The BDO GovCon Week Ahead - July 2021

July 2021

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July 26, 2021

Contractors May Avoid Liability for Reporting Cyber Incidents: Earlier this month, the Senate Intelligence Committee proposed a bill that would give entities a secure method to report cyber intrusions to the Cybersecurity and Infrastructure Security Agency (CISA) and would require them to do so within 24 hours of recognition of the incident. In exchange for the classified reports, they would not be used as evidence in any civil or criminal investigations brought by the victim of the incident, the information would be exempt from the Freedom of Information Act (FOIA), and only Congress would be able to subpoena the information and use it for oversight purposes.
 
The bill calls for an interim final rule that would take effect within 270 days, without prior public notice. It also details what information needs to be included in the notifications, including IP addresses, techniques used to execute the intrusion, and vulnerabilities exploited. The bill would also allow for CISA to assess a civil penalty of up to .5% of the entity’s gross revenue from the prior year for each day the violation continues, if they are found to be in violation of the reporting requirements. If the entity is a Federal contractor, violations would likely result in the loss of existing and potential future contracts.
 
The bill is yet another step that the Government is taking to mitigate the effects of cyber intrusion and the committee is hoping that if entities are voluntold to report information around breaches, that the Government will be better prepared to protect critical infrastructure.

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DoD Doubles Down on Climate-Change Strategic Efforts: Climate change is at the forefront of many discussions nowadays.  From the constant warnings that climate change will continue to foster a breeding ground for stronger and more destructive weather events, to the meteoric rise of electric vehicle (EV) company stocks. The Department of Defense (DoD), spurred by a January 27, 2021 executive order, is on track to present a plan on September 1, 2021 that will make climate change a paramount aspect in the strategy of the military’s risk assessments, operations, and programming.
 
According to the assistant secretary of defense for sustainment Paul Cramer, the DoD is “using the executive order to respond to climate change by enhancing military resiliency and reducing environmental harm.” The plan is expected to surround the following key efforts:
 
1)  Climate-Informed Decision Making: This directs the DoD to continue to make climate considerations an integral element of decision-making processes and enterprise resource allocations.
2)  Train, Test, and Equip a Climate-Ready Workforce: This will help mold the DoD’s current and future efforts across activities relating to the development, acquisition, fielding and sustaining of equipment and services.
3)  Building Climate-Change Resilient and Natural Infrastructure: This effort is meant to ensure that the DoD’s existing installations and infrastructure can withstand future climate-related challenges, contingency options are in place, and new infrastructure projects meet various efficiency and climate resilience metrics.
4)  Supply Chain Resilience and Innovation: This effort will help the DoD ensure that key suppliers and industries can continue to operate as needed, if, and while they are impacted by climate change. Special focus will be placed on the uninterrupted access to key supplies, materials, chemicals, and services.
5)  Enhanced Adaptation and Resilience through Collaboration: This initiative will expand the collaboration and unity of efforts in missions across the multitude of DoD components, to adapt based on lessons learned and gain efficiencies through economies of scale. These efficiencies can then be integrated into existing DoD missions.
 
To ensure progress continues to be made on these initiatives, the DoD must provide an annual update starting January 2022 to the National Security Council, explaining the progress made to date in incorporating security implications of climate change into existing and new documents and processes.
 
As the DoD begins to roll out additional guidance on its climate related goals, contractors should be aware of potential upcoming regulations as well as opportunities. Specifically, the focus on supply chain resilience could present a plethora of contracting opportunities soon.

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Honesty Is the Best Policy: The Air Force recently issued a memorandum of understanding (MOU), detailing some of the efforts that will be taken in fraud prevention and detection work. The MOU, issued on July 8, 2021, supersedes the 2011 MOU and highlights some joint and individual goals for the deputy assistant secretary for contracting, the deputy general counsel (GC) for Contractor Responsibility and Conflict Resolution, and the Air Force Office of Special Investigations (OSI) in making the fight against acquisition fraud and corruption a top priority.
 
While not surprising, it is reassuring to see the Air Force, who spends in excess of $70 Billion annually, committing efforts to prevent and deter fraud. Some focus areas that were specifically mentioned are counterfeit parts and cybersecurity priorities, and the Air Force will be pursuing remedies by facilitating investigations and coordinating litigation efforts. Derek Santos, Contractor Responsibility and Conflict Resolution deputy GC stated, “the General Counsel’s Office will coordinate legal remedies for corruption, fraud, and other misconduct affecting the department’s transactions [such as grants, cooperative agreements and contracts. Our focus is to protect military systems from those who are dishonest, through coordinated responses to any attempts to introduce counterfeit parts into our supply chain or any other attempts to compromise the business integrity of Air Force or Space Force missions.”
 
