Tag Archives: Government Regulations

Other Transaction Agreements (OTA) Best Practices For Success

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NATIONAL DEFENSE MAGAZINE

The intent of OTAs is to leverage commercial technologies for military purposes, improve the nation’s industrial base and allow for more cost effective and affordable solutions without extreme bureaucracy.

Opportunities are available to traditional defense industry partners and nontraditional defense contractors, such as academia, non-profits and other small businesses.

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“Imagine this. The Defense Department had an urgent need for armored vehicles to protect warfighters from new threats during a time of war. By applying a unique and tailored acquisition approach with specific attention to time and similar solutions already available in the commercial marketplace, it successfully started fielding new vehicles only 18 months after identifying the warfighter need.

The program referenced here was the mine-resistant ambush protected vehicle program, which began in 2006. Was the program a success? Absolutely. Was it a risk-free or perfect solution? No. Although the MRAP program was timely in helping mitigate the threat and associated warfighter casualties, there were challenges related to operating field conditions, training, sustainment, transportation and costs. The program, however, ultimately enabled the creation of other military vehicles that are still widely used today and supports how tailored acquisition approaches can produce successful outcomes.

A popular and continuously growing phenomenon within the department is the other transaction authority, or OTA. It permits Defense Department entities to award OTA agreements for research, prototyping and production efforts critical to national security. They are not an acquisition approach or strategy; however, they are flexible options that can support an acquisition approach or strategy.

Given leadership’s priorities for the increased application of adaptive acquisition methods, it is highly likely OTAs will be a key ingredient for success.

OTAs are binding agreements between Defense Department organizations and industry partners that are different than Federal Acquisition Regulation contracts, grants and cooperative agreements. While they are an innovative and flexible option that are not subject to all acquisition laws and regulations, they require vigorous program management.

Here are some points to remember:

OTAs are not new to the department. Although it received limited authority in 1989, the authority has significantly expanded since 2015. As a result, more agencies and industry partners are working together on the agreements. OTAs vastly differ from contracts because negotiations are not limited by FAR-based restrictions and allow for more robust terms between parties. This includes, but is not limited to, intellectual property rights, title to property, payment terms, project schedule or duration, cost or price analysis, financial and project status reporting, disputes, remedies and termination.

Congress specifically provided the authority to foster business flexibility for certain circumstances. Unfortunately, there is not a universal process or checklist for all parties to follow when planning or executing the agreements. This is intentional because universal processes across the department could hinder innovation and expanded industry participation.

Since OTAs will differ between agencies, these entities should individually create and maintain some form of standard business processes to support how to execute them from initial planning through completion. Examples of standard business processes include organizational policies, instructions, directives, guidebooks and standard operating procedures. These resources are foundational for success as they can provide tremendous assistance and value to not only the parties seeking to do business with the defense organization, but also the personnel leading or supporting the process.

There can also be immense benefits for industry partners who have not previously done business with the department. It currently has an “OT Guide” published in November 2018 available to the public; however, it is very broad and not unique to individual DoD organizations. Creating and maintaining standard processes can enable consistent and efficient operations, prevent miscommunication, minimize noncompliance with laws and assist organizations during evaluations or audits.

Since there is not a one-size-fits-all option to execute OTAs, defense authorities and industry partners should be aware of the various options available. Specific to prototype OTs, the most widely used type of OT, there are primarily four options for execution. Figure 1 provides helpful information associated with each option.

Agencies should carefully evaluate all options prior to option selection, depending on the specific need or the entity’s experience with OTAs. Evaluation can be done by market research and other means to effectively support the strategy and objectives. For example, if an organization is seeking a prototype that could be created by start-up companies or existing commercial firms, it may be in the best interest to award an OTA on its own, through the Defense Innovation Unit, or to a consortium.

Alternatively, if an agency is seeking a prototype similar to one another government agency is concurrently seeking through its own prototype OTA, it may be in the best interest — and the most economical option — for it to leverage the other government agency’s agreement. The Government Accountability Office reported in 2019 that the majority of funding for prototype OTAs between fiscal year 2016 and fiscal year 2018 was awarded to consortiums.

