Pentagon Acknowledges U.S. Contractor Presence In Syria For First Time

Image:  “Defense One”

“AL MONITOR”

“The US military is using more than 5,500 contractors in the campaign to defeat the Islamic State (IS) in Syria and Iraq, the Pentagon revealed in a quarterly report this week that acknowledges the use of contractors in the Syrian war zone for the first time.

The latest figures from US Central Command indicate that 5,508 US and foreign contractors are working alongside US troops in the two combat zones.”

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“That’s an increase of 581, or 12%, over January’s numbers, which did not include Syria. About half of the contractors are US citizens, while the rest are local or third-country hires.

The disclosure comes as President Donald Trump has signaled his desire to pull US troops out of Syria “very soon” after the end of the counter-IS mission. The role of contractors in Syria is also under increasing scrutiny after hundreds of Russian contractors died in a battle with US troops and the Kurdish-led Syrian Democratic Forces in the oil-rich Deir ez-Zor province, as CIA Director and Secretary of State-designate Mike Pompeo publicly confirmed in his Senate confirmation hearing April 12.

Unlike the Russians, however, the US contractors are mostly focused on supporting the 2,000 US troops in Syria by delivering hot meals, gasoline and other supplies. More than 30% of them support logistics and maintenance, according to the quarterly Pentagon report, and another 27% help with support and construction of US military outposts in the region.

“It’s not the Russian contractor role in Syria, which is … deploying tactical military units of squad company size,” said Peter Singer, a senior fellow and strategist at the New America think tank in Washington. “It’s the old stuff that Halliburton used to do.”

More than 400 “security” contractors are also involved in the fight in both countries, but “you’re not seeing the 163rd private US military group invading a city in Syria,” Singer said. Russian military contractors are also helping to protect oil fields across the country, protecting an industry that represented a quarter of Syria’s government revenue in 2010.

Though previous Defense Department personnel reports in the region hadn’t mentioned a Pentagon contractor presence in Syria, the US Department of Labor acknowledged in a report last year that two contractors were killed and six injured in fiscal year 2017. The Pentagon numbers don’t represent contractors working for other US agencies, such as the State Department, which assists with demining.

The Pentagon’s admission comes after an awkward back-and-forth between Trump and his top military and diplomatic advisers at a National Security Council meeting last week. While the president wants to declare victory on IS and pull out, the Pentagon has asked the commander-in-chief to leave US forces in Syria to prevent insurgent cells from regrouping along Syria’s border with Iraq.

Gen. Joseph Votel, the head of US Central Command, said at a public event last week, “The hard part is in front of us” in the war-torn country. Less than a mile away at the White House, Trump appeared to contradict US pledges to stay in the Syria fight at an open Cabinet meeting after long expressing his frustration over US military spending in the Middle East. The White House also recently announced a $200 million cut in funds earmarked for stabilizing Syria.

Despite their nonkinetic role, some experts say contractors face many of the same dangers as the US troops and Syrian forces who battled Russian mercenaries in February. With IS on the run and multiple US antagonists ready to push out the United States and its allies, civilian personnel risk getting caught in the crossfire.

“I would give America a six-month honeymoon here,” said Joshua Landis, the director of the University of Oklahoma’s Center for Middle East Studies. “Turkey, Syria and Iran are just sitting there, waiting to stick shivs in us.”

https://www.al-monitor.com/pulse/originals/2018/04/pentagon-acknowledge-us-contractor-presence-syria-iraq.html

 

 

 

 

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5 Federal Service Contracting Marketing Challenges To Overcome

 

Image:  “deepatel.com “

“WASHINGTON TECHNOLOGY”  By Elizabeth Harr

“No-growth firms are concerned about competition and commoditization of their service set.

High-growth firms anticipate a much broader set of challenges around a growing remote workforce, maintaining differentiated capabilities with new skills, and changes in the government buyer.”

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“The government contracting industry has experienced increasingly rapid growth over the past three years. Among firms in the Government Contracting segment of the 2018 High Growth Study, the median annual growth rate for government contracting firms in 2017 was 13.3 percent, an increase of more than 50 percent over 2016 (see Figure 1). In contrast, the growth rate for firms that do not sell any government services fell by two percentage points to 9.1 percent.

Figure 1. Median Annual Growth by Level of Government Contracts

Our study identified a segment of government contractors with significantly higher growth rates than their peers — as much as 3 times as high. Almost four out of 10 government contractors (39.5 percent) are in an elite category that we refer to as “High-Growth” firms – firms that achieve at least 20 percent compound annual revenue growth over a three-year period.

The big challenges, and how High-Growth firms address them

We also found interesting differences in the way high-growth firms view the future threats to the industry, as depicted in the tables below. Where as no-growth firms are concerned about competition and commoditization of their service set, high-growth firms anticipate a much broader set of challenges around a growing remote workforce, maintaining differentiated capabilities with new skills, and changes in the government buyer.

