Service Contractor Magazine - March 2012

March 2012 / The Voice of the Government Services Industry

PSC Turns 40 ALso inside: 7

Sounding Board: FACING AUSTERITY

10

fedramp

13

ramblings of a real life entrepreneur

29

US…As entrepreneurs

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March 2012 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 Carrington Blencowe Manager, Event Support blencowe@pscouncil.org Bryan Bowman Manager, Marketing bowman@pscouncil.org Matt Busby Manager, Member Services busby@pscouncil.org Elise Castelli Manager, Media Relations castelli@pscouncil.org Bethany Egan Administrator, Coalition of International Development Companies egan@pscouncil.org Larry Halloran Director, PSC International Development Initiative halloran@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 Kate Petersen Manager, Legislative Affairs petersen@pscouncil.org Melissa R. Phillips Director of Meetings & Events phillips@pscouncil.org Robert Piening Director of Finance piening@pscouncil.org Jean Tarascio Membership Associate tarascio@pscouncil.org Kristine Thomas Executive Assistant thomas@pscouncil.org Callander S. Turner Vice President, Marketing & Membership turner@pscouncil.org

The Voice of the Government Services Industry

10 What’s different?

7

13

Facing Austerity

of a Real Life Entrepreneur

Sounding Board:

RamBLINGS

16

PSC Turns 40

29

US…AS ENTREPRENEURS

4 President’s Corner / 22 Letter from Sen. Mark Warner / 23 Bill Tracker / 32 Policy Spotlight / 34 Committee Corner / 35 Member News / 38 PSC Scene and Heard

For advertising or to submit articles or items for the Member News section, contact: Bryan Bowman

Professional Services Council

Service Contractor / March 2012 / 3

PRESIDENT ’S CORNER

F

40 and Counting

orty years ago this spring, a small group of visionary leaders came together to create the National Council of Professional Services Firms in Free Enterprise (NCPSFFE), to serve as their eyes, ears and voice in the policy arena. The foundation laid by those legends—people like Bob Krueger, Bill Wolf, Frank Reilly, Earle Williams, George Monroe, Mike McCullough, John Toups, Harvey Kushner and others—was the essential launching pad for what is now the Professional Services Council.

Four decades later, that small band of firms that comprised the NCPSFFE has grown into the PSC, the largest and, we believe, most effective advocate and resource for the federal professional services industry. We are now 350 member companies strong, and growing, representing every segment of the sector and companies of all sizes.

The association’s trajectory, like that of this industry, has been impressive and constant. But that alone is not reason enough to celebrate this milestone anniversary. Rather, what we can and should be celebrating is the enormous impact this industry has had, and continues to have, on our government’s diverse missions. We can look with pride at the capabilities and people this industry has brought to bear on some of the most difficult and challenging problems facing the government. Even amidst the sometimes harsh rhetoric in the political sphere, and despite the occasional problems and issues that come to light, the record of this industry is impressive by any measure. Moreover, it is a record that transcends individual agencies and encompasses the totality of the government. While much attention is rightly paid to the work of this industry in supporting our men and women in uniform and our nation’s security, there is equally important work being done in other, often unnoticed but still substantial ways. From helping to improve internal agency business processes and systems to providing critical citizen interfaces, this industry plays a central role in helping our government operate better, smarter and more efficiently.

But before we crow too loudly, we ought to take a moment and recognize two related realities. First, we do nothing without our partners in government: the committed civil service professionals with whom we work, to whom we report, and with whom we collaborate every day.

They are on the front lines and they too have been in the line of fire far too often. They deserve not only our appreciation but also our support.

Second, despite a record of exceptional performance, we can always do better. We can and, in the current fiscal environment, we must continue to look for ways to improve outcomes, reduce costs and do our part to help optimize the taxpayer’s dollars. The challenges are many and not all are within our control, but I am confident that we can and will succeed in the future as we have in the past.

4 / Service Contractor / March 2012

Throughout the year, we will recognize and celebrate PSC’s 40th Anniversary with special features and pictures in each issue of Service Contractor magazine. We will culminate the celebration with a special 40th Anniversary event at our Annual Conference in October. We invite and encourage everyone to participate by providing us with anecdotes and other information to help us trace and reflect on the association’s history as fully as possible.

Finally, I know you will find this issue of Service Contractor to be of value. In addition to launching our 40th Anniversary recognition, in this issue we also have a number of important and relevant features. Two PSC board members—Pam Little of ATS and Deb Werner of BAE Systems—share their perspectives on how the new austerity is impacting their internal planning, expenditures and investments. GSA’s Dave McClure offers a look at the new FedRAMP and his hopes and vision for it. Ray Oleson, well known to us all, has authored a fascinating article about the keys to building successful businesses, something he has done several times with exceptional success. PSC board member Marc Andersen (Ernst and Young) offers some thoughts on public-private partnerships and our Vice President of Government Relations Roger Jordan highlights the interesting and important work of the PSC Labor/Human Resources Committee. Finally, our own Alan Chvotkin explores the growing use of non-traditional procurement methods, such as “contests”, and what needs to be done to ensure they are done right.

It has been a remarkable 40 years for PSC and for our industry.

And the future looks to be just as interesting, challenging and exciting. We look forward to joining with you in shaping that future.

Thanks as always for your support of PSC.

Stan Soloway President & CEO Professional Services Council

Professional Services Council

Service Contractor / March 2012 / 5

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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.

Facing Austerity

QUESTION: How is the federal government’s era of austerity and uncertainty impacting investment and other decisions companies like yours are making, particularly, but not solely, with regards to people, technology, and R&D?

W

Pamela Little

Co-Chief Executive Officer ATS Corporation

hile there is no doubt that our sector is facing an unprecedented period of uncertainty as the government grapples with difficult budget decisions and a longer term strategy for dealing with the deficit, I have not lost sight that it is still a very large market with areas that are still growing and a long term bullish outlook. Our investment and other decisions cannot impair our ability to compete in the current market or weaken our positioning when the industry rebounds.

During this challenging time, we have all had to adapt to a market where opportunities for growth are limited due to an overall pressure to reduce government spending, specifically the compounding impact of delayed new award activity, significant competitive pricing pressure and even funding reductions on existing multi-year contracts. We have to carefully weigh each of our strategic decisions and the impact to our key constituents—including our people, our customers, and our investors, realizing choices rarely benefit all three equally. To best maintain balance across these constituents, our aim is to structure our organization to best maximize our competitive strengths, develop clear priorities and measurable return parameters to drive our investment decisions, attract a talented workforce, ensure we deliver quality solutions to our customers, and feed our growth engine, all while ensuring we maintain our strong financial footing and the flexibility to both weather challenging economic times or fund growth.

Organizationally, we are structured to optimize performance in our core markets and competencies as well as promote flexibility to pursue very targeted areas of growth within those principal areas. As it relates to business development initiatives, we do continue to invest in research and development, strategic hires and new contract vehicles that support our targeted growth strategy, recognizing that

B Deb Werner

VP, Business Development BAE Systems

continued on page 8

AE Systems has long forecasted the budget pressures that the DoD is experiencing today, and spent much of last year aggressively restructuring our business to ensure our ability to be competitive in this changing market.

In anticipation of today’s budgetary environment, we’ve spent the last two years driving cost out of our business. We streamlined the organization, removing millions of dollars of costs by eliminating layers of management and reducing overall headcount.

We have also taken steps to ensure portfolio diversification: shifting our emphasis to the new priorities. Our strategy identifies and addresses what we describe as fast lanes of opportunities within the more difficult environment. Fortunately, we have a robust international focus on countries with growing defense needs.

In fact, most of us in the defense industry have already experienced significant cuts in funding on existing contracts and reductions in our customers’ program budgets. We have had to make difficult but necessary choices to properly position ourselves for the new reality of our industry.

Whether you are developing advanced intelligence, surveillance and reconnaissance (ISR) systems or providing critical on-site mission support services, the human talent that we engage in supporting our federal customers is the foundation of our organization. We work diligently to attract and retain the most talented, dedicated and professional people in the industry. In addition to maintaining an attractive benefits package and an attractive work environment, we offer career growth potential, opportunity for employees to work on challenging research projects, and rewards and recognition for innovation of all types, extraordinary customer service, and new technology. continued on page 8

Professional Services Council

Service Contractor / March 2012 / 7

Pamela Little

continued from pg. 7

despite the industry challenges, the cost of money is inexpensive today. However, we have been more disciplined in our infrastructure staffing levels and resource investments.

For our civilian areas of business, we are focusing primarily on business productivity-related growth opportunities where agencies are learning to do more with less of their own resources and need technology solutions to consolidate systems and improve efficiencies, such as cloud computing and mobile applications. While we have a 30-year track record of building financial and case management systems for federal agencies to improve productivity, we are also looking at additional investments for continued growth in this area. We have already made research and development investments in mobility applications that we believe we can leverage as specific new opportunities emerge. We are additionally looking for talent in this area to both broaden our technology skill sets as well as expand our presence at new agencies.

