Tag Archives: Government Regulations

Federal Workers Earn 32% Less Than Private Sector Employees Doing The Same Jobs

Fed Emloyee Salaries

Federal employees see nearly 32 percent less on their paychecks than their private-sector counterparts, according to a recent report by the Federal Salary Council’s Locality Pay Working Group. (Getty Images)


“Federal employees on average see a 31.86 percent difference between their paychecks and those doing the same work in the private sector according to an April 10, 2018, report submitted to the Federal Salary Council by its Locality Pay Working Group.”


“The working group calculates the pay gap between federal employees and their private-sector counterparts by taking sample data from the Bureau of Labor Statistics’ National Compensation Survey in areas of the country in which federal employees receive locality pay and averaging those pay rates into a format that is comparable with federal general schedule rates.

Federal employees can receive locality pay on top of what the general schedule rates allow for their position if the government has determined that the cost of living in that locality is higher than the rest of the U.S.

These 46 established and four pending locality pay areas can span wide swaths of the U.S., such as the entire states of Hawaii and Alaska, to make up for cost-of-living expenses.

The Washington-Baltimore-Arlington locality, for example, would have seen a nearly 88 percent pay disparity from 2015 to 2017 without the addition of locality pay, according to the report.

The target disparity for the whole of the federal workforce is five percent, according to the report, giving the government a long way to go to bring employee pay in line with targets.

In 2017 and 2018 reports, the Council recommended that Burlington, Vermont; Virginia Beach, Virginia; Birmingham, Alabama; and San Antonio, Texas, be established as new locality pay areas, and the President’s Pay Agent approved that recommendation, though the regulatory process to make that change has yet to be undertaken.

For 2019 pay, the working group also recommended that Corpus Christi, Texas, and Omaha, Nebraska, be established as locality pay areas, as pay disparities in those areas have exceeded the rest of the U.S. by more than 10 percent in the past three years.

Federal employee base pay has seen fairly steady increases since 2014, hovering at or just above one percent. U.S. code calls for increases in basic pay equal to the percentage increase in the Employment Cost Index minus half a percent. As the ECI increased to 2.6 percent in September 2017, the GS basic pay increase for 2019 should be 2.1 percent.

The working group’s report was submitted during an April 10, 2018, meeting of the entire Federal Salary Council, whose full report to the Pay Agent will be made available in the coming weeks.”



U.S. Army Prioritizes Research And Development (R&D) Funding And Intellectual Property Policies


Army Reaearch and Development


“The idea is to put the money not on various projects that may have been growing with a life of their own, but instead bring that money back against the top six priorities.

More commercial model that may involve purchasing licenses from industry.  Industry can also license intellectual property from the government.”

“The Army’s assistant secretary for acquisition, logistics and technology is looking to aid the service’s modernization efforts by implementing new policies regarding research and development and intellectual property.

Bruce Jette said the Army has already realigned R&D funds to meet its top modernization priorities, which include long-range precision fires, a next-generation combat vehicle, future vertical lift platforms, a mobile and expeditionary communication network, air and missile defense capabilities, and soldier lethality.

“The idea is to put the money not on various projects that may have been growing with a life of their own, but instead bring that money back against the top six priorities,” he said March 28 at the Association of the United States Army’s Global Force Symposium in Huntsville, Alabama.

Additionally, Jette’s office wants to give more freedom to researchers and lab directors by providing some funds that are specifically geared towards innovating technologies that the military may not have anticipated, he noted.

“We can’t … incrementally engineer breakthroughs, and that’s what we’re trying to do is give them the freedom to do that,” he said.

Jette said the service is also working to establish a fund aimed at crossing the “Valley of Death,” referring to the process for transitioning new technologies into existing programs of record.

For example, a senior commander “would sit there and say ‘OK, one of the guys has this project, he’s got it done, it’s ready, and do we want to actually put it into that program?’” Jette said.

Following consultation with the program manager, senior leaders would then make a decision on the way forward, he explained. “We decide it’s worth it. We do it with our eyes open and … then we fund the transition.”

Jette also wants to improve how industry and the government handle intellectual property. Both sides have been “sloppy,” he said.

“The government starts using your IP, you start using the government’s IP, you can’t get extricated and we begin having unpleasant complications,” he said. There needs to be movement towards a more commercial model that may involve purchasing licenses from industry, he added.