Challenge 1. Changes in how buyers buy

Notably, high-growth government contractors perceive a top industry threat to be in the way government buyers are making purchase decisions. Not only from a regulatory perspective. They are also noting a shift that requires firms selling to the government to do far more than just meet RFP requirements. Firms with a high degree of visibility for what matters most across the professional services landscape – expertise – is what it takes to help them rise to the top. As such, the top-most strategy identified by high-growth firms, in green in Figure 2, was to make their expertise more visible in the marketplace, as shown in Figure 2. No-growth firms, in red, by comparison, focused more on improving their marketing in general.

Figure 2. Key Business Strategies of High-Growth vs. No-Growth Government Contractors

Challenge 2. Competition from all sides

Another of the marketing challenges identified by high-growth government contractors is increased competition — not just from established firms, but also from new and emerging competitors. One of their chief strategies in addressing this challenge is to differentiate themselves, which many do by specializing how they go to market. Our study found that high-growth firms are dramatically more likely than no-growth firms to specialize in the technology they use – which makes intuitive sense if high-growth firms also view the advent of AI as a primary industry threat.

Challenge 3. Need for top talent

Government services, like many industry sectors, faces a never-ending challenge to attract new talent. Fortunately, the criteria that top talent find most important when selecting their next professional home are closely aligned with the leading criteria organizations use when vetting firms. In my firm’s separate research on employer branding, we found that being aligned with a growing firm was most important to job candidates in their search.

We also know from other research that expertise is the chief quality decision makers are looking for when selecting a firm. This means that building both your external and your employer brand around specialized expertise is a powerful strategy. Doing so signals to decision makers you have what it takes to get the job done, and it signals to future recruits that you are the firm best able to help them achieve their career goals.

Challenge 4. Competing primarily on price

While a win theme as lowest cost bidder certainly is applicable in certain circumstances, firms cannot maintain a sustainable competitive on price alone. A better alternative is to pursue a differentiation strategy — highlighting a meaningful difference between you and your competitors that is valued by your potential clients. Differentiation is not easy or simple, however.

Challenge 5. Marketplace unpredictability

Government contractors face a variety of market unknowns, whether driven by agencies’ budgets, regulatory pressures, or other factors. In our study, we found that high-growth firms tend to place a priority on cultivating a deep understanding of the government buyer and identifying competitive advantages. In fact, they are almost 2 times more likely to conduct frequent research into their target markets and respective decision makers than firms that are not growing.

Position your firm for faster growth

Recognizing your key marketing challenges is the first step in overcoming them. Another good strategy is to gain insights from the fastest-growing firms in the government contracting arena and incorporating relevant strategies and tactics in your own program. To learn more, I invite you to view our recent study for yourself.”

https://washingtontechnology.com/articles/2018/04/05/insights-harr-5-marketing-challenges.aspx

About the Author

Elizabeth Harr is a partner at Hinge, [http://www.hingemarketing.com/] a marketing and branding firm for professional services. Elizabeth is an accomplished entrepreneur and experienced executive with a background in strategic planning, brand building, and communications. She is the coauthor of Inside the Buyer’s Brain, How Buyers Buy: Technology Services Edition; and Online Marketing for Professional Services: Technology Services Edition. 

 

 

 

 

 

 

 

 

 

 

Federal IT Modernization Centers of Excellence Launching In Major Agencies

“FEDSCOOP”

“The biggest IT modernization of all time.

Two million employees, roughly, non-military inside the government, a budget of $100 billion, thereabouts, 330 million customers, and we’re somewhere between five and 20 years out of date in terms of a lot of the systems we’re trying to modernize.”

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“The IT Modernization Centers of Excellence team at the U.S. Department of Agriculture kicked off work this week, according to the program’s lead.

Joanne Collins-Smee, executive director of the CoE effort led by the General Services Administration in partnership with the White House, told attendees Thursday at FedScoop’s IT Modernization Summit that the “first phase” of the project launched April 2.

Collins-Smee said there is a team of 10 USDA IT personnel who report to her office that is embedded in the Centers of Excellence for the next two years. Those experts will pair up with the five industry vendors awarded contracts in March to bring private sector best practices to the department’s modernization efforts in five areas: cloud adoption, IT infrastructure optimization, customer experience, contact-center performance and service delivery analytics.

These aren’t just any 10 USDA technologists. The department had “a brilliant idea that we are now going to use across the rest of the government,” Collins-Smee said. “They ran a top-talent contest for their IT team and selected 10 people that are now embedded in the CoEs for two years.”

She called the CoE detailees “leaders already recognized in IT at USDA.”

