Category Archives: Us Economy

HUBZone Program Updates And Flexibilities During COVID-19

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Image: SBA

Summarizing the following updates of interest to HUBZone enterprises:

I. HUBZone Program flexibilities during COVID-19

II. HUBZone Program updates related to a regulation change

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U.S. SMALL BUSINESS ADMINISTRATION (SBA)

 I.  HUBZone Program flexibilities during COVID-19

How can firms maintain the 35% HUBZone residency requirement if some employees are college students whose residence hall has closed?  SBA recognizes that some HUBZone employees are students who have been called home to locations no longer in a HUBZone, even though they continue to work remotely, impacting firms’ ability to maintain the 35% HUBZone residency requirement.  SBA will determine affected firms’ compliance with the 35% HUBZone residency requirement by reviewing documentation showing where the impacted employee lived prior to the COVID-19 response measures being put in place. Accordingly, a firm that has a HUBZone  employee that was required to move from student housing to a non-HUBZone location AND continues to work for the HUBZone firm, the firm may continue to count that employee as a HUBZone resident by providing documentation showing:  1) the university/college closed the student’s residence and 2) the employee has been maintained on the payroll.  This applies only to students who, at the time of the firm’s application for certification or recertification, were already on payroll and had residency established prior to the university closing student housing. 

How can firms maintain compliance with the Principal Office requirement if their employees are required to telework?  SBA recognizes that if all of a firm’s employees are required to telework in response to the COVID-19 pandemic, this might impact a firm’s ability to comply with the HUBZone program’s principal office requirement.  In response to this concern, SBA will determine affected firms’ compliance with the principal office requirement by reviewing the firm’s compliance prior to the telework measures being put in place. Accordingly, at the time of application for certification or recertification, a firm that has placed its employees on mandatory telework will have to provide documentation showing where its employees performed their work prior to requiring telework.  Such an applicant will also be required to provide a signed statement that: the firm put all their employees on telework associated with social distancing in response to the COVID-19 pandemic;  the teleworking measure is temporary in nature; and the employees will return to their normal work location once the teleworking measures have been lifted.

How can firms maintain compliance with the requirement for uninterrupted and continued employment for “Legacy HUBZone employees,” as outlined in the HUBZone regulations at 13 C.F.R. 126.200(d)(ii)(3), if employees are laid off or on extended sick leave?  The revised HUBZone regulations, which became effective December 26, 2019, allow firms to count “Legacy” HUBZone resident employees as permanent HUBZone resident employees if they are able to demonstrate that the employee was a HUBZone resident for 180 days prior to and for 180 days following the firm’s HUBZone certification or recertification.  In addition, the requirement states, “The certified HUBZone small business concern must maintain records of the employee’s original HUBZone address, as well as records of the individual’s continued and uninterrupted employment by the HUBZone small business concern, for the duration of the concern’s participation in the HUBZone program.”  SBA recognizes that many firms have placed employees on extended (unpaid) sick leave status or are contemplating layoffs. SBA will allow HUBZone companies to place an employee in a temporary non-paid status such as FMLA to care for themselves or a sick family member during COVID-19 if the firm attests to their intent to put such individuals back on payroll after the period of extended sick leave. However, there is no such exception for employees that have been laid-off.  If a firm lays off an individual, that individual cannot be counted as a “legacy HUBZone employee” for any future HUBZone certification or recertification.

Can the HUBZone Program expedite my application for certification?  SBA may expedite the application of any firm that submits a complete package for certification and indicates that they intend to respond to a specified solicitation that relates to COVID-19. 

Can the HUBZone Program waive or reduce the 35% residency requirement?  This statutory requirement would necessitate Congressional action to change

     II.  HUBZone Program updates related to a change in regulations

When and why did SBA propose new rule changes to the HUBZone program? The SBA proposed new regulations to make it easier for small businesses to participate in the HUBZone program. These changes will make the program more attractive for small businesses to invest in HUBZones and hire HUBZone residents, providing greater impact to communities and making it easier for federal agencies to meet their goal to award 3 percent of contracts to certified HUBZone small businesses.  The rule change was published in November 2019 and took effect December 26, 2019.   

What are the new rules around recertification? All firms will be required to undergo an annual recertification rather than a triennial recertification, with a full documentation review taking place every three years.  Once certified, a firm is eligible for all HUBZone contracts for which the business qualifies as small, for a period of one year from the date of its initial certification or most recent recertification (unless the concern acquires, is acquired by, or merges with another firm during that period).   Prior to this change, in order to be eligible for a HUBZone contract, firms had to prove their HUBZone eligibility at both the time of offer and the time of award, lengthening the procurement process for HUBZone firms uniquely among all small businesses—and serving as a disincentive for federal agencies to contract with HUBZone companies. 

When and how will annual recertification begin? SBA has experienced a delay in the implementation of our new annual recertification process.   Firms which, based on the prior triennial recertification schedule, were due for recertification in 2020 will be contacted automatically by the HUBZone Certification and Tracking System (HCTS) and will be required to recertify on the anniversary date of their initial certification.  (For example, if a firm was initially certified on December 1, 2017, the firm will receive a notice from HCTS that it is due to recertify its HUBZone status within 30 days of December 1, 2020.)   All other firms (which were not scheduled to recertify in 2020 under the triennial recertification rules) will continue to be considered eligible as of the date of their initial certification or most recent recertification, and must be prepared to prove their eligibility at that time if their HUBZone status is protested in connection with a HUBZone solicitation issued after December 26, 2019.    Until such time as we have introduced a fully automated recertification process for all firms, we will also allow firms to voluntarily recertify on the anniversary date of their initial certification, if they choose to do so. We will advise firms within the next two weeks regarding the process for voluntary recertification on their anniversary date.

