Tag Archives: Government Regulations

Defense Contractor Agrees To Pay $1 Million To Settle Allegations Under The False Claims Act

Alpha Reseaerch and Technology

Image:  Air Force Times


“In submitting its proposals, ART knowingly included millions of dollars in personal expenses of its owners Donne and DeAnn Smith, which ART knew were unallowable in government contracting.

Those expenses included payments for the design and construction of the Smiths’ luxury personal residence in Amador County, luxury cars, a personal caretaker, and a weekend at the Hotel del Coronado in San Diego.” 

“United States Attorney McGregor Scott announced today that Alpha Research & Technology, Inc. (“ART”), an El Dorado Hills company that provides command and control systems to the U.S. Air Force, has agreed to pay the United States $1 million to resolve allegations that it violated the False Claims Act by knowingly submitting inflated contract pricing to the government.

Between 2006 and 2011, ART submitted subcontract proposals to prime contractors including The Raytheon Company and The Boeing Company that were to be included in firm-fixed-price proposals made by those prime contractors to the Department of Defense.

The False Claims Act allows the government to recover damages and penalties for the presentation of false claims for payment to the United States. By improperly basing its government subcontract proposals on unallowable costs, ART caused the United States to pay improperly inflated prices.

“It is a priority of this office to safeguard public coffers against fraud and abuse that affect the integrity of federal contracting programs,” said U.S. Attorney Scott. “We will continue to work closely with our federal law enforcement partners to address the unnecessary expenditure of taxpayer funds, and results like this one help accomplish that objective.”

Chris Hendrickson, Special Agent in Charge of the Department of Defense, Defense Criminal Investigative Service (DCIS), Western Field Office, said, “Padding government contracts with personal expenses is an act of greed that diverts taxpayer dollars away from the critical support of our soldiers, sailors, airmen, and Marines.  DCIS is committed to working with partner agencies to root out fraud in Department of Defense contracting.”

“Cost mischarging schemes such as this cheat the Air Force and ultimately the American taxpayer,” said Air Force Office of Special Investigations Special Agent in Charge Cornelius King. “I appreciate the dedicated efforts of the Defense Criminal Investigative Service, The Defense Contract Audit Agency, and the U.S. Attorney’s office who helped hold this Air Force contractor accountable.”

The settlement is the product of a joint investigation by DCIS, the Defense Contract Audit Agency, and the Air Force Office of Special Investigations. Assistant U.S. Attorney Colleen M. Kennedy handled the case for the United States. The claims settled by this agreement are allegations only and there has been no determination of liability.”



HUBZone’s Beware The Too Good To Be True Offer


Hubzone 3 SBA

too good 1 McIntoshMD Rules

Free Lip Piercing Image:  “McIntosh MD”       Rules and Hub Zone Images “SBA”


“While the [HUBZone] program was designed to provide legitimate small businesses with a path to get their foot in the door with the federal government, it has become a prime target for fraud.

To retain their HUBZone eligibility and avoid potential civil or criminal liability, small business owners need to understand the potential pitfalls.”

I’m sure you’re familiar with the adage, “If it sounds too good to be true, it probably is.”

For owners of HUBZone businesses—small businesses that operate and employ people in Historically Underutilized Business Zones (HUBZones)—it’s a motto to keep in mind as they travel to one of the largest HUBZone matchmaking events in the country this October, the National HUBZone Conference in Chantilly, Virginia.

This annual conference provides a tremendous opportunity for HUBZone business owners and corporations to network and identify potential partners who can help them win business with the federal government. Unfortunately, such gatherings can also attract nefarious corporate executives who are on the hunt for a HUBZone business to illegally use as a pass-through to gain access to lucrative federal contracts that would otherwise be out of reach.

But there are proactive steps a HUBZone business can take to protect itself and the integrity of the HUBZone program.

Understandably, many small businesses are unable to comprehensively serve the needs of a federal contract on their own, so they partner with larger corporations. There are legitimate ways to engage in such a partnership and the SBA provides extensive guidance in how to do so. However, HUBZone businesses are sometimes approached with a proposal to sign off as a partner on a contract or bid without having to perform any of the actual work. That should raise a red flag. Experienced HUBZone businesses generally refuse to engage in these types of deals. But when large businesses are intent on establishing a pass-through with a HUBZone organization, they will often use conferences to shop the offer to many potential partners until someone says “yes.”

In other cases, large businesses and corporations are more covert about their intent to use a HUBZone organization as a pass through. In these instances, in the months immediately after partnering on a piece of business, a HUBZone organization may find their corporate partner slowly beginning to squeeze them out of performing the work for which they have been contracted, while still continuing to pay them. In these situations, when the work arrangement starts to look and feel less like a partnership and more like the HUBZone business is just being used for its HUBZone certification, it may be time to take a closer look at the engagement to see if the larger business is committing fraud.

Contractor fraud in HUBZone set-aside programs is a little bit like an iceberg. It can be difficult to detect and prove, which is why even though the problem is pervasive, only a small percentage of fraud cases ever make it to a courtroom. This is why HUBZone contractors play a key role in helping to police their industry. In particular, there are a number of ways for HUBZone business owners to protect themselves and the HUBZone program from these pervasive forms of fraud.