Stay tuned to the BDO GovCon Week Ahead for updates on how the Air Force builds upon the MOU and steps taken to maintain the integrity of its acquisitions and protect the warfighter and their mission.

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July 20, 2021

President Biden Takes Aim at Big Tech: On Friday, July 9, 2021 the White House issued an executive order (EO) with several initiatives designed to increase American small business completeness and crack down on large corporations’ anti-competitive practices. With “Big Tech” under the congressional microscope, Biden’s executive order notes that large corporations dominate in roughly 75% of all U.S. industries. “That lack of competition drives up prices for consumers,” the administration wrote in a fact sheet distributed ahead of the signing. “As fewer large players have controlled more of the market, mark-ups—charges over cost—have tripled.  Families are paying higher prices for necessities—things like prescription drugs, hearing aids and internet service.”
 
The EO promotes competition in multiple industries of the U.S. Economy, and organizations in the technology space could see significant changes. The order focuses on four areas of competition among technology companies, particularly those that manage large online platforms: big corporations buying up smaller competition, unfair practices that lock out small businesses, platforms gathering too much personal information on users, and manufacturers limiting third-party access to tools and materials needed to repair devices. It also calls for the Federal Trade Commission (FTC) to establish new antitrust regulations to combat large technology firms’ extensive advantages and potentially unethical business conduct, which includes restrictions to big technology company mergers and acquisitions, potential limits on accumulations of data, and changes to large online retail marketplaces.

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Men at Work? Manpower/Staffing Reporting Transitioning to SAM: In early July 2021, the Department of Defense (DoD) published a final rule that implements a replacement to the Enterprise-wide Contractor Manpower Reporting Application (ECMRA), as recommended in the FY2016 National Defense Authorization Act (NDAA). Despite the outdated term for staffing, service contractors have not been required to enter hours worked in ECMRA since before Government fiscal year (GFY) 2020. Going forward, the System for Award Management (SAM) has been designated as the official repository for that data.
 
The final rule, published on July 9, 2021, requires contractors with DoD contracts or task orders, in excess of $3 million, for logistics management services, equipment-related services, knowledge-based services, and electronics and communication services to annually report theirs and their first-tier subcontractors’ hours in SAM. Each annual report will contain the amount invoiced and the amount of direct labor hours incurred in performance of the contract/task order in the previous fiscal year.
 
Transitioning this requirement is yet another step that the Government is taking to make SAM.gov a one-stop shop for all its acquisition needs. Stay tuned to the BDO GovCon Week Ahead for insight and do not hesitate to reach out to a BDO Government Contracting professional for questions on reporting hours worked and other reporting requirements that are transitioning to SAM.gov.

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Cross-Agency Tech Transfers – DHS’ Hope for More Efficient Contracting: Are you a small business contractor that has received a Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) award and want to increase your work with the Federal government? The Department of Homeland Security (DHS) may have an exciting new opportunity for you…
 
To streamline acquisitions, reduce duplicative efforts, and gain efficiencies, DHS has expressed interest in applying various emerging technologies small businesses contractors are already developing for other Government agencies to their own operational needs. To kickstart this initiative, DHS plans to host a webinar on July 20, 2021 for small businesses that are interested in learning more about upcoming opportunities. The opportunities include:
 
1)  Studying the feasibility and utilizing autonomous vessel tracking in ports and waterways. The Coast Guard hopes to explore how various systems and sensors could be used to autonomously track and record vessel transits within those waterways
2)  Details surrounding SBIR and STTR technologies that could be used to support a vigorous and universal 5G and internet of things situational awareness system
3)  Details on technologies and systems that could be used to identify chemical, biological, radiological and/or nuclear threat detection across extensive geographic locations. These efforts would be performed in tandem with DHS’ Countering Weapons of Mass Destruction Office
 
Standing by this new initiative, DHS’ SBIR Program Director noted that he is “excited to see how small businesses can help DHS meet its mission, while saving time and money, by understanding how SBIR technologies could be used in new ways”.  Although DHS is only kicking off this initiative with the above-mentioned tree (3) RFI’s, it shows an exciting new trajectory for current and upcoming small business contractors.

For more information, please click this link.



July 12, 2021

GSA FAS Commissioner Disagrees that TDR Program Is Ineffective: In late June 2021, the General Services Administration (GSA) Office of Inspector General (OIG) issued a report stating that the Transactional Data Reporting (TDR) pilot program was not meeting its stated objectives and recommended that GSA terminate the program. The GSA Federal Acquisition Service (FAS) Commissioner respectfully disagrees.