Are Governors now permitted to ask SBA to designate HUBZones?  A new Governor-designated covered areas initiative that became effective on January 1, 2020, represents an opportunity to expand the HUBZone program to reach more distressed rural communities.  The new authority allows state governors to petition SBA to designate as HUBZones rural areas with populations under 50,000 and unemployment levels of 120 percent of the U.S. or state average.  SBA will provide updates and update the HUBZone maps to reflect newly covered areas.

Are there other changes to the HUBZone maps? SBA has frozen the HUBZone maps through 2021, until the results of the 2020 Census are available. This will provide the program and participating small businesses with an opportunity to transition to a new requirement to update the maps and designations on five-year intervals, starting after the 2020 Census. Five-year HUBZone updates will enable small businesses to plan and invest in their HUBZone communities without fear that their designation may change from one year to the next, thus providing stability for both the community and HUBZone businesses. While the maps are frozen, no new Qualified Non-Metropolitan Counties, Qualified Census Tracts, or Redesignated Areas will be removed from or added to the maps. However, SBA will continue to add locations approved through the new Governor-designated covered areas initiative, qualified base closure areas, qualified disaster areas, and Indian lands, as any new data is received.

How has the definition of the Principal Office changed?   A new provision in the HUBZone regulations allows small businesses that invest in HUBZones by purchasing a building or entering a long-term lease (of 10 years or more) to maintain HUBZone eligibility for up to 10 years, even if at some point the office location no longer qualifies as a HUBZone. This provision does not apply to offices located in areas categorized on the HUBZone map as Redesignated areas.

Are there changes to the 35% HUBZone employee residency requirement?  The new rule allows HUBZone companies to retain long-term “Legacy” HUBZone resident employees as permanent HUBZone resident employees, under certain circumstances.  An employee who resides in a HUBZone for at least six months (180 days) at the time of certification or recertification, and continues to reside in a HUBZone for at least six months (180 days) after such time, may continue to be considered a HUBZone resident so long as they are continuously employed by the firm, even if he/she moves to a non-HUBZone area, or if the area of his/her residence loses HUBZone geographical eligibility. If the firm wants to count such a “Legacy” employee as a HUBZone resident for the duration of the individual’s employment, then at the time of any subsequent recertification, the firm will be required to identify any such employee and provide supporting documentation demonstrating that the individual resided in a HUBZone for 180 days before and after certification and that the individual has been an employee of the firm for the entire period of time since the firm’s certification.

How may I obtain help or learn more about the HUBZone Program?  The following resources may be accessed for additional support:

IRS COVID-19 Tax Relief Guidance

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The IRS issued Notice 2020-18, which supersedes and expands on the tax relief originally announced in Notice 2020-17.

The most significant change in 2020-18 is that taxpayers may defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest regardless of the amount owed.

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The original payment caps (up to $1 million for individuals and non-corporate filers, and up to $10 million for corporate filers) have been eliminated. The notice also clarifies that this extension applies to estimated tax payments due April 15, 2020.


The deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers, as well as those who pay self-employment tax. Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. 

 IRS issued Notice 2020-18

Small Tech Companies Got $1 Billion At USAF Virtual South By Southwest

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DEFENSE NEWS

The U.S. Air Force lost its chance to hang out at South by Southwest this week after the new coronavirus known as COVID-19 caused the cancellation of the festival.But the service still awarded nearly $1 billion in contracts during a virtual version of its event held March 12.

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“[The event], included keynotes from Air Force Secretary Barbara Barrett, a “Pitch Bowl” where companies delivered short pitches in the hopes of receiving small contracts from the Air Force, and other events meant to deepen the Air Force’s connection to small commercial tech firms.

The largest contracts — worth more than $550 million total — went to 21 companies to develop “big bet” technologies. Those companies are Aerial Applications, Analytical Space, Anduril Industries, Applied Minds, Elroy Air, Enview, Edgybees, Essentium, Falkonry, ICON Technology, Orbital Insight, Orbital Sidekick, Pison, Privoro, Shift.org, Swarm Technologies, Tectus Corp., Virtualitics, Wickr, Wafer and one company that the Air Force has not disclosed.

“For all these awardees, you’re on a four-year, fixed-price contract that we believe, if successful, will disrupt part of our mission in a way that will give a huge advantage for our future airmen,” said Will Roper, the Air Force’s acquisition executive.

The value of the contracts awarded by AFWERX may seem small compared to the multibillion awards for major defense programs. However, these awards go a long way in helping technology firms overcome the “valley of death” between technology development and production, when a lot of companies are vulnerable to failure, said Chris Brose, head of strategy for Anduril Industries, which specializes in developing artificial intelligence technologies.

“For a company like ours or companies of that size, It’s quite significant. It allows us to really kind of do more of the good work that we’re doing, to scale and grow and work with new partners, and it makes a huge difference,” Brose said.