Further, the GAO reported that the department — in response to congressional direction — is improving its reports on OTA usage to provide more data and transparency. Given the options available for executing OTAs, it is critical that both defense organizations and interested industry partners are cognizant of the options and their individual characteristics.

Another factor for success is sound planning and identification of technical performance parameters.

Failing to plan is planning to fail. Since parties can negotiate and tailor many OTA elements, it is critical for all parties involved to complete sound planning efforts prior to execution. Also, because they promote “outside the box” business practices, risk management is not a choice, but the backbone of the effort from cradle to grave. Agencies should start planning with a clear needs statement or defined problem supporting a capability gap.

Next, the entity must perform adequate market research and requirements analysis to determine if solutions already exist or whether the capability is possible among industry partners. Adequate market research efforts must consider existing commercial products and practices, technological stability and current similar Defense Department or federal government efforts.

Entities must ensure OTAs will comply with codes, depending on the effort’s characteristics. The agency must collectively and clearly articulate what success looks like and how success or performance will be measured. Is the end game a report as a result of extensive research? Or is the end game follow-on production if the prototype OTA successfully meets the capability gap?

The government shall give full consideration to key areas related to cost, schedule and performance throughout the project’s life since OTAs do not eliminate the need for effective program management. Thus, consideration shall be given to vital technical characteristics or performance parameters, such as cybersecurity, intellectual property, technology transfer, testing, integration, interoperability and life cycle sustainment/supportability. Parties involved should continually ascertain when to continue or terminate the effort based on cost-benefit analysis.

Planning efforts should also encompass the means by which the government will publicize and solicit OTAs. Publicizing activities should target relevant and capable industry partners identified from market research. Solicitation activities must be creative, through fair and reasonable methods, to foster maximum competition. Methods include white papers, commercial solutions openings, requests for proposals, panel pitches, industry days, LinkedIn and Twitter.

OTAs require critical thinking and can be incredibly complex. Besides the many aspects of cost, schedule and performance to be considered and evaluated, they have minimum predefined requirements and are accompanied with unique negotiations requiring advanced levels of business acumen from various perspectives. OTAs are a team sport and should have diverse participation by technical and non-technical personnel.

Standardized OTA training or credential programs are not widely available to Defense Department or industry personnel. Personnel should seek to complete some form of OTA training. Nontraditional contractors should also complete training on the electronic invoicing system that will be used to submit invoices for work performed on OTAs. Invoicing the department can be cumbersome, especially for smaller firms with operations largely dependent on timely cash flows.

OTAs also require sufficient documentation since they have more flexibility and fewer internal controls when compared to other business options. Documentation is also vital to support OTA-related actions were fair, reasonable, transparent and legal. The need for sufficient documentation applies to both government and industry partners.

Appropriate documentation assists organizations in establishing beneficial continuous feedback loop mechanisms to replicate best practices and learn from shortcomings. Documentation also allows independent or unbiased individuals to follow OTA-related business decisions and funding. Documentation is even more meaningful as defense organizations spend greater amounts of taxpayer funds on OTAs and Congress seeks additional details on their usage.

Also, the law requires that all prototype OTs above $5 million include a clause that provides the GAO full access to records. As a result, all parties involved need to make documentation efforts a priority throughout the life of every OTA. Lack of existent or appropriate documentation could cause all the parties to receive undesired scrutiny from

Congress and defense leadership. Congress could also reduce or eliminate the authority if parties do not create or maintain sufficient OTA documentation.

The ability for the nation to maintain a sustainable competitive advantage and efficiently leverage adaptive acquisition methods depends on OTAs. It is all but certain they will continue to grow in popularity.

Although they are a bright and shiny object drawing significant attention from expanded usage, the department, its agencies and industry partners must carefully plan and execute OTAs from cradle to grave.

While they are flexible alternatives, they are accompanied by risks, not appropriate for every situation, and do not have a universal pathway for guaranteed success. OTAs must be treated as a privilege rather than an authority that will remain indefinitely.

