The BDO GovCon Week Ahead - November 2019

November 2019

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November 25, 2019

 

Continuing Resolution Likely to Keep Government Open – For Now: At press time, Congress was poised to pass a Continuing Resolution (CR) to keep the government open until December 20th. That’s good news in that previously-started government projects can continue, but not as good as if Congress had passed any of the permanent FY’20 spending bills. The earliest that will happen now is in December, though contractors should expect that some of their government customers will likely not get appropriations until March or April. There is also the chance that some agencies may operate on a CR for the entire Fiscal Year.  Additionally, the time at which the CR runs out will likely coincide with a House vote on the impeachment of the President. That political angle adds considerable uncertainty to how, and if, any appropriations bill will be handled, including any new CR that would keep the government open until sometime in January. It is quite possible that there could be a temporary shutdown right before Christmas if political tensions are high enough. This uncertainty causes tension for contractors, as well as the government customers to whom they sell. The pace of business can slow considerably if your federal customer is distracted by having to participate in Continuity of Operations meetings, or the potential personal impact a shutdown could cause. The current level of uncertainty will continue at least until December 20th, and perhaps longer if there is no clear path forward for keeping the government open, or for providing appropriations money that will allow for new project starts. Happy Thanksgiving.     
 
Questions GSA Faces For 2020: The General Services Administration (GSA) has several key initiatives and contract changes underway. The success or failure of these variations may alter the way contractors do business with that agency and the rest of the federal government. Here are some key questions contractors should ask and agency leaders should be prepared to answer:

  1.  How Long Will Emily Murphy Remain as Administrator? Murphy is doing a great job leading the agency, especially regarding acquisition changes such as the Schedules Consolidation Project, the expansion of Alliant and OASIS, and the initiation of the agency’s e-marketplace pilot. She is the catalyst for moving the agency forward.  As we near the 2020 election, the number one question for GSA is: how long will Murphy remain, and what will happen to its positive momentum when she inevitably departs?

  2. Is the Agency Prepared to Launch E-commerce and E-procurement pilots? Language in the FY’20 DOD Authorization bill directs GSA to increase its number of e-commerce pilots by two. The agency is currently only proceeding with testing an e-marketplace model.  How will the agency respond once the Authorization bill is passed and find the resources to test two other models, even as the e-marketplace model gets off the ground?

  3. Now That OASIS and Alliant Have Grown, How Will the Agency Manage Them? These two popular GSA IDIQ contracts have grown exponentially in terms of the number of contractors and the amount of business flowing through them, which has increased visibility. Ask anyone in the Multiple Award Schedules world and they will tell you that being the biggest also means you have the biggest target on your back.  It’s one thing to add dozens of new companies.  It’s quite another to manage a program on a scale much larger than the one that was originally envisioned.  There is a tendency in government management to try to solve all the world’s problems by fixing acquisition. Now that these programs have been theoretically fixed, how will they be managed?

  4. Is the Agency Open to Allowing the Schedules Consolidation Time Line to Slip A Bit? While people usually don’t want to see government programs get behind schedule, the Schedules Program could benefit from a bit of slippage. The agency wants to start consolidating the contracts of companies that hold more than one Schedule contract in July.  They also plan to phase out the current SIN structure at about the same time. July is manifestly during the federal busy season. If the purpose of Schedules consolidation is to make the program easier to use, GSA leaders may want to rethink the timing of these changes so that they occur at a time other than when customers most rely upon it. It’s no disgrace to make these changes in October, and such timing could benefit both contractors and agency customers.  

 
DOD Is Full Steam Ahead on Cybersecurity Maturity Model Certification (CMMC) Implementation:  Government contractors selling to the Department of Defense need to know that the agency is serious about your cybersecurity protections. Cybersecurity Maturity Model Certification (CMMC) Version 0.6 was released to the public on November 15. The latest release includes guidance for what will be expected for contractors to meet CMMC Levels 1-3. CMMC Levels 4-5 guidance will be released in the next update (Version 0.7) due out in December. The DOD stated that it intends to engage in formal FAR/DFARS rulemaking in Fall 2020, which will include issuance of an interim rule around October 2020. Contractors need to be prepared to show that their cyber systems meet necessary standards for the type of business provided.  The DOD intends that CMMC Level 3 will be the entry level for prime contractors. As for subcontractors, DOD anticipates that if a prime contractor has a Level 3 certification, a subcontractor providing limited services may not be required to do the same.  Subcontractors providing a wider range of services, however, may be held to the same standard as the prime.  It appears that RFI’s will include CMMC language starting in late Summer 2020 and that the interim rule will be included in RFP’s starting in or around October 2020. The DOD is on track to release CMMC Version 1.0 in January 2020. For more information on these changes contact  BDO Government Contracting Director Tim Trickett at ttrickett@bdo.com.

