Veterans Administration Has $1 Billion Unexpected Funding Shortfall

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“THE ARIZONA REPUBLIC”

“Under repeated questioning, VA Secretary David Shulkin acknowledged the department may need emergency funds.

The Department of Veterans Affairs was scolded by both parties over its budget Wednesday as lawmakers scurried to find a fix to an unexpected shortfall of more than $1 billion that would threaten medical care for thousands of veterans in the coming months.

“We would like to work with you,” Shulkin told a Senate appropriations panel. “We need to do this quickly.”

At the hearing, lawmakers pressed Shulkin about the department’s financial management after it significantly underestimated costs for its Choice program, which offers veterans federally paid medical care outside the VA. Several questioned Shulkin’s claim that the VA can fill the budget gap simply by shifting funds — without an emergency infusion of new money — without hurting veterans’ care.

“The department’s stewardship of funds is the real issue at hand,” said Sen. Jerry Moran, R-Kan., chair of the Appropriations panel overseeing the VA. He faulted VA for a “precarious situation” requiring a congressional bailout.

Shulkin cited unexpectedly high demand for Choice and defended President Donald Trump’s 2018 budget request as adequate, but allowed that more money may be needed.

“On financial projections, we have to do better,” he said. “We do not want to see veterans impacted at all by our inability to manage budgets.”

Shulkin made the surprise revelation last week, urgently asking Congress for help. He said VA needed legal authority to shift money from other VA programs.

His disclosure came just weeks after lawmakers were still being assured that Choice was under budget, with $1.1 billion estimated to be left over on Aug. 7. Shulkin now says that money will dry up by mid-August. He cited excessive use of Choice beyond its original intent of using private doctors only when veterans must wait more than 30 days for a VA appointment or drive more than 40 miles to a facility.

Skeptical senators on Wednesday signaled they may need to move forward on a financial bailout.

In a letter Wednesday to the VA, Moran joined three other GOP senators, including John McCain, in demanding more detailed information from VA on what fix is needed.

“Unless Congress appropriates emergency funding to continue the Veterans Choice Program, hundreds of thousands of veterans who now rely on the Choice Card will be sent back to a VA that cannot effectively manage or coordinate their care,” the senators said. “We cannot send our veterans back to the pre-scandal days in which veterans were subjected to unacceptable wait-times.”

VA is already instructing its medical centers to limit the number of veterans sent to private doctors. Some veterans were being sent to Defense Department hospitals, VA facilities located farther away, or other alternative locations “when care is not offered in VA.” It also was asking field offices to hold off on spending for certain medical equipment to help cover costs.

Congressional Democrats on VA oversight committees have also sharply criticized the proposed 2018 budget. Shulkin, for instance, says he intends to tap other parts of the VA budget to cover the shortfall, including $620 million in carryover money that had been designated for use in the next fiscal year beginning Oct. 1.

The budget proposal also seeks to cover rising costs of Choice in part by reducing disability benefits for thousands of veterans once they reach retirement age, drawing an outcry from major veterans’ organizations who said veterans heavily rely on the payments.

Shulkin has since backed off the plan to reduce disability benefits but has not indicated what other areas may be cut.

Sen. Patty Murray, D-Wash., told Shulkin that it sure sounded like VA needed money.

“You’re defending this budget, but your job is to defend veterans,” she said. “It seems to me if the administration makes the request, it will be better served.”

The VA’s faulty budget estimates were a primary reason that Congress passed legislation in March to extend the Choice program beyond its Aug. 7 expiration date until the money ran out, which VA said would happen early next year. At the bill-signing ceremony with veterans’ groups, Trump said the legislation would ensure veterans will continue to be able to see “the doctor of their choice.”

The department is now more closely restricting use of Choice to its 30-day, 40-mile requirements.

The unexpectedly high Choice costs are also raising questions about the amount of money needed in future years as VA seeks to expand the program.

Earlier this month, Shulkin described the outlines of an overhaul, dubbed Veterans CARE, which would replace Choice and its 30-day, 40-mile restrictions to give veterans even wider access to private doctors. He is asking Congress to approve that plan by this fall.”

http://www.azcentral.com/story/news/nation/2017/06/22/veterans-affairs-facing-1-billion-shortfall-because-unexpected-choice-program-costs/418787001/

 

Generals and Admirals Need Checks and Balances Too

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ASSOCIATION OF UNITED STATES ARMY”  By Lt. Col. Joe Doty, USA Retired and Maj. Gen. Rich Long, USA Retired

“Without question, most past and present top officers are some of the finest, most competent, values-based and selfless officers our nation can produce.

But they, like us all, are human, flawed, and we all need a healthy dose of oversight and accountability.

Some generals have made the news lately for behaviors that violate the professional ethic. Although this trend seems new or current, it isn’t. Thomas E. Ricks, a well-published author on defense matters, wrote “General Failure” in the November 2012 issue of The Atlantic and in the same year published a book, The Generals: American Military Command from World War II to Today, on the same topic. His critique focused on a perceived lack of accountability in our armed forces at the general-officer level.

In June 2008, Lt. Col. Robert Bateman wrote “Cause for Relief: Why Presidents No Longer Fire Generals” in Armed Forces Journal. And in May 2007, then-Lt. Col. Paul Yingling wrote his (in)famous “A Failure in Generalship,” also in Armed Forces Journal. Our national security advisor, Lt. Gen. H.R. McMaster, in 1997 wrote Dereliction of Duty: Lyndon Johnson, Robert McNamara, the Joint Chiefs of Staff, and the Lies that Led to Vietnam. The book talks about failures at our highest officer and political levels up to and during the Vietnam War.

Generals are human beings and as such we need to be honest and frank about human behavior and human frailty. Nobody is perfect. So it seems to be an appropriate question: How is the system working in terms of oversight and accountability for general officers?

