Tag Archives: Government Regulations

Reasons To Outsource A Chief Compliance Officer

Image: The Fox Group LLC


“Some small- to mid-sized government contractors are finding that outsourcing the chief compliance and ethics officer (CCEO) role is more effective, both as to cost and effectiveness, than hiring one internally.

One estimate states that nearly a quarter of firms outsource some or all of their compliance functions.”


“The outsourcing of high-level management functions is nothing new. It has been done with chief financial officers, general counsels, internal audit, IT, and even CEOs and chief operating officers for decades.

A contractor may be required by Federal Acquisition Regulation 52.203-13 to have a corporate compliance and ethics program. According to a 2017 survey, the average annual total compensation of a CCEO in the aerospace and defense industry is $198,000, a hefty price for a small- to mid-sized company. Moreover, finding an experienced person to fill that role who really understands what constitutes an effective program, and who has some degree of credibility with government agencies, can be very difficult.

There are several reasons why outsourcing the role may be the better solution. One is immediate confidence in the compliance expert and the expert’s advice by stakeholders. Stakeholders may be aware of the current lack of in-house skills and want better assurance regarding the company’s compliance measures and program.

Another is trust among the regulators. An independent, objective, third-party compliance professional may give government officials more confidence in a company’s program and demonstrate its commitment to invest in ethics and compliance. This is one of the primary reasons government agencies may require a company to engage an independent corporate monitor when resolving issues involving misconduct.

It might also save time and money. Because the outsourcing of the function may be done using flat monthly rates, the company benefits from more accurate costs for budgeting, as well as on-demand expertise for: compliance policy drafting/revising; training and guidance; hotline investigations; compliance and ethics risk assessments; auditing and monitoring; and reporting — all without the added costs of recruiting, training, orientating, supporting and managing internal compliance staff.

The monthly cost of outsourcing the chief compliance and ethics officer role to an expert can be significantly less than hiring an experienced professional in-house.

Companies should also appreciate that having just a code of conduct, some policies and trainings do not constitute an effective compliance program. Things are made a bit more complex for government contractors in that the Federal Acquisition Regulation provides little to no precise guidance or specifics on how to comply with the mandatory requirements of FAR 52.203-13, and contracting officers and other relevant agency personnel are poorly — if at all — trained on what constitutes effective compliance.

“Companies may be vicariously liable for the actions of their employees, subcontractors and others.”

FAR Subpart 3.10, “Contractor Code of Business Ethics and Conduct,” obliges all government contractors, regardless of their size, to conduct themselves with the highest degree of integrity and honesty. It further states contractors should have a written code of business ethics and conduct. To promote compliance with the code, contractors should have an employee business ethics and compliance training program and an internal control system that: are suitable to the size of the company and extent of its involvement in government contracting; facilitate timely discovery and disclosure of improper conduct in connection with government contracts; and ensure corrective measures are promptly instituted and carried out.

To ensure that a compliance program meets the FAR requirements and helps protect the company from other enforcement risks, it is best to design and implement one in accordance with §8B2.1 of the U.S. Federal Sentencing Guidelines. This will be what a government contractor’s compliance with the Federal Acquisition Regulation will be tested against by agency suspension and debarment officers.

In addition, companies may be vicariously liable for the actions of their employees, subcontractors and others. Should misconduct occur, a company that does not have an effective compliance and ethics program is exposed to corporate criminal and civil liability, as well as suspension and debarment from all federal government contracting.

Overall, §8B2.1 has two primary requirements for companies: exercise due diligence to prevent and detect criminal conduct, and otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law.

To meet these objectives, §8B2.1 identifies and elaborates on seven essential elements of an effective compliance and ethics program: standards of conduct, policies and procedures; a compliance officer and committee; education and training; monitoring and auditing; reporting and investigating; enforcement and discipline; and response and prevention.

Small- to medium-sized federal government contractors should seriously consider outsourcing the compliance function — at least for a while. Designing and implementing a compliance program that is effective and meets requirements takes a lot of time, resources and expertise. By bringing in an expert to get the program up and running well — which should take 12 to 18 months — the company can then consider recruiting a compliance professional to work in-house as the chief compliance and ethics officer, or continue outsourcing the role. “



Four Big Questions For Cyber Security In 2019



“If the United States wants to keep up with digital innovations from China and other countries it is necessary to change the American government’s relationship with the private sector and academia.

