• Teleworking DoD employees are once again a target in the latest spending legislation from House appropriators. A policy rider in the fiscal 2025 defense spending bill would block any funding from going toward the costs of teleworking or remote working for defense employees and contractors. The GOP-led appropriations committee advanced the spending bill last week. The telework measure, however, may be unlikely to make it into the final appropriations package for fiscal 2025. Democrats, with a Senate majority, have remained largely in favor of federal telework. They say it fosters better workforce recruitment and retention.
  (Fiscal 2025 Department of Defense appropriations bill - House Appropriations Committee)
• Early signs are pointing in the right direction after some recent federal workforce reforms. The Office of Personnel Management’s initiatives over the last couple of years have included banning the use of salary history in hiring, creating a portal for internship openings and broadening eligibility for the Pathways Program. Larger impacts of those changes are likely still further down the road. But there are already some initially positive indications, especially for early-career recruitment: “It’s going to take a little more time. I do think what we’re seeing, though, is a renewed and increased interest in federal job opportunities by early-career talent,” OPM Acting Director Rob Shriver said.
  (Early-career federal job openings seeing ‘renewed and increased’ interest, OPM’s Shriver says - Federal News Network)
• The Energy Department wants to secure the future electric grid from cyber threats. Energy’s Office of Cybersecurity, Energy Security and Emergency Response (CESER) is working to set security expectations for using the cloud. Later this year, the CESER office will convene with big cloud service providers and the clean-energy sector to collaborate on cybersecurity requirements. The discussion comes amid growing threats to critical infrastructure, including the energy grid. Many renewable energy operators are relying on cloud computing for critical services.
  (Energy working with renewables industry, cloud providers on cyber requirements - Federal News Network)
• The Department of Veterans Affairs is looking to keep aging and disabled vets living independently. The VA is looking at how smart-home technologies and wearables like smartwatches can flag when aging and disabled veterans are having a medical emergency in their homes. Joseph Ronzio, VA’s deputy chief health technology officer, said the department is also taking steps to ensure veterans have a say as to who gets this data, and how it may be used. “Everyone nowadays has some smartness in their home, whether it’s a speaker, whether it’s light switches, whether it’s different types of lights or other physical devices — cameras, motion detectors that leave a digital service," Ronzio said.
  (VA looking at ‘smart home’ tech to keep aging, disabled vets living independently - Federal News Network)
• The Army has taken over the role of the Combatant Command Support Agent for U.S. Cyber Command (CYBERCOM). The Department of the Air Force has served in this role since 2017. The shift mainly happened because the primary location of CYBERCOM operations is at Fort Meade in Maryland, where the Army has a significant presence. About 350 Air Force civilian employees in U.S. Cyber Command became Army civilians as part of the reshuffle. The Army will now provide administrative and logistical support to CYBERCOM. Congress mandated the transition as part of the National Defense Authorization Act.
  (Army becomes combatant command support agent for CYBERCOM - U.S. Army)
• The Defense Department has signed a $248 million deal with Duke Energy to deliver solar power to five military bases in the Carolinas over the next 15 years. The power will come from two newly-built solar arrays in South Carolina, and DoD has agreed to buy all the electricity those facilities can generate. Defense officials said the project helps meet the government’s energy sustainability goals, and – in combination with on-base microgrids – makes the five bases more resilient against disruptions to off-site power supplies.
  (DoD Announces Two Solar Projects to Supply Five Military Installations in the Carolinas With Clean Energy - Department of Defense)
• Three more agencies are getting nearly $30 million to accelerate their IT modernization projects. The governmentwide Technology Modernization Fund is granting $17 million to the Energy Department to update its human resources IT systems. The fund is also backing a Bureau of Indian Education project to modernize school websites for tribal communities. The Federal Election Commission is also getting funding to improve online services for political campaign filers.
  (Technology Modernization Fund announces investments to modernize tribal school websites, campaign finance software, federal HR system - General Services Administration)
• The Department of Transportation (DOT) is drafting a new cybersecurity strategy. Transportation officials told the Government Accountability Office (GAO) that the agency will finalize the plan by September. GAO said DOT needs a strong cyber risk management plan to address threats to its data and systems. The congressional auditor is also urging Transportation officials to take a closer look at their cyber workforce needs.
  (Priority open recommendations for Transportation Department - Government Accountability Office )
• The Space Force’s first chief technology and innovation officer, Lisa Costa, has officially retired from federal service. At the Space Force, Costa was responsible for developing strategies and policies that advanced science and technology efforts across the service. She also spearheaded the Unified Data Library project, a repository that collects space situational awareness data from military and commercial sources. Prior to her current role, she served as the chief information officer at U.S. Special Operations Command. There is no information yet as to where Costa will be working next.
  (Space Force’s chief technology and innovation officer retires from government service - LinkedIn)

The post Teleworking DoD employees targeted by House spending bill first appeared on Federal News Network.

Complaints are coming from contractors on the General Services Administration’s multiple-award schedule. They say contracting officers are trying to re-negotiate finished contracts and making unreasonable demands for information. For more, the Federal Drive with Tom Temin talked with federal sales and marketing consultant Larry Allen.

Interview transcript 

Tom Temin  And you have found that this is mainly happening in the information technology part of the Unified Schedules program.

Larry Allen That’s right. And at the outset, you know, I’ve worked on the GSA Schedules program for well over 30 years. And we certainly have seen things ebb and flow over that time. But recently, the level of industry discussion on problems, particularly with the IT schedule, has been pointing up close to an all-time high. And it’s time to get these issues out in front of people… get a little disinfecting sunshine on them, if you will, so that we have a program that works better not just for contractors, but for government customers.

Tom Temin Well, what is happening? What are contracting officers actually doing, that the contractors are complaining about?

Larry Allen  They’re doing several things. I think one of the most notable things, Tom, is that there seems to be no end to the amount of data that contracting officers feel that they are entitled to. Papering the record, just one more set of transactional data, and you know, all of that data…everything a contractor submits, it has to be accurate, current and complete. And the more you’re asked to submit, the more, you’ve got to keep track of everything and make sure you’re meeting that standard. And if you’re not, then you are setting yourself up for some future potential audit problems, not to mention the paperwork that you’re having to provide in an endless stream of requests that come. One of the other things that’s happening is — and you alluded to it in the setup — and that is (for) contracts that are already in place, GSA has already negotiated it, the contracting officer has found that to be a fair and reasonable price. Six months (or) a year later, a company comes in and asks for a contract modification. And the contracting officer now uses that as an occasion to reopen negotiations on everything and say, ‘Well, wait a minute, that maybe wasn’t a fair and reasonable price.’ And the contractor is left saying, ‘Well, wait a minute, this is how I’ve been selling. I’ve been doing this for the last year, people enjoy doing business with me this way.’ You know, there’s only so much blood in the turnip that you can give. And that’s an issue too. I think one of the things that every contractor ought to be concerned about as well, Tom is contracting officers asking companies who have their contract set up through GSA’s Transactional Data Reporting pilot, for contractor-based sales information. That’s not supposed to happen at all. And it’s a real danger for me, I think, look, when TDR was set up, I put a blackbox warning out on it on exactly this issue. And since then, things have you know, mitigated a little bit where TDR has proven to be a viable pathway for companies who can’t use the traditional method to get on scheduled. But if we’re getting into a situation where there’s no standard for what constitutes enough data, or how much data because there’s not supposed to be any data in the first place, that is a moment that every TDR contractor should wake up and say, ‘Stop. What’s going on here?’

Tom Temin We’re speaking with Larry Allen, president of Allen Federal Business Partners. I mean, there are legal restrictions on what the government can ask for — correct? — in what are basically totally commercial products. This is not cost plus contracts or development contracts, but simply commercial items available widely.

Larry Allen Right. And I think this is one of the disconnects, Tom. First of all, the Paperwork Reduction Act is a rule that even the schedules program has to adhere to, where the government is only supposed to make reasonable data requests. And in fact, GSA has to go out every so often, and renew its authority to collect data from contractors. Usually, that type of request is rubber stamped at the FAR Council. But right now, I don’t think it should be. It seems like if it just sales through the rulemaking process, then the idea is that whatever we’re asking for is fine, and we’re not asking for anything more than we should be. And that’s manifestly not the case. Ironically, we’re talking about this at a time when GSA is trying to be pro-environment, but there are a lot of trees that are losing their lives to provide the paperwork, the contracting officers want. Are you aware that GSA management is aware of this? And maybe we’ll do something to mitigate it… get some word out to their CEOs? Tom, I think they weren’t aware of it before this, but they’re aware of it now. I know that the schedules program management office is aware of these issues. They’ve already indicated that they want to have discussions with the contracting officer management team at the IT part of GSA. I think that’s a good idea. But I do think it’s going to take some senior level intervention here to say, ‘Hey, look, this program worked best when it’s a partnership. When contractors and GSA work together to serve our common federal customer. This is not a program that works well of contractors have a target on their back.’  And just because you’re doing $20 billions a year today through this program, from the IT schedule doesn’t mean that thus now and forevermore, it shall be. One need look no further, Tom, than the Oasis Plus Program and the fact that Oasis overtook the GSA professional services schedule in terms of sales a couple of years ago. So you can actually kill the goose that lays the golden egg.

Tom Temin All right, well, we’ll keep an eye on that one and see what develops. Especially as you say, there’s a lot of G wax around that people can use alternatively to the to the schedules. Also your reporting that whistleblower lawsuits are reaching companies in greater frequency, especially to help enforce the cybersecurity regime.

