Lessons Learned from Anonymous & LulzSec

Cybersecurity and supply chain protection are becoming increasingly important aspects of government contracting, especially as federal agencies place an increased compliance burden on contractors in this era of heightened attention to attacks by foreign agents and hacker groups like Anonymous and LulzSec.

So, what’s a contractor to do to protect itself and its government customer?

Here at PSC and SmartContracting blog we often espouse the importance of up front planning for all parties to ensure success in government acquisitions and programs. In our most recent issue of PSC’s quarterly Service Contractor magazine, Michael Howard, a principal cybersecurity consultant for Microsoft, explains how the same holds true for cybersecurity.

While firewalls and virus protection are important aspects of defending your networks, so too is having clean codes, especially when it comes to avoiding a successful attack by a hacker group bent on sharing your information with the world.

The new set of Republican Cybersecurity Task Force recommendations have also sharpened the focus on the cybersecurity challenges facing our nation. In the same issue of Service Contractor magazine we spoke with the co-chairs of the bipartisan Congressional Cybersecurity Caucus—Reps. Michael McCaul, R-Texas, and Jim Langevin, D-R.I.—to get their take on where the myriad cyber security legislation is going this Congress.

You can read those story (and others) here.

Image via.

The Compelling Rappelling Stories of a Government Contractor

They’re at it again. The government contractors who rappelled down the side of the Washington Monument and the National Cathedral to assess the damage from the August earthquake are now scaling the Air Force Memorial to check for cracks and corrosion.

Engineers from the “difficult access team” at engineering firm WJE (not a PSC member) are a shining example of what contracting looks like when it’s done right (which is 99 percent of the time).

These important inspections highlight why government and industry must work in partnership to do great things and why contracting can be smarter than hiring in house staff. In this case, the high cost of keeping a band of rappelling engineers on staff would be prohibitive, especially when one considers the rare and temporary need at hand. Although some who say contractor billing rates are too high would disagree, the duration of the work is an important factor in determining when to hire a contractor and when to hire an employee. It’s far more taxpayer friendly to hire a short-term contractor to do specialized work, like rappelling down the side of a national landmark, than it is to hire that person on permanently and thus making the taxpayers foot the bill for pension and lifelong health care costs, even if the short-term contractor costs are “higher.”

But such smart partnerships are in jeopardy. If Congress chooses to arbitrarily further limit the costs contractors can reimburse for salaries of their best, brightest and bravest employees, it may be impossible for companies to do work with the government, especially when it comes to high-skill or high-risk work.



Photo via nps.gov.

Great Moments in Contracting History: Riding the (Micro)Wave

A magnetron.

Recently, the Wired blog Danger Room published a rundown of nifty gadgets developed with government funds that also changed the way we live our everyday lives. While many know that GPS and the Internet were spun from government-funded ideas, did you know that the humble kitchen appliance known as the microwave was the result of a government contract?

The microwave, it turns out, was an unhappy accident turned happy, as Danger Room explains:

Percy Spencer, an engineer with the defense giant Raytheon, thought he was building [a] magnetron for radar sets. Suddenly he discovered his pants were a sticky mess. A Mr. Goodbar he kept in his pocket had melted from the heat emitted from his active radar set. From that embarrassing accident came a multimillion dollar industry — and one of the great twin blessings and curses of the American kitchen.

Photo via.

International Development Spending is Smart Contracting

Smart.

With the congressional super committee and others mulling the return on investment for various government programs, there has been a misguided call to cut foreign aid and other international development assistance. It seems nobody is really asking, or bothering to answer, the question: What do we get for the development dollar? The answer: jobs, economic growth, and security abroad—and at home.

An October Professional Services Council white paper for Congress and other stakeholders explains how international development assistance, often delivered through contracts with U.S. firms, does more than create strong foreign economies and governments. The white paper explains that foreign assistance benefits Americans by creating American jobs, establishing strong and stable allies, and opening new markets to U.S. companies.