Brose declined to detail the precise nature of Anduril’s contract with the Air Force, but said that the general objective is to prove that an unmanned aerial system can deliver a mass of swarming drones capable of performing complex missions. While a human would still be “in the loop” overseeing the network, certain tasks — such as steering the drones, moving their sensors and processing gathered data — would be automated.”

https://www.defensenews.com/industry/2020/03/13/small-tech-companies-got-a-combined-1b-at-the-air-forces-virtual-version-of-south-by-southwest/

Many Contractors Awaiting Pandemic Guidance From Government Agencies

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FCW

Lawmakers want federal agencies to publicly post their contingency plans so everyone has a better idea of what to expect as more federal employees move to telework and other alternative operations. Official agency advice is scarce.”

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“Some agencies posted some contractor-specific contingency guidance in the last few days ahead of the March 19 letter from Senate lawmakers, but federal contractors FCW has spoken with in the last few days said official agency advice for contractors is scarce.

The Environmental Protection Agency and the U.S. Agency for International Development rolled out guidance for their contractors at the end of last week, telling them to keep in close contact with their agency contracting officers, as well as check their contracts’ language for information on how to move ahead.

In a March 19 letter to the acting directors of OMB and OPM, Sen. Mark R. Warner (D-Va.) and seven other senators called on those agencies to require all federal agencies to post their contingency plans for COVID-19 outbreaks, so the public knows what services to expect and federal contractors have some guidance on how to comply with their contracts.

“Making these [contingency] plans transparent and readily available is key to ensuring that our constituents understand what services are continuing in the midst of the uncertainty and disruption caused by COVID-19. It is also important for federal employees and contractors to understand and properly implement the required mitigation measures and for policymakers to ensure compliance with these measures,” said the letter.

The letter said posting the plans was in line with the way the government handles the plans during a non-Coronavirus related government shutdown.

Contractor telework

The Professional Services Council urged Russell Vought, acting OMB director, to extend telework to the contractor workforce where possible.

Many contractors are being sent and home told that “telework is not authorized under the contract,” PSC President and CEO David Berteau wrote in a March 18 letter to Vought.

“Sending contractors home without authorizing telework effectively ends the important work being done for the government by those contractors,” Berteau wrote. He said the lack of guidance also undermines the intent of the President when OMB told federal agencies to allow government workers the “maximum telework flexibilities.”

Additionally, the National Defense Industrial Association, the U.S. Chamber of Congress, PSC and other trade groups are urging Congress to include contractor telework and assistance for contractors who can’t work because of closed federal facilities in coming pandemic relief legislation.

Excusable delays

EPA and USAID rolled out guidance for their contractors on March 13 and March 12 respectively, telling the businesses to keep in close contact with their agency contracting officers, as well as check their contracts’ language for information on how to move ahead.

USAID told contractors in its notice that contractors shouldn’t begin any new work or change work plans without getting written approvals from agency contracting officers and managers.

It told contractors not to begin any new work or change approved work plans.

The agency also said it is considering setting up an expedited procedures package for disease emergency response.

USAID contracting officers, said the agency, will get in touch with contractors if it needs to redirect resources. It said it said it would consider additional contract implementation expenses due to the virus on a “case-by-case basis.”

USAID advised contractors with workers infected by the virus and temporarily unable to work to “continue to incur operating costs–to be able to restart activities immediately if circumstances or instructions change.”

On March 13, the EPA posted a Coronavirus FAQ for small businesses that answered some basic questions about how they should proceed. The guidance advised contractors to review their contracts to see how, and if, those documents offer any latitude for delays. It advised small business contract holders to look to the Federal Acquisition Regulation for further information on how federal contract performance is handled under extreme circumstances, including pandemics. It warned that “force majeure” clauses common in the language of many commercial contracts, are not the same under the FAR.

Contractors that have “Excusable Delays” provisions in their contracts that cover contingencies including epidemics.

EPA advised contractors to consult with customer agencies closely on whether specific federal workers or sites would be available or open for work. It said contractors might also get wind-down and startup costs covered if work can’t be done because of absent workers or closed sites.”

https://fcw.com/articles/2020/03/19/contractors-guidance-coronavirus-rockwell.aspx?oly_enc_id=

Faster Qualification/Expanded Access – Disaster Assistance Loans For Small Businesses

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Once an economic injury declaration has been made in a state or territory, the new rules allow the affected small businesses within the state or territory to apply for a disaster assistance loan.

SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for each affected small business.

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“NEWS RELEASE

PRESS OFFICE Release Date: March 17, 2020                      

Contact: Jennifer.Kelly@sba.gov, (202) 205-7036

Release Number: 20-26                    

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WASHINGTON – Today, as part of the Trump Administration’s aggressive, whole-of-government efforts to combat the Coronavirus outbreak (COVID-19) and minimize economic disruption to the nation’s 30 million small businesses, U.S. Small Business Administration Administrator Jovita Carranza issued revised criteria for states or territories seeking an economic injury declaration related to Coronavirus (COVID-19). The relaxed criteria will have two immediate impacts:

  • Faster, Easier Qualification Process for States Seeking SBA Disaster Assistance. Historically, the SBA has required that any state or territory impacted by disaster provide documentation certifying that at least five small businesses have suffered substantial economic injury as a result of a disaster, with at least one business located in each declared county/parish. Under the just-released, revised criteria, states or territories are only required to certify that at least five small businesses within the state/territory have suffered substantial economic injury, regardless of where those businesses are located.
  • Expanded, Statewide Access to SBA Disaster Assistance Loans for Small Businesses. SBA disaster assistance loans are typically only available to small businesses within counties identified as disaster areas by a Governor. Under the revised criteria issued today, disaster assistance loans will be available statewide following an economic injury declaration. This will apply to current and future disaster assistance declarations related to Coronavirus.