Larry Allen That’s right, Tom, we’d forecast when all the cybersecurity rules started coming down, that the primary way that they would be enforced would be through whistleblower cases. And we’re just starting now to get some evidence that that’s actually what’s playing out. We had a whistleblower, this time, blowing the whistle against SAIC alleging that on one of their government contracts, they didn’t fulfill all the cybersecurity duties they were supposed to adhere to. We don’t know whether that’s true or not. But what we can say is that once the allegations were made, the contractor in this case acted in a way that is probably not a best practice. You don’t solely isolate the employee, you don’t take away their rights, you don’t fire them for blowing the whistle. There are FAR rules on that type of stuff. And you can actually make the situation worse for yourself. Because now instead of just having to defend against the cybersecurity allegations, you’ve got a retaliation suit that you’re gonna have to settle as well. So it’s just really full employment for your legal staff.

Tom Temin Yeah. So, what’s your best advice for companies then, besides making sure the cyber procedures are in place that are required to start with?

Larry Allen Well, I think at a basic level, if you have whistle — every company has, on paper anyway, whistleblower protections. Those whistleblower protections actually have to be operational. It’s nice to have them on a piece of paper, it’s nice to have them in a policy document, but they actually have to be lived. And don’t fear the people who blow the whistle. Look if, at a minimum, if you’d listened to the whistleblower in this case, you would have an opportunity to know whether or not the allegations were valid or not. Now you’ve got lawyers involved and the Department of Justice, it’s going to cost you a lot of money, it’s probably going to cost at least one person, their job in the company. And you didn’t need to do it. So, my advice is to relax, work through it, follow the rules that you’re supposed to follow. They’re there for a reason. And they can actually save you some time and aggravation.

Tom Temin I guess that’s our theme today. Stay within your guidelines and your lanes of travel, whether you’re government or industry.

Larry Allen I think that’s a good takeaway. These things exist for a reason and they help make sure that we have a good government market. And that’s really what the outline is. We want to be able to have the business of government run smoothly.

The post GSA contracting officers are driving schedule holders crazy first appeared on Federal News Network.

The Government Accountability Office (GAO) recently reiterated something it has been pointing out for years: The government wastes billions and billions of dollars on duplicative and overlapping activities. The Federal Drive with Tom Temin‘s guest says the GAO overlooked a crucial way to stop the waste, namely shared services. Steve Goodrich is the Chairman of the Shared Services Leadership Coalition.

Interview Transcript: 

Tom Temin  The Government Accountability Office recently reiterated something it’s been pointing out for years. The government wastes billions and billions on duplicative and overlapping activities. My next guest says the GAO overlooked a crucial way to stop the waste, namely, shared services. The chairman of the Shared Services Leadership Coalition, Steve Goodrich, joins me in studio now. Steve, good to have you in.

Steve Goodrich  Thanks, Tom. And thanks for having me.

Tom Temin  And just briefly, tell us about the coalition. You’ve been around for more than last week?

Steve Goodrich  I certainly have. I’ve been around government working on these kinds of reforms for over 40 years. The Shared Services Leadership Coalition was formed to specifically focus on shared services and improving the efficiency and effectiveness of government founded by John Marshall.

Tom Temin  And John is still around.

Steve Goodrich  He’s our president and CEO.

Tom Temin  And the idea of shared services goes back. Well, I mean, there’s the National Finance Center and places like that, that go back generations, really of government, but it was called lines of service, I think.  Lines of business. That’s correct. In the George W. Bush administration as a way when electronic government started really becoming something of a thing, and government was going online. Why do you think there has been not so much progress in expanding shared services?

Steve Goodrich  Lines of business.

Tom Temin  And I would think in some ways, shared services would be more efficient now than in the past. If you take something like the National Finance Center, and its counterparts, these are big buildings with capital expenditure and data centers that have to be updated. It’s expensive to operate. Whereas it could all be in the cloud now, where the government pays for it, it still could be a shared service, but without all the capital infrastructure needed.

Steve Goodrich  There needs to be a real focus on building the infrastructure required to get there. There’s nobody in charge. There’s nothing statutory about shared services. And it needs to be brought together. I mean, it really started with a push in the Reagan administration. But every administration has had it, it’s been part of the President’s management agenda in the past, but it hasn’t quite gotten legs yet. Because it is an investment and a transition that has to take place. Well, not only in the cloud, but you have a real opportunity to reduce the number of platforms around government. And with the advent of generational AI, bots, the advanced technologies that are out there, there’s tremendous opportunity for cost savings, efficiency and effectiveness with shared services.

Tom Temin  Now, some agencies do share services, and you’ve got some examples of where it’s working and the savings have been documented.

Steve Goodrich  Oh, sure, absolutely. So if you look at NASA, for example, they’ve saved over $200 million in putting together a shared service. They actually borrowed about $40 million to put it together and paid that back within just several years. You know, almost 90% of large corporations in the private sector are doing shared services now. You know, Johnson and Johnson has saved, with only 150,000 employees, has saved almost $2 billion now.

Tom Temin  That’s a lot of shampoo.

Steve Goodrich  That’s an awful lot of shampoo. You’re absolutely right. So there’s great opportunity for government to do this right.

Tom Temin  And if you look at NASA, what services do they share, and with whom? Or is it among the centers of NASA that had been duplicating the same thing?

Steve Goodrich  Well, NASA is primarily within the walls of NASA. So they’re doing HR and IT and finance and and those kinds of things. You also have, you mentioned NFC, which is external, if you will, in the Interior Business Center, supporting other agencies, PSC at HHS, Arc at Treasury. You have a number of them. They haven’t all yet been required to measure their performance, and that’s absolutely a critical element. You know, Commerce has enterprise services, you know, DoD has defense. So we’ve made, for example, with payroll, you know, back in the early 2000s, when it was reduced from 26 payroll centers to four, over $1.6 billion was saved in doing that. And it’s not just about the money, it’s real opportunity to consolidate and reduce the number of technology platforms we have.

Tom Temin  We’re speaking with Steve Goodrich. He is chairman of the Shared Services Leadership Coalition. And it’s not like this is totally unfamiliar to government in the larger sense. I’m thinking of the Bureau of the Fiscal Service. Otherwise, you’d have every agency with a checking account. But no matter who you have been paid for in the government, your check says Treasury.

Steve Goodrich  Your check all comes through Treasury. Payroll comes through four centers. So whether you’re talking HR procurement, IT services, financial services, imagine consolidating and reducing the number of platforms the number of resources required and getting better service. As we all know, this government is overspending and constantly. Now, I get it. No Congressman has ever gotten elected saying, I’m for shared services. That just doesn’t get votes. It’s not the sexy stuff. But the opportunity to increase government performance, serve the mission of agencies and save a heck of a lot of money is there.

Tom Temin  Well, that’s right, too, and even though it’s not a subject of interest in the parades and the speeches back home, Congress nevertheless deals with thousands of such items as it is. Nobody back home on the congressional trail of reelection would be excited by 99% of what’s in the defense authorization bill, for example. All those 800-series provisions on procurement, yet Congress does those. So it seems like they could take on shared services, even though it’s not exciting, because of their track record with a thousand other things that aren’t exciting.

Steve Goodrich  They could, and you know, Congress is very good at looking at individual agency budgets. They’re not very good at looking cross-government. And that’s where we need to focus them. That’s where we need some statutory requirements to get there. And that’s where we need a person, an individual with the accountability and responsibility and authority to make this happen across government. Those are the things that are missing.

Tom Temin  And what would a statute cause to happen, do you think?

Steve Goodrich  Well, one, it’ll make it mandatory, because as I said, it’s not a mandatory factor now. Two, it’ll provide the resources necessary to make the transition from here to there. And, like anything else, an investment is required. But we need to do the analysis. We need to put the business model together. And we need to identify what the ROI is, and demonstrate to the government that is possible.

Tom Temin  Because mandatory is easy to say, but what exactly would be mandatory? Payroll? Or, I mean, we’d have to specify what services need to be shared, and among whom, wouldn’t it?

Steve Goodrich  We do, and I don’t think we boil the ocean. You know, I think we establish shared service for a clear definition of what it is, making it mandatory. And then let’s start with one, develop the business model, make the adjustments that are necessary, and then start migrating that model from line of business to line of business.

Tom Temin  And is there one particular service that you think is particularly ripe for being the guinea pig?

Steve Goodrich  Well, I think there’s a number of them that are ripe, you know. Procurement would work, you can do something small, like travel management. HR is the one a lot of people go to, but it’s very complex. I think we should be working on that. And there are folks like at OPM who are working on building the foundations out for the marketplace, the standards, things like that are getting there, as well as for, you know, grants is another possibility, to really push on grants. Again, you don’t want to boil the ocean, because you want to get this right. And make sure, you know, in Washington, you know, our memory fades after a number of years. We need to keep it in the limelight. And our policy recommendation is to establish a role in GSA at the commissioner level, to have the authority to pull this off and make it happen.

Tom Temin  Because they used to have GSA consolidating all of the information technology procurement. And if you wanted to do it as an agency, you had to get that delegation.

Steve Goodrich  Correct.

Tom Temin  So that went away, I think, when the Brooks Act was repealed.

Steve Goodrich  Yeah, you know, it happens in different ways, because agencies still have the focus and the authority to do what they want, when they want to do it. And so, you know, GSA can come out with a new, great, really efficient procurement vehicle, and agencies can choose to use it or not. Okay. And that’s part of the mandatory part. But there has to be a migration, and this is a 10 to 15 year migration to make it work.

Tom Temin  Are there any members that are sympathetic that you kind of leverage into the rest of Congress?

Steve Goodrich  Well, I think the oversight committees in both Houses are interested in this, as well as, you know, appropriations and budget. They want to figure out how to use shared services to create the efficiencies. And, you know, the TMF, the Technology Modernization Fund, allows for shared services, in fact, specifically states that will support shared services. It hasn’t to date, but there’s real opportunity, because the investment for this isn’t just Congress appropriating funds, and absolutely getting a return. You do have TMF. You do have the savings by not investing in all the many systems that the agencies are asking for right now. Give them the band-aids and paperclips right now, but pull money from existing opportunities in the budget. You know, the TMF and other areas, even customers can help support this and it won’t cost a whole heck of a lot and there is a return.