We have also closely tracked health information technology trends where we have seen continued support from the administration for a number of programs in this area. We see a number of emerging opportunities to pursue where we can build on our experience at organizations within the Department of Health and Human Services as well as the commercial areas of our business, which have a strong presence within the Blue Cross Blue Shield System. To better equip our company to pursue this market we are investing in new contract vehicles, cultivating new teaming partners, as well as recruiting new hires with specific health carerelated expertise.

For our national security areas of business, we are focusing on several opportunities where we are seeing growth, particularly in the border and export control areas where we have long-term programs in place and significant expertise. To build on the experience, we are dedicating funds for research and development for new technologies related to emerging border control initiatives, establishing critical teaming relationships with large primes to enable us to pursue new sizeable opportunities, as well as investing in the necessary contract vehicles. We also recently recruited a new manager with significant national security experience to add to our existing reach and understanding of these areas.

Underlying our strategy to pursue targeted areas of growth, our organization is fortunate to have a stable base of business providing high-end technology solutions for our customer’s vital systems, with many relationships dating back to the inception of the company over 30 years ago. Therefore our strategy has also emphasized protecting that base and serving those clients, as they increasingly face extreme budget pressures and need technology solutions to improve their efficiencies and lower costs. We have continued to invest in certifications at the corporate and individual level that ensure our methodologies reflect the industry’s highest standards of performance and latest technology trends.

Finally, as a services organization, it is critical to recognize that it’s our people who are essential to our success, particularly in challenging times. Whether it’s on the operations team or the infrastructure staff, it is imperative across our organization to strive for retaining and attracting high performers to optimize performance with constrained resources.

8 / Service Contractor / March 2012

As we enter an election year where uncertainly is likely to continue with a prolonged debate over program funding priorities and even agency survival, we must remain disciplined with our corporate decisions while protecting our future. And, most importantly, we cannot lose our optimism in an industry where so many of us have fully dedicated our careers and continue to value its critical contribution to the operations of the government. 3

Deb Werner

continued from pg. 7

We have actually increased our spending on training, particularly in areas of future anticipated need. In these cases, we develop our own very specialized training to prepare and position people for future programs. Our people are our greatest asset and we know that the key to our continued success for BAE Systems is to maintain a robust and talented workforce.

We also have a mature strategic process defining and investing in the solutions and products for the future (looking out at a five year horizon). In the past, this has been a combination of both looking at strategic long term programs as well as anticipating requirements that have not been programmed but are highly likely to become a need. We have reduced our investments over the last two years due to pricing pressures and the uncertainty in the market. Going forward, we will continue to invest in technology and solutions but, to a lesser extent and only in very focused areas that we have higher confidence of ultimately resulting in funding. For example, we know our customers are grappling with the “big data challenge” as more information of all kinds is being captured and disseminated for tactical and strategic decision makers. To help our customers manage, organize and effectively use this data we have invested in a range of tools and technologies (from cloud infrastructure to software for handheld devices) that we know will be part of the solution. But, there is no question that, given the current environment, R&D decisions come with much higher stakes.

Fortunately, our employees understand our customers—what they need today, tomorrow and into the future. This customer intimacy gives us the confidence to make bold but calculated moves.

How we continue to invest and what we invest in will be driven by not just where the DoD will invest but in how the department chooses to acquire goods and services in the future. Areas where the sustained procurement trend is “technically acceptable lowest price” will warrant minimal investment unless there is more flexibility in how a contractor can deliver the solution. As the PSC wisely pointed out in its excellent position paper, “Impacts of DoD Budget Reductions on the Services Sector Industrial Base and Potential Mitigation Strategies,” the government needs to acknowledge in its decision-making that the more complex a service or solution it is acquiring, the greater risk—and therefore likely the cost—to a business. Ultimately, if every procurement is a race to the bottom, the consequences will be disastrous for us all.

We are hopeful that working with our customers—and with the critical support of leading organizations such as PSC—we will successfully navigate these challenges and arrive at a place where the government is getting the services it requires and industry has the stability it needs to effectively and efficiently deliver those services. 3 Professional Services Council

Professional Services Council

Service Contractor / March 2012 / 9

by David McClure Associate Administrator, GSA Citizen Services and Innovative Technologies

What’s Different with FedRAMP?

Many federal Chief Information Officers (CIOs) and IT professionals identify security and privacy protections as the single biggest challenge with adopting cloud computing services in the federal government. Ensuring secure, reliable, and cost-effective cloud computing is simply paramount for successful cloud deployment results.

10 / Service Contractor / March 2012

Professional Services Council

O

ver the last two years, a great deal of collaborative effort has been underway to put a security assessment and monitoring approach in place that achieves greater confidence and trust in cloud-based computing solutions—the Federal Risk and Authorization Management Program, or FedRAMP. FedRAMP provides a standardized approach to security assessment, authorization, and continuous monitoring for cloud products and services. It advocates a “do once, use many times” framework where agencies can quickly and confidently leverage security authorizations granted by other agencies to cloud service providers. This should save government and industry cost, time, and staff resources and enable faster procurement of cloud information systems/services for federal agencies.

FedRAMP addresses foundational security elements that are critical for achieving greater harmony and trust in federal computer security and privacy protection. Featuring a standardized, baseline set of security controls, based on NIST 800-53 standards, that are critical to cloud computing solutions and the use of independent, accredited third party assessor organizations (3PAO), FedRAMP differentiates from previous government-wide cybersecurity efforts. Additionally, the program enjoys the full support of a Joint Authorization Board (JAB), FedRAMP’s governing entity composed of CIOs from the Department of Defense, the Department of Homeland Security, and the General Services Administration. JAB support lends credibility to the process of leveraging FedRAMP provisional authority to operate (ATO) packages. Of equal importance, the FedRAMP program advances a gradual shift in balance towards real-time continuous monitoring controls and away from more static, compliance-based security efforts. By instituting a standardized approach to security authorization of cloud services, FedRAMP facilitates more efficient cloud procurement across the federal enterprise. FedRAMP does not require creation of new procurement processes or FAR requirements; instead, it relies on existing acquisition policies and practices as a structure. The program will accelerate procurement and

Professional Services Council

implementation of cloud solutions by providing standard security and authorization processes that will be implemented within established acquisition frameworks.

Security standards and controls are important but not entirely sufficient for informed, secure, and reliable cloud computing adoption. Cloud service level agreements (SLAs), standardized contracting practices, language, and templates, as well as clarity between cloud service providers (CSP) and agencies regarding roles and responsibilities, are crucial success factors. SLAs for cloud systems should be based on a strong foundation of mutual trust, interaction and accountability between providers and buyers. By defining meaningful, measurable service levels between a CSP and a consuming agency, cloud SLAs must be tailored to address the performance requirements of an individual contract.

In addition to a FedRAMP authorization, an agency must be privy to any terms of service (TOS) agreements CSPs may enforce when granting access to their environments. CSP market entry into the federal government environment remains intense and rigorous. By increasing consistency and standardizing how protection of government systems and data is demonstrated, we expect FedRAMP to help strengthen cloud security while becoming a leading example for leveraged cost efficiencies.

In short, the FedRAMP program is a progressive, evolutionary approach to improving the security of cloud computing systems for the federal government.

Continuous improvement is expected as FedRAMP matures and continues to rapidly augment existing controls testing with real time monitoring conditions. By forcing both cloud service providers and buyers to carefully sort through and address security, privacy, legal, policy, and regulatory provisions that apply to cloud service models, FedRAMP improves the federal government’s security posture while simplifying the duplicative and redundant nature of the existing FISMA compliance process. It also reinforces greater movement towards continuous monitoring of cloud service environments and pushes for this to be done with increased automation and a focus on risk management rather than compliance. 3

Service Contractor / March 2012 / 11

Wyle Tackles the Tough Jobs

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With 16 years of dedicated support for the JSF program, Wyle provides engineering and program management support; foreign military sales management; flight test support; threat reprogramming, analysis and assessments; and basing and ship suitability services. For more information, go to www.wyle.com

12 / Service Contractor / March 2012

Experts for the 21st Century

Professional Services Council

Ramblings

of a Real life Entrepreneur

by Ray J. Oleson

F

ederal contractors have just come through a tremendous period in government contracting where federal budgets have been expanding.

Like boats rising with the tide, many contractors have been growing with the expanding budgets. However, the future looks tougher and growth will be harder to achieve. Subsequently, the risks of expanding growth will also be greater.

For privately held companies, this is especially true. Companies reach size points where it is impossible to grow without major investments in infrastructure and professional people that can help run and build the company. For owners of privately held companies, this often means risking all assets to grow the business. In government contracting, risk stress points usually occur from $20 million up to $150 million in revenues.

