While many had hoped that the President’s State
of the Union address last week would at least signal a path to avoiding a new
partial government shut-down, that didn’t really materialize. This leaves Congressional leaders, and feds,
with substantial uncertainty over what happens next. A bi-partisan Congressional group has been
working on compromise spending legislation and may well be close to a
deal. Whether the White House would
accept that, however, is a large unknown.
Even if Congress passed a spending bill and the president vetoed it, it
is very uncertain whether there would be enough votes for an over-ride. Even the Democratically controlled House
would need some level of Republican support for such an action. Indeed, some leaders in each party at least
privately want the President to use his emergency authority to divert existing
money and build a border wall so that they can pass a clean spending measure
that is separate from that issue.
While that opens a new can of worms for the use of presidential
authority, it would, at least, result in a government that was on more sure
footing in terms of being open for business.
It is quite likely that this one will come down to the wire, as most
shut-downs do. Contractors must be
prepared to close down some operations, again, but may not have to. Watch next week closely and remember
that at least this is more exciting than last Sunday’s “Super” Bowl.
While the Department of Defense issued its new cloud strategy earlier this
week it is perhaps more notable for what it doesn’t say than what it does. On the surface, DOD is embracing different
types of cloud solutions with an eye toward adopting commercial cloud
platforms. Anyone who’s spoken with DOD
officials, however, knows that pitching an off the shelf cloud solution
will likely not lead to much business.
Left out of the policy is the reality that many DOD and service branch
leaders want cloud solutions with the highest level security protections,
an expensive proposition that automatically counts out all but the largest
companies. Also missing is DOD’s
preference for dealing with known, established contractors – especially
when newer solutions like cloud are being acquired. This is essentially reinforced by the cloud
policy which takes a “warfighter first” approach and states that cloud
solutions must be built “in a manner that never puts the warfighter at
risk”. While there may be some limited,
pilot-like opportunities for innovation, the agency has already signaled that
larger cloud solutions will go to either established DOD contractors that can
implement cloud tools that are both offensive and defensive, or leaders in
commercial cloud technology that can meet high security requirements. Established DOD contractors offering cloud
solutions should be familiar with the policy, but also understand what is
missing
Contractors buy other contractors all of the
time. Indeed, having a key contract can
be the difference between a sale or no sale. It’s
important to remember, however, that regardless of the status of your corporate
acquisition, the government considers the original contract holder to be the
prime contractor unless a formal novation has taken place. Experienced government contractor Grant
Thornton learned this lesson the hard way.
While they had already executed an Asset Purchase Agreement to buy OASIS
contractor Wyle Labs, Wyle’s novation request had not be completed
by GSA. When Wyle bid on an OASIS task
order they admitted that Grant Thornton would do 100% of the work (indeed, the
even did all of the proposal work). The
Department of Homeland Security deemed the offer non-responsive and found
considerable risk in the fact that they would not be in privity of contract
with the entity actually performing the work. When Wyle protested to the GAO, GAO sided with
DHS. Contractors need to be aware of the
risks to pending procurements when conducting a transaction. Similarly, although they should be
open and candid with contracting officers about pending deals, the risk remains
that an agency will disagree and choose not to award a contract until the
transaction, including novation, is complete.
What better way to spend Valentine’s Day than with Larry Allen taking a
GSA Schedules class? Join Allen Federal
and the Public Contracting Institute for a Hands On Workshop on the latest
developments in GSA’s Multiple Award Schedule program February 14th
in Washington, D.C. It’s not all hearts
a flowers, but we guarantee that you’ll leave with a better sense of how to
manage your company’s Schedule contract.
Chocolates will be distributed!
See the details here: http://publiccontractinginstitute.com/event/hands-on-workshop-how-multiple-award-schedule-contracts/
Although your federal
customers do have to prepare as if there might be another partial shutdown,
Allen Federal is placing the odds of such an event at well below 50-50. That doesn’t mean that we’re predicting that
all of the issues that led to the first shutdown will magically be addressed,
but rather that there is little will in Congress, especially in the Senate, to go
through another shutdown event for quite some time. It is quite possible that Congress could vote
to fund the agencies in play and decide separately on the President’s border
wall initiative. Another scenario is
that Congress sends another CR to the President who then vetoes it, only to
have that veto overridden. Either way, agencies
currently operating under a CR are likely to continue doing so for the
foreseeable future. That’s not
the best news for contractors, but it does keep agencies open and provides an
opportunity for discussions about future business when and if formal
appropriations are made available.
One wild card to watch is what the President says tomorrow night in his
State of the Union address. That may
provide clues as to whether a grand deal is achievable, potentially resulting
in actual appropriations measures being passed in the short-term. In the meantime, the government is open for
business, albeit with morale and weather issues making it slow going.