Among the key highlights noted in the white paper:

• More than 10 million U.S. jobs are tied to exports and U.S. companies gain access to the growing markets of the developing world via international assistance and development spending. (p. 3)

• U.S. aid has allowed countries such as South Korea to successfully “graduate” from recipient to donor nation and cemented the United States’ role as a favored trade partner. (p. 3)

• Studies show that every $1 spent through trade assistance generates $53 in U.S. exports. (p. 6)

• As troops drawdown in Iraq and Afghanistan, every $4 spent by State will save $45 in Defense Department spending. (p. 6)

With that return on investment, we can’t afford not to continue foreign assistance.

The Cost of Critical Functions

The Office of Federal Procurement Policy (OFPP) finally issued its long-awaited, and fairly lengthy, policy memo governing the use of contractors to perform critical functions and functions closely associated with inherently governmental functions. But the policy memo is not fully functional because it tells agencies to determine the costs associated with in-house performance of non-inherently governmental work but lacks guidance on how they are to estimate and compare the costs with the private sector.

While the true cost to the government of contractor performance is fairly clear, the true costs of in-house performance has never been adequately determined using any of the existing methodologies.

Earlier this year, the Center for Strategic and International Studies (CSIS) recommended the most comprehensive public-private cost comparison methodology to date and PSC endorsed it. It is troubling that OFPP did not mention this or any other methodology, let alone adopt the sound, evidence-based CSIS analysis.

Additionally, there is strong evidence to suggest that the private sector is more efficient and cost effective for performing these functions. Even the Commission on Wartime Contracting reached this conclusion in the appendix to its Aug. 31 final report.

We look forward to seeing further guidance from OFPP on the cost comparison methodology. Until such guidance is issued, OFPP’s final policy memo on “Performance of Inherently Governmental and Critical Functions” cannot be considered truly final.

OMB on Fiscal Challenge: Strategic Analysis A Must

Don't use one of these to cut the budget.

If there is some good news out of the Office of Management and Budget fiscal 2013 budget guidance asking agencies to propose cuts, it’s this:

These 5 and 10 percent reductions from the 2011 enacted level should not be achieved by proposing across-the-board reductions.

It’s a point OMB Director Jack Lew reiterated in his blog post commenting on that guidance:

We do not believe in making across-the-board cuts; rather, we believe that we should cut what is wasteful or not essential and invest in what is critical to long-term growth and other priorities

Hopefully agencies will take a “don’t have to tell me twice” mentality toward these cuts and look strategically at where they can cut ineffective or low priority programs so they can “double down” on the programs brining the most value to their missions.

PSC has long said that we recognize that austerity is here and we’ll all feel some pain, but that doesn’t mean arbitrary cuts should take place. While cutting across the board is the easy path, such practice ultimately is an abdication of rigorous analysis that often leaves mission-essential programs underfunded while keeping ineffective programs intact. Strategic analysis is a must and is smart budgeting. It’s great to see that OMB agrees.

An Inside Look at Suspension and Debarment

As we get ready to print the September issue of PSC’s quarterly magazine, Service Contractor, we couldn’t wait to share an exclusive article by two Air Force attorneys—Deputy General Counsel Steve Shaw and Associate General Counsel Todd Canni.

The article explains why the Wartime Contracting Commission’s interim recommendations for governmentwide changes to the suspension and debarment system, which would make these discretionary actions automatic in some circumstances, should not be adopted. In debunking many myths about suspension and debarment perpetuated by the Wartime Contracting Commission’s interim recommendations, Shaw and Canni explain why alternatives to suspension and debarment are actually a more effective technique for getting results.

PSC Discusses Debt Threat

With the debt limit breach just a few short days way, Smart Contractors are sure to be asking “What is going to happen to my contract and my business if Congress doesn’t reach an agreement and the administration can’t raise the debt ceiling?”

 

Since the U.S. government has never defaulted on a debt before, it is difficult to say with any certainty what will transpire. It’s not even clear that failure to raise the debt ceiling will result in a default, but there are some key points you should understand about operating when the government cannot borrow money:

 

 

Guest Blog: Smart Contracting is Saving Money

By Teddy Kidd
PSC Manager of Legislative Affairs

In an environment of increasing budget austerity a surprising piece of wisdom was shared at a recent meeting of the House Smart Contracting Caucus: This is a time of opportunity for federal contractors to help the government save money.