First, if you are a HUBZone business owner who is approached at a convention like the National HUBZone Conference to become a “pass through” for a larger corporation, keep your eyes and ears open. There is a strong likelihood that the corporate contact who offered you a “too good to be true” deal will pursue your peers until someone agrees to their terms. When you have knowledge of this type of fraud, it is important to reach out to an attorney who specializes in government contracting fraud cases and can help you share this information with the federal government. Often, by serving as a whistleblower, you may be entitled to monetary rewards if the government can prove the fraud occurred.

Second, if you are a HUBZone business that enters into a partnership with a larger organization, make sure you have a tightly defined contract and scope of work. This scope of work should clearly state the percentage of work that you are required to perform, as well as what the work will entail. By having these legal documents established at the beginning of a relationship, it will be very difficult for a corporate partner to illegally squeeze you out of a partnership.

Third, and most importantly, it is critical that HUBZone businesses have a strong backbone to stand-up to corporate executives rather than giving in and accepting payment in exchange for the use of their certification. If you’re in a partnership, insist that you perform the work—even if your corporate partner pressures you not to. And if you’re presented with a “too good to be true” offer, protect yourself and your business by walking away. When in doubt, talk to a lawyer.”



Andrew Miller is a shareholder and attorney at the firm Baron & Budd. 

126,000 Service Members In Cross Hairs as DoD’s ‘Deploy Or Get Out’ Policy Takes Effect



Deploy or Get Out

Image:  OAF Nation


“Excluding trainees, approximately 6 percent (126,000) of the total force — active duty, National Guard and Reserve — were non-deployable as of Aug. 31, 2018,” DoD said in a statement to Military Times.

This new department-wide retention policy is based on the underlying premise that in order to build and maintain a ready, lethal force, all military members must be deployable,” said Pentagon press secretary Dana White.”

“The Pentagon’s hard line on troop readiness took effect Monday, and 126,000 service members now find themselves on a path to separation if they do not become deployable in the next 12 months.

“Deploy or get out” was an early policy priority of Defense Secretary Jim Mattis to improve the overall readiness of U.S. military forces. It was formalized in February and gave the services until Oct. 1 to be ready to begin holding troops accountable. Those intervening months also gave troops time to prepare, to get rid of administrative, legal or medical blocks that may have previously kept them in a non-deployable status.

DoD said in a statement to Military Times. “This includes temporary as well as permanent non-deployable service members. The reasons vary, but they are predominantly medical.”

Of that 126,000 total, 66,000 are non-deployable due to illness or injury, DoD said.

Of that 126,000 total, 24,000 are considered permanently non-deployable and were pending a disability evaluation that could lead to the service member’s transition out of the military, DoD said.

As Secretary Mattis has said before, ’every action will be designed to ensure our military is ready to fight today and in the future.’

There are some exceptions. Pregnant and post-partum service members are exempt, as are service members whose injuries were a result of combat operations. Other exemptions may be granted by the service secretaries on a case-by-case basis.

The policy was put in place to stop service members who had learned to game the system to keep from deploying, which had put a harder burden on those who continued to fill open spots.

It’s that disparity the policy is trying to address, said Master Sgt. Rob Couture, a spokesman for the Joint Chiefs of Staff.

“We’re trying to get after fairness,” Couture said.

And even though the policy did not officially take effect until Monday, it’s pending arrival over the last few months may have had a chilling effect as the numbers of forces on non-deployable rosters dropped dramatically.

In January, DoD had said that approximately 11 percent, or 235,000, of the 2.1 million personnel serving on active duty, in the reserves or National Guard were non-deployable.

Of that January total:

  • 93,000 were on some type of limited duty due to a physical limitation.
  • 23,000 were on a permanent physical-limiting profile.
  • 99,000 were listed as non-deployable for reasons that were administrative, for example, they haven’t had a dental checkup or hadn’t done their periodic health assessment
  • 20,000 were temporarily non-deployable due to pregnancy or post-pregnancy status.

By May, those numbers had dropped to 143,000, DoD reported, without providing a breakdown. By August, the numbers were down again.”


Unconstitutional Presidential Wars

Unconstitutional Presidential Wars

(Photo: U.S. Army / Spc. Anthony Zendejas IV)


“Congress allowed President Truman to set a troubling precedent that subsequent presidents have used to continue to improperly expand their war powers.

The current war powers debate often misses how Congress has repeatedly allowed the executive branch to improperly infringe upon its authority.”

“The Framers rejected the British model that placed all powers over external affairs, including going to war, with the executive. They vested the war power in Congress, recognizing that the President could “repel sudden attacks.” In Federalist No. 4, John Jay warned about executive wars, stating that “nations in general will make war whenever they have a prospect of getting any thing by it; nay, absolute monarchs will often make war when their nations are to get nothing by it,” engaging in wars “not sanctified by justice or the voice and interests of his people.”

The United States followed that constitutional system from 1789 through World War II. Since that time, Presidents Truman, Clinton, and Obama have engaged in unconstitutional wars, deciding to seek authority not from Congress but instead from the U.N. Security Council or from NATO allies. It is sometimes argued that when presidents receive a resolution of support from the Security Council they satisfy international law. They do not, however, satisfy the U.S. Constitution. The Senate through the treaty process, such as agreeing to the U.N. Charter, may not transfer Article I powers of Congress to international or regional organizations. Presidential military initiatives after World War II have violated the rule of law, the principle of self-government, and the system of checks and balances.

