June 2014 / The Voice of the Government Services Industry
Convergence: Blurring the Market
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Driving and enabling government innovation
10
ALso inside:
convergence: what it means for professional service companies
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OMB’S Beth cobert
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partnering for best value: A case STudy
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June 2014 Service Contractor is a publication of the Professional Services Council 4401 Wilson Blvd., Suite 1110 Arlington, VA 22203 Phone: 703-875-8059 Fax: 703-875-8922 Web: www.pscouncil.org All Rights Reserved PSC Staff Stan Z. Soloway President & CEO soloway@pscouncil.org Alan Chvotkin Executive Vice President & Counsel chvotkin@pscouncil.org Bryan Bowman Manager, Marketing bowman@pscouncil.org Matt Busby Manager, Member Services busby@pscouncil.org Joe Carden Vice President, Marketing & Membership carden@pscouncil.org Elise Castelli Manager, Media Relations castelli@pscouncil.org Charlene Dowdy Membership Associate dowdy@pscouncil.org Paul Foldi Director, International Development Affairs foldi@pscouncil.org Karen L. Holmes Office Manager/Receptionist holmes@pscouncil.org Roger Jordan Vice President, Government Relations jordan@pscouncil.org Jeremy W. Madson Manager, Federal Affairs madson@pscouncil.org Melissa R. Phillips Director of Meetings & Events phillips@pscouncil.org Robert Piening Director of Finance piening@pscouncil.org Jean Tarascio Manager, Events Services tarascio@pscouncil.org Matthew Taylor Policy Associate taylor@pscouncil.org Kristine Thomas Executive Assistant thomas@pscouncil.org Dave Wennergren Senior Vice President, Technology Policy wennergren@pscouncil.org For advertising or to submit articles or items for the Member News section, contact: Bryan Bowman
The Voice of the Government Services Industry
10 Services Succeeding in a Converging World
7
Sounding board: driving and enabling government innovation
13
18
convergence: Innovation in what it means government for professional service companies
20
partnering for best Value: A case study
4 President’s Letter / 16 Marketview 2014 / 25 Bill Tracker 31 Time for Competition: Billions in FFRDC Sole-Source Awards 35 Policy Spotlight / 36 Committee Corner / 37 Member News 38 PSC Scene & Heard Cover photo: Dudavrev Mikhail/shutterstock.com
Professional Services Council
Service Contractor / June 2014 / 3
PRESIDENT ’S LETTER
Convergence, Innovation and the PSC Vision
A
t the PSC Marketview Conference in February, one of the more compelling discussions was about the implications for our industry of the convergence we now see taking place in which, among other things, the traditional lines separating the professional services and technology sectors have been largely obliterated.
The move to an “as a service” environment is already creating dramatic changes in our market and among and for the government customer. Those changes are certain to only increase over time. It is that shifting marketplace environment that prompted us to launch in March our PSC Technology Policy Council and is one of the key drivers behind our revised PSC vision for the next three to five years. And it is that environmental shift that has helped form the core of this issue of Service Contractor. So, what do we mean by “convergence?” On some levels, it is easily defined: the government, as is the case with many commercial customers, is moving away from owning infrastructure of all kinds and instead “buying by the drink.” Cloud is the most obvious example, but it is only one. Increasingly, across the professional services and technology sectors, old models are giving way to an array of new models. It is not only the pace of technology change but, moreso, the pace of application development that is unprecedented in today’s market. As that shift continues, the nature of many different business models and relationships, between industry and government, and between technology providers and their channel partners, are also changing. It has long been the case that technology plays a critical role in the delivery of professional services of all kinds, but never has that role been as dynamic as it is today. Over the months ahead, we will be talking a lot more about these trends and their implications for our industry and our government customers. In addition, we will be presenting to the Board of Directors a strategic vision for the future of PSC, which directly addresses these trends. The creation of the Technology Policy Council is but one step in that journey. It does not reflect a change in our mission or focus; rather, it reflects an expansion of our ability to address and account for the major trends driving the marketplace. 4 / Service Contractor / June 2014
This issue of Service Contractor is therefore focused on some of the key trends and challenges this presents. From OMB Deputy Director Beth Cobert’s article on the administration’s innovation agenda, to our Sounding Board feature on the keys to innovation with comments from Mike McKelvy (CH2MHill) and Julie Susman (Jefferson Consulting), and from the article on convergence by IBM’s Anne Altman, who also chairs the new Technology Policy Council, to an excellent recounting of our Marketview panel discussion on the topic by AECOM’s Jim Jaska, we have begun to link these trends and implications. We are also pleased to present a special article on FFRDCs from Jerry Howe of Fried Frank. Also in this issue, IAP’s James Schofield and University of South Alabama’s Robert Shearer write about the value of public-private partnerships; PSC’s Alan Chvotkin discusses the government’s acquisition policy reviews and our Board-led responses in our Policy Spotlight; and PSC’s Jeremy Madson shares the work of our Intelligence Community Task Force. This is a very exciting time at PSC. We are at the perfect stage to take stock, invest, and move forward in new and important ways. Over the past few months we, along with our Executive Committee, have already started down this exciting path. As always, we look forward to your continued partnership as we take the critical steps of moving forward together.
Stan Soloway President & CEO Professional Services Council
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Professional Services Council
SOUNDING BOARD:
In each issue, PSC asks members of our board of directors to offer their perspectives on key challenges facing the government services industry.
Driving and Enabling Government Innovation What are the two or three things you think companies need to do to help drive and enable more innovation in government?
A
s a company that works for the United States and local governments through multiple agencies around the world, CH2M HILL gets to see the various ways programs, procurement and projects are done, and we’ve learned a few important things along the way.
Communication matters
Michael E. McKelvy
Executive Vice President & Chief Delivery Officer, CH2M HILL
One way we can enable more innovation is to communicate examples of successful project implementation we have seen in other agencies. We’ve been asked, “How do we compare to the other agencies you work with?” This is a great question because there is a great difference. Some agencies use incentive performance contracts where we get to really differentiate and add value. Others look for fixed-price commodity pricing. Contrary to perhaps popular government belief, the incentive contracts usually perform better on total cost, value and schedule than the commoditized programs. But unless an agency can see the proof statement elsewhere in government, there is hesitancy to change. Programs with clear scope and schedule can be fixed price. But those with great uncertainty when driven to fixed price can have a host of changes and eventually claims. Cross-agency dialogue can help align contract types with the appropriate program. We can play a role as a catalyst for that interaction. continued on page 8
W Julie Susman
Photo: Lightspring/shutterstock.com
President & CEO, Jefferson Consulting Group
hen agencies develop solicitations and particularly performance-based acquisitions, companies should encourage the inclusion of a performance measure for introducing innovations in the services provided to the government. The agency could require semi-annual or annual meetings to discuss the innovations and reward the company for its new ideas that improve quality or save time or money. Using this approach leverages innovation to improve the agency’s ability to meet its mission. It is very important that companies communicate with government program and budget owners in advance of the acquisition process. This provides the opportunity to discuss innovative ideas, capabilities and technology that might not be known to the government customer. Government program managers often complain that industry only shares generic capabilities during one-on-one meetings because of proprietary data fears. The result is that the government doesn’t have the information they need to understand offerings/capabilities before writing the RFP. Government needs to reward rather than discourage this type of communication by protecting individual companies’ innovative ideas. A good way to encourage an open dialogue is to use Statements of Objectives (SOO) that focus on government needs and desired outcomes rather than specific requirements, the latter of which tends to stifle innovation. In addition, the recent increase in the use of lowest price, technically acceptable (LPTA) acquisitions prevents firms from offering innovative solutions. LPTA acquisitions send the message continued on page 32
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Michael E. McKelvy
continued from pg. 7
Applying technology
The second area where companies can help drive innovation in government is in the appropriate, purpose-driven, application of technology. We have the responsibility to speak up and tell our contracting officers when there is a better way to do something. Often, there is the temptation to simply “take the test” and respond to the task at hand by giving them what they ask for. But what they ask for might be based on old technology or what was done the last time. With our experience on the private side, we see a much greater variety of project solutions and must stay on top technically in order to survive and to thrive. We owe it our government customers to bring them along with us.
Communications + technology = meaningful innovation
The intersection of effective communications and technology can produce some powerful results. We witnessed this on an environmental clean-up project at a Superfund site, which required multitudes of dump trucks transporting and depositing contaminated soils. The government request was simply to transport and deposit the soil at the
laydown yard outside of city limits. Since trucks with clean fill dirt and trucks with contaminated soil were both entering the site at the same time, logistics were a nightmare. Trucks would be entering the site with no idea where they should go or where the most efficient place was to dump the material. We used GPS technology, satellite tracking and communications with the trucks before arriving at the site. This enabled a smooth traffic flow around the multiacre site, eliminating mistaken soil deposits in the wrong areas, reducing the number of trucks onsite at any given time and providing for much less truck idling time waiting for an open slot, thereby reducing carbon emissions. In future program requests, this GPS-enabled logistics requirement can now be built in from the start. The bottom line? Driving meaningful innovation and better overall results begins with an understanding of the client’s needs, a curiosity to determine what’s working and what can be improved, open communication and the realization that, collectively, government customers and privatesector providers can achieve a better outcome for the agency by working together. 3
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Professional Services Council
Service Contractor / June 2014 / 9
Services succeeding in a converging world
How technology solutions will reshape the professional and technical services delivery model for government customers.