But when it comes to the U.S. government’s relationship with the cyber industry, structural barriers to innovation remain.”


“How will cybersecurity experts remember 2018?

The Department of Justice announcedsweeping indictments against Chinese hackers and the U.S. intelligence community reported that foreign countries continued to interfere in American elections.

So what comes next? Here are four overarching questions for the cybersecurity community in 2019:

What will the new Pentagon chief do with expanded cyber powers?

In August, the president gave the secretary of Defense the ability to conduct cyberattacks against foreign countries so long as they do not interfere with the national interest of the United States, according to four current and former White House and intelligence officials. But the resignation of Jim Mattis, the Defense secretary, means the next Pentagon chief will have a broad arsenal of cyber authorities.

For the cyber community, Patrick Shanahan, the current acting secretary, is a relative unknown. He has not given significant insight into how he views the role of offensive cyberattacks for the Pentagon, and his scheduled Jan. 1 elevation comes as some in the Trump administration and U.S. Cyber Command have pushed for even more authorities. However, he has spoken at length about the need for the defense industry to bolster its own cyber practices.

Although the appointment of Shanahan as acting Pentagon chief is temporary, he is on the short list of officials who may take on the job full time.

The new Pentagon chief may also have to decide when the National Security Agency and U.S. Cyber Command should split.

Both bodies are led by Gen. Paul Nakasone, but that may change. Cyber Command is in the process of gaining its own infrastructure to conduct offensive cyberattacks, and a Pentagon official told Fifth Domain in November that it appeared the split was all but certain to happen in the coming years, although no formal decision as been made.

What comes next in the U.S.-China cyber relationship?

The Department of Justice released a flurry of indictments against Chinese hackers in 2018, accusing Beijing’s cyber sleuths of infiltrating American government agencies and defense contractors.

The most recent round of allegations came Dec. 18, and the legal action could continue in 2019. While announcing the most recent indictments, Deputy Attorney General Rod Rosenstein accused China of breaking an agreement not to use hacked materials for commercial use, although he did not offer evidence.

The hacking allegations come amid a broader trade war between the United States and China. Experts have told Fifth Domain a trade war could increase digital tension between the two nations. If the trade war continues, experts say they see little incentive for China to limit its cyberattacks.

Will America suffer blowback for more offensive cyber operations

“The side effects of the strategy of ‘persistent engagement’ and ‘defend forward’ are still ill-understood,” Max Smeets and Herb Lin, experts at Stanford University wrote for Lawfare. “A United States that is more powerful in cyberspace does not necessarily mean one that is more stable or secure.”

Experts also warn of making any rush judgments about the effectiveness of these offensive cyberattacks. Current and former intelligence officials worry that uncovering and attributing a hack can take more than a year, and, even then, that process is not perfect.

One former official pointed to the leaked documents about Russian targeting of American election infrastructure in 2016 that was sent to the news organization the Intercept. It took months for the intelligence community to understand the full extent of the hack, the official said, an example of how long it takes to detect a cyberattack.

However, all of that means it is reasonable to expect that the merits of the new offensive cyber operations may not be known publicly for years.

Will Congress take action to streamline cybersecurity contracting and research?

Yes, changing the way government does business is ambitious. But experts argue that if the United States wants to keep up with digital innovations from China and other countries it is necessary to change the American government’s relationship with the private sector and academia. The effort to streamline cybersecurity funding and research will fall to the new Congress, in which Democrats will take over the House of Representatives.

But when it comes to the U.S. government’s relationship with the cyber industry, structural barriers to innovation remain.

On average, it takes roughly seven years for an idea to get a contract inside the U.S. government. In that length of time, a product is already two generations old. Former Pentagon officials have used the digital fight against the Islamic State as an example of how long the process takes. It took roughly two years for Cyber Command to receive the proper equipment and training after the order to digitally defeat the Islamic State, officials told Fifth Domain.

In addition, the cybersecurity industry is watching a series of bills in Congress. Sen. Mark Warner, D-Va., has pushed for a streamlined security clearance process, and industry officials told Fifth Domain they expect him to continue the effort in the new year. The bill could make it easier and cheaper to get a security clearance.