NO WEEK AHEAD NEXT WEEK:  The BDO team wishes you and your family a Happy Thanksgiving!  We are taking a few days off from government contracting and recommend the same.  We will resume the Week Ahead December 9th.
 



November 18, 2019

Contractors Need to Ensure Representatives Know About the Impact of New Rules on Their Business:  Commercial item and service contractors are about to be hit with a series of new rules that will increase the cost of doing government business for all and may be a deciding factor for others to leave the federal market entirely. Whether it’s paying for a third party to evaluate your cybersecurity structure, getting rid of equipment that may have a tie to a Chinese government-controlled company, or DOJ’s new program encouraging people who have no knowledge of procurement rules to find improprieties, the days of streamlined commercial acquisitions are numbered. Few elected officials understand the impact of these changes on companies located in their state or district. Unless your Congressional representative is from suburban Maryland or Virginia, your company should assume that your Congressman and Senators are not certain if a bill they voted for could cost income and jobs in their district or state. It is incumbent upon government contractors to tell their story, either individually or collectively. If you can’t remember the last time your company called on its elected officials, or invited them for a tour of your operation, now is the time to fix that. Industry associations can also play an important role in ensuring the collective voice of their members is heard. Either way, your company provides good jobs, and taxes, in your state. Make sure your elected officials know what the added costs mean.
 

While Protests Are Down, Effectiveness Rate Remains the Same:  Federal contract protests continued to decline in Fiscal Year 2019, dropping 16% from the previous year. At the same time, the effectiveness rate, where a protestor received some desired action, remained steady at 44%. Bid protests remain a useful tool for contractors as federal agencies take remedial action in many cases, rather than letting a protest run its full course. That’s an important takeaway. Protesting companies can live to bid again on the same opportunity almost half of the time. When a good GAO protest can be filed for about $50,000, the question becomes, why wouldn’t a company protest on an important project? One reason for the drop in the total number of protests, is that agencies may be catching on and switching procurements to government-wide acquisition contracts and similar vehicles. Task orders made against such contracts are only protest-able for DOD procurements when they are valued at $25 million or more. The civilian agency threshold remains at $10 million. Some of the most popular Indefinite Delivery Indefinite Quantity (IDIQ) contracts, such as GSA’s OASIS, also carry a best in class designation from OMB. The previously listed factors give agencies a powerful reason to use such vehicles. GSA OASIS task orders soared to $20 billion last year, while GSA Professional Service Schedule sales, where protests can be filed over task orders of any size, remained flat. Regardless of acquisition vehicle, the latest protest information provides important data for contractors. Timely and reasonable protests can bring good results. If you would like to reduce the risk of your award being protested, recommend that your federal customer use an IDIQ vehicle with a high threshold. See the story here for more: 
 

Congress Poised to Setup Showdown Between Appropriations and Impeachment:  The Continuing Resolution currently funding government agencies would be extended from November 22nd to December 20th under a deal being considered by House and Senate appropriators.  While that’s good news in terms of keeping the government open, the expiration date of the extension will likely coincide with a House vote on impeachment.  This could most definitely throw a political wrench into spending and opens the possibility that the government could shut down right before Christmas.  Optimists believe that the extended time may allow for packages of two to three appropriations bills at a time to pass. The bills that contain border funding money, and other controversial projects would not be included.  Others believe that the Senate would be unlikely to go along with nearly any measure to keep the government open as a protest over a House impeachment vote.  Government contractors and their customers can only watch as the various scenarios unfold.  The closer the government comes to running out of money, the more your customers will have to focus on their Continuity of Operations planning.  This means reduced time for contractor discussions and a generally slower pace of business due to both the distraction this process brings and the fact that agencies are still funded by temporary money that cannot be used for new project starts.  It is difficult to predict how much impeachment proceedings will truly impact spending bills.  The two issues have rarely coincided over the course of history.  There is also rhetoric on all sides that would support virtually any scenario. 
 

Mail Bag:  Federal Gift Giving at Holiday Time:  Alert reader W. Disney of Orlando, FL writes, “We had a great year in federal business in FY’19 and my Vice President wants to say thanks to key customers with a free turkey. Is this allowed under federal gift rules?”  

Answer: Unfortunately, W., the answer is probably no. Unless it’s a small turkey – hardly a sign of appreciation – that bird may end up costing you and your customer more than its worth. Gift limits vary greatly by agency and by the type of person receiving the gift. The general rule is that companies cannot provide anything valued at more than $20 per occasion and no more than $50 per company to that person per year. Even then, some offices – and contractors – have zero tolerance policies in place. As for turkeys, there is even specific precedence here where one contractor’s sales rep provided a “turducken” to a couple of sailors. All of them got in serious trouble. It’s best to double check with your customer beforehand to see what their limits are and to always err on the side of caution. A thanks for your business note are probably the safest approach. I hear that there may be a radio station in Cincinnati looking for extra turkeys for a promotion there this year. Your company should investigate it.
 