Tom Temin  Steve Goodrich is chairman of the Shared Services Leadership Coalition. Thanks so much for joining me.

Steve Goodrich  You’re welcome.

Tom Temin  We’ll post this interview along with a link to more information at federalnewsnetwork.com/federaldrive. Subscribe to the federal drive wherever you get your podcasts.

The post Why the government should use more shared services to reduce costs first appeared on Federal News Network.

The professional organization AFCEA International has launched its 139 national chapter right in Orlando, Florida. It’s meant to help facilitate connections for members of the space industry with government agencies. It’s even calling it the Space Coast Chapter. To learn more about how this came together and what the chapter has planned, I spoke to Tony Brown, who is Director of the Products/Software Division for TM3 Solutions, Inc. and will be leading the new group.

https://spacecoast.afceachapters.org/

Interview Transcript: 

Tony Brown  So, this all came about through a series of some funny things that I probably wouldn’t want to say on air, but I could say, because it’ll make people laugh. But basically, I came to the Florida region from Washington DC, after COVID. I was kind of looking for scenarios to kind of grow my networking because I was still flying back and forth, back and forth to DC for meetings and after COVID things kind of, you know, shut down or they did shut down. And so, I started to look at venues and the Florida area for networking. And I was already doing some work with our exploration with SOCOM and the combatant commands over in Tampa. The Tampa AFCEA chapter is a very strong chapter within AFCEA. Of course, they support the combatant commands, so CENTCOM, a lot of the tenants out of MacDill Air Force Base. So, I started getting involved there. When I got there, it was still the Tampa chapter, became the Small Business chair of that chapter, and started to really get involved. And then at some point, we decided to call ourselves the Central Florida chapter. And within our logo, it had Cape Canaveral, and also Orlando, saying that the Tampa region was so how should I say, well established with their AFCEA chapter, when we voted to extend our region and call it the Central Florida chapter. I kind of looked at Orlando and I said, well, I don’t know very much about Orlando. I am physically based near St. Augustine. So, I’m on the east coast of Florida. And knowing that there was really not much representation for the Canaveral area, I started to dip my foot into what that could look like. Ironically, Eric, a funny thing. I went to a trade show or trade Expo down there. And we actually had an AFCEA a table that one of the purses, the tradeshow venue had actually given us. And I didn’t have any collateral about AFCEA. And as people would come and say, hey, what do you all do? I was like, Well, I’m with AFCEA. While I’m thinking I’m in DC, and everybody knows what AFCEA is. And people are like, what’s AFCEA? And I’m like, oh, God, I remember leaving that venue, very distraught and wondered how this was going to happen. As we had some other meetings, I met someone his name is Justin Filler. He’s with a company called NewSat. He says, hey, if you’re really interested in doing this, we’ll make sure we get people that are interested. But let’s keep you know; we have to keep it moving. Because there have been efforts to get a chapter started a while ago after the other one, the previous Canaveral chapter when you told it. there been some efforts, but it didn’t. It didn’t grow any feet. So, we started having a what we call it space coast presence events. And Eric by the third event, something really unique happen. The participants at the event, were chanting AFCEA Space Coast, and that’s when I knew it was real. And at that point, we really put a lot of efforts into getting a solid chapter started. And it took about took 11 months, but within a 10th or 11 month it started getting real and here we are now as though 139th AFCEA chapter.

Eric White  Wow. So clearly, there was a lot of enthusiasm to start this chapter. What about it is going to make this one unique. I guess I should ask there you just said 139 chapters, the Space Coast chapter probably one of the more unique names Some of the chapters that I’ve seen, at least from an AFCEA perspective, what sets you all apart?

Tony Brown  Totally agreed. And I’m glad you picked that up. So, I think a number of things, as I look at it, when I first got down to the Florida region, I would come down to the Canavero region, because it’s so point of entrance, right? And I would come down, and I was like, ah, it looks like it’s growing, but it’s not quite there. And then, as you saw, when Space Force was starting to get settled, and actually started, launches, for whatever reasons, may be undisclosed, and some disclose the ULA launches with NRO, and then also SpaceX. So, as I’m seeing all these launches, and some of them being federal, and then also you had NASA, I said, Wow, this is this is this region is really starting to grow with the space programs, as they have been over the last three years, and especially with Space Force. So I thought, and I thought as the community, the and the tenants down at Patrick, I really believe that an AFCEA chapter would be instrumental as this whole area is growing, and also just very unique, and the mission for Space Force and all of the other all the other tenants at Patrick to be able to have kind of an app co platform, which would offer the collaboration, and your stem, scholarships, all of the all of the values and virtues that encompass the AFCEA organization as a whole.

Eric White  And so yeah, you kind of finished up by discussing what I was going to ask you next. What does this mean, now for all of those folks who have really grown with the Space Coast, it’s crazy that you say, you know, it wasn’t quite there yet, when it was referred to as the Space Coast. And it just, you know, wasn’t prime for the picking just for from a government standpoint, but now, with the growth of the Space Force and the really the reinvigoration of US air or US space travel? What does this mean for the industry as a whole, especially down there?

Tony Brown  Eric, it’s, again, you know, fun, I don’t mean, to be cliche, in my, in my responses, it’s kind of the sky’s the limit. I mean, the projects, and the missions that are that are going on down here are just actually mind boggling. So many of the any, any of the military establishments, even, you know, NASA civilian, also, you know, foreign partners. There’s just so much going on with space right now. And again, I’m gonna do it again, I hate to do this, but it’s, it’s the final frontier, right? It’s one area, that we as a nation, and also not just for exploration, and the good of mankind, as we’re speaking up, like with the NASA projects, but also in the DOD, in the DoD sector with trying to achieve space dominance and make sure that our nation is protected.

Eric White  Yeah, you’ve been at this for a long time, if I could just, you know, finish it up here, pick your brain on what, you know, where you see things going. And you say the sky’s the limit. But, you know, what does that mean? Are we going to see just continued growth in this sector? Or is there a saturation point?

Tony Brown  In my mind, but from what I can see, I don’t really see a saturation point. I mean, if you look at, I kind of look back at the army, I looked back at Navy, I’ve looked at Intel agencies, and scenarios like their missions. Right. And certainly, I would say that the US Air Force has air superiority across the world, I would say the Navy, the same in the same token, right? And space, now that’s an open area. And I think a lot of our adversaries are well, I don’t think but we know that a lot of stories are or are looking to achieve space dominance. And by the way, whatever that means. For all intents and purposes, I just, I don’t see a saturation point anywhere soon.

Eric White  Looking towards the future, anything that you all have set up on the horizon, so far, is there anything that we can certainly plug for you here.

Tony Brown  On the AFCEA side, one of the things that I think is important with this region and, and the tenants over at Patrick, one of our goals is to really have a collaborative set of communications with them. So, we want members, the tenants of Patrick, which, Eric, I gotta say something else. I got down here. And I thought it was just Air Force and Space Force and a couple of other tenants that were out of Patrick. Well, I got down here and I learned that there are a number of very high value and very well-known tenants that are down here. So, I’ll tell you a quick story I was I was going to a meeting at an agency under defense human resource agency called our administration called Domi, which is a diversity platform within a DOD sector. So, I thought that was interesting, right. And then, as I’m getting directions from the guard, that he says, go past the State Department hanger, you’ll notice that there are a couple of Coast Guard planes outside of there. And I’m thinking Coast Guard State Department I didn’t like that. I know NRO is down here and a National Recognizance office. And also, as I went past as one of the tenants here that has really been instrumental and participation with AFCEA has been AF tech. And I believe that’s the Air Force Technical applications, technical applications. And when I found out about their mission, I was like, wow, just out of curiosity. Have you heard of AFtech?

Eric White  No, I have not.

Tony Brown  Okay, well, Air Force to technical applications. I think it is center, but they’re responsible for monitoring nuclear treaties around the world. And I’m like, wow. So, as I started to learn about a lot of the tenants here, I really wanted this AFCEA chapter to be a collaborative organization or platform where we could talk to leadership with these tenants and find out what they could use from AFCEA as a platform to help them fulfill their mission. We just really want support from the community down here. I I’ve had a lot of folks ask about volunteering efforts. We plan to do, you know, a bunch with a scholarship with scholarships and also work for us development and also the students. It could be K through 12. Kind of, you know, introducing them into a potential career opportunity and, and also grooming the next workforce in order to support the commands here.

Eric White  Tony Brown is leader of the new space coast chapter for AFCEA International.

The post A prominent industry group creates a new chapter right on the space coast first appeared on Federal News Network.

The committee today voted to approve a bill from Rep. Carlos Gimenez (R-Fl.), “Decoupling from Foreign Adversarial Battery Dependence Act.” The bill would block DHS from procuring batteries from six Chinese companies over concerns about human rights abuses, as well as supply chain and cybersecurity concerns.

Under the legislation, the ban would begin on Oct. 1, 2027.

During today’s markup, Gimenez said he had engaged with DHS in developing the legislation over the past two months. “The committee incorporated nearly all of DHS’s inputs,” he said.

Gimenez also said he was expecting a report from DHS within the coming months describing the potential impacts of the proposed ban.

Under the bill, DHS would be able to waive the prohibition if it determines the battery purchases don’t pose a national security risk. DHS would also be able to issue a waiver if there are no viable alternatives.

The latest push targeting major Chinese battery manufacturers comes after the fiscal 2024 defense authorization act included a corresponding ban on the Defense Department buying batteries from the same six companies. The DoD ban will also go into effect on Oct. 1, 2027.

That law, however, gives the Pentagon the ability to waive the limitation for any reason.

TSA commuting legislation

The homeland security committee today also unanimously passed legislation that would explore better compensating Transportation Security Committee employees for the time they spend commuting to the job.

The “TSA Commuting Fairness Act,” introduced by Rep. Tim Kennedy (D-N.Y.), would require TSA to conduct a feasibility study on allowing employees to clock in for work when they arrive at airport parking lots or bus and transit stops. The study would evaluate whether such a program could rely on location data from employees’ phones.