Great Moments in Contracting History: It’s a Grand Old Flag



The Betsy Ross flag.



Tomorrow is Flag Day, so today we thought we’d celebrate by noting the one of the U.S. government’s first contracts—the deal with Betsy Ross to sew the nation’s first flag.

According to legend, a secret committee of the Continental Congress approached the seamstress in 1776 with a rough outline (some things never change) of the flag design they wanted and she perfected the familiar stars and stripes. Following the successful completion of the contract, Ross turned her upholstery business into a flag making business, making her perhaps the first woman-owned small business to do business with the government.

Many historians believe Ross’ exclusive claim on the flag to be nothing more than really good PR. Evidence shows other upholsterers made flags for the Colonial-era government around the same time. Many of those upholsterers were women.

How Green is Thy Company?

After May 31, government contractors may have to show their green before they get a contract. Don’t worry, I’m not talking about money. The green on display is environmental in nature.

Under an interim rule published May 31, and made effective that day, 95 percent of government purchases must be “energy-efficient (Energy Star or Federal Energy Management Program (FEMP)-designated), water-efficient, biobased, environmentally preferable (e.g., Electronic Product Environmental Assessment Tool (EPEAT)-registered), non-ozone depleting, contain recycled content, or are non-toxic or less toxic alternatives, where such products and services meet agency performance requirements.” National security, law enforcement and intelligence purchases exempted, of course.

No Comparison, CSIS Costing Method is the Superior Option

In the debate over sourcing federal work, there is one point where all sides agree: the government does a poor job of estimating its own costs when comparing them to private-sector costs of performance.

Now, just in time to inform this debate, which is again surfacing as Congress considers the National Defense Authorization Act, the Center for Strategic and International Studies released an important report identifying enormous gaps in current cost-comparison methodologies. Moreover, the CSIS report proposes a new taxonomy for making these comparisons that is more comprehensive and source-neutral than any method available to the government today.

Great Moments in Contracting History: We Built This City

May 3 marked one of the greatest moments in contracting history: the anniversary of the incorporation of Washington, D.C., a city designed and built almost entirely by federal contractors, according to the GovWin blog.

GovWin, an online publication of PSC member company Deltek, reports the following:

The first contractor in Washington was surveyor Andrew Ellicott, hired to set the boundaries of District of Columbia, and who placed boundary markers (some of which are still visible today) at every mile point in 1791-92. His assistant, African-American Benjamin Banneker was the first minority contractor.

 

PSC Raises Concerns with Creation of CMS FFRDC

A key pillar of the Obama administration’s ongoing acquisition reform effort is boosting competition for opportunities to support the government’s missions. Yet, a decidedly non-competitive trend is emerging among federal agencies. Increasingly, agencies are forgoing altogether the normal procurement process to instead make sole-source awards to non-profits entities known as Federally Funded Research and Development Centers (FFRDCs).

The latest example comes from the Health and Human Services Department, which plans to establish a new FFRDC for the Centers for Medicare and Medicaid Services (CMS) that will be available to the entire department. In an April 12 letter, PSC objected to the CMS plan outlined in a March 17 Federal Business Opportunities (FBO) notice because their proposal does not appear to meet the basic requirements for establishing such an entity.

Simply put, CMS failed to identify any research or development needs or justify why the FFRDC should be permitted to perform work across HHS. Under the Federal Acquisition Regulation, there are 10 requirements agencies must satisfy before establishing an FFRDC, including ensuring that “existing alternative sources for satisfying agency requirements cannot effectively meet the special research or development needs” of the agency. More significantly, the FAR requires that the “basic purpose and mission of the FFRDC is stated clearly enough to enable differentiation between work which should be performed by the FFRDC and that which should be performed by non-FFRDCs.”

In our view, the notice does neither. CMS takes a different view.

