While many government contractors make good faith efforts to comply with contract clauses and navigate other federal contract requirements, sometimes there is no pat answer depending on the CO and the specific circumstances of a given situation.  The Government Accountability Office (GAO) recently provided a great example of this when it ruled that a company with a temporarily lapsed SAM registration should not have been excluded from a competition because the government failed to include the proper FAR clause requiring offerors Read more

Set-aside task orders awarded to a small business would no longer have their size status protected for duration of the project per a proposed rule issued recently by the Small Business Administration (SBA) (https://tinyurl.com/yc69vthh)  Current Schedule rules allow a federal customer to use the size status of the contractor at the time of award to determine whether the company is small.  That status usually remains the same through the life of the task order, even if the company’s size status later changes.  The SBA rule, however, would end that practice and require companies to re-certify in the case of a “triggering event”, such as a sale, merger or Read more

While Congress lurches towards some sort of CR that will begin the 2025 Fiscal Year, contractors and their federal customers may want to look at the larger picture.  While no one may like what they see, it is important to understand the reality and its possible implications for long-term spending and stability.  The term “fiscal cliff” is one that is heard more and more and is something that cannot be ignored.  The Congressional Budget Office (CBO) reported last week that they expect the federal deficit to reach $2 trillion this year.  While revenue is growing, outlays are growing more quickly.  Whether it’s mandatory spending, such as Social Security and Medicare, or infrastructure improvements, continued deficit spending patterns will soon require hard decisions by elected leaders who, to be honest, don’t exactly fit the mold of those chronicled in “Profiles in Courage”.  This matters to contractors because it could point to significant changes in both spending and corporate taxation trends.  Your taxes could go up, even as your market goes down.  A quick quiz on the numbers is instructive.

Place the following categories of spending in order from highest to lowest: (A) Defense spending, (B) Interest on the federal debt, (C)Medicaid, (D) Medicare, (E) Social Security.  While the answers are provided below, the fact is that all these choices, except Defense spending, are considered “mandatory”.  Without meaningfully addressing these issues, taxes will inevitably increase and discretionary spending, which includes national defense projects, will decrease.  We’ve said before that contractors should engage their elected officials in discussions on how spending decisions impact their business.  That impact will increasingly have little, if anything, to do with actual federal contract spending.

Answers to Quiz:  Social Security – $1.3T, Interest on the Debt – $870B, Medicare – $847B, DOD spending – $753B, Medicaid spending – $561B.  All figures are from the Congressional Budget Office.

Even as contractors focus on the last two weeks of the fiscal year, changes are coming to the federal procurement world that every company needs to know about and understand.  Here are three things shaping your market today that could impact your business for good or otherwise.

1.  Guidance Coming Soon for AI in Acquisition:  The Office of Management and Budget (OMB) is expected to issue policy guidance in the next 7-10 days on how federal buyers should incorporate AI into their acquisition processes.  We wrote recently that many policy leaders believe that AI can be an important tool in assisting acquisition professionals in making good business decisions but is not nearly mature enough right now to be solely relied upon.  The OMB guidance will tell government and by extension contractors, how AI can best be used in acquisitions right now.

2.  More Rules Coming on Contractor Environmental Mandates:  GSA officials said last week that industry can expect new rules on greenhouse gas emissions, climate change, and overall sustainable acquisition approaches in the next several months.  This is on top of single use plastic restrictions and other pro-environment requirements that have previously been introduced.  The current administration is serious about using the federal acquisition system to drive environmentally friendly practices.  Whether the government market is big enough to actually make a dent in these areas is unknown, but industry should expect its costs to go up in trying to meet the new rules.

3.  GSA Will Focus More on TAA Compliance:  During the same regulatory discussion last week, GSA policy officials were clear with industry that Trade Agreements Act compliance will be one key focus area over the next year.  Contractors are correct if they feel that there is a government-wide push to limit the use of Chinese technology and products across the board, with increased TAA compliance being just one tool to bring it about.  Contractors are on notice that the government is serious about the origins of the components and end products being offered.  They should also remember that the compliance pendulum seldom stops in the middle.  As such, a “belt and suspenders” approach to compliance in this area may be a best practice.  The bottom line is that government contractors cannot afford to only focus on sales, no matter how enticing that may be.  The boundary lines of what is and what is not acceptable are changing and no company wants to wake up and find itself on the outside.

A small business working on a classified DOD project while logged onto an open, unsecured wifi network, a contractor who didn’t get paid because an adversary had stolen their CAGE code, and the relatively ease with which China was able to get complete F-35 blueprints are just some examples of why federal contractors and their customers must take cybersecurity seriously.  If these examples shock you, imagine how shocked you’d be if you knew some of the examples that are so troubling that they, themselves, are classified.  These were among the points driven home this week during a Coalition for Government Procurement “cyber-side chat”.  While much of the discussion focused on new DOD CMMC requirements, the basic Read more