In 1945, when Senators were debating the U.N. Charter, President Truman wired a note to Senator Kenneth McKellar (D-TN). He pledged that whenever the United States considered resolutions to use American troops in a U.N. military action, “it will be my purpose to ask the Congress for appropriate legislation to approve them.” Statutory authority would be needed from both houses of Congress. With that understanding, the Senate approved the U.N. Charter by a vote of 89 to 1.

It was then necessary for Congress to pass legislation to decide how the United States would agree to U.N. military actions. Under the Charter, all U.N. members would make available to the Security Council “on its call and in accordance with a special agreement or agreements,” armed forces and other assistance. Those agreements “shall be subject to ratification by the signatory states in accordance with their respective constitutional processes.” Congress had to decide how to articulate and honor those constitutional processes.

That congressional effort is expressed in the U.N. Participation Act, enacted in December 1945. The statute provides that agreements for the use of military force “shall be subject to the approval of the Congress by appropriate Act or joint resolution.” Advance congressional approval would be needed for involving U.S. forces in a U.N. military action. Truman signed this bill without expressing any constitutional or policy objections.

In 1950, by involving U.S. troops in a U.N. military action against North Korea, Truman violated the U.N. Participation Act, the U.S. Constitution, and his own personal pledge to Senator McKellar. At a news conference on June 29, a reporter asked him if the country was at war. He answered: “We are not at war.” Asked whether it would be more correct to call the operation “a police action” under the United Nations, he replied: “That is exactly what it amounts to.” As would be the case for subsequent Presidents, Truman decided to play games with words. At Senate hearings in June 1951, Secretary of State Dean Acheson conceded the obvious by admitting “in the usual sense of the word there is a war.” Federal and state courts regularly agreed that hostilities in Korea amounted to war.

Following Truman’s initiative, President Bill Clinton sought “authority” from the Security Council to use military force in Haiti and Bosnia. Unable to obtain U.N. authority to take military action in Kosovo, he reached out to NATO allies for support. At no time did he seek authority from Congress for those actions. His actions violated the Constitution.

On March 21, 2011, President Barack Obama reported to Congress that U.S. forces operating under a U.N. resolution had begun a series of strikes against Libyan air defense systems and military airfields “for the purposes of preparing a no-fly zone.” Those strikes, he said, “will be limited in their nature, duration, and scope.” The term “no-fly zone” might seem to some as so restrained that it would not reach the level of war. However, those military actions require destroying the capacity of a country to act against the United States and its allies. Regardless of how U.S. officials sought to downplay a no-fly zone, using military force against another country that has not threatened the United States is, as former Secretary of Defense Robert Gates said in his book “Duty,” published in 2015, an “act of war.” Very straight and important talk, respectful of constitutional values.

A memo released by the Office of Legal Counsel on April 1, 2011, chose to engage in various word games. It concluded that the military actions against Libya did not constitute “war” because of the limited “nature, scope, and duration” of the planned military operations. Although Obama anticipated that military actions would conclude “in a matter of days and not a matter of weeks,” they continued for seven months.”


Defense Industry Fighting DoD Proposal To Change Performance Payments


Defense Companies Fighting Performance Payments

EDITORS NOTE:   10/2/2018 The Pentagon has now changed its position on this matter and backed off:  Pentagon Backs Off


“The baseline performance- and progress-based payment rate for larger companies would be reset from 80 percent to 50 percent, with incremental increases or decreases based on new criteria proposed by DoD.

If a contractor, for instance, delivers end items on time, hits milestone schedules, or avoids serious corrective action requests, it would win 10 percent bumps for each. (Small businesses would have their own schedule of incentives.)”

 “The Pentagon’s proposed plan to lower the rate of progress and performance payments some companies receive on defense contracts is sending shockwaves through the industry and invited a backlash from three large trade associations.

To incentivize defense firms to work more quickly and more efficiently for the taxpayer, Pentagon leaders want to create a tiered system that recognizes high performing companies with higher performance-based payments. Contractors, however, are balking at the Pentagon’s efforts to make them more accountable.

While obscure to the general public, the proposed rule changes have rattled government contractors, which argue they would choke off funding for innovation, shackle them with more bureaucracy, increase the cost of military equipment— and hurt profits.

The baseline performance- and progress-based payment rate for larger companies would be reset from 80 percent to 50 percent, with incremental increases or decreases based on new criteria proposed by DoD. If a contractor, for instance, delivers end items on time, hits milestone schedules, or avoids serious corrective action requests, it would win 10 percent bumps for each. (Small businesses would have their own schedule of incentives.)

The National Defense Industrial Association is calling on DoD to rescind the regulation and collaborate with industry to create a different rule. One objection it has is the proposed rule would determine payment rates based on companies’ overall performance, as opposed to contract by contract.

“The marching orders from Congress is we have to be faster, more innovative, to do better for the warfighter,” said NDIA Senior Vice President for Policy Wesley Hallman. But, under the proposed rule, a company that wants to take on a high-risk project that fails, “will later be judged on that thing the following December. They’re incentivized to take a low-risk approach.”

