Service Contractor Magazine Spring 24

With over $2B in commitments, our support for the financial needs of government contracting firms dates back decades.

PSC STAFF

David J. Berteau President & CEO berteau@pscouncil.org

Stephanie S. Kostro Executive Vice President, Policy kostro@pscouncil.org

David Broome Executive Vice President, Government Relations broome@pscouncil.org

Joe Carden, CAE Senior Vice President, Marketing & Membership carden@pscouncil.org

Paul Foldi Vice President, International Development foldi@pscouncil.org

Lauren Ayers Vice President, Defense & Intelligence ayers@pscouncil.org

Tim Brennan Vice President, Government Relations brennan@pscouncil.org

Krista Sweet Vice President, Civilian Agencies ksweet@pscouncil.org

Andrea Ostrander Vice President, Events ostrander@pscouncil.org

Robert Piening, CPA, CGMA Vice President, Accounting & Finance piening@pscouncil.org

Cassie Katz Vice President, Marketing katz@pscouncil.org

Melissa Phillips, CMP Director, Operations phillips@pscouncil.org

Michelle Jobse Director, Vision Forecast jobse@pscouncil.org

Jean Tarascio Director, Events tarascio@pscouncil.org

Tomeka B. Scales, Ph.D. Director, Media Engagement & Communications scales@pscouncil.org

Sebastian Herrick Director, Procurement Policy herrick@pscouncil.org

Donald Baumgart Senior Manager, Vision Forecast baumgart@pscouncil.org

Karen Holmes Office Manager holmes@pscouncil.org

Christian Larsen Senior Associate, Public Policy larsen@pscouncil.org

Laila Hammonds Membership Associate lhammonds@pscouncil.org

Madeline Hayes Membership Associate hayes@pscouncil.org

Marin Selig Events Associate selig@pscouncil.org

Gisell Lopez Event Marketing Associate lopez@pscouncil.org

Anna Nestler Marketing Communications Associate nestler@pscouncil.org

Cole Model Sponsorship Associate model@pscouncil.org

FPRESIDENT’S LETTER

or the first time since last summer, government contractors and our federal customers are not faced with the near-term threat of a government shutdown.

In March, Congress passed, and the president signed, two bills that appropriate funds for the remainder of Fiscal Year 2024. Constraints on federal programs imposed by continuing resolutions are gone, at least until the next CR. For now, service contractors can focus on the tasks at hand, bidding, winning, and performing the work needed to support the missions and functions across all agencies and programs in the U.S. government.

Even so, no one is taking it easy. Congress is wrestling with legislative issues and deadlines, as reflected in our quarterly legislative update, the “Bill Tracker,” starting on page 13.

One of the most vital deadlines for Congress is funding for the next fiscal year, FY25. The President’s Budget Request was submitted in March; committees are conducting hearings and will begin to mark up bills. This “regular order” of business is always challenging, but it’s especially so in an election year like this.

Election years also present opportunities for the executive branch. This issue provides suggestions for contractors to help their program customers prioritize achievable results in year four of a four-year term. Check out the advice in “Sowing Seeds for the Future: Contractors in an Election Year” on page 8.

Recent years have brought new focus to the importance of industrial base capabilities and capacities, for the overall economy and particularly for government contractor support. From Covid-related disruptions in supply chains and workforce to unexpected demands for munitions to support Ukraine, the industrial base has drawn a lot of attention.

Much of that attention, though, has focused on products rather than services. In “Strengthening Security Through the

Services Industrial Base” on page 6, I explore the broader view of the industrial base that will be needed to meet current and future demands.

Key elements of the industrial base writ large are the roles played by financial markets. Guest writer Mikhail Grinberg of PSC member company Renaissance Strategic Advisors offers some new approaches to increasing competition and participation across industry in his article on page 20.

Looking further into the future, new technologies and applications offer a vision of integrating technology and data into a more personalized approach to providing government services. See guest author Stefan Becker’s intriguing vision in “2030 Vision: Revolutionizing Government Services Through Human-AI Collaboration,” beginning on page 10.

One technology area of tremendous interest and fast growth continues to be artificial intelligence. PSC has ramped up engagement on AI, including but not limited to widely attended events that offer critical insights into how the federal government plans to leverage generative AI and how companies can best approach AI in the final months of FY24 and beyond. One such event was our annual conference on Federal Law Enforcement. You can read some highlights on page 21 and plan now to attend the upcoming conferences listed on page 27.

As always, we at PSC work each day to help government services contractors support vital federal missions and functions and to help your government customers become smarter customers and better buyers. We appreciate your support and engagement, and we welcome your feedback and your input.

David J. Berteau, President and CEO

MStrengthening Security Through the Services Industrial Base

by David J. Berteau, President and CEO, PSC

uch is being said and written about the health and resilience of the U.S. defense industrial base. U.S. government assistance to Ukraine has highlighted shortfalls and surge capacity challenges for certain weapons and munitions. COVID-19 created or exacerbated problems with supply chains, distribution systems, access to materials, and workforce shortages. As this article is written, the Defense Department (DoD) is working on implementation guidance for its recently released industrial base strategy.

All this attention focuses on the need for strengthening the industrial base. Yet, efforts largely ignore half of that very industrial base – the services half.

It’s past time to expand the aperture, look at the key roles played by the services industry, and strengthen the services industrial base by focusing on those roles.

To be clear, this limited view of the industrial base is not new. When the Packard Commission1 convened in 1985, it focused primarily on the systems and processes that designed and produced major weapon systems. The commission’s final report paid far less attention to sustainment, logistics, and support, even though over the life of a weapon, the costs of that support far outweigh the costs of design, development, and production.

