Category Archives: Us Economy

Pentagon Shows Bumpy Progress Toward Curbing Improper Payments

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Pentagon Pumpy Road

“GOVERNMENT EXECUTIVE”

As the agency with the largest budget, the Defense Department continues to make shaky progress in the governmentwide push to reduce improper payments, the Pentagon’s inspector general reported on Friday.

The watchdog’s required annual review of fiscal 2017 estimates of significant improper payments showed that the department had complied with only two of six requirements under the 2010 Improper Payments Elimination and Recovery Act and related Office of Management and Budget guidance.”

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“The programs in nine areas reviewed include travel pay departmentwide (an estimated $263 million in bad payments), followed by misrouted military pay estimated at $182.5 million. Other categories included health care, retirement and commercial payments.

Defense last year succeeded in complying with provisions in the 2002 improper payments law (as amended in 2010) by conducting “program-specific risk assessments and reporting an overall improper payments rate of less than 10 percent,” the IG found. But the chief financial officer staff lapsed in not publishing all required information in the program integrity section of its November 2017 agency financial report; did not publish statistically valid improper payment methods for four programs; did not publish all required elements for corrective actions; and did not confirm that all components submitted required information.

For example, the report said, the Office of the Comptroller and the CFO “discussed the IPERA program at only a summary level and misinterpreted the payment recapture program reporting requirements.”

The travel pay program estimate “was not reliable because it did not include estimates from all reporting components, and some components did not use statistically valid sampling plans to test and estimate,” it continued. “Specifically, Navy and Marine Corps personnel were not able to complete their tests of travel payments, as required by OMB Circular No. A-123.”

The IG also determined that the comptroller and CFO “did not implement strong internal controls at the DoD level to improve reporting and instead relied on controls at the component level,” the result being that “DoD leadership and Congress may not be able to determine if DoD has the resources it needs to reduce its improper payments.”

The IG made five recommendations, among them developing a data call template based on the law’s requirements, improving coordination among components on testing, and developing milestones for expanding oversight of senior officials on travel costs.

The deputy chief financial officer and the deputy to the commanding general of the Army Financial Management Command agreed with most recommendations and planned to take corrective action.

But Mark Easton, deputy chief financial officer, wrote that this year’s report “differed from previous reviews in that it identified specific reporting deficiencies never previously focused on by your office,” such as presenting properly paid payments, and addressing internal controls and human capital requirements. And the office of Comptroller David Norquist disagreed with the recommendation on travel expense monitoring, saying, “Milestones are not necessary for implementing a charter for expanding the oversight responsibilities of senior accountable officials,” given that a corrective plan is in the works.

Defense’s mixed progress was noted by Peter Tyler, a senior policy analyst who tracks improper payment issues for the nonprofit Project on Government Oversight.  “Along with the Pentagon needing to work harder to reduce improper payments, we see the IG report as being too polite,” he told Government Executive. ”The reported DoD improper payments numbers are highly suspect,” as the Government Accountability Office has pointed out. “That is why DoD cannot pass or even complete a financial audit.”

POGO would like the Pentagon and other agencies to better scrutinize payments to contractors and elevate the importance of curbing the bad payments. “OMB could really help DoD and all the federal agencies by not just clarifying their guidance, but also further implementing some of the lesser-known aspects of the law, such as the Do Not Pay program and federal-wide data analytics initiative,” Tyler said.”

https://m.govexec.com/defense/2018/05/pentagon-shows-bumpy-progress-toward-curbing-improper-payments/148159/?oref=river

 

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US Remains Top Military Spender

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Military_Spending_Indy_0 Portside dot org

“DEFENSE NEWS”

“Worldwide military spending is estimated to have reached $  1.7 trillion in 2017, according to a new report from the Stockholm International Peace Research Institute. This is the highest level of military expenditure since the end of the Cold War.

Although U.S. spending has decreased from 2008 levels by 14 percent, it still spends 2.7 times more than the next highest spender, China.”

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“The top five biggest spenders were the United States, China, Saudi Arabia, Russia and India, which accounted for 60 percent of global military spending.

China, Russia and India saw dramatic increases in spending since 2008. According to the report Chinese military spending in 2017, approximately $228 billion, has increased 110 percent since 2008, with Russian and Indian spending growing by 36 and 45 percent to $69.4 billion and $66.3 billion, respectively.

Between 2016 and 2017, China increased military spending by 5.6 percent, Saudi Arabia by 9.2 percent and India by 5.5 percent. Despite announcing a new host of nuclear weapons and completing the country’s largest military exercises in history, Russia’s spending fell by 20 percent in the same time frame.

“The increases in world military expenditure in recent years have been largely due to the substantial growth in spending by countries in Asia and Oceania and the Middle East, such as China, India and Saudi Arabia,” said Dr Nan Tian, researcher with the SIPRI Arms and Military Expenditure program. “At the global level, the weight of military spending is clearly shifting away from the Euro–Atlantic region.”