“They will continue to have the DNA and really effect that cultural change within the organization,” Collins-Smee said. “Never mind the other stroke of brilliance is they know where everything is buried with the organization, right? They’re top talent across USDA. It was a brilliant idea, and we were noodling on this thing about culture change and how do we effect the best culture change.”

Over the next two years, Collins-Smee’s office, the team of 10 at USDA and the five vendors will focus on some of the “big rocks” challenging IT modernization efforts, she said. Initially, the work will be done at the department-level at USDA, but then they’re “bringing those practices to other agencies.”

Chris Liddell, who leads IT modernization efforts for the White House Office of American Innovation and has championed the idea for IT CoEs since he joined the Trump administration, said the effort develops a needed institutional capacity for federal IT modernization.

“This will not be fixed in one year, it won’t be fixed in two years, it may not even be fixed in one or two administrations,” said Liddell, who was named recently as one of President Donald Trump’s deputy chiefs of staff. “This is a multi-year journey that we are all going on. So creating institutional capacity to effect change is critical, and that’s where the Center of Excellence fit in. They’re a central source, as the name suggests, of expertise that can help firstly one agency but thereafter the whole sets of agencies in their individual modernization approach. So it’s a critical part of an overall strategy toward IT modernization across the government.”

The IT modernization the U.S. federal government faces is unprecedented, and “orders of magnitude bigger than” the private sector transformations the New Zealand native and former Microsoft CFO has dealt with in his career.

“The journey we’re going on is probably the biggest IT modernization of all time,” Liddell said. “We’re talking about two million employees, roughly, non-military inside the government, a budget of $100 billion, thereabouts, 330 million customers, and we’re somewhere between five and 20 years out of date in terms of a lot of the systems we’re trying to modernize.”

https://www.fedscoop.com/usda-modernization-centers-excellence-joanne-collins-smee/

 

 

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

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?”

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“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 Small Business Federal Government Contracting “Past Performance” Challenge

“SMALLTOFEDS” By Ken Larson

“As a small business begins the proposal submission process to federal government agencies or to prime contractors the past performance requirement is a major challenge. 

How can a new organization or one that is new to government contracting muster a response? High quality proposals based on commercial success and teaming with other historically experienced government contractors are two principal techniques.”

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“By definition a start-up company in government contracting has no direct government agency past performance projects to site in meeting the requirement in requests for proposals (RFP’s) for historical references to similar projects in terms of size, duration and complexity.

Past performance data must be specific to the enterprise bidding a contract. It cannot site historical references to performance of individuals now in the company when they were with other firms, achievements by predecessor companies or successful projects that the current company did not perform as its current entity. The purpose for this rigid perspective by the government is to avoid “Fronting” a new enterprise with misleading information to obtain a high past performance rating.

The answer to the past performance challenge lies in historical projects that may be similar in the commercial arena and a high quality proposal that clearly demonstrates an understanding of the requirement at hand, a unique and cost effective project plan and high performing personnel and/or products tailored to the statement of work to offset an interim, light past performance record.

A past performance reference sheet usually accompanies an agency RFP. It normally requires the bidder to fill it out with references to historical projects the company has performed and the contact points for confirmation. The government may request these forms in advance of the main body of the proposal to allow enough time to send them to the references. The past performance form is sent by the government to the references and you never see the result. The input goes directly from your past performance references back to the government.

For details on past performance formats and records processes please see Your Past Performance Record

Many small businesses work through prime contractors to “Grow” past performance history (subcontracts count). By teaming with a sizable firm a small entity can relate its participation to larger projects and ultimately graduate to a good library of references, carefully maintained and kept as a living, growing data base of good customer service records that can be sited again and again in proposals.

It is wise to keep customer perceptions of your professionalism and products or services alive by constant vigilance, visits, surveys and other feedback mechanisms so that you are not surprised at a proposal debriefing when you find that a client you thought rated you highly did not.

The major services maintain past performance records by contract that you can access. Inquire with them as to a membership at the appropriate web site and review them regularly. The GSA utilizes service companies to rate contractors. You can get your rating by inquiring with them, much like a credit rating, except pertinent to cost, schedule and technical performance. Monitor your D&B report. It is always out there for prime contractor and government assessment of your financial health, your vendor payment history, your organization profile and your rating.

The U.S. Federal Contractor Registration USFCR  has a narrative to profile your company. Check your registration and insure you have a current and complete description of your supplies and services available to all who use the Dynamic Search Mechanism Dynamic Small Business Search (DSBS)

Insure your web site, your capability statement and your marketing plans are maintained current alive and dynamically reflective of your successes as you pursue new business and carefully develop your library of past performance records by project with accessible profiles to use in your government proposals.”