“I’ve done this on the outside. Show me the box — that’s your IP. Put that in the bid. Show me what the limits of that [are],” he said. “Tell me what you want to do for licensing … [and] we can have conversations.”

Industry can also license intellectual property from the government, he noted.

If “we built something and … you want to apply it commercially, you want to apply it to another effort, I’m willing to talk about licensing fees,” he said. “Most people don’t realize that, but the government can get paid for their intellectual property.”





GSA SAM Registration Hackers Used Spearphishing









“It’s unclear how much the scammers have netted through their scheme, which is being investigated by the GSA inspector general and federal law enforcement.

GSA’s System for Award Management, or SAM.gov, didn’t provide two-factor authentication or use an email protocol designed to protect against incoming emails with spoofed domain names in their addresses. “

“Cybercrooks who stole federal payments by hacking contractor accounts on a GSA website used sophisticated spearphishing techniques to steal login credentials and then diverted payments to bank accounts they controlled, an executive of a contractor targeted in the scam told FedScoop.

The inspector general’s office declined to comment, but sources familiar with the investigation told FedScoop that the cyberattacks that facilitated the fraud had been identified last year and were ongoing as recently as last week.

Targeting was also aided by the rich data the website provided.

The scammers “didn’t need to do any reconnaissance or research, the usual kind of social media engineering” to find out who at each company controlled the SAM.gov account, the executive said. “SAM.gov handed them the targeting intelligence they needed for the campaign.”

The public website has a search function that enables visitors to identify the point of contact for any company with an account on the site — which contractors can use to manage the payments they receive under federal contracts.

“It’s a spearphishing guide,” said the executive, who asked not to be identified because of the sensitive nature of the case. The emails sent to the points of contact “were very high quality,” said the executive, adding that they appeared to come directly from SAM.gov and contained a message asking recipients to click on a link to a fake login page. “It was a high quality facsimile of the real page,” the executive said. When the recipient entered their username and password, the page harvested them, then redirected the user to the real site, along with random login data.

“What you see next [after entering your information] is the real login page with the error message, so you think you’ve fat-fingered it,” explained the executive.

Having harvested the credentials for the account administrator, the hackers were able to login and use the site’s management functions to change the bank accounts into which federal payments were delivered.

Security experts say such attacks can be prevented by at least two baseline best practices that SAM.gov lacked:

● Two-factor authentication (2FA) — requiring the user to identify themselves via a secure hardware token or one-time passcode sent to their mobile phone, in addition to their password. But SAM.gov didn’t offer that option for account administrators, the executive said.

● DMARC, or Domain-based Message Authentication, Reporting and Conformance, is the industry standard measure to prevent email spoofing — when hackers make their messages appear as if they come from trusted correspondents. If DMARC had been deployed and enabled, spoofed emails purporting to come from SAM.gov would have been marked as spam or simply discarded. SAM.gov has a DMARC record, but enforcement has not been switched on.

A GSA spokeswoman declined to address specific questions about 2FA and DMARC. “This is an active law enforcement-sensitive investigation,” she said in an emailed statement. “GSA has made public as much information as it is able on our website and will continue to update accordingly.”

The executive from the targeted company was very critical of SAM.gov’s security. “It’s ridiculous how poorly put together that site is,” he said, adding that when the company first discovered the cyberattack, he struggled to find a point of contact at GSA to report it to.

“I couldn’t convince anyone to listen to me,” he said. After his initial contact with federal
investigators last year, “There was silence for months,” he said.

“Once they knew there was a problem, they had a responsibility to notify the site’s users… Everyone with an account should have been told to check whether their banking information had been changed … There are a thousand things they could have done.”

“The problem is not they had a problem, everyone has problems” concluded the executive. “The problem is the glacial speed with which they’ve responded.”


Related GSA Announcement:








The Small Business Federal Government Contracting “Past Performance” Challenge


Past Performance


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

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

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

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

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

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

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

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

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

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

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

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


Ken Fluther

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





Defense Companies Funneling Newfound Tax Reform Cash Into Corporate Pension Offsets

Defense company pension Liability

Generally speaking, the biggest recipient of cash infusion happens to be pension plans.. (doomu/Getty Images)


“Most companies froze them a decade ago or longer. But that didn’t eliminate the liability that comes with having to reserve funds for paying out retirement to the many individuals that already have built up those nest eggs.

