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Centre Law & Consulting

Many “small” businesses listed in Federal Procurement Data Systems find themselves in a paradox—they’re at once too small to compete with large contractors, but also too large to benefit from small business set-asides. These growing firms have achieved what every small business owner hopes for—start small, gain market traction, and grow. But when a firm graduates from the benefits of small business set-asides, they enter the “mid-tier” — a murky limbo that can leave them vulnerable and, potentially, unable to compete.

The government should, as a matter of policy, continue to support and foster the growth of firms that enter the mid-tier. Research suggests maturing small businesses produce more jobs than established companies or startups. But today, these mid-tier firms have nowhere to “grow” in the federal marketplace. It’s a double-edged sword that’s not good for the economy or the federal agencies that rely on relationships with maturing small businesses.

Size Does Matter…

When it comes to professional services, mid-tier contractors simply cannot compete with the large contractors that dominate the space. Larger firms have several competitive advantages that make true competition between mid-tier firms and the largest firms illusory.

Multi-billion dollar companies have the resources to commit the talents of well-paid business development and marketing staffers solely to proposal development across multiple industries. This increases the competitiveness of the largest companies in the bidding process — potentially freezing out emergent smaller companies. In contrast, mid-size companies have limited bid and proposal budgets and typically do not have teams of individuals solely dedicated to business development and marketing. This lack of infrastructure at mid-size companies constrains their ability to compete successfully against larger actors.

What can a mid-size firm do? Often, they’re forced to sell. Competition is stifled when multi-billion dollar companies force these businesses into their supply chain through acquisition once these companies have become ineligible for small business awards. If not acquired, an advanced small or mid-size company may have to modify its business model to focus on subcontractor relationships with other large or small companies. Being limited to subcontractor roles impairs the mid-tier firm’s ability to gain project management experience essential for further growth.

…Especially in a Shrinking Market

Over the last decade, the competitive dynamics of the federal procurement market – and in particular the federal professional services industry – have changed drastically. The federal market continues to shrink in the short-term, along with the diversity of companies that supply government customers. Industry consolidation appears to have run its course in terms of efficiency, and now it simply means fewer choices for government managers.

Uncertain procurement strategies by government agencies — owed partially to congressional gridlock — challenge agencies and industry to see and prepare for future requirements. This uncertainty has adverse effects on competition and deprives the federal government of the opportunity to realize a return on its initial investment in emergent small businesses.

As in any market, there are winners and losers. But for today’s small contractors, winning might just be what sets them up to be losers. Finding opportunities to help mid-tier companies mature into strong businesses is essential — both for the competitiveness of the market and the ability of agencies to meet their mission with the most innovative solutions.

Advanced small firms have done what we all want to do. They began small, became seasoned, and grew. The government should as a matter of policy, support and foster such growth since previous data from Christopher Yukins and other researchers suggest that maturing small businesses produce more jobs than either very large or new companies. Presently, these advanced small firms have nowhere to “grow” in the federal marketplace. That is not good for the economy or federal agencies that have derived benefits from their relationships with growing small contractors.

Sizing Up the Competition

Increased concentration of Federal Professional Services Industry contract awards being performed by large companies stifles competition because advanced small companies simply cannot successfully compete with the largest players. Larger firms have several advantages that make competition between advanced small and the largest firms illusory. Multi-billion dollar companies leverage the talent of well-paid business development and marketing staff as well as teams of professional technical writers and graphic artists that can dedicate their efforts solely to proposal development. Additionally, large size companies can use their expertise to operate in multiple industries. This increases the relative competitiveness of the largest companies in the bidding process. In contrast, mid-size companies have limited bid and proposal budgets and typically do not have teams of individuals solely dedicated to business development and marketing. This lack of infrastructure at mid-size companies constrains their ability to compete successfully against larger actors.

Competition is stifled when multi-billion dollar companies force these businesses into their supply chain through acquisition after these companies have become ineligible for small business awards. If not acquired, an advanced small or mid-size company may have to modify its business model to focus on subcontractor relationships with other large or small companies. Being limited to subcontractor roles impairs the advanced small firm’s ability to gain project management experience essential for further growth.

The Government Market is Shrinking

The federal market continues to shrink in the short-term, along with the diversity of industry choices that supplies those customers. Industry consolidation appears to have run its course in terms of efficiency, and now simply means fewer choices for government managers. Uncertain strategies by government agencies — owed partially to congressional gridlock -challenges agencies and industry to see and prepare for future requirements. This uncertainty, however, has an adverse impact that shuts down competition and deprives the Federal Government from realizing any return on its initial investment in advanced small companies during their early growth.

While significant policy change will occur next year regardless of who takes control of various levels of government is an easy prediction to make, those working within today’s contracting community can expect to be asked to get things done faster and more effectively. Within federal contracting, all its many constituencies define success differently (whether you are a small, advanced small, mid-sized, or large business) and almost never achieving a consensus. As in all business, there are winners and losers. “Where you stand depends on where you sit.” In the worst-case scenario, an Advanced Small firm will fail.

To learn even more, plan to attend “Federal Procurement Opportunities for Small Businesses and Middle Market Contractors“, a breakfast seminar hosted in partnership with Mid-Tier Advocacy on June 23 in Tysons Corner, VA.

Register Now | Centre Law & Consulting

Mid-Tier Advocacy, Inc. (MTA) is a 501(c) 3 non-profit organization was established to work toward the elimination of the competitive disadvantage facing mid-tier government support service companies. A nonpartisan organization, MTA provides resources and public awareness through issue forums and structured branded events. As such, we leverage the collective voice for mid-tier firms in response to federal policies that impact their growth and sustainability. MTA hosts scheduled business events “MTA Business Focused Breakfast” in the DMV area where industry meets policy.

About the Author:

Tonya Saunders, Founder of Mid Tier Advocacy | Centre Law & Consulting Tonya M. Saunders
Founder of Mid-Tier Advocacy, Inc.