The level of complexity often depends upon the size of the business. In my experience, companies may do task chasing up to $100 million in revenue, but if a company doesn’t have the capability to market major programs at $100 million, growth rate will slow. As companies grow larger they face greater competition. At the same time, their customers become more sophisticated and demanding.

In response to a more challenging environment for government contracting and increasing competition, a focus on the right strategy and capabilities is imperative for organic growth. Strategically, building a company through organic

growth is the single fastest value builder of any business. Operationally, lead generation, a well-defined business development methodology, and measurement capabilities are critical to minimize risk and capitalize on growth opportunities.

For example, in my last two government contracting companies, SI International and Salient Federal, the owner’s growth risk was minimized by working with Frontenac, a private equity investor.

Frontenac has a program in place called CEO First. The CEO First program focuses on getting the right people on the bus1 and then figuring out operationally where to drive it. It allows companies to invest, up front, in fiduciary areas such as contracting, accounting, human resources and other government contract requirements and disciplines. This strategy also allows investment in the right people to manage fiduciary areas and identify the right growth opportunities to build the company.

Generating lead opportunities is a critical component of building value and expanding the business. A lead opportunity may be large or small, near term or future, and can be tactical or strategic in nature. A lead can come from anywhere.

Every team member should be aware of lead opportunities. Leads come from published sources, friends or industry colleagues. They can come from executive management or from a meeting with a current or prospective client. Once a lead is generated it is important to respond quickly and determine its validity.

Understanding how many leads a company needs to drive growth is a good first step in developing this capability.

Let’s say a company’s current revenue is $50 million and this company wants to grow 20 percent a year. Likewise, assume a loss of revenue from existing contracts.

For example, if a company estimates a loss of 10 percent of revenue from the current base, this company would have to add about $15 million in revenue to meet a 20 percent growth rate. Further, if proposal win rate is 30 percent, this same company would need to bid $50 million in opportunities to achieve the growth rate.

As guiding principles, keep in mind the following: AXIOM 1—Happy customers will figure out how to get you more business not less.

AXIOM 2—Long term, multi-year contracts simplify marketing and sales efforts by reducing the yearly volume that needs to be replaced.

To be successful in bidding major programs in the federal market, a welldefined and systematic business methodology is important for producing and closing new business. A business development methodology is simply a series of customer-focused steps that enable the company to substantially increase win rates, build customer retention, and increase revenue production. Each step continued on page 14

Jim Collins, Good to Great (Harper Business, 2001).

1

Professional Services Council

Service Contractor / March 2012 / 13

from page 13

along the way has several key activities and has a predictable and measurable outcome.

A well-defined business development methodology helps an organization: 1. Identify and qualify leads.

2. Find more opportunities for business among current clients.

3. More consistently position the unique value of your company.

4. Discover the true needs or “pain points” of the client and map these to your company’s capabilities and strengths.

5. Better assess the revenue potential for a given opportunity.

6. Close more business.

7. Build better client relationships.

8. Put a follow-up process in place that helps drive sales and customer satisfaction after the initial sale.

In putting a market-focused organization together, consider the following: AXIOM 3—People buy from people; therefore, you need to talk to the client.

AXIOM 4—Fill the client’s needs. Don’t push old projects, pet projects, or what you think a customer needs unless it is needed. Listen to what a customer tells you.

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14 / Service Contractor / March 2012

Another small business growth strategy to consider when growth is stalled is selling the business. To have a company that is acquirable, the focus needs to be on customers’ revenue and cash flow. The idea that a company will grow revenue and outrun expense is false. In order to become saleable, every company should expect and plan to build revenue and positive cash flow as soon as possible. Focus on customers and build a great relationship with each and every one of them.

When I buy companies, I use seven criteria to measure a company’s effectiveness with customers. These criteria are based on how customers view the company and not an owner’s view of how well the company is doing.

Assess and measure effectiveness with the following questions: 1. How does the customer view the quality of service?

2. Are you compliant with the contracts?

3. Have you contained the cost?

4. How does the customer view your commitment to his project?

5. Is the customer satisfied?

6. How does the customer view your corporate commitment?

7. How does the customer view your ability to provide quality personnel?

For each response, rate effectiveness on a scale from zero to five, with five being the best score. In my experience, the best scores are at least a four or five on each question.

In summary, I couldn’t possibly share all the lessons learned over the years in one short article. What I can tell you is that I have learned most of the lessons from mistakes I have made and the willingness to learn from them. My career in the information service marketplace started at Univac in 1966. At this time, there weren’t business models for building a federal or commercial information technology services business. We had to invent the industry. We had to recognize the problem areas, fix them and move forward.

In contrast, today there are many models for building solid service companies to serve the information technology marketplace. There are also consultants to help small company’s assess and develop solutions for issues and problems. When seeking an outside expert, find someone that can give solid advice based on real world responsibilities and experience. Determine the route you want to take and make sure you have a plan to accomplish your goals. 3 Ray J. Oleson was the founder, chairman of the board, and Chief Executive Officer of SI International through 2006 and continued as the executive chairman of the board until it was sold to Serco in 2008. He is the cofounder and chairman of the board of Salient Federal Solutions.

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Service Contractor / March 2012 / 15

PSC Turns 40

16 / Service Contractor / March 2012

Professional Services Council

As PSC starts the celebration of our 40th year, we look back at the many milestones we’ve reached during our years of leadership of the federal professional and technical services industry and recognize the people who have been an integral part of our history.

Professional Services Council

Service Contractor / March 2012 / 17

1980 1980

Virginia Littlejohn becomes first PSC executive director.

1970 1972

National Council of Professional Services Firms in Free Enterprise (NCPSFE) founded with 35 members.

1972

Dr. Robert W. Krueger, president of PRC, becomes PSC’s first chairman.

1974

Office of Federal Procurement Policy created.

1974

William M. Wolf, president of Computer Business Management, becomes PSC chairman.

1976

Frank W. Reilly, president of Macro Systems, becomes PSC chairman (first nine months).

1980

George Monroe, president of PRC Systems Services, becomes PSC chairman.

1980

PSC leads defeat of Consultant Reform Act that would have halted all federal contractors and their employees.

1981

Jack Aalseth, president of ERC, becomes PSC chairman.

1981

NCPSFE renamed the Professional Services Council (PSC).

1982

R. Michael McCullough, president of Booz Allen & Hamilton Inc., becomes PSC chairman.

1982

Small Business Innovation and Research Act becomes law with PSC support.

1976

1985

1977

1987

Joseph Lawler, president Camp Dresser & McKee International, becomes PSC chairman (last three months).

Earle C. Williams, president and CEO of BDM International, becomes PSC chairman.

18 / Service Contractor / March 2012

John M. Toups, president of Booz Allen & Hamilton Inc., becomes PSC chairman.

John “Jack” C. Rennie, chairman and CEO of Pacer Infotech, Inc., becomes PSC chairman.

Professional Services Council

1988

1994

Mark Schultz joins PSC as executive director.

PSC releases the first Cost Realism Manual.

1989

1994

1990

1995

Phillip A Odeen, president and CEO of BDM International, becomes PSC chairman.

PSC leads the services industry in working for passage of the Federal Acquisition Streamlining Act (FASA).

Edward H. Bersoff, chairman of BTG Inc., becomes PSC chairman.

1990

PSC membership tops 113 members.

1991

The Bombay Group of USAID and World Bank contractors join PSC, and the PSC International Development Task Force is formed.

1991

Harvey D. Kushner, president of Kushner Management Planning, becomes PSC chairman.

1992

Bert Concklin joins as PSC’s first president.

1992

Then CJCS Gen. Colin Powell addresses PSC.

1993

Dan R. Bannister, chairman of DynCorp, becomes PSC chairman.

1993

PSC major procurement reform advocacy reflected in Clinton Administration’s National Performance Review.

1993

Sen. Jeff Bingaman, D-N.M., addresses PSC members.

Professional Services Council

1996

FASA success followed by passage of the Clinger/Cohen Act that provides for sweeping changes to federal management and procurement of information technology.

1997

CG Appleby, Esq., senior vice president and deputy general counsel of Booz Allen & Hamilton Inc., becomes PSC chairman.

1997

PSC’s decade-long advocacy of Best Value acquisition becomes a reality with the rewrite of Federal Acquisition Regulation Part 15.

1997

PSC works with Congress to craft new contract bundling statutes that receive support from large and small businesses.

1999

J. Kenneth Driessen, chairman, president, and CEO of MRJ Technology Solutions, becomes PSC chairman.

Service Contractor / March 2012 / 19

2000 2000

PSC pushes through legislation that for the first time provides service contractors interest on late government payments.

2001

Paul V. Lombardi, president and CEO of DynCorp, becomes PSC chairman.

2001

Stan Soloway joins as PSC president. Later that year, Alan Chvotkin joins as executive vice president and counsel.