So it’s understandable then that Lockheed would decide to make a whopping $5 billion cash contribution into its pension trust in 2018, satisfying required payments until 2021. It also explains Raytheon’s contribution of $1 billion, Northrop’s $500 million and Harris’ $300 million, to just name a few more.”

“If you listened to the annual earnings calls of the major, public defense companies (wait, does everyone not do that?) then you might have noticed a common theme.

They’re all going to have more cash. And a lot of them have similar plans for how to spend it.

One of the advantages of the tax reform law was to trim the corporate tax rate from 35 percent to 21 percent, which, in the words of Lockheed Martin’s CEO Marillyn Hewson, “reduces the combined U.S. corporate tax rate from the highest in the industrialized world, in line with the tax rates used in the most advanced economies.”

In the short term, most companies experienced a little bit of hurt by way of a one-time non-cash increase to income tax expense; it showed in earnings, with some falling short of guidance. But the advantages will certainly kick in starting next year.

So then what do companies have in mind? The idea behind the corporate tax cuts, if you ask the Trump administration, was jobs. And longer term, that conceivably will happen among the defense companies. But first, the money is going to other things. And generally speaking, the biggest recipient of cash infusion happens to be pension plans.

If pensions seem “so 1990s,” it’s because they kind of are. For years, that liability has been an enormous drag on the books for companies, particularly those that have been around for a long time (meaning just more obligations).

But here’s what’s interesting about pension liability — and bear with me here, since it’s complicated and I’m not a financial expert: Liability is so high because interest rates are low, and interest rates are used to calculate long-term obligations. Because pension payouts run so far into the future — 60 to 70 years to cover the lifespan of all participants — a company’s plan must predict how much it needs in the short term to cover future payments. That’s done by using an assumed discount rate based on the interest rate of fixed-income securities. Make sense? Put simply: The lower the discount rate, the higher the assumed pension obligation.

Of course, that very reason makes pension liabilities “artificially high,” in the words of Lockheed CFO Bruce Tanner, when he was kind enough to walk me through all this in 2012. I remember this statistic being quite telling: If the interest rate increased to 7.75 percent at that time, Lockheed’s unfunded liability of $12.78 billion in 2012 would have suddenly become zero. Rates have remained low, so pension liability has remained high.

So then what’s the point? If pension liability is something of a false drag on the books, and if we all assume that interest rates will eventually rise, then couldn’t this newfound infusion of cash be better spent elsewhere — acquisitions, research and development? Executives assured investors that too was happening — if not now, then soon.

Lockheed said it’s exploring such things as employee training and educational offerings, increasing charitable contributions in STEM, and increasing the company’s ventures investment fund for early-stage companies developing disruptive tech. And Harris will invest $20 million in technologies to accelerate innovation and affordability efforts for customers, also granting each of its roughly 17,000 nonexecutive employees 10 shares of Harris common stock. That brings a current market value of about $1,470 each, or approximately $24 million in total.

So other investments are happening. It’s also important to consider that companies are using the tax cut windfall to front-load pension contributions before tax rates fall from 39.6 percent to 37 percent. Getting the most for their contribution, so to speak. That makes particular sense amid chatter mentioned by Richard Safran of Buckingham Research Group on an earnings call that the Pentagon might look to claw back some portion of the tax benefit from defense companies either by renegotiating existing contracts or re-pricing items on future ones.

Short-lived benefits? Too soon to tell, but better to take advantage now.”






Homeland Security Falling Short in Managing Risky Contractors


Contracted workers install a blue tarp on a roof damaged by Hurricane Irma as a part of FEMA / The Corps of Engineers “Operation Blue Roof” program in Monroe County (Cudjoe Key), Florida on Tuesday, Oct. 3, 2017. (Photo: J.T. Blatty / FEMA)


“The Department of Homeland Security awarded over $23 billion in contracts, grants, and other federal assistance in fiscal year 2017.

The Department’s suspension and debarment policies and practices are falling short, making it more difficult for the agency to ensure taxpayers’ money isn’t lost to fraud, waste, and abuse.”

“The watchdog concluded the Department’s suspension and debarment policies and practices are falling short, making it more difficult for the agency to ensure taxpayers’ money isn’t lost to fraud, waste, and abuse.