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Professional Services Council
Photo: Santiago Cornejo/shutterstock.com
by James Jaska President, Government, AECOM Technology Corporation
T
he ongoing permeation of digital technology into nearly every aspect of people’s work and personal lives continues to spark discussions about “convergence.” A term that has been used for at least 10 years and will probably remain a relevant topic for at least the next decade, convergence entails the combination of two or more different technologies or services to create a new offering that revolutionizes an existing solution. This phenomenon is evolving the standard business model and delivery of professional and technical services around the world, and playing a critical role in how companies will increase their value proposition to U.S. government customers for their mostcritical missions and success factors. Convergence is often discussed in terms of data networks, digital devices, systems, big data and media. And now, the importance of convergence is centering on U.S. government services requirements and delivery: • Technologies influencing the way professional and technical services are contracted and delivered. • Successful service providers focusing on optimization of services performance and delivery cost effectiveness. • Government customers preferring solutions and performancedriven procurements for their professional and technical service needs. • Government and industry being prepared for a significant paradigm shift. Is convergence about performance optimization, cost reduction, or providing truly innovative solutions to customers’ service needs? Time will likely show that it involves all three, and those who understand and capitalize on this will excel.
Changing Market Landscape
During the next few years, a group of professionals will emerge having first-hand experience with services and technology convergence. These individuals will understand how to leverage multiple operating platforms, network systems requirements and processes occurring at large operations, especially those with multi-facility installations and locations, resources in multiple geographies and requirements for multi-functional solutions, all while delivering a varied level of professional and technical services. The leaders in this future services-technology convergence market will combine their proprietary services knowledge with the latest technological innovations. It is all about innovation— the way we creatively respond to customer demands as an industry by applying the appropriate technologies to clients’ needs at the right moment. The impact from this change will most likely affect every stage of the services supply chain—from establishing requirements and work scopes to delivery and monitoring contract performance. Think about the impact that the launch of the Uber application has already had in evolving the way people move by seamlessly connecting passengers with livery-service drivers and ridesharing. This model has created value through time sav-
ings and cost effectiveness, resulting in more options for riders and more business for drivers. This type of dynamic servicestechnology convergence potential can also be realized in many current government service markets that take full advantage of technology driving performance. Timing is a critical factor where convergence is concerned. There are many examples of companies that invested in innovative systems, processes and methods too early to fully reap their benefits. And, of course, there are many more examples of companies that invested too late and failed because of their timing.
Receptive Customers
In the past, government customers, especially the Department of Defense, have often approached private industry to create a new technology that meets a certain requirement. Today, government is also asking industry to adapt existing technologies to meet mission requirements. Tomorrow, our customers will be asking industry to leverage technology converged into services offerings that greatly improve performance while also significantly reducing cost of services delivery. In fact, that need is here now. An example of this market shift is the One Acquisition Solution for Integrated Services (OASIS), which is GSA’s attempt to develop a next-generation contract vehicle for complex professional services. The vehicle is designed to span multiple professional service disciplines; contain significant IT components (that are not IT requirements in and of themselves); contain ancillarysupport components as “other direct costs”; require flexibility for operating under all contract types at the task order level; and be flexible to deploy any one or combination of all of the above. The importance of technology as an integral part of government services needs is also evidenced by recent legislation to bolster government IT practices. The Federal Information Technology Acquisition Reform Act, passed by the House of Representatives in February 2014, contains changes to IT acquisition and management, including increasing the authority of agency chief information officers, promoting data center optimization, strengthening and streamlining information technology acquisition management practices, and recognizing the importance of a highly skilled IT workforce. As servicestechnology convergence expands in application, the significant legislative and policy impacts will create a dramatic shift as the government looks at new approaches to setting requirements, protecting information and procuring solutions.
Innovative Industry and Competitive Forces
As government agencies continue to seek more dynamic, technology-based capabilities to meet requirements with smaller budgets, the pressure for new appraoches will extend to professional and technical services firms such as those in the membership ranks of the Professional Service Council. Consider a services procurement in which the government is buying an integrated services-technology capability in which the operating systems pull through demand-driven human capital services vs. a traditional approach of procured contracted labor, continued on page 12
Professional Services Council
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from page 11
capability, or staff augmentation through contract vehicles. In a service-technology converged environment, requirements such as those found in Base Operations Service Support (BOSS), Logistics Civil Augmentation Program (LOGCAP), Logistics Worldwide (LOGWORLD), or other GSA Schedule services as examples, would be contracted for, deployed and delivered in a manner that links information technology with demand-driven supply chains and performance-based contracts for services delivery. The resulting impact on industry of these services-technology converged requirements will be a reshaping of the business models and government services markets themselves. New market forces, at a minimum, will impact the form of traditional services offerings, contracting models and channel partnerships. Some of the impacts might include new services and technology firms’ alliances, fewer long-term channel partnerships and more dynamic pricing and resource deployment, including possibly a change in the relationship between employers and their employees. Without a government-wide plan to ready itself for such a future shift, it will be challenging to address projected contract requirements for programs, acquisition and contract-personnel needs, as well as placing a priority on training the acquisition community and managers with crucial skills in information technology, systems solutions and cybersecurity. Federal agencies will also have to further evolve the acquisition, contracts administration and auditing policies
and procedures, to name a few. Material change in practices would be needed for the successful completion of transformation efforts driven by this paradigm shift in services-technology convergence.
Evolving Future
The key to success regarding technology and services convergence is to innovatively select the right technology at the right moment to properly respond to requirements and to set the correct requirements for solutions to complex problems—especially in areas such as custom-facing activities, applications, training, data/information integrity, security and systems investments. Doing so also requires informed legislators, policymakers and leaders to ensure that acquisition policies, practices and people’s skills are aligned with this new innovation-driven approach, which involves: • Technology influencing systems and services staffing. • Services business models focusing on performance optimization and innovation. • Procurements that are solutions oriented and performance driven. • Government and industry embracing a paradigm shift. Convergence is here, and both the private and public sectors must be prepared to not only adjust but also embrace this paradigm shift. 3
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Professional Services Council
Convergence:
What it Means for Professional Service Companies
Photo: Alexander Supertramp/shutterstock.com
T
by Anne Altman General Manager, IBM U.S Federal Government and Industries
he pace of information technology (IT) continues down its transformational path, driving powerful change within organizations of all stripes—from government agencies to small businesses and Fortune 500 companies. This transformation has not only changed what organizations buy but also how and from whom. Over the past several years, we’ve seen a fundamental shift in how organizations, especially federal agencies, buy hardware and IT services. Eschewing well-established silos and old, outdated, procurement models, federal customers are demanding a convergence of technology products and IT services from their contracting partners. This convergence has impacted the professional services industry—lines that have often defined traditional IT companies and service organizations have blurred. However, I firmly believe there is no going back. Companies, regardless of their heritage or current product portfolio, must re-examine how they offer services to federal agencies in order to compete and succeed in this market. Professional Services Council
For many of us, the concept of convergence between services and technology is not new. We’ve witnessed the private market go through a similar evolution over the past decade. We’ve seen how data has become the new natural resource driving the emerging technologies like cloud, analytics, and mobile, that have enabled the big data and social media explosion. Now it’s the government’s turn. The convergence trend is being driven by the current state of many agencies’ IT infrastructure. The ongoing transition from outdated, legacy IT systems to more flexible, cloudbased platforms (“as-a-service”) is not only inevitable, but it is necessary to keep pace with an increasingly interactive, on-demand environment in which agencies must now operate. Despite tightening budgets, agencies continue to fund this transition: International Data Corporation (IDC) predicts that federal cloud services spending alone will reach $1.7 billion in fiscal year 2014. continued on page 14 Service Contractor / June 2014 / 13
Recently, IBM’s Research Labs conducted its yearly Global Technology Outlook—a vision of the future for information technology and its implications on industries. This analysis and its conclusions reaffirmed many of our hypotheses: agencies will continue to see a rapid convergence of technology and services, led by the expanded use of cloud computing and the continued integration of mobility services. Using these emerging and powerful platforms, the report predicts that agencies will also look to big data and predictive analytics, as well as multimedia data and cognitive computing, to create new insights. Knowing this, professional services companies must respond. We have to understand that the new demands of our federal customers must drive and inspire our service offerings and our organizations. In addition, we must become more active and engaged participants on this issue, using our experience in private industry as a working case study, to show federal
agencies how convergence can be done—and done right. That is why the Professional Services Council recently created the Technology Policy Council, a substantial expansion of its policy and advocacy portfolio. The goal is to inform and lead the current conversation around the convergence of IT and professional services, helping federal agencies and stakeholders understand how the government can leverage this new approach to improve citizen services while managing costs. I hope this new initiative will also serve as a catalyst for our industry to take stock of the current environment, and as necessary, rethink our approach. Our federal customers have spoken and, as PSC members, our companies must recognize the signs and reflect this new demand through the products and services we offer to our customers. We’ve brought the power of convergence to the private sector. It’s time for us to bring the same to federal agencies. 3
We have to understand that the of our federal customers
new demands must drive and inspire
our service offerings and our organizations.