The Evolution of Defense Services

In part, the realities of the Cold War drove the Packard Committee’s focus. Plans, exercises, and war games regularly showed that a land war in Europe with the Soviet Union and its Warsaw Pact allies would reach a tipping point within a few weeks of a Soviet invasion. There were few scenarios in which services and support became a decisive factor in the war’s outcome.

The Berlin Wall and the dissolution of the Soviet Union changed this planning construct. By 1993, the focus of DoD, the White House, and Congress was shifting to “dual-use technology.” At that time, the term meant technology developed originally for defense purposes, using DoD research and

development (R&D) funding. “Dual-use” meant that research results were spun off to the broader commercial market.

Today, that dynamic has reversed. Dual-use efforts now focus on capabilities and technologies built for commercial use and subsequently applied to national security requirements. Private sector capital—including venture capital--is flowing to support such dual-use efforts. The last five years has reportedly brought investments of up to $100 billion in startups.2

The Data

The federal government collects data on funds obligated to contracts and reports those data in the Federal Procurement Data System (FPDS). At PSC, we analyze those data and make the results available to our member companies.

Since Fiscal Year 2008, DoD contract obligation totals for services has exceeded the totals for products. In Fiscal Year 2023, the latest year for which full-year data are available, DoD contract obligations for services were more than 10 percent above obligations for products.

In addition, DoD today can and does procure much of what it needs as a service rather than through ownership of a product. Gone are the days of owning every server on which data are stored - cloud services contracts are cheaper, faster, with more available data. There are many more examples of this shift, from software-as-a-service to buying space launch services rather than buying the launch vehicle itself.

Services as Part of the Industrial Base

Still, DoD has not taken full advantage of these changes, either the capabilities developed for the commercial sector or the opportunities to buy results as-a-service. Focusing on using that advantage offers real promise to support an industrial base with resilience, innovation, flexibility, and surge capacity. What changes can make that shift happen?

Perhaps the greatest barrier to increasing the use of services as part of the industrial base is that was not past practice.

1 The Packard Commission was formally the President’s Blue Ribbon Commission on Defense Management, chaired by David Packard. Its final report is at https://www.documentcloud.org/ documents/2695411-Packard-Commission. The author of this article served as Executive Secretary for the commission.

2 See for example “Investors Are Betting on Defense Startups” by Heather Somerville in the Wall Street Journal, January 26, 2024, at https://www.wsj.com/tech/defense-startups-risk-becomingfailed-experiment-without-more-pentagon-dollars-dc9e663a.

Photo

Gone are the days of owning every server on which data are storedcloud services contracts are cheaper, faster, with data that are more available.

In DoD, as in much of government and business, the past is stronger than the future. Contracting officers are not incentivized to take risks and pursue something different that diverges from past practice.

Changing that starts with better requirements, the basis for every contract. What does the government need? Done right, the answer to that question will focus on results and outcomes. Evaluation of proposals will be built on an understanding of the value of those results, not just the cost.

The absence of such requirements is one of the main barriers to a stronger industrial base with greater innovation. In a recent presentation to an audience of defense contractors, I asked for a show of hands: who had proposed some innovative solution to a DoD customer, only to be told that DoD does

not have a validated requirement for that innovation? At least a third of those in the room raised their hands. That sample is consistent with similar requests over the years, and it may well reflect both the opportunity and the difficulty of using as-aservice to strengthen the industrial base.

Conclusion

If DoD wants a 21st-century industrial base, it needs to become a smarter customer, one that is more aware of the potential to procure results through services as well as products. It can do that by focusing on results and outcomes, not input measured in labor categories and labor rates. In the next issue of Defense Contractor, we will explore some ways this can be accelerated. 3

Sowing Seeds for the Future: Contractors in an Election Year

by David J. Berteau President and CEO, PSC

One certainty in American democracy is that elections arrive on schedule. Unlike parliamentary systems, under which national elections can be called with relatively short notice, the U.S. Constitution mandates that presidential elections occur on a specific Tuesday in November every four years. In addition to the president, those elections include all 435 Representatives and roughly one-third of U.S. Senators.

One consequence of this mandatory schedule is that we always know when we are in the fourth year of a presidential term. 2024 is such a year.

Regardless of whether that fourth year is the end of a first presidential term or of a full eight-year run, every political appointee in every agency can see a finish line, a time limit on achievements of a particular four-year term. Appointees who want to leave their marks can feel that deadline approaching.

What, if anything, does that mean for federal contracting, for contractors, and for their government customers? This article reflects the observations of the author, from inside and outside government, since the 1970s.

Year four of a four-year term is often seen as a year in which very little gets done, either by Congress or the administration. However, it can be a year of significant accomplishment within a federal department or agency. If you are a contractor supporting a program or a federal official trying to secure those accomplishments, there are a few key actions that help them reach success.

Keys to Success

Those keys to success include:

1) Focus first and primarily on projects and goals for which good foundations have already been laid. For the most part, avoid new starts. There is rarely enough bureaucratic time and momentum to move far enough, fast enough.

2) Plan with detail and clear timelines. Plans should include cushions, fallbacks, and offramps in the event of a sidetrack or derailment of some element of the plan.

3) Track closely and frequently the steps needed for those projects to survive an election and continue into the following year. Those steps include guidance documents (directives, instructions, memos, etc.), funding and other resources, committees and councils, personnel, etc. Often, one critical element is a long-term support contract for continuity and implementation.