ABOUT THE AUTHOR

“Small to Feds” is maintained by Ken Larson a Veteran of 2 tours – US Army Vietnam.  As a Volunteer Counselor, he assists many small businesses with their planning and operations processes. Subsequent to his military service Ken spent over 30 years in federal government contract management and 10 years in small business consulting. He  assists small companies wishing to enter or enhance their position in federal government contracting or grow their commercial enterprise.

http://www.smalltofeds.com/2008/07/small-business-government-contracting.html

 

 

 

General Services Administration (GSA) Aims for E-Commerce “Sweet Spot”

“NEXT GOV”

“The General Services Administration on Friday released the final plans for building a government-wide e-commerce portal that would make buying commercial products easier and faster for federal agencies.”

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“In the proposal, GSA and the Office of Management and Budget detailed the timeline for rolling out the platform. The agencies also called on Congress to make a handful of legislative changes to open the door for online federal purchasing. Agencies would ultimately use the portals to buy products from pens and pencils to potentially more complex items, like mobile devices or other technologies.

“This opportunity to increase competition and improve transparency in the acquisition process can greatly reduce the burden the current processes place on both our acquisition workforce and industry partners,” GSA Administrator Emily Murphy said in a statement.

GSA and OMB are scheduled to spend the next year conducting market research and working with agencies and companies to hammer out details of the portal, such as terms and conditions for sellers and the products that will be available. The agencies plan to begin testing the platform by the end of fiscal 2019, with a final rollout scheduled for the following year.

The concept for the e-commerce platform sprung from the Defense Acquisition Streamlining and Transparency Act, a section of the 2018 National Defense Authorization Act. Many criticized early versions of the bill, which would have granted a monopoly to a single e-commerce provider, but lawmakers amended the final version to require a phased rollout with multiple contracts and e-commerce providers.

GSA’s proposal recommends four changes to the legislation that are “viewed as necessary” to begin rolling out the portal. The recommended changes are based on feedback from government and industry, as well as an e-commerce industry day GSA hosted in January.

The agency requested Congress to raise the maximum purchase threshold for items on the platform from $5,000 for the Defense Department and $10,000 for civilian agencies to $25,000 for each group, as well as increased sharing of spending data across government. GSA also asked to increase its authority to modernize competition requirements and use various contracting vehicles to make the platform more efficient.

The agency also asked lawmakers to expand the legislation’s definition of “commerciale-commercee portal” to cover future technologies and business models.

“We didn’t want to inadvertently lock out something just because we hadn’t been thinking about it at the time,” said Laura Stanton, assistant commissioner for GSA’s office of strategy management, in a phone call with reporters. “It’s really to give us as many options as possible as we look forward to implementation next year.”

Stanton said meeting implementation deadlines are one of the agency’s “highest priorities,” and each legislative change it highlighted would help speed up the rollout. She added GSA might make additional legislative recommendations in the future based on the market research the agency conducts over the next year.”

http://www.nextgov.com/it-modernization/2018/03/gsa-wants-get-e-commerce-portal-and-running-2020/146742/

 

Pentagon Could Impose New Cyber Regulations on Industry

 

Image:  Massivealliance.com

“NATIONAL DEFENSE MAGAZINE”

“We want the bar to be set so high, it will become the condition of doing business” with the Pentagon, Deputy Defense Secretary Patrick Shanahan said Feb. 6.

He emphasized that the level of cyber vulnerability within the defense community is significant, and hinted that parameters could be put in place to ensure companies were doing their part to keep critical information safe.”

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“You can imagine if tomorrow  … instead of having a financial disclosure statement, we want you to sign a cyber disclosure statement that says, ‘Everybody you do business with is secure,’” he said. “I don’t think you’d sign that tomorrow, but … we need to get to that level because your secrets, our secrets are exposed.” He did not elaborate on how specifically the Pentagon aims to achieve that level of security.

Shanahan assumed the role of deputy defense secretary in July 2017 after spending over three decades at Boeing, most recently serving as the senior vice president for supply chain and operations. Speaking to reporters after his speech, he noted that cyber hygiene standards were “just a condition of employment at the company.”

“In terms of protecting our data and protecting their information, there should be this standard,” he added. He referenced his college-aged son and noted, “I don’t call him up and ask him if he’s brushed his teeth.”

Product integrity and safety were “the first order of business” at Boeing, he added. “When I think of things like safety, cyber falls into that category … as being one of those things that should be uncompromising.”

It may not be easy to change the culture to be more stringent about cyber hygiene, but the U.S. workforce once also engaged in lengthy debates about smoking, he noted.

“We need to have the same intolerance on cyber,” he added.

The Defense Department has continued to prioritize cybersecurity efforts inside and outside its facilities as it warns of the potential threat of an attack from a near-peer adversary, as well as the dangers posed by everyday electronics usage. The 2018 National Defense Strategy, which was released in January, stated that the Pentagon will prioritize investments “in cyber defense, resilience and the continued integration of cyber capabilities into the full spectrum of military operations.”

