“Arbitrary reductions would
not be the right way to go,”
said Senate Armed Services Committee Chair Jack Reed (D-RI) last week, when
asked whether he expected deep cuts in Pentagon spending as an offset to
pandemic funding. He prefers to examine
proposals made by Pentagon leaders first, to see what weapons programs and
other cuts they recommend. Reed, and
other Congress watchers, also point out that any steep defense cuts would
require Republican support given the 50-50 split in the Senate and the
razor-thin Democratic majority in the House. This could all be good news for contractors
that sell anything from professional services to products to DOD
customers. Many companies have expected
substantial cuts to programs as the new Congress looked for ways to balance
defense spending with civilian agency priorities. Contractors thathave been planning for flat DOD spending and may be well-positioned to
continue doing business if such forecasts prove accurate. Where defense money ends up is still far from
certain, despite Reed’s statements and those made in late 2020 by his House
counterpart Adam Smith (D-WA). At least
one member wants further cuts to so-called “4th estate” DOD civilian
workers. Neither party, however,
wants to be seen as weak on defense spending with the growing international
presence of China and Russia.
Defense spending may not increase as it has, but most companies should
continue to find good opportunities throughout the agency.
Recently-issued Executive Orders on everything from “Made in America”, to secure
supply chains, payment of fair wages, and more may have government
contractors and their customers wondering what will change, when changes will
be implemented, and what they will be. Indeed, if your company hasn’t
been paying attention to the string of orders that have the potential to impact
procurement, you are behind the curve. See the list here: https://www.federalregister.gov/presidential-documents/executive-orders/joe-biden/2021. This is a particularly important time
for contractors to be aware of what’s happened so far, and what has yet to
happen. You also can’t always
take your customer’s word for it, either, as they may be as confused as you
are. The bottom line is that no
real changes have yet to take effect and likely won’t for several months. The Biden Administration implemented a 60-day
moratorium on new regulations that runs through March 20th. Provisions of Executive Orders (EO’s) need to
be turned into rules before becoming effective.
Those rules will fill in details on the “how” factor on such issues as
whether the Buy American Act exception for COTS IT remains in place, supply
chain requirements, and other policy directives more broadly covered in an
order. At least one company we know has
been asked by a customer to certify that it meets a new EO standard. No company can do this yet, however, because
there is no new regulatory standard to meet.
Make sure you know the difference between what has been proposed
and what has actually been implemented.
Watch this space and watch modifications to your contracts to understand
how your company will be impacted.
Remember, too, whether a contract modification is sent to implement a
policy change or some other matter, NEVER sign and return it without reading
and understanding it first.
Some readers believe that we exaggerate the risks of contract
non-compliance. We wrote recently about the
potential for the Department of Justice to use the False Claims Act to pursue
contractor culpability when supplying compromised SolarWinds solutions. We could see your eyes rolling from here. The Department of Justice helpfully
backed us up last week, though, by sending a warning to government contractors
that they will be turning up the False Claims Act heat on cybersecurity fraud.
Acting Assistant Attorney General Brian
Boynton told the Federal Bar Association Qui Tam Conference this week that it
is not difficult to imagine a situation where False Claims Act liability may
arise given what the government pays for systems or services that are supposed
to comply with required cybersecurity standards. The bottom line: If your company provides a cybersecurity system
that fails to meet stated federal requirements, or attests to a cyber standard
that it does not meet, DOJ could pursue a False Claims Act case against you. Boynton went on to say that cybersecurity was
one of six key priorities for the civil division when it comes to the False
Claims Act. Contractors are on notice to
ensure that they comply with any cyber standards included in an RFP or RFQ and
that their company meets cyber-related standards such as CMMC. The cost of an FCA investigation starts
at seven figures and can easily reach the mid-8 level, not including potential
suspension or debarment. Keep
that in mind when your company contemplates whether to spend six figures on a
cyber compliance system.
Conversely, if your company does meet required standards and your
competitors do not, you now have a powerful tool that should give you an
advantage. If a government customer
still goes ahead and makes an award to a non-compliant company a whistleblower
case you file can add to your bottom line.
It’s beyond bad manners to have a contract out of compliance, it’s
something that can put your company at real risk. Allen Federal has conducted contract
compliance reviews for many companies.
You’d be surprised what we find, even from companies with good
systems. It’s a best practice to have an
outside set of eyes review your contract terms, pricing, and other
matters. Reviews can be done quickly, as
well. Contact us today at email@example.com to see what we can
do for you.
Acting GSA Administrator Katy Kale and FAS Commissioner Sonny Hashmi
recently outlined the agency’s top four priorities. Contractors should take note and understand
how each one may either directly or indirectly impact them. First up is continued COVID-19 supportand, closely tied to it, bolstering economic recovery. While
considerable effort has been put into meeting personal protective equipment
(PPE) needs, this support could also include logistics assistance to other
agencies as well as new methods to support a workforce that splits its time
between office and remote locations. This could mean opportunities for
contractors to provide GSA and its customers with a variety of logistics and
remote workforce services. That
workforce, itself, may become more diverse and see increased advancement
opportunities for women and minorities. Workforce diversity and equity
are the second major goal. This may or may not change who contractors
work with, but it is certainly an indication that GSA may be looking for
the same types of initiatives in its contractor base. Last, impacting climate change,
possibly viagreen procurement, is making a comeback and could
impact contractors in new ways.
Plans were being crafted toward the end of the Obama Administration, for
example, that would have required contractors to not only report on the
eco-friendliness of any goods they make, but on the green status of their
office buildings, supply chains, and other business components. Absent from the priorities was any specific
mention of GSA’s need to improve acquisition outcomes or manage its
still-substantial real estate holdings.
Either GSA leaders believe that these are so well handled now that they don’t
require top-level attention, or these basic agency functions will be
subordinate to the new priorities.