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Professional Services Council
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Professional Services Council
Service Contractor / June 2014 / 15
Marketview 2014
†Greg Giddens, the executive director of VA’s Enterprise Program Management Office talks about cost reductions at his agency at Marketview 2014.
CrowdStrike Services President and CSO Shawn Henry, a former FBI executive assistant director, explains the human element of the cyber threat at Marketview 2014 in Ameilia Island, Fla.
16 / Service Contractor / June 2014
Professional Services Council
® DHS’ Nick Nayak joins
Marketview 2014 via video teleconferencing to discuss services in agencies with panel moderator Tom Eldridge of SAIC, and fellow panelists (from left to right) Tracey Pinson of the Army, Greg Giddens of VA and Dick Ginman of the Defense Procurement & Acquisition Policy Office.
® Former DCMA Director
πRetired Admiral James Stavridis presents his opening keynote argument for considering cyber security the new frontline at Marketview 2014, the PSC Spring Conference.
Charlie Williams discusses the state and future of contract administration and oversight at Marketview 2014.
®Richard Clarke, the former national coordinator for security, infrastructure protection, and counter-terrorism, offered his views on how government and industry can guard themselves from the enemy within during his closing keynote speech at Marketview 2014.
†Acting Deputy Under Secretary of Defense (Comptroller) Mike McCord discusses the DoD Budget during a Marketview 2014 panel on agency opportunities in a cost reduction environment.
® PSC President and CEO
Stan Soloway sets the stage at Marketview 2014 in Amelia Island, Fla. on March 17.
® AECOM’s Jim Jaska (left)
moderates a Marketview 2014 panel on the convergence of technology and services, featuring (from left to right) Deloitte’s Robin Lineberger, Dell’s George Newstrom, A-T Solutions’ Dennis Kelly, and Engility’s Professional Services Council Craig Reed.
Service Contractor / June 2014 / 17
Innovation in Government
by Beth Cobert, Deputy Director for Management, Office of Management and Budget
E
ffectiveness. Efficiency. Economic growth. People and culture. These are the key pillars of the President’s Management Agenda and the elements through which we are working to enhance the federal government’s ability to innovate and deliver a world-class customer experience for citizens and businesses. Having been on the job about eight months now, I’ve witnessed firsthand the progress already made by federal agencies on these priorities. From piloting new talent exchange initiatives, finding ways to buy smarter, or making creative use of existing flexibilities within the FAR, innovation is happening in government. Our central challenge now is how we
promote and scale successful innovations so they can have the maximum benefit for the American people. One area where we’re putting this into practice is through our efforts to improve the delivery of Federal IT. Building on progress already underway to reshape IT delivery, we are focused on ensuring the federal government has the best talent working inside government, the best companies working with government, and the best processes in place to ensure everyone involved can do their best work and be held accountable for delivering excellent results for our customers and the taxpayer. In order to do this, we’re actively looking to adopt the best ideas from both
inside and outside of government. The General Service Administration’s 18F program is a prime example of a program that helps agencies deliver user-friendly digital services like the recently launched FBOpen. The Office of Management and Budget is working closely with GSA as we pilot our own digital service project. We are also pursuing flexible hiring authority for IT talent government-wide, so we can scale up our efforts to recruit talented individuals. Another place where we have scaled up is our efforts to make governmentgenerated data and the products of federally funded R&D available to the public. We have found that access to these
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Professional Services Council
government assets has promoted innovation, job creation, and economic prosperity. Since 2009, the administration has released tens of thousands of government data sets to the public, while ensuring strong privacy protections are in place. Private companies have used government data to bring transparency to retirement plans and help consumers find fraudulent charges on their credit card bills. Because of this success, we are continuing to release more federal data sets, especially for high-impact sectors like education, healthcare, energy, and tourism. We are also piloting innovative ways to leverage the immense talent of the federal workforce. Recently, we invited agency leaders to a GovConnect Expo where they could see demonstrations of the many pilot projects currently underway that are providing innovative solutions to challenges facing the federal workforce. One of these pilot projects, for example, is a skills marketplace where employees can connect to projects that utilize their specialized talent, even if the projects are outside of the employee’s assigned office. The expo was a success and
resulted in many new agencies signing up to put these practices to work at their own agencies, a good sign that we are on the right track. Scaling up successful innovative pilots in government relies on our ability to create a mechanism for the exchange of ideas among agencies. One mechanism we use to gather agency feedback is the President’s Management Council (PMC), a monthly meeting of Deputy Secretaries from each cabinet agency, joined by the heads of GSA and OPM. During our PMC meetings, we are able to get instant, candid feedback on how pilots and innovative proposals are working within agencies, and which of these might be ripe for expansion. As leaders who drive forward much of the day-to-day agency management, the PMC members make an excellent focus group for extending innovative practices within the Management Agenda. In addition, we’ve worked to reinvigorate the President’s Management Advisory Board (PMAB), a group of CEOs from across all sectors recruited to bring their expertise to address govern-
ment management issues. For our Spring PMAB meeting, we brought the Board members together with PMC members and agency representatives to study customer service challenges across government. The PMAB not only had great ideas to share, but came away with a set of actionable assignments that they’ll be working on over the next quarter. We don’t see the PMAB and PMC as simply “nice to have” groups, but as essential elements in our efforts to build a more innovative government. Similarly, we don’t take lightly the importance of having private companies and industry groups like PSC involved as we implement innovative ideas within the President’s Management Agenda. Piloting ideas gives us an opportunity to seek this feedback and to course correct and adapt before scaling what works across government. By incorporating this feedback and accelerating our efforts to bring the best innovative practices to scale, we can provide the American people with a truly smart, innovative, and efficient 21st century government. 3
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Professional Services Council
Service Contractor / June 2014 / 19
Partnering for Best Value: A Case Study
by James Schofield, General Manager, IAP World Services and Robert Shearer, Professor, University of South Alabama “Partnering is a formal management process in which all parties to a project agree to adopt a cooperative, team-based approach to project development and problem resolution to eliminate—or at least reduce—conflicts, litigation, and claims.” (Excerpted from U.S. General Services Administration website)
20 / Service Contractor / June 2014
Professional Services Council
A
s a matter of policy and sound management, partnering promotes quality, efficiency, safety, timeliness, and best value for taxpayers’ on operations and construction contracts. Partnering saves time and money otherwise spent in adversarial dispute resolution, and preserves business relationships for future projects. Much of the literature and practice of project partnering is centered on large construction projects. The partnering concept, which became prominent in the 1980’s as a dispute management tool for publicsector construction projects, is a prime example of public-private collaboration, and is equally well applied to large service contracts. The U.S. Army Corps of Engineers recognized the benefits of partnering as early as 1988 when the Corps’ Mobile District awarded a contract for construction of Oliver Lock and Dam, a $50+ million project. Colonel Robert Keyser, PE, F. SAME (USA, Ret), then a captain, was assigned as project officer. During early research, Keyser learned from Fluor-Daniel in Greenville, South Carolina, that the company’s interest in private-sector partnering took shape when leadership realized that their office of counsel was the only group in the company that had enough people to field TWO softball teams at the company picnic, not a good sign for a professional engineering firm. Keyser also recalled that not everyone on that first project team initially bought into partnering. A key turning point occurred when the team faced an expensive issue related to sourcing the aggregate for the concrete. Working together, the government-contractor team worked out a new design mix that met the project needs and kept sourcing local and less costly. On other projects where partnering was not as successful, Keyser noted that a recurring theme was senior leaders showing up for partnering sessions, but not really engaging in the process. At the General Services Administration (GSA), a national policy on partnering has been issued this year, updating and re-confirming GSA’s 1994 policy. Laura Stagner, AIA, PMP, of the GSA Public Buildings Service Office of Design and Construction notes, “In every successfully partnered project, the facilitator gets the team to a certain point, then you have
Article photos courtesy of IAP.