In an April 13 letter to PSC, CMS wrote that although CMS leaders are “aware of the specific regulations regarding the establishment of an FFRDC,” CMS “does not have a requirement of detailing our market research or decision making processes” because “revealing this information may compromise the procurement process.” How publicly justifying procurement decisions would do so is not explained, but CMS assured PSC that all the appropriate processes were followed. Given the lack of transparency into their processes, we’ll just have to take their word for it. But that won’t stop us from raising our objections to the CMS initiative.

PSC: Draft Executive Order Counterintuitive, Counterproductive

Should a draft presidential Executive Order become final, government contracting companies and their executives will be forced to operate under new rules to which no other citizens or class of citizens are subjected.

The draft order requires all bidders for federal contracts to include in their bids a list of all political contributions made by the company and its senior executives, including contributions to any third-party organizations that in turn may make campaign contributions or launch political ads. According to the draft, the disclosure requirements are necessary to ensure the separation of politics from the procurement process.

The whole idea is absurd.

Guest Blog: And the Winners Are…The International Community and American Taxpayers

By Larwrence J. Halloran

Director of PSC's International Development Initiative

The Pulitzers weren’t the only prestigious awards handed out this week. Five PSC member companies were among 40 international development organizations recognized by DevEx as the most innovative in their field.

Results of a survey of thousands of development professionals from around the world honored Abt Associates, AECOM, Booz Allen Hamilton, Deloitte Consulting and Development Alternatives Inc. (DAI) for their application of ground-breaking concepts and approaches against stubborn development challenges.

A Taxing Time For Contractors

Just in time for Tax Day, Congress is considering two bills that could dramatically alter the landscape for government contracting firms. One bill would help firms, while the other could harm them.

First, the harmful bill: “The Contracting and Tax Accountability Act of 2011,” introduced by Rep. Jason Chaffetz, R-Utah, and approved by the House Oversight and Government Reform Committee on April 13. While PSC doesn’t want to see serious tax delinquents obtaining government contracts, the legislation removes suspension and debarment officials’ ability to exercise their professional judgment to determine whether the facts surrounding a tax delinquency merit such harsh treatment. In addition, it fails to include any minimum threshold, which means a contractor would be suspended or debarred for even the most insignificant of tax deficiencies.

It is unclear if and when the bill will be considered by the full House, but PSC continues to educate Congress about the consequences of the bill.

Now for the potentially good news: companies who play fair and follow the rules could be one step closer to a reprieve from the onerous, mandatory 3 percent withholding on their contract payments, which is scheduled to go into effect on Jan. 1, 2012. Sen. Scott Brown, R-Mass., and others have offered an amendment to the Small Business Innovative Research (SBIR) reauthorization bill to repeal the withholding.

In a letter to all senators, PSC urged support for Brown’s amendment. PSC also signed on to a letter from the Government Withholding Relief Coalition, of which PSC is a member, further urging repeal. It is unclear whether the Senate will consider this amendment during the SBIR bill debate, which has been delayed due to unrelated issues.

Other senators and a bipartisan group of House members have also introduced repeal legislation. In late March, the Office of Management and Budget voiced support for a delay in the implementation date.

Smart Contracting Starts with a Smart Contracting Workforce

Smart contracting starts with a smart contracting workforce, a fact picked up by two smart contracting gurus in Congress: Sen. Susan Collins, R-Maine, and Rep. Gerry Connolly, D-Va.

The two lawmakers have each dropped identical acquisition workforce reform bills that will help improve civilian agency training by creating a clear reporting structure for the Federal Acquisition Institute (FAI). The bills, S. 762 and H.R. 1424, would mandate FAI report directly to the Office of Federal Procurement Policy and would give OFPP the power to enforce governmentwide training standards for acquisition personnel through FAI.

Do New Small Business Parity Rules Create Disparity?

The long-awaited interim rule  that is supposed to create parity among the Small Business Administration’s myriad preference programs was finally published March 16. Now contracting officers know that HUBZone, 8(a), service-disabled veteran-owned, and women-owned small business programs are equal when considering whether to set aside a competition for any of these four programs. But what happens if a contracting officer wants to set aside a competition for all small businesses?

