Tag Archives: government contracting

Pentagon Raises Contractor Progress Payment Threshold To Keep Cash Flowing

Standard
Image: Levelset.com

WASHINGTON POST

The Pentagon, in a move to boost cash flow to large and small defense companies during the coronavirus crisis, will temporarily increase the percentages paid to contractors, known as periodic progress payments.


For small businesses the rate will go to 95% from 90% of incurred cost.”

______________________________________________________________________________

“Public interest groups called for the policy to be closely monitored.

The change comes as the U.S. Department of Defense was touched by a coronavirus fatality for the first time. A contractor who tested positive for the virus and worked at the Defense Security Cooperation Agency in Crystal City, Virginia, died on Saturday, the Pentagon said.

The Pentagon’s Director of Defense Pricing and Contracting issued a “Deviation on Progress Payments” memo late Friday that increases the rate for contracts to 90% of incurred costs from 80% for large businesses, Pentagon spokesman Air Force Lt. Col. Mike Andrews said in a statement on Sunday.

For small businesses the rate will go to 95% from 90%.

“This is an important avenue where industry cash flow can be improved,” Andrews said. The department also “is accelerating payments through several means to prime contracts, and directing prime contracts to expedite payments to subcontractors,” Andrews said.

In addition, the agency that manages contracts is working with the Pentagon’s accounting organization that makes the payments “to ensure that invoices are continuing to be paid in a timely manner,” Andrews said.

Blow-Back Possible

Pentagon acquisition head Ellen Lord on Friday issued guidance to industry that defense contractors are “expected to maintain their normal work schedules” — within recommended guidelines from the U.S. Centers for Disease Control and Prevention — amid the coronavirus outbreak because they’re considered “critical infrastructure.”

Byron Callan, a defense industry analyst for Capital Alpha Partners, said in an email that the new policy “will work if the large contractors assist smaller ones that are typically small and private. Think of the $50 million machining parts company that has 70% of sales for commercial aerospace and 30% of defense.”

The industry also risks negative blow-back if the increased payments are abused, he said. “If the large public companies use this change to accelerate share buybacks, I would expect management to be tarred and feathered,” he said.

“It’s important to help employers to keep paying people during this crisis, but the Pentagon needs to do more than just trust the better angels of these companies’ nature to prevail,” Mandy Smithberger, a director for the Project on Government Oversight, which monitors military spending, said in an email.

Taxpayer-Ripoff?

“They should require companies that receive these funds to commit that this money won’t go to dividends, salaries, and stock buybacks, but to the employees on the front lines who are most vulnerable.”

Shay Assad, the Pentagon’s long-time top official on pricing and contracts financing, said in an email the new effort reflects a fundamental misunderstanding of the regulations already in place that already provide for generous reimbursement rates. Assad retired in 2019.

“The fact is that cost of borrowing” from banks “is negligible” and doesn’t require additional Pentagon intervention, Assad said. “There is absolutely no reason to change the progress payment rates for large businesses. Large business is more than capable of using their own cash or borrowing at minimal interest rates. This is a taxpayer rip-off.”

Assad estimated that the top five defense contractors generated $93 billion in free cash flow between 2012 and 2017. “They bought $90.5 billion of their own stock during that same time frame,” he said. “There is no cash-flow intervention required.”

https://www.washingtonpost.com/business/on-small-business/pentagon-raises-contractor-payments-to-keep-cash-flowing/2020/03/22/f4ed6ee6-6c79-11ea-a156-0048b62cdb51_story.html


Many Contractors Awaiting Pandemic Guidance From Government Agencies

Standard

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.”

______________________________________________________________________________

“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=

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

Standard
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.”

______________________________________________________________________________

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/

A Winning Proposal Isn’t Always The Best

Standard

WASHINGTON TECHNOLOGY By Lisa Paf

Image: Eventbrite.com

Avoid the trap of equating a win with a good proposal. Critically evaluate your live and submitted bids using a variety of quality measures to identify areas for improvement.

In the end, this approach will result in better quality and more consistent wins.

______________________________________________________________________________

“Is a winning proposal a good proposal? Some argue that by definition, yes, a win is a good proposal. However, we all know that a proposal can be the winner for reasons unrelated to proposal quality—such as a price shoot out.

Therefore, when we look back at our win-loss track record, we miss a lot of important data if wins and losses are the only measures of successful performance. As a result, we may re-use a poor-quality proposal or dismiss a losing proposal that has some successful elements.

Are your proposals good?

In a Deltek webinar, Bob Lohfeld polled the audience to ask: “Are your proposals compliant, responsive, AND compelling?” Interestingly, only 15 percent of 150-plus respondents believed that their proposals were consistently achieving all three measures of quality. Another 35 percent responded that their proposals sometimes achieved all three. Meanwhile, 35 percent stated that their companies consistently do NOT achieve all three, while the remaining 15 percent responded that their companies do not even understand the importance of all three performance measures.

In my experience, bidders do focus on compliance (although often do not achieve that measure as I pointed out in a recent Washington Technology article). However, many do not fully understand the difference between a compliant proposal and a responsive proposal. And, many do not grasp what makes a proposal compelling.

Compliant versus responsive

Your proposal can be compliant but not responsive. How does that happen? The narrative complies with the instructions, evaluation criteria, and work requirements. The format, whether electronic or hard copy, conforms with the instructions. The proposal even includes a compliance matrix. However, the content fails to focus on the meaning behind the RFP words. The outline is correct, but the proposal narrative misses the mark, perhaps providing too much detail on topics the customer does not care about and too little on what they value.