Though Section 831 of the 2017 National Defense Authorization Act encourages DoD to use performance payments, NDIA argues the rule violate’s the law’s intent and that lessening companies’ cash flow would slow payments to subcontractors and sap funding for independent research and development.

“We’re doing our best to let them know how this will hurt industry,” said NDIA Director of Regulatory Policy Corbin Evans.

The trade group’s comments were submitted at a public meeting Sept. 14 to consider changes the Pentagon proposed in August to federal acquisitions rules, the Defense Federal Acquisition Regulations Supplement. The Defense Department is holding another public meeting, Oct. 10, before the public comment period ends on Oct. 23.

Both the Professional Services Council and the Aerospace Industries Association, which more than 300 companies in the aerospace and defense industry, also offered presentations in opposition.

The move toward better stewardship of taxpayer dollars comes amid record Pentagon budget growth and amid a reorganization of the Pentagon’s acquisition, technology and logistics office, now due to finish in a few months.

The move falls in line with Under Secretary of Defense for Acquisition and Sustainment Ellen Lord’s efforts to halve the timeline of major defense acquisition programs, which are notoriously slow.

“I believe the lifeblood of most industry is cash flow, so what we will do is regulate the percentage of payments or the amount of profit that can be achieved through what type of performance they demonstrate by the numbers,” Lord said in a Defense News interview last week.

Hence, “we’re going to begin to reward companies through profit or through progress or performance payments, as a function of how they manage all of that, as well as quality and delivery and a variety of other things,” Lord said.

Though it’s unclear whether DoD will formally move ahead with the rule by a Dec. 1 deadline, investors have already responded negatively to a reports on the changes, according to aerospace and defense sector analysts at Cowen and Company.

“It will be a scramble for companies and DoD to compile the necessary data to evaluate the rate request. Under the current draft rule, DoD would need to evaluate the rate request in just one month for all its suppliers,” Roman Schweizer, of Cowen and Company, said in a note to investors Friday. “We suspect that will be very hard the first time and suggests this year may be too hard.”

Still, Cowen analyst Cai von Rumohr downplayed the near-term effects, especially beyond the major primes. He speculated the proposed rule change will have negligible impact on contractor results in 2019 since it doesn’t apply to any current contracts; it’s very unlikely to go into effect before 2020, if ever; it will not apply to time and materials and fixed-price commercial terms contracts, and because it will only apply to some cost-plus contracts.”


Pricing with Credibility in Small Business Federal Government Contracting


Image: “Video Blocks”


“Avoid defective pricing accusations by establishing credibility with your customer through consistent, regulatory-compliant, cost and pricing in your proposal submissions and negotiations.

Assuming a proposal to a government agency has an acceptable technical solution and past performance and management factors that convince the customer it is a viable candidate, then pricing may be the winning element in the source selection equation.”

“The mechanics of government contract pricing have been discussed previously at this site. The discussion relates how pricing should be a natural outgrowth of the organization structure, market strategy, competitive analysis, business system design and long range planning:

Pricing Service ContractsThe above article also explains how long and short term pricing factors should be integrated with the management and technical elements of any given proposal and that a total view of the business is best presented by integrating long-term company strategy with short term proposal objectives.

The purpose of this article is to augment the above discussion with tips on establishing and maintaining credibility in pricing to a government customer.

Certified Cost or Pricing Data

Certified cost or pricing data under the “Truth in Negotiations Act” (10 U.S.C. § 2306a) or TINA statute is proposal pricing, which for procurements greater than $750,000, (Section 811 of the fiscal year 2018 NDAA includes a provision that increases the threshold up to $2,000,000.)  is certified by the contractor as accuratecomplete and current as of the date of agreement on price.

The absence of a certificate does not eliminate defective pricing liability.

The statement underlined above is a key principle in relationships with the government and its auditors. TINA influences a government auditor’s thinking and it is in the back of the mind of every contract negotiator. They are taught and learn by experience to look for TINA faults.

Thus, even if your procurement does not meet the above threshold for TINA certification you should price to establish a similar credibility with your customer, even though you may not have to sign a TINA “Certificate of Current Cost or Pricing”. Doing so is simply good risk management in business.

You may read more about cost and pricing data and the negotiation process at the following link:

Contract Negotiation

Remember Historical Data is Precedent Setting

All auditors, negotiators and pricing analysts are preconditioned to utilize historical data. The last or most favorable price offered a customer for a commercial off-the- shelf product is strong support for what is currently being quoted. This is particularly true of GSA Schedule negotiations, product updates or repetitive buying situations.  If you are a commercial supplier, a quantity factor will also enter into play.  In general, orders of higher quantity than historical pricing quantities undergo downward pricing pressure by the buyer unless some other factor such as a non-recurring tooling charge, learning curve interruption, obsolescent material or other upward factors can be offered as support for a higher unit price on a higher quantity buy.

Educate Your Auditor

An auditor who is familiar with your forward pricing rates, your business system and your product lines will understand your proposal cost and pricing data better than one who has not been briefed on the big picture of your company business operation.  Take the time to conduct briefings at that level and acquaint new government personnel with your operations.  Do not assume he or she has read prior audit reports.  They may have done so but a face to face courtesy briefing is much more effective than reading some other auditors view of a specific proposal.