And many in the federal cybersecurity community have called for a change in academia’s relationship with cybersecurity.

The universities and research institutions in the United States focusing on quantum computing are “subpar,” George Barnes, deputy director at the NSA said in June.

Experts say that quantum computers will make traditional cybersecurity methods obsolete because of the expansive computing power.

However, new investments in artificial intelligence and a new Solarium Commission, which was created to help contextualize cyber in the broader national and economic security discussion, may provide solutions to these problems.”


Don’t Overlook The Government Contract Data Requirements List (CDRL)



“SMALLTOFEDS” By Ken Larson 

“Although it is unusual to negotiate separate pricing for contract data, your negotiated contract and resulting budget baseline must contain the resources to prepare and submit these items.

On contracts for new products, data item submissions represent major benchmarks on the contract schedule. Results of study, research, engineering design and development are submitted in the form of data items to the government for approval.”

“The Contract Data Requirements List (CDRL) is usually contained in Part III, Section J of the government solicitation you are bidding and the executed contract upon award.

The CDRL is a register of the deliverable data items. Each data item has a discrete numeric identifier, a data item description (DID) number and a delivery schedule to the customer.

The CDRL is commonly conveyed on DD Form 1423 by the Department of Defense (DOD) specifying the delivery address, number of copies required and the reviewing and approving authority for the data item within the government agency.  It also specifies electronic addresses if electronic data delivery is necessary. Forms other than a DD Form 1423 may be used to convey data item requirements by agencies outside DOD. That form may be as simple as a listing of requirements.

You should review the listing to insure adequate definition and understanding exist for you to commit to the data requirements when you sign your contract. Data Item Descriptions (DID’s) are available at:

Data Item Description Library

Although it is unusual to negotiate separate pricing for contract data, your negotiated contract and resulting budget baseline must contain the resources to prepare and submit these items.

On contracts for new products, data item submissions represent major benchmarks on the contract schedule. Results of study, research, engineering design and development are submitted in the form of data items to the government for approval.

Once approved, data items form the specifications for continuing effort on the contract. Key design reviews on development programs are focused on the contents of data item submissions.

Data item submissions contain reports of contract cost and schedule performance, results of status meetings and records of ongoing deliveries. Data item deliveries are key factors in demonstrating successful performance under the contract.

In some instances, the number of data items and the level of detail in each are negotiable with the government. Such negotiations have a direct impact on cost even though data items are not normally priced separately in the contract.

The cost for data item preparation and submission is usually included in the pricing in Section B of the contract within the prices for contract line item deliverable to which the data items apply.

SDRL or “Subcontract Data Requirements List” is a prime contractor flow-down of the CDRL requirements to a subcontractor.

Generally the prime will structure the SDRL to insure that subcontractor data submissions support the prime contract CDRL technical content, schedule and other parameters.

The prime may also take the liberty to incorporate additional requirement to support their own internal systems of quality,cost and schedule control.

As with CDRL requirements, SDRL’s should be carefully priced within the end item CLIN’s to which they apply to insure cost coverage.”


GSA Consolidates 24 Contract Schedules Into One Products-And-Services Offering


GSA Sechedule Consolidation

GSA Administrator Emily Murphy addresses the 2018 ACT-IAC Imagine Nation ELC conference on Oct. 16. (Carten Cordell / FedScoop)


“GSA delivered on its long-awaited promise to reform the Multiple Award Schedule program Tuesday, announcing plans to condense 24 contract vehicles into a single offering for products and services.

Administrator Emily Murphy said in a statement that the reform plan is an integral piece of the GSA’s vision of a more efficient, agile and inclusive acquisition process.”

“Reforming our schedules will improve customer service, make it easier for small businesses to access the schedules program, reduce duplication for all our vendors, and allows GSA’s workforce to focus on delivering solutions,” she said. “This is an important step in addressing feedback we’ve received from our government and business partners.”

Murphy has been teasing details about the schedules reform plan for months, saying in May that by retooling the program — which controls $31 billion in annual spending — GSA could help drive “vigorous competition at the task order level” by establishing common standards and requirements to drive acquisition savings and efficiencies.