Recently we’ve had an admiral caught up in the “Fat Leonard” scandal; a former aide to the secretary of defense, Maj. Gen. Ronald Lewis, was relieved of his duties due to transgressions; and Maj. Gen. David Haight was forced to retire due to questionable professional behavior. At some point, we must ask ourselves whether there is a more effective system of checks and balances that can mitigate some of these issues. Lastly, and perhaps most egregiously, there is the case of former Brig. Gen. Jeffrey Sinclair, who pleaded guilty to adultery, maltreatment of a subordinate, engaging in improper relations and several other charges. Who was providing oversight of him or holding him accountable for his actions?

Don Snider, an expert in the study of the Army profession, notes that professions like the military are self-policing. Other unique aspects of professions (such as law and medicine) include that they:

  • Provide a necessary service to the country.
  • Have a shared ethic.
  • Have a unique expert knowledge.
  • Develop their own members.

Our military takes each of these aspects of being a profession seriously. As the most senior representatives of a self-policing profession, our general officers should be the standard-bearers and set the example for the rest of the force—and for the country—in their personal and professional lives.

They should also know how to self-police. Assuming there is real self-policing of generals, either by someone or a group, would it be helpful to make the policing process more transparent? Would making public the specific (and anonymous) examples of how generals are holding themselves accountable be an appropriate service to the nation?

At the risk of oversimplifying this self-policing and oversight challenge, is a general’s immediate supervisor responsible for policing and holding accountable his or her subordinate? Is the four-star responsible for the three-star? Is the two-star responsible for the one-star? Here, it is important to note that the concept of chain of command is ingrained in the DNA of every service member. It is part of the professional ethic. And the construct of chain of command has a built-in concept and understanding of responsibility and accountability, which does not cease once someone is promoted to general rank.

DoD inspectors general certainly play a role in oversight and accountability, but it’s a role initiated after an allegation has been made. IG investigators are not involved in the day-to-day business of general officers. How do we get more proactive and ahead of the allegations?

At the top levels, trust is sacrosanct. Theoretically, our promotion and selection system has selected those who need little or no oversight. However, the promotion and selection system is only as good as people can make it, and there will be bad apples. It can be argued that officers at this level need more or closer oversight due to their strategic responsibilities and the potential for national or international embarrassment. The Gen. David Petraeus affair could serve as an example.

Mathematically and statistically, it is safe to assume there are bad apples among general officers. The military’s selection and promotion system is run by human beings, so it must have flaws and make mistakes. Is it realistic to think every general never does anything wrong? This violates common and reasoned sense. There are just over 300 generals in the active Army and about 650 in the Total Army. The fact that only one or two get in trouble each year is pretty good and perhaps surprising, but because of the sacred nature of their duties, even one-tenth of a percent is too high. Again, the need for oversight and accountability.

In terms of the human dimension and understanding of this topic, there are basic psychological processes at work. One can be called the Bathsheba Syndrome or “the dark side of success,” which suggests absolute power corrupts absolutely or that enormous success can be an antecedent to ethical failure. There are numerous historical examples of this: Tiger Woods and Richard Nixon come to mind. As such, it can easily be argued that because of their success, top officers need more oversight and accountability.

Expectancy theory is taught in most basic psychology courses and suggests people behave in ways they are expected to behave. Officers who attain the rank of general are the best of the best and are expected to be that way—almost flawless—and in some cases, may think they are flawless (as their evaluation reports state) and therefore think they can get away with anything. Unhinged or unbalanced ambition and/or unhealthy narcissism are recipes for disaster.

There is a difference between an officer who knows they should be and deserve to be a general, and one who may be a bit surprised and humbled to obtain the rank. This difference may be cognitively and emotionally subtle at the individual level, but can be profound in how it plays out. Again, an argument for more structured oversight and accountability.

It is the nature of life in the military to cover for each other. Loyalty to and taking care of your buddies and comrades in arms is part of the professional ethic. These bonds are emotional and powerful, as they must be due to the nature of the profession. But to what extreme? When are the times when this loyalty does not and should not apply?

The answer is: when one’s actions are unethical, against the law or will hurt the effectiveness of the organization. Importantly, a subordinate’s loyalty to a general-level officer is often exponentially magnified due to the rank, position power, referent power and expert power of the general. Hence, loyalty at this level may be impervious to and blind to wrongdoing. Asking or expecting a subordinate to call out a possible transgression by a superior officer can, unfortunately, be a career-ender for the subordinate. Is it realistic to think people in and around Sinclair over the course of his career never suspected anything nefarious was going on?

A recommended solution to this challenge is for DoD to require colonels selected as executive officers for generals to attend the IG course and have as part of their duties a formal responsibility of reporting and answering outside the chain of command and to certify, under oath, that they are not aware of malfeasance or issues that must be addressed. Other duties could include:

  • Challenging the general’s assumptions and thinking.
  • Attempting to find blind spots in the general’s personality and thinking.
  • Asking lots of “why” questions.
  • Providing candid and blunt feedback and assessments.

We also recommend that DoD increase its education and developmental opportunities in terms of helping officers increase their emotional intelligence, specifically in terms of self-awareness and self-management. Emotional intelligence is a leadership skill that can be taught, learned and increased over time. Individuals with high levels of emotional intelligence are less vulnerable to self-delusion, burnout, and personal and professional indiscretions.

Our purpose here is not to poke anyone in the eye or throw stones. Our focus is on organizational improvement and learning. “

GENERALS NEED CHECKS AND BALANCES TOO

 

 

Industry/Pentagon Revolving Door Featured in Deputy Secretary of Defense Confirmation

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Industry Pentagon Revolving Door

“BREAKING DEFENSE”

“Mr. Shanahan, you’re not making me happy,” the chairman said. “You just ducked basically every question Sen. Fischer asked you.”

After Nebraska Senator Deb Fischer tried to elicit the nominee’s position on how to respond to Russian violations of the Intermediate Nuclear Forces (INF) treaty, McCain stepped in.