2001

PSC President Stan Soloway named to congressionally mandated Commercial Activities Panel, chaired by the Comptroller General that recommends to Congress far-reaching changes to A-76

2002

PSC leads industry negotiations with Congress and DoD on new rules governing GSA Schedules and Multiple Award Contract purchases.

2003

Joseph M. Kampf, president and CEO of Anteon International Corporation, becomes PSC chairman.

20 / Service Contractor / March 2012

2003

PSC leads industry efforts to defeat the TRAC Act, the most dangerous anti-competition and anti-outsourcing legislation in more than a decade.

2003

PSC membership tops 150 companies

2003

PSC-led IPT (co-led by the directors of DCMA, DFAS, and DCAA) presents DoD leaders recommendations for improving contract formation, payment, and close-out processes.

2004

PSC leads industry efforts on the President’s Millennium Challenge Account and SEC rules regarding completion accounting methods.

2005

Stan Gutkowski, managing director of Washington D.C. operations at Accenture, becomes PSC chairman.

2005

PSC funds first ever study of the professional services industrial base; based on results, creates a working group that would become the Services Industry Competitiveness Committee.

2006

Jim O’Neill, corporate vice president & president of Northrop Grumman, becomes PSC Chairman.

Professional Services Council

2006

PSC tops 200 member companies.

2008

PSC merges with the Contract Services Association, creating a unified voice for the industry.

PSC membership tops 300.

2008

Philip Nolan, president and CEO of Stanley Associates Inc., becomes PSC chairman.

2008

EMCOR’s Mike Shelton, chairman of CSA, serves as PSC Co-chairman.

2011

PSC helps form the Coalition of International Development Companies to educate stakeholders about the important role for-profit firms play in international development.

2011

PSC leads industry efforts to repeal the 3 percent tax withholding on contractors.

2011 2010

Mac Curtis, president and CEO of Vangent becomes PSC chairman.

2010

PSC leads successful effort to eliminate harmful insourcing language from the 2011 National Defense Authorization Act and the 2011 Omnibus Appropriations Act that would have encouraged civilian agencies to increase insourcing of work currently and appropriately performed by the private sector.

PSC comments on DoD’s business systems rules proposal results in significant improvements in DCAA and DCMA approach to audits; hosts discussion with DCAA, DCMA and DPAP leaders on the rules.

2011

Paul Cofoni, president and CEO of CACI, becomes PSC chairman.

2012

PSC celebrates its 40th Anniversary and its continued advocacy leadership.

Professional Services Council

Service Contractor / March 2012 / 21

An Open Letter to PSC Members from Sen. Mark Warner February 10, 2012 Dear Friends and Colleagues, As the Honorary Chairman of A Billion + Change, a national campaign to mobilize billions of dollars of pro bono and skills-based volunteer services from corporate America by 2013, I’m spearheading an effort to find 500 companies around the country who are willing to take the challenge to bring their best business skills and talents to serve the needs of nonprofits and communities at home and around the world. And I’m writing you today to urge all members of the Professional Services Council to join us in this vital effort.

This initiative is not entirely new to many of you. In his role as both PSC’s President and a member of the board of the Corporation for National and Community Service, which is a key supporter of the initiative, Stan Soloway convened a number of PSC member companies to discuss how they could engage and participate. And last year, PSC, along with Deloitte and the Fairfax County Chamber of Commerce hosted a seminar on the benefits—to the community and to the companies—of skills-based volunteering.

This campaign comes at a critical time of significant need in our communities and of increasing demands on our nonprofit colleagues. To meet these challenges, A Billion + Change is inspiring and encouraging businesses to harness their talent and expertise to help nonprofits achieve more with their scarce resources. For these organizations, the value of skilled support in areas such as general operations, marketing, technology and professional services can be 400% greater than the value of traditional volunteering.

Our pledge companies, including your fellow PSC members, have already committed more than $1 billion in skills-based and pro bono volunteer services to date. Our goal now is to build on that momentum by helping companies fulfill their pledge, and encouraging new companies to join the campaign. That’s how we’ll unleash billions in service, talent and expertise to support the work of community-based organizations. Moreover, all of the evidence strongly suggests that for the participating companies, such programs drive greater employee satisfaction and engagement and can be a real discriminator in recruiting talent.

I therefore encourage you and your company to take the A Billion + Change pledge by committing to create or expand pro bono and skills-based volunteering in your workplace. You can learn more about the campaign and how to pledge through the enclosed fliers, at www.abillionpluschange.org or by contacting the campaign’s Executive Director, Jenny Lawson (jlawson@pointsoflight.org). In addition, if you are already engaged in such efforts, please let us know so that we can count you among the scores of leaders in this crusade.

PSC companies who take the pledge will be invited to a special coffee this summer to share your pledge commitment and kick-off a regional business gathering in support of A Billion + Change. And all pledge companies are regularly invited to special events that allow you to network with other corporate service leaders, decision-makers and thought leaders around the country as they implement their pledge goals.

You can expect to hear more about A Billion+Change and the work of its corporate leaders in the PSC magazine this spring and summer. In the meantime, I look forward to your joining us as we move forward to make ever greater impacts on the needs of our nation and our community.

I appreciate your thoughtful consideration and prompt action.

Best regards,

Sen. Mark Warner

22 / Service Contractor / March 2012

Professional Services Council

Bill Tracker: 112th Congress-Second Session (2012)

H.R. 7

American Energy and Infrastructure Jobs Act of 2012, Mica (R-FL)

Summary Would provide $260 billion over five years for investment in transportation infrastructure projects.

STATUS Reported by House Transportation and Infrastructure Committee on 2/13/2012; passed House on 2/15/2012

Homeland Security Cyber and Physical Infrastructure Protection Act of 2011, Thompson (D-MS)

Summary Seeks to enhance cybersecurity capacity by creating and enforcing performance-based standards.

STATUS Referred to Technology, Info. Policy, Int’l Relations and Procurement Reform Subcommittee on 2/8/2011.

H.R. 174

H.R. 282

Federal contractors participation in the E-Verify Program, Gallegly (R-CA)

Summary Would require federal contractors and subcontractors to utilize E-Verify to confirm the employment eligibility of all of their employees.

STATUS Referred to Immigration Policy and Enforcement Subcommittees on 2/7/11.

H.R. 483

Electronic Employment Eligibility Verification and Illegal Immigration Control Act, DeFazio (D-OR)

Summary Would require the Secretary of Homeland Security to create and maintain a publicly available

and accessible online database of contracting and subcontracting individuals or entities which discloses the number of employment eligibility violations and employment eligibility verification rejections each contracting or subcontracting individual or entity has received.

STATUS Referred to Natural Resources Committee on 2/14/11.

H.R. 598

Alaska Native Corporations contracting reforms, Thompson (D-MS)

Summary Would eliminate the preferences and special rules for Alaska Native Corporations under the program under section 8(a) of the Small Business Act. STATUS Referred to Indian and Alaska Native Affairs Subcommittees on 2/14/11. Related Bill: S. 236.

H.R. 651

United States-Afghanistan Status of Forces Agreement (SOFA) Act of 2011, Woolsey (D-CA)

Summary Would require the President to seek to negotiate and enter into a status of forces agreement with Afghanistan, mandating that U.S. Armed Services and contractor personnel be completely redeployed from Afghanistan.

STATUS Referred to Foreign Affairs Committee on 2/10/11.

H.R. 735

Government Neutrality in Contracting Act, Sullivan (R-OK)

Summary Would preserve open competition and federal government neutrality toward the labor relations of federal government contractors on federal and federally funded construction projects.

STATUS Referred to Oversight and Government Reform Committee on 2/18/2011. Related bill: S. 119.

H.R. 829

Contracting and Tax Accountability Act of 2011, Chaffetz (R-UT)

Summary Would prohibit the award of contracts in excess of the simplified acquisition threshold unless the

prospective contractor certifies in writing to the awarding agency that the contractor has no seriously delinquent tax debt.

STATUS Reported by Oversight and Government Reform Committee on 4/13/11.

Stop Taxing American Assistance to Afghanistan Act, Welch (D-VT)

Summary Prohibits U.S. assistance for Afghanistan unless the United States and Afghanistan enter into a

bilateral agreement which provides that work performed in Afghanistan by U.S. contractors is exempt from taxation by the government of Afghanistan.

H.R. 936

STATUS

Referred to Foreign Affairs Committee on 3/29/11.

Professional Services Council

Service Contractor / March 2012 / 23

Bill Tracker: 112th Congress-Second Session (2012) H.R. 1136

Executive Cyberspace Coordination Act of 2011, Langevin (D-RI)

Summary Would establish within the Executive Office of the President the National Cyberspace Office to

coordinate issues relating to achieving an assured, reliable, secure, and survivable information infrastructure and related capabilities of the federal government.

STATUS Referred to Homeland Security Committee on 3/25/11.