Shanahan’s comments follow recent reports that U.S. military installations could be traced via a heat map released by Strava, a fitness tracker app that uses a device’s GPS to follow where and when a user exercises. Potential adversaries could possibly employ that data to track how personnel move across installations or how frequently, inviting security concerns.

In the past six months, Defense Secretary Jim Mattis has launched a review of how technology is used across the services, including the use of cell phones at the Pentagon. Department Chief Spokesperson Dana White said in a media briefing Feb. 1 that operational security was Mattis’ priority in taking a closer look at the potential threat posed by electronic devices.

“This recent incident [with Strava] and others has allowed him to take a bigger look at, ‘What are we doing and how are we doing it?’” she said. The Pentagon has not reached a consensus on policies going forward, she noted.

White noted that U.S. military bases have already been targeted.

“Information is power and our adversaries have used information to plan attacks against us,” she said.”

http://www.nationaldefensemagazine.org/articles/2018/2/6/pentagon-leader-challenges-industry-to-better-protect-cyber-assets

 

Revolving Door Between Pentagon And Contractors Spins Faster

 

Image:  “ROSECOVEREDGLASSES”

“BLOOMBERG GOVEERNMENT”

“The former principal undersecretary of the Air Force for acquisition left her job in 2003 to work for Boeing, after the Air Force announced it had awarded Boeing a 10-year tanker lease.

Soon after, she pleaded guilty to inflating the price of the contract – while she was in negotiations for her $250,000-per year Boeing job. For his role in hiring Druyun, Boeing’s then-chief financial officer Michael Sears was fired and in 2005 was sentenced to four months in prison.”

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“Ties between the Pentagon and the defense industry have deepened under President Donald Trump, prompting renewed concern about conflicts of interest that could result in favoritism toward top military contractors.

More than 80 percent of top Defense Department officials under Trump have defense contractor work experience – in many cases extensive – compared with roughly half of those President Barack Obama appointed to the same jobs, a Bloomberg Government analysis found.

Defense industry supporters say contractor work experience is a highly valuable asset for Pentagon officials, especially those who are part of the acquisition process.

But key senators of both parties worry about the ethics problems that could arise by putting these former corporate executives in the highest Defense Department posts where they oversee the awarding of billions of dollars of contracts.

Corporate Conflicts

“The Defense Department’s job is to protect our national interests, not the financial interests of defense contractors,” Sen. Elizabeth Warren (D-Mass.), a member of the Armed Services Committee, told Bloomberg Government in a written statement.

Armed Services Chairman John McCain (R-Ariz.) echoed those concerns during the confirmation hearings of a number of Pentagon nominees, including Deputy Defense Secretary Patrick Shanahan, a former Boeing Co. senior vice president for supply chain and operations, who left after 31 years with the company.

Over the course of his Boeing career, Shanahan oversaw several noteworthy military projects, including Army helicopters, a ground-based missile defense program, and the V-22 Osprey aircraft.

During Shanahan’s June 20 confirmation hearing before the Senate Armed Services Committee, McCain said that 90 percent of defense spending “is in the hands of five corporations, of which you represent one. I have to have confidence that the fox is not going to be put back into the henhouse.”

Shanahan promised to divest “all ties” with Boeing, with the exception of his executive retirement savings. “For the duration, if I’m confirmed, I will not deal with any matters regarding Boeing unless cleared by the office of ethics,” he said. Shanahan also committed to make public any recusal waivers he may seek.

Of the 17 top, Senate-confirmed Pentagon posts, including those overseeing defense acquisition, 14 are filled with Trump picks who have worked for defense contractors. By contrast, Obama’s first confirmed picks for the same posts included nine with industry backgrounds, or 56 percent, and seven without. There were 16 comparable positions under Obama at the time, as the acquisition, technology and logistics undersecretary position had yet to be split into two jobs.

By the end of Obama’s second term, a total of only 16 of 35 of Obama’s confirmed appointees for the same jobs, or 46 percent, had direct experience working for contractors before moving to the Pentagon.

The revolving door is working both ways as 19 of 35 of Obama’s top DOD officials have joined or rejoined the defense industry, including taking seats on contractor boards of directors.

During three contentious confirmation hearings last year, McCain and Warren took issue with the nominees’ “rotating back and forth between government” and several of the “big five” largest-grossing defense contractors – Lockheed Martin Corp., Boeing, General Dynamics Corp., Raytheon Co., and Northrop Grumman Corp.

“I will not vote to confirm nominees from industry who do not recuse themselves from matters involving their former employers for the duration required by their ethics agreements,” Warren said, “without waiver and without exception.”

Eisenhower Warning

Worries about too-cozy ties between the military and defense contracting giants aren’t new.