The OIG report recommends that the FAS Commissioner do the following:
  1. Take immediate action to mitigate the risks associated with the TDR pilot by:
    1. Restricting additional contractors from opting into the TDR pilot; and
    2. Restricting access to, and use of, the TDR pilot data
  2. Develop and implement an exit strategy for the TDR pilot and transition participating contractors out of the TDR pilot.
After reviewing the report and the OIG findings, the FAS Commissioner effectively said not so fast, as he believes that TDR data is “accurate and reliable” and that with a few tweaks, GSA can further demonstrate the value of the TDR pilot program and provide even more value to taxpayers. The response details the following corrective actions that have been or will be taken to support the rationale behind the program and to enhance its results:
  • Additional training and policy guidance on how to properly use the transactional data that is collected
  • Assembling a tiger team to update the data management plan related to TDR
The FAS Commissioner explained why TDR data and the proper interpretation / application of the data is so important to GSA and its understanding of pricing. While the OIG and FAS Commissioner work through how to proceed, the TDR pilot program will continue with backing from some of the highest-ranking officials in GSA. Stay tuned to the BDO GovCon Week Ahead for insight and do not hesitate to reach out to a BDO professional for questions on TDR or other GSA compliance matters, like the Price Reductions Clause (PRC).

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Supply Chain Woes – How to Secure U.S. Interests: Have you tried to buy a car over the last few months?  If so, it’s likely that you noticed higher prices and longer wait times, the hangover of the ongoing world-wide semiconductor shortage. Now, having to pay a little more or wait a few months may be an inconvenience for those in the market for a new car, but these supply chain lags could pose a far more detrimental issue for the Department of Defense (DoD).
 
To combat growing supply chain issues, the House Armed Services Committee’s supply chain task force has been analyzing the DoD’s supply chain problems from April to June 2021. House lawmakers are now gearing up to use the task force’s final report to prepare legislation necessary to address the issue. And while the report is not yet finalized, it is expected to be released in July 2021. Some areas the task force is urging Congress to pay special attention to are semiconductors, electronic components, rare earth materials, energetics, and active pharmaceutical ingredients.
 
The report is expected to feature legislative recommendations that would push the DoD to treat their supply chains as a top strategic priority, including ensuring that adequate processes are in place for the DoD to identify, assess, and mitigate risks associated with their supply chains so that the department can obtain visibility down multiple tiers in the supply chain. Another overarching message of the anticipated report is to reduce dependency on China in various U.S. supply chains, which has been deemed to be increasingly important, should a conventional conflict with China ever come to fruition.
 
The task force has debated on the extent to which prime contractors should be required to share supply chain specifics with the DoD. Members of the panel have argued that prime contractors should be required to track their suppliers more effectively and efficiently and share that information with the DoD. However, various parties at the Pentagon and in industry have scoffed at the idea and argued that it is essentially impossible.
 
Another possibility that has seen more bipartisan support would be to expand the “Made in America” requirements to a more Made by Allies framework, which would be done in an effort to ensure the U.S. defense supply chain is firmly entrenched in the U.S. and in the hands of U.S. allies. Once the official report is released, it will be interesting to see what legislation arises and to what level it will affect the contracting community.

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Nature Doesn’t Wait for Slow Acquisition Cycles: On June 23rd, the U.S. General Services Administration (GSA) announced the award of a Multiple Award Blanket Purchase Agreement (BPA) for use by the National Oceanic and Atmospheric Administration (NOAA). The NOAA Mission IT Services (NMITS) award, a $2.1 billion small business set-aside contract vehicle with a base period of five years and a five-year option period, will allow the scientific agency to procure a variety of IT tools, including enterprise and cloud computing, application administration, cybersecurity and information assurance and other IT services.
 
“NOAA’s missions are vitally dependent on IT services”, NOAA Chief Information Officer Zachary Goldstein said in a statement. “With the award of NMITS, NOAA can more rapidly access highly qualified private sector talent, a key to cost-effectively operating and modernizing our information management environment and advancing our service to the American people.” GSA’s Information Technology Category (ITC) Assistant Commissioner Laura Stanton said, “Our primary goal in ITC is to work with agencies to deliver solutions like this BPA. These types of solutions make it easier and allow our partners to focus on their mission instead of acquisition while helping speed up their procurements.” She continued, “We pride ourselves on close agency partnerships like this, and we are thrilled to support NOAA with its complex IT needs.”
 
The contract vehicle utilizes GSA’s MAS-IT Category contract designed to shorten procurement cycles, ensure compliance and obtain the best value for innovative technology solutions. The new BPA combined with MAS-IT should dramatically expedite NOAA’s IT acquisition cycle, and it will be interesting to see if other agencies follow suit. Interested contractors should continue to monitor SAM.gov as the NOAA begins rolling out solicitations.

For more information, please click this link.