Out of the top 15 military spenders, only the U.S., United Kingdom and Italy had a decrease in spending over the last decade.”

https://www.defensenews.com/industry/2018/05/02/us-remains-top-military-spender-sipri-reports/

 

How Does A Combat Vet Feel When Hearing A Civilian Say, “We Shouldn’t Be Over There, We Should Worry About Ourselves”?

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Rose Covered Glasses”  

“The civilian must accept his or her role in the issue. Elected representatives appropriate money and approve U.S. activities in other countries.

Solders go where they are ordered by their commander. If the civilian wishes change, then change can be at hand if the elected official is contacted and a strong input from the citizenry makes the demand heard.”

Quora Veterans Opinions on Today’s Warfare

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“FOREIGN POLICY”

“Asking warriors to do everything poses great dangers for our country — and the military. Our armed services have become the one-stop shop for America’s policymakers.

Here’s the vicious circle in which we’ve trapped ourselves: As we face novel security threats from novel quarters — emanating from nonstate terrorist networks, from cyberspace, and from the impact of poverty, genocide, or political repression, for instance — we’ve gotten into the habit of viewing every new threat through the lens of “war,” thus asking our military to take on an ever-expanding range of nontraditional tasks.

But viewing more and more threats as “war” brings more and more spheres of human activity into the ambit of the law of war, with its greater tolerance of secrecy, violence, and coercion — and its reduced protections for basic rights.”

U.S. Army Prioritizes Research And Development (R&D) Funding And Intellectual Property Policies

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Army Reaearch and Development

“NATIONAL DEFENSE MAGAZINE”

“The idea is to put the money not on various projects that may have been growing with a life of their own, but instead bring that money back against the top six priorities.

More commercial model that may involve purchasing licenses from industry.  Industry can also license intellectual property from the government.”


“The Army’s assistant secretary for acquisition, logistics and technology is looking to aid the service’s modernization efforts by implementing new policies regarding research and development and intellectual property.

Bruce Jette said the Army has already realigned R&D funds to meet its top modernization priorities, which include long-range precision fires, a next-generation combat vehicle, future vertical lift platforms, a mobile and expeditionary communication network, air and missile defense capabilities, and soldier lethality.

“The idea is to put the money not on various projects that may have been growing with a life of their own, but instead bring that money back against the top six priorities,” he said March 28 at the Association of the United States Army’s Global Force Symposium in Huntsville, Alabama.

Additionally, Jette’s office wants to give more freedom to researchers and lab directors by providing some funds that are specifically geared towards innovating technologies that the military may not have anticipated, he noted.

“We can’t … incrementally engineer breakthroughs, and that’s what we’re trying to do is give them the freedom to do that,” he said.

Jette said the service is also working to establish a fund aimed at crossing the “Valley of Death,” referring to the process for transitioning new technologies into existing programs of record.

For example, a senior commander “would sit there and say ‘OK, one of the guys has this project, he’s got it done, it’s ready, and do we want to actually put it into that program?’” Jette said.

Following consultation with the program manager, senior leaders would then make a decision on the way forward, he explained. “We decide it’s worth it. We do it with our eyes open and … then we fund the transition.”

Jette also wants to improve how industry and the government handle intellectual property. Both sides have been “sloppy,” he said.

“The government starts using your IP, you start using the government’s IP, you can’t get extricated and we begin having unpleasant complications,” he said. There needs to be movement towards a more commercial model that may involve purchasing licenses from industry, he added.

“I’ve done this on the outside. Show me the box — that’s your IP. Put that in the bid. Show me what the limits of that [are],” he said. “Tell me what you want to do for licensing … [and] we can have conversations.”

Industry can also license intellectual property from the government, he noted.

If “we built something and … you want to apply it commercially, you want to apply it to another effort, I’m willing to talk about licensing fees,” he said. “Most people don’t realize that, but the government can get paid for their intellectual property.”

http://www.nationaldefensemagazine.org/articles/2018/3/28/senior-army-acquisition-official-highlights-potential-policies

 

 

 

Acquisition Insanity: USS Ford Block-Buy Proposal

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USS Ford. (Photo: U.S. Navy

“THE PROJECT ON GOVERNMENT OVERSIGHT”

“Less than a year after the first-in-class ship’s commissioning (before it ever launched or recovered an aircraft…a first in history), the sea service is exploring options to buy them in bulk. 

The program’s $6 billion cost increase earned the Ford-class program a spot on Senator John McCain’s (R-AZ) “America’s Most Wasted Report.”  The ship’s electric advanced arresting gear is supposed to be able to go 16,500 landings between mission failures. So far, the best it can do is 19. “


“The Navy wants to go all in on the USS Ford-class aircraft carrier program.