H.R. 1163

Patriot Corporations of America Act of 2011, Schakowsky (D-IL)

Summary Would grant a preference to “patriot” corporations in the evaluation of bids or proposals for federal

contracts. Provides a definition of “patriot corporation.”

STATUS Referred to Oversight and Government Reform and Ways & Means Committees on 3/17/11.

H.R. 1354

American Jobs Matter Act of 2011, Murphy (D-CT)

Summary Would amend titles 10 and 41, United States Code, to allow contracting officers to consider

information regarding domestic employment before awarding a federal contract.

STATUS Referred to Oversight and Government Reform Committee on 4/8/2011. Related bill: S. 1363.

H.R. 1474

Summary

STATUS

Freedom From Government Competition Act of 2011, Duncan (R-TN) Would require the government to purchase goods and services from the private sector. Provides exemptions, such as inherently governmental functions. Would require the use of competitive procedures as well as public-private competitive sourcing analysis in accordance with OMB procedures.

Referred to Oversight and Government Reform Committee on 4/27/2011. Related bill: S. 785.

H.R. 1906

Fairness in Federal Contracting Act of 2011, Cole (R-OK)

Summary Would amend title 41 of the United States Code to prohibit executive agencies from requiring the

disclosure of political contributions by an entity submitting an offer for a federal contract.

STATUS Referred to Oversight and Government Reform Committee on 6/20/11. Related bill: H.R. 2008, S. 1100.

H.R. 1949

CLEAN UP Act, Sarbanes (D-MD)

Summary Would suspend public-private job competitions indefinitely and encourage agencies to bring

contracted work back in-house.

STATUS Referred to Oversight and Government Reform Committee on 6/20/11. Related bill: S. 991.

Keep Politics Out of Federal Contracting Act of 2011, Issa (R-CA)

Summary Would prohibit inserting politics into the Federal acquisition process by prohibiting the

submission of political contribution information as a condition of receiving a Federal contract.

STATUS Referred to Oversight and Government Reform Committee on 6/20/11. Related bill: S. 1100.

H.R. 2008

H.R. 2146 DATA Act, Issa (R-CA)

Summary Would require broad contractor reporting of federal spending similar to requirements under the

American Recovery and Reinvestment Act. STATUS Approved by Oversight and Government Reform Committee. Placed on the Union Calendar on

10/25/2011. Related bill: S. 1222.

H.R. 2340

Transparency in Government Act of 2011, Quigley (D-IL)

Summary Would change the Federal Funding Accountability and Transparency Act to require a “look back”

period of 10 years in lieu of the current 5 year period.

STATUS Referred to Judiciary Committee on 8/25/11.

24 / Service Contractor / March 2012

Professional Services Council

Bill Tracker: 112th Congress-Second Session (2012)

H.R. 2665 Stop Outsourcing Security Act, Schakowsky (D-IL)

Summary

Would phase out the use of private military contractors in the federal government.

STATUS Referred to Armed Services, Foreign Affairs and Intelligence Committees on 7/27/11. Related bill: S. 1428.

H.R. 2880

Contingency Operation and Emergency Oversight Act of 2011, Tierney (D-MA)

H.R. 2923

Josh Birchfield Security Contract Oversight Improvement Act, Donnelly (D-IN)

Summary

STATUS

Would create an Office of the Special Inspector General for Overseas Contingency Operations, headed by a Special Inspector General to conduct, supervise, and coordinate audits and investigations of the treatment, handling, and expenditure of amounts appropriated for overseas contingency operations.

Referred to Oversight and Government Reform Committee on 10/3/2011.

Summary Would require DoD to establish a Quality Assurance Surveillance Plan setting standards to be incorporated in DoD oversight plans governing all security contractors operating in Afghanistan, and other future contingency operations.

STATUS Referred to Armed Services Committee on 9/14/11. Related bill: H.R. 1540.

H.R. 2980 Stop Excessive Taxpayer Payments to Government Contractors Act of 2011, Tonko (D-NY)

Summary

STATUS

Would limit the reimbursement amount for compensation paid to employees of government contractors at $200,000, the rate payable for Level I of the Executive Schedule.

Referred to Oversight and Government Reform Committee on 10/3/2011.

H.R. 3116

Department of Homeland Security Authorization Act of 2012, King (R-NY)

H.R. 3779

Small Business Growth and Federal Accountability Act of 2012, Owens (D-NY)

H.R. 3850

Government Efficiency through Small Business Contracting Act, Graves (R-MO)

H.R. 3851

Small Business Advocate Act, Graves (R-MO)

Summary Includes several provisions designed to help DHS improve its acquisiton planning, management and oversight.

STATUS Reported (Amended) by the Homeland Security Committee on 10/13/11.

Summary

STATUS

Summary

STATUS

Summary

STATUS

Would cut an agency’s procurement budget by 10 percent following a year in which it missed its small-business contracting goal and would offer agencies more authority to give “preference” to small companies when awarding contracts. The term “preference” is not defined in the bill.

Referred to Oversight and Government Reform and Small Business Comittees on 1/18/2012.

Would boost the annual government-wide small business contracting goal from 23 percent—a goal rarely reached—to 25 percent. It would also increase the goal of awarding subcontracted dollars to small businesses from 35.9 percent to 40 percent. To hold top agencies accountable to meeting these goals the bill would withhold bonuses from senior agency officials when small business goals aren’t met.

Referred to Oversight and Government Reform and Small Business Comittees on 1/31/2012.

Would assign greater authority to the Offices of Small and Disadvantaged Business Utilization (OSDBU) by making the office director a senior executive position that reports “directly and exclusively” to the agency head.

Referred to Oversight and Government Reform and Small Business Committees on 1/31/2012.

Professional Services Council

Service Contractor / March 2012 / 25

Bill Tracker: 112th Congress-Second Session (2012) H.R. 3893

Subcontracting Transparency and Reliability Act of 2012, Mulvaney (R-SC)

H.R. 3980

Small Business Opportunity Act of 2012, Herrera Beutler (R-WA)

H.R. 3985

Building Better Business Partnerships Act of 2012, Schilling (R-IL)

Summary Seeks to ensure that federal contracting opportunities help legitimate small businesses and gives small contractors a voice when their work is being unfairly insourced.

STATUS Referred to Oversight and Government Reform and Small Business Committees on 2/2/2012.

Summary Requires small business advocates (OSDBUs) to be part of the federal procurement and acquisition planning processes and would give OSDBUs access to acquisition plans before RFPs are released.

STATUS Referred to Small Business Committee on 2/8/2012.

Summary

STATUS

H.R. 3987

Summary

STATUS

Would allow SBA to oversee all civilian agency mentor-protégé programs to ensure they properly benefit small businesses by improving the small business’ ability to win and perform on contracts and subcontracts. It also would authorize SBA to have mentor-protégé programs for all small businesses and not limit the program to only small businesses in the 8(a) program, those that are owned by a woman or a service-disabled veteran, or that are located in a HUBZone.

Referrred to Small Business Committee on 2/8/2012.

Small Business Protection Act of 2012, Walsh (R-IL) In response to recent efforts by SBA to create new size standards for deciding what businesses qualify as “small,” this legislation would only allow for the use of “common size standards” where each NAICS code included in the common size standard would have an independently justified size standard equal to the common size standard.

Referrred to Small Business Committee on 2/8/2012.

S. 21

Cyber Security and American Cyber Competitiveness Act of 2011, Reid (D-NV)

Summary Would secure the United States against cyber attack, enhance American competitiveness and

create jobs in the information technology industry, and protect the identities and sensitive information of American citizens and businesses.

STATUS Referred to Homeland Security and Governmental Affairs Committee on 1/25/11.

S. 119

Government Neutrality in Contracting Act, Vitter (R-LA)

Summary Would preserve open competition and federal government neutrality towards the labor relations of federal government contractors on federal and federally funded construction projects.

STATUS Referred to Homeland Security and Governmental Affairs Committee on 1/25/11. Related bill: H.R. 735.

S. 235

Lieutenant Colonel Dominic ‘Rocky’ Baragona Justice for American Heroes Harmed by

Contractors Act, McCaskill (D-MO)

Summary Would provide personal jurisdiction in causes of action against contractors of the United

States performing contracts abroad with respect to members of the armed forces, civilian employees of the United States, and United States citizen employees of companies performing work for the United States in connection with contractor activities.

STATUS Referred to Homeland Security and Governmental Affairs Committee on 1/31/11.

S. 236

Alaska Native Corporations Contracting Reforms, McCaskill (D-MO)

Summary Would eliminate the preferences and special rules for Alaska Native Corporations under the

program under section 8(a) of the Small Business Act.

STATUS

Referred to Small Business and Entrepreneurship Committee on 1/31/11. Related bill: H.R. 598.