This factor can be a double edged sword, however. An auditor who knows the operation extremely well can also spot deviations in cost and pricing data and require explanations for anomalies in pricing based on observed trends.

Develop a Comprehensive Basis of Estimate (BOE)

A good BOE should have the following principal attributes:

* Clear identification of the products, services, skills, materials and performance factors required to complete the contract and material/subcontract quotes, labor categories and skill sets to perform the effort.

* A description of the conditions under which the contractor will be required to perform and any related environmental or location factors that affect the hours or dollars quoted

* Specific references to product specifications that govern an acceptable product or services performance outcome and delivery acceptance so that the cost data has boundaries.

* A schedule for the contract that identifies discrete delivery dates for products and specific start and end dates for supporting labor to that escalation and price expiration are established.

* A precise description of government/customer furnished material or facilities required and when it will be made available to the contractor to bound the expectations of the client with respect to elements your company cannot or will not control.

Insure Compliance with Cost Accounting Standards (CAS) Requirements

Small businesses are generally required to meet modified CAS coverage for service contracts. This requires consistency in the manner in which a small business quotes a proposal and the manner in which costs and billings are accounted after award.  You can read about these requirements at the following link:

What Small Business Should Know About FAR and CAS

Insure your proposal contains no unallowable costs and that your direct labor as well as your overhead and G&A rates are applied in accordance with your latest forward pricing agreement. If you do not have a forward pricing agreement, explain precisely how your rates were developed from a CAS compliant business system perspective:

FAR And CAS Compliant Business Systems

Utilize Weighted Guidelines as a Check to Prepare Support for the Profit Rate Quoted

Although policy in FAR Part 215-404-4 states that contracting officers ….” do not perform a profit analysis when assessing cost realism in competitive acquisitions”, it is wise to understand the contracting officer and his representatives are indirectly forming opinions of the risk to the contractor and the mix of cost elements in the proposal. That opinion directly effects profit negotiations and judgments.

Contractors should be aware that the Weighted Guidelines Method is mandatory for all negotiated procurements except Cost-Plus Award Fee Contracts and exceptions as approved by a higher authority. Contracting officers are to prepare their position using DD Form 1547 with associated backup and file it at the conclusion of negotiations.

Understanding the weighted guidelines method can assist in achieving a higher profit on a negotiation because a contractor can present a position at the table that logically supports the following elements required by FAR Part 215-404-4:

* Performance risk

* Contract type risk

* Facilities capital employed

Read more regarding the Weighted Guidelines Method at the following link:

Weighted Guidelines


A reputation for defective pricing leads to accusations of waste fraud and abuse in government contracting and is mostly about what a contractor knew regarding company prices at the time a bid was negotiated and what the contractor did not disclose in the supporting data regarding the likely cost outcome of the contract.

Actions taken by the government and litigation resulting from defective pricing become part of the contractor past performance record and must be disclosed during competition for other programs.”



Ken Portrait - Copy (2) - Copy

As a Micro Mentor Volunteer Counselor,  Ken assists many small businesses with their planning and operations processes. He receives many inquiries from small companies wishing to enter or enhance their position in federal government contracting. Volunteer time, books, articles, and resources are 100% free and maintained exclusively for small business on the above subjects.  Small business owners or prospective owners locate  at 





Pentagon’s Contract Managers Have Room for Improvement

DCMA Room for Improvement

DCMA Web Site


“Properly managing defense contracts is a complicated and important part of our national security. Such contracts range from laundry and food services to body armor and fighter jets.

Given the high stakes and the many ways things can go wrong, it is little surprise that the Government Accountability Office has kept the management of defense contracts on its “High-Risk List” since 1992 (the list was created in 1990). “

“Last month, the Project On Government Oversight (POGO) reported the scathing findings of previously unpublished government investigations into contract mismanagement committed by none other than the Pentagon agency dedicated to managing contracts. When considered alongside other audits and reviews of the Defense Contract Management Agency (DCMA), the reports paint a disturbing picture of systemic failures and sloppy management, casting doubt on the agency’s ability to protect taxpayer and government interests in the trillions of dollars’ worth of contracts it administers. The investigative and audit reports POGO reviewed contain numerous recommendations that the agency has yet to address. While several of these recommendations were issued within the past few months, some date back three years or more, despite agency leadership agreeing with the recommendations on paper.

These recommendations present opportunities for the agency to improve its performance with thoughtful and deliberate changes. Reviewing them reveals underlying problems that cut across various programs, with major themes including training, management, and internal policies.

In similar fashion, the Defense Department’s Inspector General recently placed “Enabling Effective Acquisition and Contract Management” in the number three spot on a list of the Pentagon’s “top 10 management and performance challenges” for fiscal year 2018, above even cybersecurity.

Last month, the Inspector General collected and published all of its recommendations for the Pentagon that were unresolved as of March 31, 2018. It highlighted the theme of contractor oversight, which has 161 pending recommendations split among DCMA and other parts of the Defense Department. Yet even though the recommendations are split, the agency plays an outsized role in overseeing contractor performance.

