Apparently the specter of planes falling from the skies was enough to convince the White House and Congressional leaders to forge an agreement to re-open agencies that had been shuttered for 36 days.  The President has signed a Continuing Resolution passed by Congress that will re-open agencies such as DHS, Transportation, State, Agriculture and others that had been shuttered through February 15^th.  As a practical matter, however, it is highly unlikely that another shutdown is in the works after that time given the substantial impact on the people and programs essential to issues like national security and transportation safety.  A CR will allow agencies to continue doing what they had been doing in FY’18, at approximately the same dollar levels.  It will also allow past-due invoices to be paid.  About the only thing that a CR will not allow is the start of new projects that need CR money to fund them.  That still requires an official FY’19 appropriation. 

Keep in mind, though, that new projects are being worked on, and never really stopped, in DOD, HHS, the VA and other agencies that account for 70% of discretionary spending.  Business was being conducted during the shut-down.  DISA moved forward on its planned massive DEOS cloud buy, GSA edged closer to issuing ATO’s to EIS contractors, and HHS continued to make innovative use of technology in acquisition.  There is definitely business to be had in these agencies and contractors would be wise to focus on the dollars that are definitely available.

Prospects for appropriations for agencies operating under a CR are unclear at this time, but may become clearer as the next three weeks unfold.  Stay tuned.

One piece of good news coming from the end of the partial government shutdown is that contractors may be able to recover certain costs incurred that are associated with the closure.Several regulatory clauses, such as the FAR’s Suspension of Work, allow for contractors to be compensated.  Companies will have to move quickly once the agency that owes them money re-opens, though, as most of the clauses offer a short timeframe in which incurred costs can be covered.  Another best practice is for contractors to set up specialized charge codes for closure-incurred costs.  That way, it is clearly visible to both the contractor and its client that specific costs were associated with the shutdown, separate and apart from costs incurred in the course of normal business operations.  Contractors may even be able to collect interest on overdue payments as well.  Guidelines issued by the previous White House during the 2013 shutdown provided for interest to be paid under certain conditions.  This has been pointed to by some in government now as a precedent that could allow for payment this time.  It is essential for contractors to check their specific contracts to ensure that the proper clauses are included, whether for cost plus or time and material work.  Also, be prepared to move quickly so that you don’t lose any more money than you have to as a result of the partial closure. 

Allen Federal works with a lot of companies.  This gives us a chance to see what works well, and certainly what does not.  We’ll skip our usual preaching on contract compliance and discuss three things we’ve seen recently as examples of what NOT to do:  1. No Follow Through:  The meeting you had with the customer went well.  They were impressed!  That was 5 weeks ago, though, and you haven’t gotten around to following up.  Now, your impressed customer wonders about your reliability and is on to five new projects.  Opportunity lost.  Lesson: Always follow up quickly.  2.  Over-promising:  If you can’t produce Justin Bieber to work on your project, say so.  Too many companies say “yes we can” when the real answer is “maybe we can”.  Again, your customer loses faith in you and you’ll likely end up ensnarled in contract disputes that eat up time and resources.  It is better to under-promise and over-perform.  Lesson: Don’t do the crime if you can’t do the time.  3.  Failing to Pay Attention to Detail:  Does the task order you’ve just been issued match with the underlying contract?  Were you supposed to provide a Mercedes, but delivered a Ford?  Failing to pay attention is so common we think that most companies fall into this trap from time-to-time.  If the TO doesn’t match the contract, STOP!  Too many contractors just “go with the flow”, which means that they can “go without getting paid” if what they do is different from what the contract says they should do.  Remember, only a CO can make a change to a contract.  Lesson:  Pay attention to the fine print.

The Department of Defense should consider replacing commercial buying and existing simplified acquisition procedures with simplified, readily available procedures for procuring readily available products and services.  This is among the recommendations made by the DOD Section 809 panel in its “Volume 3” report released earlier this week.  This recommendation, number 35 in the full report, seems to suggest that DOD cease using existing IDIQ contracts, like GSA Schedule contracts, but it does not come right out and say so.  Schedule contracts, arguably, are simplified acquisition procedures and, additional Panel recommendations can be read as making these contracts easier to use.  Recommendations 74 & 75, for example, call for the elimination of redundant documentation requirements or superfluous approvals that add no value to the acquisition process.  This would seem to embrace recommendations made by Booz Allen Hamilton, and others, to streamline the Justification and Approval process so that blanket approvals can be given for the use of non-DOD contracts. 

Overall, the report recommends that DOD embrace a three-tiered “Dynamic Marketplace Framework” for acquisition.  The first bucket would be items that are readily available and require no customization.  Rules and regulations would be minimized for the acquisition of such solutions.  The second bucket would hold solutions that are readily available, but require some customization.  Simplified procedures would also be used to acquire these solutions, but a few more steps would be required.  Defense-unique solutions would be in the third bucket.  The acquisition of these solutions would face a more formal process, but even here the Section 809 panel recommends new rapid acquisition authorities and other flexible approaches.

For IT acquisition, the Volume 3 report recommends that DOD adopt rules to allow for the more flexible acquisition of IT on consumption-based solutions.  Such guidelines could make it easier for DOD entities to buy “as-a-service” solutions.  Recognizing the IT brain-drain in DOD, the Panel also calls for DOD to create a pilot program where it would be able to get assistance from technology consultants via an on-line talent marketplace.

Additional recommendations would limit protests under certain circumstances, with recommendation 67 eliminating the ability of a contractor to file a protest at the COFC after filing with GAO.  Similar recommendations deal with dollar levels for protests and timelines for protest resolution.

Panel Chairman David Drabkin called the Volume 3 report, “the one with the bold ideas” at a recent gathering at George Washington University Law School.  It is expected to be the final report of the Section 809 panel.  The House and Senate Armed Services Committees, along with DOD and other interested parties, will now sift through the recommendations to see which ones make into future Defense Authorization measures or DOD policy directives.  This will likely be a multi-year process.  In the meantime, the Panel has published an Executive Summary of the Volume 3 report, available here for those who want to take a more complete look:  https://section809panel.org/volume-3-report/

The IRS is bringing back over half of its furloughed workforce to process tax refunds while, at the same time, US Courts may shutter most of their civil operations after January 25^th if no additional funds are provided by Congress.  These are just two examples of the shifting sands of federal business during a partial government shut-down.  The person you were speaking with today, may not be their next week.  Re-called workers, though, are unlikely to be available for industry meetings except when they are directly related to immediate, mission critical performance.   Indeed, meetings and travel are among the top agency activities to be curtailed as a result of the partial shut-down.  Agencies like GSA that are operating from fee-based money are even curtailing travel to ensure that funds for core operations are available for as long as possible.  All of this spells increased frustration for contractors.  Planned projects sit idly, invoices pile up, and key opportunities for communication evaporate.  The longer the partial shut-down continues, the longer it will take to unravel when everyone goes back to work, too.  No one can assume that federal business will be “business as usual” with currently closed agencies for some time.