Despite calls from industry, and even the
Pentagon, to delay requirements that defense contractors purge all Huawei, ZTE,
and other banned tech throughout their entire company, Congressional leaders
seem unwilling to grant a statutory extension. Indeed, House Armed Services Committee Chair
Adam Smith (D-WA) would like the Government Accountability Office to initiate a
report on the implementation of Section 889, the portion of the FY’19 defense
bill that set the ban in motion. The FCC
recently named Huawei and ZTE as formal risks to national security. The question of how contractors should
comply, though, is difficult to answer. No
regulation has yet been issued for either review or comment. A draft reg is thought to be stalled in OMB’s
Office of Information and Regulatory Affairs.
The mere absence of a regulation, though, does not forestall the
implementation of the law, Part B of which is scheduled to become
effective August 13th. While
DOD leaders had indicated earlier this year that they would like to see a
six-month delay, one branch of the government can’t undo what another branch
has done without some sort of formal action.
While some may believe that limited enforcement will provide a degree of
relief, keep in mind that the initial watchdogs of company compliance
were always more likely to be whistleblowers. As such, contractors may be left to taking
the broadest reading of the law, which bans the use of Huawei, ZTE and
affiliated technologies throughout a DOD contractor’s company, regardless of
where in the world it is located or whether or not the specific location is
involved in DOD work. The bottom
line is that any company with significant DOD business must take precautions to
ensure that both it and its subcontractors comply with the law.
While prime contractors may interact with
sub-contractors every day, its usually about meeting a current requirement or
how to approach an upcoming bid, not on some element of compliance. When was the last time,
though, that you checked the Country of Origin on products shipped from your
key suppliers? Are their key personnel
still part of the company? When was the
last time they (or you) had training? As
a prime your responsibility runs beyond generating business and
even beyond ensuring that your own compliance processes are up to date and
being followed. You are
responsible for the performance of your sub-contractors and you can be
financially liable, along with them, if there are gaps in their
compliance. While many large companies
have an annual certification process for sub-contractors, many medium or
smaller companies do not. All
prime contractors that work with sub-contractors should have regular oversight
of their sub’s adherence to applicable compliance rules. Topics to cover include size status, whether
the source for key parts has changed, the existence of a business ethics
program, compliance with FAR sub-k flow downs, and any other area that impacts
a specific contract or agreement. It can
be difficult to ensure sub compliance at a time when workplaces are virtual,
but your company is the one ultimately at risk during an audit or whistleblower
incident. As with your own compliance, ensuring that sub-contractors are
fulfilling their own obligations is a pennies on the dollar investment. Taking the time now can save you – and
your sub – money later on.
Overstock, Amazon, and Fisher Scientific
are the awardees of GSA’s commercial electronic commerce platform pilot. The program, mandated by Congress in an
effort to enable federal agencies to take advantage of the ease of use of
commercial e-commerce platforms, is expected to launch as early as the
first-part of July, meaning that it will compete for year-end business
opportunities with the GSA Schedules and other programs. A wide variety of commercial products will be
available, including office supplies, furniture, and, apparently, lab
equipment. While orders will be limited
to the micro-purchase amount, it is unclear whether that level includes the
temporary $20,000 ceiling some agencies have set due to the impact of COVID-19 or
will be at the standard $10,000. Either
way, significant purchase card business could be done, especially as
agencies seek to obligate “use or lose” funds later this summer. In announcing the award, GSA Administrator
Emily Murphy said, “The e-commerce portals proof-of-concept is an important
step in offering a solution for purchasing commercial products online that
protects our federal supply chain against malicious and counterfeit goods,
furthering our national security.”
Indeed, supply chain security was a key offeror evaluation point. Another important element of the three-year
pilot is the ability of agencies to gather spend analysis and other user
data. Contractors are required to
capture certain elements of buying activity, something that has proven to be of
high interest to agencies.
Agencies already using awardee e-commerce platforms will be expected to
transition to the GSA program, with contractor help. Success will likely depend on pricing,
ease of use, security, and how effectively companies can market their
solutions.
What if your company could hire trained
workers from different parts of the country and not have to have them all move
to the DC area or pay DC area wages? That may be one benefit of the post-COVID-19
workforce according some federal and industry executives. “… I can have remote workers, they don’t
have to be in D.C., so I can bring real talented folks into work with us, they
can be living in upstate New York, anywhere … rather than hire 50 people in
D.C., I can hire 50 people across the country,” said Cybersecurity
and Infrastructure Security Agency (CISA) Director Christopher Krebs at a recent
event. It’s not only cyber-jobs, though,
many different types of non-classified work can be performed by qualified
people regardless of physical location.
We know of one firm who has an employee who literally travels the world,
but is plugged into the company network during US east coast work hours. So long as there are clear goals,
expectations, and an internet connection, employees may seldom have to come to
the “mother ship” or meet in-person with clients. Contractors may want to expand their
hiring horizons in anticipation of initiatives by either government
agencies or other companies. Virtual
work-forces pose challenges, like ensuring your own network security, but could
also give you a capability and pricing advantage.
New reader J. Legend of Brentwood, CA writes, “Our company is
doing work on a contract with a “not to exceed” amount of $200,000. We will likely only incur $100,000 of time
and labor. Can we bill for the full
$200K?” Nice try, J. but a
“not to exceed” contract means only that the government will spend “up to” that
amount during the contract.
Contractors cannot bill for more than the time or costs they actually
incur. Submitting a bill for more
is a prima facia False Claims Act violation and can cost your company more than
the business was worth. There is
substantial case law on this point.
Although it might be tempting, it is ultimately not worth the risk to
your company’s other business or reputation.
Contractors can only bill according to the terms and conditions of the
contract and only for valid prices or costs incurred. This is true, by the way, even if a
government contracting officer says you “must” bill for the entire “not to
exceed” amount. Although CO’s
should always be given respect, following advice contrary to the law can still
get you in trouble