Federal agencies use suspension and debarment to prevent individuals and companies suspected or found guilty of misconduct from receiving contracts, grants, loans, and other federal money. Suspensions and debarments aren’t used as a punishment; instead, they are used to protect taxpayers by making sure the government only does business with responsible entities.

Among the deficiencies highlighted in the report, the Department’s guidelines regarding suspensions, debarments, and administrative agreements—a remedy used in lieu of suspension and debarment—are outdated and missing needed information. In particular, the Inspector General found inadequate documentation for five of seven administrative agreements approved between 2012 and 2017.

The watchdog also determined the Department lacks an effective centralized system to track suspension and debarment activities, which may have caused the agency to publicly report inaccurate data for one year. In addition, for an eight-month period in 2016 and 2017, the Federal Emergency Management Agency (FEMA) failed to update the System for Award Management (SAM) and the Federal Awardee Performance and Integrity Information System (FAPIIS)—databases that track which individuals and companies have been barred from doing business with Uncle Sam. Fortunately, the Inspector General reported that none of the individuals and companies FEMA excluded during that reporting lapse had received funds from FEMA or any other federal agency.

The Inspector General made several recommendations for improvement, including updating suspension and debarment guidelines, devising a centralized information tracking system, enhancing information sharing within the agency, and incentivizing employees to timely report suspensions, debarments, and administrative agreements in the SAM and FAPIIS databases. The good news is that the Department agreed with all of the recommendations and is taking steps to address them. According to the report, the agency expects to fully implement all recommended fixes by the end of September this year.

The Project On Government Oversight has called for strengthening the federal suspension and debarment system and providing government contracting officials with more and better awardee accountability data. We are encouraged that the Department is increasing its usage of suspension and debarment, and that it is making improvements where necessary.”




Defense Logistics Agency (DLA) Lost Track of Hundreds of Millions of Dollars




| Daniel Slim/AFP/Getty Images  DLA serves as the Walmart of the military, with 25,000 employees who process roughly 100,000 orders a day on behalf of the Army, Navy, Air Force, Marine Corps and a host of other federal agencies — for everything from poultry to pharmaceuticals, precious metals and aircraft parts.


“Ernst & Young found that the Defense Logistics Agency failed to properly document more than $800 million in construction projects.

Across the board, its financial management is so weak that its leaders and oversight bodies have no reliable way to track the huge sums it’s responsible for, the firm warned in its initial audit of the massive Pentagon purchasing agent.

The audit raises new questions about whether the Defense Department can responsibly manage its $700 billion annual budget — let alone the additional billions proposes. 

The department has never undergone a full audit despite a congressional mandate — and to some lawmakers, the messy state of the Defense Logistics Agency’s books indicates one may never even be possible.”

“If you can’t follow the money, you aren’t going to be able to do an audit,” said Sen. Chuck Grassley, an Iowa Republican and senior member of the Budget and Finance committees, who has pushed successive administrations to clean up the Pentagon’s notoriously wasteful and disorganized accounting system.

The $40 billion-a-year logistics agency is a test case in how unachievable that task may be. The DLA serves as the Walmart of the military, with 25,000 employees who process roughly 100,000 orders a day on behalf of the Army, Navy, Air Force, Marine Corps and a host of other federal agencies — for everything from poultry to pharmaceuticals, precious metals and aircraft parts.

But as the auditors found, the agency often has little solid evidence for where much of that money is going. That bodes ill for ever getting a handle on spending at the Defense Department as a whole, which has a combined $2.2 trillion in assets.

In one part of the audit, completed in mid-December, Ernst & Young found that misstatements in the agency’s books totaled at least $465 million for construction projects it financed for the Army Corps of Engineers and other agencies. For construction projects designated as still “in progress,” meanwhile, it didn’t have sufficient documentation — or any documentation at all — for another $384 million worth of spending.

The agency also couldn’t produce supporting evidence for many items that are documented in some form — including records for $100 million worth of assets in the computer systems that conduct the agency’s day-to-day business.

“The documentation, such as the evidence demonstrating that the asset was tested and accepted, is not retained or available,” it said.

The report, which covers the fiscal year that ended Sept. 30, 2016, also found that $46 million in computer assets were “inappropriately recorded” as belonging to the Defense Logistics Agency. It also warned that the agency cannot reconcile balances from its general ledger with the Treasury Department.

