Is Innovative Procurement the Answer to Budgetary Constraints?

As agencies continue to feel pressure to modernize their aging infrastructure, and find other avenues for completing their respective missions with restrained funding, several areas of interesting solutions seem to be working their way across government.

As blogged by Steve Kelman on Federal Computer Week's The Lectern, several agencies are using competitive prototyping, and other innovations, as a step to encourage groundbreaking solutions by industry, combined with evaluating process over paper.

First up the Department of Homeland Security’s (DHS) Flexible Agile Support for the Homeland or FLASH, which was designed to be a small business contract for a variety of Agile development and other DevOp services. The source selection process focused on the use of tech demonstrations, and forgoing the typical Request for Proposal process which is usually daunting for small businesses, especially newer entrants into the market.

This was an excellent approach to acquiring software development services, but was regretfully plagued with management errors in the evaluation and selection process.

A teachable moment for sure, but DHS has made a commitment to innovative, and will continue to find ways to improve its procurement processes and find the best ways to bring in innovative firms and solutions to the agency as discussed on Government Matters.

These tech demos are an excellent way to see how firms behave, think, interact with users, and of course, verify the quality of the products and services being developed. These are tangible factors for evaluation, and can simply not be done with paper-based approaches to selecting vendors.

Besides DHS and 18F from the General Services Administration, the Department of Veterans Affairs, used a tech demo to select a vendor for a task order for software development to support benefit appeals processing modernization. The Center for Medicare and Medicaid Services has done tech demos, as has the Department of Health and Human Services, who have been pioneers in digital services through the Buyers Club, and the leadership of Mark Naggar.

This past week, the Office of Personnel Management issued a Request for Information on innovative solutions to modernize their infrastructure, and how best to pay for it. Perhaps a culture shift is underway across government, which is a good thing. A very, very good thing.

Let’s hope that these initiatives continue to spread across government, and that the days of reading through 100-page RFPs are at an end for both industry and the government.

Small Business Teaming: 3 Tips For Forming Productive Partnerships

Forbes.com

Although the small business market is currently difficult, there are opportunities for small businesses in the federal market. This is particularly true in the professional services sector, where large businesses are seeing their contracts being recompeted as socioeconomic set-asides.

As a result, teaming relationships for small businesses are of particular interest, and can provide an excellent opportunity for new business either as a prime or subcontractor, with new partners and relationships. However, teaming does come with issues that are of particular concern as well, such as running afoul of small business size status, eligibility, affiliation, and being taken advantage of by firms needing to “rent” a designated socioeconomic designation.

Here are three issues to consider when teaming for small businesses: 

1. Details. Worrying about details later is a recipe for disaster. The teaming agreement should detail how the parties will structure the team, and the work that each party will be performing through a clear statement of work. Further, the teaming agreement should have very specific terms that demonstrate the party’s intent to be bound in the structure of the relationship (e.g. the proposed prime contractor “SHALL”), and their performance in connection with the contract, such as those that meet limitations on subcontract provisions. You should also have a copy of the subcontract you plan on entering into, should the proposed prime be awarded the contract.

The last thing on Earth you want is to have an unenforceable agreement that is not definitive enough to qualify as enforceable. Do not leave details vague, and do not leave issues subject to too many conditions.

2. Communication. Small businesses must ensure that when executing the contract, there are no negative impacts on their small business size or status. Make sure that any issues such ownership, control, and affiliation are dealt with, and that all requirements for small business regulations and governance are met. This is especially true for firms that are certified in the Small Business Administration’s 8(a) program, and for veteran owned business certifications by the Department of Veteran’s Affairs.

3. Exclusivity. The purpose of the relationship is to create a winning team that complements each other, and having each party add capability that wins the contract and differentiates the team from the competition. Exclusivity provisions are especially necessary for small businesses as primes, because it prevents the larger businesses sub from “shopping around”, and teaming with others businesses to win no matter what. Not having exclusivity provisions defeats the purpose of teaming. Make sure that your proposed teaming partner is teaming with you, and you alone, such that you are the only offeror benefitting from what the teaming partner brings to the table.

Understand that your short-term gain could have devastating impacts long-term. Small businesses too often sacrifice these concepts, and that is a mistake. A small business should understand that they need to be prepared to walk away from the teaming agreement, if it is in your firm’s long-term interest.  

Always consult a legal professional, and ensure your teaming agreements are clear, concrete, and will help shape the successful teaming partnership to the benefit of both parties.

Will VA certifications of SDVOSB go away? We in the Veteran’s community can only hope so

Photo by ZDNet

Recent contracting missteps, as reported by the Washington Business Journal (WBJ) and Microtech by the Washington Post, seem to have endangered the Veteran’s Affairs (VA) programs for certifying firms as either Service Disabled Veteran Owned Small Business (SDVOSB) or Veteran Owned Small Business (VOSB).