Professional Services Council
to own it.” Once the project team “owns it,” then the team begins to enjoy superior performance enabled by higher trust levels. Stanger also echoed Keyser’s emphasis on senior leader engagement. James Moore, P.E., CCM of the USACE’s Construction Management Community of Practice, noted that the USACE now requires professionally facilitated partnering for projects designated as “mega projects.” This requirement is outlined in a recent Engineering and Construction Bulletin (ECB) that describes what a mega project is and the various management tools (including partnering with a three-tiered management system) that are required. As agencies are challenged to operate with ever smaller staffs, partnering can be a force multiplier. At NAVFAC Washington’s Public Works Department Annapolis, there is an ongoing partnership between the “in-house” Public Works staff and the Base Operating Support (BOS) Contractor, IAP World Services. That partnership is successfully capitalizing on the collective strengths of the NAVFAC and contractor teams. In Annapolis, the NAVFAC and IAP partners regard themselves as a single “public works” team. The Annapolis Public Works team directly supports the U.S. Naval Academy and the North Severn support base. Public Works provides 24/7 Campus Operations Support for all of the academic, athletic and administrative facilities on the 330-acre campus. The partnering process begins with commitment from top management of each organization and an initial workshop where the stakeholders identify common goals enshrined in a partnering charter, candidly share expectations of each other, and develop action plans to address priorities and potential obstacles to success. The key players also design a process to identify and proactively resolve issues within the management team. Regular follow-up meetings provide an opportunity to assess the effectiveness of partnering—including communications and working relationships among team members—monitor and update action plans, and identify new or unresolved issues. On large projects, a third party facilitator is frequently employed to guide the team through partnership formation and follow-up sessions. continued on page 22 Service Contractor / June 2014 / 21
from page 21
In Annapolis, IAP World Services is currently performing in year five of a nine year contract. IAP’s scope of work includes operations and maintenance of all utilities and building systems, special events and transportation. NAVFAC’s in-house Public Works team handles the owner’s roles: planning, engineering, environmental permitting, real estate, and contracting for major construction and renovation programs. Consistent with NAVFAC policy, the Annapolis Base Operating Support Contract spells out where partnering fits in: “Partnering Philosophy: The first principle is that the Navy views its contractors as partners and not just abstract service providers. The Navy wants its contractors to succeed because partners’ success drives the Navy’s successful mission completion. Within the bounds of acquisition policy the Navy intends to work to find solutions that will be beneficial to both the Government and its partners.” The initial partnering session in Annapolis was held in October 2009. Consistent with the size of the contract and NAVFAC policy, the team selected (and continues to utilize) a professional partnering facilitator, Robert Shearer. Shearer walked the team through an overview of partnering, identification of the stakeholder’s expectations, and a draft partnering charter. An important recurring element of Shearer’s approach has been a partnering management team evaluation. The evaluation is a report card that the team fills out on itself during each session, covering about a dozen rating factors which include: open communications, timely issue resolution, mutual understanding of the contract, reasonable sharing of risk, and “one team” approach. The evaluation helps focus the team on areas where improvements can be celebrated, and without fail also helps surface issues that have emerged since the last partnering session. In more than 20 years as a partnering consultant, Shearer has never seen a government organization and a private contractor transform so quickly from start-up to a high-performance team. Synergy—the idea that combining talents creates a greater positive impact than the sum of the individual parts—is evident in every key decision this team makes and every task it carries out. One of the trademarks of an excellent team is that its members are as committed to the success of each other as they 22 / Service Contractor / June 2014
are to their own success. From the beginning it was evident that this leadership team shared mutual respect and was willing to share information and tackle difficult operational challenges through a joint problem-solving approach. Thanks to partnering, the Public Works-IAP team was ready for anything when nature served a one-two punch in the fall of 2011. While the team was preparing for potential storm surge, high winds and rain from Hurricane Irene, an unexpected event happened—an earthquake hit the U.S. East Coast. When the earthquake hit, we were already in hurricanepreparation mode. Back in 2003, Hurricane Isabel brought a seven-foot storm surge and four feet of water into many Naval Academy buildings, so we wanted to secure the facilities and prevent as much damage as possible. So when the earthquake struck, with no advance warning, the Public Works team was able to jump into action, responding to calls about facility damage and flooding from broken piping. Though not catastrophic, the earthquake spawned hundreds of inspection, conditionassessment and repair tasks. We are proud of how IAP employees think and act as members of the Naval Academy Public Works team. In addition to any contractor’s natural desire to provide good customer service, the partnering framework sets the stage for daily working relationships. When we get a call from our Navy counterparts, we are instantly inclined to say “yes,” and then figure out with them how to make “yes” work. The same applies when they get a call from us. Our mutual commitment to a partnering approach gets us over a lot of bumps in the road. This doesn’t mean that we don’t have resource and contract issues; it just gives us a very positive foundation to tackle them together. Not every year brings a one-two punch of storms and earthquakes. When things are going well, it is tempting to defer formal partnering sessions, regarding partnering as a “solved” problem. A key to the Annapolis partnership success has been consistent work on partnering even when there seemed to be no “issues.” Since the outset of the contract, there have been nine partnering sessions. These range from 2-3 hours to a full day event. Outside of partnering gatherings, the partnership involves weekly performance meetings, and many daily interactions. Not every project applies partnering principles with equal success. One project manager noted, “Sometimes Professional Services Council
we go to partnering sessions where our client believes that partnering is an opportunity to ask for things not in the contract, or worse makes the session feel like a punitive remediation.” At the Annapolis 2013 partnering session, Rick Nohmer, IAP Vice President for Global Services, noted “having been to several Navy partnering sessions, the USNA sessions are by far the most productive and well attended. Navy Public Works leadership taking a half day out of busy schedules to work on partnering with their contractors truly sets the tone. There is no doubt in my mind when talking with the IAP on-site leadership that this is not only a priority, but something they all believe will help in delivering better service and customer satisfaction to the Navy.”
Professional Services Council
Over time, teams do not remain static. In the Annapolis partnership, a typical gathering comprises about 20 leaders, and of the 20 that gathered in October 2009, 50 percent of the names have changed due to military rotations and normal turnover. Working on partnering during otherwise “quiet” periods has the added benefit of building the team’s strength for the next obstacle around the corner. As an example of publicprivate partnership, the partnering model offers the promise of team-based management committed to achieving common goals and instilling a collaborative “win-win” approach. Partnering in Public Works at the U.S. Naval Academy has set a standard for similar multi-stakeholder, long-term business relationships. 3
Service Contractor / June 2014 / 23
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Bill Tracker: 113th Congress-Second Session (2014) NEW
Newly introduced since last issue
Major action taken since last issue
Bill became law since last issue
Cyber Intelligence Sharing and Protection Act, Rogers (R-MI) Summary Would establish cyber threat intelligence sharing procedures between the intelligence community and certain private sector entities. STATUS Passed by the House (288-127) on 4/18/2013.
H.R. 624
H.R. 731
Summary STATUS
Protecting Americans Abroad Act, Radel (R-FL) Would allow the State Department to use best-value contracting in awarding local guard or protective service contracts in high-risk areas abroad under the diplomatic security program. Referred to Foreign Affairs Committee on 2/14/2013. Related bills: H.R. 2723, H.R. 2848, S.1386.
H.R. 882 Contracting and Tax Accountability Act of 2013, Chaffetz (R-UT)
Summary STATUS
Would propose for debarment any contractor with an unpaid, seriously delinquent tax debt. Would require prospective contractors to certify that the contractor has no unpaid, seriously delinquent tax debt. Passed by the House (407-0) on 4/15/2013. Related bIll: S. 2247.
H.R. 1163 Federal Information Security Amendments Act of 2013, Issa (R-CA)
Summary Seeks to enhance the governmentwide management, oversight, and coordination of information security risks, including contractor-related systems and information. STATUS Passed the House (416-0) on 4/16/2013. Federal Information Technology Acquisition Reform Act, Issa (R-CA) H.R. 1232 Seeks to reform federal government acquisition of information technology by providing additional Summary
authorities to agency CIOs, consolidating data centers, enhancing IT spending tracking and strategic sourcing, and creating assisted acquisition centers of excellence within the federal agencies. STATUS Passed the House on 2/25/14. Related bills: H.R. 4435, S.1611, S.1843. Global Partnerships Act of 2013, Connolly (D-VA) H.R. 1793 Seeks to streamline and improve USAID’s procurement process, to maximize transparency, Summary
STATUS
efficiency, simplicity and speed. It also expresses the Congress’ preference for strong competition and a wide range of nonprofit and for-profit partners in development initiatives. Referred to Foreign Affairs, Oversight and Government Reform, Rules, and Ways and Means Committees on 4/26/2013.
H.R. 2008 Stop Taxing American Assistance to Afghanistan Act, Welch (D-VT)
Summary STATUS
Would prohibit U.S. assistance for Afghanistan unless the two governments enter into a bilateral agreement that provides that work performed in Afghanistan by U. S. contractors is exempt from taxation by the government of Afghanistan. Referred to Foreign Affairs Committee on 5/15/2013.
H.R. 2061 Digital Accountability and Transparency Act of 2013, Issa (R-CA)
Summary STATUS
Would require the director of OMB to establish highly detailed, government-wide financial data standards for federal funds. Would require a review of existing financial reporting requirements to consolidate and eliminate duplicative reporting. Would establish a pilot program authorized to collect detailed reports from federal fund recipients and to identify barriers and burdens related to data collection related to federal spending. Related bill, S. 994, became Public Law 113-101 on 5/4/2014.
Professional Services Council
Service Contractor / June 2014 / 25
Bill Tracker: 113th Congress-Second Session (2014) NEW
Newly introduced since last issue
Major action taken since last issue
Bill became law since last issue
Civilian Contractors Engaged in Intelligence Activities Reduction Act of 2013, Jackson Lee (D-TX) H.R. 2434 Would mandate a 25 percent reduction in the number of contractors with top secret security Summary
STATUS
clearances that are engaged in intelligence activities. Would direct the Director of National Intelligence to conduct a study to determine the extent to which contractors are used in the conduct of intelligence activities and the type of information that they can access. Referred to Intelligence Committee on 6/19/2013.