Tonya Saunders is the founder and principal for Washington Premier Consulting and Washington Premier Group. Among her accomplishments is founding and directing Mid-Tier Advocacy, a national coalition of small, emerging, and medium-sized businesses.

 

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Centre Law & Consulting

Trump’s 2-for-1 Reducing Regulation Order – What Does It Mean? | Centre Law & Consulting in Tysons VA
 
On January 30, 2017, President Trump issued an executive order (EO) entitled Reducing Regulation and Controlling Regulatory Costs. The aim of the EO is to reduce the number of regulations in order to “manage the costs associated with the governmental imposition of private expenditures required to comply with Federal regulations.”

Specifically, the EO requires that whenever an executive department or agency publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed. The EO further dictates that the total incremental costs of all new regulations, including repealed regulations, shall be no greater than zero. The EO defines “regulation” or “rule” as an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency but specifically excludes regulations issued with respect to the military, national security, or foreign affairs function of the United States.

Moving forward, the EO also imposes a regulatory budget for fiscal year 2018, which would limit the amount of new regulatory costs agencies can impose on individuals and businesses each year.

While the regulation seems straightforward, its implementation is likely going to be subject to inherent difficulties. For example, some of the challenges include:

  • The EO does not define what constitutes an “executive department or agency”.
  • It is not entirely clear if independent establishments or government corporations within the executive agency are intended to be included.
  • The definition of regulation contained in the EO is rather vague. If interpreted narrowly, it may only involve a minor set of regulations each year.

In a notable – and rather bold – claim, President Trump stated, “We think we can cut regulations by 75 percent. Maybe more, but by 75 percent.” According to Politico, there are more than 171,000 pages of regulations. So even with Trump’s 2-for-1 regulation, the administration would need to issue 85,000 pages just to cut that number in half. NPR has written that even conservative economists say that cutting regulations by 75% is not believable.

See Politico for the full text of the executive order.

About the Author:

Heather Mims | Centre Law & Consulting in Tysons VA Heather Mims
Associate Attorney

Heather Mims is an associate attorney at Centre Law & Consulting. Her practice is primarily focused on government contracts law, employment law, and litigation. Heather graduated magna cum laude from the George Mason School of Law where she was the Senior Research Editor for the Law Review and a Writing Fellow.

 

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Federal Contractor and Subcontractor Labor Reporting Requirements Under the Vietnam Era Veterans Readjustment Assistance Act

This is a reminder to Federal contractors and subcontractors of an important annual Federal labor reporting requirement coming due September 30, 2017.  The Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) requires Federal contractors and subcontractors with contracts valued at > $150,000 to annually report employment data for protected Veterans in their employ.

If Federal Acquisition Regulation (FAR) Clause 52.222-37, Employment Reports on Veterans (Feb 2016) (or earlier versions of this clause) is contained in your Federal contract or has been “flowed down” to your subcontract from the prime contractor, you may have a reporting obligation.

What is a VETS-4212 Report?

The report, known as “VETS-4212” (formerly known as VETS-100 or VETS-100A, and often referred to as such in contracts awarded using earlier versions of FAR Clause 52.222-37) is due for submission to the Veterans Employment Training Service (VETS) at the U.S. Department of Labor, no later than September 30, 2017.  Fiscal Year 2017 reporting opens up Tuesday, August 1, 2017.

Reporting is legislatively mandated under 38 U.S. Code, Section 4212, codified at 41 CFR Section 61-300, respectively, contractors and subcontractors who enter into, or modify a contract or subcontract with the Federal government, and whose contract meets the criteria set forth in the aforementioned legislation/regulations, are required to report annually on their affirmative action efforts in employing veterans. VETS has a legislative requirement to collect, and make available to the Office of Federal Contract Compliance Programs (OFCCP), U.S. Department of Labor, reported data contained on the VETS-4212 report for compliance enforcement.

Although the threshold for VETS-4212 reporting shown at 41 C.F.R. § 60-300.4, Coverage and waivers, shows reporting applicability for contracts and subcontracts valued at $100,000 and greater, in 2015 the amount was increased to $150,00 as a result of inflation adjustments to acquisition-related thresholds as required by the  Ronald Reagan National Defense Authorization Act of 2004.  OFCCP adopted the Federal Acquisition Regulation Council’s adjusted thresholds for determining whether a contract or subcontract is covered by VEVRAA regulatory requirements.

Accurate and timely reporting, as well as record keeping is critical to stellar contract administration.  A contractor’s affirmative action obligations in the hiring and retention of Veterans is subject to audit by the OFCCP.

A special note to U.S. Department of Veterans Affairs (VA) Federal Supply Schedule Contract holders.  VA requires submission of this report to the U.S. Department of Labor regardless of the dollar amount of sales under the contract, and failure to submit can impact processing of modifications, extension packages, and new and ensuing offers.

Just in time for VETS-4212, Centre Law & Consulting is offering an informative “VETS-4212 Reporting” Webinar on August 17, 2017.  This timely webinar is designed for contractor personnel responsible for administering Federal government contracts with values > $150,000, containing FAR Clause 52.222-37, Employment Reports on Veterans, and for subcontracts where the contractor has flowed the clause down to the subcontractor.  The webinar is an excellent refresher for seasoned contract administrators and is ideal for new contractor personnel and for those who are being trained as back-ups or support personnel for contract administrators.  Click here to learn more about the VETS-4212 Reporting Webinar.

 

By Wayne Simpson

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Reproduced with permission from Federal Contracts Report, 105 FCR (Dec. 6, 2016). Copyright 2016 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com

Talk More, Fret Less, Proposed Rule Urges Feds, Contractors

Federal acquisition officials are encouraging increased communication between industry and government, in the hope of ensuring a more efficient process for both parties.

