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CAN THE GOVERNMENT ACCEPT FREE SERVICES? IT DEPENDS

A Facebook friend of ours recently wondered whether the government could accept free services to complete and repair the border wall along the US southern border. Although there are many angles to this issue, strictly speaking from a procurement perspective, the answer here is probably “no”.  The federal government cannot usually accept free services and goods.  This prohibition dates all the way back to the late 19th century when Congress passed the Anti-Deficiency Act.  The simple intent was to prevent people or companies from providing something of value for free and later submitting a claim, thus busting an agency’s budget and requiring additional appropriations from Congress.  Like most government rules, however, there are exceptions.  One is in the case of a true emergency involving “imminent” danger to safety of human life or the protection of property.  This exception has been discussed frequently over the past year given that President Trump declared a national emergency over COVID-19.  Other exceptions are also tied closely to public health circumstances involving the military or the Public Health Service.  Outside of these areas, however, contractors cannot offer something for free unless they expressly agree to do so in writing via a contract.  For GSA Schedule contractors, however, this does not mean that the government doesn’t want to know about free services or goods you provide in the course of your commercial business.  Although the government may not be able to accept them, GSA rules state that contractors must disclose them so that the government can take advantage of lower overall prices.  More than one company has found out the hard way that “free” can cost you something.

SURPRISE! CONGRESS INCLUDES $1B FOR TECH MODERNIZATION. HERE’S WHERE IT GOES

The IT Modernization Fund will end up getting its $1B infusion after all.  Efforts of senior administration officials, coupled with specifics on where the money will be spent, were enough to overcome Senate doubters.  The $1B is part of the $1.9T COVID relief package.  $650 million of the money is going straight do DHS for cybersecurity projects.  The Cybersecurity and Infrastructure Security Agency will oversee the distribution of that money.  $200 million will go to the US Digital Service for various IT projects, with the remaining $150M headed to the Federal Citizens Services Fund.  The IT Modernization Fund is a type of revolving account, meaning that agencies will have to pay that money back to the fund via realized savings.  Other agencies will then be able to apply for fund dollars for their own projects.  The directed spending approach, however, may be an indication of how the fund will receive additional money in the future:  specific projects up front, with re-paid funds available for others later.  While it is too soon to tell what extra money might come, it is worth noting that the Biden administration has already indicated support for as much as $9 billion for it.  Contractors should reach out to the three initial agencies receiving funds now.  While some of the cyber money may be spoken for, contractors previously played an important role in shaping project proposals seeking fund money.   In addition to the funding for the TMF and other cybersecurity and IT initiatives, the Senate bill included the extension of the Section 3610 authorities to let agencies pay contractors if they cannot work during the pandemic. 

THREE COMMON MISTAKES CONTRACTORS MAKE – AND YOU SHOULD NOT

Federal government contracting is not a “reinvent the wheel” business.  Here are three mistakes others have made so that you don’t have to:  1.  Trying to be everywhere at once:  Many contractors, and not just new ones, are overwhelmed by the size of the federal market.  They reach out to as many agencies and departments as possible, but don’t take the time to learn about any in detail.  This is a recipe for frustration, not to mention uneven sales.  A focused approach to the market works best.  Not even the largest contractors try to be everywhere at once.  Pick a small set of initial targets, get to know them, and then spread out slowly from there.  2.  Trying to do it all yourself:  Experienced, successful contractors acknowledge that federal business is not a go-it-alone business.  You need help, whether its sales, marketing, compliance, or contracting assistance.  Remarkably, some companies know this at first and then slowly morph to a “DIY” attitude.  Look, trying to wear too many hats will not only cause them to fall over, but you will, too.  Get help when you need it.  It’s not a sign of weakness, it’s a sign that you take sustained growth seriously.  3.  Failure to do proper research:  You’d be very surprised at how many contractors get into a meeting with a prospect only for the prospect to say 5 minutes in, “You know we just brought that solution last week?”  Your heart sinks as you realize you’re not only wasting your time, but the prospect’s.  Make sure you know what’s happening in the agencies you targetBe ready ahead of time to engage on upcoming needs and help define them.  Also, while everyone likes to sell a prospect “something they don’t even know they need”, using that as your entire government approach likely won’t end well, either.  Federal agencies generally have a good idea of what they need and, more importantly, what’s in their budget.  There’s always an opportunity for something new, but, more often, its better to know what your customer is looking for and try to fulfill it.    Have other “would you believe?” stories?  Send them along at info@allenfederal.com.       

STUPID CONTRACTOR TRICKS RETURNS! BRIBERY! DIAMONDS! PRISON!

A former federal contractor employee is now serving a 70 month prison sentence in connection with his actions of bribing federal officials to obtain construction contracts for his company and then collecting even more in kick-backs to steer the resultant sub-contracts to a specific provider.  John Winslett may have been concerned that, at 66, he didn’t have enough saved to retire.  He offered cash, vintage cars, diamonds and weapons to Army personnel who then steered an estimated $19 million in business his way.  All of the goodies, though, equaled only about $100,000, far less than the over $700,000 in kickbacks he took from the sub-contractor. That should have been enough to pay for a few years in a place nicer than his current jail cell, if only he didn’t get caught.  Contractors absolutely must monitor the actions of those who develop business for them.  Few companies really send BD people out with instructions to buy off federal officials, but they can nevertheless be responsible for their bad actions.  At a minimum, the company will have to hire outside legal help to protect its interests and will then have to work to regain trust and re-establish the company’s image in order to get future business.  Monitoring employee actions in the field may seem expensive, but it is far less so than what Winslett’s company is now facing.  Make sure your company has proper oversight systems in place to ensure that one or two people can’t place your entire operation at risk.

TO BIC OR NOT TO BIC, THAT IS THE QUESTION

Bloomberg Government clarified recently that one-in-three IT dollars are placed through Best In Class (BIC) contracts for Information Technology Solutions. That’s a huge difference from their January report showing that BIC vehicles account for only 7% of sales overall.  One big reason for the difference is the emphasis that the Office of Management and Budget, GSA, and others placed on using BIC’s specifically for IT acquisitions.  Agencies were encouraged, directed, and generally made to use BIC vehicles as their preferred IT acquisition method.  Other BIC vehicles, according to Bloomberg sources, may have some elements in them, such as LPTA provisions, that make them less desirous overall.  The bottom line for contractors is to still have approximately three acquisition methods in mind when discussing a potential buy with a customer.  If the solution is predominantly IT and the company has one or more BIC IT vehicles, that could definitely be of interest to the client.  Outside of IT, though, the numbers show that a BIC vehicle may be something nice to have, but the absence of one need not be a show-stopper.  Indeed, a contractor’s recommendation may be a major factor in how an agency chooses to acquire solutions such as professional services.  As such, contractors should definitely be prepared to offer input.  Promoting easy-to-use contract methods is an important part of building trust with a client.  As GSA proceeds with planning its OASIS follow on, companies may want to pay close attention to how user-friendly it will be and what the new vehicle’s capacity will be to handle OASIS-like projects.  The right solution is important, whether the acquisition is made through a BIC contract or another approach.