H.R. 2444 Commonsense Contractor Compensation Act of 2013, Tonko (D-NY)
Summary Would limit the cap on allowable contractor compensation to the salary of the vice president, $230,700. STATUS Referred to Oversight and Government Reform and Armed Services Committees on 6/19/2013. Related bills: S. 1192, S. 2286.
H.R. 2606 Stabilization and Reconstruction Integration Act of 2013, Stockman (R-TX)
Summary Would establish an Office for Contingency Operations to consolidate reponsibility for “overseas stability and reconstruction operations” currently divided among the Department of Defense, Department of State, and USAID. The director of the Office for Contingency Operations would report to the Secretary of State and the Secretary of Defense. STATUS Referred to Armed Services, Foreign Affairs, and Oversight and Government Reform Committees on 6/28/2013.
H.R. 2638 Foreign Aid Transparency and Accountability Act of 2013, Poe (R-TX)
Summary STATUS
Would require the development of guidelines regarding the establishment of measurable goals, performance metrics, and monitoring and evaluation plans that can be applied with reasonable consistency to U.S. foreign assistance. Referred to Foreign Affairs Committee on 7/10/2013. Related bill: S. 1271.
H.R. 2719 Transportation Security Acquisition Reform Act, Hudson (R-NC)
Summary STATUS
Would direct the administrator of the Transportation Security Administration to develop a strategic multiyear technology acquisition plan. Would require the agency to report on the plan’s implementation as well as TSA’s goals for small business contracting. Passed by the House (416-0) on 12/3/2013. Related bill: S. 1893.
Summary STATUS
Would allow the Secretary of State to award local guard contracts on the basis of best value. Would reduce the bid price of proposals received from American citizens and joint ventures by 10 percent. Referred to Foreign Affairs and Oversight and Government Reform Committees on 7/18/2013. Related bills: H.R. 731, H.R. 2848, S. 1386.
H.R. 2723 Embassy Security and Enhancement Act of 2013, Engel (D-NY)
H.R. 2848
Department of State Operations and Embassy Security Authorization Act, FY 2014, Royce (R-CA) Summary Would allow the Department of State to use cost technical trade off source selection criteria for the selection of local guard services under the Diplomatic Security Program when such services are to be provided in an area that qualifies as a “high risk, high threat post”. STATUS Passed by the House (284-37) on 9/29/2013. Related bills: H.R. 731, H.R. 2723, S. 1386.
26 / Service Contractor / June 2014
Professional Services Council
Bill Tracker: 113th Congress-Second Session (2014) NEW
Newly introduced since last issue
Major action taken since last issue
Bill became law since last issue
H.R. 2912 Afghanistan Suspension and Debarment Reform Act, Chaffetz (R-UT)
Summary STATUS
Would give the Special Inspector General for Afghanistan Reconstruction (SIGAR) suspension and debarment authority for foreign and Afghan contractors operating in Afghanistan when agencies fail to initiate a “timely” review of contractors identified by SIGAR. SIGAR would have the authority to make exceptions that permit a debarred or suspended contractor to be awarded new contracts in specific cases. Referred to Foreign Affairs and Oversight and Government Reform Committees on 8/1/2013.
Summary STATUS
Would establish a National Office for Cyberspace to coordinate cybersecurity efforts. Would prohibit agencies from entering into contracts involving information technology without including in the contract requirements to provide effective security for that information. Would require contractors and subcontractors that operate or use an information system or information infrastructure on behalf of an agency to conduct an annual audit to assess compliance with cybersecurity regulations. Referred to Homeland Security and Oversight and Government Affairs Committees on 8/2/2013.
H.R. 3032 Executive Cyberspace Coordination Act of 2013, Langevin (D-RI)
H.R. 3345 SUSPEND Act, Issa (R-CA)
Summary STATUS
Would establish a Board of Suspension and Debarment within the GSA to act as a centralized body to manage all executive agency suspension and debarment activities. Provides waiver authority for agencies that meet strict metrics. Retains, and expands, the authorities of the Interagency Suspension and Debarment Committee. Requires public posting of suspension and debarment officials’ decisions not to take suspension or debarment action on cases referred to the suspension and debarment official. Reported by Oversight and Government Reform Committee on 10/29/2013.
H.R. 3696
National Cybersecurity and Critical Infrastructure Protection Act of 2013, McCaul (R-TX) Summary Would provide liability coverage for providers of approved cybersecurity technologies that defend against cyber incidents. Would require DHS to assess the effectiveness of its existing authorities for acquiring cybersecurity technologies to ensure that such processes and authorities are capable of meeting the department’s cybersecurity missions. Would establish formal and meaningful information sharing procedures between DHS and private sector entities. STATUS Reported by the House Homeland Security Committee on 2/5/2014.
H.R. 4022 Security Clearance Reform Act of 2014, Lynch (D-MA) Summary STATUS
Would require that the president submit to Congress a plan to reform the security clearance process based on a shift to continuous evaluation and monitoring of local government records, commercially available information such as credit history and foreign travel, and social media, among other information. Would require that certain federal funds be withheld from local governments that do not comply with requests for records by federal agencies or contractors performing background investigations on their behalf. Would require that only federal employees perform agency final quality reviews of background investigations, background investigation interviews with the individual seeking a clearance, and background investigations for clearances at the top secret level or higher. Would prohibit the award for investigative support services to a company that also holds a contract to perform background investigation fieldwork services, and vice versa. Referred to Oversight and Government Reform and Judiciary Committees on 2/10/2014.
Professional Services Council
Service Contractor / June 2014 / 27
Bill Tracker: 113th Congress-Second Session (2014) NEW
Newly introduced since last issue
Major action taken since last issue
Bill became law since last issue
H.R. 4093
Greater Opportunities for Small Business Act of 2014, Graves (R-MO) Summary Would increase the government-wide small business prime contracting goal to 25 percent and would increase the subcontracting goals to 40 percent. STATUS Reported by the Small Business Committee on 4/9/2014. Related bills: H.R. 4435, S. 196. DHS Acquisition Accountability and Efficiency Act, Duncan (R-SC) H.R. 4228 Would enhance a number of acquisition management and policy changes implemented by DHS’ NEW
Summary
Management Directorate over the past several years, including the codification of the existing Program Accountability and Risk Management (PARM) Office. Would also require DHS to develop a multiyear acquisition strategy and would require DHS to appropriately report and take corrective actions for any programs that experience significant cost overruns or schedule delays. STATUS Reported by the Homeland Security Committee on 5/6/2014. NASA Authorization Act of 2014, Palazzo (R-MS) H.R. 4412 Would authorize NASA programs and activities, and STEM education funding. Includes provisions
NEW
Summary
STATUS
that would require the NASA FAR supplement to address contractor responsibilities regarding detection and avoidance of counterfeit electronic parts. Would also restrict contract awards to entities that have unpaid tax liabilities or criminal convictions. Reported by Science, Space, and Technology Committee on 4/29/2014. Related bill: S. 1317.
National Defense Authorization Act for Fiscal Year 2015, McKeon (R-CA) H.R. 4435 Would authorize appropriations for military activities of the Department of Defense for Fiscal
NEW
Summary
Year 2015. Includes several acquisition-related provisions including an extension of existing caps on services contracting, increases to small business prime and subcontracting goals, and cost comparison requirements between military, contractor, and DoD civilians. Also includes provisions addressing unauthorized Afghan taxes and federal IT acquisition reform. STATUS Passed the House as amended (325-98) on 5/22/2014. Related bills: H.R. 1232, H.R. 4093, S. 196, S. 2410. Intelligence Authorization Act for Fiscal Year 2014 and 2015, Rogers (R-MI) H.R. 4681 Would fund all U.S. intelligence activities across 16 different agencies through fiscal year 2014. Summary
STATUS
Would require that intelligence contractors develop and operate a security plan consistent with standards to be established by the Director of National Intelligence (DNI). Would require that cleared contractor personnel be monitored continuously according to DNI standards, and require the development of information sharing procedures between the federal and private intelligence communities to assist with continuous evaluations. Reported by Intelligence Committee on 5/27/2014. Related bill: S. 1681.
Assuring Contracting Equity, T. Udall (D-NM) S. 196 Would raise the government-wide small business contracting goal to 25 percent from 23 percent Summary
STATUS Summary STATUS
S. 994
and would also increase the goals of certain small business subcategories to 10 percent. Would also limit to two the number of small business subcategories in which agencies could take credit for small business performance. Referred to Small Business and Entrepreneurship Committee on 1/31/2013. Related bills: H.R. 4093, H.R. 4435. Digital Accountability and Transparency Act of 2013, Warner (D-VA) Would require the director of OMB to establish highly detailed, government-wide financial data standards for federal funds. Would require a review of existing financial reporting requirements to consolidate and eliminate duplicative reporting. Would establish a pilot program authorized to collect detailed reports from federal fund recipients and to identify barriers and burdens related to data collection related to federal spending. Became Public Law 113-101 on 5/9/2014. Related bill: H.R. 2061.