November 11, 2019

Three Tips for Getting End Of Year Fed Face Time:  Reaching federal prospects this time of year can be difficult with the conference season in full swing, and holidays right around the corner.  Here are three tips to help you get the meeting you want before the real college bowl season begins: 

  1. Participate in As Many Conferences and Events as Possible:  Your federal prospect is likely either speaking or attending more than one event this November.  There are at least four major events in the commercial contracting space on November 21st alone.  Your company is behind the curve if you’re not attending at least some events offered at this time of year.  Your competitors are attending these events and creating valuable contacts. 

  2. Make Yourself Available at Slow Times:  We’ve had excellent success over the past few years in seeing key federal officials the Tuesday before Thanksgiving, or even the next morning.  Some feds are at work the week between Christmas and New Year’s.  Good, deep discussions can be had that simply aren’t available when there’s a full appointment calendar.  Plus, wouldn’t it be great to take a break from the in-laws for a morning and lay the foundation for some business? 

  3. Don’t Get Frustrated By “Use it or lose it” Leave:  This is a real thing in the federal space.  Your key contact may really be off from December 9th until the beginning of the year.  This is especially true of contracting officers and other acquisition officials.  They tend not to take a lot of time off in the summer and then spend October and November in training or on acquisition planning for the coming year.  Chances are they’ll be back in January.  You will still have time to talk with them for at least 60 more days before the business cycle picks up again.

Follow these tips and you will build a foundation for future success without taking closed doors personally.   
 

DOJ Creates Procurement Collusion Strikeforce:  The Department of Justice is concerned that current methods to detect and punish fraud, waste, and abuse in government contracting are not enough to ensure deterrence.  As such, they recently announced the creation of a Procurement Collusion Strikeforce. While there is no official word on who will be part of the Strikeforce, it will likely be a dedicated part of the DOJ Civil Division.  A key part of the Strikeforce’s work will be to analyze complaints received by the public.  In a formal Notice published in the October 24th Federal Register, DOJ is requesting approval from the Office of Management and Budget to approve the creation of a new form, The Procurement Collusion Strike Force (PCSF) complaint form.  The agency believes the new form will facilitate reporting by the public of “complaints, concerns, and tips regarding potential antitrust crimes affecting government procurement, grants, and program funding.”  The form is a clear indication that DOJ is seeking to more directly engage the public in overseeing government contract compliance.  Though the intent of the Strikeforce might be positive, the public form may seem a bit Orwellian.   Respondents will even be able to complete and submit information electronically through the PCSF complaint form on DOJ’s Antitrust Division’s website.  Contractors need to be aware of stepped up contract compliance enforcement, even if this “citizens on patrol” effort may not play as large a role as intended.  Comments on the Notice are due to OMB on December 23rdSee the link here for more
 
Executive Order 13897 Revokes Nondisplacement Of Qualified Workers Under Service ContractsPresident Trump issued Executive Order (EO) 13897 on October 31st, revoking a previous EO that had required successor contractors and subcontractors to offer employees working under a predecessor contract a right of first refusal of employment under the successor contract if they were to otherwise be terminated.  The original EO, Nondisplacement of Qualified Workers Under Service Contracts (13495), was intended to protect workers when a contract changed hands from company to company.   EO 13495 was frequently criticized by industry over the requirement to offer employment to nonmanagerial employees who may not have been the successor contractor’s preferred candidate and who may have been less qualified than another potential employee.  Because of EO 13897, federal contractors now have the flexibility to develop their workforce on a contract new to them without being required to first offer positions to the incumbent employees that had done work under the previous contract.  Contractors can now choose which positions would benefit from being staffed with new employees without the risk of triggering an investigation by the Department of Labor.  EO 13897 directs the Secretary of Labor and the Federal Acquisition Council to promptly move to rescind any orders, guidelines, programs or policies implementing EO 13495.  In addition, EO 13897 directs the Department of Labor to immediately terminate any investigations or compliance actions based on EO 13495.  Read a copy of the Executive Order 13897 here

 