“We’re very encouraged that banks and financial institutions are responding to the President’s efforts to mobilize an unprecedented public-private response to the Coronavirus (COVID-19) outbreak. As a result, most small businesses that need credit during these uncertain times will be able to obtain it. However, our goal is to ensure that credit is available to any and all small businesses that need credit but are unable to access it on reasonable terms through traditional lending channels,” said Administrator Carranza. “To that end, the SBA is relaxing the criteria through which states or territories may formally request an economic injury declaration, effective immediately. Furthermore, once an economic injury declaration has been made in a state or territory, the new rules allow the affected small businesses within the state or territory to apply for a disaster assistance loan.” SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for each affected small business. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.

Process for Accessing SBA’s Coronavirus (COVID-19) Disaster Relief Lending

  • The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). Upon a request received from a state’s or territory’s Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration.
  • Any such Economic Injury Disaster Loan assistance declaration issued by the SBA makes loans available statewide to small businesses and private, non-profit organizations to help alleviate economic injury caused by the Coronavirus (COVID-19).
  • SBA’s Office of Disaster Assistance will coordinate with the state’s or territory’s Governor to submit the request for Economic Injury Disaster Loan assistance.
  • Once a declaration is made, the information on the application process for Economic Injury Disaster Loan assistance will be made available to affected small businesses within the state.
  • These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
  • SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
  • SBA’s Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government’s coordinated response, and the SBA is strongly committed to providing the most effective and customer-focused response possible.

For additional information, please visit the SBA disaster assistance website at SBA.gov/Disaster.”

Spinning Up Telework Presents Procurement Challenges

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Image: Eztalks.com

FCW

There’s good news and bad news for agencies looking to ramp up telework in the wake of the coronavirus pandemic, according to federal contracting experts.

The good news is federal acquisition contracts are set up for quick acquisition of essential telework equipment, such as laptops or tablets, said acquisition experts FCW spoke with. The bad news could be that online scammers are watching the expanding tele-workforce with great interest.

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“The emphasis on agency telework is growing, and although most agency employees are already assigned computers, there may be some hardware gaps to fill as workforces move to remote locations.

Federal governmentwide acquisition contracts, such as NASA’s Services for Enterprise-Wide Procurement, the General Services Administration’s ordering schedule and the National Institutes of Health Information Technology Acquisition and Assessment Center (NITAAC) are set up to help quickly fill laptops, tablets and other IT commodity orders, they said.

“In general, SEWP is an agile acquisition vehicle that allows for quick turn-around times for quotes and provides points of contacts for all contract holders to facilitate quick communications,” Joanne Woytek, SEWP manager told FCW. The GWAC, she said, has not seen any specific increase related to teleworking support, so far.

“For laptops, tablets, printers, agencies have purchase cards,” Alan Chvotkin, executive vice president and counsel for the Professional Services Council, told FCW. “Orders placed on SEWP and federal schedules can get responses within 24 hours,” he said, adding that speedier responses could pump up costs.

SEWP posted a warning on its webpage at the beginning of March saying delays in some order could result from stresses on the supply chain.

In an email to FCW on March 11, Woytek again noted that delivery of technology “is limited by the capacity of industry.” She said order delivery “is going to be on a case by case basis and greatly dependent on the complexity, configuration and size of an order.”

However, the demand for laptop and tablet computers from federal agencies during the next few weeks, probably won’t be too steep, said Roger Waldron, president of the Coalition for Government Procurement.

Agencies, however, should be working diligently to “level set” their computer and network needs for the coming weeks, as well as keep informed on their existing IT contracts and how to leverage GWACs, such as SEWP, to back fill last-minute IT and IT commodity needs.

Even though agencies will probably have the resources to get any necessary computers for new telecommuters, another acquisition expert said they face a sneaky obstacle — telework-savvy cyber adversaries.

Bad actors are on the lookout for new teleworkers, as those workers open up a vulnerability to protected networks, said Evan Wolff, a partner at Crowell & Moring, who co-chairs the firm’s Privacy & Cybersecurity Group and is a member its Government Contracts Group.

Targeted phishing emails and other cyber crime techniques could be a challenge for federal IT managers with increasing numbers of telecommuters, Wolff told FCW in an interview.

Federal IT managers, he said, may not have appropriately secure infrastructure in place to lock down all communications. Additionally, simple things, such as shared living space with non-government employee roommates, could also present issues, if the federal teleworker has a sensitive post, he said.

“We’re already seeing a focus on customized phishing” aimed at non-government telecommuters as the coronavirus spreads, said Wolff. That wave of targeted remote worker phishing email is probably coming to new federal telecommuters too.

“Bad actors understand a target’s leadership and the types of appropriate email” that could temp them into taking the bait, he said.”