McCain’s biggest objection to Shanahan, however, was the nominee’s 31 years at America’s second largest defense contractor, Boeing. (Only Lockheed Martin sells more to the Pentagon. And Sen. McCain, thanks to the long-running scandal over Boeing’s former tanker deal, is believed to harbor a deep suspicion of Boeing’s conduct).

“Not a good beginning. Not a good beginning,” Senate Armed Services chairman John McCain told the administration’s nominee for deputy secretary of defense this morning. “Do not do that again, Mr. Shanahan, or I will not take your name up for a vote before this committee. Am I perfectly clear?”

“Very clear,” said Patrick Shanahan, enduring a rocky confirmation hearing for the No. 2 position in the Pentagon, which remains unusually short on senior officials. Other senators at the hearing asked Shanahan about Pentagon procurement, especially about nurturing innovation, continuing the Third Off Strategy for high-tech weapons, and starting the Pentagon’s long-awaited audit this fall. But McCain repeatedly took the mike to berate the Trump nominee for non-answers on Russia and for potential conflicts of interest after his 31 years at Boeing.

In that initial exchange, Shanahan’s specific offense was giving a vague non-answer in his written testimony to the committee’s question on whether he supported providing “lethal defensive weapons” to Ukraine. In the hearing, ironically, when McCain asked Shanahan to clarify, he stated his support for arming the Ukrainians so swiftly and unequivocally that the irascible but aging senator seemed momentarily thrown before returning to the attack.

“I want to move forward as quickly as I can with your nomination,” McCain told Shanahan at the hearing’s end, “(but) I am concerned. 90 percent of defense spending is in the hands of five corporations, of which you represent one. I have to have confidence that the fox is not going to be put back into the henhouse.”

“Mr. Shanahan, I think you’re a fine man; you have an outstanding record; (but) take a look at your responses that you sent to this committee,” McCain said. “Some of them were less than specific, at least one of them (was) almost insulting.”

Citing US casualties in Afghanistan, Ukrainian casualties against Russian-backed separatists, and the US shoot-down of a Syrian jet, McCain made it clear he wants clear answers on administration policy — and if the committee doesn’t get them, it will find answers of its own as it works on the annual defense policy bill.

“I want some answers, I want some straightforward answers, (and) if they don’t give us a strategy from the people that I admire most, we’re going to put a strategy in,” McCain warned. “I want to work with this administration, I want to work with this president, I want to work with the new secretary of defense, — who I happen to be one of the most ardent admirers of — but I have to tell you, in a couple of weeks, we’re going to mark-up up the defense authorization bill….The president has two choices: Either give us a strategy or we will put a strategy that we develop into the defense authorization bill.”

“Somehow over the last several years, this committee seems to have been treated as sort of a rubber stamp,” McCain concluded. “That’s not what the Constitution of the United States says. The Constitution of the United States says that the Senate would provide advice and consent.”

http://breakingdefense.com/2017/06/mccain-hammers-depsecdef-nominee-shanahan-on-russia-boeing/

Limits Placed on Congressional Oversight

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Oversight Limitis Shutterstock

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“THE PROJECT ON GOVERNMENT OVERSIGHT” By Peter Tyler

“In May, a legally binding opinion by the Justice Department’s Office of Legal Counsel (OLC) was made public, stating that individual Members of Congress “do not have the authority to conduct oversight” of the executive branch.

[ They are]  only entitled to “voluntary cooperation” with their requests for information.

However, individual Members of Congress play a critical role in conducting a lot of important oversight. If agencies follow the OLC opinion, it would diminish Congress’s oversight power.

As pointed out in a previous Project On Government Oversight blog, the OLC opinion builds on a harmful and long-standing executive branch policy that diminishes congressional oversight authority, with what appears to be a troubling new twist. And Congress has rightly excoriated the executive branch for this new policy—most notably in a letter from Senator Chuck Grassley (R-IA)—defending its Constitutional duty and responsibility to oversee the executive branch.

The OLC opinion (Authority of Individual Members of Congress to Conduct Oversight of the Executive Branch) dangerously asserts that only committee or subcommittee chairmen have Constitutional authority to conduct oversight, and, accordingly, to make requests for, and be official recipients of, information from the executive branch. It argues that the Constitution does not authorize individual Members of Congress—including committee ranking minority members—to conduct oversight, since they are not “endowed with the full power of Congress” in the form of a chair appointment. As a result, the requests for information by Members who are not Chairs, would not be “properly considered” as an oversight request, because they do not “trigger any obligation to accommodate congressional needs and [are] not legally enforceable.”

Oddly and detrimentally, the opinion puts oversight requests from individual Members of Congress (and even other committee members and the Ranking Members) as less important than information requests from the public. Such requests may (or may not) be answered at the discretion of the executive branch, wrenching away Members’ Constitutional prerogative to exercise oversight as a separate but equal branch of government. The opinion’s de facto result would be to increase and centralize the power of the executive branch—which is primarily made up of appointed bureaucrats, not elected representatives.

One key difference between this new OLC opinion and previous Justice Department guidance from 1984 is that the new opinion asserts that, “Whether it is appropriate to respond to requests from individual members will depend on the circumstances.” (Emphasis added) The Justice Department’s 1984 guidance states, “if the [Congressional] request is not an official committee or subcommittee request, then the agency should process it as a request from ‘any person’ under the FOIA.” The difference is subtle, but important. Previously, the executive branch’s policy was to treat requests for information from individual Members of Congress as a Freedom of Information Act (FOIA) request. Now, according to OLC, agencies have discretion to not respond to Congress at all, depending “on the circumstances.”

How have agency officials responded to the new OLC opinion? Public statements by federal agencies have varied.

