts for rebuilding efforts following Katrina and Rita—each a Category 5 storm and two of the strongest hurricanes ever recorded—both of which hit the coast in August and September of 2005. Gulf Coast small businesses directly received almost $2.9 billion in total federal contract funds awarded for recovery projects for Katrina and Rita between fiscal 2005 and 2009. But GAO could not get a complete picture of how much money was awarded to area small business via subcontracts.

In performing a review of the plans, GAO found the Corps and DOD could not provide reports on contractors’ subcontracting accomplishments on 13 of 43 construction contacts that included plans.

However, Linda Oliver, DOD’s acting small business director, wrote that GAO auditors didn’t ask for paper copies of the documents about monitoring efforts after not finding them in the Electronic Subcontracting Reporting System. The Corps provided a number of paper copies of checkups on subcontracting plans afterward.

Even so, GAO reported that the Corps didn’t provide subcontracting accomplishment reports for 11 of its contracts and could not provide a reason for why information was unavailable for these contracts. In addition, DOD did not provide subcontracting information on 2 of the 14 construction contracts that GAO reviewed. DOD officials said that they could not find any paper or electronic subcontracting accomplishment reports after searching their retained records, according to GAO’s report.

GAO recommended officials ensure their contracting offices are checking subcontracting plans.

— by Matthew Weigelt – Aug. 18, 2010 – Federal Computer Week

Filed Under: Government Contracting News Tagged With: Army Corps of Engineers, DoD, GAO, subcontracting

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