Appropriate use in accordance with Congress’ intent could produce tremendous value for the Defense Department and industry partners. Alternatively, inappropriate use could result in inefficient use of taxpayer resources and Congress limiting or eliminating the modernized authority.”

https://www.nationaldefensemagazine.org/articles/2020/4/15/other-transactions-best-practices-to-enable-success

Bipartisan Cyberspace Solarium Commission Will Report In Early 2020

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Image: “LinkedIn

“CYBERSCOOP”

The Cyberspace Solarium Commission, a bipartisan group tasked last year with devising a strategy for defending the U.S. against cyberattacks, is almost ready to reveal its proposals to the world.

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“The commission’s final report, expected to be issued in March or April, may include new reporting requirements for the private sector that would incentivize better security practices, the commission’s co-chairs, Sen. Angus King, I-Maine, and Rep. Mike Gallagher, R-Wis., said Tuesday during a Council on Foreign Relations summit in Washington, D.C.

While the final language is unclear, the report is expected to include a sweeping set of proposals ranging from an overhaul of congressional oversight on cybersecurity issues to an assessment of the Pentagon’s offensive and defensive readiness. Whether there’s broader appetite outside of the 14-member commission to implement the recommendations, however, remains to be seen.

One idea the commission has entertained is convincing insurance companies to offer better rates to clients who follow specific guidelines meant to bolster their cybersecurity, King said. Insurance companies already are incentivizing clients to work with cybersecurity vendors considered more likely to stop data breaches, as CyberScoop has reported.

“How do we ensure they are at some minimal level of cybersecurity?” King said. “The insurance company will say to the company if you do these things your rate will be ‘x,’ if you don’t do these things it will be ‘2x.’”

The commission also has considered reporting requirements that would encourage companies to decrease the time it takes them to detect, evaluate, and remediate possible network intrusions.

The so-called 1:10:60 rule has been helpful in debating possible requirements, Gallagher said. That rule encourages firms to detect intrusions in one minute, have an analyst evaluate it in 10 minutes, and remediate it within 60 minutes. Meeting this benchmark, according to CrowdStrike data, would eradicate most hackers before they’re able to move beyond their initial entry point.

“You can imagine a world in which we require regulated companies or critical infrastructure to collect 1:10:60 data or something similar,” Gallagher said.

The focus of any such proposal would be to hold companies accountable in case of a breach, Gallagher said.

How the exact proposal on reporting detection and remediation might be adopted, however, is still being debated. In the meantime, Gallagher noted, the federal government could improve its own internal reporting, perhaps by sending Congress quarterly updates about agencies’ detection and remediation times.

Changing behavior in Washington, too

The Solarium’s report may present Congress with some structural proposals that could enhance its oversight of cybersecurity issues, the co-chairs said.

The commission is unanimous that Congress needs to change how it conducts cybersecurity oversight, according to King, and the Solarium report may present lawmakers with proposals on how to expands their visibility into cybersecurity gaps. One way to do that could be to create a select committee to oversee cybersecurity issues, he said.

For now, it seems, many of the commission’s proposals will be focused on “enhancing” the role of the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA). Hiring initiatives may be a priority, Gallagher suggested.

Recommendations for the White House could make an appearance in the final report as well.

“There is near unanimity on the need to get a focal point in the White House to do oversight of the cyber community,” Gallagher said.

The White House cybersecurity coordinator, a role that then-national security adviser John Bolton eliminated in 2018, has not resurfaced despite Bolton’s departure.

The commission also will mandate the Pentagon conduct internal assessments of the operational capacity of different cyber personnel in the Department of Defense. Such a change could provide insight on how U.S. Cyber Command personnel, for example, are functioning under a new Pentagon strategy of being more aggressive in cyberspace, known as “defending forward,” according to Gallagher.

The commission has also been debating how hiring can and should be different for cybersecurity posts at the Pentagon.

“Do you need a cyberwarrior to do 100 pushups? We don’t want to lower the standards of the military, but we need to be able to tailor the requirements to the job,” King said.”

New SBA Size Standard Rule For Small Business Contracting

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Image: SBA

“FCW”

A Small Business Administration rule implementing legislation that changes the calculations to determine small business size standards takes effect on Jan. 6, 2020. 

The rule itself, which extends the period of average annual receipts from three years to five years for the purpose of determining size standards, was finalized Dec. 5.