26 / Service Contractor / March 2012

Professional Services Council

Bill Tracker: 112th Congress-Second Session (2012)

S. 372

Cybersecurity and Internet Safety Standards Act, Cardin (D-MD)

S. 633

Small Business Contracting Fraud Prevention Act of 2011, Snowe (R-ME)

S. 761

Acquisition Workforce Improvement Act of 2011, Collins (R-ME)

S. 785

Freedom from Government Competition Act, Thune (R-SD)

Summary Would reduce the ability of terrorists, spies, criminals, and other malicious actors to compromise, disrupt, damage, and destroy computer networks, critical infrastructure, and key resources.

STATUS Referred to Commerce, Science, and Transportation Committee on 2/16/11.

Summary

STATUS

Summary

STATUS

Would prevent fraud in small business contracting by making improvements to HUBZone and Section 8(a) programs and issuing an annual report in Congress outlining suspension, prosecution and debarment.

Referred to Small Business and Entrepreneurship Committee on 9/22/11.

Would establish a government-wide Acquisition Management Fellows Program and related funding and reporting requirements to improve the federal acquisition workforce.

Referred to Homeland Security and Governmental Affairs Committee on 4/7/11.

Summary Would require the government to purchase goods and services from the private sector. Provides

exemptions, such as inherently governmental functions. Would require the use of competitive procedures as well as public-private competitive sourcing analysis in accordance with OMB procedures.

STATUS Referred to Homeland Security and Governmental Affairs Committee on 4/12/11. Related bill: H.R. 1474.

Information Technology Investment Management Act of 2011, Carper (D-DE)

Summary Would require executive agency participation in real-time transparency of investment projects as

well as performance and governance reviews of all cost overruns on federal information technology investment project.

STATUS Referred to Homeland Security and Governmental Affairs Committee on 4/12/11.

S. 801

S. 991 CLEAN UP Act, Mikulski (D-MD)

Summary

STATUS

Would significantly broaden the definition of functions that the government must perform under law and prohibit the government from undertaking A-76 competitions.

Referred to Homeland Security and Governmental Affairs Committee on 5/12/11. Related bill: H.R. 1949.

S. 1100

Keeping Politics Out of Federal Contracting Act of 2011, Collins (R-ME)

S. 1145

Civilian Extraterritorial Jurisdiction Act (CEJA) of 2011, Leahy (D-VT)

S. 1222

Data Accountability and Transparency Act of 2011, Warner (D-VA)

Summary

STATUS

Would amend title 41 of the United States Code to prohibit executive agencies from requiring the disclosure of political contributions by an entity submitting an offer for a federal contract.

Referred to Homeland Security and Governmental Affairs Committee on 5/26/11. Related bills: H.R. 2008, H.R. 1906.

Summary Would clarify and expand federal criminal jurisdiction over federal contractors and employees outside the United States STATUS Reported by Judiciary Committee on 6/23/11. Related bill: H.R. 2136.

Would require accountability and transparency in federal spending.

STATUS Referred to Homeland Security and Governmental Affairs Committee on 6/16/11. Related bill: H.R. 2146.

Summary

Professional Services Council

Service Contractor / March 2012 / 27

Bill Tracker: 112th Congress-Second Session (2012) S. 1363 American Jobs Matter Act of 2011, Rockefeller (D-WV)

Summary

STATUS

S. 1428 Summary

STATUS

Would amend titles 10 and 41, United States Code, to allow contracting officers to consider information regarding domestic employment before awarding a federal contract.

Referred to Homeland Security and Governmental Affairs Committee on 7/13/11. Related bill: H.R. 1354.

Stop Outsourcing Security Act, Sanders (D-VT) Would phase out the use of private military contractors in the federal government.

Referred to Armed Services Committee on 7/27/11. Related bill: H.R. 2665.

S. 1546

Department of Homeland Security Authorization Act of 2012, Lieberman (ID-CT)

S. 1694

Defense Cost-Type Contracting Reform Act of 2011, McCain (R-AZ)

S. 1736

Acquisition Savings Reform Act of 2011, Brown (R-MA)

Summary Includes several provisions designed to help DHS improve its acquisiton planning, management and oversight.

STATUS Reported favorably by the Homeland Security and Governmental Affairs Committee on 9/21/11.

Related Bill: H.R. 3116.

Summary Would restrict DoD’s ability to enter into cost-type contracts for the production of major defense acquisition programs (MDAPs).

STATUS Referred to Armed Services Committee on 10/12/11.

Summary Seeks to improve agency strategic sourcing, contract close-outs, and increase productivity improvements and cost efficiencies in services contracts.

STATUS

S. 1747

Referred to Homeland Security and Governmental Affairs Committee on 10/19/2011.

Computer Professionals Update Act, Hagan (D-NC)

Summary Would clarify that certain computer or information technology occupations meet the “professional” exemption under the Fair Labor Standards Act.

STATUS

S. 2038

Summary

STATUS

Referred to Health, Education, Labor and Pensions Committee on 10/20/2011.

Stop Trading on Congressional Knowledge Act of 2012, Lieberman (I-CT) Seeks to limit insider trading by executive and legislative branch officials based on information they obtain through their public service. The Senate-passed version contains loosely defined terms that would require extensive private sector reporting of regular and legitimate day-to-day communications with government officials.

Passed the Senate, as amended (96-3) on 2/2/2012. Passed the House, as amended, (417-2) on 2/9/2012.

Stay up-to-date on the state of our industry with a Market & Policy Briefing or

subscribe to PSC’s quarterly industry updates on our YouTube channel.

http://www.youtube.com/user/ThePSCouncil

28 / Service Contractor / March 2012

Professional Services Council

by Marc Andersen

Markets Leader, U.S. Government & Public Sector, Ernst & Young LLP

P

ublic-private partnerships. Innovation. Entrepreneurship.

Doing more with less. Nimbleness. With all the discussion, dialogue and rhetoric making the rounds on approaches to restarting the economic engine of our country, I took a step back and thought through the practical actions that we can each consider taking in our own relative areas of control.

What are the levers that we can each pull in the context of our roles and responsibilities that will result in different outcomes? What are the examples from government, other sectors and other nations, that we can consider and then implement?

Much of the national debate on restarting the economy involves philosophy and policy: What is the direction we should take and who is responsible for what? What needs to change and what will be different? That is all well and good, especially if you are a philosopher or a policymaker. Most of us are not. We are public-sector and private-sector businesspeople directly charged with achieving immediate, tangible results for our businesses, agencies and programs.

With respect to the philosophy and policy, we have the most direct opportunity of any people in the world to impact change—as citizens in a democracy. We can choose to serve in government and also choose to participate in the electoral process, determining who is responsible for setting the way forward from a policy perspective.

US‌

as Entrepreneurs

We can also choose to serve as members of one of the largest and most successful public-private partnerships in the world, either as one of the 19.1 million public-sector employees of government (2.5 million at the federal level [including 500,000 postal workers], with another 16.6 million making up the balance at the state and local levels) or, like me (and the approximately 7 million others), as one of the privatesector contractors supporting government at all levels.

In my role, I serve as the leader of our government and public sector business for the Americas for Ernst & Young. Sounds great, but what does that

mean? My day-to-day responsibilities are building and growing our practice that serves the U.S. federal government and working with and supporting our teams across the U.S. in other public-sector market segments and throughout the Americas. It is a blast.

From my perspective, there has never been a more exciting time to be a member of this partnership, working with the talented men and women in the federal workforce.

Our team has been afforded opportunities to help solve complex issues and assist in the important execution of various agencies’ respective missions. For example, we have assisted continued on page 30

Professional Services Council

Service Contractor / March 2012 / 29

from page 29

the Department of the Treasury with standing-up the Office of Financial Stability, charged with administering the Troubled Asset Relief Program (TARP). We have executed important compliance work for the Universal Services Administrative Corporation’s (USAC) investment in building the communication infrastructure for the nation’s schools and libraries. We have assisted the Department of Defense with audit readiness efforts to make the department auditable and served the Millennium Challenge Corporation’s efforts to build the emerging markets of tomorrow through providing project and financial management assistance to the development of the energy sector in Malawi, Africa. In addition, we have had the opportunity to contribute to the better care of our wounded warriors at the Department of Veterans Affairs through improving the processes relating to patient flow at VA hospitals. We also serve as the auditors for Depart-

ment of Health and Human Services, the Department of Education, and the United States Postal Service. Our practice and business is growing. Over the last two years we have created over 100 jobs just in our federal practice.

All of these, and countless other examples across industry, have been accomplished through the publicprivate partnership ecosystem that we are a part of in our role as government contractors.

But what can industry and government do differently to make an even greater impact given the challenges in our economy?

The reduction in the federal budget has impacted government’s ability to deliver services to citizens and correspondingly our ability to grow and develop our firms at the same rates the industry enjoyed over the last decade.