Prior to the publication of the parity rule, the Federal Acquisition Regulation was silent on whether socioeconomic programs should be considered before creating a set-aside competition for all small businesses. The new rule erases that doubt by adding the following language to the FAR:

“There is no order of precedence among the 8(a) Program (subpart 19.8), HUBZone Program (subpart 19.13), Service-Disabled Veteran-Owned Small Business (SDVOSB) Procurement Program (subpart 19.14), or the Women-Owned Small Business (WOSB) Program (subpart 19.15). … The contracting officer shall first consider an acquisition for the 8(a), HUBZone, SDVOSB, or WOSB programs before using a small business set-aside.”

Did Congress intend for parity to apply across all small business set-aside opportunities, regardless of whether they’re tied to a socioeconomic program, when it amended the HUBZone statute last year as part of the Small Business Jobs Act? By crafting a rule that specially excludes other small businesses, the FAR Council may have inadvertently created a new form of disparity.

DoD and PSC Agree on Role of Suspension and Debarment

It appears the Defense Department agrees with PSC’s views on how suspension and debarment should be used: as tools to protect the government, not as weapons to automatically punish contractors accused of wrongdoing.

In testimony before the Wartime Contracting Commission on March 28, Ash Carter, undersecretary of Defense for acquisition, technology and logistics, told the panel:

“There is a potential unintended consequence of turning suspensions and debarments from tools to protect the government’s interest into tools that automatically punish contractors…Such an approach may have a chilling effect on contractor cooperation in identifying and fixing real problems.”

Well said. PSC President and CEO Stan Soloway expressed similar sentiments in his latest Washington Technology column. In it, Soloway explains why the immediate suspension or debarment of contractors accused of wrongdoing runs counter to the basic tenets of due process and inappropriately shifts the role of suspension and debarment.

Great Moments in Contracting History: A Walk on the Moon

What does the company Playtex, maker of bras and baby bottles, have to do with the Apollo 11 moon walk?

Everything.

Without Playtex’s flexible spacesuit design, there would have been no spacesuit for Neil Armstrong and Buzz Aldrin to walk on the moon in. Or at least a less mobile one if this video from "Talk of the Nation Science Friday" is any indication.

Just goes to show what a little smart contracting can achieve.

Fixed-Price Contracts Won’t Fix Contracting



Malcolm O'Neill addresses PSC members.



The Obama administration has promoted increased use of fixed-price contracting as a way of shifting risk and generating savings in government contracting. But smart contractors know that fixed-price isn’t the smart choice for all procurements. It appears the Army knows that too.

Malcolm O’Neill, the assistant Army secretary for acquisition, logistics and technology, joined PSC for a Dialogue Series lunch on March 9 and explained why he thinks fixed-price contracting is just as risky to government as the much derided cost-reimbursement style contracting when used inappropriately.

“My experience has been that when [contractors] offer a fixed-price bid, it's 10 percent to 15 percent more than [they] need,” because rather than accept risk contractors pad their bids to avoid it, O’Neill said. Cost-plus-incentive fee contracts, however, encourage contractors to stick to cost and schedule estimates because they will be rewarded for good performance and punished for poor performance, he said.

Additionally, “a fixed-price contract gives license to steal,” if the government needs to change the requirements after the contract is awarded, as it often does. “If I was the contractor I’d come back and say ‘All bets are off, I have a new bid.’ Whereas with cost-type contracts all you do is modify it and say ‘What would it cost to add to this program?’” O’Neill said. “In fixed price it’s a whole different ballgame”

While the arguments for and against using fixed-price contracts may vary, knowing the most appropriate contract type to acquire specific goods and services is smart government contracting.

Direct Assistance is Direct Way to Waste, Fraud and Abuse

With the State Department and U.S. Agency for International Development racing toward direct assistance as a way to disperse billions of foreign assistance funding, the government’s top watchdog is waiving the caution flag.

In March 3 congressional testimony, the Government Accountability Office warned that Afghanistan and Pakistan are so unstable that State and USAID plans to give cash to them would cause ”the vulnerability of U.S.-funded programs to waste, mismanagement, and corruption…to increase given the weak internal controls of some of the Afghan and Pakistani entities involved in implementing them.”