4) Build support by identifying (or creating) and enabling supporters and champions in the program and across the broader department or agency. Champions in other executive branch agencies and in Congress may be equally important.

5) Start now. Many of those steps needed will take most of the time remaining between now and next January.

Where Can Contractors Help

In most federal agencies, initiatives are solidified through guidance documents and other plans, which can include:

• an implementation plan for a strategy,

• a new or revised agency directive or instruction,

• a charter for a council or committee,

• a new career civilian position,

• support contracts with sufficient qualified staff, defined work statements, and committed funds that extend into the future, and

• a spending plan for budgeted funds.

All of these things can take months to put in place. Existing contractors with appropriate scope and funding can support work now for them to be accomplished on time.

Elements of the bureaucracy may say, “There is already too little time.” For example, a new agency-level guidance document may routinely take more than 12 months to write, coordinate, and get approved. However, with sufficient support from the top and with regular monitoring of progress (including from coordinating offices), that process can move more quickly. Coordination happens at the speed of attention… as well as the speed of bureaucracy.

The same benefit from high-level support and constant attention can produce more timely results in those other actions cited in the bullets above.

What If There Is a Second Term?

Why should there be a focus on year four when there might be a year five? History says, “Don’t count on a second term.” If there is a second term, history then says, “Don’t count on appointees keeping their position.”

Every one of the last nine decades has seen a president who was reelected to a second term (with the exception that, in the 1940s, it was a third and then a fourth term). However, only four of the past 11 presidents actually served a full eight years, underscoring the uncertainty of how much time remains for any initiative.

Here is the fact that many fail to note: in every one of those reelections to a second term, there was substantial turnover and change in administration personnel, in every department and agency and at every level.

If the incumbent wins reelection, many of those who helped make that possible on the campaign trail are looking for a job in that second term. In addition, many political appointees are ready for a change after the first term. Numerous vacancies occur.

Importantly, even if there is a second term and an appointee stays in the same job in year five, it will be helpful and often necessary to have solidified and implemented the work begun in the first term and be ready for new initiatives in the second term.

Conclusion

In sum, the keys to achievements in the fourth year of a fouryear term are: (1) focus; (2) plan; (3) track; (4) build support; and (5) start now.

We know that federal services contractors are as committed to the missions and functions of their supported programs and agencies as are government personnel themselves, and that commitment can contribute significantly to success in Year Four.

Contractors who are alert to the opportunities to support such actions can bring to bear a knowledge of the necessary steps and a track record of success in undertaking those steps. Everyone can benefit from taking advantage of those opportunities, no matter what happens in the election. 3

by Stefan Becker Senior Vice-President, Regulatory Agencies Programs Business Unit Lead, CGI Federal

Imagine entering a virtual replica of your favorite local coffee shop. However, instead of ordering an Americano, you can access real-time information about a pending farm loan, apply for a federal grant or access critical social services. This is no longer science fiction; it is the emerging reality of a constituentcentric, hyper-personalized interaction model between the federal government and its constituents.

This new approach will present exciting opportunities and critical challenges for government executives. In this future, customer engagement will reach a new level, empowered by a carefully orchestrated symphony of artificial intelligence, connected devices and data exchange at a massive scale.

Setting the stage for transformation

In this 2030 vision, gone are the days of static websites and impersonal forms. individuals and businesses will expect a government experience tailored to their unique needs and preferences rather than navigating interfaces that are driven by regulations and policy compliance. Technology will be the key driving force, enabling:

• Ease of engagement: AI-powered interconnected systems anticipate needs and proactively assist individuals as they transact with the government. Imagine an AI-powered assistant helping complete and submit your application for veterans’ benefits, reminding you of expiring passports or providing personalized guidance on Social Security options.

• Omnichannel and omni-language accessibility: Seamless interactions in multiple languages across any device become the norm. Apply for a grant through a virtual town hall or request student loan updates via your smart speaker.

• Hyper-localized services: Federal services adapt to the specific needs of diverse communities and even individual neighborhoods. The government could target disaster relief based on real-time damage assessments or enact localized environmental regulations informed by micro-climate data specific to your block.

Orchestrating the human-AI duet

In 2030, will technology replace humans? Will government interactions be replaced with data-powered virtual assistants? Absolutely not. Despite the rise of AI—or, perhaps because of it—people will demand human engagement at key points in government processes. Meeting this demand will necessitate a carefully orchestrated collaboration between humans and machines that could include:

• Empathy conductors: AI will handle routine tasks and transactions, generating personalized insights, but the emotional intelligence and judgment will still come from human leadership. Whether navigating legal complexities or seeking post-disaster support, people will expect both technological efficiency and authentic human interaction.

• Hybrid interactions: Secure video calls within AI-powered portals will enable instant connection with human representatives whenever clarification or support is needed. Virtual webinars will transition seamlessly to facilitated small group or one-on-one discussions, providing tailored information for all participants.

• Building trust: Understandable AI algorithms and clear communications bridge the gap between machine logic and human warmth, ensuring that carefully orchestrated symphony doesn’t turn into disharmony.

Tuning the orchestra for the future

Making this human-machine collaboration model a reality will necessitate working across today’s government agency boundaries and training the existing workforce on emerging technologies within the context of their integrated roles. Public servants will need to become adept at collaborating with AI, interpreting data insights, and providing empathetic support alongside technological solutions. Grants managers will need to be trained to leverage AI tools for advising grantees based on data-driven insights tailored to their unique communities.