Cuts have been made, contracts are on hold, deferred and even cancelled—and there is yet to be clarity as to the way

30 / Service Contractor / March 2012

forward with a specific understanding of the trade-offs and implications of budget reductions to all citizens.

What we do know is that the national ATM machine is running low.

There also must be a point at which we can no longer simply print more money. Innovation and entrepreneurship will be the engines that will drive our economy to recovery and then to new levels of prosperity.

Achieving economic recovery through innovation and entrepreneurship is not exclusively government’s role any more than it is exclusively industry’s role. It is our collective role, in partnership on behalf of all citizens.

Ernst & Young recently surveyed entrepreneurs across the G20, resulting in the identification of five key findings necessary to spur the growth of the economy. They are: entrepreneurship culture, education and training, access to funding, regulation and taxation and coordinated support.1

Professional Services Council

As we learn from the perspectives of entrepreneurs around the globe, we can also learn from what is working well within government today. And the good news is that there are many, many examples to choose from.

In a new book, Paths to Making a Difference: Leading in Government, my colleagues Paul Lawrence and Mark Abramson profiled Arun Majumdar, the first director of the Advanced Research Projects Agency-Energy in the Department of Energy. Demonstrating an entrepreneurial spirit, Majumdar led the creation of a new agency dedicated to developing transformational energy technologies through a variety of public-private ventures. In describing his outreach efforts to universities and the private sector, Majumdar said, “I reached out to universities. I set up informal meetings to just chat with experts to find out their issues and thoughts. I wanted to know what

people were already doing …. There is no substitute for retailing. You have to go see people one on one and get to meet them.”

Another example of innovation and entrepreneurship at work today in government is Millennium Challenge Corporation’s structure and approach to achieving results. This is a favorite example of mine of how government can operate differently and innovatively. The Millennium Challenge Corporation is an agency that is capped at 300 people, forcing sharp decisions on the margins, driven by a framework that focuses on good policies, country ownership and results. MCC forms partnerships with some of the world’s poorest countries, but only with those committed to good governance, economic freedom and investments in their citizens.

Now, while we are more effectively investing in the development of the emerging economies of tomorrow, ben-

efiting both the developing countries and U.S. taxpayers—how can we apply that approach and learning to solving domestic growth issues? Is now the time to consider a domestic Overseas Private Investment Corporation?

What else can we be doing that will drive different outcomes?

I am confident that as government contractors we will be part of the solution, working in innovative ways with government. We have a generational opportunity to make a difference in the way services are delivered to citizens, delivered through one of the most powerful publicprivate partnerships in the world.

What will you do differently today to innovate, to be an entrepreneur?

How will you take our partnership to the next level? 3 The views expressed herein are those of the author and do not necessarily reflect the views of Ernst & Young LLP.

http://www.ey.com/GL/en/Issues/Business-environment/G20-Entrepreneurship-Barometer-2011

1

Growth. Strength. Stability.

FCE Benefit Administrators, Inc., the industry leader in fringe-benefit design, compliance, and administration, enables employers to fulfill their fringe obligation by funding a trust for employee benefits.

FCE is a full-service third-party administrator (TPA) with more than 20 years experience in this regulatory niche. Whether the preferred approach is selffunding or fully insuring, FCE’s in-house actuarial expertise helps hundreds of government contractors achieve fringe compliance, reduce payroll taxes, and promote employee welfare, all without funding beyond the fringe obligation.

Questions? Contact Gary Beckman, President/CEO, at (800) 899-0306 or beckman@fcebenefit.com www.fcebenefits .com

FCE Benefits 887 Mitten Road Burlingame, California 94010-1303 800.899.0306 • 650.341.7432 fax corpoffice@fcebenefit.com Professional Services Council

Service Contractor / March 2012 / 31

PSC Policy Spotlight:

by Alan Chvotkin

PSC Executive Vice President and Counsel

Facing the Challenge of Austerity with Non-Procurement Procurements

W

e are in the “age of austerity” in the federal marketplace.

For the first time in the last decade federal spending on goods and services has declined for two government fiscal years in a row. In addition, fiscal year 2011 was the first year in more than five years that federal spending on services did not outpace the overall rate of spending on all goods and services. While the federal services market remains significant in size and opportunities—with some areas such as cybersecurity and information security likely to grow considerably—agencies are increasingly turning to contests, challenges and other similar “nonprocurement” transactions to acquire goods and services heretofore typically acquired through the normal federal procurement system in the belief the approach will save money or achieve better or faster results.

As of early February, more than two dozen agencies had more than 150 contests in progress, ranging from the U.S. Agency for International Development to the Department of Veterans Affairs. While many of these activities were small dollar value prizes, in August 2011 the Department of Energy awarded a $10 million cash prize to Philips Lighting North America under DoE’s “Bright Tomorrow Lighting Prize.” Others have also awarded prizes in excess of $1 million.

Three recent examples demonstrate the successful use of these contests and challenges, but each calls into question whether it would have been possible

and more appropriate to approach these objectives through the traditional procurement process.

First, in late 2011, the Defense Advanced Research Projects Agency (DARPA) conducted its fascinating “Shredder Challenge” that asked contestants to reconstitute five documents shredded with a multi-cut shredder. With an eye toward intelligence gathering and information protection, DARPA put this shredder challenge out in the marketplace in the form of a contest to see if researchers could solve the problem. In 30 days, 9,000

32 / Service Contractor / March 2012

teams submitted solutions to one or more of the problems and one team solved all of them to earn the $50,000 prize. As a result, DARPA now has an undisclosed methodology that might have application for military intelligence.

In October 2011, the Veterans Affairs announced the winner of its “Blue Button for All Americans” contest, which offered a $50,000 prize to the company that was able to demonstrate a process to enable veterans to download their personal health data through the VA’s “Blue Button” system, regardless Professional Services Council

of where the veteran gets care. As a result of this contest, VA now gets to use the process across the department, as well as in collaboration with the Defense Department’s TRICARE program and the Department of Health and Human Services’ Centers for Medicare and Medicaid Services. The winning company donated all of the prize money to the Wounded Warrior Project.

Finally, in December 2011, NASA announced it was using its special transaction authority, called Space Act Agreements, instead of contracts for the next phase of its commercial crew program seeking U.S. companies to transport American astronauts into space. According to NASA, the flexibility in these competitive agreements will allow them to maintain a larger number of partners during this phase of the program and better adjust the technical direction, milestones and funding than would have been possible under contracts.

Each of these approaches has merit for the agencies and their mission. By sidestepping the complex procurement process, which can often act as a barrier to companies entering the federal marketplace, these non-procurement initiatives allowed agencies to draw from expertise of individuals and companies that don’t participate in the regular federal procurement process. Further, each contest, by using special authority given to the agency and unique contest rules, allowed the government to obtain rights to any offered solution and other benefits that

may have not been available through traditional means.

Ease of access to the results and cost savings aside, the rise of non-procurement procurements raises questions about how these contests can achieve some of the benefits of the regular federal procurement system. For example, under the traditional procurement system, competitive processes provide federal agencies with access to vendors that have proven track records and long-term staying power, meaning there is someone to support the user should something go wrong. It also means there is someone to hold accountable. In addition to ensuring quality, the traditional procurement process also ensures that government purchases are made in a way that is fair and open.

The regular procurement process also helps the government achieve certain socioeconomic goals. For example, given the dollar value involved in many of these contests, a procurement approach to these problems would have been set aside for small businesses, which the administration counts on as the engine for job creation.

In considering the rise of contests, challenges and nonprocurement procurements, the Office of Management and Budget and agency officials must carefully balance the important protections and uses of the traditional procurement system versus the contests or challenge alternatives to ensure the public interest is truly being well served. 3

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by Roger Jordan

Vice President of Government Relations, PSC

Committee Corner: Labor Relations/Human Resources Committee

L

abor-related policy issues are emerging with increased frequency, and with the potential for additional proposals that may have meaningful effects on contractors, PSC is taking them on through our Labor Relations/Human Resources Committee.

Whether it is the “nondisplacement of qualified workers under successor contracts” rule spurred by Executive Order or Office of Federal Contract Compliance Programs’ (OFCCP) desire to more closely examine contractor affirmative action and non-discrimination activities or the increased contractor oversight efforts within the Labor Department (DoL) and other agencies, this PSC committee offers a unique forum for our

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members to assess the proposals and engage in industry-to-government discussions about the compliance burdens and risks.

The government has done little formal outreach to the private sector on these issues and the Labor Relations/Human Resources Committee provides an opportunity to speak with a unified voice and have frank discussions with government policy makers so that our concerns are considered on the front end of policy formation, not after the fact.

The committee has already been instrumental in helping PSC and its industry partners on the Council of Defense and Space Industry Associations (CODSIA) develop comments on several labor related rules, including OFCCP’s “Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors Regarding Individuals with Disabilities” and its “Non-Discrimination in Compensation; Compensation Data Collection Tool.” In addition, PSC was successful in convincing the Agriculture Department to pull back rules that would have required contractors to certify they are in compliance with all labor laws.