Another common mistake that makes a proposal non-responsive is focusing too much on your company rather than the customer. The proposal can be compliant, but if every paragraph begins with your company rather than the customer, it is not responsive. Too much fluff, words that don’t matter, and unsubstantiated bragging can all reduce responsiveness. When evaluators read non-responsive content, they lose interest. Non-responsive content also reduces the evaluators’ trust in the bidder as a potential contractor.

Responsive versus compelling

Similarly, a proposal can be compliant and responsive, but not compelling. A proposal is compelling if it is rich in Strengths. Strengths in the federal market are features with proven benefits that have meritexceeding requirements or significantly reducing mission or contract risk in a manner the customer values. The only way to understand what the customer values is to spend a lot of time with the customer listening to needs and then returning to discuss potential solutions. It is an iterative process, leveraging information gathered from a variety of customers to formulate potential solutions and then gathering feedback to refine the solution.

Using a Strength-based solutioning approach helps you identify potential Strengths, vet them with customers, and then articulate them in your proposal as part of your discriminating value proposition. Strengths make responsive content more compelling and make it easier for government evaluators to score your Strengths. Strengths also build trust because the proposal then demonstrates that the bidder understands the customers.

Other measures of goodness

Certainly, there are other valid measures of goodness. Lohfeld Consulting has seven proven quality measures that include compliant, responsive, and compelling as well as customer-focused, easy to evaluate, well-written, and visually appealing.

In proposal post-mortems, consider not only whether the proposal was a winner, but also whether it met the seven quality measures. If not, why not?

  • Was capture insufficient?
  • Did capture fail to identify Strengths?
  • Did proposal writing fail to articulate the value proposition in a compelling and customer-focused manner?
  • Was the proposal hard to read and lacking in visuals?
  • Was the narrative simply poorly written?

Even if your proposal resulted in a win, asking these questions is still valid because the proposal may have won despite its faults. There is always room for improvement.

Winning doesn’t validate the proposal’s goodness

I do a lot of proposal reviews and post-mortems. I have read proposals that are good and lost as well as proposals that are bad and won.”

https://washingtontechnology.com/articles/2020/03/04/insights-pafe-proposal-quality.aspx

Lisa Pafe

About the Author

Lisa Pafe is a capture strategy and proposal development consultant and is vice president of Lohfeld Consulting. She can be reached at LPafe@LohfeldConsulting.com

$876 Million In Disabled Veteran-Owned Small Business Contracting Fraud Dishonors Veterans

Standard
Image: Georgia Tech Contracting Education Academy
PLEASE SEE https://contractingacademy.gatech.edu/tag/sdvosb/ FOR REPORT AND DETAILS

WASHINGTON TECHNOLOGY

The sad truth is that each time a government contract is awarded to a company falsifying its status as a SDVOSB, other veterans operating legitimate, eligible small businesses are denied opportunities that they’ve earned through their service to our nation.

It’s up to us to ensure these opportunities are safeguarded for our veterans today and tomorrow. It’s the honorable thing to do.

______________________________________________________________________________

“Ensuring that each veteran receives our full respect and support as he or she transitions back to civilian life is one of our duties as a nation.

While the personal sacrifice made by our veterans is impossible to measure and represents a debt that can never fully be repaid, it is vital that Americans do what we can to protect the benefits and services our nation’s veterans have earned. 

Extending opportunities to entrepreneurial veterans who have suffered service-related disabilities is one way our nation honors their extraordinary service. The Service-Disabled Veteran-Owned Small Business (“SDVOSB”) procurement program was established in 2003 as an extension of the federal government’s policy to maximize procurement opportunities for small businesses. The program provides opportunities for SDVOSBs by establishing a goal that at least 3 percent of all federal contracting dollars be awarded to service-disabled veteran-owned small businesses each year.

Three percent of federal contracting dollars may seem like a small amount—but the reality is this program represents billions of dollars in opportunity for our nation’s veterans. Unfortunately, over the years, this program has become a lucrative target for fraud and abuse. In fact, in a sobering December 2019 report from the Government Accountability Office focused on contracting fraud with the Department of Defense, one of the most rampant forms of abuse documented relates to contractors falsely claiming eligibility for contracts set aside for small businesses owned by service-disabled veterans. 

Schemes in which well-resourced, large companies either create fraudulent SDVOSBs or manipulate existing SDVOSBs to capture federal set-aside contracts for themselves are on the rise. These schemes are robbing our nation’s veterans of opportunities that they earned through their service. This is why it is critical that we understand the rules involving contracts set aside for SDVOSBs, as well as how to identify SDVOSB fraud.

First, let us look at the rules of SDVOSB procurement. In order to be eligible for a set-aside or sole-source SDVOSB contract with the federal government, a firm must meet four criteria. First, the firm must be a small business. Second, the company must be at least 51-percent owned by one or more service-disabled veterans. Third, a service-disabled veteran must hold the highest position in the company—such as the role of CEO—and be responsible for the day-to-day operation of the firm. And finally, the eligible veterans must have a service-connected disability.

It’s also worth noting that while SDVOSBs can join forces with large companies to bid on government contracts, to qualify for an SDVOSB set-aside opportunity, at least 51 percent of the net profits earned by the joint venture must be distributed to the SDVOSB and the SDVOSB needs to play the lead role as project manager on the project.

