A sales executive under pressure to make a
quarterly number “discovers” the military base down the road from your branch
appointment is made and a sale is closed.
Later, the executive sends his new client a pair of Boston Red Sox
tickets as a thank you. Your
federal team never even knew about it, but now you have a compliance problem. The scenario above is not imagined, similar
ones play themselves out all the time (not withstanding that there aren’t any
Red Sox games currently). That’s
why the answer to the question above is “False”. While your federal team may not be perfect,
substantial evidence suggests that a company’s largest liability for
non-compliance can come from people outside your federal business operation. That’s why training for all of your
sales and marketing professionals is a best practice. It need not be the same full-on training the
federal team receives, but everyone should be aware of the special rules
surrounding the conduct of federal business.
Some companies even go so far as to strictly regulate who can and cannot
call on federal customers. This takes
coordination and communication at the senior level of the company. That’s the point. Federal contract compliance is
everyone’s business. Make sure your company
knows about your federal business and what it means to the company overall.
An interim rule is expected to be
published in today’s Federal Register implementing Section 889 Part B of the
2018 Defense Authorization Act. This provision prohibits the government, “from
entering into a contract, or extending or renewing a contract, with an entity
that uses any equipment, system, or service that uses covered
telecommunications equipment or services as a substantial or essential
component of any system, or as critical technology as part of any system,” (new
language in FAR 52.204-25) unless an exception applies or a waiver is granted. Exceptions will be granted on a case-by-case
basis and will only serve to delay the requirement to comply, not do away with
it. Contractors should closely examine
the rule, the draft of which was 86 pages, and ensure compliance. The interim rule is effective August
13, 2020. Key features
- The rule applies only to prime
contracts, not sub-contracts due to the way the statute was worded.
- The government shall insert the new
clause into any new contract or existing contract upon modification, extension,
- Contractors must make a “reasonable
inquiry” inside their company to discover whether or not covered IT and
telecommunications equipment is used.
- “Covered equipment” includes products
from Huawei, ZTE, Hytera, Hangzho Hikvision Digital, Dahua and their
- The prohibition on using prohibited
equipment extends company-wide and is NOT limited to those parts of the company
that contract with the federal government.
- Contractors that discover
non-compliant equipment are expected to remove it and have one business day to
notify the government that such equipment has been discovered.
The FAR Council acknowledges that the cost to comply
with the standard will run into the billions of dollars. Contractors are encouraged to submit
comments on the interim rule during the 60-day comment period,
indicating that this is considered a major rule making. This interim rule has been anticipated for
nearly a full year. Companies should
already have been taking steps to comply.
See the interim rule here for more and make sure you understand
how it applies to your business. https://acquisition.gov/sites/default/files/page_file_uploads/FAR%20Case%202019-009-Interim_Rule_prepublication_07_10_20.pdf
The House DOD Appropriations Subcommittee voted to allocate $694.6
billion in “on-budget” defense spending for Fiscal Year 2021, plus another
$68.4 billion for “contingency operations.” That total is not drastically different from
last year’s figure and must now be reconciled with the Senate. In the meantime, House appropriators
are seeking nearly $250 billion in increased discretionary spending for a host
of domestic programs, including transportation, housing, and
infrastructure spending. While the
package is meeting resistance from Republicans, it is likely that some level of
increased spending will be enacted. Few
members, after all, would like to face voters during the COVID-19 pandemic and
try to justify not spending money viewed by many as necessary to address the
resultant health and economic impacts.
While final spending totals won’t be known until this fall, at the
earliest, Congressional action on a host of FY’21 spending measures now
is starting to provide a clearer picture of the type of market contractors
could expect. The additional
money could ultimately be a “win-lose” scenario, though, as the
bill for all of the additional spending will come due. Some readers may recall the comic strip Bloom
County that had an anxiety closet where monsters lived. The federal spending version of this is the
Congressional Budget Office report issued this week showing that the
budget deficit for June of this year was $863 billion, 10 times what it was for
June 2019, and larger than the entire deficit for 2019 itself. While extra money means increased business
opportunities in the short term, contractors can expect reduced spending numbers
and higher tax burdens, perhaps starting as early as 2022. It is never too early to prepare for riding
out the next storm.
When the General Services Administration
announced the cancellation of Alliant II Small Business it said that it wanted
to try a new, innovative acquisition approach.
What better way to do that than to embrace a non-priced IDIQ contract? GSA has embraced innovation under its current
leadership team on multiple fronts. The
Commercial Solutions Opening (CSO) program, e-marketplace initiative, and
Schedules consolidation project are all attempts to make it easier for customer
agencies to find what they want from GSA.
Now is the time to take the next logical step. Whether a pilot or a full-fledged
vehicle, GSA has the ability to take this step. There is precedent, too, for the non-priced
approach with other federal contracts, including DOD Basic Ordering Agreements,
in which several GSA Schedule holders already participate. Eliminating contract level pricing also
allows the agency to move ahead quickly, a key factor that benefits not only
the small businesses involved, but the agency as well. The time it takes to put together a
large IDIQ contract is increasingly becoming a stumbling block toward their
creation and delays over pricing factors contribute to the problem. Technology, competition, and the availability
of other contract vehicles can all contribute to ensuring that task order level
prices are fair and reasonable. We’ve
been talking about non-priced contracts since 1992. It’s time to move into the implementation
Did you get a new clause added to your contract and
can’t figure out what it means or why its there? Is an ordering agency insisting on extra
language on your task order? Are you
just not sure what a term in your BPA means?
Allen Federal can help. We offer
“Check-In” service at reasonable rates for people who need answers and insights
on contract terms, new federal developments, or just sanity checks to ensure
their positions are defensible. We’ve
answered hundreds of questions for a wide variety of companies. If you’re just not sure what a key term or
requirement means, we can help. Contact
us today at firstname.lastname@example.org.