“This isn’t about private sector versus public sector,” she said. “This is really about taking common requirements for administrative services and trying to see, first of all, are there efficiencies we can gain and can we improve the customer service that takes place with those?”

While GSA officials didn’t offer extensive detail about how the reform plan will play out, they did stress that it has been developed in collaboration with agency and industry stakeholders to facilitate how each can conduct business at a time when products and services are in high demand.

“A single schedule for products and services will make it easier for customers to find and purchase the solutions they need to meet their respective missions,” said Federal Acquisition Service Commissioner Alan Thomas, in a statement. “It will also provide a single-entry point to MAS with consistent practices applied across the program and save vendors from the burden of managing contracts on multiple schedules.”

GSA officials said they would provide more information on the consolidation plan at its Dec. 12 industry day, where it’s expected to also discuss the second phase of its Federal Marketplace e-commerce strategy.”



Assessing Department of Labor (DOL) Government Contract Wage/Rate Determinations


departmentoflabor wage rate

 “Small To Feds”    By Ken Larson

“To manage compliance with The Service Contract Act and the Davis-Bacon Act, regularly review your company labor category rates and fringe benefits for ongoing compliance with DOL Area Wage Determinations.

Sample the DOL Wage Determination web site regularly as a normal function of maintaining your labor rates and fringe benefits costs. ” 

“When pricing government contracts, in particular service contracts, the small business will encounter government wage determinations under the Service Contract Act and Davis-Bacon Act. These determinations specify the minimum wages and related benefits that must be paid to all hourly employees charging time directly to a federal service contract as part of a total compensation plan.
The Department of Labor Manages the Wage Determination program.
Contractor compliance with Wage Determinations  is subject to audit by the Department of Labor, Defense Contract Audit Agency, or other agency audit procedures. Failure to prove compliance may subject the contractor to debarment from all government contracts for up to three years.

Service Contract Act, as an example, requires minimum wages be paid per labor category as defined in the Directory of Occupations and listed as minimum wages per labor category on the Area Wage Determination incorporated into each contract. The wages are mandatory minimums paid employees for every hour worked on the contract as defined by The Act, both full-time and part-time. A typical Wage Determination is below:


When bidding a service contract with a requirement containing a Wage Determination, the labor category wages and fringe must conform, as a minimum,to the Wage Determination in the government Request for Proposal (RFP).  The personnel must be paid not less than the wages and fringe benefits specified in the determination when the contract is awarded.

Due to competitive factors and labor market concerns the company may propose labor and fringe exceeding the Wage Determination, but the bid cannot go beneath the government specified rates.  Below is a typical conformance table for an engineering firm with the Wage Determination information of the right side and the company bid rate on the left side of the table.  (Please Click Image to Enlarge)

The Fringe element of the Wage Determination conformance is usually discussed in the basis of estimate for the fringe rate in the price proposal. A major project in a given location may impact on the company wide-fringe rate if existing fringes in the company do not meet the minimum requirement for the wage determination in the area being bid.This can be a deciding factor in a bid/no bid decision on a prospective project.

When conforming a labor category to a government wage determination,  the title of the company job need not be identical to that to which the government wage determination refers, but the company job description must be made available to an auditor for compliance mapping purposed; i.e. the role of the individual and the scope of his or her job description must very closely match the government documents. It is best to use existing company labor categories and descriptions and work any exceptions during the conformance process, conveying the results in the form of a table similar to the above in your proposal.

If a particular wage determination selected by the contracting officer in the RFP appears to be vastly out of sync with the scope of work in the prospective contract, it is best to bring this to the government’s attention in the form of a question or a suggestion for improvement during the Q&A or draft RFP comments phase of the bid process.  But remember, your question, its answer and any action taken by the CO will be made available to all competitors.

In many instances competitive labor rates, and in some cases benefits as well, will be higher than those specified in the government wage determination. Wage determination updates by the government often lag rapidly changing technical labor markets and area economic trends.

Evaluate your initial GSA Schedule and renewals against area wage determinations, since the government may choose to buy off your schedule or you may choose to use your GSA Schedule rates to bid a procurement where a wage determination applies.

