Federal Announcements and Reports

  • On August 2, 2017, as required by the 2017 federal fiscal year (FY) National Defense Authorization Act (NDAA), the U.S. Department of Defense (DOD) presented to Congress its plan for splitting the Office of the Secretary of Defense's acquisition office into two organizations. The plan creates two Under Secretaries: one for Research and Engineering and another for Acquisition and Sustainment. In the plan, the DOD maps how existing organizations would be paired with the new Under Secretaries of Defense. Although the formal roles take effect on February 1, 2018, DOD stated that additional time would be needed to complete the personnel moves under the plan.
  • Oversight.gov was launched on August 2, 2017 by the Council of Inspectors General on Integrity and Efficiency (CIGIE). The goal of Oversight.gov is to "improve the public's access to independent authoritative information about the Federal Government," by housing reports from various Offices of Inspector General (OIG). Although participation in the website is not legally required, 36 of 73 OIGs have already participated in the beta test. Historically, OIG reports have been posted and housed on individual OIG websites in accordance with section 8M(b)(1) of the Inspectors General Act of 1978, which requires the public posting of all OIG inspection reports, audits, or evaluations. By creating a centralized location where these reports are to be housed, CIGIE hopes to make it easier for the public to access these reports. The full list of OIGs that participated in the Oversight.gov beta test as of August 14, 2017 may be found here.
  • The Small Business Administration (SBA) is considering various ways to improve what is known as "procurement readiness," which is meant to prepare small businesses to do business with the government. These ideas include training as a requirement before certification and additional assistance in the acquisition of contracts and subcontracts, in the form of increased aid from the SBA. A remedial period will be made available to unsuccessful 8(a) companies that will allow them to temporarily put their term on hold while they undergo business development training. The SBA is also considering avenues for assisting small businesses with the macro-level changes occurring in the procurement world, which is trending toward consolidation and larger contracts. Some noteworthy changes include the new All Small Mentor-Protégé Program and asking procuring agencies to reserve a percentage of contract awards, in addition to contract dollars, for small businesses. It will be interesting to see how these ideas are implemented over time.
  • Each year, the U.S. Department of Labor (DOL) issues "wage determinations," which are adjustments to its health and welfare fringe benefits rate. This year, two adjustments were made by the DOL: one for Service Contract Act (SCA) covered contracts, and another for SCA covered contracts that are also covered by Executive Order 13706. On July 25, 2017, the DOL increased the health and welfare rate for contracts covered by the SCA from $4.27 per hour to $4.41 per hour. For contracts covered by Executive Order 13706, the health and welfare fringe benefits rate is now $4.13 per hour. The new rates apply to all service contracts awarded after August 1, 2017.
  • On August 15, 2017, the National Institute of Standards and Technology (NIST) issued Draft Revision 5 to Special Publication (SP) 800-53, Security and Privacy Controls for Federal Information Systems and Organizations. Among the major changes in Draft Rev. 5, NIST proposes to make security and privacy controls more outcome-based; integrate privacy controls into the security controls catalog; promote integration with different cybersecurity approaches, including the Cybersecurity Framework; and incorporate new, state-of-the-practice controls based on threat intelligence and empirical attack data. More details and a copy of Draft Rev. 5 are available on the NIST website. Comments should be submitted via e-mail to sec-cert@nist.gov with the subject "Comments on Draft SP 800-53 Rev. 5." The deadline for comments is September 12, 2017.

Ongoing Legislative Developments

  • There are some notable acquisition reform provisions contained in the House and Senate versions of the 2018 NDAA. Areas of interest include commercial items, "other transaction" authority, intellectual property, acquisition system management, data analytics, should-cost management, software acquisition, and several revisions of previous reforms. The 2018 NDAA proposes to make purchasing commercial products quicker and easier by "establish[ing] a program to procure commercial products through online marketplaces[.]" Respective provisions of the House and Senate bills would raise the dollar threshold under the Truth in Negotiations Act (TINA) for the provision of pricing data. Section 803 of the House bill would raise the threshold from $500,000 to $2.5 million. Section 813 of the Senate bill would increase the threshold to $1 million. The Senate bill would also raise the DOD simplified acquisition threshold to $250,000. Both the House and Senate bills would implement required training for acquiring commercial items to ensure proper understanding of these provisions.