Government Must Make Sure Contracts Cover Remote Work And Classified Access Logistics

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Image: “HRsolutions.com

DEFENSE ONE

‘It is really important to adjust and amend contracts so that contractors can continue to work with the government counterparts.’ If that’s teleworking, that’s teleworking, if it’s moving to a different location, it’s moving to a different location.”

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As millions of Americans prepare to work from home in an effort to slow the spread of the coronavirus, Defense Department managers and the companies that support them are waiting for guidance on just how they should be clearing their offices.

Set aside the workers who build planes, ships, tanks and other weapons on special assembly lines around the country. Plenty more are holders of security clearances who can’t do their jobs without special computers and facilities that protect classified information. Among them: analysts, war planners, and engineers designing next-generation weapons.

But the situation is murky even for the hundreds of thousands of government contractors who don’t need access to secret information. As the Pentagon begins sending nonessential employees home, it’s unclear what’s going to happen to them.

“There’s almost no guidance going out about contractors,” said David Berteau, a former Pentagon official who is now CEO of the Professional Services Council, an organization that advocates for government contractors. “Part of that problem is, contractors are managed on a contract by contract basis.”

And in many cases, these employees’ contracts don’t even mention remote work.

“You don’t want to change contracts from the top down,” Berteau said. “But you can send out guidance to contracting officers that says, ‘It is really important for you to adjust and amend contracts so that contractors can continue to work with the government counterparts.’ If that’s teleworking, that’s teleworking, if it’s moving to a different location, it’s moving to a different location.”

For years, the U.S. government has done drills and exercises to prepare for scenarios where workers cannot access secure facilities, said Berteau, who served as assistant defense secretary for logistics and materiel readiness during the Obama administration.

But: “We have not taken those lessons from the simulations seriously enough that we’ve done the preparation necessary to execute it,” he said. “So now we’re having to do it in real time. It’s important that we get it done. It’s important that we keep the government working. It’s important that contractors are part of that keep the government working goal. And it’s important that they have guidance [and] it’s integrated across the government in order to make that happen.”

As for the government workers and contractors who must access classified information, there’s no alternate, for now at least, to having a secure government facility.

“You can’t go home on your laptop and plug it in and get classified data,” Berteau said. “It’s my personal belief…that we could do a lot more than we are doing.”

But, he noted, it would likely cost a lot to buy the equipment needed to make that happen.

“We have got to be taking notes as we go about what we need to do better … so we’re more ready the next time it comes,” Berteau said. That would be a federal government, executive branch, responsibility, but it would also be a congressional responsibility to make sure it happens and that the resources are available to do it.”

https://www.defenseone.com/business/2020/03/when-your-work-classified-work-home-doesnt-work/163782/

U.S. Remains Largest Military Arms Exporter Over Last 5 Years

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DEFENSE NEWS

The United States was the largest exporter of major arms from 2015-2019, delivering 76 percent more materiel than runner-up Russia, according to a new study by the Stockholm International Peace Research Institute think tank.

The study found that the U.S. provided major arms — defined by the think tank as air defense systems, armored vehicles, missiles and satellites, among other materiel — to 96 countries in those five years, with half of the weapons going to the Middle East.

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“The U.S. contributed about 35 percent of all the world’s arms exports during that five-year time period, partly supported by the increased demand for American advanced military aircraft in Europe, Australia, Japan and Taiwan, said Pieter Wezeman, a senior researcher at SIPRI.

From 2015-2019, Russia’s major arms exports decreased by 18 percent; France’s increased by 72 percent, making it the third largest exporter; and Germany’s increased by 17 percent, making it the fourth largest exporter.

Worldwide arms exports rose nearly 6 percent in 2015-2019 from 2010-2014, and increased 20 percent from since 2005-2009, SIPRI said.

Arm exports to countries in conflict in the Middle East increased by 61 percent in 2015-2019 compared to 2010-2014, the study showed. Saudi Arabia, the country to which the U.S. exported the most arms, was the largest importer globally in 2015-2019. The kingdom’s imports increased 130 percent compared to the previous five-year period. Armored vehicles, trainer aircraft, missiles and guided bombs were among the leading arms purchased by the kingdom.

Despite attempts in Congress to restrict arms exports to Saudi Arabia, the delivery of major arms, including 30 combat aircraft ordered in 2011, continued in 2019 as the U.S. provided 73% of Saudi Arabia’s imports.

In May, U.S. President Donald Trump issued an emergency declaration to push through an $8 billion arms deal with Saudi Arabia and other Middle Eastern countries for precision-guided bombs and related components. In July, he said blocking the sale of arms to Saudi Arabia would “weaken America’s global competitiveness and damage the important relationship [the United States] share with [its] allies and partners.”

U.S. arms exports to Europe and Africa increased by 45 percent and 10 percent, respectively, in 2015-2019. U.S. arms exports to Asia and the Oceania region decreased by 20 percent, as a result of fewer arms exports to India, Pakistan, Singapore, South Korea and Taiwan.

Since 2018, the U.S. has exported almost 100 major weapons to international organizations like the United Nations, the African Union and NATO, the report said, noting that Russia did not send weapons to these organizations.

Among the top 10 arms exporters outside Europe and North America, Israel and South Korea showed the biggest increase in exports. Israeli arms exports increased by 77 percent in 2015-2019 — a record for the country, according to the study. South Korea, which showed a 143 percent increase during that same time period, more than doubled its number of export clients.”

https://www.defensenews.com/2020/03/09/who-were-the-largest-major-arms-exporters-in-the-last-5-years/

SBA Small Business COVID-19 Disaster Assistance Loan Details

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U.S. SMALL BUSINESS ADMINISTRATION (SBA)

TheU.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19).

SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.

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PRESS OFFICE

Release Date:March 12,2020

Contact:Jennifer.Kelly@sba.gov (202)205-7036

Release Number:20-24
SBA To Provide Small Businesses Impacted by Coronavirus (COVID-19) Up to $2 Million in Disaster Assistance Loans:

Our Agency will work directly with state Governors to provide targeted, low-interest disaster recovery loans to small businesses that have been severely impacted by the situation. Additionally, the SBA continues to assist small businesses with counseling and navigating their own preparedness plans through our network of 68 District Offices and numerous Resource Partners located around the country. The SBA will continue to provide every small business with the most effective and customer-focused response possible during these times of uncertainty.

Process for Accessing SBA’s Coronavirus (COVID-19) Disaster Relief Lending


• TheU.S. Small Business Administration is offeringdesignated states and territorieslow-interestfederal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). Upon a request received from a state’s or territory’s Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration.

• Any such Economic Injury Disaster Loan assistancedeclaration issued by the SBA makes loans available to small businesses and private, non-profit organizations in designated areas of a state or territory to help alleviate economic injury caused by the Coronavirus (COVID-19).


• SBA’s Office of Disaster Assistance will coordinate with the state’s or territory’s Governor to submit the request for Economic Injury Disaster Loan assistance.


• Once a declaration is made for designated areas within a state, the information on the application process for Economic Injury Disaster Loan assistance will be made available to all affected communities.


• SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.


• These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%.


• SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.


• SBA’s Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government’s coordinated response, and the SBA is strongly committed to providing the most effective and customer-focused response possible.


For additional information, please contact the SBA disaster assistance customer service center. Call 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail disastercustomerservice@sba.gov.”

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Americans And Our Government Expect And Accept Trillions In Pentagon Waste

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(Illustration: CJ Ostrosky / POGO)

THE PROJECT ON GOVERNMENT OVERSIGHT (POGO) By Mandy Smithberger

Congress only recently passed and the president approved one of the largest Pentagon budgets ever. It will surpass spending at the peaks of both the Korean and Vietnam wars. 

 This after $2 trillion on war in Afghanistan alone. between $10 million and $43 million spent constructing a single gas station , $150 million for  luxury private villas for Americans. The Pentagon has, by the way, never actually passed an audit.

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“Call it a colossal victory for a Pentagon that hasn’t won a war in this century, but not for the rest of us. Congress only recently passed and the president approved one of the largest Pentagon budgets ever. It will surpass spending at the peaks of both the Korean and Vietnam wars. As last year ended, as if to highlight the strangeness of all this, the Washington Post broke a story about a “confidential trove of government documents” — interviews with key figures involved in the Afghan War by the Office of the Special Inspector General for Afghanistan Reconstruction — revealing the degree to which senior Pentagon leaders and military commanders understood that the war was failing. Yet, year after year, they provided “rosy pronouncements they knew to be false,” while “hiding unmistakable evidence that the war had become unwinnable.”

Given the way the Pentagon has sunk taxpayer dollars into endless wars, in a more reasonable world that institution would be overdue for a comprehensive audit.

However, as the latest Pentagon budget shows, no matter the revelations, there will be no reckoning when it comes to this country’s endless wars or its military establishment — not at a moment when President Donald Trump is sending yet more U.S. military personnel into the Middle East and has picked a new fight with Iran. No less troubling: how few in either party in Congress are willing to hold the president and the Pentagon accountable for runaway defense spending or the poor performance that has gone with it.

Given the way the Pentagon has sunk taxpayer dollars into those endless wars, in a more reasonable world that institution would be overdue for a comprehensive audit of all its programs and a reevaluation of its expenditures. (It has, by the way, never actually passed an audit.) According to Brown University’s Costs of War Project, Washington has already spent at least $2 trillion on its war in Afghanistan alone and, as the Post made clear, the corruption, waste, and failure associated with those expenditures was (or at least should have been) mindboggling.

Of course, little of this was news to people who had read the damning reports released by the Special Inspector General for Afghanistan Reconstruction in previous years. They included evidence, for instance, that somewhere between $10 million and $43 million had been spent constructing a single gas station in the middle of nowhere, that $150 million had gone into luxury private villas for Americans who were supposed to be helping strengthen Afghanistan’s economy, and that tens of millions more were wasted on failed programs to improve Afghan industries focused on extracting more of the country’s minerals, oil, and natural gas reserves.

In the face of all this, rather than curtailing Pentagon spending, Congress continued to increase its budget, while also supporting a Department of Defense slush fund for war spending to keep the efforts going. Still, the special inspector general’s reports did manage to rankle American military commanders (unable to find successful combat strategies in Afghanistan) enough to launch what, in effect, would be a public-relations war to try to undermine that watchdog’s findings.Pentagon in the center of a vortex of hundred dollar bills.

Making Sense of the $1.25 Trillion National Security State Budget

Our final annual tally for war, preparations for war, and the impact of war comes to more than $1.25 trillion—more than double the Pentagon’s base budget.Read More

All of this, in turn, reflected the “unwarranted influence” of the military-industrial complex that President (and former five-star General) Dwight Eisenhower warned Americans about in his memorable 1961 farewell address. That complex only continues to thrive and grow almost six decades later, as contractor profits are endlessly prioritized over what might be considered the national security interests of the citizenry.