In 2030, robots will support and augment government employees but not replace them. AI will handle repeatable tasks and actions, freeing humans to focus on the mission and build trust and meaningful connections with the people and organizations they serve. Manifesting this human-machine collaboration is the key to unlocking a future where the business of government can reach new norms in efficacy.

Data will drive and underpin hyper-personalized arrangements

How do we achieve this hyper-personalized utopia? The answer lies in data. By leveraging vast amounts of data (with robust privacy and ethical safeguards, of course), federal agencies will be able to:

• Predict and prevent issues: AI analyzes data to predict everything from infrastructure failures to public health outbreaks, enabling proactive interventions and resource allocation in advance.

• Personalize communications: Chatbots and virtual assistants tailor responses to individual needs and preferences, providing a more human-like experience.

• Optimize resource allocation: Data-driven insights guide efficient resource allocation, ensuring government uses taxpayer dollars effectively.

Harmony and trust in the age of hyper-personalization

This 2030 world of government service will depend on harmony and trust. Building and maintaining trust in government is paramount. Transparency is key: people need to understand how their data is used and why they receive specific recommendations and decisions. Robust data security measures and clear privacy policies will be needed to prevent misuse and erosion of trust. Human oversight and accountability must ensure that AI doesn’t replace human judgment in critical decision-making.

The transition to this hyper-personalized model will not be smooth. It demands a paradigm shift, significant investments in technology and infrastructure, a commitment to ethical data use, change management to prepare the workforce, and true publicprivate partnerships. Government can begin learning from the experiences of sectors like finance and retail at the forefront of evolving customer experience. But the benefits of realizing this model can be profound: a more engaged citizenry, improved services based on a strong mission focus, and a stronger, more resilient society. 3

Bill Tracker: 118th Congress-Second Session (2024)

Information of 4/8/24

H.R. 170 Domestic Security Using Production Partnerships and Lessons from Yesterday Act of 2023 / Domestic SUPPLY Act of 2023, Griffith (R-VA)

SUMMARY Would establish a program to promote domestic manufacturing of personal protective equipment (PPE) for infectious diseases and other public health emergencies and would require PPE purchased by the Federal Government to be manufactured in the U.S.

STATUS Referred to the House Committee on Energy and Commerce, Subcommittee on Health on 1/20/23.

H.R. 399 Small Business Advocacy Improvements Act of 2023, Luetkemeyer (R-MO)

SUMMARY Would expand the functions and duties of the Office of Advocacy of the Small Business

Administration

to include additional international work.

STATUS Passed the House on 1/25/23; Received in the Senate and referred to the Senate Committee on Small Business and Entrepreneurship on 1/26/23.

H.R. 675 Secure Space Act of 2023, Pallone (D-NJ)

SUMMARY Would prohibit the Federal Communications Commission from granting licenses or access to American markets for satellite systems from certain communications equipment or services providers.

STATUS Reported by the House Committee on Energy and Commerce on 4/25/23.

H.R. 825 Banning Operations and Leases with the Illegitimate Venezuelan Authoritarian Regime Act / BOLIVAR Act, Waltz (R-FL)

SUMMARY Would prohibit contracting with persons that have business operations with the Maduro Regime.

STATUS Referred to the House Committee on Oversight and Accountability on 2/2/23. Related bill: S.257.

H.R. 826 Supply Chain Security and Resilience Act, Wild (D-PA)

SUMMARY Would establish a Supply Chain Resiliency and Crisis Response Office within the Department of Commerce that would monitor the supply chains for critical goods or services and collaborate with various stakeholders to respond to disruptions in those supply chains.

STATUS Referred to the House Committee on Energy and Commerce, Subcommittee on Innovation, Data, and Commerce on 2/10/23.

H.R. 832 Giving Disadvantaged Businesses Opportunities for Success Act, Garcia (D-IL)

SUMMARY Would make a number of changes to policies impacting disadvantaged businesses at the Department of Transportation.

STATUS Referred to the House Committee on Transportation and Infrastructure, Subcommittee on Railroads, Pipelines, and Hazardous Materials on 2/7/23.

Bill Tracker: 118th Congress-Second Session (2024)

H.R. 1149 Countering Untrusted Telecommunications Abroad Act, Wild (D-PA)

SUMMARY Would require the Department of State to report on the prevalence of certain Chinese telecommunications equipment in American embassies and in the networks of U.S. allies.

STATUS Received in the Senate and referred to the Senate Committee on Foreign Relations on 4/20/23.

H.R. 1538 Emerging Business Encouragement Act of 2023, Carson (D-IN)

SUMMARY Would require the head of each Federal agency to establish goals for contracting with a certain percentage of “emerging business enterprises” for each fiscal year.

STATUS Referred to the House Committee on Small Business on 3/10/23.

H.R. 1659 Department of Veterans Affairs IT Modernization Improvement Act of 2023, Takano (D-CA)

SUMMARY Would require the Department of Veterans Affairs to enter into a contract for the independent verification and validation of certain modernization efforts of the Department, including the Electronic Health Record Modernization Program, the Financial Management and Business Transformation Program, and supply chain modernization programs, among others.

STATUS Forwarded by the House Committee on Veterans’ Affairs, Subcommittee on Oversight and Investigations to Full Committee by voice vote on 7/19/23. Language is included in H.R. 2809 and S. 1125 EHR Program RESET Act of 2023.

H.R. 1695 Strengthening Agency Management and Oversight of Software Assets Act, Cartwright (D-PA)

SUMMARY Would address software asset management practices by Federal agencies and would require each agency to complete a comprehensive assessment of the software entitlements and software inventories of the agency and submit the assessment to the head of the agency, the Office of Management and Budget, the General Services Administration, the Government Accountability Office, and Congress.