The Navy has already repeated several common acquisition mistakes with the Ford program, but this latest scheme would pile on more problems. The Navy committed to this program—which includes several new major ship systems like nuclear reactors, catapults, and radar systems—while their designs were still in a conceptual stage, and the inevitable complications in their development have contributed greatly to the program’s $6 billion cost increase. Committing to such a large program with so many unproven systems earned the Ford-class program a spot on Senator John McCain’s (R-AZ) “America’s Most Wasted Report.” Yet, James Geurts, the Navy’s Assistant Secretary for Research, Development, and Acquisition, said before the House Armed Services Committee on March 6 that the Navy is studying a potential two-ship block buy for the third- and fourth-in-class ships.

Geurts testified that such a plan could save $2.5 billion over the total cost of the program, although this is only a rough estimate at this point as they are asking for evidence of savings from the contractor rather than seeking an independent cost estimate. The history of this program should make everyone skeptical of such claims. The Government Accountability Office released a report in 2017 that stated cost estimates for the Fordprogram are unreliable because they do not take into account the risks associated with building the ships before the design has been completed and tested.

Navy leaders have made at least one step in the right direction with the program recently. Following pressure from several key lawmakers, Navy Secretary Richard Spencer announced that the USS Ford will undergo crucial full-ship shock trials in 2019 or 2020. Shock trials occur when explosives are detonated underwater in close proximity to a fully kitted-out and crewed ship. This is done to test the integrity of all the ship’s systems to determine if they are sufficiently hardened to withstand the rigors of combat. Shock trials are supposed to be done as early as possible in a shipbuilding program so design problems can be identified and fixes incorporated into the design before more ships are constructed. This helps avoid costly retrofits on already constructed ships. In 2017, the Project On Government Oversight called on Congress to demand the Navy carry out these tests.

This latest announcement reverses an earlier Navy decision to postpone shock trials to the second-in-class ship of the Ford program, which would have delayed these tests for up to six years, by which time construction on three of the ships would have been substantially completed. The Navy and the Pentagon’s testing director both agreed in 2007 to performthis important test to the first-in-class ship. But on February 2, 2015, the Navy abruptly informed DOT&E that they would not conduct shock trials on the Ford, citing concerns the tests would delay the ship’s first operational deployment.

Senators John McCain (R-AZ) and Jack Reed (D-RI), the Chair and Ranking Member, respectively, of the Senate Armed Services Committee, have been rather vocal about their wishes to see the shock trials performed on the USS Ford. Other Members of Congress, however, have been working to do the Navy’s bidding by inserting language in the 2018 National Defense Authorization Act that would have allowed them to postpone the tests.

The Navy, in seeking a block buy, is following what is becoming a well-trodden path created by the Military-Industrial-Congressional Complex in two significant ways. In a big-picture sense, they want to gain commitments to purchase as many units as possible before a design has been fully tested. We are seeing this now with the F-35 program where, at the current pace, taxpayers will be on the hook for more than 600 aircraft before testing can conclusively prove the design can actually perform in combat.

As with the F-35 program, block-buy plans for the Ford program skirt the margins of legality. The Pentagon can commit to multiple-year acquisition contracts, but only after certain criteria have been met. Title 10 U.S.C., Section 2306b stipulates that for a program to be eligible for multiyear procurement, the contract must promote national security, result in substantial savings, have little chance of being reduced, and have a stable design. Until any program completes the IOT&E process, it does not meet the criteria for a multiyear contract.

Pentagon leaders know this, which is why they are careful to request block buys instead of multiyear contracts. Calling such a plan a block buy means the scheme is not subject to the same legal requirements. This is little more than verbal jiu-jitsu because the net effect is the same: the American people are stuck with the tab for an unproven weapon that may never live up to the lavish promises used to sell it, leaving the troops with a system that could fail them at the very moment they need it the most. It should also be noted that that there are plenty of people in Congress who are complicit in this plan. More than 100 lawmakersrecently sent a letter to the Secretary of Defense pushing for the two-carrier deal.

While the announcement that the Navy will conduct shock trials on the USS Ford is a positive step, this program has a lot more to prove before lawmakers should commit more taxpayer dollars. No decision for any kind of a multiyear purchase should be made until after all operational tests are performed and the results are properly evaluated and reported. Any potential savings from a multiyear deal now could easily be erased paying for expensive retrofits should significant design flaws be found during the remaining tests.”

http://www.pogo.org/straus/issues/defense-budget/2018/acquisition-insanity-uss-ford-block-buy-proposal.html

Feast or Famine? How Will The New Budget Impact Federal Contract Spending?

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Feast or Famine

Image: “FCW – The Business of Federal Technology”

“WASHINGTON TECHNOLOGY” By David Berteau

“We are halfway through the fiscal year, and we now have a full appropriations act for the entire federal government for fiscal 2018, the “Continuing Appropriations Act of 2018.”

What will be the impact of this on government services contractors?”


“First, the act means the end of the constraints imposed on both funding and programs by the series of continuing resolutions under which the government has been operating since Oct. 1.

It also eliminates any risk of another government shutdown due to a lapse in appropriations, something that has occurred twice this year already.