Demographics in your company may play a role.  Accumulation of labor cost history driving a pay rate in one geographic location of a company for a given labor category may not meet government wage determinations if that category is used in another geographic area with a different area wage determination in a substantially different labor market.  Many larger firms maintain standard rates across multiple geographic locations to deal with this factor.”




Foreign-Owned Entities Can Be Small Businesses Under SBA Government Contracting Rules


Foreign Owed Small Business

“SMALLGOVCON” By Steven Coprince

“Government contractors often assume that a foreign-owned company cannot qualify as a small business under the SBA’s government contracting size rules.

Not so.  As demonstrated by a recent SBA Office of Hearings and Appeals size appeal decision, a foreign-owned entity can qualify as a small business, provided that it has a physical location in the United States and contributes to the U.S. economy.”

” OHA’s  [Office of Hearing and Appeals] decision in A&Y Government Services, LLC, SBA No. SIZ-5966 (2018) involved an Army solicitation for vehicles and spare parts.  The solicitation was issued as a small business set-aside under NAICS code 336112.

After evaluating proposals, the Army announced that Bukkehave, Inc., or “BHI,” was the apparent successful offeror.  BHI is based in Florida, and is a wholly-owned subsidiary of a Danish company, Bukkehave Corporation.  An unsuccessful competitor, A&Y Government Services, LLC, then filed a size protest challenging BHI’s small business status.

The SBA Area Office noted that BHI was affiliated with its parent company and several other entities.  However, when combined with its affiliates, BHI’s employee count still fell below the 1,500-employee threshold for NAICS code 336112.  The SBA Area Office issued a size determination finding BHI to be an eligible small business for purposes of the Army contract.

A&Y filed an appeal with OHA.  A&Y’s appeal stated that BHI “is merely a sales office owned by a FOREIGN corporate entity.”  Awarding the work to BHI, A&Y argued, would mean that the money paid by the Army “will go to Denmark.”

OHA wrote that, contrary to A&Y’s apparent misconception, “SBA regulations . . . do not bar a foreign owned concern from participating in a small business set-aside, provided that the concern is based in the U.S. and contributed to the U.S. economy through the payment of taxes or otherwise.”  In support, OHA cited 13 C.F.R. 121.105(a)(1), the SBA’s regulation defining a “business concern.”

In this case, OHA wrote, “BHI is a corporation based in the state of Florida, and . . . BHI contributes to the U.S. economy by paying taxes.”  OHA denied A&Y’s size appeal, writing that there was “no basis to conclude that BHI is ineligible for this procurement.”

In my experience, many government contractors believe that a foreign-owned entity can never qualify as a small business for purposes of the SBA’s government contracting rules.  But as the A&Y Government Servicescase demonstrates, the truth is more nuanced.  It’s not foreign ownership that is the test, but rather a U.S. location and contribution to the American economy.”



Lowest Price Technically Acceptable Contract Award Justification Criteria Remain Fuzzy


Lowest Price Technically Acceptable

Image:  Defense Acquisition University (DAU)


“The Defense Department has not yet instituted new congressionally mandated changes to the criteria for lowest price, technically acceptable contracts, a Government Accountability Office report released Nov. 13 found.

Two controversial criteria  – for procurement of goods, the goods being purchased are predominantly expendable in nature, nontechnical, or have a short life expectancy or shelf life; and the lowest price reflects full life-cycle costs, including for operations and support.”

“The Defense Department has not yet instituted new congressionally mandated changes to the criteria for lowest price, technically acceptable contracts, a Government Accountability Office report released Nov. 13 found.

Acquisition officials can choose to award contracts based solely on the lowest bid when there was a competition and when they meet all the minimum technical requirements. About a quarter of contracts worth more than $5 million the Army, Navy, Air Force and Defense Logistics Agency awarded in fiscal year 2017 used the process, GAO found.

Congress in the National Defense Authorization Act of 2017 revised the regulations to increase the number of criteria that must be met from five to eight. The department has yet to update these guidelines, GAO found in the report, “DoD Should Clarify Criteria for Using Lowest Price Technically Acceptable Process.”

LPTA contracts have been controversial in certain sectors such as information technology, where vendors assert that past performance and a company’s qualifications for doing the work should be taken into account, as is the case in traditional contracts, a practice also known as “best value.”