Even though these rules should be easy to understand and follow, the lure of securing set-aside government contracts worth billions of dollars is too much for some large business owners to resist, often leading some to commit fraud by creating small businesses to serve as a “pass through” entity to illegally win SDVOSB set-aside contracts. For example, the Virginia-based defense contractor ADS, Inc. and Luke Hillier, ADS’s former Chief Executive Officer, collectively agreed to pay the United States nearly $37 million to settle allegations that they violated the False Claims Act by fraudulently obtaining federal set-aside contracts reserved for small businesses that ADS was ineligible to receive. Specifically, ADS settled allegations that it had established a “pass through” small business named MJL Enterprises led by a former ADS employee who happened to be a service-disabled veteran. The lawsuit further alleged that ADS managed MJL’s day-to-day operations and supplied the necessary logistical services to allow MJL to perform under its SDVOSB set-aside contracts. In turn, MJL brought in more than $70 million in small business set-aside government contracts that ADS otherwise would not have been eligible to receive.

In the case of ADS, the punishment for allegedly using a fraudulent SDVOSB was severe. Hillier’s settlement of $20 million is among the largest secured against an individual in the history of the FCA. In addition to the $20 million settlement announced by the DOJ in August 2019, the firm also paid the U.S. government a settlement of $16 million in 2017 related to the same conduct.

So, what can be done about the issue? The GAO report underscores that the Defense Department should be doing more to verify who actually owns and manages the companies that supply the agency with goods and services. That sounds great, but the reality is the complex system that includes thousands of vendor companies and hundreds of thousands of contracts and subcontracts makes this kind of additional oversight a herculean task.

Another solution is to encourage those with insider knowledge of potential SDVOSB fraud to come forward as whistleblowers. Whistleblowers with direct knowledge about the ownership and management structure of these organizations are uniquely positioned to shine a light on fraudulent schemes that may otherwise never be uncovered.”

https://washingtontechnology.com/articles/2020/03/03/insight-miller-disabled-vet.aspx

The Future Of Cybersecurity Maturity Model Certification (CMMC) For Defense Contractors

Standard
Image:  (castillodominici)

FIFTH DOMAIN

CMMC 1.0 was released at the end of January.  The Department of Defense official leading the overhaul of cybersecurity requirements for the Department of Defense contractors sees the model as being in a “constant state of evolution” over the next few years.

____________________________________________________________________________

“Katie Arrington, the chief information security officer for the Office of the Under Secretary of Defense for Acquisition and czar for the new Cybersecurity Maturity Model Certification, told Fifth Domain in an interview at the RSA Conference that work on CMMC will be a “perpetual thing.”

After the CMMC requirements are written into contracts around October, Arrington said she wants to “have some data to say ‘okay, these controls — are they really worth the return on investment? Do we need to tweak the model?’

Right now, Arrington said, she is working with staff to create the audit training. One of the challenges in building the training, like creating CMMC itself, is ensuring that it is simple and easy to understand.

Beyond CMMC, Arrington said that the “next big thing” she’s going to work on is supply chain illumination tools and adding continuous monitoring into “… those most vulnerable in our supply chain and the ones that are working on the most critical technologies,” she said. “I need to know how they’re doing acting day-to-day, how their supply chain looks.”

Arrington also told Fifth Domain that she expects CMMC to be adopted internationally in 2020 and 2021.

“Our Five Eyes partners are like, ‘hey, we’re right here with you,’” she said.

With the federal government facing constantly evolving attacks on its supply chain, Arrington said that CMMC needs to be able to adjust to new challenges.

“If it becomes a checklist, we have all failed,” she said. “It needs to become critical thinking about security and understanding that the threat today will not be the same threat that’s here a year or two years from now. And that we have to be constantly looking at how do we tweak? How do we bob? How do we weave?”

https://www.fifthdomain.com/dod/2020/02/28/the-future-of-defense-contractor-cybersecurity-standards/


Contractors Report Issues With GSA “SAM” Opportunities Portal

Standard
SYSTEM OF AWARD MANAGEMENT
Image: SAM Web site

“FCW”

Companies large and small are still not happy with the General Services Administration’s new federal contract opportunities portal, according to the Professional Services Council.

___________________________________________________________________________

“At the request of its technology and services company members, PSC registered irritation with the balky system in a Feb. 7 letter to Julie Dunne, commissioner of GSA’s Federal Acquisition Service.

Alan Chvotkin, PSC’s executive vice president and general counsel, told Dunne that some initial start-up pains for the system still nag users.

“Regrettably, initial ‘bumps in the road’ have continued beyond the functionality that GSA announced would not be carried over from the old system, and our members asked that we bring their views to your attention,” said Chvotkin in the letter.

The FedBizOpps contract notification and tracking website was moved to beta.SAM.gov late last year. From the beginning, contractors complained the new site frustrating to search and ineffective. GSA is consolidating several of its legacy awards systems into SAM.

PSC has heard from vendors large and small who said they are having continued trouble with accessing and searching the site, as well difficulties in how search results are displayed, which can have different font sizes and no copy or print functions. The vendors also said email alerts and updates from the site have been uneven. Those problems have been issues since the cutover the new beta.SAM system last November.

“GSA appreciates that the Professional Services Council shared the views of some members regarding the migration of FBO.gov to beta.SAM.gov, as we take the feedback of all users seriously,” a GSA spokesperson told FCW in an email on Feb. 12. “The agency’s Integrated Award Environment team welcomes the opportunity to work with the Council as it conducts a careful review of the input shared with GSA in early February.”