An updated regulation would make it clear that it’s in the government’s best interests to talk to industry during all phases of the purchasing process, according to a proposed Federal Acquisition Regulation (FAR) rule published Nov. 29 in the Federal Register. It bolsters the notion, detailed in procurement policy memos issued in 2011 and 2012, that acquisition officials need to fret less about possible negative ramifications of talking to industry, and instead open lines of communication.

Some government contracts attorneys say they approve of the renewed emphasis.

“For a long time, there has been a fear of communication between agencies and contractors, but that needs to continue to change,” Jeff Chiow, a shareholder with the law firm Rogers Joseph O’Donnell PC in Washington, told Bloomberg BNA. “I think it’s absolutely appropriate.”

‘Must Not Hesitate.’
The proposed rule would mandate that the FAR adopt a section of the 2016 National Defense Authorization Act, which made it clear that agency acquisition personnel are “permitted and encouraged to engage in responsible and constructive exchanges with industry, so long as those exchanges are consistent with existing law and regulation and do not promote an unfair competitive advantage to particular firms.”

The proposed language to the FAR takes this one step further, specifically suggesting that government officials “must not hesitate” to communicate with industry as early as possible in the acquisition cycle to help determine what exactly is available in the commercial marketplace.

The rule also would add language to the FAR ensuring that agencies maximize their use of commercial products and services in meeting their requirements.

The key is that agencies should be broadcasting their plans to all competitors, and then have “frank conversations about what’s needed” with them to help determine if their proposals might be tweaked to fit the government’s needs. “The emphasis should be at the beginning of the process, but communication should be ongoing,” he said.

Not all government contracts attorneys agree on the impact of the proposed rule. Some say it wouldn’t do anything to stop the process from tilting toward larger contractors.

“In my opinion, the proposed rule does not materially change the current government and industry procurement cycle interaction or lack thereof,” Barbara Kinosky, managing partner of Centre Law & Consulting, told Bloomberg BNA in an e-mailed statement. “The large companies and those with savvy sales people will always be on the front end of procurements. They did not get to be large businesses by finding out about procurements on eBuy for the first time.”

The rule won’t change a government culture that, as it pertains to smaller procurements, “believes in low price and minimum engagement with contractors,” Kinosky said.

Common Misconceptions.
The proposed FAR rule was spurred by a pair of detailed procurement policy memos titled “Myth-Busting” and “Myth-Busting 2” that discussed “misconceptions” about communication between industry and government during the acquisition process.

The first of the memos, issued Feb. 2, 2011, and authored by Dan Gordon, then the administrator of the Office of Federal Procurement Policy, addressed what he said were 10 common misconceptions, including ungrounded fears that contractor-government communications are often the source of bid protests, and that because contractors are akin to registered lobbyists, conversations with them should be avoided to reduce disclosure burdens.

“While agencies do not have the resources and are not required to meet with every vendor at every step of the acquisition process, information gathered from industry sources plays an invaluable role in the acquisition process,” Gordon wrote. “For this reason, agencies must develop practices that will ensure early, frequent, and constructive communication during key phases of the process.”
 

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Pentagon Issues Internal Warning Against Use of Lenovo Equipment | Centre Law & Consulting in Tysons VA
 
Uh-oh, Lenovo…

On September 26, the Pentagon’s Directorate for Intelligence, J-2, reportedly issued an internal report warning against the use of equipment made by computer manufacturer Lenovo because of concerns regarding potential cyber spying against defense networks. J-2 supports the Chairman of the Joint Chiefs of Staff, the Secretary of Defense, Joint Staff, and Unified Commands, and it is the national focal point for crisis intelligence support to military operations, indications, and warning intelligence in DoD as well as Unified Command intelligence requirements.

Per a report from Bill Gertz of The Washington Free Beacon, the Chinese Academy of Science, a Chinese government research institute, owns a 27 percent stake in Lenovo Group Ltd. The J-2 report purportedly states that “cyber security officials are concerned that Lenovo computers and handheld devices could introduce compromised hardware into the Defense Department supply chain, posing cyber espionage risks.” The report also purportedly contains a warning that Lenovo is seeking to purchase U.S.-based IT companies in order to gain access to classified defense networks.

The cyber security concern surrounding Lenovo is evidently not a new one as Gertz’s article reports that, following the company’s 2014 purchase of IBM’s BladeCenter line of computer servers (for a cool $2.1 billion), the U.S. Navy replaced the IBM servers within the “Aegis” battle management systems deployed on guided missile destroyers and cruisers over concerns that China could hack the warships through the server.

And, for those wondering, “why isn’t this a TAA issue?,” the server business Lenovo purchased is based out of North Carolina. Perhaps “country of ownership” will become as relevant as “country of origin.”

About the Author:

David Warner | Centre Law & Consulting David Warner
Partner

David Warner is a seasoned legal counselor with extensive experience in the resolution and litigation of complex employment and business disputes. His practice is focused on the government contractor, nonprofit, and hospitality industries. David leads Centre’s audit, investigation and litigation practices.

 

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Of Mistletoe and Employee Misclassification | Centre Law & Consulting in Tysons, VA
 
Earlier this week, a U.S. Department of Labor webpage dedicated to the issue of employee misclassification went live. Just in time for the holidays!

While much ink has been spilled in recent weeks regarding potential changes of direction at the DOL in a Trump Administration, the new webpage suggests that the agency will continue to view the abuse of independent contractor status as an enforcement priority for the foreseeable future. The new page does not provide any novel substantive content, but it does bring together at a single location a wealth of information in what the DOL self-describes (accurately, one must admit) as a “user-friendly webpage where workers, employers, and government agencies can find information and resources.”

For example, some of the substantive topics appearing on the “Pay and Misclassification” page include:

It is clear that the webpage is intended to arm individuals with the information and tools needed to understand the boundaries of independent contractor/employee status as well as the rights appurtenant to such status.