Second, it provides substantial increases in funding for numerous agencies and programs. Under the Bipartisan Budget Agreement of 2018, enacted on Feb. 9, the Budget Control Act caps for fiscal years 2018 and 2019 were raised significantly, and the fiscal 2018 final appropriations provides funds for most of those increases.

The Department of Defense has the largest appropriations increase, $80 billion above the previous budget cap for 2018 and $26 billion above the president’s requested budget level. For non-defense agencies, the cap was raised by $63 billion, but the omnibus appropriations bill distributed that increase unevenly and incompletely across those agencies. We are still sorting through the bill’s 2,100 pages, but it’s apparent that some departments and agencies will see an increase well above both their fiscal 2017 funding levels and above the president’s budget request for 2018, while other agencies will see lower funding levels.

In the aggregate, though, these increases, spanning many agencies and programs, may well turn the second half of fiscal 2018 into a very different market for contractors than it was in the first half. To understand how it will change, let’s look back at government contract spending in the first half of 2018.

Public data for DOD contract obligations have not yet been released, even for last October. However, monthly defense spending (as reflected in Treasury Department outlay data) for the first five months of fiscal 2018 show that defense spending was up by more than $10 billion (nearly 5 percent) compared to the same period under the fiscal 2017 CR, even though fiscal 2018 CR funding was slightly less than fiscal 2017. It appears that DOD has been spending at a rate that anticipated an appropriations increase.

The total defense increase is 15 percent above the previous caps, but only 4 percent above the programmed budget that DOD had prepared. For contractors, this likely means increased opportunities, but perhaps not as much as the numbers might indicate at first glance.

For non-defense agencies, the first half spending story is quite different, and here we do have official data to analyze. Comparing fiscal 2018 CR first quarter contract obligations to the same period under the fiscal 2017 CR shows a drop of 27 percent year-over-year. This is the largest single quarterly decline in a long time.

Obligations for services contracts declined only slightly less, 23 percent year-over-year. In some agencies, the decline has been even greater. For example, contract obligations for the U.S. Agency for International Development saw a year-over-year decline of nearly two thirds.

This pattern raises two important questions for services contractors; Why did that decline happen? Is it about to change?

First, why the decline in contract spending? Maybe it’s because the president’s proposed budget for fiscal 2018 included significant funding reductions for many non-defense agencies. With CR spending levels unchanged from 2017 throughout the first half of fiscal 2018, and the prospect (or risk) of final funding even lower under the president’s budget, some agencies appear to have planned for and spent at rates equal to the lower numbers.

Second, will that decline in contract spending reverse itself under the significantly higher full-year appropriations levels? Since the president’s proposed budget for fiscal 2019 for many of these non-defense agencies does not include that increased spending, this can put agencies in a bind. Do they spend the money Congress appropriated for fiscal 2018 and anticipate similar levels of appropriations for fiscal 2019, or do they spend only to the president’s budget level while anticipating reductions for 2019?

Comments from Mick Mulvaney, director of the Office of Management and Budget, at the Feb. 12 release of the president’s 2019 budget may offer some insight. With regard to the $63 billion increase in the non-defense appropriations cap that the president had just signed on Feb. 9, Mulvaney stated that “we don’t need to spend all the money.”

Another indicator is the omnibus appropriations bill itself. Congress expanded only DoD’s flexibility to permit more spending in the final two months of the fiscal year, for the DoD operation and maintenance accounts. Year-end spending is typically limited, but despite the late enactment of 2018 appropriations, other agencies will have no greater flexibility to spend the additional funds than in the past.

Finally, will OMB constrain non-defense agency spending? If so, will it do so indirectly, or will it issue direct written guidance? How rapidly and fully will OMB and agency comptrollers apportion and allocate funds to program offices? Independent of OMB guidance, will agencies be able to spend the additional 2018 funds in the remaining half of the fiscal year? It’s too soon to know the answers to these questions, but they will directly determine contract spending over the next few months.

PSC will be tracking and reporting on this regularly in the coming months, so stay tuned!”

https://washingtontechnology.com/articles/2018/04/02/insights-berteau-budget-analysis.aspx

About the Author

Mr. Berteau became the President and Chief Executive Officer of the Professional Services Council (PSC) on March 28, 2016. With nearly 400 members, PSC is the premier advocate of and resource for the federal technology and professional services industry. As CEO, Mr. Berteau focuses on legislative and regulatory issues related to government acquisition, budgets, and requirements, helping to shape public policy, lead strategic coalitions, and work to improve communications between government and industry. PSC’s member companies represent small, medium, and large businesses that provide federal agencies with services of all kinds, including engineering, logistics, operations and maintenance, information technology, facilities management, international development, scientific, and environmental services. 