Chvotkin has been talking to GSA about the portal since development began. He told FCW in an interview that some of the issues nagging the system were anticipated by GSA, and the agency has been working to smooth them out. Still, he said, PSC members have been lodging detailed complaints with his organization about the system.

The level of detail in the complaints was surprising, he said. Suggestions from users — including adding saved-search functions, limiting requests for authentication as well offering NAICs-code search functions —  could be considered by GSA to modify the system.

“They’re still in a transition phase where they can make fixes,” said Chvotkin.

That transition could continue for the foreseeable future, according to Chvotkin. GSA plans to add some reporting functionality to the Federal Procurement Data System, better known as FPDS, in the fall.”

https://fcw.com/articles/2020/02/12/sam-beta-psc-woes.aspx?admgarea=TC_Acquisition

Army’s Infantry Squad Vehicle Sparks Robust Competition

Standard
SAIC-Polaris DAGOR

NATIONAL DEFENSE MAGAZINE

The Army is trying to fast-track the acquisition of an all-terrain, highly transportable vehicle intended to provide ground mobility capabilities for infantry brigade combat teams.

The service is holding a series of tests to inform its decision and is slated to choose one vehicle for production in fiscal year 2020 based on soldier feedback.”

_____________________________________________________________________________

“In February 2019 the service approved a procurement objective to purchase 651 infantry squad vehicles, or ISVs. The Army selected GM Defense, an Oshkosh Defense-Flyer Defense team and an SAIC-Polaris partnership last summer to build two prototypes each for the initiative. They each were awarded a $1 million other transaction authority agreement to build the vehicles. OTA agreements enable the Defense Department to cut through some of the bureaucratic red tape associated with the Pentagon’s traditional acquisition system by enabling them to speed up the delivery of new capabilities.

Prototypes were due in November and were assessed at Aberdeen Test Center in Maryland, the Army said in a press release. Following the trials — which ended in December — the vehicles were scheduled to be sent to Fort Bragg, North Carolina, in January for a second round of testing.

The vehicle must be able to carry nine soldiers and weigh no more than 5,000 pounds so it can be sling-loaded from a UH-60 Black Hawk helicopter and fit inside a CH-47 Chinook.

GM Defense’s bid is heavily based off of its Colorado ZR2 and ZR2 Bison variants — a Chevy-made, mid-sized, off-road truck, Mark Dickens, chief engineer at GM Defense, said in an interview.

Seventy percent of the vehicle is made of commercial products, he noted.

“The chassis — which is the frame, the suspension, driveline, engine, transmission, transfer case, axles, brakes — all of that hardware is directly from the Colorado ZR2, with the addition of some of our performance parts for off-road use,” Dickens said.

The contractor’s parent company, General Motors, builds approximately 150,000 vehicles per year that utilize the same chassis as its ISV offering, a factor that streamlined the design process of the vehicle, Dickens noted.

“Anything on this chassis … somebody could walk into a Chevy dealership and purchase those parts,” he said.

The rest of the components were either uniquely made for the vehicle, or built from modified existing commercial products.

The company leveraged computer analysis from General Motors to ensure specific aspects of the vehicle, such as rollover protections and off-road racing capabilities, were precise, Dickens said.

The vehicle can also accommodate different cargo and occupant configurations and is easily transportable via sling attached to a UH-60 Black Hawk or inside a CH-47 Chinook, according to the company.

Meanwhile, Polaris Defense has designed the DAGOR ISV, which “delivers off-road mobility while meeting the squad’s payload demands, all within the weight and size restrictions that maximize tactical air transportability,” said Nick Francis, director of the company.

Polaris’ partnership with SAIC further enhances the team’s offering by leveraging capabilities that have “been tested, certified and fielded to operational units” since 2015, he said.

The vehicle has an integrated turret, is heavy-weapons capable and has an oscillating arm available for additional lethality, he said via email.

The bid is based on Polaris’ DAGOR vehicle, which is a platform already in use by the Army. The new ISV variant offers warfighters more mobility and maneuverability, said Mike Gray, a vice president at SAIC. The company is providing the systems engineering to integrate new tools to meet the service’s requirements.

The vehicle also has casualty evacuation capabilities.

“If any squad member is injured, only a single seat needs to be stowed on the side of the DAGOR ISV for full [casualty evacuation] capability, making our solution the only light tactical vehicle that keeps the squad unified and moves soldiers safely from one objective to the next,” he said.


Left to right: SAIC-Polaris DAGOR, Oshkosh Defense and Flyer Defense’s Ground Mobility Vehicle 1.1, GM Defense ISV concept

By partnering with Polaris, SAIC is leveraging the commercial expertise and off-road vehicle capabilities of the company with its proven performance defense vehicles, Gray said.

The platform meets the Army’s requirements for the tactical environment, Francis said. It is under 5,000 pounds, able to carry nine soldiers and is air-transportable.

Additionally, training and field support for the company’s ISV submission are available through already established networks within SAIC and Polaris that currently provide support to the military, Francis noted.

Oshkosh Defense and Flyer Defense designed a platform that is based on two Flyer-designed vehicles. These include the Ground Mobility Vehicle 1.1, which is in use by Special Operations Command, and another version of the vehicle employed by the Army for ground mobility in the interim of acquiring a new capability, Flyer Defense said in a press release.

