Federal agencies consistently spend between 6-8% of their annual acquisition budget in the last week of the fiscal year, according to a report issued recently by the Department of Treasury’s Fiscal Service Data Lab. That equated to over $35 billion of business in FY’17. That’s a good reason to postpone your vacation for another week. Year-end isn’t the only time feds spend money, according to Treasury. The week after Congress passes a Continuing Resolution also sees a spike in buying activity. Professional service spending spikes at this time, as well. Conversely, Treasury found that agency service spending decreases somewhat when Congress passes actual longer-term appropriations bills. The speculation is that such funding measures allow agencies to do better long-term planning. While Treasury’s analysis is intended primarily for federal agency use, contractors will find it useful as well. In addition to the year-end numbers, for example, Treasury also found that spending tended to ebb and spike at specific times each month. This information can be vital to contractor planning and outreach. While it is no news that spending happens at the end of the year, info on CR-related spending and monthly peaks where spending spikes enables companies to appropriately plan BD activities. Make sure that your plans are fine-tuned for the end of this FY.
The Section 846 e-commerce portal project has significant potential to be innovative, if GSA can succeed in keeping specialized contract rules and regulations to a minimum for companies that, in many cases, are already selling to federal agencies. In order to match the innovative nature of this program, the agency should consider the latest innovative acquisition strategies it is proposing to agency customers for their end of year buying as contracting approaches. One option for GSA to consider is the use of Other Transaction Authority (OTA). This authority is currently being used extensively at the Department of Defense for even large dollar acquisitions and GSA is promoting OTA use as well. It is specifically being used to attract non-traditional contractors to the federal market, just like the non-traditional companies that make up much of the e-commerce portal community. Consider that these established commercial businesses already have well-tested and accepted payment methods, anti-fraud detection and prevention methods, and the ability to highlight, or even ensure, that acquisitions are made via specific companies. The companies would easily be able to create a federal portal that meets the original intent of Congress without the added burden of specific contract clauses or other traditional government contracting requirements. GSA would be able to move quickly, as well, as OTA-based acquisitions can be done in a timely manner.
Another option to consider is the use of GSA’s new Commercial Solutions Opening pilot. This pilot provides a way for GSA to quickly establish even large dollar contracts without the use of traditional Federal Acquisition Regulation clauses. GSA’s stated goal for the CSO program is, “…to provide a streamlined approach for acquiring innovative commercial products and services.” There is perhaps no better opportunity to match an innovative and streamlined acquisition method with the innovative acquisitions that commercial e-commerce platforms provide.
Success with the Section 846 project depends on keeping contract terms to an absolute minimum. Left with the choice to sign up for new and unfamiliar burdens or maintain existing business practices, most portal providers will elect the latter. This would defeat the purpose of the original Congressional legislation and potentially make the use of e-commerce portals by individual agencies more expensive and harm mandatory and other socio-economically favored contractors.
Contractors need to carefully review Contractor Teaming Agreements (CTA’s) to ensure that they are specific and enforceable. While a general CTA may be easier and faster to execute, such agreements tend not to hold up in court – precisely when you need it. According to a client alert recently issued by Steptoe and Johnson, the Virginia Supreme Court recently ruled in CGI Fed, Inc. v. FCi Fed, Inc. that a teaming agreement entered into by the two companies for State Department Visa processing did not create an enforceable obligation to enter into a subcontract with specific terms. Further, the Court found that CGI could not recover damages on its fraudulent inducement claim because it was not entitled to lost profits under a subcontract in which the final terms were uncertain and unenforceable. While the Steptoe article used hyperbole to make its point (saying that CTA’s are, in essence, doomed), the fact is that companies don’t always put enough time and thought into their teaming agreements. Indeed, it is difficult to tell in this case, where words such as “subcontractor” are used, whether this is a classical GSA-based CTA or not. Getting terms right is a frequent short-coming of CTA’s. CTA’s can be valuable tools that enable contractors to pursue business they otherwise might not have a chance to compete for. While it is tempting, especially at year end, to wantonly team with another firm, this case underscores the need to ensure that CTA terms are specific and provide your company with the protections you think you are getting.
Government contract audits are no fun. They take away time, distract key personnel and cost money even under the best of circumstances. What’s more, if you’re a GSA Schedule contract holder that suddenly gets a post-award audit notice, you can assume that this, indeed, is not the best of circumstances. Regardless, your company needs to be prepared. Allen Federal has worked with numerous companies, as well as their Schedule consultants and counsel, to ensure that your audit goes as smoothly as possible. We work with the team to identify potential issues before an auditor, recommend remedial action, and help prepare an audit response that puts your company in the best possible position. Our services are pennies on the dollar compared with the fines and penalties and auditor could recommend. In fact, we’ve ended up saving clients’ money more times than not. See what we can do for you and your contract management team today. Contact us at info@allenfederal.com.
GSA really does want to hear from you, whether you’re a portal provider or supplier, via its RFI’s that are now out for comment. The agency issued a further indication of what, precisely, it is hoping to obtain in this process via a blog post last week. Specifically, GSA would like to know what contract clauses could be exempt from this project based on the following criteria:
- Does the FAR clause/provision come from appropriation law?
- Does the FAR Clause/provision contain criminal or civil penalties?
- Does the specific statute explicitly state it applies?
- Is the FAR clauses/provision consistent with current standard commercial practice for the e-commerce industry?
- Is it required to implement Section 15 of the Small Business Act?
- Is it needed to implement a bid protest procedure?
- Is it consistent with the current commercial practice for the e-commerce industry?
GSA believes that there are no applicable clauses where a statute specifically says the provision should apply to commercial item or COTS acquisitions. Interestingly, however, the agency may include False Claims Act provisions in any e-portal provider contract as the FCA clearly contains criminal and civil penalties. How the FCA would be applied to portal providers, who may serve as both a direct biller, or billing conduit for a third party, should be a question providers ask back to GSA now. Potential FCA, or other civil liabilities, is something a portal provider should be well aware of when considering participating in the 846 project.
Comments on the RFI are due to GSA on July 20th and a public meeting may follow in August or September. The agencies ultimate goal is to launch a limited e-commerce pilot in early 2019.