“Doing so would reduce commuting costs and improve quality of life for employees while allowing TSA leadership to manage the workforce appropriately and maintain order and discipline,” Kennedy said during today’s mark-up.

Kennedy referenced how TSA employees typically have to navigate a lengthy secondary commute between airport parking lots and their assigned airport checkpoints. Many have to wait for bus or light rail connections, or they have to walk to the from the lot to the airport. “And if these hardworking Americans are just a few minutes late to clock in, they can face discipline and punishment,” he added.

“This study will help both TSA and Congress gain insight into ways to address these challenges and the potential costs and benefits of pursuing an innovative program along these lines,” Kennedy said.

Digital identity report

The committee also unanimously approved a bill introduced by Rep. Clay Higgins that would require TSA to submit a report on the current state of “digital identity” ecosystems, as well as the value of digital IDs in the transportation sector.

Higgins said he supports TSA’s digital ID initiatives. “It’s also important that we understand the full extent of the risks and benefits of utilizing this technology to advance the agency’s homeland security mission,” he added.

“Using a digital ID is not only more convenient, but also better for ensuring privacy protection as opposed to using conventional physical IDs,” Higgins said. “Digital IDs do not need to be handled by a [transportation security officer].”

TSA has started accepting digital IDs, such as mobile drivers licenses that are stored in a mobile phone’s electronic wallet, at some airport checkpoints. The agency this week announced it would begin accepting New York state-issued mobile drivers licenses at select airports. The announcement brings TSA’s digital ID initiative to nine states and 28 airports so far.

TSA’s work has represented a primary pathfinder in the federal government’s acceptance of digital IDs. Meanwhile, the National Institute of Standards and Technology is considering including mobile drivers licenses and other digital credentials in its revised digital identity guidelines.

The post Lawmakers advance DHS bills to ban Chinese batteries, help TSAers with commute first appeared on Federal News Network.

Cost plus contracts can run into trouble when the government takes five years to audit indirect costs. That is what happened to a Navy contractor, and now it has a million-dollar dispute. They are now in court. For details, the Federal Drive with Tom Temin spoke with Haynes Boone procurement attorney Zach Prince.

Interview Transcript: 

Eric White Cost-plus contracts can run into trouble when the government takes five years to audit indirect costs. That’s what happened to a Navy contractor and now it has a million dollar dispute. They’re in court over the details. And Federal Drive host Tom Temin discussed it with Haynes Boone procurement attorney Zach Prince.

Tom Temin  And this all seems so routine, that you have a cost-plus contract, there’s direct costs, easy to bill indirect. Tell us what happened here and what the cautionary tale here is.

Zach Prince  Sure, Tom. So, some background is probably helpful. I know this is an arcane area in government contracts, but when you’ve got a cost type contract, the basic idea is that your costs are reimbursed. You’ve got your actual cost experience, the government pays for that, with some caveats for the things the government decided they don’t pay for. And then on top of that, you’ve got a fee. It’s fixed typically in advance, because otherwise, there’s an incentive to run up the costs. And it should be fairly routine. You submit your invoices as you perform, for your direct costs. But every business is going to have indirect costs. That’s back office support, things that aren’t directly tied to one government contract, they support your whole operations. The way you get paid for those is you get paid based on a ratio that’s developed, a percentage that gets applied to your direct costs. As you go through things during your year performance, it’s an estimate, it’s provisional. You get it trued up at the end of a fiscal year. You send the government a proposal. The government’s supposed to audit it in a reasonable time or decide that they don’t need to audit it, come up with a final rate. And then you have a true up audit, invoice. You send an invoice to the government for more money if your rates are higher, or potentially you owe the government a credit if your rates are lower than you had assumed. The problem is, especially in the mid 2010s, the government had a massive backlog in these types of contracts where they’d have proposals that would sit there for years, where the defense contract audit agency did nothing until the very last minute when maybe they would disclaim the ability to do an audit for whatever reason. And then they throw it back over to DCMA, or the Navy or Army or whoever it is. And they would have to say, okay, what do we do with this now? Usually, this is years after a cost has been incurred. People who are there at the company at the time, aren’t there anymore to justify why they did cost X, Y or Z, and it creates these very messy disputes. Most of the time, it hasn’t mattered to the government. I mean, Congress has gotten involved and has put a lot of pressure that has gotten things a little better. But, practically, day to day administration, if the government takes five years, it just means they’re in a better position to challenge you. Because you have the burden of establishing that your costs are reasonable. The government doesn’t. So now, the government’s in a position where they can say, forget about it, you can’t get these costs back and you don’t have a lot of recourse.

Tom Temin  Don’t contractors calculate those costs on a government-approved accounting system? And keep the records so that you can kind of just spit up the answer?

Zach Prince  Yeah, they do, but there’s a lot of flexibility there. And, you know, the nature of what it means to have an approved accounting system is somewhat of a matter of dispute. This case is a good example of it, because in this case, in the Court of Federal Claims, is company reliability and performance technologies, had two DCAA audits saying their accounting systems were approved. And then still a couple years down the road DCAA said we can’t audit your incurred cost proposals because your accounting system was insufficient. It begs the question, what did they audit? And what was their conclusion?

Tom Temin  All right. So what happened then, when the government denied these? In other words, five years later, the government said these costs are not proper, and a million dollars of adjustment for the contractor didn’t get paid. We’re speaking with Zach Prince. He’s a partner at the law firm Haynes Boone. So, then the contractor took them to court, and then what happened?

Zach Prince  So what’s frustrating about this case is actually the government didn’t say the costs were improper. The government said the costs were allowable, that is they complied with the accounting system requirements. They didn’t get rid of any of their costs on the basis of the government’s arcane rules. They just said after five years, you, contractor, can’t get this money back now because of the cost ceilings that are in these contracts. There wasn’t enough money allocated to the contracts during performance. You’re supposed to be telling the government regularly, you know, we’re at 75% of what’s been set aside for funding for this contract, you need to set more money. It’s hard to do that with indirects. But the government said this is going to prevent you from recovering.  They brought up what I think is a really interesting argument that I’ve seen raised before but not necessarily prevail yet, although I really think it should and it might here, that the government can’t use the funding limitations as a basis to refuse to pay the contractor amounts that are owed because the government breached the contract first in two ways, both of which are stemming to back down to their obligation to do an audit and true up of your indirect costs in a timely fashion. That is not five or six years later, within a couple of months, maybe a couple years at most. And that the government has an obligation to true up the provisional rates in a meaningful way, during performance. So you can’t just have the same provisional rates from year one to year five. They should be adjusted so that the government doesn’t have a situation where they’ve paid you too much or too little. And then you have to do this true up process later. It should be a fairly routine administrative process. It often doesn’t happen that way.

Tom Temin  And the court decided in favor of the contractor but you’re writing that it’s not necessarily the answer to the bigger question.

Zach Prince  They decided that way for now. So it’s a summary judgment decision, which means that the government made the argument that there are no facts that could be construed against it, essentially, if it went to trial, that would entitle the contractor to judgment. So the court said no, no, based on what we’ve seen here, there’s enough facts to establish that you, government, breached this contract in a couple of ways. And that you can’t prevent the contractor, or maybe won’t be able to prevent the contractor from recovering, based on these limitations of fund restrictions. Whether the court gets there in the end in a decision on the merits, it’s an open question. I kind of doubt they’re gonna get to a decision on the merits.

Tom Temin  What do you think will happen instead?

Zach Prince  I think they’re gonna settle this. I mean, if I were advising the government, or the contractor, I’d say, we’re talking about a million bucks, not a lot of money. Litigation is expensive, and it’s time consuming. And it’s clear that the court has an interest in ruling in the contractor’s favor here, or at least acknowledging the equities that lie in favor of the contractor. You come to the table, you throw some numbers around, and you walk away.

Tom Temin  Yeah, I mean, the government, the Navy will rebaseline a program to the tune of a billion dollars. You know, 1/1000 of that, they need to be able to find for a contractor when the government was, in effect, this is not the legal term, but negligent, in how it handled indirect costs.

Zach Prince  Yeah, that’s right. And the government doesn’t dispute that these are amounts that are allowable, and that otherwise should be reimbursed to the contractor. So in all fairness, it’s not like the contractor is trying to get one over on the government, the government doesn’t suggest otherwise. It’s just relying on this technicality, that I think is a stretch anyway. It doesn’t want a bad decision out there for itself later, which this I think could result in. It really ought to be coming to the table, which is unfortunate for the contractor community, honestly, because I’d like to see a decision on the merits in favor of the contractor here so that we can point to it in the future.

Tom Temin  So what can contractors maybe do to prevent this from happening? And what could the government maybe do better?

Zach Prince  So from the contractor side, I mean, they’ve got to be proactive. When they’ve got their incurred cost proposal sitting out there for years, contact your contracting officer. Do it regularly, or your administrative contracting officer, and say, you know, this is sitting out there, and we are having trouble figuring out our firm responsibilities when we don’t know what the rates are, and we need help. They also could do a better job of telling the government, hey, we need our rates, that are being used on a provisional basis for billing, to reflect reality, so that nobody is left holding the bag down the road. On the government side, you’ve got to do a better job of administration. It’s not just the Navy. It’s everyone in DoD, and certainly everyone’s civilian agencies. I’m seeing, and have been for years, rates getting trued up the very end of the six year statute limitations of the window when you have to challenge anything. And that’s because of their pressures internally, and there’s backlogs and I totally get it. But you can’t let it sit that long, because you’ll never be able to figure out these disputes if you wait that long

Eric White  Procurement attorney Zach Prince is a partner at Haynes Boone speaking there with Federal Drive host Tom Temin. We’ll post this interview at federalnewsnetwork.com/federaldrive. Subscribe to The Federal Drive wherever you get your podcasts.

The post How cost-reimbursement contracts can go haywire over time first appeared on Federal News Network.

