Monthly Archives: July 2020


A sales executive under pressure to make a quarterly number “discovers” the military base down the road from your branch office.  An 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, 2020Key features include:

  • 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, or renewal.
  • 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 affiliates.
  • 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.


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 phase.


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