“After this new size standard takes effect, small businesses will be able to make critical investments to grow their businesses without fearing that they will lose access to resources and contracting opportunities,” Sen. Ben Cardin (D-Md.), a sponsor of the Runway Extension Act legislation, said in a statement.”

Click to access 2019-26041.pdf

300 Military Bases With Possible Toxic Forever Contamination

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A ir Force fire protection specialists douse a simulated ship fire with foam during a training exercise at the Military Sealift Command Training Center East in Freehold, N.J., on Dec. 5, 2013. (Tech. Sgt. Matt Hecht/Air National Guard)

MILITARY TIMES

Hundreds of military installations have either known or likely water contamination caused by runoff from firefighting foam used in response to vehicle and aircraft accidents, according to the Environmental Working Group.

Using Defense Department data, the organization built an interactive map of 305 sites, which are found in all 50 states. Each map dot opens up to information and links on perfluorooctane sulfonate or perfluorooctanoic acid, known as PFAS.

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“Of these sites, 138 have not been previously identified on EWG’s map of known PFAS contamination at military bases, civilian airports and industrial sites,” according to a Tuesday new release. “In addition, 42 of these sites were not included on a list of 401 locations the Pentagon gave to Congress of active and former installations where PFAS contamination was known or suspected.”

An interactive Environmental Working Group map lays out PFAS contamination across 305 military sites. (EWG)

An interactive Environmental Working Group map lays out PFAS contamination across 305 military sites. (EWG)

The map went live the day after the House and Senate armed services committees finalized a compromise defense authorization bill for 2020, which includes provisions to approaching the PFAS issue going forward.

Expected to see a vote in the House on Wednesday, the law would prohibit the use of PFAS-laden firefighting foam after Oct. 1, 2024, and immediately ban any use of the foam outside of emergency situations.

While the bill dropped a provision that would have brought PFAS-contaminated bases under the federal Superfund law, providing funding and a requirement to clean them up, the NDAA pushes the Pentagon to work with state governments to start clean up using funds from the Defense Environmental Remediation Account.

It would also require that military firefighters are testing for PFAS levels in their blood, as the chemicals do not break down over time and are known to build up in the human body.

In the mean time, the Air Force has been testing a system that might be able to remove PFAS from ground water, and DoD is funding research into a new firefighting foam.”

https://www.militarytimes.com/news/your-military/2019/12/11/here-are-more-than-300-bases-with-possible-toxic-forever-chemical-contamination/

National Archives/Records (NARA) To Stop Accepting Paper-Based Records At End Of 2022

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FEDSCOOP

“The National Archives and Records Administration (NARA) is set to stop accepting paper-based records at the end of 2022, and the White House Office of Management and Budget has a new guidance out to help agencies meet this deadline.”

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OMB published a memo late last week that lays out expectations and deadlines for agencies as they move toward the paperless futureNARA archives documents from all corners of the government.

“The Federal Government spends hundreds of millions of taxpayer dollars and thousands of hours annually to create, use, and store Federal records in analog (paper and other non-electronic) formats,” the memo states. “Maintaining large volumes of analog records requires dedicated resources, management attention, and security investments that should be applied to more effectively managing electronic records.”

Instead, OMB is directing agencies to “ensure that all Federal records are created, retained, and managed in electronic formats, with appropriate metadata,” and “develop plans to close agency-operated storage facilities for paper and other, analog records, and transfer those records to Federal Records Centers operated by NARA or commercial storage facilities.”

The OMB guidelines require that all agencies “manage all permanent electronic records in an electronic format” by Dec. 31, 2019. By December 31, 2022 this requirement extends to all permanent records as well as temporary records, “to the fullest extent possible.”

“Beginning January 1, 2023, all other legal transfers of permanent records must be in electronic format, to the fullest extent possible, regardless of whether the records were originally created in electronic formats,” the memo states. After that date, agencies will be required to digitize permanent records in analog formats before transfer to NARA.”

Dec. 31, 2022 is also the deadline for agencies to close their agency-operated record centers, and transition all records to federal or commercial centers.

For its part, NARA will update its regulations on standards for electronic record keeping by Sept. 30, 2020.