Although the current certification process is challenging enough, this recent issue by VA really is inexplicable, and a glaring example of the overall mismanagement of the VA contracting process for a program that supposedly is “critical” for the VA mission:

The Department of Veterans Affairs abruptly ended a three-year contract with an Alexandria company nearly three months earlier than planned, leaving in limbo the crucial task of processing applications from contractors hoping to be verified as veteran-owned small businesses…

To give VA cover, in typical bureaucratic fashion, was Tom Leney, chief of small and veteran business programs at the VA:

…The VA’s head of small and veteran-owned business programs is apologetic about the change, though short on details. He’s also vowing that the agency’s application processing work — which has drawn fire from critics — will continue, and be done efficiently…

…”I recognize the impact that this change has and I am sorry that we have not been able to avoid this situation,” Tom Leney, the VA’s executive director of the small and veteran business programs, wrote in an email to Ardelle employees who support the contract, which was obtained by Washington Business Journal…

Where Do Certifications Go From Here?

What to make of all this? Well, one of the main contractors processing applications, Ardelle Associates, is trying to figure out what do. Ardelle President, Art Forcey, had some interesting ideas as to what is happening:

…”I think it was political. I think delays in getting a new competition started caused infighting about what to do and people took some heat for extending our contract,” he said. “But this wasn’t the right way to go.”…

Was it political? Of course it was. However, one of the principal reasons that I believe caused this misstep was simply a lack of proper acquisition planning. I am sure there was infighting, but this program is a great foundation for “empire building”, as I like to call it, and as further demonstrated by the recent power grab by the VA to take control of SDVOSB eligibility away from the Small Business Administration (SBA).

Nonetheless, we can only hope that these continued issues will allow the VA to get back to its core mission, which should not include certifications of SDVOSBs and VOSBs. In fact, the $40 million being spent on these programs should be diverted to the backlog of claims that are both an embarrassment, and a disservice, to veterans waiting in almost perpetuity for their claims to be processed.

Common Sense Legislation Can Solve This Problem

Recent investigations and legislation into the certification process by both the House Small Business Committee and the House Committee on Veterans’ Affairs will hopefully correct these VA lapses and bring improved efficiency and consistency to the process, currently known for mismanagement and waste.

Further, legislation to this effect can hopefully now move forward. Representative Mike Coffman (R-CO), has introduced or co-sponsored several pieces of legislation to correct these issues, most notably H.R. 2882, “Improving Opportunities for Service-Disabled Veteran-Owned Small Business Act of 2013,” which requires VA to relinquish control over the verification of SDVOSBs and VOSBs to the SBA.

I believe this is the way to go, as this exercise in futility is simply not working, and drastic change is needed. There is simply too much overall, redundancy, and a lack of defined methodology and processes that subject the firms seeking verification to subjective terms. Furthermore, the process is needlessly complicated and cumbersome, and lengthy delays and rejections are inevitable in this environment.

Photo by USPS

Although the numbers seemingly are gamed as to the length of time for certification coming out of the Center for Veterans Enterprise at 27 days, a line longer than Black Friday lines at Best Buy can be formed of firms that can refute this ridiculous statistic of the time and documentation required for certification.

I hope this legislation moves forward, as it makes sense. The SBA already has the processes, infrastructure, and experience in place to certify firms for socioeconomic certifications and eligibility. That is what they should be doing. It is a matter of sticking to your strengths, and certifications should not be part of the VA mission any longer.

Contact your Congressional representative, and get them on board with H.R. 2882. You can do this directly from govtrack.us.

Don’t our veterans deserve better?

Your Taxpayer Dollar$ at Work: Volume II

Last year I started a series to highlight outrageous cases of waste, fraud, and abuse by the federal government. In the current environment of complete political theatre and legislative dysfunction leading to budget crises, debt ceilings, and continuous resolutions, I can probably write a book with so much material. However, I wanted to focus on a truly outrageous case of fraud and waste that is shocking, even when we succumb to the worst stereotypical fears of our government.

According to a recent inspector general report at the Department of Veterans Affairs (VA), $540 million dollars annually worth of business is being awarded to companies that fail to meet eligibility requirements for veteran owned small businesses or service-disabled veteran owned small businesses. The report stated these results were extrapolated from audit results, which assumes $540 million, and could add up to $2.5 billion over the next 5 years. The report further estimates that factoring out ineligible businesses, the VA only awarded 12 percent of its procurement dollars to actual veteran owned small businesses (VOSBs) and 10 percent to service disabled veteran owned businesses (SDVOSBs), as opposed to the 23 and 20 percent it said it did during fiscal 2010. Half a billion in estimated fraud? Give me a break.