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex,” President Dwight Eisenhower, himself a retired general, warned just before leaving office in 1961. “The potential for the disastrous rise of misplaced power exists and will persist.”

There remain few ironclad protections against conflict-related abuses, government watchdogs say. The Trump White House prohibits senior officials hired into the Pentagon and other agencies from working on matters involving their former employers for two years – but officials can ask for recusal waivers, and such discussions, including whether the waivers have been granted, are kept secret.

“It’s clear that this administration values the experience of business executives over that of career civil servants,” Mandy Smithberger, director of the Straus Military Reform Project for the Project on Government Oversight, a Washington nonprofit group, told Bloomberg Government.

The shift has spurred an increased risk of abuse, Smithberger said. “The lack of transparency is a real concern,” she said. Without proper management of conflicts of interest, unfair competition can result, she said.

Worst-case scenarios could include everything from awarding contracts worth billions of dollars to a former employer, to not properly overseeing a program, to failing to account for cost overruns, she said. When contractors fail to deliver a promised system, or deliver an ineffective plane or ship that doesn’t meet national security needs, significant sums would be wasted.

Defense Secretary James Mattis – who was elected to a board seat with General Dynamics in 2013, and received at least $276,000 in fees from the company since then – has taken several steps to avoid actual and perceived conflicts.

Mattis stepped down from his board seat as a condition of confirmation. In his government ethics agreement made public a year ago, he also agreed to recuse himself, for a year, from participating “personally and substantially in any particular matter involving specific parties in which I know General Dynamics is a party or represents a party,” unless otherwise authorized to participate.

Shanahan set up a unique system to try to avoid conflicts, Bloomberg News reported last August. He signed a so-called “screening arrangement” to notify Mattis of issues involving Boeing.

The conflict alert system was set up to instruct both Mattis and Shanahan’s staff to refer “certain matters to another official” for decisions, the Bloomberg story said.

McCain pressed the conflict issue during November 2017 hearings for John Rood, the nominee for defense undersecretary for policy who previously worked as senior vice president with Lockheed Martin International, and Mark Esper, the Army secretary nominee who was Raytheon’s top lobbyist in Washington from 2010-17, earning more than $1.5 million from the company in his last year there, according to news reports.

Warren asked Rood if he would commit to forgo seeking a waiver from his two-year White House recusal pledge regarding Lockheed projects. McCain followed up, telling Rood, “You should not be making decisions that are related to your previous employment, or would affect the fortunes of one of them. So, I don’t like your answers. Most of us don’t like your answers.”

On Jan. 3, the Senate confirmed Rood by an 81-7 margin. McCain, who has been battling brain cancer, missed the vote. Warren voted no.

Valuable Expertise

Many Pentagon and contractor officials say the main benefit of drawing talent from industry is clear: contractor officials have direct experience designing and building weapons systems and related services.

“Just as it’s good to have former military personnel in Congress providing oversight over the military, it’s good to have former industry people in government providing oversight over industry,” John Luddy, the Aerospace Industries Association’s vice president for national security policy, told Bloomberg Government in a written statement. “They have the experience to know what is and is not reasonable in industry offerings. They know which questions to ask.”

The AIA includes as members the big five defense contractors, each of which declined to comment for this story.

Such experience allows officials to better calculate and manage risk, and realistically assess weapons project schedules, Andrew Hunter, director of the Defense-Industrial Initiatives Group at the Center for Strategic and International Studies, said in an interview.

Industry expertise is difficult to replicate in the other fields presidents often draw from when looking for defense leadership, such as think tanks, Capitol Hill staff and military officers and civilian staff, Hunter said.

Exit to Industry

Since Trump took office, several Obama-appointed defense officials have taken a time-honored path. They’re now working for the contractors whose weapons programs the Pentagon oversaw under their watch.

Former deputy secretary of defense Robert Work was elected to Raytheon’s board of directors about a month after leaving the Pentagon. Work praised Raytheon in December 2016 as a company that boasts “the best missileers in the world,” Defense News reported.

Frank Kendall, former undersecretary for acquisition, technology and logistics, was appointed to defense contractor Leidos’s board.

Former undersecretary for intelligence Marcel Lettre II is now vice president, national security, for Lockheed Martin.

Deborah Lee James, the former Air Force Secretary, joined Textron Systems’ board of directors.

Most recently, former assistant secretary of the Navy for research, development and acquisition Sean Stackley became a corporate vice president for L3 Technologies.

Former senior defense officials are subject to a range of restrictions involving working or lobbying on programs that they, or others within their company, handled while in the government.

The 2018 National Defense Authorization Act (Public Law 115-91) further tightened the rules for high-ranking former military officers and counterpart civilian Pentagon officials. Under the new defense authorization, former Executive Schedule III officials and higher – who include Work, Kendall, Lettre, and James – are subject to a two-year “cooling off” period, during which they can’t lobby Pentagon officials regarding any department projects.