Meanwhile, a recent audit by NARA’s inspector general found continuing weaknesses in the agency’s ability to manage electronic records. Legacy IT systems, for example, hinder the agency’s capacity to ensure that it is collecting all the records it should be collecting.

“These deficiencies combined represent a material weakness in electronic records management and will continue to have a negative impact unless improvements are made,” the inspector general’s report reads.

The IG made a total of 10 recommendations to improve NARA’s electronic records management practices. NARA agreed with all 10 recommendations, and provided descriptions of the actions it plans to take to address the issues identified.”

Government Awards Migrant Children Shelter $341 Million Contract Without Competition

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Migrant children are escorted throughout the Homestead Temporary Shelter for Unaccompanied Children during Good Friday in Homestead, Florida on April 19, 2019. MATIAS J. OCNER MOCNER@MIAMIHERALD.COM

“MIAMI HERALD”

“Federal officials told the Miami Herald that their decision to issue Comprehensive Health Services the new deal on a no-bid basis was due to an “unusual and compelling urgency.

[White House Ex- Chief of Staff John Kelly has joined the board of the company that runs the shelter and was employed as a lobbyist for the company before taking his White House Post]
https://www.miamiherald.com/news/local/immigration/article230007499.html

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” The Homestead shelter for unaccompanied migrant children has been shrouded in secrecy and cloaked in controversy from the moment it was reactivated in February 2018. Lawmakers scornful of President Trump’s immigration policies have been blocked from visiting. Because it sits on federal land, Florida’s child welfare agency is barred from investigating allegations of abuse.

Rather than close it, as activists have demanded, the feds just gave the operator, Comprehensive Health Services,a brand new contract — one worth $341 million.

There was no competitive bidding and it happened under the radar.

By the time the contract — the latest in a series of short-term deals — runs out in November, CHS will have earned more than half a billion dollars for housing migrant children, a figure that inflames critics while advocates say it is justified by an out-of-control influx on the southern border. The dollar total could rise still higher since the payment escalates if the number of youths increases, as is expected.

The cost per youth, as of last month, amounts to $775 per day, according to the U.S. Department of Health and Human Services.

“The skeptic in me thinks that it might have been a way to fly under the radar and avoid people noticing a half-a-billion-dollar deal,” Scott Amey, general counsel for the Project on Government Oversight, said of the newcontract. Amey directs contract oversight investigations at the D.C.-based watchdog group, including reviews of federal spending on products and services.

The center, formally known as the Homestead Temporary Shelter for Unaccompanied Children and actually located outside the Homestead city limits, is the only facility for migrant children operated by a for-profit corporation, another sore point with critics, since they note that the longer a youth is detained, the better it is for the company. (CHS doesn’t decide how long a youth remains.) CHS is a subsidiary of Caliburn International, which itself is under the umbrella of the private equity firm DC Capital Partners, a firm whose advisory panel consists of a battery of top national security, diplomatic and military officials with strong government ties.

The Miami Herald tried repeatedly to get the companies — any of the three — to discuss the lucrative new deal on the record. Neither CHS nor Caliburn responded.

A secretary at DC Capital, who did not give her name, said: “Sorry but we have a blanket policy that we’re not talking to the press, and based on the meeting we just had, especially not about the Homestead shelter. I’m not trying to be condescending, but that’s what it is.”

ORIGINALLY UNDER OBAMA

The center actually opened under the Obama administration on a site formerly run by the Job Corps, a vocational training program for young men and women. It was during a prior surge in unaccompanied minors arriving at the border. When the surge ebbed, the compound closed.

It reopened under the Trump administration in February 2018 and became a flashpoint when the controversy over family separations came to a boil. Some youths who had been separated from their parents were housed there.

CHS, at first hired in a competitive bid process, initially was one of several vendors fulfilling divvied-up responsibilities. After the facility closed and reopened, CHS became solely responsible for the operation and was awarded a four-month, $50 million contract.Its most recent contract, a nine-month $222 million deal, was set to expire on April 20 when HHS awarded the company the new seven-month, $341 million “sole-source” contract.

Usually, government contracts are subject to policies, statutes and regulations that encourage competition to ensure proper spending of taxpayer dollars. However, federal officials told the Miami Herald that their decision to issue Comprehensive Health Services the new deal on a no-bid basis was due to an “unusual and compelling urgency.”