The ISV requirements shared 95 percent commonality with two of Flyer’s previously fielded vehicles, the company said.

Oshkosh declined to be interviewed, citing competitive reasons.

Though the Army has narrowed down the competition, the ISV solicitation drew heavy interest and submissions from members of industry, said Andrew Hunter, director of the defense-industrial initiatives group at the Center for Strategic and International Studies.

It is notable that the Army often has numerous bidders for its acquisition programs despite the limited number of suppliers in the defense industrial base writ large, Hunter said.

“There [are] not that many competitors,” he noted. “Lockheed Martin, Boeing, Northrop Grumman, Raytheon and General Dynamics — they’re the big industry players and, in a lot of cases, they have dominant positions within their key markets.”

Nevertheless, the Army has been able to attract a number of bidders for its projects, Hunter said.

“They tend to have a very competitive marketplace that they participate in, and in particular when it comes to tactical vehicles, they have had a real history of being able to generate a lot of competition,” he said. “Those are all really encouraging signs. It’s an indication that this is a really healthy part of the industrial base.”

Competitive pressures can yield new innovations and options that the service might not have had with a more static part of the industrial base, he said.

The Army’s plan to procure the ISV to meet its ground mobility requirement comes following a significantly delayed effort.

The 2016 plan to hold a competition was delayed while procurement of the initial ground mobility vehicle was leveraged through an existing contract with Special Operations Command.

The service previously purchased the command’s vehicles for a number of airborne infantry brigade combat teams. However, in the fiscal year 2018 defense spending bill, Congress directed the Army hold a competition for the program.

The program executive office for combat support and combat service support posted on its website last year that the service planned to pursue a competition for a ground mobility vehicle, now known as the infantry squad vehicle.

As the Army is working to fast-track the acquisition of the ISV, its use of rapid prototyping for the design phase of the program is significant, Hunter noted.

“Rather than starting with a set of infinitely detailed military specifications and trying to find … [a] vendor willing to tackle and do the engineering to provide all that, they are going out to industry and saying: ‘Here are some general requirements that we have, show us what you can do,’” Hunter said.

If the service can find a capability that meets its requirements, it could potentially field it quickly, he added.

The same acquisition model was used for the M-ATV program, which was a version of the mine-resistant ambush protected vehicles. Over the course of the five-year program, the military quickly deployed approximately 12,000 MRAPs in Afghanistan and Iraq.

“This ISV competition really seems to have absorbed that heritage — that practice of success that the Army has used for tactical vehicles and are applying it to this requirement,” he said.

Another notable aspect of the ISV competition is the participation of GM Defense, Hunter noted.

There has been a lack of interest from the commercial automotive industry in the defense sector, even though it is a natural fit for manufacturing vehicles, he said.

“Even in recent years when the automotive industry started to take an interest in producing vehicles for the Army, it has been hard for them to break through,” Hunter added.

“The fact that GM Defense is one of the final three competitors offering a version of the Chevy Colorado — that is intriguing.”

Hunter believes the service could potentially benefit from leveraging commercial supply chains.

The ISV is a “test case, or really proof of principle, that the Army can really rapidly acquire something from scratch that fills a military need,” he said. “Beyond just this relatively small requirement here, it has the possibility to condition the larger acquisition space.”

The military could also benefit from utilizing commercial components, he noted.

If the service can prove with this competition that it can deliver a well-made capability quickly, it could enhance and potentially further shape its future acquisition initiatives, he noted. “

https://www.nationaldefensemagazine.org/articles/2020/2/14/armys-infantry-squad-vehicle-sparks-robust-competition

Mentor-Protégé Agreements: Benefits for Big and Small

Standard
Image: istock

NATIONAL DEFENSE MAGAZINE

Mentors and protégés each uniquely benefit from the All Small Mentor Protégé Program.

Not only does it allow mentors to pursue small business set-asides through joint venture agreements, but mentors can also evaluate acquisition targets, develop their employees, and gain insight on industry innovations.

_______________________________________________________________________

“During the last three fiscal years, the Defense Department awarded more than $77 billion to small businesses through set-asides under programs generally managed by the Small Business Administration. Consequently, large businesses are precluded from competing for these contracts.

But the SBA’s All Small Mentor Protégé Program offers opportunities for large businesses to mentor small businesses where the two entities may pursue these set-aside contracts together. The intent of the program is to encourage large businesses to work with small businesses to increase and expand the small firms’ capabilities. In doing so, the large businesses may compete for this pool of previously inaccessible contracts.

While contract awards are the most sought-after prize, the program offers many other benefits for both mentor and protégé.

The regulatory purpose of the program is to “enhance the capabilities of protégé firms” and improve their “ability to successfully compete for federal contracts.” That being said, a recent SBA report also recognized that the program is intended to benefit both mentors and protégés. This same report indicated that as of April 2019 there were 759 active mentor-protégé agreements.

The real benefit of this program comes from the mentor and protégé being able to enter a joint venture and compete for federal small business set-aside contracts without being found affiliated. While eligibility for these set-aside contracts usually requires a company to be small under SBA’s size standards, one exception to this rule is when two firms are “approved by SBA to be a mentor and protégé,” according to the rule.

Qualification for this exception requires SBA’s approval of the proposed mentor-protégé agreement. Once the agreement is approved, the mentor and protégé may form joint ventures to pursue small business opportunities without worrying about the size of the mentor. Equally beneficial is that the agreement itself is not the basis to find affiliation between the mentor and protégé, as that would undermine the purpose of the program.