In addition to tackling these new government initiatives, the committee will continue to focus on core issues that have always been hot topics of discussion for labor and HR professionals, including Service Contract Act-related issues, on which PSC offers regular training courses taught by DoL officials.

We also maintain good relationships with the military services’ labor advisors and we are cultivating discussions with civilianagency labor advisors.

The Labor Relations/Human Resources Committee is a great venue for PSC members to engage on an array of critical labor policy issues. And given the broad array of topics to be addressed, we are always seeking new members and new perspectives from the membership. Now is the time to join the committee and play an important role in PSC’s policy development. 3 PSC Labor Relations/Human Resources Committee Meets: Quarterly Next Meeting: Q1 2012 Invited Guest: OFCCP Chair: Al Corvigno (MARAL, Inc.) Staff Contact: Roger Jordan, jordan@pscouncil.org Professional Services Council

MEMBER NEWS Congratulations to PSC Members Earning 2012 Fed 100 Awards

Each year, Federal Computer Week presents The Federal 100 Awards, recognizing government and industry leaders who make a significant difference in the way government uses technology to transform agencies or accelerate agency missions.

Professionals from government and industry will be honored at the annual Fed 100 gala on March 28 for their efforts to improve how the federal government acquires, develops and manages IT. Congratulations to this year’s PSC members who are being recognized with a 2012 Fed 100 award: • Andrew M. McCann, HP Enterprise Services • Brad Antle, Salient Federal Solutions • Daniel E. Porter, CACI • Jeff Trauberman, Boeing • Larry D. Cox, SAIC • Lauren C. States, IBM • Linda A. Mills, Northrop Grumman • Natalie M. Givans, Booz Allen Hamilton • Robert L. Nabors, Booz Allen Hamilton • Robin Lineberger, Deloitte • Stuart Mervis, General Dynamics Information Technology • Peter Gallagher, Unisys Federal Systems

PSC Membership Elects New Leadership for 2012

The Professional Services Council (PSC) elected new members, and re-elected continuing members, to its Board of Directors and Executive Committee at its annual membership meeting on December 15. The PSC Board of Directors is responsible for policy oversight and setting the direction of the association.

Paul Cofoni, president and CEO of CACI International, Inc., was elected chairman of the association. John Hillen, president and CEO of Sotera Defense Solutions, was elected vice chairman. Ellen Glover, executive vice president of ICF International, was elected secretary. Rod Mateer, a partner at Deloitte, remains the association’s treasurer.

In addition to the officers, the following PSC members were elected to serve on the Executive Committee in 2012: Jerry Briggs (Accenture), Bonnie Carroll (Information International Associates), Ed Casey (Serco), Larry Cooley (Management Systems International), Angela DrummondRodgers (SiloSmashers), Kathleen Flanagan* (Abt Associates), Deepak Hathiramani* (Vistronix), James Jaska* (AECOM), Robin Lineberger (Deloitte), Andy McCann (HP Enterprise Services), Jim Sheaffer (CSC), and Sudhakar Shenoy continued on page 36

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MEMBER NEWS (Information Management Consultants). (* new member of PSC Executive Committee) Twenty-three members of the current Board of Directors were elected to new 3-year terms, and three new members of the Board were also elected. The re-elected Board members are: Wes Anderson (Microsoft), Glenn Baer (ARINC), Nancy Blethen (Tech Systems), Robert Bowe (Legatus6), Karrye Braxton (Global Business Solutions), David Dacquino (VT Group), Mark Danisewicz (American Systems), Chuck Dominy (IAP Worldwide Services), Kathleen Flanagan (Abt Associates), Gary Giarratano (Phoenix Management, Inc.), Isiah Harris (AMERITAC), David Kriegman (Jacobs Technology), Shiv Krishnan (INDUS), John Lange (Madison Services), Dario Marquez (MVM), Jim Neu (Wyle), Charles Prow (IBM), Mike Shelton (EMCOR), David Swindle (URS Corporation), Hugh Taylor (Northrop Grumman IT), Larry Trammell (TechFlow), Robert Vincent (VW International) and Deb Werner (BAE).

The new Board members are Ken Hunzeker (Exelis), John Gastright (DynCorp) and Rod Buck (The Columbia Group).

PSC Honors Members for Outstanding Service

During the December 15 annual membership meeting, PSC honored four executives with PSC Achievement Awards for their leadership and commitment to the association. They are: • Julie Susman (Jefferson Consulting) and Ken Quaglio (Ernst & Young) for their work developing and co-chairing PSC’s Veterans Affairs Task Force; • Bob Vincent (VW International) for his leadership on PSC’s Executive Committee and his work on mid-tier business concerns; and • Jerri Shaw of JBS International, for her leadership of the Annual Conference Planning Committee.

PSC Members Give Back with Help from JAMIS Software Corporation

The Professional Services Council (PSC) and JAMIS Software Corporation collected 145 pounds of food for the Arlington Food Assistance Center (AFAC) during PSC’s annual membership meeting on December 15.

AFAC, which serves an average of 1,600 families in need each week, had an acute need for donations during the holiday season because the number of families requiring assistance typically grows between Thanksgiving and New Year’s Day. Last year, during Thanksgiving week alone, AFAC served more than 1,800 families comprising nearly 5,000 individuals.

Recognizing the growing need, PSC pledged to collect at least one food item or other necessity from every attendee at the annual members meeting. To encourage members to be even more generous, donors received raffle tickets for a chance to win an iPad furnished by JAMIS. Thanks to JAMIS for their support and to all PSC members who donated.

PSC employees also spent their annual day of service at AFAC’s warehouse on January 24, bagging groceries for AFAC customers and sorting seeds for AFAC’s “Plot Against Hunger” program.

The PSC staff bagged vegetables, rice and other groceries for customers of the Arlington Food Assistance Center on January 24.

36 / Service Contractor / March 2012

Professional Services Council

MEMBER NEWS Members Invited to Become a 40th Anniversary Celebration Partner

In honor of PSC’s 40 years of leadership to the industry, PSC members are invited to become a special year-long Celebration Partner.

As PSC celebrates this milestone throughout the year, Celebration Partners will be recognized at every PSC event in 2012, culminating at the PSC Annual Conference in October at The Greenbrier. Celebration Partner recognition includes mentions at the following events and in the following materials:

Help PSC celebrate its 40th year and reserve your $3,000 partnership today by contacting Melissa Phillips at phillips@ pscouncil.org. All reservations must be made by April 1.

Have a story for Service Contractor’s Member News section?

E-mail Bryan Bowman at bowman@pscouncil.org.

• Dialogue Series breakfasts and lunches • Networking Happy Hours • Marketview 2012: The PSC Spring Conference • The PSC 2012 Annual Conference • Other general PSC programs and committee meetings • PSC website • Anniversary features in Service Contractor magazine • Rotating recognition in the PSC Insider Newsletter • Signage at the PSC office

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PSC: SCENE & HEARD 1

Rep. Gerry Connolly, right, discusses procurement challenges during a December 1 Congressional Smart Contracting Caucus event. The panel also featured, from right to left, PSC’s Stan Soloway, GSA’s Dave McClure, OMB’s Lesley Field, and moderator Jill Aitoro, of the Washington Business Journal. Caucus Co-Chair Rep. Rob Wittman, not shown, also participated in the event.

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CACI President and CEO Paul Cofoni takes the mic and the helm at the PSC Board of Directors’ meeting on December 15, where he was voted in as PSC’s new chairman.

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Federal CIO Steven VanRoekel addresses PSC’s December 15 Board of Directors meeting.

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Revelers enjoy noshing and networking at PSC’s Holiday Party on December 15.

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PSC’s Alan Chvotkin, left, Venable’s John Cooney, center, and Robert Keith, formerly of the Congressional Budget Office, discuss the implications sequestration could have on industry during a January 17 event for PSC members.

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Deputy Defense Secretary Ash Carter addresses the PSC Leadership Summit on January 30.

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Acting OFPP Administrator Lesley Field address the PSC Leadership Summit on January 30.

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PSC members discuss priority topics the association should tackle in 2012 during the PSC Leadership Summit on January 30.

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PSC’s Stan Soloway, left, joins Secretary of Defense Leon Panetta, Deputy Secretary Ash Carter, Undersecretary Frank Kendall, AIA President Marion Blakely, and other executives from PSC, AIA and NDIA to discuss the health of the Defense Industrial Base in the face of budget austerity. (Photo courtesy of AIA).

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DHS Chief Procurement Officer Nick Nayak, left, welcomes attendees to a Homeland Security Department industry day event on January 26 where PSC’s Stan Soloway, center, spoke alongside DHS CIO Richard Spires, right, and other DHS leaders.

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38 / Service Contractor / March 2012

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