While putting money directly in the hands of foreign leaders will surely build some temporary good will, it doesn’t necessarily build local capacity, prevent money from going to the enemy or otherwise ensure work actually gets done. Well-designed programs that strategically deploy the expertise of U.S. development firms, however, build lasting good will by nurturing sustainable local capacity and leaving tangible improvements behind.

Suspension and Debarment: Use the Right Tool for the Right Job



What tool would you choose?



There is an old cliché that says “If you have a hammer, everything is a nail.” That’s the view many take of how the government should apply the tools of suspension and debarment, which reentered the news Feb. 28 when the Wartime Contracting Commission held a hearing to discuss how the government applies these tools to protect its interests.

Unfortunately, some witnesses, and some members of Congress, appear to favor the use of suspension and debarment as blunt instruments to be used whenever a company or, presumably, an employee of a company, is indicted for any offense related to their work for the government. To them, the fact that someone is alleged to have violated the law is reason enough to bar them from future government work.

“Where’s the accountability?” they asked.

However, as administration witnesses pointed out, while that may seem logical, it is a wholly inaccurate reading of the purpose of suspension and debarment. Hence, I would ask a different question: “Did the companies take actions to prove they’re ‘presently responsible,’ correcting the problems that led to the wrongdoing?” Isn’t that what really matters?

As Joseph Billings and Nathanael Hartland, attorneys from Miles & Stockbridge explain in the latest edition of PSC's Service Contractor magazine (out this week), suspension and debarment are the equivalent of a death sentence for government contractors. If they were applied to firms without first considering whether the firms in question are “presently responsible,” the results could be dire.

FAQs About The Implications of a Government Shutdown for Industry

There are no dumb questions, only smart contractors. This is especially true when it comes to questions about a potential government shutdown. The more questions you ask, and the sooner you ask them, the better. Below are some frequently asked questions, which we tried to answer at our recent event exploring the implications of a shutdown on government contractors.

Guest Blog: PSC on DCAA: Progress Made, More Improvements Needed

By Roger Jordan

Vice President, Government Relations

Recent coverage of the Defense Contract Audit Agency’s problems, including the recent HSGAC Contracting Oversight Subcommittee hearing on February 1, has focused on how the agency has improved its audit processes through risk-based audit strategies that prioritize high-risk contracts and related actions. In testimony and recent interviews with the media, DCAA director Patrick Fitzgerald touted that the changes he’s implemented, coupled with a new contractor business systems rule, will put the agency back on track, he believes.

Admittedly, Fitzgerald has more work to do, and from an industry perspective we encourage him to look at the effect of his reforms on contractors and what further steps must be taken to improve DCAA-industry collaboration. For example, DCAA is still not effectively communicating with industry about corrective action plans contractors implement in response to DCAA audit findings deeming contractors’ systems deficient. In addition, DCAA is taking an excruciatingly long period of time to give contractors’ systems a “clean bill of health” after corrective action plans have proven effective.

Unfortunately, the Senate hearing represented a missed opportunity to focus on these issues.

The Army Leads the Way on Insourcing

The Army is leading the charge toward smart insourcing.

In a bold action, Army Sec. John McHugh suspended all ongoing and future insourcing operations at the Army unless each proposal for insourcing is based on a comprehensive, analytical, approach and the sourcing decision is presented to him for approval.

In a Feb. 1 memo, McHugh wrote:

In an era of significantly constrained resources, the Army must approach the insourcing of functions currently performed by contract in a well-reasoned, analytically based and systemic manner, consistent with law and prevailing Presidential and Department of Defense guidance. Accordingly, effective the date of this directive, I reserve to myself the authority to approve any insourcing proposal, wherever generated across the Army. Any insourcing proposal presented for my consideration must be fully documented and justified. Any proposal will include, at minimum, a manpower requirements determination, an analysis of all potential alternatives to the establishment of permanent civilian authorizations to perform the contracted work, certification of fund availability and a comprehensive legal review.

PSC has called for such analytically rigorous reviews for some time and we’re pleased to see the Army drilling much needed discipline into what has been a disorderly process. The rest of the federal government should promptly follow the Army’s lead.