“Contracting officials have broad discretion in the selection of the evaluation criteria that will be used in an acquisition,” the report noted.

However, GAO found that the services were issuing few LPTA info-tech contracts as they were following guidance to avoid using the process in such circumstances. Only nine LPTA info-tech contracts out of the 133 it examined were worth more than $10 million in 2017.

Meanwhile, an official told the government watchdog that the new guidelines will be updated by the end of fiscal year 2019, however, other contracting officers interviewed expressed confusion on how to interpret the new criteria.

The first of the three new criteria is clear: a written justification for the use of the LPTA must be included in the contract file. However, the final two are left open for interpretation, officials told GAO.

The two controversial criteria are: for procurement of goods, the goods being purchased are predominantly expendable in nature, nontechnical, or have a short life expectancy or shelf life; and the lowest price reflects full life-cycle costs, including for operations and support.

Four of 14 contracting officials interviewed said they did not understand the “expendable in nature” criteria and eight of 14 said lifecycle costs were not applicable to their acquisitions, the report stated.

For example, one of the 14 contracting officials interviewed said he didn’t know whether the general purpose computers he was buying to be used for five years would fall under the “short shelf life” criterium.

“Absent clarification on how to consider these two criteria, DoD increases the risk that its contracting officials will not consistently implement the requirements … as amended,” the report said.

GAO recommended that the Defense Department’s director of defense pricing and contracting should clarify how to apply the short life expectancy criteria and the full lifecycle costs criteria. The Defense Department agreed with the report’s findings and said the criteria will be clarified by the end of fiscal year 2019.”


GSA Proposes New Cyber Security Reporting Rules For Contractors


GSA Cyber Security Rules GettyImages-.jpg

“Getty Images”


“The General Services Administration is proposing new rules shaping how contractors protect government information on the IT systems they manage.

GSAR Case 2016-G511 and 2016-G515 — call for amending the General Services Administration Acquisition Regulation to include requirements for contractors to safeguard GSA information in a solicitation’s statement of work, as well as the procedures for they inform the agency of a potential breach.”

“GSAR Case 2016-G511 allows contracting officers to implement agency cyber requirements and standards into each solicitation, providing a centralized cybersecurity guidance across the enterprise for contractors to adhere to.

“This rule will require contracting officers to incorporate applicable GSA cybersecurity requirements within the statement of work to ensure compliance with federal cybersecurity requirements and implement best practices for preventing cyber incidents,” the Federal Register post said.

GSAR Case 2016-G515 seeks to update the nearly two-year-old GSA policy, 9297.2C, on how the agency, and the contractors overseeing its and its customer agencies’ IT systems, safeguard Personally Identifiable Information and other confidential information, in addition to the procedures taken when a breach is discovered.

Because 9297.2C didn’t go through the rulemaking process when it was established in 2017, it wasn’t open for public comment. By moving it to the GSAR, GSA can seek public and industry input on how the rule can be improved.

“Further, it establishes the requirement for contractors to preserve images of affected systems and ensure contractor employees receive appropriate training for reporting cyber incidents,” the post said. “The rule also outlines how contractor attributional/proprietary information provided as part of the cyber incident reporting process will be protected and used.”

GSA officials detailed in the post their plans to release notices of proposed rulemaking in February 2019 for GSAR Case 2016-G511 and in April for GSAR Case 2016-G515, with comment periods running for two months for each respective rule.”


Don’t Get Carried Away With Other Transaction Agreements (OTA) Experts Caution


OTA Carried Away Wall Street Journal

Image:  “Wall Street Journal”


“The acquisition instrument allows agencies to sidestep the Federal Acquisition Regulation and work with innovative companies that don’t normally do business with the government.

Like most trends, because it’s currently in vogue, it runs the risk of being dramatically overused.”

“Other Transaction Agreements (OTAs) have been all the rage in the federal acquisition community in 2018.

acquisition officials from the departments of Defense and Homeland Security are concerned that the OTA’s innovative reputation could become as cool as cargo shorts if agencies abuse it.

“I think that’s the biggest risk,” Soraya Correa, DHS chief procurement officer, said Thursday. “That people use them properly, that we don’t overuse them, that we don’t abuse them, so they are around for the long haul. How I manage that is by making sure that we understand the authorities that we have been given, we really think about what that authority is for and then we educate.”