HHS emphasized that the lucrative award boiled down to who could take care of immigrant children best as growing numbers of unaccompanied minors arrive at the border, causing shelter populations to balloon.

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Children photographed at the Homestead shelter for unaccompanied minors in early March 2019. COURTESY OF CARRIE FEIT

The center has been the target of frequent protests, including ones by congressional Democrats, most of whom are critical of President Trump’s restrictive immigration policies. Recently, an artist projected the words “Shut it down” onto detention center walls, using light. Lawmakers seeking to tour the facility have at times been turned away.

The Miami New Times reported on an employment ad placed by CHS stating that potential hires must at all times be “physically able to run, jump, lunge, twist, push, pull, apply approved restraint techniques and otherwise manage or coerce the full weight of an infant or adolescent.”

HHS said in a statement: “Currently, [Comprehensive Health] is identified to be the most knowledgeable and experienced in the Homestead service requirements needed and the only source [the Office of Refugee Resettlement] has identified that is capable of meeting the urgent need to increase bed capacity at Homestead in a timely manner.”

In financial records, CHS describes itself as specializing in “consulting, engineering, cost estimating, and project and construction management.”

The private equity company that controls it, DC Capital Partners, has a powerhouse advisory board that includes Richard L. Armitage, former U.S. deputy secretary of state; Michael Corbin; former ambassador to the United Arab Emirates; Michael V. Hayden, former director of the Central Intelligence Agency and of the National Security Agency; Donald M. Kerr Jr., former deputy director of science and technology at the CIA; Anthony C. Zinni, former commander-in-chief of the U.S. Central Command and former U.S. Envoy to the Middle East; and Stephen F. Loftus, former director of the Office of the Budget for the United States Navy.

HHS would not comment on how CHS was deemed most qualified or whether any other providers were considered. The agency also wouldn’t provide compliance reviews for the company because they contain “proprietary information.” Such reviews gauge whether vendors are doing a good job and meeting goals.

Normally, under federal contracting regulations, agencies are supposed to seek proposals from “as many potential sources as is practicable under the circumstances.” Those regulations also say sole-source contracts “may not exceed one year, unless the head of the agency determines that exceptional circumstances apply.”

Issuance of a no-bid contract has to be signed off by someone high up the bureaucratic ladder, said Charles Tiefer, a professor of government contracting law at the University of Baltimore.

“The excuse for not competing, mainly that this is an ‘urgent and compelling need,’ shows that the agency has papered their excuses at a high level,” said Tiefer, who served as deputy general counsel with the House of Representatives for more than a decade and worked as a trial attorney at the Department of Justice. He said he has leveled similar criticism of contracting practices during the Obama administration.

CHS’ new contract may have gone largely unnoticed in the government’s online contract summary database, usaspending.gov, because it was under a new name and identification number. Usually extensions to contracts fall under the previous ID numbers.

But the vendor changed last year from Community Health Services Inc. to Community Health Services LLC.

Kenneth Suh, an attorney who represents the company, offered a “no comment” before hanging up when asked the reason for the change.

There can be tax, record-keeping or other benefits inherent in changing from a corporation to an LLC.

Government officials said the Miami Herald would have to wait 30 days from when the contract was awarded to gain access to the details.

‘A BIG EMERGENCY’

Jessica M. Vaughan, director of policy studies at the Center for Immigration Studies, says these “types of emergency no-bid contracts” do more good than harm and that they “are not as unusual as people may think.”

“Congress has provided this tool of sole-source procurement or accelerated contracting that enables the government to enable a facility to be up and running more quickly than usual,” Vaughan said, adding that the president has the authority to do this differently when there’s an emergency, “and this a big emergency.”

“That’s why they had to acquire this facility in this way. The alternative would be to put kids in inappropriate situations or to just release them and we know already that that doesn’t work. There’s a need for more space because the kids are being held for a little while longer while sponsors are identified.”

On Wednesday, HHS requested an emergency appropriation of $4.5 billion to “address the immediate humanitarian crisis.” This includes $2.9 billion for HHS to increase shelter capacity for migrant children.

