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.