Prior to PSC, Mr. Berteau was confirmed in December 2014 as the Assistant Secretary of Defense for Logistics and Materiel Readiness. He managed logistics policy and processes to provide superior, cost effective, joint logistics support to the entire Department of Defense. He oversaw the management of the $170 billion in Department of Defense logistics operations. 

Earlier, Mr. Berteau served as Senior Vice President and Director of the National Security Program on Industry and Resources at the Center for Strategic and International Studies (CSIS) in Washington, D.C. His research and analysis covered national security, management, contracting, logistics, acquisition, and industrial base issues. Mr. Berteau is a Fellow of the National Academy of Public Administration and has previously served as an adjunct professor at Georgetown University and at the Lyndon B. Johnson School of Public Affairs, a Director of the Procurement Round Table, and an Associate at the Robert S. Strauss Center at the University of Texas. 

Before he joined CSIS full time in 2008, he served as a CSIS non-resident Senior Associate for seven years. In addition, he was director of national defense and homeland security for Clark & Weinstock, director of Syracuse University’s National Security Studies Program and a professor of practice at the Maxwell School of Citizenship and Public Affairs, and senior vice president at Science Applications International Corporation (SAIC). He served a total of 14 years at senior levels in the U.S. Defense Department under six defense secretaries. 

Mr. Berteau graduated with a B.A. from Tulane University in 1971 and received his master’s degree in 1981 from the LBJ School of Public Affairs at the University of Texas. 

 

 

 

 

 

 

 

 

The Scam Artist Who Sold Fake Armored Trucks to U.S. Army

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Fake Trucks

PHOTO ILLUSTRATION BY THE DAILY BEAST

“THE DAILY BEAST”

“Whyte’s fraud is symptomatic of rushed, desperate weapons-purchases that were common during the Pentagon’s invasion and occupation of Iraq. 

Years after the Iraq occupation morphed into a wider U.S. intervention targeting Islamic State militants, the Pentagon still doesn’t know exactly what it’s spending its money on.”


“Sometime in the summer of 2006, John Ventimiglia, a plant foreman for Canada-based Armet Armored Vehicles, visited the company’s Ontario factory to inspect several Kestrel armored trucks that Armet was assembling for the U.S. military in Iraq.

Ventimiglia was horrified by what he saw, according to court documents. The vehicles lacked the floor armor that the military had specified. Instead of special, blast-resistant mineplate, workers had installed fragile plywood planks. It was also apparent that workers were using sandbox-style play sand in the vehicles’ construction—although Ventimiglia wasn’t sure why.

Ventimiglia emailed his coworker Frank Skinner, who then approached the FBI. Nearly 12 years later, this past week, a U.S. district court sentencedArmet CEO William Whyte to five years in prison for supplying fake armored vehicles to the U.S. military during the height of the American-led occupation of Iraq. Seventy-two-year-old Whyte, of Ontario, must also pay back the U.S. government for the trucks.

“Evidence at trial demonstrated that Whyte executed a scheme to defraud the United States by providing armored gun trucks that were deliberately under-armored,” the Justice Department stated.

But the military’s contracting problems aren’t unique to Iraq.

In 2011, the congressionally mandated Commission on Wartime Contracting in Iraq and Afghanistan reported that contractors had cheated the Pentagon out of $31 billion since 2001 (PDF). In one 2007 case, two South Carolina sisters—co-owners of a small parts-supplier—were found guilty of billing the Pentagon $20 million for hardware that was worth a fraction of that.

“Unfortunately, there are unscrupulous individuals out there who will take advantage of a wartime emergency, even one involving the lives and safety of our troops, to pad their own pockets,” Dan Grazier, a former Marine who is currently an analyst with the Project on Government Oversight in Washington, D.C., told The Daily Beast.

In Iraq, an escalating insurgency motivated many of the most flawed purchases. From mid-2005 to mid-2006, roadside bombs and other improvised explosive devices killed around 40 Americans per month in Iraq. Starting in 2006, the Defense Department spent $50 billion buying no fewer than 24,000 up-armored vehicles.

So-called Mine-Resistant Ambush-Protected trucks, or MRAPs—built by major defense contractors—accounted for most of the new vehicles. But the crash effort drew in small companies too, some of which assembled less-complex armored trucks for hauling Iraqi and coalition officials around Baghdad and other Iraqi cities.

Armet Armored Vehicles was one of those smaller companies. The Ontario-based company, which also operated a factory in Danville, Virginia, specialized in adding armor to SUVs and building ambulances and police vehicles. The company provided vehicles for Fast Five, the 2011 installment in the Fast and Furious film franchise.

In March 2006 the Defense Department hired Armet to build Kestrel armored trucks based on the chassis of a Ford F550 pickup. The price: around $200,000 per truck, including shipping. All told, Armet stood to earn $4 million.

The first four Kestrels were due in Baghdad 45 days after Whyte signed the contract in mid-March 2006. The rest, by the end of July. “Here we go, the first 20 Kestrels for Baghdad,” Whyte emailed his staff, according to court documents. “The only problems that I see is the chassis and FINANCE!”