Given the widespread use (and abuse) of independent contractor arrangements in the government contracts industry, contractors would be well counseled to review their current 1099s to ensure that the status can withstand scrutiny as this issue is unlikely to move to the backburner, even with new leadership coming onto the scene in early 2017.

About the Author:

David Warner | Centre Law & Consulting David Warner
Partner

David Warner is a seasoned legal counselor with extensive experience in the resolution and litigation of complex employment and business disputes. His practice is focused on the government contractor, nonprofit, and hospitality industries. David leads Centre’s audit, investigation, and litigation practices.

 

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The Federal Marketplace can be challenging and risky for the uninitiated, and even for seasoned contractors. The Federal Acquisition Regulation (FAR) alone contains 53 parts over 1,903 pages, including nearly 590 provisions and clauses (some with alternates), and many of which will ultimately find their way into your contracts. And this doesn’t even include Agency-specific acquisition regulations which supplement and implement the FAR.

As if securing and administering government contracts were not challenging enough, how about trying to figure out the puzzle of who buys your supplies and services, where and how they buy them, and who do they buy from?

Unfortunately, some folks still rely exclusively on agencies’ Forecasts of Contracting Opportunities (FCO) thinking this is all they need for identifying upcoming procurement opportunities. While Federal Law (P.L. 100-656) requires all Federal agencies with procurement budgets of $50+ Million (almost all of them these days) to publish an FCO, the FCOs from most agencies are unfortunately not robust, are hardly all-inclusive with their information, and only tell part of the story.

Fortunately putting together the Who—What—When—Where and How puzzle pieces is much easier than securing and administering a contract thanks to the Federal Procurement Data System — Next Generation, commonly known as FPDS-NG or FPDS.

A Better Solution

A great way to know where procurements are going is to see where they’ve been. That’s where Federal Procurement Data System comes in. It is the real-time relational database serving the government acquisition community as the authoritative source of contract information, which contains summary level data and is used at all levels of the Federal government for policy and trend analysis. The numbers and data in FPDS change every hour of every workday. The system contains millions of transactions, and there are millions of permeations for extracting various combinations of data elements to suit your unique needs.

Unlike FPDS, the USAspending.gov website uses a static approach to capturing and reporting data, meaning the data is presented and simple charts and graphs which do not change until the next update, which is required every 30 days under the Federal Funding Accountability and Transparency Act. This makes access to current and real-time data through FPDS is invaluable, and knowing how to put the pieces of this puzzle together can help competitively position your company and help boost your federal sales.

Hands-On Learning

Don’t be overwhelmed by the idea of learning a system that might new to you though! On August 16, 2016, learn the intricacies of FPDS in one-day course, “Introduction to the Federal Procurement Data System”.

This hands-on, dynamic course unlocks the mysteries and power of FPDS for your company’s competitive benefit and includes content such as:

  • Providing an overview and requirements of FPDS reporting by Federal agencies
  • Detailing what transactions are required to be reported along with what is available and what is not available through FPDS
  • Learning who buys what, how they buy, and whether these procurements are conducted through the Federal Supply Schedules Program, Other Government Agency Contracts, or on the open market
  • Identifying when your competitors’ contracts will expire or when other contracts in your commercial line of endeavor are due to expire and be re-competed
  • Discovering if set-asides are used in acquiring the products and services you offer and how you may qualify
  • Explaining the distinct advantages of using FPDS vs. USAspending.gov

This course will use a combination of both lecture and hands-on laboratory, whereby participants will create individual FPDS accounts and actually create and run reports using standard reporting as well as the system’s invaluable and powerful ad hoc reporting capabilities. The critical knowledge, skills, and abilities gained from this intense one-day training class can be taken back to the workplace, along with reports ready to be run and re-run to meet your company’s needs.

What’s In It for You?

Enhance your company’s competitive position in the Federal market place by harnessing the power of procurement data. Stop wasting scarce marketing resources targeting agencies where opportunities do not exist. Instead, use data from FPDS to focus, target, and hone your marketing efforts in areas which will offer the best potential returns on your marketing investment. You’ll also save time by eliminating the need for time-consuming and often costly Freedom of Information Act (FOIA) requests for data.

Your competitors have this information and use it to their competitive benefit and advantage, why shouldn’t you? If you want to be the “go-to-person” at your company for this type of data and you want your company to be more competitive, then this course is for you.

We look forward to seeing you on August 16, so we can put the puzzle pieces together!

About the Author

Wayne Simpson | Centre Law & Consulting Wayne Simpson, CSCM
Wayne Simpson is a seasoned former Federal executive and acquisition professional who is also a highly-motivated and demonstrative small business advocate, with nearly 38 years of Federal Civilian Service with the U.S. Department of Veterans Affairs (VA), and its predecessor organization, the Veterans Administration.

 

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This Blog is Subject to Change in a Twitter Moment | Centre Law & Consulting in Tysons VA
 
How many of you now go to bed wondering, “What presidential tweet am I going to wake up to next?” The federal contracting space has been shaken, not stirred.

In the old news department, President Trump instituted an immediate hiring freeze this Monday, signing a presidential memorandum that would affect a large swath of the executive branch. There are exemptions, of course, for those working in the military, national security, and public safety.

In my discussions with officials at several federal agencies, it appears that the language is vague enough that different agencies are interpreting this in different ways. If your entire team is on the airplane that has the “water landing” does this mean that no one can be hired to do the work? Maybe it will become more clear in the next couple of months. The executive order directs the Director of OMB, in consultation with the Director of OPM, to recommend a long-term plan to reduce the size of the Federal Government’s workforce through attrition. The order does say that contractors cannot be hired to circumvent the intent of the order.

However, a big problem is that the federal workforce has not been growing. Federal News Radio is reporting that the size of the federal workforce has been decreasing, not increasing. The size of the federal workforce has steadily declined over the past 50 years. Approximately 2 million people worked for civilian agencies in 2015—nearly a 10 percent decline since 1967.