While the Prompt Payments Act ensures the prime David works for gets paid quickly, sometimes within 15 days, the same defense prime makes David wait 90 days. This three-month gap until payment costs David, back of the envelope, about $200,000 in annual financing — the equivalent of a highly skilled full-time employee with annual salary and benefits.

For David’s small business this constitutes a significant drain of resources.

A year ago, a Pentagon report called out this and other problems facing small businesses and extolled the innovation small business contractors like David bring. But clearly the federal government has not made much progress in lessening the burden on small business.

The proof is in the numbers: From fiscal 2011 to 2020 the number of small businesses receiving Defense Department contract awards decreased by 43%, despite obligations increasing by 15%.

From David’s point of view, while the 90-day payment plan is both irksome and expensive, he feels it is by no means his most significant barrier to growth.

Small business owners endure something akin to second-class citizenship in the federal marketplace, indentured either as subcontractors or shoved into joint ventures (JVs) or teaming arrangements, because they don’t have the recent past performance on large projects that would allow them to successfully win prime contracts.

With a thicket of regulations blocking their pathway — the current FAR is over 2,000 pages with additional policies on cyber and supply chain risk coming soon — industry giants just thunder past them. In short, “graduating” from small business contracts to “full and open” contract work is a David and Goliath contest.

Think about it from David’s point of view. He and other small government contractors (GovCon) like him are expected, with annual revenues of, say, $20M, to show they have performed work in the hundreds of millions of dollars as proof of competency, something Boeing, Lockheed, Raytheon and the rest can do with their eyes closed.

Another headache for these Davids: The government sets arbitrary deadlines for entry on very important vehicles so that if a small business does not quality by that date, they are closed out of competing for five or ten years.
Moreover, the government does not award contractor performance assessments to subcontractors, yet primes take credit for the work of their subs like David – performance that they then use to get even more prime work.

Because of these and other perverse rules, at the moment a small business picks up momentum and gets more awards under his or her belt, they “size out” of their North American industry classification system (NAICS) code.

This means smaller businesses are suddenly prohibited from obtaining small business contracts — the contracts they initially fed on. This is literally known, inside the small business GovCon world, as “the Valley of Death.”

Let’s be honest and accept an inconvenient truth. It is better to be a prime contractor than a David doing the sub work for one. Not only is it time to rethink many of the rules and regulations that govern small businesses serving the federal customer, but it’s also time to say out loud that this is an emergency.

Small business participation in the federal market has fallen approximately 50% between 2010 and 2022.

Everyone in and out of government agrees that small businesses are an engine of innovation. As Secretary of Defense Lloyd Austin III has said, “for far too long, it’s been far too hard for innovators and entrepreneurs to work with the department. And the barriers for entry into this effort to work with us in national security are often too steep — far too steep.”

According to Gallup, American have more confidence in small business than they do the police, public schools, the medical system, church or even our military.

If the Pentagon and the Biden Administration share that confidence, they must do more to bridge small businesses into mid-tier land, freed from their current second-class status and the significant shackles that come from only subbing to primes or teaming to get work.

Sharon B. Heaton is the CEO and founder of sbLiftOff, a national mergers and acquisitions advisory firm specializing in government contracting companies. She serves on the SBA’s Investment Capital Advisory Committee.

The post It’s time to help the Davids in small GovCon first appeared on Federal News Network.

Topics include:

• The possible increase in both micro-purchase and simplified acquisition threshold
• Issues confronting the agency comptroller regarding audit-ready data
• Oversight and audit issues from a cost and burden perspective

The post All things SmartPay first appeared on Federal News Network.

Federal services contractors are scratching their collective head over a State Department gambit. State put out a solicitation to sponsor three federally funded research and development centers (FFRDCs). But what the department wants doesn’t sound like anything industry or government couldn’t do already. That’s according to the Federal Drive with Tom Temin‘s guest, the Executive Vice President for Policy at the Professional Services Council, Stephanie Kostro.

Interview Transcript: 

Tom Temin   And this is an odd solicitation because you don’t think of State Department is doing basic scientific research.   

Stephanie Kostro   This is a head scratcher. I love that you use that word. In mid May State Department announced its intent to sponsor three federally funded R&D enters are FFRDCs is and what they’d like to do, according to this notice is to facilitate public private collaboration for numerous activities related to diplomacy and modernization. Public comments are due in three months in August, it’ll be two months from now. However, what is the head scratching part of this is that the areas that they would like the FFRDCs to focus on are things like operational support, which is acquisition planning and development or operational analysis and organizational innovation. The second area is emerging threats, experimentation and evaluation. The third area, is IT and cyber ops. To be honest, when I look at this time, I think some of this stuff is inherently governmental. And some of it can easily be done by private sector contractors who already have relationships with the State Department and other agencies. So that is where the head scratching comes from.   

Tom Temin   And so to establish an FFRDC, that itself is a competitive process, you might say, could a large services contractor, I mean, a lot of them kind of do this type of work, just establish themselves make an arm of themselves as an FFRDC. Those are nonprofit, right?  

Stephanie Kostro   Yeah. FFRDCs a nonprofit, they receive federal funds directly appropriated within bills. And they exist for very specific reasons. And that is to say, to provide R&D capabilities that could not effectively be met by the government or the private sector alone. These three areas are not among those that I would list for areas that cannot be met.  

Tom Temin   Right. So what will you say to the State Department like, stop it?  

Stephanie Kostro   I would say that we have seen, I would call it mission creep. Some may take issue with that phrase before FFRDCs in the past, you know, we’ve got some excellent FFRDCs that worked hand in hand with the government, the private sector has no problem with them. However, they are established for very specific reasons that could not otherwise be addressed. And so it’s this issue where we see the expansion of scope that is problematic for the private sector, and should be problematic, quite frankly, for the government as well.  

Tom Temin   And you’re watching the 2025, National Defense Authorization law still being developed in both the House and the Senate. And there’s something about FFRDCs and expanding them in that bill.   

Stephanie Kostro   Yeah, Tom, they always offer members of Congress offer amendments almost every year that talk about FFRDC is and sometimes extend the scope in ways that you know, the State Department is looking at this year, we’re looking at the House version of the National Defense Authorization Act. And there are amendments proposed for that bill that would do things like create a Technology Center on open source software security, again, this is an area that could be easily addressed by the private sector. And so when we watch amendments like this, we always keep that foundational principle in mind is what could the government do? What can the private sector do, and it’s that gap that FFRDC is are supposed to fill.   

Tom Temin   This gambit of the FFRDC sounds a little bit like the cousin of other transaction authority, where you can creep, because of the ease of it, creep it beyond the scope that it’s really supposed to be serving.   

Stephanie Kostro   And I think that is where if you do effective oversight, you can call this to mind. And so when PSC comments on things like the State Department’s notice, or like amendments that are under consideration, we really do focus on the principle underlying it as opposed to the the details or the operational details. And so again, the principle comes down to what is appropriate for FFRDC to do, what can existing FFRDC’s do with their authorities and what should the private sector address?  

Tom Temin   We are speaking with Stephanie Kostro, Vice President for policy at the Professional Services Council, and you have also submitted comments or will be submitting comments. I guess they were due yesterday, on a FAR Council gambit to establish a FAR Part 40 dealing with supply chain. What do you see there?  

Stephanie Kostro   Now we are part of PSC as part of what is called the Council of Defense and Space industry associations. We affectionately call it CODSIA. CODSIA submitted comments to this joining several associations PSE believes that FAR Part 40 is a great idea. It talks about supply chain it talks about information security, what we are seeking in this is as as they develop FAR Part 40 further that they really address clarity that they identify and define specific terms that will help the contractors support them more effectively, for example, things like information and communication technology, otherwise known as ICT. What does it mean in this context? What does it mean in supply chain security? And I’m looking forward to hearing the government’s response to some of these questions that were posing in the comments submitted yesterday.   

Tom Temin   And what specifically does FAR Part 40 seek to do with respect to supply chain and security of it doesn’t exactly sound like an acquisition issue directly that you would think it would be in the FAR?  

Stephanie Kostro   Yeah. Well, I’m glad you asked that question. What the language says is that FAR Part 40 is going to address policies and procedures for prohibitions, exclusions and supply chain risk information sharing. This is an area where contractors are very interested in what the government has to say about definitions about what compliance requirements look like, and how do you safeguard information that addresses security objectives. And so, again, we are welcoming of this FAR Part 40, we are just looking for additional definitions and what exactly they’re characterizing, as, for example, ICT. So, again, this is an iterative process. This was a request for information, we provided what we could we provided lots of questions. And we’re looking forward to further engagement with the government on this topic. 

Tom Temin   Because it’s fair to say that there are two or three different proposals and rulemakings going on now, to solicit information from contractors from industry, even if they’re not contractors, on cybersecurity related matters. You have it on the DoD side, and on the civilian side through CISA.   

Stephanie Kostro   You know, I’d characterize this as a flurry of rulemaking activity, cybersecurity, specifically, we’re seeing a lot in terms of National Institute for Standards and Technology, NIST, and their cybersecurity framework, we see a lot coming out of the Department of Homeland Security, a lot coming out of the Department of Defense, the cyber Maturity Model certification process, etc. And so, again, clarity is really important here so that when it comes to compliance, not only are contractors in full compliance with what their requirements are, because at the end of the day, we are actually more cyber secure, and our supply chains are more secure. That is the objective here.  

Tom Temin   Yes. Because that reference to like you say, ICT information and communications technology. That sounds like without saying it outright, they still want to keep China out of that particular part of the federal supply chain.  

Stephanie Kostro   If you look at the National Security Strategy, we are always keeping our eye on China. And China has so many tentacles within the technology area, both IT and otherwise. And so I think as we move forward, understanding what’s required and what is, you know, expected of contractors is going to be paramount.  

Tom Temin   All right. So I guess basically, then your comments to the FAR Council, we’re just clarification, or did you say do this or don’t do this?  