Whyte was correct that it would be problematic to finance what was, for Armet, a substantial boost in production. The company fell behind. Unable to build the trucks on time and to spec, Whyte essentially faked them—replacing some government-mandated floor armor with plywood and leaving gaps in the protection on other parts of the vehicles.

“He knew he couldn’t meet the deadline,” Frank Skinner, who in 2006 oversaw Armet’s Danville factory said of Whyte during the latter’s two-month trial in in the U.S. District Court for the western district of Virginia beginning in June 2015. The first two Kestrels arrived in Baghdad at least two months late. Around the same time, Skinner secretly contacted the FBI about Whyte’s fraud.

While building faulty trucks and delivering them late, Whyte hounded military officials to pay Armet in advance for future vehicles. The military refused most of the requests. “You need to stop using progress payments for an excuse for your inability to deliver these vehicles against any type of credible timeline,” Cmdr. Tommy Neville, a contracting officer in Baghdad, wrote to Whyte.

“We miscalculated and were deluded when we believed that money was forthcoming,” Whyte wrote to another military official in October 2006. Years later, federal prosecutors would allege that Whyte repainted some of the Kestrels he had built for, but not yet shipped to, the U.S. military and instead sold them to the Nigerian government—because the Nigerians offered a higher price. A judge threw out that complaint for a lack of evidence.

In March 2008, the Pentagon rejected the seventh gun truck that Armet had shipped to Iraq and canceled the contract. By then the military had paid Armet around $2 million for six trucks it could not use. The Justice Department indicted Whyte in July 2012 and issued a warrant for his arrest the same day.

“None of the armored gun trucks delivered by Armet and Whyte met the ballistic and blast protection requirements of the contracts, despite the defendant’s claims that the vehicles met the standards,” the FBI stated. “Armet and Whyte knew that each of the six armored gun trucks failed to meet the required standards, that they were defective, and that they would not protect the officials they were intended to protect.”

Whyte fled to Canada to avoid prosecution. Armet shut its doors. Canadian authorities extradited the former CEO after a three-year legal battle. On Oct. 9, a jury unanimously found Whyte guilty on three counts of major fraud against the United States, three counts of wire fraud and three counts of criminal false claims.

Five months later on Feb. 20, Judge Jackson Kiser sentenced Whyte to spend 70 months in prison—and to pay back the $2 million his company received for the fake armored vehicles.

For the Pentagon, the underlying problem likely persists. In January 2017, the Government Accountability Office estimated that, as recently as 2016, as much as 5 percent of all federal payments to individuals and contractors were “improper” and resulted in $144 billion in waste in that year alone (PDF).

But that calculation didn’t take into account military contracts, owing to “serious financial management problems at the Department of Defense that have prevented its financial statements from being auditable,” the GAOexplained. In late 2017 Congress finally passed a law requiring the Defense Department to conduct a full audit starting in 2018.

In the meantime, it’s unclear how many other William Whytes are out there, cheating American servicemembers and taxpayers. “This is just one of the many reasons why we need to have effective oversight of the DoD acquisition process,” Grazier said.”

https://www.thedailybeast.com/the-scam-artist-who-sold-fake-armored-trucks-to-us-army

 

How Are U.S. Government Contracts Negotiated and Awarded?

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“BIZ WARRIORS FORUM”

“Unlike commercial business, the vast majority of government contracts are subject to negotiation.

Even in competitive procurements, the government may award a contract based on best value (a combination of technical, cost and other factors) not necessarily to the lowest price bidder.”


“The final price paid by the government is then subject to negotiation. Under General Services Administration (GSA) Schedules and Indefinite Delivery/Indefinate Quantity (IDIQ) Contracts, terms and conditions and labor hour pricing are agreed upon in advance but individual delivery orders are negotiated separately regarding the labor hours, material and travel cost necessary to complete a discrete scope of work.

Cost Plus and Time and Material contracts are also negotiated procurements on many occasions. Only small, fixed price purchase orders under $25,000 and items purchased under FAR Part 12, “Commercial Contracting”, are awarded solely on the basis of price.

Contract negotiations can fall under three (3) different business scenarios:

Negotiations directly with a government contracting officer pursuant to a federal government contract

Negotiations with a prime contractor for a subcontract under the prime’s federal government contract

Negotiations with a subcontractor to establish a price and flow down the terms and conditions of your contract with the federal government.

NEGOTIATION TEMPLATE

In federal government contracting each of the above scenarios pass through the following template of negotiation steps:

A. Audit

B. Fact-finding

C. Pre-award Survey

D. Cost Negotiations

E. Final Profit Negotiations

F. Contract Award

The above template is recognized throughout the Federal Acquisition Regulation (FAR) and in the Defense Contract Audit Agency (DCAA) Handbook. All government agencies and contractors utilize it.”