Correa and Scott Stewart, technical director of procurement at the Defense Information Systems Agency, said at an AFFIRM luncheon that while OTAs have become a popular way for agencies to discover new technology solutions, they are but one tool in a vast acquisition arsenal — not a catch-all.

OTAs allow agencies to develop and scale prototyped technology that is either a new application or can enhance an existing platform, like a smartphone, without going through a full contract acquisition process, often providing officials to develop innovative solutions through a non-traditional contractor base.

OTAs are contracts — which can be negotiated with commercial terms and conditions — but their ability to be developed quickly with a broader contracting pool has made them the hot acquisition item of the year.

But that doesn’t mean they are right for every situation, Stewart said, or that they can’t be successfully protested. Often enough, he has to dissuade defense agencies from pursuing an OTA because it’s the wrong vehicle for what they are trying to procure. But the promise of a fast acquisition has some officials striving to use them beyond their design.

“If somebody comes to us and says, ‘Hey, I want to do an OTA,’ [we say] let’s sit down and talk about it,” he said. “Usually, nine out of 10 times, we talk them out of it because it turns [we say], ‘Why can’t you just buy that on a FAR procurement contract? No, the help desk is not a prototype.’”

But the popularity of the vehicle within DOD and DHS means that civilian agencies are growing interested in their potential use, and Correa said that an overabundance of OTAs in the acquisition realm could remove their speed advantage and potentially lead to a crackdown on the authorities allowing them.

“I think the more we use them, it’s going to get a little slower to get to award,” she said. “But [in a year], I also think we will be talking about how more civilian agencies are using those. Where we are using them, how we are using them and hopefully that we are being really consistent. What I hope we are not talking about is regulations governing OTAs, that’s my biggest fear.”


Let’s Wager On New Proposed Federal Acquisition Regulation (FAR) Rules


FAR Betting Wired dot comFAR Betting - Supplier University dot com

Image: Wired.com                                           Image:  Supplier University.com

“FEDERAL NEWS NETWORK” By Jason Miller    

“The Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA) recently released its semi-annual regulatory agenda . 

Putting some odds on how likely the most significant of the 36 proposed and nine final FAR rules would come to fruition. What are the chances of any of these rules getting past the finish line?”

“The oddsmakers should keep in mind that George Washington University professor Bridget Dooling found the number of significant regulatory activity has fallen 74 percent since the Trump administration took office. During the first 18 months of the administration, agencies launched fewer than 250 big rules, compared to 807 in the first year of Barack Obama’s administration and more than 700 in George W. Bush’s first year.

I brought in my own version of a sports oddsmaker in Larry Allen, the president of Allen Federal Business partners and long-time federal acquisition observer and expert, to help me explain the odds we set:

Proposed rules

1.  Determination of fair and reasonable prices on orders under multiple award contracts

        Is rotating private-sector talent into government the key to IT workforce shortage?

Odds: 5 to 1

Rationale: This one has a pretty good chance because several agencies already wrote deviations to the FAR that directs contracting officers to determine price reasonableness on their own. Allen said the next phase would be to bring this concept down to the task order level.

2.  Use of Acquisition 360 to encourage vendor feedback

Odds: 25 to 1

Rationale: This proposed rule goes back to 2016 under the Obama administration so the likelihood of it getting through is not good. At the same time, Allen said it hasn’t gone away either in almost three years. “How would you regulate the feedback? There are a lot of things to get a 360 view of a transparent acquisition that doesn’t require a new rule, but changes in the processes and reminders to follow the rules on the books, including encouraging vendor feedback would be helpful,” he said. “I’m not sure there is a really strong regulatory case for it.”

3. Section 508-based standards in information and communication technology

Odds: 6 to 1

Rationale: The Access Board recently finalized updated Section 508 standards so this FAR update is almost an important formality. Allen said agencies still struggle to get Section 508 right in contracts so changing the FAR shouldn’t be too difficult.