Regarding the workforce, and in specific the federal contracting workforce, the Obama Executive Orders are in the twilight zone. Executive Order 13673, Fair Pay and Safe Workplaces, was stopped cold by a Texas federal district court in 2016. Since this was a unilateral act by the President, it will most likely be undone along with the Executive Order on Sick Leave.

On the minor but still need to know information, a final rule came out on Privacy Act training. At a minimum, contractors must educate employees about:

  • The provisions of the Privacy Act of 1974, including penalties for violations
  • The appropriate handling and safeguarding of personally identifiable information
  • The authorized and official use of a system of records or any other personally identifiable information
  • The restriction on the use of unauthorized equipment to create, collect, use, process, store, maintain, disseminate, disclose, dispose, or otherwise access personally identifiable information
  • The prohibition against the unauthorized use of a system of records or unauthorized disclosure, access, handling, or use of personally identifiable information
  • Procedures to be followed in the event of a suspected or confirmed breach of a system of records or unauthorized disclosure, access, handling, or use of personally identifiable information

Those are today’s latest updates, but we’ll see what Twitter has to say about it in the coming days.
 
About the Author

Barbara Kinosky Barbara Kinosky
Managing Partner

Barbara Kinosky has more than twenty-five years of experience in all aspects of federal government contracting and is a nationally known expert on GSA and VA Schedules and the Service Contract Act. She has a proven track record of solving complex issues for clients by providing strategic and business savvy advice. Barbara was named a top attorney for federal contracting by Smart CEO magazine in 2010, 2012, and 2015.

 

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How is your relationship with the government going? Have you heard about the “transformational changes” that are being made to the GSA’s Federal Supply Schedules Program? And do you really know how many moons the Earth has?

Below is a round up of recently trending Federal Contracting issues you should know about.

Overly Restrictive Solicitations.

Nexagen Networks of Aberdeen, Maryland, challenged the terms of a task order request issued by the Army for information technology services. Nexagen argued that the solicitation’s requirements for experience with Oracle Endeca Information Discovery (OEID) was unduly restrictive of competition and created bias in favor of the incumbent contractor. GAO denied the protest. From the decision:

“Moreover, to the extent Nexagen’s premise is that there is no equivalent software available, that alone would not demonstrate that the TOR’s requirement is unduly restrictive. Again, the issue is not whether the specification restricts competition, but whether the specification is reasonably necessary to meet the agency’s actual needs. Even where specifications are based on a particular product – or, as Nexagen alleges here, a particular firm’s capabilities or experience – we have found that this type of requirement is not improper in and of itself; nor will an assertion that a specification was “written around” features offered by a particular firm provide a sustainable basis for protest if the record establishes that the specification is reasonably related to the agency’s minimum needs”.

And so it goes.

Gov Con Marketplace Musings

Elvis lives. The theme song for incumbents this year is “Heartbreak Hotel”. I am seeing fewer incumbent wins as the government cares less about the relationship and more about the cost. I am also seeing agencies take single-award contracts and, instead of the usual recompete for the follow on contract, they are awarding the work as a task or delivery order off a multiple-award contract vehicle. (Side note – usually the one you are not on.) Multiple requirements are also being bundled into single winner-take-all order awards. What are you seeing in the marketplace? Share your thoughts and observations in the comments below.

VA Privatization

Veterans Affairs privatization is moving along on several fronts. Sen. John McCain introduced a bill that will allow veterans to opt out of the VA healthcare system and use local healthcare providers. The VA Commission on Care is expected to issue a final report any day now. The draft report shifted health care to for veterans to more private providers. Most veterans groups oppose privatization.

Old News and the Creation of Mass Hysteria by Law, Accounting, and Consulting Firms

The Supreme Court issued a decision on Escobar holding that the implied false certification theory can be a basis for liability under the False Claims Act (for government contractors) when a defendant submitting a claim makes specific representations about the goods or services provided, but it fails to disclose non-compliance with material statutory, regulatory, or contractual requirements that make those representations misleading with respect to those goods or services; and liability under the FCA for failing to disclose violations of legal requirements does not turn upon whether those requirements were expressly designated as conditions of payment. Key word is material.

Final Rule Released on GSA Transactional Data

According to the U.S. General Services Administration (GSA) website, a final Transactional Data Reporting (TDR) rule will publish in the Federal Register on June 23, 2016. The rule “will reduce unnecessary burdens on contractors and small businesses and potentially save millions of dollars for the American taxpayer…and will be implemented through a pilot program across GSA contract vehicles.” It is seen as one of the most transformational changes to GSA’s Federal Supply Schedules Program in more than two decades.

A Trick Question

Use this when you don’t want to pick up the check. How many moons orbit the earth? Answer: 1.5 moons. NASA has just located a mini moon in our orbit.

About the Author

Barbara Kinosky Barbara Kinosky
Managing Parnter

Barbara Kinosky has more than twenty-five years of experience in all aspects of federal government contracting and is a nationally known expert on GSA and VA Schedules and the Service Contract Act. She has a proven track record of solving complex issues for clients by providing strategic and business savvy advice. Barbara was named a top attorney for federal contracting by Smart CEO magazine in 2010, 2012, and 2015.

 

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Have you been hacked yet? Has your personal information been exposed by foreign hackers? Worried this year’s election results might be tampered with foreign cyber attacks? Well, you are not the only one worried about future cyber attacks. The U.S. Government is worried too, and to combat that, the General Services Administration (GSA) will release four Cybersecurity Special Item Numbers (SINs) for its GSA Schedule 70 for Information Technology procurement.