Last week, in an appearance before the House Committee on Transportation and Infrastructure, Transportation Secretary Elaine L. Chao responded to a question regarding information requests from Congress by saying that “I will do everything I can, but it’s up to the White House on what they want to do. It’s up to the White House and this administration. I’m not in charge of that.” Homeland Security Secretary John Kelly said at a different hearing, “Regardless of who the letter comes from—and it doesn’t have to just come from a ranking member or chairman—we’ll respond to any congressional inquiry.”

Members of Congress from both political parties are criticizing OLC’s opinion.

Representative Jason Chaffetz (R-UT), Chairman of the House Committee on Oversight and Government Reform, publically opposed the policy, calling it “dangerous and unsustainable.” Likewise, Senator Claire McCaskill (D-MO) condemned the policy, assuring “I’ll punch above my weight on this if this administration thinks it can withhold information.” Senators Rob Portman (R-OH), Tom Carper (D-DE), and Heidi Heitkamp (D-ND) all offered criticism, with Senator Portman reflecting on his time as budget director in the George W. Bush administration: “I found dealing with Congress frustrating, but I felt it was my responsibility to deal with Congress, it’s the way the founders set things up.”

The strongest criticism is coming from Senator Chuck Grassley (R-IA), Chairman of the powerful Senate Judiciary Committee, who wrote to President Trump urging him to encourage executive-branch cooperation with Congressional oversight, and requesting that the White House rescind the opinion. Senator Grassley has long conducted robust Congressional oversight as an individual Member of Congress, Ranking Member, and Chair. His letter is a thorough criticism of the OLC opinion, pointing out the major flaws and citing case law and long-held Congressional practices in equal measure. Senator Grassley argues that, “Every member of Congress is a constitutional officer…. This applies obviously regardless of whether they are in the majority or the minority at the moment and regardless of whether they are in a leadership position on a particular committee. Thus, all members need accurate information from the Executive Branch in order to carry out their Constitutional function to make informed decisions on all sorts of legislative issues covering a vast array of complex matters across our massive federal government.”

Senator Grassley makes an important reference to the DC Circuit Court of Appeals case Murphy v. Department of the Army, which concluded that “[i]t would be an inappropriate intrusion into the legislative sphere for the courts to decide without congressional direction that, for example, only the chairman of a committee shall be regarded as the official voice of the Congress for purposes of receiving such information, as distinguished from its ranking minority member, other committee members, or other members of the Congress.” He further notes that it would be even more inappropriate for the executive branch to determine how Congress does its job. The implication is that the OLC’s opinion threatens our constitutionally mandated system of checks and balances.

The OLC opinion emphasizes the ability of committee chairs to legally compel information from the executive branch via subpoena as evidence of their “authorization” to conduct oversight. However, as Senator Grassley put it, “that’s just not how it works.” He describes that, “[t]he vast majority of information Congress obtains, even through a Chairman’s requests, is obtained voluntarily, not by compulsion,” and the subpoena is “a last resort.”

Senator Grassley draws attention to the fact that many requests for information from Members of Congress are not partisan in nature, and that a partisan response from the executive branch to these requests “discourages bipartisanship, decreases transparency, and diminishes the crucial role of the American people’s elected representatives.” He ends by noting that the OLC opinion “obstructs what ought to be the natural flow of information between agencies and the committees, which frustrates the Constitutional function of legislating.”

The good news is that the OLC opinion does not have to represent the final word of the Administration. President Trump should recognize the rights and duties of Congress to oversee the executive branch, and tell OLC to rescind the opinion.  Equally important, Congressional leadership should be unified in demanding that the executive branch provide information critical to Congress’s Constitutional obligations.”

http://www.pogo.org/blog/2017/06/limits-placed-on-congressional-oversight.html

By: Peter Tyler
Investigator, POGO

Peter Tyler is an investigator for the Project On Government Oversight. Peter’s areas of expertise are Congressional Oversight, Federal spending accountability, Inspectors General.

Are You Prepared for a Contract Cancellation?

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“WASHINGTON TECHNOLOGY”  By Darrell Hineman, Brian Courtney

“The possibility of a contract termination should be incorporated into every government contractor’s business continuity plan.

Implementing safeguards and procedures designed to mitigate the risk of a termination will limit the impact it has on your organization’s operations.

Preparing for the possibility of a contract termination is a defensive strategy that contractors should undertake now. Here are three key steps you should consider immediately:

  1. Plan ahead. Never consider your contract as “termination-proof.”
  2. Fully understand the contract termination process
  3. Learn how to calculate and submit your Request for Equitable Adjustment or settlement proposal.

The possibility of a contract termination should be incorporated into every government contractor’s business continuity plan. Implementing safeguards and procedures designed to mitigate the risk of a termination will limit the impact it has on your organization’s operations. Ask yourself, “Does my organization have procedures in place to deal with cure notices, customer complaints, and quality issues? What about monitoring subcontractors?”

If you are still reading this article, you probably are not as well prepared for a contract termination as you should be. Most contract terminations have a root cause and are not solely due to the government no longer requiring the items or services.

Here are some common contract termination causes and how to prevent them:

Failure to immediately address government concerns

Whether a complaint or “suggestion” is received verbally or in writing from the government, there should be a process in place to respond immediately. Often, we hear from clients that their program personnel were in the process of addressing a government issue (but apparently not in real-time). Now, they are dealing with a cure notice for many items to be corrected in two weeks.

Incorporate the handling and response to government communications and complaints/concerns into your program management policy and procedures. All complaints/concerns should be documented and tracked from the initial problem to the eventual solutions.

Regular communication with the government is also critical in staying ahead of potential contract issues and preventing a termination. The contractor program manager should routinely relay project status to the government in writing – even if not required under the contract terms. We recommend weekly communications but, depending on the project, monthly communications may suffice.

Failure to evaluate change orders for potential effect on cost or schedule

Sometimes, trying to fully please the client can actually lead to a termination. A contractor has only 30 days from the date of receipt of a written order to assert its right to an adjustment. Often, accepting changes without evaluating the impact on scope, cost, and/or schedule can lead to project delays and cost overruns. These may ultimately result in missed delivery/performance dates.