SMALL BUSINESS FEDERAL GOVERNMENT CONTRACT NEGOTIATION

https://bizwarriors.com/forum/threads/how-are-u-s-government-contracts-negotiated-and-awarded.5451/

Business Incubator Aims To Help Small Firms Win Government Work

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Image: townhall.folsom203

“THE WASHINGTON POST”

“Despite an array of new set-aside programs meant to give small firms an advantage, the number of small companies holding primary government contracts has shrunk substantially since 2010.

OST founders Olessia Smotrova and David Huff say insider knowledge — and not resources — is the main thing that keeps small firms out of the market. “It literally is the divide between those who know what to do and those that don’t,” Smotrova said.”


“Business incubators have been all the rage in the D.C. area in recent years, as local leaders try to step beyond the region’s dependence on federal money. But the area’s newest incubator is taking a different approach: doubling down on federal contracts while trying to open that market to a more diverse group of people.

To help small businesses grow and compete for government work, a Rockville, Md.-based consulting business called OST Global Solutions is starting an incubator focused on helping its members scale within the federal market.

Members can go through the program remotely or co-work at OST’s offices, paying between $275 and $695 a month. The coursework focuses on the nuts and bolts of following government bid proposals and keeping government decision-makers happy, as well as the intangible aspects of entre­pre­neur­ship and business management.

The secret to their work, Smotrova says, is getting members to hold themselves to ambitious growth metrics by constantly competing for new work. Too often government contractors are content to rest on their laurels once they win a contract, she says.

“A lot of government contractors don’t have that sense of urgency to fill their pipeline,” Smotrova says.

The program commits members to an ambitious growth path of 400 or 500 percent, and gives them customized goals they must reach before they can graduate.

“We can diagnose where they are failing and why they are failing,” Smotrova said.

One of the first members to opt for the co-working program is Virginia-based VG Systems LLC, an eight-person IT firm that brings in between $1.5 million and $2 million a year in revenue.

Chief executive Thomas Perry says he’s hoping OST can help him get a more stable stream of income. The company’s earnings can vary widely based on what work is available.

“It’s been a wild roller coaster,” Perry said. “The reason we’re trying to go through the incubator is we’re trying to make that a little more of a smooth upward growth curve.”

Small businesses that are working in the federal space usually do so with the help of official “set-aside” programs designed to give such firms an advantage.

One is Ogden, Utah-based Wynsor LLC, a 10-person firm that makes a steady business of decontaminating old uranium mines, among other environmentally oriented work for the federal government.

Lea Ann Rodriquez founded Wynsor in 2007 while she was still working at the Idaho National Laboratory, which she left in 2009. Today her firm is working on uranium mines in Oklahoma and Washington state, and also holds a contract to decontaminate respirator machines at Hill Air Force Base in Utah.

It took her three years to get through the paperwork required for the Small Business Association’s 8a small disadvantaged business certification program, which gives her an automatic leg up on certain federal contracts.

But the market is getting more competitive, even among the small businesses that qualify for set-asides. And her advantage under that program expires in 2021 when the eight-year program times out.

She wants to keep her company after 2021, but to do so she’ll have to grow before the company “graduates” and loses its certification under that program. She’s hoping OST can teach her how to compete for work without having the help of a set-aside program.

“A lot of [8a program participants] graduate and their sales just plummet,” Rodriquez says.

Others joining the incubator are leveraging deep connections to the U.S. military. One is Gib Godwin, a former two-star Navy rear admiral who runs a consulting firm.

Godwin retired from the Navy in 2006 and briefly worked for PricewaterhouseCoopers and Northrop Grumman before setting off on his own. His company, BriteWerx LLC, competes for federal work under a set-aside program for service-disabled veterans.

His only full-time employee is his daughter, who holds the title of chief financial officer. Their small partnership takes in between $850,000 and $950,000 each year in revenue, most of it through a single Navy contract the firm received through a sole-sourced award.

As a former Navy officer, there are certain lines he can’t cross. He has a lifetime ban against winning large contracts related to the F-18 Hornet and F/A 18 Super Hornet fighter planes, for example, because he served as a chief engineer on those programs while in the Navy. He has similar limitations on certain Navy and Marine Corps IT systems.

But his rank has mostly helped the business, he says.

“My flag officer network has been a huge help,” Godwin said. “Because of what you’ve done before, you can get a meeting without crawling through broken glass on your belly.”

https://www.washingtonpost.com/business/capitalbusiness/business-incubator-aims-to-help-small-firms-win-government-work/2018/01/20/424fb02e-fd53-11e7-8f66-2df0b94bb98a_story.html?utm_term=.3bd6fe4b8ae8

 

 

A New Era In Accessing Federal Spending Data

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Federal spending contractingacademy.gatech.edu

Image: contractingacademy.gatech.edu

“Businesses across all sectors can use federal spending data to identify sources of government funding for job training, technology modernization, and other business-relevant concerns.

Current and potential government contractors can also use data on government procurement to identify trends and opportunities across different federal programs.”