The infamous “revolving door” that regularly ushers senior Pentagon officials into defense-industry posts and senior defense-industry figures into key positions at the Pentagon (and in the rest of the national security state) just adds to the endless public-relations offensives that accompany this country’s forever wars. After all, the retired generals and other officials the media regularly looks to for expertise are often essentially paid shills for the defense industry. The lack of public disclosure and media discussion about such obvious conflicts of interest only further corrupts public debate on both the wars and the funding of the military, while giving the arms industry the biggest seat at the table when decisions are made on how much to spend on war and preparations for the same.

Media Analysis Brought to You by the Arms Industry

That lack of disclosure regarding potential conflicts of interest recently came into fresh relief as industry boosters beat the media drums for war with Iran. Unfortunately, it’s a story we’ve seen many times before. Back in 2008, for instance, in a Pulitzer Prize-winning series, the New York Times revealed that the Pentagon had launched a program to cultivate a coterie of retired-military-officers-turned-pundits in support of its already disastrous war in Iraq. Seeing such figures on TV or reading their comments in the press, the public may have assumed that they were just speaking their minds. However, the Times investigation showed that, while widely cited in the media and regularly featured on the TV news, they never disclosed that they received special Pentagon access and that, collectively, they had financial ties to more than 150 Pentagon contractors.

Given such financial interests, it was nearly impossible for them to be “objective” when it came to this country’s failing war in Iraq. After all, they needed to secure more contracts for their defense-industry employers. A subsequent analysis by the Government Accountability Office found that the Pentagon’s program raised “legitimate questions” about how its public propaganda efforts were tied to the weaponry it bought, highlighting “the possibility of compromised procurements resulting from potential competitive advantages” for those who helped them.

While the program was discontinued that same year, a similar effort was revealed in 2013 during a debate over whether the U.S. should attack Bashar al-Assad’s Syrian regime. You probably won’t be surprised to discover that most of the former military figures and officials used as analysts at the time supported action against Syria. A review of their commentary by the Public Accountability Initiative found a number of them also had undisclosed ties to the arms industry. In fact, of 111 appearances in major media outlets by 22 commentators, only 13 of them disclosed any aspect of their potential conflicts of interest that might lead them to promote war.

The same pattern is now being repeated in the debate over the Trump administration’s decision to assassinate by drone Iranian Major General Qassem Soleimani and other Iran-related issues. While Soleimani clearly opposed the United States and many of its national security interests, his killing risked pushing Washington into another endless war in the Middle East. And in a distinctly recognizable pattern, the Intercept has already found that the air waves were subsequently flooded by defense-industry pundits praising the strike. Unsurprisingly, news of a potential war also promptly boosted defense industry stocks. Northrop Grumman’s, Raytheon’s, and Lockheed Martin’s all started 2020 with an uptick.

Senator Elizabeth Warren (D-MA) and Representative Jackie Speier (D-CA) have offered legislation that could shut down that revolving door between the major weapons makers and Washington for good, but it has met concerted resistance from Pentagon officials and others still in Congress who stand to benefit from preserving the system as is. Even if that revolving door wasn’t shut down, transparency about just who was going through it would help the public better understand what former officials and military commanders are really advocating for when they speak positively of the necessity for yet another war in the Middle East.

Costly Weapons (and Well-Paid Lobbyists)

Here’s what we already know about how it all now works: weapon systems produced by the big defense firms with all those retired generals, former administration officials, and one-time congressional representatives on their boards (or lobbying for or consulting for them behind the scenes) regularly come in overpriced, are often delivered behind schedule, and repeatedly fail to have the capabilities advertised. Take, for instance, the new Ford class aircraft carriers, produced by Huntington Ingalls Industries, the sort of ships that have traditionally been used to show strength globally. In this case, however, the program’s development has been stifled by problems with its weapons elevators and the systems used to launch and recover its aircraft. Those problems have been costly enough to send the price for the first of those carriers soaring to $13.1 billion. Meanwhile, Lockheed Martin’s F-35 jet fighter, the most expensive weapons system in Pentagon history, has an abysmal rate of combat readiness and currently comes in at more than $100 million per aircraft.

Officers Advocating for More F-35s Often Had Financial Stakes

It’s clear that many of those advocating for more F-35s are far from independent and impartial experts.Read More

And yet, somehow, no one ever seems to be responsible for such programmatic failures and prices — certainly not the companies that make them (or all those retired military commanders sitting on their boards or working for them). One crucial reason for this lack of accountability is that key members of Congress serving on committees that should be overseeing such spending are often the top recipients of campaign contributions from the big weapons makers and their allies. And just as at the Pentagon, members of those committees or their staff often later become lobbyists for those very federal contractors.

With this in mind, the big defense firms carefully spread their contracts for weapons production across as many congressional districts as possible. This practice of “political engineering,” a term promoted by former Department of Defense analyst and military reformer Chuck Spinney, helps those contractors and the Pentagon buy off members of Congress from both parties. Take, for example, the Littoral Combat Ship, a vessel meant to operate close to shore. Costs for the program tripled over initial estimates and, according to Defense News, the Navy is already considering decommissioning four of the new ships next year as a cost-saving measure. It’s not the first time that program has been threatened with the budget axe. In the past, however, pork-barrel politics spearheaded by Senators Tammy Baldwin (D-WI) and Richard Shelby (R-AL), in whose states those boats were being built, kept the program afloat.