Stephanie Kostro   So we encourage them to include certain things in their FAR Part 40 as they move forward, and then asking about other items that, you know, should they be excluded from this list as they move forward on FAR part 40. It’s exciting to be part of the development of a new part of the far. I mean, I’m a acquisition nerd. So I think it’s exciting. Maybe not everyone would agree. But as we move forward, I think some of these foundational principles of what is excluded what is included in policy, it’s exciting to be part of that.  

Tom Temin   Well, if you read down in their solicitation for information and get to the lower bullets, you see words like bytedance, tick tock Kaspersky, you know, all of the big bugaboo isn’t have come up. Yeah, over the years in this area. So I guess maybe, yeah, maybe it is China and other Russia for that matter, that they’re worried about.  

Stephanie Kostro   Tom, you and I’ve talked about supply chain issues before and it is really hard for a prime contractor to know down to the Sub Sub Sub Sub tier who exactly is getting involved. And so this area of supply chain elimination, and resilience is an area of a lot of angst, and a lot of, you know, engagement between the government and contractors. We’re all learning this together. 

The post State Department’s R&D approach has industry puzzled first appeared on Federal News Network.

The Grants Quality Service Management Office over the last year helped several micro agencies buy award management services.

This pilot was part of how the QSMO is crawling before it tries to walk or run with larger agencies.

Andrea Sampanis, the acting director of the Grants Quality Service Management Office in the Department of Health and Human Services, said the procurement pilots with AmeriCorps, the Inter-American Foundation and the Northern Border Regional Commission opened the door to bigger possibilities to modernize federal grant services.

“We worked with them to explore the vendors on our Catalog of Market Research, making sure they were ready to meet their needs and helping to support them through the procurement process,” Sampanis said on Ask the CIO. “IAF and NBRC are live, on target and on budget, which is not an easy thing to do. AmeriCorps is expected to go live this fall. Huge kudos to these three agencies, as they were prepared to be good customers, willing to accept the system as-is and supported by great leaders in their chief information officer and chief procurement offices.  Their grants teams came together to support a great vendor product from our Catalog of Market Research.”

While the AmeriCorps, the Inter-American Foundation and the Northern Border Regional Commission are considered micro agencies, the amount of money each of them awards through grants is anything but small. Sampanis said the AmeriCorps is more like a medium-sized agency when looking at the amount of money it awards through grants. In fiscal 2024, for example, the agency expects to award $577 million in grants.

The Inter-American Foundation and NBRC are much smaller with IAF, awarding about $145 million and about $50 million in grants, respectively.

Grants QSMO aims to speed acquisition

While these three agencies don’t reach the billions HHS or the Education Department or the NASA hand out, Sampanis said demonstrating how the procurement assistance pilot works opens the door to improve and expand the QSMO’s efforts.

The QSMO marketplace current has approved seven grants management system providers and is in the middle of conducting market research to expand its services.

“We have one quote that says having access to Grants QSMO market research puts you 1,000 steps ahead in your procurement. It’s our goal to speed up the acquisition process and give agencies more buying confidence as they are pursuing a vendor on our catalog.  The vendors on our catalog are selected to support meeting grants standards and align to 2CFR 200 requirements,” Sampanis said. “It just lets them really focus their attention on a fewer number of providers to really say, ‘Hey, this solution is purpose built for grants. It’s an award management solution that is software-as-a-service and very configurable.’ It should feel easy. They don’t have to go and renegotiate a contract.”

The QSMO also works with the agency’s CIO and security leadership, helps develop performance work statements and serves as advisors during the entire acquisition phase.

“I always encourage agencies to meet with all the vendors on our Catalog of Market Research to understand what’s out there and share their specific needs. I think they learn a lot about themselves by talking to the vendors,” Sampanis said. “I helped them all the way through the pilot because I’m learning a lot. Every time I hear a contracting officer ask a new question, I think, ‘hey, that’s something I need in my catalog because that’s true.’ I always say our goal is to speed up an agency’s acquisition and give them buying confidence.”

HHS has led the Grants QSMO since January 2021 and has been building its services over the last few years.

With the Office of Management and Budget finalizing the update to the governmentwide grants guidance under 2 CFR earlier this year, standardizing certain key areas like notices of funding opportunities and overall trying to expand access to more than $1.2 trillion in grants and cooperative assistance agencies pay out each year, Sampanis said the QSMO is ready to expand its services and offerings.

Two common drivers of grants modernization

Having that baseline understanding and confidence in the marketplace is a key factor in success, said Wagish Bhartiya, the chief growth officer for REI Systems, which helps agencies modernize their grant systems.

Bhartiya said there are two basic drivers of grant modernization. The first is budget and second is technology.

“There has been a greater focus on budget and how much of our budget goes towards grant funding and how that funding is being deployed? How much of that is serving management processes, some of the overhead aspects of grant management, which will exist inherently, versus how much should be deployed into the community? That analysis, I think, is getting more acute,” he said. “The technology itself has evolved and shipped in a way that, I think, is much more possible now to be thoughtful about performance and mission. The technology is enabling some of this some of these questions to be asked because we now have the potential and the power to look at it for the first time.”

These two big trends are part of how grants providers are shifting their mindsets away from being so compliance focused to spending more time and money on measuring and ensuring outcomes.

“There’s all these dollars flowing through our grant programs so we need to start to think just as much about the downside, protecting from a compliance and a risk mitigation perspective, as the upside into the mission impact in terms of what are the tangible and successful outcomes,” Bhartiya said. “The other big theme is customer experience and user experience, and now the grantee experience.”

He said this updated point of view is part of why many grant providers are more willing to change today than ever before. He said this means the singularity of the way grants management worked over the last few decades is going away.

“Every grant program thinks they’re a snowflake and they think they’re special or unique and actually bespoke. But when you zoom out, you see that actually 85% of what a grant making agency does is essentially the same in the core lifecycle design,” he said. “Convincing them that they don’t need to make everything bespoke and tailored to the Nth degree because they can leverage best practices, use what’s worked for other agencies because there’s a chance to reduce the burden on their staff and on the recipient community is part of the challenge.”

Bhartiya added that the benefits of an end-to-end system, that’s in the cloud are becoming more clear to agencies.

The post Grants procurement pilots demonstrate speed to modernization first appeared on Federal News Network.

A shrinking number of companies seem to want to do business with the federal government. Especially small businesses. Could it be all of the reporting and compliance requirements. There is one class of compliance that is particularly tricky, as the Federal Drive with Tom Temin heard from the Founder and CEO of PROCAS, Jim Wesloh.

Interview Transcript: 

Tom Temin  For someone that went through the trouble of finding government opportunities, deciding they want to do this and then bidding and winning, what should they have in place already to be able to fulfill a contract that is unique and different from what is normally expected in the private sector?

Jim Wesloh Well, we focus on government contract accounting, including timekeeping expense reports, the entire general ledger and project management and project reports. And we’re going to focus particularly on timekeeping right now. A lot of new owners might be used to working in a commercial organization where they can just fill out their timesheets at the end of the week and turn them in, you might think that’s fine. There are some additional requirements for government contracting, for example, they’re going to want to make sure that everybody does their timesheet every day, you might say, why can’t I just wait to the end of the pay period? Well, just like you might hear on the news that people need to have contemporaneous recording of thoughts when things happen to justify them. It’s the same with timekeeping. If you wait two weeks, you might not remember what you did. And so that’s the only justification that you actually have for the work that you did.

Tom Temin And just because the government says, so you have to do it every day.

Jim Wesloh Yes. So, the Federal Acquisition Regulations is the body of law that governs purchasing from the government. And it says that you need to make sure that you can justify your expenses. And then the defense contract audit agency will audit contracts, not only for defense contractors, but often for other agencies. Also, you must follow their rules.

Tom Temin Sure. And it’s safe to say to that the DCA could come at you six years later and look into a contract. Oops. So that gets to the idea of keeping time and keeping records for a long time, in a manner that you can reproduce them.

Jim Wesloh Yes. And the other thing is, some new government contractors might think well, can I just record time? Or do the accounting for my government programs, and not worry about commercial contracts if they had the commercial contracts before? And the answer is no, if you’re a government contractor, everything falls within the scope of the audits, because things that you do on the commercial contracts will also affect the government contracts, you have direct costs that are for a particular project. But you also have indirect costs that are allocated across contracts, both government and commercial. So you have to establish your base, which would be like the denominator of a fraction, to show how much needs to be going to the commercial contracts and the government contracts, you have to record time for all your contracts, and also your indirect expenses, your overhead and your general administrative expenses, as well as your paid time off and holiday, those also get allocated to your government contracts and your commercial contracts.

Tom Temin So, a standard commercial system for accounting of all of that then would not be adequate for government contract.

Jim Wesloh That’s right. In commercial contracting, you might hear of companies having overhead, that’s generally just all the costs that are going directly to the jobs in government contracting, they want to have you split out overhead that supports contracts in general administrative costs that are necessary to run the business but don’t really help your projects. And then they might also want you to break out fringe benefits in addition to base salary that would support your employees and potentially facilities costs. They want you to track and then bid proposal costs and independent research and development costs. And about a quarter of the government contractors may also have a value-added situation where they have a lot of subcontractors or materials. And they would want to record subcontract administration or material handling costs as separate indirect costs. So that’s a lot more elaborate. And you’d have to then be able to calculate your indirect rates and apply them to your job so much more complicated for commercial organization,

Tom Temin we’re speaking with Jim Wesloh, the founder and CEO of PROCAS. So that gets complicated as you say, for example, if you have administrative help, and it costs you a million dollars a year to maintain it for your company, then you have to allocate that portion of administrative costs to what it is you’re doing for the government. And that gets down to specific hours. And it’s almost like you have to guess or some point, I mean, is there allowable limits within all of these different elements that you have to allocate toward your federal contract, such that there’s some matchup between what you actually spent and what went towards supporting that particular effort.