A refresh of the Schedule 70 solicitation is expected to be released in September that will include these new Cybersecurity SINs. GSA is referring to these new SINs as Highly Adaptive Cybersecurity Services (HACS) SINs. The HACS SINs were mandated by the Obama Administration’s Cybersecurity National Action Plan. This is no small initiative, but rather a plan to invest $19 billion in an attempt to ensure “Americans have the security tools to protect their identities online, that companies can protect and defend their operations and information from hackers, and that the U.S. Government protects the private information citizens provide for federal benefits and services” (Source).

The HACS SINs will be divided into four distinct SINs:

  • Penetration Testing under SIN 132-45A
  • Incident Response under SIN 132-45B
  • Cyber Hunt under SIN 132-45C
  • Risk and Vulnerability Assessment under SIN 132-45D

The vetting process for vendors will be the most thorough and detailed of any SIN on Schedule 70. While vendors will have requirements similar to those for services SINs such as SIN 132-51, the HACS SINs will also require vendors to pass an oral technical evaluation. These oral technical evaluations will be scenario-based in an attempt by GSA to ascertain the knowledge level of the prospective vendor. Vendors will be given a pass/fail grade after an undetermined time (target is seven days) from the completion of the oral evaluation. Vendors who are not able to pass this oral evaluation will not be allowed to submit an offer or modification for any HACS SIN for at least six months from the date of their previous evaluation. Oral evaluations will be conducted virtually and each SIN will have its own scenario that vendors will have to address and complete. GSA will allow up to five key personnel to attend these oral evaluations from the vendor, but no recording devices of any kind will be allowed during the evaluation. These evaluations could take anywhere between forty minutes to three hours by GSA’s estimates, depending on how many HACS SINs the vendor is proposing in their offer/modification.

There will be no limit to the number of awardees of the HACS SINs, but GSA is targeting to have an initial fifteen vendors awarded once the HACS SINs are officially rolled out. The turnaround time for GSA will be dependent on the number of vendors who propose the HACS SINs, but GSA is creating a dedicated tiger team to evaluate new offers and modifications that include the HACS SINs. GSA’s target for evaluation is seven days for modifications and forty five days for new offers.

While there is still more to be revealed about these new HACS SINs, it is clear GSA is making a concerted effort to put these new SINs at the top of their priority list. If you want to be in the front of the line to get these new SINs awarded on your contract, be sure to check the GSA Interact site and submit your modifications/offers through the eMod/eOffer site.

For more information regarding GSA and the HACS SINs, be sure to register to attend Centre Law and Consulting’s next Boot Camp for GSA Schedules training course on November 9-10, 2016.

About the Author

Michael Glazer
Contracts Manager

Michael Glazer focuses primarily on GSA/VA Schedule consulting. He regularly assists clients in all aspects of FSS contract management including contract negotiations, modifications, IFF reporting, subcontracting plans and reporting, IOA assessments, and other contract compliance issues. Michael also provides experience with GSA Alliant 1 & 2, ITES 3H and 3S, CIO-CS and SP3, and other large IDIQ contracts on an as needed basis to clients.

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Reproduced with permission from Federal Contracts Report, 105 FCR (July 27, 2016). Copyright 2016 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com

HHS Couldn’t Justify IT Competition Cancellation, COFC Says

The Department of Health and Human Services couldn’t justify its cancellation of an IT competition that a protester claimed was tainted by bias, the U.S. Court of Federal Claims said (Starry Assocs. Inc. v. United States, 2016 BL 241279, Fed. Cl., No. 16-44C, 7/27/16).

Judge Eric G. Bruggink set aside the cancellation because there was no evidence the agency meaningfully reviewed its IT needs before making that decision. The court also barred several agency employees from participating in any subsequent competition actions.

The case “shows the recent trend that courts will hold federal agencies accountable for arbitrarily canceling solicitations or failing to take meaningful corrective actions. In this case, we have both,” Wojciech Z. Kornacki of Centre Law & Consulting LLC told Bloomberg BNA.

It was noteworthy that the court granted injunctive relief, Kornacki said. “The court felt that the public interest favored the injunction because the public had an interest in the integrity of the federal procurement,” he said. “The court found that the agency actions reflected ‘a lack of fidelity to the procurement process.’”

This action was necessary for Starry to get access to discovery tools, like depositions, that aren’t available at the Government Accountability Office, said Sandy Hoe, senior of counsel at Covington & Burling LLP. “But that discovery tool in a bid protest is limited to extraordinary situations such as here,” he said. “I would expect to see that tool being used in very few other circumstances.”

Prohibiting the government from canceling a solicitation is unusual, he added.

“The reasoning makes sense given the bias here, but that relief is only a few steps short of the court directing an award to a party, which is virtually never done,” he said. “Another option the court might have exercised was to order the agency to pay Starry’s bid and proposal costs and allow the solicitation to be canceled.

“Apparently, the court was not willing to let the agency off the hook so easily given the agency’s bad conduct,” Hoe said.

Award Affirmed

Incumbent protester Starry Assocs. Inc. filed a protest with the Government Accountability Office (GAO) after the agency awarded a task order to Intellizant LLC. The agency took corrective action by re-evaluating quotations, but then affirmed the award.

Starry filed a second protest that the GAO partially sustained, recommending that the agency re-evaluate Intellizant’s quotation. Shortly thereafter, the agency canceled the solicitation.

Starry protested the cancellation as pretextual and biased because it argued the agency was trying to steer the award toward Intellizant. The GAO rejected the protest, so Starry pursued the matter with the court (105 FCR 22, 1/12/16).

In April, the court granted Starry’s request to depose agency officials because Starry made a strong bias case against an agency official who previously worked for Intellizant (105 FCR 306, 4/12/16).

Reevaluation Not Serious

The court concluded that it didn’t have to reach a decision on the bias claim because the cancellation was clearly arbitrary.

Once agency officials selected Intellizant, any other result was unwelcome and not seriously considered, the court said. Officials told the GAO and Starry they would undertake a serious re-evaluation of Intellizant’s proposal, but the record didn’t reflect such an effort, the court found.