STATUS Committee consideration and mark-up session held by the House Committee on Oversight and Accountability on 7/12/23. Related bill: S. 931.

H.R. 1744 Transparency in Government Contracts Act, Castro (D-TX)

SUMMARY Would require the Small Business Administration to disaggregate data on Federal contracts awarded to small business concerns in certain reports.

STATUS Referred to the House Committee on Small Business on 3/23/23.

H.R. 2670 National Defense Authorization Act for Fiscal Year 2024, Rogers (R-AL)

SUMMARY Would authorize appropriations for fiscal year 2024 and set forth policies for Department of Defense programs and activities, military construction, the national security programs of the Department of Energy, and the Maritime Administration.

STATUS Became Public Law No: 118-31 on 12/22/23. Related bill: S. 2226.

Bill Tracker: 118th Congress-Second Session (2024)

Information of 4/8/24

H.R. 2726 Small Business Payment for Performance Act of 2023, Stauber (R-MN)

SUMMARY Would allow small businesses to request an equitable adjustment for certain change orders on military construction contracts and would require the Federal Government to pay at least 50% of cost occurred from the change order upon receipt of the equitable adjustment.

STATUS Referred to the House Committee on Small Business on 4/19/23.

H.R. 2809 EHR Program RESET Act of 2023, Takano (D-CA)

SUMMARY Would authorize the Electronic Health Record Modernization Program and require IVV for major IT programs at the Department of Veterans Affairs.

STATUS Referred to the Committee on Veterans’ Affairs, Subcommittee on Oversight and Investigations on 6/29/23. Related bill: S. 1125.

H.R. 2811 Limit, Save, Grow Act of 2023, Arrington (R-TX)

SUMMARY Would increase the Federal debt limit and provide for changes to and decreases in discretionary spending.

STATUS Passed the House on 4/26/23; Hearings held by the Senate Committee on the Budget on 5/4/23.

H.R. 3935 Securing Growth and Robust Leadership in American Aviation Act, Graves (R-MO)

SUMMARY Would reauthorize the Federal Aviation Administration through fiscal year 2028, including activities and programs related to airport planning and development, facilities and equipment, and operations.

STATUS Passed the House on 7/20/23; Considered by the Senate on 9/30/23. Related bill: S. 1939.

H.R. 4223 National AI Commission Act, Lieu (D-CA)

SUMMARY Would establish an artificial intelligence commission, and be utilized for other purposes.

STATUS Referred to the House Committee on Science, Space, and Technology on 6/20/23.

H.R. 4225 VA Acquisition Review Board Act of 2023, Mrvan (D-IN)

SUMMARY Would establish an acquisition review board at the Department of Veterans Affairs.

STATUS Forwarded to the Full Committee by Voice Vote on 7/19/23.

H.R. 4467 DHS Border Services Contracts Review Act, Brecheen (R-OK)

SUMMARY Would direct the Under Secretary for Management of the Department of Homeland Security to assess contracts for covered services performed by contractor personnel along the United States land border with Mexico, and for other purposes.

STATUS Passed the House on 3/5/24; Received in the Senate and referred to the Senate Committee on Homeland Security and Governmental Affairs on 3/6/24.

Bill Tracker: 118th Congress-Second Session (2024)

Information of 4/8/24

H.R. 4552 Federal Information Security Modernization Act of 2023, Mace (R-SC)

SUMMARY Would improve the cybersecurity of the Federal Government, and for other purposes.

STATUS Referred to the House Committee on Homeland Security, Subcommittee on Cybersecurity and Infrastructure Protection on 7/11/23; Committee Consideration and mark-up session held on 3/7/24.

Related bill: S. 2251.

H.R. 5310 Improving Contractor Cybersecurity Act, Lieu (D-CA)

SUMMARY Would amend Title 41, United States Code, to require information technology contractors to maintain a vulnerability disclosure policy and program, and for other purposes.

STATUS Referred to the House Committee on Oversight and Accountability on 8/29/23.

H.R. 5810 Fair Pay for Federal Contractors Act of 2023, Pressley (D-MA)

SUMMARY Would provide back pay to federal contractors, and be utilized for other purposes.

STATUS Referred to the Committee on Appropriations and the Committee on Oversight and Accountability on 9/28/23.

H.R. 7532 Federal AI Governance and Transparency Act, Comer (R-KY)

SUMMARY Would provide guidance and guardrails over the use of Artificial Intelligence by the Federal Government.

STATUS Passed out of committee on 3/7/2024.

S. 135 Prevent Government Shutdowns Act of 2023, Lankford (R-OK)

SUMMARY Would automatically approve a continuing resolution upon a lapse in appropriations and withhold funding for certain activities until appropriations are enacted.

STATUS Referred to the Senate Committee on Homeland Security and Governmental Affairs on 1/30/23.

S. 257 Banning Operations and Leases with the Illegitimate Venezuelan Authoritarian Regime Act / BOLIVAR Act, Scott (R-FL)

SUMMARY Would prohibit contracting with persons that have business operations with the Maduro Regime.

STATUS Placed on Senate legislative calendar under general orders on 5/16/23. Related bill: H.R. 825.

S. 917 Securing Open Source Software Act of 2023, Peters (D-MI)

SUMMARY Would require the Cybersecurity and Infrastructure Security Agency to take several steps to address the use of open source software by the Federal Government, critical infrastructure entities, and others.

STATUS Placed on Senate legislative calendar under general orders on 5/16/23.