Jim Wesloh So, you’ll record the cost for the projects, and you’ll record for example, your administrative costs, and if you have a cost-plus fixed fee contract, in theory, you get reimbursed for all of your costs, but in practical purposes, there might be a cap on your contract value. And so if you said you were going to spend $2 million on direct costs and a half million dollars on indirect costs and you had in this is a very simplified version of an indirect rate, you have a 50% indirect rate, but then you spent 750,000, that was above the contract value, you wouldn’t be able to be reimbursed for the additional costs.

Tom Temin Right? So, you have to have proportionality in what it is you’re allocating from your overall costs to your federal contract costs.

Jim Wesloh Yes. So, in very simplified terms, if a quarter of your projects were government and a quarter of the projects and costs work commercial, then you’d have 25% Going to the government 75% Going into commercial that’s a very simplified version of this, it gets much more complicated than that.

Tom Temin Sure. And suppose you have like a really expensive administrative assistant, that is maybe paid more than the people that you have working on the contract for the government, is that likely to cause a problem, your hourly administrative costs that you’re allocating to this are higher than your direct cost of the person doing the work the programming,

Jim Wesloh they want to look for reasonableness. And if you have a situation where you’re paying an administrative assistant, much more than the people working the jobs, it’s probably a situation where it’s a family or friend. And they’re probably gonna say, though, that that’s not allowable cost that it’s, the position doesn’t justify that. So, it’s not reasonable to be paying that much,

Tom Temin right. If you’re paying say, you want to have eight a status, or women own status, and so you make your wife, the sensible person, that wife can’t also be the administrative assistant, taking a half a million dollars out of the business and salary, that kind of thing.

Jim Wesloh Yeah, that would be unreasonable and unacceptable. So, getting back to somebody who’s thinking about getting into government contracting particular, that some of the emphasis that they should be thinking about for timekeeping, people have to record their time every day. If it’s a digital system, they have to be a unique user login times other people can’t get in and do your time for you. If you make a change, there has to be an audit trail of the changes with a reason for the change. And at the end of the period, they have to certify it. And then a supervisor has to approve it. So, these are just some basic elements that you must have. And if you don’t have a system that can handle that, then the defense contract audit agency or some other auditor might come in and say that these costs are not justified, they’re not allowable, we have no confidence in them. So, the government may not reimburse you for them. So, you might not get paid on your contracts.

Tom Temin Right. And the government, by the way, don’t they also have the right to certify or approve of the accounting system that you use before you use it on a contract?

Jim Wesloh Yes, there’s a standard form 1408. That’s basically a checklist of things that you need an accounting system to do. And some of those things are inadequate timekeeping system accurate accounting system, the accounting system has to generally follow generally accepted accounting principles, including doing accrual accounting, and not cash accounting that most companies will start out doing and is okay for tax purposes, but they want to have accrual accounting. And they want to make sure that time is recorded every day. And you know that they can allocate the time to the different cost objectives that we talked about the direct the overhead, the GNA, the fringe facilities, material handling, subcontractor, administration, BNP and R&D they will check in make sure you have an inadequate accounting system.

Tom Temin So, you have to have that in place before you really bid if you’re going to be able to have any success.

Jim Wesloh They’ll come in and often do a pre award audit of your accounting system, and they want to make sure that you have something in place ready to go. If you’re not operating it already. If your commercial company not operating it, they want to make sure you actually do have it set up to be ready to go if you win the contract.

Tom Temin Well, two quick questions. Does the cost of adding that system capability? Does that qualify as a reimbursable cost?

Jim Wesloh Yeah, that is an allowable cost. So, your GNA rate so you can find a system and implemented, and those costs would be allowable, according to the Federal Acquisition Regulations.

Tom Temin And I don’t know much about the accounting software market, but do the large or the popular commercial programs have federal extensions available to them in general?

Jim Wesloh a couple of them do. But generally, they’re rather awkward to get the data to go back and forth, because you’d have to have all your costs in the general ledger. And then you would have to have a way to do these indirect rates with all these different cost pools. And then you have to come up with the rates for those different pools, and then you need to be able to allocate those costs back to all the contracts. And so that gets complicated when that’s in two different systems. So, it’s much easier if you have a system that’s purpose built for government contracting.

Tom Temin And I guess those programs then can work backwards toward purely commercial customers too?

Jim Wesloh Yes, there’s nothing in government contracting that would preclude someone from using the government contracting system for commercial work, but the commercial systems are not adequate for doing good Government Contracting generally.

Tom Temin Right. So, if you start a company and you think you might someday want to do government contracting, maybe prove yourself with commercial First, start out government compliant. That really would be cruel accounting.

Jim Wesloh We sell accounting system for government contractors, we would not recommend doing that if you’re going to do commercial work, we would recommend that you do it and you do it as easy as possible. And then if you are getting serious about it, it’s a big commitment. So, we actually would not recommend that somebody just start a company using a government contracting system with the thought of maybe in five or 10 years, I might do government contracting. I don’t want to go against our own sales, but we would not recommend that.

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Aronie outlines the spectrum of “reviews, investigations, and audits” that are part of doing business with the federal government. He continues with his analysis of the oversight spectrum by outlining the key features associated risks for contractors when dealing with GSA’s Industrial Operations Analyst (IOA) reviews, audits, and investigations.

As part of a wide-ranging discussion, Aronie shares best practices and key considerations for contractors dealing with investigations and audits.

Among other topics, Jonathan gives his thoughts on the role contractor self-initiated internal reviews/investigations can have in mitigating risk.

Finally, the discussion concludes with a focus on how of GSA’s legislative proposal addressing “best value” in the federal supply schedules will increase competition, leverage commercial innovation, and deliver enhanced mission support to customer agencies.

The post Key trends in audits and investigations first appeared on Federal News Network.

Significantly, the ASCEND BPA acquisition strategy includes two other related pools: Pool 2 – Software as a Service (SaaS) and Pool 3 – Cloud Related IT Professional Services. At the ASCEND BPA industry day held on February 8^th this year, FAS indicated that it was starting market research on Pools 2 and 3 and that industry partners should look for a Request for Information (RFI) for those pools this summer. Consistent with this schedule, FAS plans on first issuing a separate RFQ for Pool 1, followed by a separate RFI and RFQ for Pools 2 and 3.

The draft RFQ for Pool 1 marks the latest step in a multi-year journey towards FAS’s goal of establishing a governmentwide BPA for cloud services. In 2021, FAS issued an RFI to MAS contractors for a governmentwide, Multiple Award Cloud BPA. The following year, FAS introduced the ASCEND BPA acquisition strategy while continuing the dialogue around the structure and requirements. The RFIs, industry day, and draft RFQ together raise questions/uncertainties for FAS, customer agencies, and industry regarding the appropriate acquisition strategy. In particular, the highly commercial nature of cloud services is pushing up against government-unique requirements, bringing the ASCEND BPA to a “fork in the road.”  Will the BPA “ascend” towards a streamlined acquisition strategy with corresponding requirements that embrace commercial terms and practices? Or will the BPA continue to “descend” into an overly complex acquisition strategy that incorporates layers of government-unique requirements?

Here are some of the key aspects of the current strategy that have raised uncertainty among FAS’s industry partners:

• The current pool structure is inconsistent with commercial practice and delivering an integrated, holistic cloud solution, as it will increase complexity, risk, and costs for customer agencies and MAS contractors. Its separate pool approach is compounded further by the separate procurements for each of the pools.  FAS should engage with industry on the optimum approach to structuring the functions consistent with commercial practice and the underlying schedule.
• The current draft RFQ/SOW incorporates requirements that are inconsistent with commercial practice. The divergence from commercial practice will limit competition, innovation and, ultimately, value to the customer. In this regard, see generally the individual industry feedback the Coalition submitted in response to the RFQ. FAS should focus on limiting non-commercial terms to the maximum extent practicable.
• Relatedly, the layering on of additional agency-specific cloud requirements at the BPA level will increase complexity and costs for MAS contractors, which, in turn, likely will impact competition and value for customer agencies. FAS should identify a simplified, core set of requirements that generally apply governmentwide, while allowing customer agencies to tailor requirements at the task order level, thereby streamlining the process and enhancing competition. This approach also is consistent with the highly customizable nature of cloud requirements.
• The absence of agency commitments to use the ASCEND BPA continue to create risk for MAS contractors. Identifying agency commitments will incentivize industry to compete for the BPA and improve the quality of any responses submitted. In addition, this increased competition will enhance value, savings, and innovation over the long term. It is central to ensuring robust mission support through the BPA.
• As part of the overall acquisition strategy for the ASCEND BPA, FAS’ industry partners also are keen to understand how the BPA strategy fits within its overall IT portfolio currently meeting customer agencies mission support requirements. Questions remain about vertical and horizontal contract duplication arising from the ASCEND BPA acquisition strategy.

Over the course of the development of the ASCEND BPA, FAS’ industry partners have appreciated the opportunity to engage and share feedback on the acquisition strategy and requirements. Given the approaching fork in the road, perhaps it is time for a “cloud roundtable” to discuss the way forward for ASCEND in delivering best value mission support for customer agencies. Coalition members stand ready to facilitate and contribute to such a roundtable discussion to improve the program.

The post What is the Trajectory of the ASCEND BPA? first appeared on Federal News Network.

At over 400 pages, the proposed CIRCIA rule is a daunting read. Bourne breaks down the rule identifying the key aspects and corresponding impacts for those covered entities.  She discusses the 16 critical infrastructure sectors covered and the corresponding number of private firms that will be subject to the rule, noting that defense infrastructure sector will now be subject to overlapping reporting requirements (CIRCIA and the DFARS/FAR cyber incident reporting requirements).

Bourne also outlines what “cyber incidents” are to be reported, walking through the key tests for reporting .

Finally, she details the mechanics and key features of the reporting process and contrasts the CIRCIA rule with the proposed FAR cyber incident reporting rule.

The post A break down of the proposed CIRCIA rule first appeared on Federal News Network.