Training: The need for additional training for contracting officers is a common theme throughout the unresolved recommendations for the agency. POGO’s review found 17 recommendations related to better training for contracting officers, specifically on: requestingand fully addressing contract audit findings; obtaining legal reviews and management approval; proper records management; contract terms and requirements; avoiding conflicts of interest; the standards for evaluating contracts; approving contract modifications; and more.

Training for other DCMA staff was recommended as well, specifically for finance and IT personnel, on the subject of budgeting and spending processes.

One shortfall for contracting officers appears repeatedly: establishing performance standardsfor contractors and using quality-assurance plans to determine if contractors are meeting those standards. POGO identified an additional five such recommendations from four separate reports within the last two years.

Management: The agency can’t blame all of its problems on lack of training. Management also needs to prioritize stronger supervision and oversight. For example, a September 2017 report involving a mismanaged information technology project—which POGO revealed last month—shows how management failed to either catch or care about ongoing violations of contracting policy. The report specifies that the contracting officer for the project “circumvented rules. Lack of training was not the cause of this problem.”

POGO identified nine open recommendations regarding the need for stronger supervision and discipline at various levels of the agency; one recommendation states that the agency’s entire IT department is in urgent need of better supervision from agency leadership.

Internal Policy Changes: At least 13 open recommendations focus on policy changes—many of which relate to strengthening or creating internal controls within the agency to prevent or correct future failures. Other topics include raising job qualifications, sharing pricing data for certain items across the Pentagon, and creating multi-functional teams to manage projects from start to finish. As with any new policies, management should ensure that these policies come with appropriate training for workers as well as corresponding oversight to ensure policies are being implemented properly.

Finally, a recommendation from POGO, for Congress: it should oversee DCMA’s conduct far more aggressively. The numerous recent Inspector General reports and the recent investigation into the agency’s violations of budget law and contract mismanagement provide a strong foundation for an oversight hearing or for other types of Congressional oversight. These reports and unresolved recommendations warrant tougher public scrutiny of how the Pentagon oversees the agency, how the agency manages itself, and how the agency oversees contractor performance.

More recommendations are sure to come, as two reports from the Pentagon’s Inspector General and at least one large internal investigation—part of the contracting disaster POGO recently reported on—are pending.

Agency leaders understand there is plenty of room for improvement. They should pay more attention to the low-hanging fruit that many of these recommendations represent. Each of these recommendations has a story behind it, and each that remains open for years on end is a testament to the failure of the status quo.”




Unsolicited Government Contract Proposals – A Multiple Stage Challenge

Unsolcitied Proposals

image ostglobalsolutions dot com

“SMALL TO FEDS”  By Ken Larson 


Most enterprises in government contracting encounter the possibility of submitting an unsolicited proposal.  The perceived opportunity arises as a result of observing a requirement that the company could uniquely fulfill, but for which the government has yet to issue a formal solicitation.

These opportunities are normally  large enough so they can’t be sold off a GSA schedule or an existing contract delivery order, and do not fall under FAR Part 12, “Commercial Contracting”


Since your product or service is not on the funding docket with the agency it does not have a funding I.D. Your job is to get the technical and project personnel enthused enough about it to carve out a niche in their program area and support a funding request for it. They do so by  to obtaining a solicitation I.D; money and authorization to buy from you.

The key to achieving the above is a good presentation revolving around your capability statement but supplemented by a pitch that should emphasize specifically how you understand the agency mission and that your offerings could further it.

Your objective should be to submit a hard hitting summary with a proposal in letter form, protected with the standard proprietary markings, through the contracting officer with whom you have already had discussions to the technical lead man in the agency and request a meeting to make the full pitch in person.


The following link is the Federal Acquisition Regulation (FAR) guidance on unsolicited proposals:

FAR Guidance – Unsolicited Proposals

Be advised that you need to assert your rights in technical data and software on anything you give them that is product oriented because you have made an investment in it. When they start putting money into its further development you find them pressuring you for a deal on licensing and free use of it in exchange for funding and orders for services. That is the normal course of events and it can be managed.

Another approach is to carefully locate a platform provider that could use your product services and team with them on a larger scale, bundled program that may be going to formal solicitation.

In either of the above instances, carefully protect your idea using the tips in the below article:

Protecting Intellectual Property

You will note that the FAR guidance specifies that cost and pricing data must be submitted so the proposal may be evaluated.  Naturally you must provide that ultimately, but it is recommended you do not do so with your initial proposal submission.  Simply state you will be pleased discuss with the agency the scope in terms of types and quantities of product and services, after which you will price the result of their input for planning purposes, pending a formal solicitation with funding commitment.

If the agency or a prime gets enthused, they will ask for a Rough Order of Magnitude (ROM) estimate for planning and funding purposes on what your product or services may cost. Be careful to make it conservative because those things get cast in concrete and caveat any ROM with a written statement that your ROM is not a formal commitment to a contract and that you will be pleased to commit with a formal proposal from the government through a duly authorized contracting officer under a funded solicitation.

I have had clients that have even been requested by agencies to write a statement of work for such a solicitation

The government fiscal year is a key driver in terms of available funding and getting it earmarked. Keep in mind funding for a program using your idea or a platform using it must fall within a funding cycle that begins 1 October, picks up heavily in July and August and must conclude in September.