FACT: Communications Between Government and Industry IS Smart Contracting!

Smart contractors know open communications with their customers are the keys to success. And from the looks of this communication, the Office of Management and Budget is looking to adopt that best practice to the government contracting field.

The Feb. 2 document launches OMB’s “Myth Busters” educational campaign to inform agency acquisition officers about the policies and current flexibilities in the Federal Acquisition Regulation that allow them to tap industry expertise throughout the lifecycle of a procurement, including requirements development and other pre-award milestones. But I’ll let OMB do the communicating here:

“Access to current market information is critical for agency program managers as they define requirements and for contracting officers as they develop acquisition strategies, seek opportunities for small businesses, and negotiate contract terms. Our industry partners are often the best source of this information, so productive interactions between federal agencies and our industry partners should be encouraged to ensure that the government clearly understands the marketplace and can award a contract or order for an effective solution at a reasonable price. Early, frequent, and constructive engagement with industry is especially important for complex, high-risk procurements.”

 

OMB ordered federal agencies to develop a high-level vendor communication plan to reduce “unnecessary barriers, publicize communication opportunities and prioritize engagement opportunities for high-risk, complex programs or those that fail to attract new vendors during recompetitions.” Unless otherwise prohibited by law, regulation or ethics standards, all forms of communication should be on the table, OMB said.

How to Weather a Budgetary Freeze: Defrost Collaboration

The President’s call in his State of the Union address for strategic and targeted investments and cuts to address the growing deficit and debt is welcomed, but, by his own admission, mere budgetary tweaking won’t avoid the type of crises now facing our allies abroad from taking hold here at home.

In fact, arbitrarily freezing program spending, federal employee salaries and hiring may cause greater problems by understaffing and under-resourcing the very agencies charged with addressing our nation’s many challenges. As such, agencies need to thaw their frozen communications with their private sector partners and take a more collaborative approach to implementing the President’s domestic discretionary spending freeze.

PSC President and CEO Stan Soloway outlined how an approach driven by open communication and collaboration across sectors could work in his latest Washington Technology column and in a statement after the State of the Union.

Revised DoD Business Systems Proposal Still Falls Short

Everyone knows the first rule of business is there are risks to be taken and rewards for taking those risks. But lately, when doing business with the Defense Department and other government agencies, it’s been all risk with little reward. In the government’s appropriate zeal to protect taxpayer dollars, it has forgotten that its business relationships with contractors are two-way streets. One place this is most evident is in the Defense Department’s proposed rule governing when it’s appropriate to withhold payments from contractors because of faulty business systems.

When initially proposed in January 2010, PSC found the rule failed to fully describe the attributes of each of the six business systems that a contractor would need to comply with in order to have an “approved” system. It’s hard to follow your customer’s wishes when the customer won’t define the boundaries and standards. We also found the enforcement and penalties in that proposal were disproportionate to the deficiencies identified and the risk to the government from one or more of those deficiencies. In some cases, Defense agencies would be allowed to withhold payments in situations where government dollars were NOT at risk, and that’s a risky proposition for any business. The customers’ auditors weren’t even required to review and validate fixes and release properly earned funds in a timely manner.

While the proposal was improved significantly with the Dec. 3 revision, it still falls short in several key areas, as PSC and other industry groups spelled out in comments submitted on January 10 by the Council of Defense and Space Industry Associations.

Clarifying Conflicts

There are few areas in life where one size fits all. Even hats can be too small for some and too big for others. So, in March, when the Defense Department proposed a one-size-fits all approach to addressing organizational conflicts of interest on everything from major weapons systems to professional services and information technology, smart contractors knew that those rules just weren’t going to fit DoD’s needs. And the Professional Services Council told them so in written comments.

Fast forward to Dec. 29 and guess what? Smart contracting officials at DoD agreed with us! They recognized that every sector of the defense industrial base was different when it came to the circumstances where conflicts could arise and how those conflicts could be addressed and narrowed down the final rule published that day. to just the area of Defense acquisitions Congress asked them to focus on: major weapon systems.