The agency maintains it will overcome its many hurdles to ultimately get a clean audit.

“The initial audit has provided us with a valuable independent view of our current financial operations,” Army Lt. Gen. Darrell Williams, the agency’s director, wrote in response to Ernst & Young’s findings. “We are committed to resolving the material weaknesses and strengthening internal controls around DLA’s operations.”

In a statement to POLITICO, the agency also maintained it was not surprised by the conclusions.

“DLA is the first of its size and complexity in the Department of Defense to undergo an audit so we did not anticipate achieving a ‘clean’ audit opinion in the initial cycles,” it explained. “The key is to use auditor feedback to focus our remediation efforts and corrective action plans, and maximize the value from the audits. That’s what we’re doing now.”

Indeed, the Trump administration insists it can accomplish what previous ones could not.

“Beginning in 2018, our audits will occur annually, with reports issued Nov. 15,” the Pentagon’s top budget official, David Norquist, told Congress last month.

That Pentagon-wide effort, which will require an army of about 1,200 auditors across the department, will also be expensive — to the tune of nearly $1 billion.

Norquist said it will cost an estimated $367 million to carry out the audits — including the cost of hiring independent accounting firms like Ernst & Young — and an additional $551 million to go back and fix broken accounting systems that are crucial to better financial management.

“It is important that the Congress and the American people have confidence in DoD’s management of every taxpayer dollar,” Norquist said.

But there is little evidence the logistics arm of the military will be able to account for what it has spent anytime soon.

“Ernst & Young could not obtain sufficient, competent evidential matter to support the reported amounts within the DLA financial statements,” the Pentagon’s inspector general, the internal watchdog that ordered the outside review, concluded in issuing the report to DLA.

The accounting firm itself went further, asserting that the gaping holes uncovered in bookkeeping procedures and oversight strongly suggest there are more.

“We cannot determine the effect of the lack of sufficient appropriate audit evidence on DLA’s financial statements as a whole,” its report concludes.

A spokeswoman for Ernst & Young declined to respond to questions, referring POLITICO to the Pentagon.

Grassley — who was fiercely critical when a clean audit opinion of the Marine Corps had to be pulled in 2015 for “bogus conclusions” — has repeatedly chargedthat “keeping track of the people’s money may not be in the Pentagon’s DNA.”

He remains deeply doubtful about the prospects going forward given what is being uncovered.

“I think the odds of a successful DoD audit down the road are zero,” Grassley said in an interview. “The feeder systems can’t provide data. They are doomed to failure before they ever get started.”

But he said he supports the continuing effort even if a full, clean audit of the Pentagon can never be done. It is widely viewed as only way to improve the management of such huge sums of taxpayer dollars.

“Each audit report will help DLA build a better financial reporting foundation and provide a stepping stone towards a clean audit opinion of our financial statements,” the agency maintains. “The findings also improve our internal controls, which helps to improve the quality of cost and logistics data used for decision-making.”



DOD Panel Proposes Big Cuts to Acquisition Red Tape

red tape.jpg

Photo: iStock


“An advisory group empaneled to help streamline the Defense Department’s moribund acquisition system proposed eliminating 165 government-unique contract clauses, 13 acquisition offices, and repealing 20 statutory reporting requirements that act as barriers to the procurement of commercial items for military use.

The Section 809 Panel — created by Congress in the fiscal year 2016 National Defense Authorization Act — is on a two-year mission to find ways to improve Pentagon acquisition. “

“The first of three volumes of recommendations was released Jan. 31, with the second expected in June and a final report in January 2019.

Volume 1 is “focused on accessing the seller, so we can get after whatever innovative technology they might offer to the warfighter before it is already obsolete,” David A. Drabkin, one of the panel’s 17 commissioners told National Defense.

The “Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations: Vol. 1,” said, “The prolonged length of an acquisition by DoD indicates the existence of two problematic issues: a workforce culture beholden to process over mission and a system that lacks incentives to quantify lost opportunity and manpower costs.”

The panel has identified several major flaws in the system. One is that it is cost-centric. It equates the cost of the product or service with the risk of an acquisition, and these arbitrary cost thresholds add authorities, processes and oversight to the regime.

The system is also “inflexible and takes a one-size fits all approach,” with dissimilar products or services being acquired under the same rules. “This approach results in unnecessary process delays and the inability to tailor activities to meet warfighter needs,” the report said.