The main culprit, not surprisingly, is the lack of accountability, according to testimony before the House Veterans Affairs' subcommittee on oversight and investigations by Belinda Finn, assistant inspector general for audits and evaluations at the VA OIG.

…Ineligible businesses received awards because VA's office of small and disadvantaged business utilization was not thoroughly reviewing business documentation and performing site visits to verify the veteran-owned status, said Finn. The OIG also found that contracting officers did not always check VA's enterprise veterans database, business size classification codes, or properly assess subcontracting and partnering agreements…

Once again the lack of resources and strain on the acquisition workforce was blamed, although this is a false argument. There is absolutely no excuse for not verifying eligibility of a firm for these types of set-aside programs, not to mention the subcontracting and partnering agreements. Where is the protection of the public’s trust?

Also of note is that only 30% of service disabled veteran contracts are with the VA, so this is a widespread issue. Obviously unethical firms and individuals are taking advantage of the lack of oversight, but there is no reason why VOSBs and SDVOSBs should be self-certifications. These programs should have formal certification processes similar to 8(a).

Although the VA has verification programs in place through its Center for Veteran Enterprise, it is woefully inadequate and cumbersome. You need your DD-214, adjudication letter from the VA (for SDVOSB), and corporate documentation showing 51% ownership and control. That is it. The current document requests are intrusive, and privacy is a risk. Explain to me how requiring 14 voided checks proves I am eligible?

Taxpayers are at risk in this program, and I hope the government, especially at the VA, understand the depths of this massive fraud being per perpetrated on taxpayers and veterans.

Poor Acquisition Outcomes Can Also Happen With The Government Acting As The Contractor

In light of all the focus recently on federal acquisition reform, one of the agencies with the most problems is the Department of Veterans Affairs. The VA is a case study on what the failed policies of the past in regards to workforce development have done to the present difficulties with completing the acquisition mission in government.

Next Gov published an article that clearly demonstrates the focus on acquisition reform should be on process and people, not pitting contractors versus government. An internal inspector general report released by the VA highlighted contracting irregularities with an arrangement the VA signed with the Space and Naval Warfare Systems Center in the management and development of IT, including one of the high-profile systems that processes educational benefit claims.

The report describes a typical contracting arrangement of a complex IT system; insufficient clarity of requirements leading to poor cost, schedule, and performance outcomes. What is interesting about this arrangement is that it is a government-government contracting agreement, although the article and the IG report shed some more light on what the understanding actually entailed:

…But the IG found that VA had not conducted an analysis as required by the Federal Acquisition Regulation as to whether awarding IT contracts to SPAWAR "is in the best interest of the government." The IG also concluded that SPAWAR, not VA, developed requirements for IT projects that "were often broad and general in nature and lacked specific deliverables."…

What the report clearly spells out is that VA not only did not know what they had arranged, but little to no analysis had been done to justify this arrangement. Further, SPAWAR simply contracted out 87 percent of the work to outside contractors:

…These companies subcontracted out the work to other SPAWAR subcontractors, which increased costs because VA "must pay an additional layer of management fees and overhead," the IG said. The VA "could not tell us who was performing the work under the [agreement], how many people were providing services, or where they were located," the report noted.

The VA's Office of Enterprise Development was unaware VA was paying SPAWAR a 10 percent management fee, and the center was "unable to provide justification or authority to charge" the fee, the IG concluded…

The report further stated that the VA simply handed over the keys to the oversight of performance to SPAWAR, with further information on poorly defined statements of work for the GI bill system which were vague and consisted of poorly detailed information. Recommendations included crafting more clearly defined work statements, establish realistic cost estimates, and improving oversight of contracts.

What the report leaves out is that these recommendations are for activities that are basic contract management issues. Also of note is the fact that the common denominator here is poor acquisition outcomes caused by poor oversight, which would have been the case had VA hired SPAWAR or any other business entity in or outside of government. I too hope that Roger Baker, the new CIO, can straighten out how these contract issues. However, he has his work cut out for him.

There are no silver bullets for VA, and I hope that more focus is given to their predicament as their service delivery continue to suffer with the common denominator being the lack of trained, competent personnel. Several VA leaders I spoke to recently claimed that they would love to implement new techniques to streamline contract management tools, and implement recommendations to better manage their contracts, but have recently delayed or cancelled procurements because they simply do not have the bodies. Looking at the disease of acquisition breakdowns involves a focus on both process and personnel in parallel, and should not be one or the other.