The agency official charged with the cancellation decision said the cancellation was reasonable because other contract vehicles could meet the agency’s needs. However, the record didn’t show that he compared those vehicles, and his supervisor and colleagues didn’t double-check his assertion.

Agency officials also said Starry would have received the award had the GAO’s recommendation been followed. Therefore, the court set aside the cancellation decision, and said the agency should again re-evaluate Intellizant’s proposal, as the GAO said in its second decision.

In addition, the court enjoined certain officials from participating in any subsequent agency actions in this competition.

Depositions with those officials “provide an illuminating, if depressing, window” into how they misrepresented the quality of their evaluation, the court said.

Specifically, one official rated Intellizant as technically acceptable despite having insufficient knowledge of the agency’s software, the court said.
 

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NDAA Provision Requires Federal Procurement Through ‘Online Marketplaces’

A provision contained in the National Defense Authorization Act for Fiscal Year 2018 (NDAA), H.R. 2810, covers “Procurement Through Online Marketplaces.”  Section 801 of Act requires the Administrator of the General Services Administration (GSA) to establish for government-wide use a program to procure products through online marketplaces for the purposes of expediting procurements while ensuring reasonable pricing of commercial products.

The GSA Administrator is required to carry out this program by the issuance of more than one contract with more than one online marketplace provider.

Although the program will be available government-wide, the Act specifically directs the Secretary of Defense to (shall) use the online Marketplaces, as appropriate, in the purchase of commercial products.

The Act also provides criteria for use in establishing Federal online marketplaces under the program:

  • is used widely in the private sector, including in business-to-business e-commerce;
  • provides dynamic selection, in which suppliers and products may be frequently updated, and dynamic pricing, in which product prices may be frequently updated;
  • enables offers from multiple suppliers on the same or similar products to be sorted or fileted based on product and shipping price, delivery date, and reviews of suppliers or products;
  • does not feature or prioritize a product of a supplier based on any compensation or fee paid to the online marketplace by the supplier that is exclusively for such featuring or prioritization on the online marketplace;
  • provides the capability for procurement oversight controls, including spending limits, order approval, and order tracking;
  • provides consolidated invoicing, payment, and customer service functions for all transactions;
  • satisfies requirements for supplier and product screening requirements of the Act; and
  • collects information necessary to fulfil the order information requirements of the Act

The Act includes requirements for supplier and product screening.

Products procured through the Federal online marketplace will be deemed to have satisfied competitive procurement requirements if there are offers from two or more suppliers of such a product or similar product with substantially the same physical, functional, or performance characteristics on the online marketplace.  Procurements consummated using the online marketplace will be deemed an award of a prime contract for purposes of goals under the Small Business Act.  Nothing in the Act shall be construed as limiting the authority of a department or agency to restrict competition to small business concerns.

NDAA passed the U.S. House of Representatives on July 14, 2017.  The U.S. Senate agreed to a motion to proceed with action on July 25, 2017.

 

About the Author:

Wayne Simpson | Centre Law & Consulting Wayne Simpson
Consultant

Wayne Simpson is a seasoned former Federal executive and acquisition professional who is also a highly-motivated and demonstrative small business advocate, with nearly 38 years of Federal Civilian Service with the U.S. Department of Veterans Affairs (VA), and its predecessor organization, the Veterans Administration.

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Last week the House Oversight and Government Reform Committee approved the Promoting Value Based Procurement Act of 2017 on a voice vote without any dissent, meaning the bill now proceeds to the House floor.

The Act, which was initially introduced in June, substantially limits the number of federal contracts that may use the lowest-priced bid as the major deciding factor – this means a severe limit on lowest price technically acceptable, or LPTA, contracts.

In fact, the current text of the bill requires revision of the FAR to require that LPTA source selection criteria are only used in six specified situations. Further, the bill mandates that, to the maximum extent practicable, the use of LPTA should be avoided in a procurement that is predominately for the acquisition of (1) information technology services, cybersecurity services, systems engineering and technical assistance services, advanced electronic testing, audit or audit readiness services, or other knowledge-based professional services; (2) personal protective equipment; or (3) knowledge-based training or logistics services in contingency operations or other operations outside the United States, including in Afghanistan or Iraq.

Rep. Gerry Connolly, D-Va., one of the bill’s co-sponsors, said during the markup that the use of LPTA contracts has become too rigidly applied and has “started to calcify some large chunks of contracting in the federal sphere.” He continued, “When an agency seeks the assistance of a company to help it analyze and address cybersecurity needs, for example, it might not know the extent of services that will eventually be needed,” and “quality and innovation must be considered.”

About the Author:

Heather Mims | Centre Law & Consulting in Tysons VA Heather Mims
Associate Attorney

Heather Mims is an associate attorney at Centre Law & Consulting. Her practice is primarily focused on government contracts law, employment law, and litigation. Heather graduated magna cum laude from the George Mason School of Law where she was the Senior Research Editor for the Law Review and a Writing Fellow.

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As we lead up to Thanksgiving later this week, many of us are in final preparations for the holiday. Some are making last minute trips to the grocery store while others are looking for pants with elastic waistbands.

However you’re celebrating this year, we at Centre Law & Consulting hope you enjoy a feast filled with friends and family. We hope you have many things to be thankful for this holiday season.

happy-thanksgiving
 
About the Author

Barbara Kinosky Barbara Kinosky, Esq.
Managing Partner

Barbara Kinosky has more than twenty-five years of experience in all aspects of federal government contracting and is a nationally known expert on GSA and VA Schedules and the Service Contract Act. She has a proven track record of solving complex issues for clients by providing strategic and business savvy advice. Barbara was named a top attorney for federal contracting by Smart CEO magazine in 2010, 2012, and 2015.