Bill Tracker: 118th Congress-Second Session (2024)

S. 931 Strengthening Agency Management and Oversight of Software Assets Act, Peters (D-MI)

SUMMARY Would direct federal agencies to generate software inventories, assess the software they use, and report that information to the Government Accountability Office and the Congress.

STATUS Placed on Senate legislative calendar under general orders on 7/25/23. Related bill: H.R. 1695.

S. 933 Federal Data Center Enhancement Act of 2023, Rosen (D-NV)

SUMMARY Would require the Office of Management and Budget to work with federal agencies to develop minimum requirements for new federal data centers regarding cybersecurity and resiliency.

STATUS Placed on Senate legislative calendar under general orders on 4/27/23.

S. 1125 EHR Program RESET Act of 2023, Tester (D-MT)

SUMMARY Would authorize the Electronic Health Record Modernization Program and require IVV for major IT programs at the Department of Veterans Affairs.

STATUS Committee on Veterans’ Affairs hearings held on 7/12/23. Related bill: H.R. 2809.

S. 1939 FAA Reauthorization Act of 2024, Cantwell (D-WA)

SUMMARY Would reauthorize the Federal Aviation Administration through fiscal year 2028, including activities and programs related to airport planning and development, facilities and equipment, and operations.

STATUS Referred to the Senate Committee on Commerce, Science, and Transportation on 6/13/23; Placed on Senate legislative calendar under general orders on 2/29/24. Related bill: H.R. 3935.

S. 2032 Legacy IT Reduction Act of 2023, Hassan (D-NH)

SUMMARY Would require the reduction of the reliance and expenditures of the Federal Government on legacy information technology systems, and for other purposes.

STATUS Referred to the Senate Committee on Homeland Security and Governmental Affairs on 6/15/23 and ordered to be reported on 7/26/23.

S. 2226 National Defense Authorization Act for Fiscal Year 2024, Reed (D-RI)

SUMMARY Would authorize fiscal year 2024 appropriations and would set forth policies for Department of Defense programs and activities, military construction, and the national security programs of the

Department of Energy.

STATUS Passed the Senate by a vote of 86-11 on 7/27/23; Measure incorporated by Senate in H.R. 2670 as an amendment on 7/27/23; Indefinitely postponed by Senate by unanimous consent on 7/27/23. Related bill: H.R. 2670.

Bill Tracker: 118th Congress-Second Session (2024)

Information of 4/8/24

S. 2251 Federal Information Security Modernization Act of 2023, Peters (D-MI)

SUMMARY Would improve the cybersecurity of the Federal Government, and be utilized for other purposes.

STATUS Referred to the Senate Committee on Homeland Security and Governmental Affairs on 7/11/23 and ordered to be reported on 7/26/23. Related bill: H.R. 4552.

S. 2422 ARCA Act of 2023, Tester (D-MT)

SUMMARY Would create an Acquisition Review Board at the Department of Veterans Affairs as well as an office for Cost Accountability and Program Evaluation.

STATUS Referred to the Senate Committee on Veterans’ Affairs on 7/20/23.

S. 3594 SHARE IT Act, Cruz (R-TX)

SUMMARY Would reduce duplication by encouraging the sharing of federally funded code across the Federal Government.

STATUS Passed committee markup on 1/31/24.

S. 3626 Conforming Procedures for Federal Task and Delivery Order Contracts of 2024, Peters (D-MI)

SUMMARY Would provide acquisition authority granted to the Department of Defense in previous NDAAs to the rest of the Federal Government.

STATUS Passed committee markup on 1/31/24.

Incentivizing Competition: Focus More on Results and Less on Regulations

By Mikhail Grinberg, Partner at Renaissance Strategic Advisors

The United States spent $511 billion on government services in 2023 across the Department of Defense (DoD) and Federal Civil agencies. The top 10 largest services contractors captured 10% of those obligated dollars. The rest was received by over 70,000 companies, 313 of which received more than $100 million in annual contract obligations. The professional services industry is now at a stable operating structure, after a decade of sequestration impacts and market consolidation.

It is also a structure that continues to be highly competitive. One problem, however, is that policymakers seem not to think so. Instead, they see scale and deal-flow as signs of excessive market concentration with possible anti-trust concerns.

Here are the signs of a vibrant market that indicate those anti-trust concerns are misplaced:

• Hundreds of new businesses are formed each year to compete for US government contracts.

• Commercial technology and services firms are entering the market.

• Private equity is actively investing in new companies.

• The volume of mergers and acquisitions is relatively high. The services market is full of competition and innovation.

Let’s look at the Department of Justice’s own index for evaluating market concentration, which re-enforces the vibrancy of the services sector.

The Herfindahl-Hirschman Index1 suggests that even if the top 5 largest managed services or IT modernization contractors merged, the consolidated result would still fall below “moderately concentrated thresholds,” and if the top 3 firms combined, the resut would barely signal a need to review the transaction for “enhanced market power.”

Of course, anti-trust reviews would go beyond the index, would be more precise and would focus on niche segments and customers. Still, these results indicate that government should focus less on anti-trust and more on creating the right incentives for the services industry to be even more competitive.

Here are three ways to do that. First, the government should reward companies that create solutions that solve a need but with less labor. Such firms should be able to retain their earnings while reducing headcount. This would incentivize contractors

to solve problems and would increase talent availability in a tight labor market.

Second, the government can adjust its policies for organizational conflicts of interest (OCI). Agency-wide OCI restrictions prevent entire divisions of companies from competing. OCI restrictions should be stringent. However, contractors trusted with the nation’s secrets should also be able to adhere to basic corporate firewalls, backed by severe penalties as a check.