“Currently, HHS is at risk of exhausting all of its UAC resources in June. Without additional funds, HHS may be forced to scale back services, may be unable to handle further growth in the number of children in care, and may have to reallocate more funds from refugees and victims of trafficking and torture,” HHS said in a statement.

Added Vaughan: “I believe it was the way to go given the circumstances.”

Florida Democratic Rep. Debbie Mucarsel-Powell, a frequent critic of the administration’s immigration policies, said she objected to any private company “profiting off of the detainment of children.”

Just how much the company will profit off of detainment of children is unclear, although company filings show that Comprehensive Health Services had about a 15 percent profit margin in 2016 and 2017. One way to look at that is: If the company collects half a billion dollars in revenue, that could translate into an added $75 million in profits.

According to federal documents, CHS’ new deal is a “cost plus” contract, which means the the provider charges the government all its costs — labor, materials, rent — in addition to salaries for top management.

A “cost plus” contract means that the government puts a tentative ceiling on what it will pay of the $341 million contract, which could only be raised by some “elaborate and well-justified changes in that figure, perhaps like the addition of beds or a pattern of much-longer stays by the children,” Tiefer added.

“So the longer the children stay, the more money they make. The more beds that come in, the more expenses they run up,” Tiefer said. “If it were a fixed-price contract, meaning, the award amount can’t go up,” Tiefer added, “they’d be saying ‘lock the door.’ ”

“Like other private equity firms, DC Capital raises money from institutional investors like employee pension funds and university endowments and then invests it,” said Jim Baker of the Private Equity Stakeholder Project, a non-profit that works with stakeholder groups that are impacted by private equity groups.

Records show some of the entities investing in DC Capital include the Baltimore police and fire departments, Missouri Department of Transportation and Highway Patrol, Prince George’s County, Police and Fire in Maryland, the University of Oklahoma Foundation and the Fresno City Retirement System in Texas.

“I do have to wonder that in this situation, if public employees know that their pension money is being invested in that sort of detention center,” Baker said.

TRIPLING ITS CAPACITY

Rather than face closure, as activists have demanded, the center is growing. It has increased its capacity from about 1,000 to 3,200 — an increase on track with the marked rise in arrivals from Central America and Mexico, including unaccompanied minors.

Recent polls have shown a rise in the percentage of Americans who agree with President Trump that there is an immigration crisis on the border, although there is disagreement on whether Trump or Democrats who oppose his policies are mostly to to blame.

As of mid-April, about 2,200 children were being housed at the complex.

Until last month, Caliburn had planned to sell up to $100 million in an initial public stock offering. However, amid controversy over President Trump’s immigration policies, the company announced in a letter to the SEC that it would cancel that plan.

Now, according to the Financial Times, DC Capital is looking to sell a 75 percent stake in Caliburn, which has grown rapidly by acquiring and combining government contractors. The publication reported that the documents accompanying the sale warned potential investors that the company operates “in a number of challenging and politically charged environments.”The spotlight fell on the company once again recently when John Kelly, the president’s former chief of staff and the onetime head of both the Department of Homeland Security and the U.S. Southern Command in Doral, was spotted entering the compound on a golf cart. That was in early April. Previously, Kelly was employed as a lobbyist for DC Capital Partners through a subsidiary, but he said he cut ties when he joined the Trump administration.

HHS would not disclose who Kelly met with that day.

The company announced on Friday that Kelly had joined the board.”

https://www.miamiherald.com/news/local/immigration/article229744049.html





Reasons To Outsource A Chief Compliance Officer

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Image: The Fox Group LLC

NATIONAL DEFENSE MAGAZINE”

“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.”

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“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. “

http://www.nationaldefensemagazine.org/articles/2019/1/4/reasons-to-outsource-a-chief-compliance-officer

Four Big Questions For Cyber Security In 2019

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“FIFTH DOMAIN”

“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.”

https://www.fifthdomain.com/industry/2018/12/31/four-big-questions-for-cybersecurity-in-2019/

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

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“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.”

https://www.smalltofeds.com/2007/07/contract-data-requirements-list-cdrl.html

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

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GSA Sechedule Consolidation

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

“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.”

https://www.fedscoop.com/gsa-multiple-awards-schedule-emily-murphy/