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.