Government contractors on the whole are optimistic about future business. More than half grew their revenue year over year. They expect more growth as the government adopts artificial intelligence. The most recent contractor survey conducted by Deltek also shows small businesses have outsized challenges. The Federal Drive with Tom Temin got more from Deltek Senior Vice President Kevin Plexico.

Interview transcript:

Tom Temin And so the contractors are optimistic, but maybe a little bit worried about appropriations coming on time, which is a legitimate worry. And the upcoming election, also a legitimate worry.

Kevin Plexico Yeah, I think overall there’s a favorable outlook on the market that we saw in the survey results. A little bit lower optimism compared to last year, but not by much. But I think, if you think about the timing when we did the survey in January, appropriations for 2024 were not done yet. And we also have the looming elections, which creates uncertainty around what to expect in terms of the political landscape and how that might affect the funding outlook as well.

Tom Temin Right. And especially pronounced, I would think, this year, because the election seems to be up for grabs between such diametrically opposed philosophies, parties, candidates. That does tend to depress agencies’ fervor for pressing ahead with new spending late in a fiscal year.

Kevin Plexico It’s not only the administration could change and there’s very different views there, but I think there’s also a lot of uncertainty in the leadership of Congress as well. And even that’s in play with this election as well. So it’s not just even the administration and presidential election, I think, that’s creating some uncertainty around the direction that we might take with agency outlook and funding outlook and political priorities that we see ahead. It really depends on Congress as well.

Tom Temin And there’s a lot of odd effects in the market lately. I’m looking at the CMS recompeting a contract that, by all measures, was being conducted more than satisfactorily by a services contractor, but they want a new contractor. Or if the incumbent wants to stick with it, they’ve got to enter into an agreement with a union and then have certain provisions of no-strike in order to continue that contract. That kind of provision and insertion we’ve never seen before. And I wonder how that has an effect on how contractors think.

Kevin Plexico I mean, that’s certainly unusual. And I think the labor market is definitely an area of challenge that a lot of contractors are facing, not just this particular issue, but just in general. We’re in an economic environment where labor costs and costs in general have been going up more rapidly than they have historically. Generally, the government contracting markets have been relatively insulated from the economic conditions. But I think we haven’t had inflation like we’ve had the last couple of years for a long, long time. And that’s created some unusual environmental factors. I think most government contractors have contracts that are negotiated and the prices are negotiated upfront, and then they have to adhere to those prices over the course of the entire five-to-10 year contract. So you have a lot of companies that are wrestling with how they continue to operate under contracts, where the prices that they initially negotiated are now a lot harder to adhere to given the price pressure in the labor markets.

Tom Temin Right. It becomes pulling teeth to get the government, especially on the [Defense Department] side, to release funds to compensate for even in cost-plus contracts.

Kevin Plexico It’s not like the government is getting extra money for inflation as well. So the government agencies that are looking at the vendor like, “yeah, we have that problem too. So we need you to live up to the contract you signed.”

Tom Temin And what about small business? Because the line has been that small business participation is on the upswing in terms of the percentage of dollars from contracting, but the number of players is shrinking. And one of the cited reasons for that is the amount of regulation for federal contracting that comes down in a lot of areas energy, labor policy and so on.

Kevin Plexico First of all, the economic environment, I think, has an outsized impact on the small business community. And not only do we have higher inflation rates, but also with the Federal Reserve stepping in to try to raise interest rates in order to bring down inflation, we have higher interest rates, and most small businesses rely on borrowing to pay for their ongoing cash flow costs and investment. So I think they’re paying higher costs both in labor and in the borrowing costs. And at the same time, to the point you just mentioned, we’re seeing essentially a consolidation of contracts in the federal government, which is making competition a bit more fierce. There’s fewer prime contract opportunities and contract places to go around. And that has an outsized impact on small business. And at the same time, we’re seeing this growing swell of compliance costs, whether it be cybersecurity, increasing audits, supply chain regulations that are all creating an environment where doing business with the federal market is actually getting more expensive and the barriers are going up. And that has an outsized impact on the small business community.

Tom Temin We’re speaking with Kevin Plexico, senior vice president for information solutions at Deltek. And the government spending itself never actually goes down. But yet at the same time, there are some procurement reforms cooking up. There’s section eight-oh-this-and-that panels coming from DoD. There is also the increased use of other transaction authority spending. What about the procurement picture? It seems like maybe strategies that have been held true for so long might need to be revised.

Kevin Plexico Yeah, I think the procurement environment is strong, and that’s where the optimism, I think, comes from. The government has continued to spend more money. We’ve had years of record appropriations in the last couple of years. It has gotten a little bit tighter this year and is expected to do the same next year with the bipartisan budget agreement that came out of the debt ceiling crisis that we had back — I guess it was around last summer. And so this year, with the appropriations that got enacted, you have some agencies that are doing pretty well. Defense Department got a 3.5% increase. Some other agencies are facing increases, but others got cuts that are pretty significant halfway through the fiscal year when they found out about it. So if you think about a cost cut or an expense cut on a budget that happens halfway through the year, you have to double down to make ends meet at the end of the year. And I think there’s a few agencies that are dealing with that issue, and that’s going to put pressure on contractors. So for contractors, I think it becomes a challenge of making sure they understand the inventory of the customers that they’re working with and how the economic and funding environment is affecting those particular agencies so they can operate smarter, be more strategic about where they’re competing.

Tom Temin And for contractors on the manufacturing side that make things, platforms and so forth. They’re still dealing with pretty significant supply chain issues, even though we’re having the COVID pandemic pretty much in the rearview mirror.

Kevin Plexico Yeah, I think there’s two aspects to the supply chain. The first is the ability to get the products that they need. That has gotten better than what it was during COVID, but it’s still there and still an issue and still is something that the administration is focused on: How do we make sure that the federal government gets the products and parts that it needs to be sustainable? But I think you’re also starting to see an emergence of a new set of supply chain challenges around where the products that the contractors are bringing to the government being manufactured. Ideally, they’re manufactured in the U.S. Absent that, we definitely don’t want them manufactured in places like China or North Korea or Russia. And we’re seeing, like the growing compliance requirements in other areas, we’re also seeing compliance requirements emerge in the supply chain world that are putting additional costs on contractors.

Tom Temin And getting back to that compliance cost. That’s a blanket that covers all contractors, whether they’re services contractors or not. All of the provisions coming along proposed or already in rulemaking and so forth, like [the Cybersecurity Maturity Model Certification], all have a implied threat that you could be caught in a False Claims Act situation if you don’t comply or if you state you comply, but they find somehow that you’re not complying with this or that provision. Does that weigh on contractors more?

Kevin Plexico I think what I’ve seen is a pivot in compliance in terms of how it’s administered and how companies think about it, to being a way that companies think about leveraging compliance for competitive differentiation. And I think one of the big changes that I’ve seen is it used to be that you would pursue an RFP and the compliance requirements would be spelled out in one of the sections of the RFP, like, “by the way, if you win this, you’ve got to comply with this, this and this.” And what we’ve seen is with the sort of adoption of these [indefinite deliver/indefinite quantity (IDIQ) and governmentwide acquisition contract (GWAC)] contracts, a lot of those compliance requirements are built into the section now in Section M, where they’re basically giving you points for your demonstration of your ability to comply with requirements. So I think what is separating the serious players in the market from the casual players is that dedication and commitment to compliance as a differentiator and an ability to separate yourself from other companies that maybe aren’t willing to make that same investment in the compliance requirements that agencies are looking for in order to do business with certain companies.

Tom Temin Yeah, that sounds like a fundamental shift where something that would just simply be a given table stakes, if you will, for every supplier. Now, just compliance with the law and regulation becomes a differentiator. That seems like an emerging trend that’s a little bit disquieting.

Kevin Plexico Disquieting, or maybe just something that the savvy contractor needs to be mindful of if they’re serious about competing in the market. I mean, I think you think about this small business challenge and the diminishing number of small businesses, yet the growth in the small business contracting, those ones that take advantage of this opportunity, I’ll call it, to really get differentiation through compliance as well as your corporate capabilities, are the ones who are winning positions on these mega-billion dollar contracts. And when they win those positions, they’re set up to really have a very high likelihood of being successful on those contracts. And obviously, if you don’t win a position, you can’t win anything. So it really becomes an opportunity to differentiate and accelerate your growth. And the small businesses that are making those investments are the ones who are being successful in getting an outsized share of the market.

Tom Temin And for those so-called innovative contractors that have a brand new type of product or service that is increasingly being sought by DoD, but also in the civilian side, they have the pressure or the impetus to try to present themselves and for the government to see them as just plain old commercial. Otherwise, they’re stuck with having to invest in an accounting system that is compliant with the government audit requirements. Not the case if they’re just commercial, even if it’s a brand new type of innovative product. Little bit of a conundrum there.

Kevin Plexico Yeah. I mean, I think if you’re a company that has the best products in the world for what you do, it still might not be necessarily an attractive option for a government agency because of all the compliance requirements they have and want. Clearly, they are stipulating in these RFPs, they want people who have done and have the experience of doing business in the government market over in some respects, whether your corporate capabilities are super strong in a particular area, but they really aren’t willing to make the trade off. They want both. And that shows up in the way they’re evaluating the RFP, for sure.

Tom Temin So bottom line, still a good market to be in for profits and growth.

Kevin Plexico I think it’s a great market for those that are willing to make the investment in the compliance requirements and that are able to differentiate themselves. Once you have a government customer for a particular area of need, you have a great platform to expand your business with that customer and also expand your product offerings, which is, I would say, another area we’re seeing in the the data from the survey, is companies are making a conscious effort to expand their offerings. Once you have that compliance platform, it gives you a great opportunity to leverage that to providing other types of services to government agencies on that platform. Obviously, it’s a great market, stable market and one of the most stable markets you’ll find. But it does carry with it the cost of doing business, which can be a lot higher than a lot of other markets.

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