“In 2017, the U.S. government spent $3.98 trillion, representing nearly 20 percent of the country’s gross domestic product. The Digital Accountability and Transparency Act (DATA Act) was passed into law in 2014 to provide detailed information on how those federal dollars are allocated each year through contracts, grants, loans, and other financial assistance awards. Under the DATA Act, federal agencies are required to report this information every quarter in a standardized way, using the DATA Act Information Model Schema (DAIMS), and publish this data on USAspending.gov.

For more than three years, the Department of the Treasury and the Office of Management and Budget (OMB) have been working to implement the DATA Act and make large amounts of new data available and useful to the public. Their efforts are now coming to fruition. Agencies have been submitting data to Treasury using the DAIMS since last May, and there is now enough data available to begin the new kinds of analyses that the DATA Act makes possible.

The Department of the Treasury, which manages USAspending.gov, is also planning to relaunch the federal spending website in the coming months with new features, functionality, and much more data than before. A preview is currently available at beta.USAspending.gov. Among the updates, Treasury has developed the Federal Spending Explorer, which breaks down spending information by budget function, agency, and object class; Award Search, which includes a wide range of advanced filters to target specific datasets; and Keyword Search, which provides a broader picture of federal spending data based on any given theme. Treasury has also launched the Data Lab to test out new visualizations for data on federal spending and related issues, including a recently published analysis of federal spending related to homelessness.

On February 7, the Department of the Treasury and the nonprofit Center for Open Data Enterprise co-hosted a Roundtable on Innovating with Federal Spending Data to advance these efforts. The Roundtable convened a wide range of stakeholders from inside and outside of government to “identify new applications of federal spending data and develop recommendations for increasing its use and impact.” The event was held under the Chatham House Rule, which allows content from the Roundtable to be shared without direct attribution to individual participants. Today the Center has published a report on key takeaways from the Roundtable, which is available here.

The Roundtable included presentations to give participants an overview of the federal spending data now available and invite their ideas on how it can be used. Leadership from Treasury and OMB described their current plans for DATA Act implementation, including David Lebryk, Treasury’s Fiscal Assistant Secretary; Amy Edwards, the Acting Deputy Assistant Secretary for Accounting Policy and Financial Transparency; and Victoria Collin, who is Acting Chief of the Management Controls and Assistance Branch at OMB’s Office of Federal Financial Management. Other presentations explored ways that different users could apply the new data and features – from a small business owner interested in competing for federal contracts in plumbing, heating, and air conditioning services to a journalist working to track federal funds directed towards Hurricane Maria relief efforts.

“This is an exciting time for anyone who wants to understand more about the federal government and a significant portion of our economy,” said Booz Allen Hamilton Vice President Bryce Pippert, who participated in the Roundtable. “These new federal spending data resources will empower citizens, journalists, policymakers, and government leaders to quickly answer questions about where federal dollars go. And this spending data can now be easily combined with other programmatic and demographic information for analysis to answer questions about the impact and effectiveness of resource allocation.”

To help participants focus on data applications most relevant to their work, the  Roundtable also included breakout sessions organized around five topic areas where federal spending data can be particularly valuable. The participants in these sessions identified current and potential uses of federal spending data in these areas, including:

 Improving Government Operations and Evidence-Based Policymaking.Federal agencies can use information published under the DATA Act to improve internal government operations. For example, agencies can analyze federal spending on procurement across the U.S. government to reduce duplication and identify opportunities for shared services. Agencies can also use this data to identify cross-government resources that could be deployed to address time-sensitive funding needs or government-wide emergencies, such as the opioid epidemic or major natural disasters.

Creating Opportunities for Federal Grant Recipients. Federal grant applicants and recipients can use federal spending data to better understand agencies’ funding priorities and improve their application outcomes. Agencies can also evaluate the success of their grants through new analyses of the distribution and impact of grants by specific regions, demographic groups, or issue areas.

Increasing Transparency and Accountability. Detailed information on federal spending can support Congressional oversight and provide budget transparency for taxpayers, including giving Congress and the public additional information to evaluate emergency supplemental requests for funding.

“We are starting to see the enormous benefits that can be gained from mining the rich array of data now available in USAspending.gov,” said Roundtable participant Kathy Conrad, Director of Digital Government at Accenture Federal Services. “By applying advanced analytics to this valuable data, including using descriptive and predictive data mining and machine learning, governments, businesses, academics and other stakeholders can gain insights that help answer complex questions and improve services for our citizens and consumers.”

The Roundtable on Innovating with Federal Spending Data represents an important step towards showing the full potential of this newly available data, convening user communities to explore updates to USAspending.gov, and thinking critically about how this information can be applied in different ways. Through efforts like these, Treasury can ensure that federal spending data is recognized as a critical government data resource like Census data or geospatial data, and that it will be widely used in ways that will have a major positive impact.”

https://www.fedscoop.com/treasury-launches-new-era-federal-spending-data/