Drabkin said: “People will tell you … that the department is buying yesterday’s technology to be delivered tomorrow. What we want to try to do is get to where we can buy tomorrow’s technology to be delivered today.”

The red tape and the risk-averse culture prevents the Defense Department from working with the widest variety of possible vendors, which can restrict its ability to get what it needs, the report added.

Many of the 20 reporting requirements, 165 clauses and 13 offices were once needed and put into place by Congress, but are no longer required, Drabkin said. The secretary of defense may choose to keep some offices for certain programs, but he shouldn’t be forced to use them when they are no longer necessary, he added.

Changing the mindset of the Defense Department acquisition community will require Congress to eliminate some of this bureaucracy, Drabkin said.

The report introduces the “Dynamic Marketplace” concept “that can harness the benefits from the global marketplace of ideas, solutions, products and services at a speed that is closer to real time than the current acquisition process allows.”

The Dynamic Marketplace concept is “about adopting the practices and particular market segment in which we are trying to do business instead of trying to make all of those market segments conform to our specific rules,” Drabkin said.

The one-size-fits-all complaint — where acquiring toilet paper is about the same process as buying a jet fighter — goes back decades, and there were attempts to fix that, but the world has changed since then, he added.

“We are looking at: how do we reset the playing field so DoD can get what it needs in time to make a difference so that our process will be agile? It will value time and speed. It will focus on innovation — not only identifying it, but getting it to the warfighter … inside the turn of our enemy,” Drabkin said.

There are five basic attributes to the Dynamic Marketplace concept that the panel is continuing to refine and evolve that will move the system from one that is process-based to outcome based. They are: competitive and collaborative; adaptive and responsive; transparent; time sensitive; and allows for trade-offs.

As for competitive and collaborative, the Defense Department’s rigid requirements process is scaring away companies with potential solutions. It should “compete solutions to a problem, rather than assess a company’s ability to meet detailed technical specifications.” Further, acquisition personnel are often fearful they will be punished for communicating directly with industry, the report said.

As for adaptive and responsive, the panel found several examples of success stories where the system worked quickly — such as the mine resistant, ambush-protected vehicles acquired to defeat roadside bombs during the Iraq War — and new initiatives such as SOFWERX and Hacking for Defense, which could be scaled up.

Those activities, plus strategies such as challenge prizes, have caused the panel to think differently about how it should propose changes to the defense acquisition system. They all ask for solutions to problems without spelling out a long list of restrictive requirements, Drabkin said.

“Transparency” touches on the inability for companies unfamiliar with the Defense Department to find entries into the marketplace. That is particularly true of small businesses, the report said. It’s time to quit relying on FedBizOpps and use platforms such as Facebook and Twitter to get the word out on opportunities, it recommended.

“Time sensitive” speaks to the process-driven culture. Adversaries are not beholden to the lengthy acquisition timeline, and potential vendors are driven away.

“Allows for trade-offs” means in some cases forgoing competition if the situation calls for it and empowering decision-makers with flexibility. Not all acquisitions are alike.”




Revolving Door Between Pentagon And Contractors Spins Faster




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

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

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

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

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

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

Corporate Conflicts

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

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

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

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

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

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

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

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

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

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

Eisenhower Warning

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

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

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

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

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

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

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

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

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

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

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

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

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

Valuable Expertise

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

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

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

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

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

Exit to Industry

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

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

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

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

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

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

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

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

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

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

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




Inside Pentagon Procurement from Vietnam to Iraq


Odyssey of Armaments

“Odyssey of Armaments” is a free download in Adobe format from the “Box” in the right margin of “Rose Covered Glasses”.

As we observe the current U.S. Defense Budget consuming enormous amounts of our available government funding and continuing in excess of $700 Billion annually,  this book details how the industry Eisenhower warned us about has become out of control.

A first person account by a Bronze Star decorated Vietnam Veteran who, after combat service, undertook a 36-year career in the US Military Industrial Complex (MIC) working on 25 large scale weapons systems in 12 corporations, including sales to 16 foreign countries.  These systems are in use today in the Middle East and throughout the world.

The book details the inside workings of the Military Industrial Complex among the armed service procurement offices and the mirror image corporations selling to them in from the Vietnam era until today.