As one can deduce, mentors are usually large businesses and protégés are usually small businesses. While mentors can also be small businesses, the regulatory context infers that mentors are primarily large firms. As with most government programs, however, it is not so simple as mentors being large and protégés being small.

Each mentor must satisfy four SBA-mandated requirements. First, a mentor must be “capable of carrying out its responsibilities to assist the protégé firm under the proposed mentor-protégé agreement.” Second, mentors must possess good character. Third, the mentor must not be on the federal list of debarred or suspended contractors. Finally, the mentor must be able to “impart value to a protégé firm due to lessons learned and practical experience gained or through its knowledge of general business operations and government contracting,” the regulations state.

While not a prerequisite, it is worth noting that SBA regulations generally require that mentors have no more than one protégé at a time. There is not an outright ban on multiple protégés. Instead, SBA has capped the number of protégés one mentor can have at the same time to three to limit any negative impact one mentor-protégé relationship may have on another.

Protégés, meanwhile, must qualify as small under its primary North American Industry Classification System code. If the protégé is looking to expand into a second code, it must identify this code as one where it is seeking business development assistance. This is not, however, carte blanche approval to enter into a new market as “SBA will not approve a mentor-protégé relationship in a secondary code in which the firm has no prior experience,” the rules state.

As with mentors, protégés are also restricted in the number of mentors allowed at one time. While the general cap is for one mentor at a time, SBA may approve a second so long as the additional mentor will provide unique forms of assistance. The agency places a lifetime cap of two mentors for each protégé.

Even if a company qualifies as a mentor or protégé, why would it want to enter a mentor-protégé agreement? More specifically, with the program “designed to enhance the capabilities of protégé firms” why would a mentor want to participate? There are four distinct benefits derived from a mentor-protégé agreement.

Money is likely the most obvious reason for mentors to participate in the program. The Defense Department set aside more than $77 billion in small business contracts in the last three fiscal years. That is $77 billion that large businesses have no way of touching — unless they are part of a mentor-protégé agreement. And that is just defense. SBA’s agency-specific prime contract goals for the 2019 fiscal year ranged from 11.65 percent to 71 percent of total procurement dollars going to small businesses.

The mentor-protégé agreement is just the first step, however. To further protect small businesses, the SBA only allows the mentor to compete for set-aside contracts through a joint venture with its protégé. Each joint venture agreement must contain provisions stating that the small business owns at least 51 percent of the joint venture entity.

Additionally, profits of the joint venture must be commensurate to the work performed. Equally important, “the small business partner . . . must perform at least 40 percent of the work performed by the joint venture.” While this precludes the large business from reaping all the profit, it can still be on the receiving end of a significant portion of any set-aside contract value.

Money aside, there are several other benefits that may come with being a mentor. First, mentors gain a valuable opportunity to directly engage with possible acquisition targets.

SBA regulations allow mentors to obtain up to a 40 percent equity interest in the protégé firm. Even if a mentor does not make this investment up front, there is nothing precluding investments occurring a year or more into the mentor-protégé agreement. During that time, mentor employees may gain valuable information from working side-by-side with the protégé. This knowledge not only facilitates other due diligence efforts, but it could also help smooth any post-acquisition transitions.

Second, the mentor-protégé arrangement allows dedicated professional development opportunities for mentor employees. The program regulations identify the following as areas of mentor-provided assistance: technical and/or management assistance; financial assistance; trade education; business development; and general administrative assistance. These are just the overarching categories; with a wide range of assistance opportunities within each category.

The Roman philosopher Seneca is often attributed with the translated phrase: “While we teach, we learn.” Each of the identified assistance categories provide opportunities for a rising star in an organization to teach the protégé, and therefore learn. Whether it is an engineer ready to cut their teeth on managing a project, an accountant looking for practical experience before their next exam, or a localized trade expert looking to become a regional or international expert, the opportunities for professional growth are myriad in a mentor-protégé relationship.

Third, mentors can stimulate internal growth or ideas through the insights of a protégé. Startups traditionally thrive by bringing new and innovative products or services to a market. As a mentor, a company will gain first-hand knowledge and access of the protégé’s innovative products and services. Not only does this help a company gauge the pulse of new business activity, but it also fosters internal growth and development through interactions with these innovative products and services.

The benefits to a protégé are often, but not always, the flip side of the mentor benefits. Where a mentor invests, a protégé gets cash infusions. Where a mentor offers training, the protégé’s knowledge base increases. Where a mentor sees what new ideas a protégé brings to the industry, the protégé gains immeasurable insight that comes from the challenges and experiences of the mentor’s own path to success. But these are not the only benefits.

Many protégés do not have in-depth corporate policies, procedures or systems. One form of mentor assistance is drafting, compiling or providing corporate documents such as record retention policies, annual review forms or proposal templates. Mentors can also provide guidance on procedures or systems best suited for the protégé. What should an internal audit process look like? What system should be used to adequately document and track contract deadlines? Each of these, and others, are areas where the mentor’s experience will help a protégé avoid some of the traditional growing pains of a small business.

Protégés, like many small businesses, experience the conundrum of needing financial resources but not having the experience, history, credit, or any other prerequisite to access those resources. Mentors can help alleviate many of these concerns. For example, a mentor’s contracting history may help an otherwise unqualified protégé obtain higher bonding limits. A mentor’s financial history may also help mentors receive more favorable credit limits or lending terms. Not only does the mentor’s presence provide immediate assistance to the protégé, but it also helps the protégé establish a trend line demonstrating its capability of handling larger financial responsibilities.