The Air Force’s new bomber, the B-21, being built by Northrup Grumman, has been on a similar trajectory. Despite significant pressure from then-Senator John McCain (R-AZ), the Air Force refused in 2017 to make public or agree upon a contract price for the program. (It was a “cost-plus,” not a “fixed price” contract, after all.) It did, however, release the names of the companies providing components to the program, ensuring that relevant congressional representatives would support it, no matter the predictably spiraling costs to come.

Recent polling indicates that such pork-barrel politics isn’t backed by the public, even when they might benefit from it. Asked whether congressional representatives should use the Pentagon’s budget to generate jobs in their districts, 77% of respondents rejected the notion. Two-thirds favored shifting such funds to sectors like healthcare, infrastructure, and clean energy that would, in fact, create significantly more jobs.

And keep in mind that, in this big-time system of profiteering, hardware costs, however staggering, are just a modest part of the equation. The Pentagon spends about as much on what it calls “services” as it does on the weaponry itself and those service contracts are another major source of profits. For example, it’s estimated that the F-35 program will cost $1.5 trillion over the lifetime of the plane, but a trillion dollars of those costs will be for support and maintenance of the aircraft.

Increasingly, this means contractors are able to hold the Pentagon hostage over a weapon’s lifetime, which means overcharges of just about every imaginable sort, including for labor. The Project On Government Oversight (where I work) has, for instance, been uncovering overcharges in spare parts since our founding, including an infamous $435 hammer back in 1983. I’m sad to report that what, in the 1980s, was a seemingly outrageous $640 plastic toilet-seat cover for military airplanes now costs an eye-popping $10,000. A number of factors help explain such otherwise unimaginable prices, including the way contractors often retain intellectual property rights to many of the systems taxpayers funded to develop, legal loopholes that make it difficult for the government to challenge wild charges, and a system largely beholden to the interests of defense companies.

In for a TransDigm, Out for Billions

While it is easy to blame TransDigm, Congress created the problem, and agencies are placed in the undesirable position of relying on outdated, and often outrageous, prices.Read More

The most recent and notorious case may be TransDigm, a company that has purchased other companies with a monopoly on providing spare parts for a number of weapon systems. That, in turn, gave it power to increase the prices of parts with little fear of losing business — once, receiving 9,400% in excess profits for a single half-inch metal pin. An investigation by the House Oversight and Reform Committee found that TransDigm’s employees had been coached to resist providing cost or pricing information to the government, lest such overcharges be challenged.

In one case, for instance, a subsidiary of TransDigm resisted providing such information until the government, desperate for parts for weapons to be used in Iraq and Afghanistan, was forced to capitulate or risk putting troops’ lives on the line. TransDigm did later repay the government $16 million for certain overcharges, but only after the House Oversight and Reform Committee held a hearing on the subject that shamed the company. As it happens, TransDigm’s behavior isn’t an outlier. It’s typical of many defense-related companies doing business with the government — about 20 major industry players, according to a former Pentagon pricing czar.

A Recipe for Disaster

For too long Congress has largely abdicated its responsibilities when it comes to holding the Pentagon accountable. You won’t be surprised to learn that most of the “acquisition reforms” it’s passed in recent years, which affect how the Department of Defense buys goods and services, have placed just about all real negotiating power in the hands of the big defense contractors. To add insult to injury, both parties of Congress continue to vote in near unanimity for increases in the Pentagon budget, despite 18-plus years of losing wars, the never-ending gross mismanagement of weapons programs, and a continued failure to pass a basic audit. If any other federal agency (or the contractors it dealt with) had a similar track record, you can only begin to imagine the hubbub that would ensue. But not the Pentagon. Never the Pentagon.

A significantly reduced budget would undoubtedly increase that institution’s effectiveness by curbing its urge to throw ever more money at problems. Instead, an often bought-and-paid-for Congress continues to enable bad decision-making about what to buy and how to buy it. And let’s face it, a Congress that allows endless wars, terrible spending practices, and multiplying conflicts of interest is, as the history of the twenty-first century has shown us, a recipe for disaster.”

https://www.pogo.org/analysis/2020/01/never-the-pentagon/

ABOUT THE AUTHOR:

Mandy Smithberger

Mandy Smithberger rejoined POGO as the director of the Straus Military Reform Project at the Center for Defense Information in December 2014. Previously she was a national security policy adviser to U.S. Rep. Jackie Speier (D-Calif.) worked on passing key provisions of the Military Whistleblower Protection Enhancement Act into law, which expands protections by increasing the level of Inspector General review for complaints, requiring timely action on findings of reprisal, and increasing the time whistleblowers have to report reprisals. Previously an investigator with POGO, she was part of a team that received the Society of Professional Journalists’ Sunshine Award for contributions in the area of open government.
Ms. Smithberger received her B.A. in government from Smith College and her Masters in Strategic Studies and International Economics from Johns Hopkins University’s School of Advanced International Studies. She also served as an analyst at the Defense Intelligence Agency and U.S. Central Command.