28 / Service Contractor / June 2014
Professional Services Council
Bill Tracker: 113th Congress-Second Session (2014) NEW
Newly introduced since last issue
Major action taken since last issue
Bill became law since last issue
S. 1192
Commonsense Contractor Compensation Act of 2013, Boxer (D-CA) Summary Would limit the cap on allowable contractor compensation to the salary of the vice president, $230,700. STATUS Referred to Homeland Security and Governmental Affairs Committee on 6/19/2013. Related bills: H.R. 2444, S. 2286. Foreign Aid Transparency and Accountability Act of 2013, Rubio (R-FL) Summary Would require the development of guidelines regarding the establishment of measurable goals, performance metrics, and monitoring and evaluation plans that can be applied with reasonable consistency to U.S. foreign assistance. STATUS Reported by Foreign Relations Committee on 12/20/2013. Related bill: H.R. 2638. NASA Authorization Act of 2013, Nelson (D-FL) Summary Would authorize NASA programs and activities, and STEM education funding. STATUS Reported by Commerce, Science, and Transportation Committee on 7/30/2013. Releted bill: H.R. 4412.
S. 1271
S. 1317
S. 1386
Chris Stevens, Sean Smith, Tyrone Woods, and Glen Doherty Embassy Security, Threat Mitigation, and Personnel Protection Act of 2013, Menendez (D-NJ) Summary Would allow the use of cost-technical tradeoff analysis as the basis for source selection criteria for local guard contracts under the Diplomatic Security Program and would provide a 10 percent price advantage for U.S. firms’ proposals for such work. Would also restrict the ability of interested parties to file a protest against a Department of State contract awarded under non-competitive procedures for an emergency security requirement. STATUS Reported by Foreign Relations Committee on 12/9/2013. Related bills: H.R. 731, H.R. 2723, H.R. 2848. Federal Data Center Consolidation Act of 2013, Bennet (D-CO) Summary Would require covered federal agencies to conduct assessments of federal data centers, develop data center consolidation and optimization plans, and measure cost savings associated with data center optimization initiatives. STATUS Reported by the Homeland Security and Governmental Affairs Committee on 5/6/2014. Related bill: H.R. 1232.
S. 1611
S. 1618
Enhanced Security Clearance Act of 2013, Collins (R-ME) Summary Would establish an enhanced security clearance system by directing modifications to the existing security clearance database and would require more frequent security clearance reviews using the enhanced security clearance system. STATUS Referred to Homeland Security and Governmental Affairs Committee on 10/30/2013.
S. 1681
Intelligence Authorization Act for Fiscal Year 2014, Feinstein (D-CA) Summary Would require DNI to collaborate with DoD and OPM in the analysis of costs and benefits of improving the security clearance background process and seeks to establish greater security clearance reciprocity among federal agencies. STATUS Referred to Homeland Security and Governmental Affairs Committee on 10/30/2013. Related bill: H.R. 4681.
S. 1744
Security Clearance Accountability, Reform, and Enhancement Act, Tester (D-MT) Summary Would terminate or debar, respectively, any individual OPM employ directly or through a contract if found to be intentionally involved in misconduct affecting the integrity of a background investigation. Would automatically place on administrative leave or suspend, respectively, any individual employed directly by or through a contract of OPM during an investigation to determine whether that person was intentionally involved in misconduct. The bill would also require that contracts for background investigative services include a provision requiring the company to report any misconduct affecting the integrity of an investigation within 90 days of the discovery of the misconduct. Would mandate that the president review and update agency guidance regarding what positions require clearances every five years. STATUS Approved by the Homeland Security and Governmental Affairs Committee on 5/21/2014. Professional Services Council
Service Contractor / June 2014 / 29
Bill Tracker: 113th Congress-Second Session (2014) NEW
Newly introduced since last issue
Major action taken since last issue
Bill became law since last issue
S. 1843
Federal Information Technology Savings, Accountability, and Transparency Act of 2013, Udall (D-NM) Summary Would mandate that all federal agencies, with the exception of DoD, have only one Chief Information Officer, who would have authority over budget planning processes related to IT, programs including significant IT components, commercial items, and commercially available off-the-shelf items. Would grant each agency CIO hiring authority over personnel responsible for IT within the agency. Would designate the CIO Council as the lead interagency forum for the development and improvement of cross-agency IT-related policy and processes. STATUS Referred to Homeland Security and Governmental Affairs Committee on 12/17/2013. Related bill: H.R. 1232. Transportation Security Acquisition Reform Act, Ayotte (R-NH) Summary Would require that the administrator of TSA develop a multiyear technology investment plan that, among other things, identifies (1) opportunities for public-private partnerships; (2) TSA’s acquisition workforce needs as required for the implementation of the multiyear plan; and (3) initiatives to streamline and clarify TSA’s acquisition process for businesses of all sizes. Would encourage the authors of the plan to include feedback from the private sector. Would require the administrator of the TSA to submit to Congress a justification of any potential technology acquisition valued over $30 million. STATUS Referred to Commerce, Science, and Transportation Committee on 12/20/2013. Related bill: H.R. 2719.
S. 1893
S. 2247 Contracting and Tax Accountability Act of 2014, McCaskill (D-MO)
Summary STATUS
NEW
Would propose for debarment any contractor with an unpaid, seriously delinquent tax debt. Would require prospective contractors to certify that the contractor has no unpaid, seriously delinquent tax debt. Referred to Homeland Security and Governmental Affairs Committee on 4/10/2014. Related bill: H.R. 882.
S. 2286 Cutting Contractor Use and Taxpayer Savings Act of 2014, Walsh (D-MT)
Summary STATUS
NEW
Would require additional DoD reporting requirements regarding service contract inventories and would require a DoD reduction in services contracting that would bring such spending levels in line with DoD spending on services in 2002 (adjusted for inflation). Would limit the allowable costs for contractor compensation to be no greater than the salary of the President of the United States. Referred to Armed Services Committee on 5/1/2014. Related bills: S. 1192, H.R. 2444.
S. 2410
NEW National Defense Authorization Act for Fiscal Year 2015, Levin (D-MI) Summary Contains a number of provisions affecting the contracting community including provisions that clarify DCAA authority to interview contractor employees as part of an audit, expand “contracting with the enemy” provisions previously enacted, and would reform security clearances procedures.
STATUS
Approved by the Armed Services Committee on 5/22/2014. Related bills: H.R. 4435.
30 / Service Contractor / June 2014
Professional Services Council
Time For Competition:
Billions In Sole-Source Awards To FFRDCs Impose Tremendous Costs On The Taxpayer by Jerald S. Howe, Jr.1
D
espite fiscal constraints, the government has issued billions of dollars in no-bid contracts to the two systems engineering Federally Funded Research and Development Centers (FFRDCs) where a competitive private industry marketplace could perform the same work at a much lower cost. Resisting the encroachment of the FFRDCs into the rightful province of the private sector was among the founding missions of the Professional Services Council (PSC). The current version of the problem was highlighted in PSC’s 2012 white paper demonstrating that: (1) Under applicable law and procurement regulations, FFRDCs are permitted to conduct only activities that the private sector is incapable of handling; (2) Restructuring of the defense industry to eliminate organizational conflicts of interest (OCIs) has greatly increased the capability of the private sector to conduct systems engineering and technical assistance (SETA) and similar activities in an OCI-free manner; and (3) The cost premium of the systems engineering FFRDCs over comparable for-profit companies is an estimated 35-45 percent.2 In the past two years, PSC’s call for a strategic re-set of the expanding role of the FFRDC has gone unheeded at a tremendous cost to American taxpayers.3
The Recent No-Bid Contracts
The Department of Defense (DoD) last year announced two multi-billion dollar awards to FFRDCs. On September 27, 2013, the U.S Air Force announced a sole-source award to one FFRDC, the MITRE Corp., of a cost reimbursable contract for systems engineering and integration support, valued at $1.7 billion.4 The work was described as assisting in “shaping and executing the Air Force core functions of DoD enterprise system engineering, architecture development, technical strategy, program strategy and program execution by providing systems engineering and deep technical expertise in acquisitions and systems analysis, electronic systems and technologies, information technologies, computing technologies and information security.” On October 18, 2013, the Air Force announced a sole-source award to a second FFRDC, Aerospace Corporation, of a five-year cost-plus contract, the first year
of which is valued at $788 million (the “Aerospace Systems Engineering Contract”).5 The Air Force described the work as “general life cycle systems engineering and integration for the National Security Space Community,” and stated that the FFRDC would “provide planning, systems definition, and technical specification support, analyze user needs, design and design alternative, interoperability, manufacturing and quality control, and assist with test and evaluation, launch support, flight tests, orbital operations and integration of space systems into effective systems of systems.” In each FFRDC contract, the identified functions in their statements of work are ones routinely performed by private-sector contractors with systems engineering capabilities.