Even with a mentor’s systems and financial backing, a protégé will not get very far if cannot win a contract. Here, mentors can provide lessons learned as well as best practices for pursuing contract opportunities. Whether through participation in industry days, responding to a sources sought notice, or changing the content, format or method of proposal submission, mentors can impart significant wisdom on the protégé. As with other forms of assistance, this help will benefit the protégé for quite some time.

Many protégés view business development as the biggest obstacle to success. Mentors, by regulatory definition, have found a way to conquer this challenge. Whether it is entering a new region, breaking into a new market, or becoming familiar with government contracting, the mentors have valuable knowledge they can pass on to the protégés. As with each other area of assistance, the scope of business development training should be customized to the protégé’s needs.

Hundreds of mentors have already benefited from the program. Protégés may gain access to a mentor’s policies, programs, personnel and financial resources, plus increase their experience in contract proposals and business development.

Most importantly, mentors and protégé’s can embrace their inner Rod Tidwell and shout for the agencies to “show me the money!” 

https://www.nationaldefensemagazine.org/articles/2020/2/14/viewpoint-mentor-protege-agreements—benefits-for-big-and-small

Pentagon DIU Bringing New Commercial Partners Into The Fold And Expanding

Standard

NATIONAL DEFENSE MAGAZINE

Armed with new contracting authorities and a mandate to help the U.S. military stay head of peer competitors, the Pentagon’s Defense Innovation Unit is bringing new commercial partners into the fold and expanding its technological focus.

___________________________________________________________________________

“DIU was launched in 2015 by then-Secretary of Defense Ash Carter to bridge the gap between the military and the nation’s tech hubs. It is headquartered in Mountain View, California, in Silicon Valley, with additional outposts in Austin, Texas, Boston and the Pentagon.

“More and more of what the department needs going into the future is dual-use technology, which means it’s equally or more important in the commercial space as it is for the military. So we’ve got to leverage what’s going on with the tremendous innovation hubs that we have around the country and make sure those companies … are thinking about the Department of Defense,” DIU Director Michael Brown said during a panel at the Reagan National Defense Forum in Simi Valley, California.

The organization has three core mission sets: accelerate commercial technology to the warfighter; boost the military’s capability and capacity by taking on transformative projects that can be scaled across platforms and across the services; and grow the national security innovation base.

Its offices in Austin, Boston and Silicon Valley are focused primarily on commercial outreach, while the one in Washington, D.C., engages with military partners such as service acquisition executives.

“We start with the DoD customer with a DoD problem,” Mike Madsen, DIU’s director of strategic engagement, explained in an interview. “Then we put that out to the tech sector and get the imaginative minds in the tech sector to help solve our problems.”

Over the past year or so, DIU’s hand has been strengthened by a number of initiatives, he noted.

A crucial one was Undersecretary of Defense for Acquisition and Sustainment Ellen Lord’s decision to give the organization new contracting authorities, including the ability to directly enter into other transaction authority agreements that are intended to cut through bureaucratic red tape associated with the Pentagon’s traditional acquisition procedures.

“She delegated that authority so that we could award our own OTA contracts, which is a pretty big deal to continue moving fast,” Madsen said.

OTA mechanisms favor nontraditional suppliers, he noted, “whether it’s a couple of folks in a garage in Minnesota or whether it’s a Fortune 100 company in Silicon Valley that just have never done business before with the department.”

The Defense Innovation Unit has awarded about 150 contracts to 122 nontraditional vendors. Of those, 66 are first-time suppliers to the military, Madsen said.

In the past, high-tech companies in the commercial sector “evaluated the $740 billion defense market and said, ‘No thanks. I don’t want a slice of that. … It’s too complex, it’s too hard,’” he said. “What we’ve represented is a lowering of those barriers to entry, making it easier for those leading-edge technology companies to get their technology to the men and women in uniform.”

Madsen said DIU understands the commercial sector’s faster business cycles.

“We want to move at commercial speeds … and look like a commercial entity to those tech companies” that are wary of doing business with government agencies, he noted.

With other transaction authority agreements, DIU can transition from a prototype contract right into a production contract as long as the prototype contract was awarded under competitive circumstances.

The organization has stood up a defense engagement team and a commercial engagement team. The defense engagement team reaches out to the services, combatant commands and other agencies to learn about their needs.

“Then we put that problem [statement] out to the commercial sector and work with them for proposals and look to award a prototype contract as quickly as we can,” Madsen said. The goal is to award a contract within 60 to 90 days, and then move through the prototyping phase and field new capabilities within 24 months.

Once a successful prototype is developed, DIU’s defense engagement team looks for ways to scale it across the department. An example is a recent effort to use artificial intelligence for predictive maintenance.

An AI prototype developed by a company called C3.ai is capable of reducing unscheduled maintenance for the Air Force by about 30 percent, “which is pretty significant for our mission-capable rates for aircraft,” Madsen said.

“We took that successful prototype to the Army and said, ‘Hey, this works on aircraft, what do you think about trying to prototype on wheeled vehicles?’” Madsen explained.

“We worked a prototype for the Bradley fighting vehicle. Now we’re engaged with the Navy to apply the same concept to not only the aircraft in the Navy, but also shipbuilding.”

The commercial engagement team’s charter, meanwhile, is to pave the way for high-tech firms to enter the defense ecosystem and transition their products into a program of record.