4. Incremental funding of fixed-price contracting actions

Odds: 30 to 1

Rationale: This 2016 proposal isn’t likely to break through after almost three years. Allen said there has been a big push for much of the last decade to bring some uniformity to fixed price contracts as there already are regulations on the books for incremental funding for cost-plus type contracts. “This rule may end up being superseded by other happening with the Section 809 panel and the Defense Department going back to the drawing board on incremental funding for its contracts,” Allen said.

5. Definition of a “commercial” item

Odds: 15 to 1

Rationale: This one comes out of the 2018 Defense authorization bill where lawmakers wanted to expand and clarify what it means for agencies to buy commercial products and services. Allen said while this is an important proposal, there will be a lot of interest and that could slow down the process. This is why the odds of the council finalizing it in the next year are low.

6. Increasing task-order level competition

Odds: 7 to 2

Rationale: This is another one coming from the NDAA, but the most recent one signed into law in August. The proposed rule is a key piece to the General Services Administration’s goal of moving to unpriced schedules, which is why the odds are lower than most others. Allen said while the concept is limited to services contracts, which do account for a majority of federal acquisition spending, the broad goal is for agencies to get better pricing at the time of purchase. “It could create more burden on contracting officers, but it would mean they get more real time pricing based on scope of work,” he said.

7. Governmentwide and other interagency contracts

Odds: 10 to 1

Rationale: The goal of this rule would be to do away with requirements for DoD to need a written determination and finding before using non-Defense contracts. Allen said this requirement is a huge stumbling block for military services and Defense agencies. “Getting a D&F to use GSA’s Alliant or the schedules slows things down and requires more paperwork. Even when the services have an agreement to use Oasis or Alliant,” he said. “Section 875 is being read by industry as eliminating that requirement. It could streamline DoD acquisition and improve the use of non-DoD contracts across the govt.” At the same time, Allen said the odds are lower than some might think as the possibility of push back from DoD is real while the Pentagon waits for Section 809 panel recommendations and/or they want more analysis on how DoD is using non-Defense contracts.

Final rules

1. Set-asides under multiple award contracts

Odds: 50 to 1

Rationale: The chances of this final rule finally cross the finish line remains long, particularly considering the council has been sitting on it since 2014. Allen said recent court decisions — the 2016 Kingdomware case requiring the Veterans Affairs Department to abide by the “rule of two” for small veteran-owned firms — has slowed down the progress of the proposed rule, causing the council to rethink whether they have to apply the “rule of two” to all task order contracts. “The odds are low and the rule may become irrelevant as we get Section 846 [e-commerce marketplace pilot] up and running,” he said. “It is more likely that the FAR case will be closed and a new one will be opened up that reflects all of these changes. This is not to say this isn’t important, but time may have overcome the current rule.”

2. Effective communication between government and industry

Odds: 3 to 1

Rationale: Of the 47 final and proposed rules, this one is the most likely to make it across home plate. Allen said this is one of those cases where OMB issued guidance, but until the FAR regulations change, there are a host of government acquisition people who are more conservative and need regulations to change. There is a lot of support across the government and industry acquisition communities for the use of tools such as reverse industry days, the “show, don’t tell me” approach to bids and other “innovations,” thus making this rule popular and an easy one to agree upon.

3. Prohibition on certain telecommunications and video surveillance services or equipment

Odds: 4 to 1

Rationale: This one also gets good odds because it’s part of the ongoing and increasingly strong focus on supply chain risk management. The FAR Council will implement the 2019 NDAA provision that prohibits agencies from buying products from China-based companies ZTE and Huawei Technologies. “Prohibiting agencies from buying from these companies because of the potential and real impact on the security of their supply chains is a big deal for industry and an even bigger deal for the government,” Allen said. “The rule is putting industry on notice saying technology from these companies are walled off to you whether you can save money or not. The biggest use of this is around the training on supply chain security.”

Prop bet

What are the chances of the Trump administration naming a permanent administrator in the Office of Federal Procurement Policy over the next 12 months?

Odds: 250 to 1

Rationale: It’s been more than two years since OFPP has had a permanent administrator and so far four candidates haven’t made it through the process for a variety of reasons. Allen said he doesn’t see any change on the horizon, either. “The administration has gone this long so they may be saying ‘why do we need one?’” he said. “And even if you named someone, it would be nine to 12 months before they got confirmed and then would only be in the position for nine to 12 months, so why measure for new curtains?”