As a preventative measure, create a standard procedure to evaluate the impact of any change request on the scope, cost, and/or schedule of a project. Share this required procedure with the customer: “Yes, we can make changes, but we first need to evaluate the scope, cost, and schedule to identify any project impacts.”

Subcontractor performance issues

Many contractors focus on complying with the requirement to issue subcontracts and neglect their associated responsibility for managing subcontractors under FAR 42.202(e)(2), Assignment of Contract Administration. Prime contractors often assume, without oversight or verification, that their subcontractors will meet prescribed performance and deliverable requirements.

When a subcontractor fails to deliver, the prime contractor is ultimately responsible for addressing the issue, or may face termination. Therefore, you should ensure that you flow down the proper terms and conditions to your subcontractors, including the prime contract termination clauses and deliverable dates.

Another step we recommend is to create a post-award subcontract administration procedure to address the risk. Ensure that adequate and comprehensive subcontractor oversight is built in to your procurement and project management processes. Any issue that can affect contract performance/delivery must be escalated quickly for resolution.

Bidding on unprofitable work

Today, when lowest price, technically acceptable typically beats out best value (though recent legislation directs more limited use of LPTA procurements), contractors often estimate their cost to fit the price they want to bid and what they think the government is willing to pay. Instead, you should be focusing on the actual cost required to address the government’s mission-stated requirements.

Even though you may know that the “price to win” is too low to perform the work adequately, the proposal development organization might not want to deviate from that winning number.

To avoid bidding on unprofitable work, you should develop a comprehensive estimating manual and system so that your estimated costs are based on real costs/prices currently in the marketplace. As part of this, build and encourage a corporate culture that incentivizes employees for more profitable work as opposed to contract wins exclusively.

As no contract is termination proof, the key is to always be prepared and have a defense strategy in place at all times.”

About the Authors

Darrell Hineman is the director of the government compliance group at the accounting, tax and advisory firm CohnReznick LLP. https://www.cohnreznick.com/industries/government-contracting

Brian Courtney is a senior manager at the accounting, tax and advisory firm CohnReznick LLP. https://www.cohnreznick.com/industries/government-contracting

https://washingtontechnology.com/articles/2017/06/09/insights-contractor-termination.aspx

 

For more information on the types of contract terminations, preparing for them and managing them, please see the article linked below:

http://www.smalltofeds.com/2011/08/federal-government-contract.html

GAO: “Late Means Late for Contract Proposals”

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“NATIONAL DEFENSE MAGAZINE” By By Julia Lippman and Jason Workmaster

“GAO’s opinion should serve as a warning to contractors that a late proposal will not be considered.

Especially with the use of electronic submission processes, a matter of seconds can be the difference between a timely and late proposal.

The Government Accountability Office on Feb. 27 reiterated its long standing rule that, when it comes to proposal submissions, “late” means “late.”

GAO addressed a protest filed by Tele-Consultants Inc. in connection with a request for proposals issued by Naval Sea Systems Command. TCI’s protest argued that its proposal was improperly rejected by the agency for being submitted after the deadline.

Under the request for proposals, the Navy sought support services for the Naval Undersea Warfare Center through the issuance of a task order to a small business holder of the SeaPort-e multiple award indefinite-delivery/indefinite-quantity contract. The solicitation was issued Sept. 28, 2016 and proposals were to be submitted electronically through the SeaPort-e portal by Nov. 8 at 2:00 p.m. eastern time. The solicitation required compliance with the proposal submission instructions outlined in the SeaPort-e multiple award contract and the SeaPort Vendor Portal User Guide.

In using the portal, contractors were required to designate an “authorized user” who could confirm the intent to engage in a legally binding action, such as submitting a proposal. When a contractor was ready to submit its proposal, its authorized user was required to use the “submit signed proposal” button. The portal would then generate a confirmation prompt that would require the user to confirm his or her intent to electronically sign and submit the proposal.

The portal was set up so that contractors could store their proposals on the contractor side of the portal prior to submitting their proposal.

The agency received three proposals by the deadline. TCI’s proposal was not among them. Rather, TCI’s proposal remained in its draft form on the contractor side of the portal because it had not engaged the submit button.

Based on a review of the server logs, the agency determined that TCI’s representatives had unsuccessfully tried to engage the button 23 and 34 seconds after the proposal deadline. TCI reached out to the contracting officer by phone and email stating that the proposal button had not allowed it to submit its proposal but that “TCI’s proposal was timely submitted and it was intended to be binding on TCI.”

TCI received an email that evening from the SeaPort-e portal that noted that, “[a]n event for which you created a draft proposal has closed without you completing the final submission process. As a result, the draft will not be considered.” There was no indication that the portal had experienced any technical malfunction that would have prevented TCI from timely submitting its proposal.

TCI argued that its proposal should not have been rejected because, even though it did not receive notice that its proposal was timely submitted, its proposal was, in fact, submitted on time. Additionally, TCI argued that, even if its proposal was late, it was in the government’s control and was, thus, subject to the exception set forth in FAR 15.208. Under FAR 15.208, proposals that are submitted after the deadline are late unless, among other exceptions, there is evidence that the proposal “was received at the government installation designated for receipt of proposals and was under the government’s control prior to the time set for receipt of proposals[.]”

TCI argued that the archival lock on proposal files was acceptable evidence to establish that its proposal was received at the government installation designated for receipt of proposals and was under the government’s control prior to the time set for receipt of proposals.

The agency responded that TCI’s failure to engage the button meant that TCI had failed to submit its proposal either on time or after the deadline. The agency explained that proposals were not added to the government side of the portal until the submit button was selected. Thus, TCI’s proposal was never received by the government or under the government’s control. The agency also proffered that it could not know if TCI meant to be legally bound by its proposal in light of its failure to engage the button.

