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.