    Another emphasis in both bills is a greater visibility of service contracts and a more thorough evaluation of the services contracts awarded by the DOD. "The Senate bill requires DOD to provide an estimate of the number of service contracts and their total cost in DOD's five year plan (§829). The House bill requires only information on the first year but that it be displayed by category in a common way across all DOD organizations (§814)." Russell Rumbaugh, Select Acquisition Reform Provisions in the House and Senate Versions of the FY2018 National Defense Authorization Act 5 (U.S. Congressional Research Service, 2017). With regard to intellectual property, both chambers seek to increase DOD's acquisition role as it relates to intellectual property. For example, "the Senate bill would require the U.S. Government to retain the rights to medical research developed exclusively with federal funds (§892). The bill also requires DOD to report when a prime contractor limits its subcontractors' intellectual property rights, a concern which most often stems from a subcontractor believing it has not received fair payment for intellectual property it developed (§899)." Id. Additional acquisition reform provisions of note may be found here. Highlights of the FY2018 NDAA may be found here.

  • On August 21, 2017, the DOD, the General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA) issued a notice of request for comments regarding an existing information clearance. The rule "intends to supplement agency annual service contract reporting requirements with the contractor provided service contract reporting information." More information on the rule may be found here. The original notice was published in the Federal Register on May 26, 2017, but no comments were received. Interested parties may submit comments on or before September 20, 2017.
  • GSA has extended the comment period for its Request for Comments from the public on "GSA's supplement to the FAR, the GSA Acquisition Regulations (GSAR), the GSA Acquisition manual (GSAM), or acquisition policies, standards, business practices and guidance that have not been codified through regulation, but may still be appropriate for repeal, replacement or modification." Comments are due by September 11, 2017.
  • In accordance with the mandate contained in various Executive Orders to reduce the cost and number of regulations federal agencies impose on the public, the SBA issued a Request for Comments seeking public input on what regulations to eliminate. The SBA would like public help "identifying which of the Agency's regulations should be repealed, replaced or modified because they are obsolete, unnecessary, ineffective, or burdensome." Comments are due on October 16, 2017.

Improper Payments

  • Following a report claiming that the DOD failed to follow statutory requirements of tracking down and cutting improper payments, Senator Clair McCaskill of Missouri asked the DOD to explain its efforts in complying with various statutory requirements. Senator McCaskill believes that "[w]hen it comes to defense spending, it's especially important that taxpayer dollars aren't being wasted and instead are being used to strengthen our national security as much as possible." To ensure this happens, she further believes that "[t]he Department of Defense needs to lay out what they'll do to identify and reduce improper payments moving forward." Under the 2010 Improper Payments Elimination and Recovery Act (IPERA), federal agencies must "meet six statutory requirements to identify, minimize and recover any improper payments they make, including estimating their improper payments, identifying programs they believe are particularly susceptible to mistaken or fraudulent payments, and developing corrective plans to reduce and recover improper payments." The DOD has made interim reports to the OIG, but according to Senator McCaskill, an inspector general report estimating almost $1 billion in improper payments made by the Pentagon last year and an allegation that the DOD failed to meet the six statutory requirements leave several open questions about DOD's IPERA compliance. As of August 24, 2017, DOD had not yet issued a comment on the senator's letter.

Potential Government Shutdown

  • With one month left before the end of FY2017, the possibility of a government shutdown is beginning to loom larger, because Congress has not yet passed spending bills for FY2018. The potential shutdown on October 1 comes on the heels of the shutdown that nearly occurred in May 2017. In anticipation of a potential shutdown, it is important for federal contractors to put themselves in the best possible position to limit costs and avoid the expensive delays that could occur beginning October 1, 2017. For more information on this, please see our article on the possible government shutdown.