Although noting that it was not clear that FAR 15.208 even applied to this FAR Part 16 procurement, GAO nevertheless agreed with the agency and found that TCI failed to submit its proposal. GAO reiterated the well-established rule that an offeror is responsible for delivering its proposal to the designated place by the designated time and that an agency is not required to consider a proposal when there is no evidence that it was “actually received” by the agency.

GAO found that there was no evidence that TCI had actually submitted its proposal to the agency as the electronic submission of a legally binding offer was not completed. TCI did not dispute that it tried to use the submit button after the 2:00 p.m. EST deadline. And TCI never engaged the button even though it tried to do so. TCI’s failure to engage the button meant that it had never submitted a legally binding proposal. GAO concluded that it had “no basis to challenge the agency’s decision that it had not received, and could not consider, TCI’s draft proposal.”

Contractors should take extra care when submitting a proposal electronically to ensure that all proper submittal steps for the submission of a legally binding proposal have been completed well before a proposal deadline.

Additionally, a proposal stored on a government portal may not be sufficient to establish it was in the government’s control.”

Jason N. Workmaster is of counsel and Julia Lippman is an associate in the government contracts practice at Covington & Burling LLP.

http://www.nationaldefensemagazine.org/articles/2017/6/15/late-means-late-for-contract-proposals

 

 

U.S. Army Is Growing By Thousands of Soldiers

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ALLIED SPIRIT V

(Photo Credit: Markus Rauchenberger/Army)

“ARMY TIMES”

“The Army has used a suite of force-shaping measures and incentives to retain and recruit enough soldiers to bring the force back to over a million.

[Measures] including five-figure enlistment and retention bonuses, as well as major opportunities for National Guard and Army Reserve soldiers to go active.

The Army is on track to reach its end strength goal of 1,018,000 soldiers by the end of September, and that will mean enough manpower to fill holes in existing combat units, save some units from planned deactivations, and man some new ones.

Units throughout the Army will feel the benefit of adding 28,000 troops to the active and reserve components, according to a Thursday release from the Army, reversing a drawdown that had planned for just 980,000 soldiers this year.

“These force structure gains facilitated by the FY17 end strength increase have begun, but some will take several years to achieve full operational capability,” said Brig. Gen. Brian J. Mennes, director of the Force Management Division, in the release. “Implementation of these decisions, without sacrificing readiness or modernization, is dependent upon receiving future appropriations commensurate with the authorized end strength.”

The Army has used a suite of force-shaping measures and incentives to retain and recruit enough soldiers to bring the force back to over a million, including five-figure enlistment and retention bonuses, as well as major opportunities for National Guard and Army Reserve soldiers to go active.

In addition to filling existing manning gaps in brigade combat teams, the release said, the plus-up will save several units that were slated for deactivation. They are:

  • 4th Infantry Brigade Combat Team (Airborne), 25th Infantry Division, based Joint Base Elmendorf-Richardson, Alaska.
  • 18th Military Police Brigade Headquarters based in Grafenwoehr, Germany.
  • 206th Military Intelligence Battalion at Fort Hood, Texas.
  • 61st Maintenance Company at Camp Stanley, South Korea.
  • 2nd Combat Aviation Brigade at Camp Red Cloud, South Korea.

Soldiers retained during the end strength build up also could end up joining the recently announced Security Force Assistance Brigades and their training school, as well as an aviation training brigade at Fort Hood.

More soldiers will also help with the Army’s increased manning in Europe.

The Army is planning to station the following units overseas, according to the release.

  • A field artillery brigade headquarters with an organic brigade support battalion headquarters, a signal company and a Multiple Launch Rocket System battalion (MLRS).
  • Two MLRS battalions with two forward support companies.
  • A short range air defense battalion.
  • A theater movement control element.
  • A petroleum support company.
  • An ammunition platoon.

Further, the Army plans to convert an infantry brigade to an armored brigade and add 1,300 new staff to Training and Doctrine Command, in an attempt to increase training and recruiting capacity, the release said.

“The end strength increase will augment deploying units, and units on high readiness status, with additional soldiers to increase Army readiness and enable us to continue to protect the nation,” Mennes said.”

https://www.armytimes.com/articles/the-army-is-growing-by-thousands-of-soldiers-heres-where-theyre-going-to-go

 

 

Pentagon Declares Lockheed F-35 “Too Big to Fail”

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F-35 Too Big to Fail

(Photo Credit: Staff Sgt. Staci Miller/US Air Force)

“DEFENSE NEWS” By Michael P. Hughes

“Officially begun in 2001, with roots extending back to the late 1980s, the F-35 program is nearly a decade behind schedule, and has  failed to meet many of its original design requirements.

It’s also become the most expensive defense program in world history, at about $1.5 trillion before the fighter is  phased out in 2070.

The F-35 was billed as a fighter jet that could do almost everything the U.S. military desired, serving the Air Force, Marine Corps and Navy — and even Britain’s Royal Air Force and Royal Navy — all in one aircraft design. It’s supposed to replace and improve upon several current — and aging — aircraft types with widely different missions. It’s marketed as a cost-effective, powerful multi-role fighter airplane significantly better than anything potential adversaries could build in the next two decades. But it’s turned out to be none of those things.

The unit cost per airplane, above $100 million, is roughly twice what was promised early on. Even after U.S. President Donald Trump lambasted the cost of the program in February, the price per plane dropped just $7 million — less than 7 percent.

And yet, the U.S. is still throwing huge sums of money at the project. Essentially, the Pentagon has declared the F-35 “ too big to fail.” As a retired member of the U.S. Air Force and current university professor of finance who has been involved in and studied military aviation and acquisitions, I find the F-35 to be one of the greatest boondoggles in recent military purchasing history.

Forget what’s already spent

The Pentagon is trying to argue that just because taxpayers have flushed more than $100 billion down the proverbial toilet so far, we must continue to throw billions more down that same toilet. That violates the most elementary financial principles of capital budgeting, which is the method companies and governments use to decide on investments. So-called sunk costs, the money already paid on a project, should never be a factor in investment decisions. Rather, spending should be based on how it will add value in the future.

