Federal investigators may need new authorities to probe cybersecurity breaches in sensitive non-government networks, according to a recently-released unclassified report from the Senate Intelligence Committee and originally reported on FCW.com.  Though the report dealt primarily with security issues in elections, recommended remedies may not be restricted to entities in that field.  The report, for example, calls for the FBI’s Cyber Division to develop policies to “pressure” victims of hacking to cooperate with federal investigators.  While the most severe consequences, the potential use of compulsory cooperation, are reserved for election-related breaches, that distinction by no means excludes government contractors or others whose sensitive data systems may have been hacked from being “encouraged” to cooperate with the FBI under other circumstances.  Cooperation would extend, also, to third-party companies hired by hacked entities to conduct incident response.  Contractors should pay close attention to this report, just one in a series of Senate Intelligence Committee reports where recommendations may find their way into legislation.  While companies involved in elections may be initial targets, they are likely not the only ones that could ultimately be covered.  Securing your network, purging covered equipment, and reporting breaches all place different kinds of costs on contractor operations.  Understanding those costs are critical to successfully navigating the waters of the federal market.

Federal government use of small businesses continues to increase with 2019 marking the seventh straight year that agencies exceeded small business contracting goals.  Nearly $133 billion in contract dollars were obligated to small firms in FY’19, an increase of $12 billion from FY’18.  That’s good enough to beat the 23% small business contract goal by 3.5%. While there are many reasons why small business use numbers continue to increase, one is the speed and ease of use small business acquisitions offer to over-worked acquisition professionals.  This can be especially important at this time of year when there are many procurement actions to be taken in a limited amount of time.  Over 10.25% of small business dollars, for example, went to disadvantaged businesses last year, an area where streamlined acquisition methods predominate. 

These numbers, however, don’t tell the entire story.  There are definitely winners and losers in the small business contracting arena.  Previous news stories have stated that thousands of small businesses leave the government market each year, likely due to new and costly rules.  This year alone small business prime contractors are having to accommodate Cyber Maturity Model Certification (CMMC) requirements and review IT and telecommunications assets to ensure that prohibited sources aren’t used.  This may be one reason why the newly-released small business subcontracting numbers show an uneven story.  Only the overall goal and the women-owned subcontracting goal were met.  New requirements continue to impact smaller small businesses, while larger small firms, especially those dedicated to federal business, are better able to absorb the costs.  

Some Schedule contracts may one-day not have contract-level pricing due to a move initiated by the General Services Administration recently that may culminate in the agency using authority given to it by Congress as part of the FY’19 Defense Authorization Act to establish Schedule contracts that leave price discussions to contractors and their customers. The recent issuance of an Advanced Notice of Proposed Rulemaking (ANPR) is the first step in setting up a possible pilot project.  The ANPR asks for comments on a host of issues, including whether task order type makes a difference, the type and breadth of professional services that could be part of the program, potential GSAR changes, and more.  The concept of a non-priced GSA Schedule contract has been discussed for nearly 30 years.  It would potentially eliminate the Schedules Price Reduction Clause as well as hourly labor rates now listed for an array of professional services.   While this initiative is likely to be popular with industry, contractors and GSA may have to work with customer agencies to provide assurance that Schedule contracts still offer a streamlined acquisition process and competitive pricing at the task order level.  Comments on the ANPR are due to GSA September 18^th.  Companies are strongly encouraged to comment.    See the link here for the ANPR, what GSA is asking for comments on, and how to submit comments:  https://www.federalregister.gov/documents/2020/08/19/2020-16681/general-services-administration-acquisition-regulation-gsar-increasing-order-level-competition-for

In this stressful time it seems like everyone could use a sanity check.  This could even apply to your contracts.  Allen Federal is happy to review your commercial item contracts and task orders to make sure they say what you think they do and to recommend changes if they don’t.  Our 30 years of experience has proven that even experienced firms benefit from an outside set of eyes now and then.  Contact us today at info@allenfederal.com and we’ll set up a review that fits your needs at a competitive price.

Federal agencies could spend as much as $630 billion in discretionary money in FY’20, up over $30 billion from the record-breaking performance of FY’19.  Discretionary spending includes the acquisition of commercial services, products, and solutions.  Almost $200 billion of the total figure had yet to be obligated as of August 5^th, according to research from Bloomberg Government.  NextGov reports, “(t)he government’s discretionary spending has increased significantly since 2015, driven largely by the Defense Department. Discretionary spending at the Army, Navy and Air Force each jumped approximately 10% in fiscal 2019.”  In addition, Bloomberg expects a significant uptick in IT and telecom spending, particularly in such areas as networking capacity, bandwidth and telework services. Bloomberg previously reported that professional services and IT spending, in that order, would be among the two highest spend areas.  All of this adds up to unprecedented opportunities for contractors.  There should be multiple opportunities for well-prepared contractors to create new business.  Adding money onto existing projects could be a potential discussion topic with current clients as well.  It wasn’t that long ago that discretionary spending dipped under the $500 billion mark.  It will almost certainly contract in future years.  Locking in business now is essential to long-term success.  FY’21 is also likely to operate under a CR until at least December.  Close business now and rest when the leaves turn.