In the wake of the Druyun case, the Pentagon made several regulatory and policy changes, Defense Department spokesman Patrick Evans told Bloomberg Government in a written statement. Among the changes: a requirement that all public financial disclosure filers certify annually to confirm their review and understanding of the federal post-government employment laws, and a mandate that post-government employment be included annual ethics training.

Senate-confirmed appointees must sign a White House ethics pledge, enter into an Office of Government Ethics-approved agreement that outlines steps taken to avoid conflicts, and divest of any Pentagon contractor stock, Evans said.

Mattis has instructed Pentagon leaders “to engage and work collaboratively with private industry – in a fair and open manner – to find ways to maintain the competitive advantage needed to fight and win the next war, as well as be good stewards of the money entrusted to us by U.S. taxpayers,” Evans said.”

https://about.bgov.com/blog/revolving-door-trump-pentagon-contractors-spins-faster/

 

 

What is a “Compliant” Federal Government Contracting Small Business System?

“SMALLTOFEDS” By Ken Larson

“It seems the single word, “Compliance” in small business federal government contracting business systems implies many different things:

• Small Business wishes to know about compliance to assess the cost of doing business with the government, assure readiness and business system capability.
•  Software Suppliers maintain they have compliant tools to achieve government contracting business management and wish to sell them.
• The Defense Contract Audit Agency (DCAA) has the mission to insure compliance with Cost Accounting Standards (CAS) under the Federal Acquisition Regulation.
• Defense Contract Management Agency Fact Finding Teams wish to observe small business systems to determine if an enterprise is capable of pricing, job cost accounting and billing consistency.
• Prime Contractors wish to know if a subcontractor is compliant with FAR and CAS so related flow down clauses can be made part of contractual agreements.

The criteria for determining government contracting small business system “Compliance”, as discussed above, is met when:

1. The business system is unique to the company, and recognizes the way the firm is organized and the way it manufactures or delivers products, supplies or services. Each company does business in a slightly different way, performs services or delivers products with organizations that function in various manners and yet all ultimately meet Modified US Government Cost Accounting Standards (CAS) objectives by live data demonstrating consistency with regard to cost allocation to contract objectives in pricing, job cost accounting, billing and closeout.

2. The business system meets Modified Cost Accounting Standard (CAS) Coverage defined by the government is as follows:

Standard 9904.401, Consistency in Estimating, Accumulating, and Reporting Costs

http://edocket.access.gpo.gov/cfr_2005/octqtr/pdf/48cfr9904.401.pdf

Standard 9904.402, Consistency in Allocating Costs Incurred for the Same Purpose
http://edocket.access.gpo.gov/cfr_2004/octqtr/pdf/48cfr9904.402-50.pdf

Standard 9904.405, Accounting for Unallowable Costs
http://edocket.access.gpo.gov/cfr_2007/octqtr/pdf/48cfr9904.405-40.pdf
http://www.smalltofeds.com/2007/04/unallowable-costs-under-federal.html

Standard 9904.406, Cost Accounting Standard—Cost Accounting Period

http://edocket.access.gpo.gov/cfr_2001/octqtr/pdf/48cfr9904.406.pdf
Modified, rather, than full, CAS coverage may be applied to a covered contract of less than $50 million awarded to a business unit that received less than $50 million in net CAS-covered awards in the immediately preceding cost accounting period.

The following article contains practical business system guidance regarding building a Modified CAS Coverage Small Business System for federal government contracting:
http://www.smalltofeds.com/2010/10/managing-risk-in-small-business-federal.html

Read the above government requirements and business system development guidance, and then give your selected method of business management the Modified CAS litmus test. Make a judgment that it is the best for your company and try it out on DCAA. If they have problems with the approach you can adjust it.

The bottom line objective is that you wish government approval going forward so that your rates are accepted in proposals, your audits have a satisfactory outcome and you get paid when you submit a billing. Without those critical success factors the business cannot operate.”

http://www.smalltofeds.com/2011/03/what-is-compliant-government.html

ABOUT THE AUTHOR

“Small to Feds” is maintained by Ken Larson a Veteran of 2 tours – US Army Vietnam.  As a Volunteer Counselor, he assists many small businesses with their planning and operations processes. Subsequent to his military service Ken spent over 30 years in federal government contract management and 10 years in small business consulting. He  assists small companies wishing to enter or enhance their position in federal government contracting or grow their commercial enterprise.

 

 

 

 

 

The Dark Side of the “World’s Most Admired” Companies

(Illustration modified from Jared Rodriguez / Truthout)

“THE PROJECT ON GOVERNMENT OVERSIGHT (POGO)”

“Fortune magazine recently released its 2018 list of the World’s Most Admired Companies. From a pool of roughly 1,500 candidates, Fortune picked the 50 “best-regarded companies in 52 industries.” 