Third, the government should clarify that profitability is desirable. Negative effects remain from excessive use of lowest price technically acceptable (LPTA) contracts, with too many services contract proposals awarded based on price alone, not results. Worse, many program offices judge contractors based on margin and profit rather than total cost. If contractor A can deliver a desired result for 10% less than contractor B but make 20% more on margin, this is a win for customers and taxpayers. These approaches, focused more on outcomes and less on resumes, archaic rules, or margins, would incentivize competition and innovation and lead to better results. 3

1 The Herfindahl–Hirschman Index is a commonly accepted measure of market concentration. The HHI is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. See: https://www.justice.gov/atr/herfindahl-hirschman-index.

Mikhail Grinberg is a Partner at Renaissance Strategic Advisors, a leading aerospace, defense, and government services strategy and mergers and acquisitions firm.

OHighlights from the Eighth Annual PSC Law Enforcement Conference

by Krista Sweet, Vice President, Civilian Agencies, PSC

n February 22, 2024, PSC hosted its eighth annual Law Enforcement Conference at the Westin Hotel in Ballston with more than 250+ people in attendance. PSC’s President & CEO David J. Berteau kicked off the event, thanked PSC’s sponsors and introduced Tom Krall of CGI Federal and Kim Giffin of GDIT as the Chair and Co-Chair of the Law Enforcement Planning Committee. Mr. Krall reviewed the conference agenda and welcomed fellow committee member Andrea McCarthy who explained the 2023 PSC Vision Federal Market Forecast process, encouraging industry to participate on a federal law enforcement team in 2024.

Johnnie Sharp, Assistant Director of the IT Infrastructure Division of the FBI’s campus in Huntsville, Alabama provided the opening keynote. He detailed the FBI’s strategic growth at Redstone Arsenal and their plans to attract, retain, and grow the cyber workforce. He also highlighted the capabilities and collaboration tools of the new state of the art Innovation Center which will serve as the FBI’s technical hub and bring multiple technology-focused divisions together to train, conduct cyber threat intelligence analysis and data analytics, and target rapidly changing technological threats.

Following Mr. Sharp’s remark, our first panel of experts from DEA, HSI, and FBI spoke on the challenges of the expanding law enforcement mission beyond US borders. They explained the threats presented from transnational organized crime and illicit fentanyl trafficking and the coordination between federal law enforcement agencies to combat these growing threats.

Our next session dove into AI and Law Enforcement: The State of Play and Roadmap for Future Use. Kim DelGreco of the FBI and Ray Shuler of DHS’s Homeland Security Investigations explained their agency operating principles that guide the use of these technologies and the processes used for security and due diligence before deployment.

The final panel included procurement executives from the FBI, CBP, US Marshals Service, and TSA discussing how they navigate law enforcement procurement in uncertain budget times. They shared the difficulties of addressing technical debt and the strategies and tools used to procure mission critical requirements within current constraints.

The most moving discussion of the day was a fireside chat led by Conrad Agagan from Capgemini with his friend and former Border Patrol Academy classmate Jason Owens, who is now Chief of the US Border Patrol. Mr. Owens spoke passionately about the changing nature of the Border Patrol mission over the past 30 years and the dedication and commitment that officers

demonstrate every day despite enormous pressures and resource shortages.

The closing keynote was provided by Carry Huffman, who recently took over as the new Director of the Federal Law Enforcement Training Center (FLETC). He explained his vision for the agency and the need to work with his customers and industry to ensure FLETC is at the forefront of cuttingedge training. The conference concluded with remarks from the Planning Committee Co-Chair Kim Giffin who summarized the themes of the day and welcomed the audience to continue networking at the post event reception.

Thank you to all of our sponsors who helped make this year’s conference so successful. Please reach out to me at ksweet@ pscouncil.org if you want to be part of our 2025 Law Enforcement Conference Planning Committee. Mark your calendars for our next conference – Thursday, February 20, 2025 – see you there!! 3

2024Navigating the Federal Cyber Rulemaking Landscape: Insights from PSC’s CMMC Comments

by Christian Larsen, Senior Associate for Public Policy, PSC

is shaping up to be a busy and consequential year for the implementation of several key cybersecurity regulations that will impact the federal contracting community. These rules address, inter alia, federal requirements for contractors to protect sensitive federal information on contractor systems and to disclose cyber incidents. Moreover, while some rules are specific to defense contractors, many will impact contractors governmentwide.

As a result, contractors will likely face challenges with reconciling, implementing, and ensuring compliance with numerous requirements across both defense and civilian contracts—requirements which may be contradictory and / or redundant.

In the last 18 months, PSC provided comments and recommendations on a slew of proposed and interim rules, including but not limited to:

• Securities and Exchange Commission’s (SEC) financial disclosure and incident reporting proposed rule;

• Office of the National Cyber Director’s (ONCD) cyber regulatory harmonization information request; and

• Department of Defense’s (DoD) Cybersecurity Maturity Model Certification (CMMC) Program proposed rule (hereafter “CMMC Program”).

For PSC, getting the CMMC Program right is critical, as DoD cybersecurity guidance tends to serve as a template for governmentwide cybersecurity approaches. Industry feedback, as always, will play a crucial role in refining regulations prior to finalization and implementation.

