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.