The Cost to the Taxpayer
In the past five years (fiscal years 2010-2014), DoD and the Air Force have awarded approximately $8.6 billion in sole-
Photo: Sergey Nivens/shutterstock.com
continued on page 32 Partner in the Washington, D.C. office of Fried, Frank, Harris, Shriver, Jacobson. Mr. Howe has served as in-house and outside counsel to private sector companies with systems engineering capabilities, but the views expressed here are his alone. 2 PSC White Paper: “Federally Funded Research and Development Centers: A Strategic Reassessment for Budget-Constrained Times” (June 5, 2012). 3 To the contrary, for the first time since 2002, new FFRDCs have been created: one at the Center for Medicare and Medicaid Services within the Department of Health and Human Services and one at the National Institute of Standards and Technology within the Department of Commerce. 4 Contract No. FA8702-14-C-0001. 5 Contract No. FA8802-14-C-0001. 1
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Service Contractor / June 2014 / 31
from page 31
source contracts to the Aerospace Corporation and MITRE Corporation for systems engineering and integration support. The PSC’s data suggests that the government pays as much as 35-45 percent more for FFRDC work than for comparable work from a for-profit company.6 Given the total volume of the FFRDC efforts, this is a huge cost differential being borne by the taxpayer. And the difference is even greater when one considers that, unlike for-profit contractors who are required to pay corporate income taxes back into the Treasury, FFRDCs operate tax-free.
FFRDCs Are Far Exceeding Their Important But Limited Role
FFRDCs were established in the late 1940s for the specific purpose of providing systems engineering and integration support to the federal government for weapons and space programs, which were not available at the time either in government or in the private sector without OCIs. FFRDCs continue to perform important work for the government where they provide unique functions that cannot readily be provided by independent, for-profit private industry. But FFRDCs also continue to provide systems engineering and integration support to the federal government as if no similar OCI-free capability is available in the private sector. For-profit companies have been successfully and cost-effectively provid-
ing systems engineering and integration capabilities for the defense and intelligence community for decades. The ranks of independent private-sector contractors having grown several-fold in the past four years, in part as a result of the enactment of the Weapons Systems Acquisition Reform Act of 2009 (WSARA).7 That law required, for major defense acquisition programs, that for-profit companies could provide systems engineering and technical assistance work only on an OCI-free basis. The law also required DoD to develop new, and to tighten existing, OCI requirements that prohibit a contractor on a major defense acquisition program, and any of its corporate affiliates, from being a prime, or subcontractor on the development of the system.8 DoD and the intelligence community responded to WSARA by adopting strict OCIavoidance policies, and major defense contractors reacted by divesting the systems engineering components of their organizations.9 As a result, there are now more independent, OCI-free, for-profit industry providers offering SETA and similar service capabilities.
The 2013 FFRDC Awards Are A Procurement Failure
The two recent no-bid FFRDC contracts skirt the requirements of federal procurement laws designed to promote competition in federal contracting. Axi-
omatically, all federal contracts must be competed unless a recognized exception applies, documented by a justification and approval (J&A). To justify awarding the multi-billion dollar systems engineering contract to Aerospace Corporation without competition, the government relied on a competition exception that provides that: Full and open competition need not to be provided for when it is necessary to award the contract to a particular source … in order to ... establish or maintain an essential engineering, research, or development capability to be provided by an educational or other non-profit institution or a federally funded research and development center.10 Yet, even the government’s own justification for this no-bid contract demonstrates that it will be for “general” engineering” efforts that are well within the expertise of industry.11 Still, the J&A is replete with conclusory statements that amount to saying that because Aerospace Corporation has had a series of contracts—with ever-expanding reach over decades into areas that for-profit companies now can and do also provide—only Aerospace Corporation can now perform the system engineering contract.12 Besides being inaccurate, this broad-brush assertion missed the opportunity to examine
PSC White Paper, 2012 at 12. Pub. L. No. 111-23. 8 WSARA § 207. Implementing regulations were issued in late 2010. 75 Fed. Reg. 81908 (Dec. 29, 2010). 9 PSC White Paper, 2012 at 9-10. 10 Federal Acquisition Regulation (“FAR”) 6.302-3(a)(2)(ii) (emphasis added). 11 See J&A at 2-3. In greater detail, the statement of work for the contract identifies a long list of space and general systems engineering tasks that are both broadly stated and commonly found in systems engineering contracts being performed by for-profit contractors. Attachment 1 to FA8802-14-C-0001 (Sept. 24, 2013). 12 J&A at 4, 6. 6 7
Julie Susman
continued from pg. 7
that innovation is not desired and lead to a price shoot out by the offerors. Innovation doesn’t have to be more expensive, especially if the customer gets what they need on time and on budget. Companies need to encourage government customers to establish program “ramp-up” and pre-“go-live” testing times based on the complexity of the contract requirements. The more innovative a program, approach, technique, or technology is, the more complex its imple-
mentation and adoption. It is important to communicate to the government well in advance of any solicitation that agency time and resources need to be included in the preparation for and managing new programs, including the training, oversight, management and evaluation of the government workforce that will be expected to function in a new environment. Adopting a new technology or program requires integrating with legacy systems and existing programs. Often not consid-
32 / Service Contractor / June 2014
ered when new requirements and funding are being pulled together, but just as important, is the need for behavioral and cultural changes throughout the government workforce. They are expected to implement and operate in a changed environment. Companies should emphasize the importance of building these requirements and resources for the federal workforce, concurrent to the planning for the contracts. Not doing so practically ensures a failed government contract. 3 Professional Services Council
the wide range of services under this multi-billion dollar contract and to assess in which portions the government could save hundreds of millions, even billions, of dollars through competition. The award of this contract also appears inconsistent with FAR 35.0174(a), which requires that, “prior to extending the contract or agreement with an FFRDC, [the sponsor] shall conduct a comprehensive review of the use and need for the FFRDC.” The “comprehensive review” must look at, among other things: • “An examination of the sponsor’s special technical needs and mission requirements that are performed by the FFRDC to determine if and at what level they continue to exist;” • “Consideration of alternative sources to meet the sponsor’s needs;” and • “An assessment of the adequacy of the FFRDC management in ensuring a cost-effective operation.” FAR 35.017-4(c). Such penetrating analyses could not have been performed in a meaningful way before awarding the systems engineering contract because much of that contract’s broad scope could be performed by for-profit companies operating in a competitive environment on a lower cost basis. The J&A confirms this, stating that:
Academia and industry do possess the breadth and depth of knowledge and experience in the highly specialized areas that the Aerospace FFRDC supports.13 Precisely because that is true, and alternative sources do exist, the sole-source contract award is improper. So how did the Air Force end up justifying the sole-source award? Under the heading of “market research conducted,” the Air Force said its market research consisted primarily of “contacting other possible FFRDCs for interest in the Aerospace requirement” and, secondarily, of “verification that for-profit contractors could not perform the FFRDC work.”14 As to the first inquiry, the Air Force concluded that there were no other suitable FFRDCs—not surprising, since each FFRDCs is designed to play a particular role and none is set up to compete with the others. As for researching the capability of private sector companies to perform the general systems engineering support being sought, the Air Force contacted no for-profit companies or industry trade associations. Instead, in September 2012, the Defense Acquisition University performed a survey of users for the Aerospace FFRDC. The user survey concluded that “for-profit industries are not a feasible alternative to the Aerospace FFRDC primarily for the reason that led to the
creation of The Aerospace Corporation in the first place—the potential for COIs”.15 Thus, the conclusions of the survey had nothing to do with the actual scientific or engineering capabilities of the private sector as an alternative to the FFRDC. Rather, for-profit industry was excluded solely due to outmoded (pre-WSARA) and factually groundless perceptions of OCIs. Times have changed in the industry. For example, the National Reconnaissance Office maintains an extensive roster of approved OCI-free, forprofit, service contractors. Inexplicably, the Aerospace J&A user survey missed this point entirely.
Conclusion
FFRDCs have a place in the acquisition system and there should be foundational agreements for relationships between the two systems engineering FFRDCs and the Air Force. But just as important, there should also be a regular, thorough, thoughtful and objective assessment of the scope and breadth of all FFRDC systems engineering contracts—with a real study of whether for-profit companies have the ability to perform this kind of work, thereby saving the government extraordinary amounts through competition. No such assessment occurred in this five-year cycle and that is both a failure to follow the law and a missed opportunity. 3
J&A at 5 (emphasis added). J&A at 5. 15 J&A at 6 (“Private profit-making industry fails to meet DOD requirements for freedom from COIs and absence of bias due to manufacture of particular product lines.”). 13 14
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PSC’s Service Contract Act Training The Service Contract Act is one of the most technically challenging aspects of competing for the award of, and successfully administering a federal service contract. SCA sets minimum pay and benefit rates for many service occupations.
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The SCA affects many different decisions made by many different people in a company. Everyone, from executive leadership to proposal writers, to accountants, project managers, and human resource specialists, needs to be conversant with the requirements of the act. This course will give your staff the knowledge to be SCAsavvy in opportunity identification, capture strategy, bid/no-bid decisions, contract pricing, contract price adjustments, wage determinations, and fringe benefit calculations. PSC is pleased to offer the only SCA training conducted in partnership with the U.S. Department of Labor, Wage & Hour Division.