Overall, these 50 companies have racked up thousands of misconduct instances and billions of dollars in penalties for a wide range of misbehavior including defective medical equipment, consumer fraud, unsafe workplaces, foreign bribery, environmental violations, and submitting false invoices on government contracts.”

---

“Apple topped the list for the eleventh year straight. General Electric plummeted in the last year from number 7 to number 30. Lockheed Martin and Adidas both cracked the top 50 for the first time.

Of course, Fortune’s ranking is somewhat skewed and self-serving. It is based on a survey of corporate executives and financial analysts. “Admiration” is measured according to criteria that emphasize companies’ financial shape over their track record of integrity and business ethics.

So, we took it upon ourselves to document the dark side of the world’s 50 most admired companies. Ten of the companies are in our Federal Contractor Misconduct Database (FCMD), which includes civil, criminal, and administrative misconduct instances dating back to 1995 for 220 of the federal government’s largest contractors. All but 3 of the top 50 are in Good Jobs First’s Violation Tracker corporate misconduct database, which includes enforcement data from the federal regulatory agencies and the Justice Department dating back to 2000 for over 2,800 companies. Both databases show that most of the companies have multiple instances of misconduct for which they paid millions of dollars in fines, penalties, judgments, and settlements.

Click on dollar figures in the table to go to the company’s summary page in the FCMD and Violation Tracker:

Fortune Rank	Company	FCMD Instances	FCMD Misconduct Dollar Amount	Violation Tracker Records	Violation Tracker Penalty Total
1	Apple			1	$32,500,000
2	Amazon			26	$5,022,375
3	Alphabet			4	$541,507,657
4	Berkshire Hathaway	1	$896,000	2,205	$388,557,922
5	Starbucks			15	$4,204,571
6	Walt Disney			32	$9,503,247
7	Microsoft			1	$5,855,841
8	Southwest Airlines			289	$18,440,515
9	FedEx	58	$759,688,721	168	$16,841,391
10	JPMorgan Chase			77	$29,459,586,865
11	Netflix
12	Facebook			1	$5,600
13	Costco			35	$15,149,903
14	American Express			16	$350,226,556
15	Salesforce.com			1	$11,009
16	Nike			1	$24,040
17	Johnson & Johnson			23	$3,005,373,378
18	Coca-Cola			85	$7,061,416
19	BMW			4	$5,250,769
20	USAA
21	3M Company			56	$6,287,531
22	Home Depot			123	$14,631,028
23	BlackRock			4	$14,265,350
24	Marriott International			64	$2,560,108
25	Boeing	68	$1,456,813,493	51	$798,109,276
26	Walmart			235	$174,764,973
27	Goldman Sachs			21	$9,526,227,860
28	Nordstrom			7	$757,935
29	Toyota			22	$1,322,336,919
30	General Electric	62	$648,594,796	132	$325,158,028
31	Delta Air Lines			584	$278,282,059
32	Singapore Airlines			7	$48,082,000
33	UPS	18	$389,305,420	243	$75,052,672
34	Procter & Gamble			28	$837,281
35	IBM	26	$916,069,818	9	$20,453,203
36	Exxon Mobil	97	$3,242,127,429	248	$1,023,262,058
37	McDonald’s			19	$636,136
38	Target			57	$5,817,664
39	CVS Health			118	$738,534,720
40	Accenture	9	$124,219,559	1	$63,675,000
41	PepsiCo			108	$7,115,748
42	Adidas			2	$26,000,000
43	Caterpillar			70	$3,874,043
44	Unilever			16	$4,806,905
45	Intel			2	$894,000
46	Visa
47	Nestlé			58	$9,189,176
48	Lockheed Martin	85	$767,331,643	74	$158,774,793
49	AT&T	22	$311,615,102	164	$433,474,022
50	Charles Schwab			4	$118,441,800
Totals		445	$8,616,661,981	5,511	$49,067,425,343

Alphabet (#3) is the parent company of Google.

Berkshire Hathaway (#4) is a multinational conglomerate consisting of dozens of subsidiaries, including BNSF Railway Company. The vast majority of Berkshire Hathaway’s records in Violation Tracker are BNSF railroad safety violations. We are aware of only one misconduct incident involving the Berkshire Hathaway corporate entity itself: an $896,000 settlement with the Federal Trade Commission in 2014 over a financial reporting violation.

Two of the companies in the top 50 were in the news recently for questionable business conduct. Accenture (#40) paid $1.7 million to settle charges of overbilling the U.S. Army. Lockheed Martin (#48) agreed to a $4.4 million deal resolving allegations that it provided defective communications equipment to the U.S. Coast Guard.”

http://www.pogo.org/blog/2018/01/the-dark-side-of-the-worlds-most-admired-companies.html