Success in unsolicited proposals is a process:

  1. An initial unsolicited proposal submission after focused marketing is the gateway
  2. A strong presentation to the customer in person is key.
  3. Rough order of magnitude (ROM) pricing permits planning by the customer
  4. A funded solicitation is a green light for a firm contract proposal

A Formal proposal submission under a funded solicitation, committing to negotiable price, schedule and delivery terms wins the contract.

In addition to the articles linked above, please review the following 2 additional articles for guidance:

Pricing Small Business Federal Government Contract Proposals

Contract Baseline Managment


Army Revamping Intellectual Property Policies


Army IP


“Futures Command will help spearhead a new approach to technology development and acquisition.

“We’ll have a non-disclosure agreement we can sign across the table and make sure that we understand what is and is not to be disclosed by the government outside the government,”..

“The Army will soon change the way it deals with contractors’ intellectual property, a top acquisition official said Aug. 21.

Many in industry have been wary of doing business with the Defense Department due to worries that their IP won’t be protected.

The Army is about to implement new policies to address those concerns, said Bruce Jette, assistant secretary for acquisition, logistics and technology.

“Many of you are small” companies, he said at the National Defense Industrial Association’s Army Science and Technology Symposium in Washington, D.C. “The No. 1 thing that you own is your intellectual property.”

Right now, the government is “leaky,” he warned members of industry. “Until we get some more stringent rules in place … you better be prepared for [your IP] to be exposed,” he said.

The Army is trying to fix the problem, he said.

“We’ve got an extensive intellectual property policy that’s being written,” he said. It is currently being “scrubbed” by Pentagon officials to make sure it complies with the Federal Acquisition Regulation, Defense Federal Acquisition Regulation Supplement and other policies, he noted.

Jette said he expects the reviews to be completed and the new rules to be in place within a month or two.

In the meantime, he advised contractors to protect their IP, or “secret sauce,” by not revealing it until formal contract negotiations are underway.

Changes from the new policies could include non-disclosure agreements.

If “you sit down [and] you want to exchange something that might be a little bit more ‘secret sauce,’ we’ll have a non-disclosure agreement we can sign across the table and make sure that we understand what is and is not to be disclosed by the government outside the government,” he said.

The Army also wants to protect itself from being too closely tied to a single vendor. Unclear IP policies have led to problems in the past, he noted.

When the service provides funding to further develop a proprietary product that a company has been working on, it can lead to complications, he said.

“The problem the government has with that is maybe your company goes belly up,” he said. ”Maybe you sell to somebody that I don’t want to buy from anymore, you know, a foreign entity, whatever. All of a sudden I’ve got this stuck together relationship, not to mention the fact that down the road maybe we want to change something” with the system, he added.

The Army is looking to license or buy products in a way that doesn’t lock the service into dealing with one supplier indefinitely.

“It means that you have to stay competitive but you get your intellectual property protected,” Jette said. “We want interfaces that are exchangeable and modular … [but] we take care of you at that front end.”

Jette was asked how industry can avoid clashing with government engineers when trying to avoid disclosing proprietary information.

Gen. James McConville, Army vice chief of staff, speaks at NDIA’s Army Science and Technology Symposium Aug. 21. (Melanie Yu/NDIA)

“That should get better … when I put the IP policy out,” he said. “We will try to get it out in such a way that you all [in industry] can see it as well and that the engineers will see it.”

Government officials will receive training, briefings and have other discussions about the new rules intended to protect intellectual property, he noted.

Jette said he doesn’t expect much resistance to the new way of doing business.

“When you talk about culture change within the government, I don’t think this one is that difficult,” he said. “I may be kidding myself but we’ve got good people [and] I think that they can respond to it.”

The move to revamp IP policies comes as the Army is trying to engage more with nontraditional partners to further its modernization goals.

The service is setting up a new Futures Command in Austin, Texas — a commercial innovation hub — to oversee its top six modernization priorities. They include: long-range precision fires; next generation combat vehicle; future vertical lift family of helicopters; the network; air-and-missile defense; and soldier lethality.

The command will be led by Lt. Gen. Mike Murray, whose nomination was confirmed by the Senate Aug. 20. Top brass are expected to attend the official activation ceremony later this week. The new organization is slated to be fully operational next summer.

Futures Command will help spearhead a new approach to technology development and acquisition, Army Vice Chief of Staff Gen. James McConville said at the S&T conference.

“We’ll do a lot more experimentation, a lot more demonstrations up front,” he said. “In the past we used to produce these very large requirement documents that are huge and they prescribe to industry exactly what we needed and what needed to be done.”

Going forward, the Army is looking for industry to bring ideas and innovations to help inform requirements and provide greater insights into what is technologically achievable.

“We’re finding we can be quicker by working with industry and being a little less prescriptive in finding what type of technology is available, and opening up to … nontraditional industry partners as we go forward by providing them a problem statement” instead of telling companies what to build, he said.

The establishment of Futures Command could result in a restructuring of the Army’s research-and-development laboratories. Over the next six to 12 months, there will be evaluations of how to make them more effective, Jette said.

McConville said there are no immediate plans to change the way that program executive offices are structured. “We’re going to see how that plays out.”


