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ALLEGATIONS IN ORACLE LAW SUIT SERVE IMPORTANT REMINDER ON CONFLICTS

While it is rare that people who misbehave in the world of government procurement can go to jail, it does happenRecent allegations made in Oracle’s lawsuit over DOD’s JEDI procurement could, if found to be true, result in one or more prison sentences, the jeopardization of a major contract award for Amazon Web Services, and the end of careers for people in both the company and DOD.  If most of this sounds familiar, it’s because it’s happened before.  Former DOD acquisition chief Darleen Druyun went to prison for her failure to recuse herself from an active procurement that she was a part of while discussing employment with Boeing, a potential winner of the procurement, at the same time.  The Oracle suit alleges much the same thing.  Two DOD officials that were part of the JEDI procurement are alleged to have had employment discussions with Amazon Web Services during the conduct of the same procurement.  At least one went to work for the company.  If the facts essentially follow the Druyun precedent, this could be very bad news, not only for the people involved, but for AWS.  Druyun served 9 months in federal prison.  At least two Boeing executives were fired.  Boeing paid a multi-million dollar fine.  Many suspect that they only reason that Boeing didn’t end up on the Excluded Parties List is that DOD relies too much on the company.  That’s not the case for AWS, or, indeed, most other contractors.  There is a lesson here for all contractors though:  Don’t recruit people to come work for you that are involved in a current acquisition on which you are bidding.  Federal rules allow for discussions in some cases, such as when the government official recuses him or herself from the project.  Absent that, treat this issue as a third rail – do not touch.

GSA PRESSES CONGRESS TO INCREASE MICRO-PURCHASE LEVEL FOR E-COMMERCE BUYS

GSA is again asking Congress to increase the Micro-Purchase Threshold (MPT) from $10,000 to $25,000, but this time with the limitation that it be only for purchases made through its e-commerce portal program and with a sunset provision after 5 years.  This was among the information released last week in the agency’s much-anticipated report to Congress on the status of its e-commerce portal project.  GSA also stated its intent to move forward with a pilot program, initially restricted to e-marketplace providers, and limited to items such as office supplies and industrial products.  Other types of e-commerce systems, such as e-commerce models where a provider purchases products from a supplier base and sells them as inventory, would have to wait until a later phase.  GSA identified three benchmarks on how the pilot would be evaluated:  1.  To what extent is the program successfully modernizing the COTS buying experience? 2.  To what extent is the program attracting buyers and thus shifting work away from contracting officers to allow them to focus on higher value work? And 3:  To what extent can the program’s increased transparency, both in terms of spending data visibility and access to mandatory source and socioeconomic programs, drive better buying strategies and decisions?  Notably absent is a pricing comparison benchmark on whether the prices paid via the e-commerce project will be higher or lower than those available from GSA’s existing Schedule contracts or other pricing on GSA Advantage.  GSA still intends to move forward with an RFP in the 3rd quarter of the year, with a plan to get a pilot up and running by the end of the calendar year. 

SUPPLEMENTALS MAY INCREASE FY’19 SPEND

The Department of Homeland Security is requesting $4.5 billion in additional money from Congress to handle an influx of people crossing the southern US border.  Over $1 billion of that amount would be for operational and technology enhancements, presenting opportunities for contractors.  In addition, Congress is also contemplating a disaster aid package to assist states impacted by last fall’s hurricanes and this spring’s floods.  DOD, too, may get into the game with the Air Force threatening to shut down work at several air bases if additional funding isn’t provided.  All of this means that contractors may be looking at increased opportunities over what is already shaping up to be a significant federal third and fourth quarter.  Birchgrove Consulting President Ray Bjorklund recently stated on the Federal News Network’s “Off the Shelf” that agencies impacted by the partial government shutdown had to make up for between $8-11.5 billion in spending that was placed on hold.  DOD and other agencies also have full appropriations over last year’s levels.  It is clear that there is business to be won.  GSA’s FEDSIM operation has already stopped taking new business and other assisted service organizations are filling their books quickly.  To use a variation on a popular commercial tag line, “What’s in your pipeline”?  This is the time of year when those fuzzy dots on your radar should be taking shape.  If you aren’t seeing action, make sure you’re looking in the right places.  We are again poised for a ride that doesn’t end till September 30th

DOD SHARES ITS NEGOTIATION PLAYBOOK WITH INDUSTRY

Be Prepared, Aim High, and Give Yourself Room to Compromise are the top three of DOD’s recently-released ten rules to its contracting officers.  Whether negotiating with DOD, GSA, or another agency, DOD’s guidance can prove helpful for contractors as well as the government workforce. As John Chierichella of Sheppard Mullin, the original source of the top 10 list, pointed out, it’s like the other team sharing their playbook for all to see.  The rules aren’t necessarily magical, but more of a common-sense guide to reinforce standard business techniques.  Although all are useful, we like number 7 perhaps the best.  The “Say It Right” guidance is important to remember in Washington especially, a place where many government and industry professionals tend to talk in shades of gray with plenty of nuance.  This can help ease tense situations and achieve compromise, but gray areas can be deadly in the contracts world.  Making sure that each term has a specific and well understood meaning is critical to ensuring both performance compliance.  Another one we’ve used is Use the Power of Patience (Number 9).  Silence can be golden and can lead to the other party making concessions just to fill the void.   It’s amazing how well applied patience helps you not give in to a bad deal.  Whether an experienced negotiator or newbie, the DOD rules are “must reads” for government contractors to keep your skills sharp and understand where the government is coming from.

DESPITE BEING A “PRIORITY” IT MODERNIZATION SPENDING MAY DROP

Federal agencies may allocate only 21% of their FY’20 IT budgets to IT modernization, according to a recent forecast from Bloomberg Government.  That’s down slightly from this year’s 23% and, while not a significant decrease, comes at a time when most believed that modernization spending would accelerate.  The total dollar drop would be about $1 billion, down to $14.5 billion.  Modernizing IT systems has been both an administration and CIO community priority.  GSA manages a small, revolving IT modernization fund to spark innovative solutions.  Considerable ink has been dedicated to modernization efforts.  Yet, as the tension over whether and how to update agency telecommunications solutions shows, there can be significant internal obstacles to truly modernizing.  In telecomm this has manifested itself in the form of agency concerns about workload, functionality, and cost.   Several agencies want nothing more than to “lift and shift” their existing telecomm infrastructure because that seems to be the easiest thing to do.   The downturn in overall modernization spending may be a result of the same line of thinking.  If so, industry has considerable work to do to show that new systems are not only safe, but easy to deliver and full of new, easier to use features that customers may not know exist.  It is apparently not enough that they are light years ahead in terms of security.  If a new solution is perceived as difficult to buy, install, and manage the customer may just keep their Model T solution.  It may be time to adapt marketing and sales messages accordingly