PSC Comments on CMMC

Published on December 26, 2023, the proposed rule for the CMMC Program would introduce changes to Title 32 of the U.S. Code of Federal Regulations. PSC provided DoD with several overarching comments and recommendations for consideration, including:

Estimated Implementation Timeline and Associated Costs: PSC highlighted that the underlying National Institute of Standards and Technology (NIST) requirements—against which contractors would need to assess their cybersecurity— may change during the CMMC rulemaking period. Such revisions could force changes to Plan of Action and Milestones (POA&Ms) and cause firms to incur additional costs beyond the range estimated under the proposed rule. PSC recommended that DoD recognize that projected POA&M costs are not the same as costs already incurred and that

such projected costs extend beyond the proposed 180-day adjudication period and would likely increase as underlying NIST requirements change.

Contract Incorporation and Implementation: PSC also noted that there could be misalignment or contradictions within ongoing parallel rulemaking efforts. Contractors could face compliance challenges due to unmatched or unexecutable requirements based on the stages of rulemaking for each effort (e.g., NIST 800-171 Rev. 3). PSC recommended that DoD consider issuing a class deviation to allow an additional 9-12 months for alignment of recent National Defense Authorization Act provisions, as well as changing policies, regulations (including NIST standards), assessment methodologies, certification of assessors, and industry adoption of the interrelated efforts.

Data Security

for

Operational, Logistics,

and Sustainment

Efforts: PSC believes that DoD’s consistent, narrow focus on protecting technical data packages for major U.S. systems largely fails to address protection of data generated by operational and/or maintenance operations. For example, data from documents such as invoices and bills of lading from

DoD operational support purchases on the global commercial market could be consolidated in such a way as to present a security concern. PSC recommended that the rule provide accommodations for such circumstances.

Standardized Compliance Framework with Reciprocity:

Beyond the CMMC Program, PSC has addressed the lack of a governmentwide standardized compliance framework in a variety of cyber rulemaking activities (e.g., ONCD’s cyber regulatory harmonization information request). Companies who support both defense and civilian missions will incur increased compliance costs over their competitors, especially in the non-defense space. PSC recommended that DoD should address the impact of standards and compliance requirements on companies who support both DoD and non-DoD customers.

Clarity on CUI Standards and Markings: PSC views

the increased use of automatic Controlled Unclassified

Information (CUI) markings on DoD communications, including emails, calendar entries, and administrative documents, as problematic. A failure by DoD to accurately, consistently apply CUI designations could result in treating every communication as CUI—even when it is not. PSC recommended that DoD establish primary controls over CUI marking standards by developing and issuing a CUI “Class Guide” in a manner similar to Security Class Guides (SCGs) developed for classified programs.

The above examples represent a cross-section of PSC’s recent comments and recommendations in this dynamic space. To access PSC’s full comments on DoD’s CMMC Program Proposed Rule, including CMMC resources and an addendum with more specific industry comments, please click here. If you have any questions regarding CMMC specifically, or PSC’s cybersecurity comments generally, please reach out to Christian Larsen, Senior Associate for Public Policy, at Larsen@pscouncil.org. 3

FROM THE FIELD: Making Blended Finance Work for Climate

by Sharon D‘Onofrio, Director of Learning for the USAID INVEST project, implemented by DAI

Blended finance represents more than just a financial strategy; it’s a key opportunity to influence the direction of capital flow in response to a shared global challenge—the climate crisis.

DAI has been managing the U.S. Agency for International Development (USAID) INVEST program since 2017, during which time it has become one of the Agency’s largest blended finance initiatives, mobilizing more than $1.4 billion in public and private investment for global development.

USAID INVEST program…has become one of the Agency’s largest blended finance initiatives, mobilizing more than $1.4 billion in public and private investment for global development.

Notably, 21 percent of these funds to date have been channeled into climate-related initiatives, amounting to $301.6 million. Climate investments have been gaining momentum as the project progresses, with more than 50 percent of the project’s climate capital raised just in the past year.

Take, for instance, a $2.7 million equity investment aimed at powering solutions for dairy farmers in Tunisia, made possible through INVEST-supported transaction advisory services. The initiative seeks to convert waste into a revenue-generating asset while simultaneously reducing environmentally harmful methane emissions. This investment is anticipated to reduce CO2 equivalent emissions by approximately 80,000 tons over four years while expanding access to affordable energy for Tunisians.

FROM THE FIELD: Working with USAID to Power Health with Clean Energy

The Challenge

Across sub-Saharan Africa, at least 100,000 health facilities lack access to reliable electricity and internet connections. This gap threatens health when clinics can’t keep the lights on for nighttime services or reliably provide patients with oxygen and other life-saving care. Without reliable power, they also can’t refrigerate vaccines and other temperature-sensitive medical commodities or use the digital tools that modern medicine relies on.

U.S. government funding from Power Africa and USAID funding (about $47 million over five years) helps launch implementation and catalyze strategic partnerships

Ensuring access to energy and digital connectivity for sub-Saharan Africa’s health sector is in part a challenge of funding. Renewable energy systems, such as solar panels with battery storage, typically require a higher up-front investment, but they beat out fossil fuel–powered solutions for reliability and ongoing costs within a relatively short time. And they support African health systems’ resilience and ability to adapt to climate change—from responding to new disease patterns to keeping the power on when extreme heat or storms interrupt grid-powered electricity.

Without sustainable funding and cross-sector coalitions to connect health facilities across the region, millions of people will continue to lack equitable access to life-saving health services. The Abt-led Health Electrification and Telecommunications Alliance (HETA) is Power Africa’s flagship initiative to meet these challenges.

The Approach

HETA is a USAID Global Development Alliance (GDA), a powerful mechanism for activating private sector expertise and resources toward sustainable development

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