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Visit www.pscouncil.org for more details and registration. 34 / Service Contractor / June 2014
Professional Services Council
Policy Spotlight
Providing a Framework for Regulation
by Alan Chvotkin, PSC Executive Vice President & Counsel
Photo: filmfoto/shutterstock.com
T
he Federal Acquisition Regulation (FAR) turned 30 on April 1 and it is showing its age. Many of the changes made to it in the past few years have not helped, only adding more prescriptive sets of directives, thus making the FAR less flexible to meet the wide range of contracting done by the federal agencies. But some are trying to give it a new lease on life. At PSC, just this year, we are working on responses to no fewer than six separate initiatives from Executive Branch agencies to identify and provide suggested changes to overly burdensome or unnecessary administrative actions in either the current FAR or agency procedures. Additional reviews are underway by the House and Senate Armed Services Committees jointly, the Senate Homeland Security Committee, and several members of Congress. In late April, PSC and other associations responded to a Defense Department regulatory reform initiative by submitting over 90 specific recommendations for change and additional submissions are in development. While each of these reviews has merit, their sponsors have failed to provide any over-arching objectives for the current or the future regulatory regime. Nor have they offered any guidance for the analysis they are asking industry to undertake. Yet, without that intellectual foundation, it is impossible to know whether any specific current rule or any planned change gets us closer to or farther from those foundation objectives. Thus, one of the initiatives the PSC Board of Directors took was to form two committees—a short-term Acquisition Policy Review Committee and a permanent Technology Policy Committee— to evaluate the current initiatives and provide thought leadership and cross-association consistency in our response to these short-term and long-term initiatives. Those committees have identified five of those critical, overarching, themes to guide PSC’s policy responses and initiatives. They are: • Transparency: The federal marketplace should be open to all qualified competitors and its transactions clear and traceable. In addition, the purpose of government procurement regulations and practices must be clearly understood and executable by both government and industry; • Accountability: Each stakeholder must be accountable for their actions but all participants share in ensuring that the acquisition ecosystem fulfills its objectives;
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• Reliance on commercial items: As the pace of change in technology accelerates, the government will find significant value and innovation by tapping into the evolving technology that is often found in the commercial marketplace. Changes to the regulations must be made to permit greater and faster government access to the innovation and experience in the commercial market; • Value for money and risk assessments: the government should expect to receive full value for its spending on goods and services but it must also be willing to minimize imposing unnecessary or unreasonable compliance expense on companies. That balance can be found through the government’s risk assessments of transactions or requirements; and • Trained federal acquisition workforce: Given the significant changes in government requirements and contractor solutions, and the adverse age and skills demographics of the federal workforce, there must be a renewed emphasis on training the federal acquisition workforce on new technologies, new business models and new learning tools. Advocacy is at the core of PSC’s charter. The framework established by these Board-established committees will serve both the short-term goal of providing a foundation for commenting on current initiatives, and provide a longer-term lens through which to evaluate future legislation or regulations. 3
Service Contractor / June 2014 / 35
Committee Corner:
Intelligence Community Task Force Tackles Security Challenges
by Jeremy Madson, PSC Federal Affairs Manager
I
n 2012, PSC formed the Intelligence Community Task Force (ICTF) to address the unique confluence of issues related to performing work under contract in the federal intelligence arena. The task force quickly established itself as the premier venue for PSC members to convene on intel business topics and dialogue in a non-classified setting with key federal intelligence officials. Since then, the scope of the task force’s mission has broadened and deepened as the ICTF stepped in to address a host of new and ongoing challenges surrounding federal information and facilities security. PSC has long advocated for sensible, workable policies governing how contractors obtain federal security clearances and are allowed access to government systems and facilities. Fol-
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lowing several high-profile incidents of classified information leaks—namely by Edward Snowden—and the tragic Washington Navy Yard shooting, questions about security and clearance processes and policies once again rose to the forefront. Further confounding these already complex issues was the fact that, in several instances, the perpetrators had at various times been granted access as federal contractors. PSC quickly engaged the ICTF to help formulate a strategic approach to counter the flare-up of anti-contractor rhetoric, while addressing the deeper issues at the heart of these security breaches. In doing so, PSC commended efforts to undertake a thorough review of federal personnel and facilities security processes, while underscoring the fact that such breaches are not uniquely tied to federal contractors, who are, and should continue to be, held to the same rigorous security standards as federal civilian and military personnel. In the aftermath of these events, the government heard PSC’s message, recognizing the crucial role of contractors in carrying out the government’s missions—including assisting in the investigative process—in two reports assessing federal security clearance processes and analyzing the Navy Yard attack. This message was echoed by key federal security officials in meetings with the ICTF and PSC members, including Merton Miller, OPM’s Federal Investigative Service’s Associate Director for Investigations, who oversees the majority of federal security clearance investigations, and Beth Cobert, OMB Deputy Director for Management, who co-led the joint committee report assessing federal security processes. As the government moves to implement the reports’ recommendations, the ICTF is poised to lead PSC’s engagement with the federal agencies and officials charged with overhauling security protocols. In 2014, Charlie Sowell, senior vice president at Salient Federal Solutions, joined Matt Carroll, executive director of secure services at Fluor, as co-chair of the ICTF. Sowell brings with him a wealth of experience gained both in the private sector and as a senior official in the Office of the Director of National Intelligence (ODNI). Under their leadership, the Intelligence Community Task Force will continue to be at the forefront of PSC’s advocacy on the evolving challenges related to federal security clearances and the wide range of unique issues inherent to doing business in the highly complex (and often classified) realm of the federal intelligence agencies. 3 Professional Services Council
MEMBER NEWS PSC Members Honored with Best for Vets Awards
PSC is proud to highlight the member companies who were recently awarded Military Times’ Best for Vets Awards. Military Times invited companies from across the U.S. to participate in a rigorous, nearly 90-question survey and rankings were developed based on the answers that companies provided to questions about their recruiting of people connected to the military; company policies related to veterans, reservists and their families; and the organization’s culture. Congratulations to the PSC members who received an award: Accenture, Alion Science and Technology, BAE Systems Inc., Bank of America, CACI International Inc., Capital One Financial, Citi, CSC, DynCorp International, Exelis Inc., Kearney & Co., URS Federal Services, and Wells Fargo.
JBS International, Inc. Receives Workplace Excellence and Health & Wellness Seals of Approval from Alliance for Workplace Excellence For the third time, JBS International, Inc. has received awards from the Alliance for Workplace Excellence—the AWE Workplace Seal of Approval and Health & Wellness Seal of Approval. The awards celebrate businesses that promote professional fulfillment and personal wellness at work, at home, and in the community.
JBS has also been featured as a Healthiest Maryland Business success story by the state. Healthiest Maryland is a statewide movement to create a culture of wellness—an environment where making the healthiest choice is easy. Read JBS’s success story here: http://1.usa.gov/1nFjUeF.
Justin Bradley Wins Inavero’s 2014 Diamond Award
JustinBradley announced in March that it was named as one of research firm Inavero’s 2014 Best of Staffing Diamond Award winners, achieving the highest quality scores in client satisfaction for five consecutive years. Less than 2 percent of all agencies in North America received the 2014 Best of Staffing Award designation for service excellence. JustinBradley is one of 20 companies across the country with the added distinction of earning a Diamond Award.
Vistronix Names New Corporate Vice President for National Intelligence Programs
Vistronix announced on May 7 that Paul Falkler has been named corporate vice president for National Intelligence Programs. In this role, Falkler will support Vistronix’s strategic vision, intercompany integration, large capture, and mergers and acquisitions as the company strengthens its capabilities within the U.S. intelligence community.
Have a story for Service Contractor’s Member News section? E-mail Bryan Bowman at bowman@pscouncil.org.
Professional Services Council
Service Contractor / June 2014 / 37
PSC: SCENE & HEARD √ OMB Deputy Director for Management Beth Cobert listened to a PSC member’s question during an April 15 Dialogue Series luncheon.
√ PSC hosted three officials
from the Naval Sea Systems Command (NAVSEA) at an April 8 meeting of the Defense Task Force. From right to left: Cindy Shaver (Director, Undersea Contracts Division), Jerry Punderson (Director of Contracts), and Sharon Rustemier (SeaPort Program Manager).
√ Rep. Mac Thornberry
(center) talked with PSC members at an April 1 PSC PAC breakfast.
√ Principal Deputy Under Secretary of Defense (AT&L) Alan Estevez gave the keynote speech at a joint PSC, U.S. Chamber of Commerce and Aerospace Industries Association event, “Acquisition Improvement in the Era of Austerity,” on April 29.
38 / Service Contractor / June 2014
πDCAA Director Patrick Fitzgerald discusses reducing DCAA’s audit backlog, measures to gain access to contractor records and people, hiring additional audit staff, and enacting new contractor compensation reimbursement caps at a May 5 PSC Dialogue Series breakfast.
† PSC President and CEO Stan Soloway offered his take on the market during a panel discussion at a joint PSC, U.S. Chamber of Commerce and Aerospace Industries Association event, “Acquisition Improvement in the Era of Austerity,” on April 29. He appeared alongside AIA’s Betsy Schmid, Renaissance Strategic Advisors’ Brett Lambert, and Etherton and Associates’ Jon Etherton.
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