Pentagon Cyber Rule May Bring A Chill To Contractors In January:  The Pentagon plans to publish the final version of the Cybersecurity Maturity Model Certification (CMMC) soon after the start of the calendar year.  The CMMC will rank contractor cyber practices on a scale of 1-5.  Officials at the Defense Information Systems Agency (DISA) have started to speculate that the new cyber requirements could significantly thin the ranks of companies eligible for critical technical projects.  Small businesses and those that primarily work in the commercial sector could be the most greatly affected.    “A very small number” of defense industrial base companies have state-of-the-art cybersecurity solutions, according to Maj. Gen. Garrett Yee, assistant to the director of DISA.  Yee went on to say that he believes that most of those systems are at the lower end of the 1-5 scale.  When asked later about how the new requirements would impact the pool of tech providers Yee stated, “No one knows the answer to that.”  Still, small businesses have traditionally made up a significant part of the DOD’s tech contractor base.  Additionally, the agency has been reaching out to non-traditional contractors to obtain cutting edge solutions.  Many of these companies either have not or cannot make the types of investments necessary to create the type of security necessary to obtain an advanced CMMC certification.  DOD leaders must balance the need for security and small business participation – both hot button political issues – as they move forward.  See the article here for more.
 
HAPPY VETERAN’S DAY: The Week Ahead wishes all veterans and their families a Happy Veterans Day today.  Thank you all for your service!


 

November 4, 2019

Congressional Leaders Consider Year-Long CR Among Appropriations Options:  As the government continues to operate under temporary funding, the two chambers of Congress remain wide apart on providing a permanent FY’20 funding solution.  All federal agencies are currently working under a Continuing Resolution (CR) that expires on November 21st.  House leaders favor a short term CR after the expiration date that would fund the government until sometime in December, and then the passage of smaller packages of appropriations bills for “non-controversial” agencies. Some agencies, like DHS, would likely still operate under a CR into the 2020 calendar year with this approach. The Senate prefers a longer-term CR for all agencies that would last into the 2020 calendar year.   Leaders in that chamber also say that depending on what happens with the House’s impeachment probe, a year-long CR is possible for many, if not all, federal agencies as Senate resources would be diverted to a possible trial.  The fact that a year-long CR remains on the table for at least part of Congress should be of concern to federal contractors.  CR’s mean that few, if any, new projects would be allowed to start, and that agency funding would stay relatively flat from FY’19 levels.  CR’s are also generally not good for efficient government operations overall.  While it is unlikely that the government will totally shut-down, FY’20 is off to a shaky start and clouds definitely remain on the horizon.  See the story here for more.
 
Despite Numerous Projects, DOD Not Satisfied with Its Return On Cloud Investments:  DOD cloud activity needs attention and coordination if the agency is to realize the full potential of the technology, according to Deputy CIO for Information Enterprise Peter Ranks.  Speaking at the recent Professional Services Council Vision conference, Ranks went on to say that cloud-related projects take up the most amount of time but, to date, have yielded the least amount of satisfaction. Until recently, DOD has spent about a half a billion dollars per year on cloud, with success coming in only a few specific areas.  Simply awarding a contract won’t solve all of DOD’s cloud-related problems, Ranks said.  He and his colleagues want to get input from industry.  This is especially true in terms of companies that can help the agency get the most out of the investments they’ve already made.  Ranks asked, “What is the right way to build elements out from the cloud?”  How the agency can optimize its existing cloud infrastructure is also a topic of interest.  The most important factor for industry to keep in mind is speed of deployment.  How fast can DOD deploy and run cloud-based software solutions?  The company that can show DOD how to get more out of the cloud and get it fast may find a receptive audience in the agency’s CIO office. 
 
Federal Customers Want Contractors to Show Them How Easy It Is To Use New SolutionsTrying to get your federal customer interested in new technology?  Be prepared to show them how easy it is to use and how quickly and efficiently it can be implemented.  These were frequent comments mentioned by federal customers interviewed by the Customer Experience team as part of this year’s PSC Vision report.  Experienced contractors make ease of use a key part of their business development approach.  They also know that this issue is only one factor that goes into a federal customer’s purchase decision.  Budget factors also play a significant role, along with the general inertia common to many large organizations.  Contractors should pay increased attention to customer experience, a concept that is not the same as customer satisfaction according to the Vision panelists.  Other elements of a strategic customer experience approach include ensuring that the buying process is transparent, that quality services are provided by helpful contractor employees and, of course, that the solution itself is effective in meeting the customer’s needs.  Unhappy customers are twice as likely to reach out to your company at least three times.  While they may ultimately get a resolution to their problem, such frequent calls drain resources away from your overall business development efforts and keep overhead higher than it could be.  Expect to see more discussions on how a positive customer experience is an important factor in federal business. 



Attend The BDO Year-End Update!

Looking for the latest information on the federal M&A market, Privacy, Digital Transformation, or Cybersecurity? Join us at the BDO Greater Washington D.C. 2019 Year-End Update. This year’s update is December 3rd at the Hyatt Regency in Reston VA. Get the latest information that will shape both your company and its federal business.

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