It also reaches out to venture capitalists to gain greater visibility into the marketplace.

“They’re effectively the gateway to hundreds, if not thousands, of companies,” Tom Foldesi, DIU’s director of commercial engagement, told National Defense. “For any particular solicitation when we’re looking for specific technologies, they are … able to point us in the right direction.

“The VCs are always a really valuable source because oftentimes they have line of sight to companies that we might not even know about. They might be in stealth mode, they might not have announced their [funding] rounds. So we can gain a lot of insight into what might be going on in the market that might not be public.”

Being co-located in the tech hubs offers advantages. DIU also has its eye on other tech centers such as Seattle and Pittsburgh, Foldesi noted. The organization has received proposals from companies based in 44 states.

“We cast a very wide net across the country,” he said.

DIU is uniquely capable of reaching out to the commercial sector and venture capitalists on short notice, putting firms on contract and helping to scale solutions across the Defense Department, officials say.

“This is very important because most of the companies are [otherwise] pulled into a labyrinthine system within the Pentagon, and it’s really demotivating,” Foldesi said.

The often-cumbersome nature of the traditional defense acquisition system is one of the reasons why a lot of companies have opted not to do business with the U.S. military. But

DIU posts it solicitations directly on its website, with the aim of moving fast on all of its projects.

“There’s money on the table,” Foldesi said. “Someone will be awarded a contract within a few short weeks or months. And then there’s the opportunity to transition that prototype contract to a program of record.”

Over the past year, DIU has improved its decision-making process for taking on new projects, Madsen noted.

“We’ve really focused on building out that concept of transition much earlier in the process so we know what that transition from prototype to production to fielding that technology to the men and women in uniform really looks like before we’re even down the prototyping path,” he said.

The Defense Innovation Unit also helps companies navigate security and compliance issues.

“Part of the benefit of working with DIU is you have a trusted advisor and partner being able to help you manage through those … potential challenges, which can be quite significant for a company that isn’t used to doing business with the DoD,” Foldesi said.

Meanwhile, the U.S. military is trying to stay ahead of advanced adversaries such as China and Russia.

“In this great era of great competition, we think the tech race is the most important one,” Madsen said.

DIU’s top five technology focus areas are artificial intelligence/machine learning, autonomy, human systems, space and cybersecurity.

“Those are the areas that we see undergoing the greatest rate of change in the commercial sector. We think they also best represent the defense mission set,” Madsen said. “But we’re not just sitting back static on those.”

DIU is now broadening its aperture and eyeing other capabilities.

Foldesi and his team are talking to venture capitalists to get a better sense of the business sectors with emerging technology that might be of interest to the military.

“We’re looking at things like power and energy right now,” including lighter and longer-lasting batteries with faster recharge, Madsen said. Advanced materials, additive manufacturing, communications technology such as 5G, and virtual reality and augmented reality capabilities are other areas of interest.

Another new initiative being pursued by DIU is known as National Security Innovation Capital, or NSIC.

About 92 percent of U.S. venture capital funding currently goes toward software, resulting in an underinvestment in dual-use hardware. As a result, early-stage hardware development companies are in such need of capital that they might turn to foreign investors that will exert influence over their intellectual property, Madsen warned.

“The concern … from our perspective is once that happens, now that technology is probably unavailable to the department,” he said.

A key objective of NSIC is to pump money into critical hardware ventures so that they don’t have to look overseas for funding and endanger the supply chain.

DIU is also overseeing the National Security Innovation Network, or NSIN, which includes universities that aid the Defense Department. The network is growing and developing relationships with nontraditional partners in academia that are not typically involved in generating technology for the military, Madsen noted.

Pentagon efforts to engage with the commercial tech sector have not always gone smoothly. For example, in 2018 Google pulled out of Project Maven — an Air Force machine learning initiative focused on sifting through drone imagery — after employees protested the company’s involvement in aiding warfighting.

However, that case is not representative of the commercial tech sector writ large, DIU officials say.

“In fact, we see the opposite,” Foldesi said.

Madsen noted that a recent solicitation for AI technology generated responses from 50 companies. “To me, that indicates that folks definitely want to work with us.”

Foldesi said overcoming wariness of the Pentagon procurement process is the greater challenge.

“This is why our mission is so critical,” he said. “If we’re successfully able to demystify and de-risk doing business with the Pentagon, people will have perceived us having opened up arguably the single biggest [potential] customer” for some of these new technologies.

As DIU reduces some of the barriers to entry into the defense market, venture capitalists are taking notice, he said.

“You’re seeing a lot more of the top VC firms in the world start to put a little bit more money into defense[-related] startups,” he said. “This is just the start of a trend that we expect to accelerate as it becomes smoother and easier to field your technology within the Pentagon.”

The Defense Innovation Unit’s resources are growing. Its budget increased by about 60 percent between fiscal years 2019 and 2020, Madsen noted.
Brown said the organization has started 60 projects and completed 30, delivering about a dozen new capabilities to the military using cutting edge commercial technology. Total contract values exceed $500 million so far.

Companies doing business through DIU have, in turn, been able to raise more venture capital, he noted.

“For every dollar we provide in a prototype contract, on average, $10 of equity capital is raised,” he said. “We just need more volume in this to get the flywheel effect going.”

https://www.nationaldefensemagazine.org/articles/2020/2/11/defense-innovation-unit-shifts-into-higher-gear