Keeping the F-35 program alive is not only a gross waste in itself: Its funding could be spent on defense programs that are really useful and needed for national defense, such as  anti-drone systems to defend U.S. troops.

Part of the enormous cost has come as a result of an effort to share aircraft design and replacement parts across different branches of the military. In 2013, a study by the think tank Rand found that it would have been cheaper if the Air Force, Marine Corps and Navy had simply  designed and developed separate and more specialized aircraft to meet their specific operational requirements.

Not living up to top billing

The company building the F-35 has made grand claims. Lockheed Martin said the plane would be far better than current aircraft — “four times more effective” in air-to-air combat, “eight times more effective” in air-to-ground combat and “three times more effective” in recognizing and suppressing an enemy’s air defenses. It would, in fact, be “ second only to the F-22 in air superiority.” In addition, the F-35 was to have better range and require less logistics support than current military aircraft. The Pentagon is still calling the F-35 “ the most affordable, lethal, supportable, and survivable aircraft ever to be used.”

But that’s not how the plane has turned out. In January 2015, mock combat testing pitted the F-35 against an F-16, one of the fighters it is slated to replace. The F-35A was flown “clean” with empty weapon bays and without any drag-inducing and heavy, externally mounted weapons or fuel tanks. The F-16D, a heavier and somewhat less capable training version of the mainstay F-16C, was further encumbered with two 370-gallon external wing-mounted fuel tanks.

In spite of its significant advantages, the F-35A’s test pilot noted that the F-35A was less maneuverable and markedly inferior to the F-16D in a visual-range dogfight.

Stealth over power

One key reason the F-35 doesn’t possess the world-beating air-to-air prowess promised, and is likely not even adequate when compared with its current potential adversaries, is that it was designed first and foremost to be a stealthy airplane. This requirement has taken precedence over maneuverability, and likely above its overall air-to-air lethality. The Pentagon and especially the Air Force seem to be relying almost exclusively on the F-35’s stealth capabilities to succeed at its missions.

Like the F-117 and F-22, the F-35’s stealth capability greatly reduces, but does not eliminate, its radar cross-section, the signal that radar receivers see bouncing back off an airplane. The plane looks smaller on radar — perhaps like a bird rather than a plane — but is not invisible. The F-35 is designed to be stealthy primarily in the X-band, the radar frequency range most commonly used for targeting in air-to-air combat.

In other radar frequencies, the F-35 is not so stealthy, making it vulnerable to being tracked and shot down using current — and even obsolete — weapons. As far back as 1999 the same type of stealth technology was not able to prevent a U.S. Air Force F-117 flying over Kosovo from being located, tracked and shot down using an outdated Soviet radar and surface-to-air missile system. In the nearly two decades since, that incident has been studied in depth not only by the U.S., but also by potential adversaries seeking weaknesses in passive radar stealth aircraft.

Of course, radar is not the only way to locate and target an aircraft. One can also use an aircraft’s infrared emissions, which are created by friction-generated heat as it flies through the air, along with its hot engines. Several nations, particularly the Russians, have excellent passive infrared search and tracking systems that can locate and target enemy aircraft with great precision — sometimes using lasers to measure exact distances, but without needing radar.

It’s also very common in air-to-air battles for opposing planes to come close enough that their pilots can see each other. The F-35 is as visible as any other aircraft its size.

Analysts weigh in

Lockheed Martin and the Pentagon say the F-35’s superiority over its rivals lies in its ability to remain undetected, giving it “ first look, first shot, first kill.” Hugh Harkins, a highly respected author on military combat aircraft, called that claim “a marketing and publicity gimmick” in his book on Russia’s Sukhoi Su-35S, a potential opponent of the F-35. “In real terms an aircraft in the class of the F-35 cannot compete with the Su-35S for out and out performance such as speed, climb, altitude, and maneuverability,” he wrote.

Other critics have been even harsher. Pierre Sprey, a co-founding member of the so-called fighter mafia at the Pentagon and a co-designer of the F-16, calls the F-35 “inherently a terrible airplane” that is the product of “an exceptionally dumb piece of Air Force PR spin.” He has said the F-35 would likely lose a close-in combat encounter to a well-flown MiG-21, a 1950s Soviet fighter design. Robert Dorr, an Air Force veteran, career diplomat and military air combat historian, wrote in his book “Air Power Abandoned”: “The F-35 demonstrates repeatedly that it can’t live up to promises made for it. … It’s that bad.”

How did we get here?

How did the F-35 go from its conception as the most technologically advanced, do-it-all military aircraft in the world to a virtual turkey? Over the decades-long effort to meet a real military need for better aircraft, the F-35 program is the result of the merging or combination of several other separate and diverse projects into a set of requirements for an airplane that is trying to be everything to everybody.

In combat, the difference between winning and losing is often not very great. With second place all too often meaning death, the Pentagon seeks to provide warriors with the best possible equipment. The best tools are those that are tailor-made to address specific missions and types of combat. Seeking to accomplish more tasks with less money, defense planners looked for ways to economize.

For a fighter airplane, funding decisions become a balancing act of procuring not just the best aircraft possible, but enough of them to make an effective force. This has lead to the creation of so-called multi-role fighter aircraft, capable both in air-to-air combat and against ground targets. Where trade-offs have to happen, designers of most multi-role fighters emphasize aerial combat strength, reducing air-to-ground capabilities. With the F-35, it appears designers created an airplane that doesn’t do either mission exceptionally well. They have made the plane an inelegant jack-of-all-trades, but master of none — at great expense, both in the past and, apparently,  well into the future.