Army Creates New “Other Transaction Agreement” (OTA) Process To Permit 30-Day Cyber Procurements




“To handle its contracting, DCO partnered with the Army Contracting Center at Rock Island, Illinois, which agreed to train and assign a dedicated cadre of contracting experts on the Army’s rapid cyber acquisition needs.

The agreement includes a coding system to tell contracting officers exactly how urgent a particular need is, ranging from the requirement to have a contract signed within 72 hours up through 45 days.”

“The Army Program Executive Office for Enterprise Information Systems is buying products at hyper speed for its defensive cyber operations.

PEO-EIS has already charted out a process to deliver new capabilities to the Army’s cyber protection teams in 30 days or less, using a combination of traditional procurement techniques and other transaction authorities. But now, its Defensive Cyberspace Operations (DCO) office has its own consortium of companies to call on for quick responses.

DCO paired up with System of Systems Security, Inc. (SOSSEC) on July 25 in an agreement called COBRA. The OTA vehicle — with a ceiling value of $100 million over five years — will support a rapid development approach the Army calls C-RAPID.

Previously, the Army relied mostly on another consortium, called C5, for its defensive cyber prototypes, but the overall goal remains the same, said Col. Chad Harris, the project manager for installation information infrastructure, communications and capabilities at PEO-EIS.

“One of our missions is to accelerate the delivery of capability for the defensive cyber operations force,” Harris told Federal News Radio. “While the OTAs are not a panacea — they don’t solve all the problems — they do help you speed up some of the steps with contracting.”

Agreement can expand beyond defensive cyber

OTAs, in many cases, are made for rapid prototyping and that’s exactly what DCO needs to do as it identifies emerging threats that the cyber force faces, Harris said.

The Cyber Operations Broad Responsive Agreement brings together like-minded companies to provide the products requested by cyber mission forces and to offer ideas to Army PEO EIS for DCO products they may want or need.

While it’s tailored specifically for DCO it can expand to other areas with administrative sign off.

Harris said the products will include mission planning, data analytics, tools, hardware, deployable kits, user activity monitoring, forensics and malware.

“[What] OTAs bring to you is the access to atypical defense contractors. Being able to get to those small businesses, somebody who might not be used to dealing with the Defense Department. OTAs give you an option to do that,” Harris said.

        What federal employees need to know about polygraphs

Lt. Col. Scott Helmore, the product manager for DCO said in one instance a nontraditional company DCO wanted to work with had not gone through some of the Commerce Department requirements for equal opportunity and delayed the buying process by 30 days. An OTA would be able to waive that issue.

A ‘broad swath of companies’ desired

Army DCO hopes to attract a broad swath of companies that can offer defensive cyber solutions.

“What we clearly know is that we don’t know everything. We don’t know all those great companies that might have the next great idea to protect the Army networks,” Harris said. “This is more general and more broad to where we can present problems and then the consortium then help us find those companies that we have not had contact with.”

Helmore added that the consortium adds diversity to the options from which DCO can choose.

“As an example, if you award that kind of contract to one major defense contractor, you may be stuck with whatever that contractor has for innovation, and you’re excluding all of the good ideas from another major defense contractor. Or you may be excluding all of the innovative ideas from small mom-and-pop businesses who really don’t want to be taken over by a larger business,” Helmore said. “That led us down the pathway of saying, ‘To focus on innovation, to focus on speed and relevance, on being ahead of our threats, let’s look at an OTA and its capabilities.’”

Katie Crompton-Silvis, the agreements officer at Army Contracting Command-Rock Island, said OTAs also strip away reporting metrics, which can take some pressure off companies.

“You take away a prescriptive ‘It shall’ to ‘show me what it can do’ and it really opens up innovation, it opens up technology,” she said. “It allows the government to get tools it normally wouldn’t get — or thinking it normally wouldn’t get in a Federal Acquisition Regulation (FAR) contract, because in FAR-based you have to be prescriptive in order to say that a contract was successful.”

DCO isn’t only working with the SOSSEC consortium, it’s also working with the C5 consortium on a more cursory level. DCO created the newest agreement so it would be more conducive to the 30 day acquisition cycle DCO wants. DCO is also working with other offices like the Defense Innovation Unit, formerly the Defense Innovation Unit Experimental.

Need for speed in procurement cycle

The 30-day cycle comes from the idea that defensive cyber technologies change every 90 days, so DCO needs to move rapidly to keep up with the pace of change.

OTAs aren’t the only ways DCO is speeding up its procurement cycle. The creation of DCO itself was a way to consolidate and centralize responsibility for buying cyber capabilities under one roof.

The office plans to acquire between six and 24 prototype systems each year using a process called Cyberspace Real-time Acquisition Prototyping Innovation Development (C-RAPID).

Under C-RAPID, “we’re putting the test people, the contracting folks, the user community, and the program manager in the same place. So everybody who’s a decision maker is in the room, and votes to say what they think the best solutions are as we move forward,” Helmore told Federal News Radio in April.

To handle its contracting, DCO partnered with the Army Contracting Center at Rock Island, Illinois, which agreed to train and assign a dedicated cadre of contracting experts on the Army’s rapid cyber acquisition needs. The agreement includes a coding system to tell contracting officers exactly how urgent a particular need is, ranging from the requirement to have a contract signed within 72 hours up through 45 days.”