While there is an agreement in concept to pass a
Continuing Resolution (CR) to start off the 2021 Fiscal Year, there is,
as yet, no agreement on the length, nor on whether another pandemic-related
stimulus bill will pass along with it.
Many Republicans are seeking a CR that keeps the government open into
sometime in mid-December. This is
consistent with conventional thinking that final FY’21 appropriations could be
finalized by Christmas. Democrats,
though, may want a shorter bill as it will provide additional opportunities to
point up differences on policy matters between the two parties. There is also no agreement on whether a new
pandemic relief bill will pass, or, if it does, how large it could be. An attempt last week to pass a comparatively
smaller measure, less than the $2 billion some elected officials have called
for, failed in the Senate. This
can all be a distraction for contractors. We’ve said before that a new relief
measure would likely be a net negative for contractors as it would impact
out-year spending and create a larger future bill that would drag down many
sectors of the economy, including government contracting. The good news is that no political leader is
discussing a shut-down. It is
highly probable that a CR will be passed that will fund the government at least
through the November election, if not longer. That provides some level of stability for
business. The outlook for a relief bill
is much more problematic. It may well be
that each party would rather have the issue to use on the campaign trail and
not an actual bill. Regardless, companies
should not get distracted over pandemic-relief “what if’s”, especially at year
end. We will keep you posted on
changes that demand your attention.
While contractors can’t exactly “forget” secure supply chains, they
shouldn’t just be focused on that one issue. Enhancing or creating domestic production
capacity and creating additional preferences for such products in federal
acquisition is fast-becoming a national, and perhaps political, priority. Both senior acquisition officials, and their
bosses, have expressed concern on the US market’s reliance on foreign-made
product in light of the COVID-19 pandemic.
Shortages of pharmaceuticals, medical equipment, and even specialty
metals needed for critical technology systems have all woken up federal
logistics and national security officials on the need to create or enhance
domestic production in these and other critical areas. Contractors can expect the next
Congress to pass legislation that could either encourage or mandate increased
domestic content in provided solutions.
In addition, laws or rules that require companies to share more
information on their supply chain capabilities may also be implemented. This may all be more expensive for both
contractors and the government, but the current thinking is that the cost is
worth it if the net result is increased US security, whether it be on
the technology, healthcare, economic, or some other front. This issue has already attracted some
attention, but will likely move closer to center stage in the coming
months. Contractors need to watch
these developments closely and be prepared to adapt accordingly.
The Department of Justice’s Procurement Collusion Strike Force, formed last year to
increase contract compliance reviews, continues to expand its efforts. Any company with sizeable government
business should take notice, not just for the task force’s actions, but
for its focus on criminal prosecution under the False Claims Act. Most enforcement actions have traditionally
been undertaken by the Civil Division of DOJ.
As a result, penalties against individuals or companies caught violating
rules include fines and potential suspension or debarment. These are strong penalties in and of
themselves, but do not ultimately compare to criminal penalties that can
seriously harm a corporate reputation and land individuals in a real prison,
not just suspension and debarment jail. Attorney
Michael Volkov, writing in JD Supra, points out: “Last year, the Antitrust
Division unveiled its important compliance guidance, Evaluation of
Corporate Compliance Programs in Criminal Antitrust Investigations.
Companies involved in public procurement should adopt and implement robust
corporate compliance programs.”
It may also be a best practice to read the DOJ report to ensure that
those programs feature components recommended by the agency. Approximately one-third of the task force’s
open criminal investigations involve government procurement. Such actions
could cost contractors millions in fines, legal fees, lost business, and
damaged reputations. Compliance is
something that few people like to talk about, but it is most definitely the
“ounce of prevention” that can protect both you and your company.
GSA issued an update last week on related to its Schedules consolidation process reminding contractors that their GSA Advantage catalogs and price lists must be updated BY October 31st.
This is despite reports that some acquisition offices are already overwhelmed with consolidation and end-of-year work.
Regardless, contractors that do not update their price lists and catalogs may have their information removed from GSA websites.
Your company,
an established government contractor, is approached by a new company with
a potentially great technology solution.
Does it, though, present a supply chain risk that federal customers
can’t use? You think it might
and provide a new government supply chain review board information. It turns out, though, that the company is
legit. They’re now suing you,
though, because you reported them as a potential risk. Sound like we’re jumping ahead to
Halloween? Not really. This is exactly the scenario government
contractors could find themselves in when trying to navigate the government’s
changing secure supply chain rules.
A new interim rule, created by the passage of the Federal Acquisition
Supply Chain Security Act of 2018, gives the government a variety of tools to
exclude an inappropriate company from contracting with the federal government
if there is a potential supply chain risk.
Similarly, government contractors are encouraged to share information on
potential secure supply chain risks, including information on problematic companies.
Contractors may, however, face lawsuits or other legal action if the
information doesn’t pan out. Talk about
a Catch 22. Federal contractors
have to be increasingly careful about the partners they use in their federal
supply chains, but also must take care to make judgements only on well-founded
information. Someone once said
that government business is not a “go it alone” proposition. This is indeed the case here. Make sure
your firm works with outside legal and other help to navigate these
increasingly tricky waters.