I believe the F-35 program should be immediately canceled; the technologies and systems developed for it should be used in more up-to-date and cost-effective aircraft designs. Specifically, the F-35 should be replaced with a series of new designs targeted toward the specific mission requirements of the individual branches of the armed forces, in lieu of a single aircraft design trying to be everything to everyone.”

http://www.defensenews.com/articles/what-went-wrong-with-lockheeds-f-35-commentary

This article was originally published on The Conversation .

About the Author

Image result for Michael P. Hughes is a professor of finance at Francis Marion University.

Michael P. Hughes is a professor of finance at Francis Marion University. He served more than 21 years in the U.S. Air Force. During that time, he spent more than 14 years in nuclear treaty monitoring and related activities, while the initial 7 years were in the aircraft maintenance and engineering (propulsion) arena with F-4 and F-15 aircraft.

http://departments.fmarion.edu/business/hughes-michael-p.html

U.S. President Blocks Veterans Group of 500,000 Members on Twitter

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Blocked Vets

“THE HILL”

“Veterans group has been critical of his time in office on Twitter.

“The Commander in Chief can block @VoteVets, the voice of 500k military veterans and families, but we will NOT be silenced,” VoteVets.org wrote on Twitter, including a screenshot that shows Trump had blocked the organization’s account.

The group has in the past criticized the president over his budget proposal, Republican attempts to repeal and replace ObamaCare and the president’s executive order temporarily barring individuals from certain predominantly Muslim nations from entering the United States

In one television advertisement aired during MSNBC’s “Morning Joe” in early February, VoteVets spoke directly to Trump, telling him to start acting like “a legitimate president.”

“Look, you lost the popular vote … You’re having trouble drawing a crowd …  And your approval rating keeps sinking …” a veteran of the war in Afghanistan says in the ad.

“But kicking thousands of my fellow veterans off their health insurance by killing the Affordable Care Act, and banning Muslims won’t help …  And that’s not the America I sacrificed for … . You want to be a legitimate president, sir? Then act like one.”

VoteVets is a progressive veterans group founded in 2006 that focuses on providing voices to veterans on issues ranging from foreign police to LGBTQ rights.”

http://thehill.com/homenews/administration/337560-trump-blocks-veterans-group-on-twitter

 

5 Ways to Make Terrorism Worse

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Terrorism Worse

“DEFENSE ONE”

“Terrorists are pleased to confront a United States that demonizes Muslims and seeks only its own advantage.

Donald Trump seems to regard a terrorist attack almost anywhere in the world as an opportunity to take to Twitter to tout his domestic political agenda. Instead of further straining relations with key democratic allies, the president would be better off reconsidering his own policies that are making terrorism worse.

First, Trump has realigned U.S. policy in the Middle East to give uncritical support to authoritarian regimes whose repressive policies fuel grievances that are exploited by violent extremists. Governments like Saudi Arabia also promote extreme, intolerant interpretations of Islam throughout the world on which terrorist groups like ISIS and al-Qa’eda base their worldviews. If Trump were serious about reducing the threat from terrorism, he would confront his authoritarian allies about the hateful incitement spread by preachers and religious and educational institutions in their countries, and about the direct support that still flows to violent extremist groups in Syria and elsewhere. He would also urge U.S. allies to govern in a way that provides hope to the millions of young people across the region who are squeezed between repressive, corrupt authoritarian rulers and violent extremists who claim to offer the only alternative. Instead, Trump condones the harmful practices of his authoritarian allies, remaining silent about their violations of human rights while offering lavish praise and arms sales.

Second, the Trump administration has taken sides in the ancient sectarian rift between Sunni and Shi’ite Muslims that has helped fuel conflict in Syria and elsewhere and created conditions in which terrorist groups like ISIS and al-Qa’eda thrive. Exploitation of sectarian divisions by Iran, Saudi Arabia, and their proxies has been one of the chief drivers of terrorist violence in the Middle East in recent years, such as the bombings in Baghdad last week, which killed dozens. Trump is encouraging U.S. allies to step up sectarian conflict in Bahrain and Yemen while issuing threats against Iran, steps that vindicate and embolden sectarian extremists in Tehran. Terrorist attacks in the Iranian capital, immediately claimed by ISIS, received only perfunctory condemnation from the White House. The White House statement, which seemed to blame the victims for the assault, has received widespread condemnation. This hopelessly one-sided approach to violence against civilians will only fuel resentment and more violence. To reduce the threat of terrorism, the United States must work to ease sectarian conflicts in the region. Trump is making them worse.

Third, Trump continues to push a travel ban against six majority-Muslim countries, even as more and more federal courts declare it unconstitutional. The president’s single-minded pursuit of this discriminatory policy supports the narrative of violent extremists who claim that Muslims are unwelcome in the West. The travel ban abets recruiting efforts in another way as well: by fomenting distrust of law enforcement among American Muslims, thus reducing the chance that violent extremists might be reported to authorities.

Fourth, Trump’s and his administration’s harsh rhetoric against Muslims, enthusiastically backed up by his cheerleaders in the media, gives license to bigots whose actions benefit ISIS and other extremist groups. Hate crimes against Muslims have jumped, perhaps by half, since Trump began his campaign for the presidency, and he has little to say about this alarming trend. The spread of bigoted attitudes towards Muslims fuels divisions that are be exploited by violent extremists.

Fifth, and perhaps most importantly, the Trump administration is not providing leadership on universal human rights and therefore failing to offer any constructive alternative to the hateful, nihilistic ideology of the terrorists. The Trump administration has pledged to put America first and secure American interests in a world “where nations, nongovernmental actors and businesses engage and compete for advantage.” Terrorists are only too pleased to confront the United States in such an amoral world, one without universal values or common interests and with no sense of global community.

By turning its back on these values, the Trump administration is unilaterally giving up the United States’ greatest strength, and making it easier for terrorists to spread division, fear, and violence.”

http://www.defenseone.com/ideas/2017/06/five-ways-president-trump-making-terrorism-worse/138602/?oref=d-topictop