 

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Preparing For A Successful CPSR Audit - training course for federal contractors | Centre Law & Consulting in Tysons VA
 
Let’s face it. We’d all rather be out selling and growing our businesses than having to deal with paperwork and audits, right? So when you hear that you have a Contractor Purchasing System Review (CPSR) coming up, it may cause a little anxiety and leave you wondering if it is really time well spent.

Now the government will tell you that the purpose of a CPSR is to evaluate the efficiency and effectiveness of the way a contractor spends federal funds and complies with federal policy. It provides the Administrative Contracting Officer (ACO) a basis for granting, withholding, or withdrawing approval of the contractor’s purchasing system.

So what does that really mean to you? Here are the Top 5 reasons that having an approved contractor purchasing system is important:

  1. Advance Notification and Consent: The first reason that usually comes to mind is the FAR Part 44 requirement for advance notification and consent to subcontract. If the purchasing system hasn’t been approved or the approval has been withdrawn, then the ACO will be required to perform consent reviews under flexibly price contracts and unpriced contractual actions to insure the Government’s interests are protected. The down side of that is these reviews take time, and while the ACO is performing the review, the subcontract award is delayed. In other words, nobody is happy about it! The client’s program manager and the company program manager want the award made to meet schedule, but the ACO has other things to do and may not put your subcontract award at the top of the list. The result is that you (the buyer/subcontract administrator) are under pressure to somehow make it happen and tensions can rise on all sides.

Consent Doesn’t Mean Approval: Okay, you’ve gone through the gauntlet and the ACO has issued the consent to subcontract notice. But, the notice will have a disclaimer that reserves the Government’s rights to second guess all aspects (i.e. adequate competition, price reasonableness, audit disallowance) of your subcontract award. You feel like you have gained nothing, and the program manager is still upset with you because of the delay in award. You want an approved system, not just a consent to subcontract. So without that approval, you’re just sitting in limbo.

Business System Clause: The Department of Defense added clauses to their contracts – 252.242-7005, Contractor Business Systems and 252.244-7001, Contractor Purchasing System Administration – that have become key components of the CPSR process. In addition, should a “significant deficiency” be identified in your purchasing system, the ACO is obliged to reduce your interim payments (i.e. progress payments, cost-reimbursement vouchers, monthly Time and Materials invoices) by as much as 5% to protect the government’s interests until the deficiency has been corrected and re-audited. The impact for you is that not only is the program manager upset with you, but so is the CFO!

Impact on Other Major Proposals: With subcontracting being a large part of major contracts, the impact of your purchasing system on proposals for new work can be critical. First, having a government approved purchasing system gets you a better rating on the management portion of your major proposals. Second, with subcontracts often accounting for as much as 60% or more of major proposal costs, the ability of an approved purchasing system to provide good quality pricing support can make the difference between winning or losing.

Documentation: Securing approval of your purchasing system relies largely on your documentation. In my earlier article, CPSR Easy As 1-2-3?, all three steps rely on clear and complete documentation. Think of it this way: an approved system by its nature should produce good documentation. So when the government reviews your work product for proposal support, business system adequacy, incurred cost, small business plan efforts, sustainability initiatives, or anything else, you can be confident that your procurement files will clearly demonstrate how efficiently and effectively your purchasing system is spending government funds and implementing government policy.

 
Take the Next Step
If you’d like to dive more in depth to the details of CPSR, learn best practices, and set yourself up for successful CPSR audits, then join us for our upcoming course on March 28-29 at our national training center in Tysons, VA.

 
About the Author

Jack Hott headshot | Centre Law & Consulting in Tysons, VA Jack Hott
Instructor

Jack Hott is an Instructor for Centre Law & Consulting. He has more than two decades of experience as a contracts professional in Government and the private sector. A retired Air Force officer, he served multiple acquisition related assignments where he managed administration, pricing, CAS and overhead approvals, supplier quality, and subcontract management.

 

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Potential Intervenors Denied Intervention in Multi-Billion Dollar Protest as Having No Legal “Interest” in Protest

The Court of Federal Claims issued a decision on September 27, 2016 denying two motions to intervene in a bid protest.

Nevada Site Science Support and Technologies Corporation (NVS3T) filed a bid protest alleging that the Department of Energy’s decision to rescind a multi-billion dollar contract awarded to it based on ownership issues involving the Plaintiff was arbitrary and capricious. Following the bid protest, Mission Support & Test Services, LLC and Nuclear Security & Technology, LLC filed Motions to Intervene.

The Court, in denying the motions to intervene, relied on Rule 24 of the Rules of the Court of Federal Claims and found that the potential intervenors have no real interest in the dispute. Rather, their interest is simply potentially being awarded the contract if the Plaintiff loses the protest.

Perhaps the Court said it best: “However, the simple fact that a party might benefit form another’s legal misfortune does not lead to an understanding that said party should have a role in occurrence of that legal misfortune. If a singer suffers a voice injury and is, as result, fired from her job, it is hardly conceivable to believe that a Court would allow a rival singer to intervene in that case on the side of the employer simply because he might subsequently get the newly vacant job!”

Nevada Site Science Support and Technologies Corporation v. United States, Fed. Cl., No. 16-1118C, 9/27/16, available at https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2016cv1118-31-0.

Protest Deemed Moot Due to Completion of Contracts

In a decision on September 26, 2016 from the Court of Federal Claims, the Court found that Plaintiff’s protest was rendered moot in light of the fact that the contracts have been completed.

This post-award bid protest involved a Plaintiff’s challenge to the Government’s use of research and development funds to develop software that the Plaintiff claims is already commercially available.

As way of background, in 2004, the U.S. Navy on behalf of the Department of Defense’s Combating Terrorism Technical Support Office (CTTSO) awarded a contract to Georgia Tech Applied Research Corporation (GTARC) for development of a program to aid first responders dealing with hazardous materials. In 2008, GTARC received a contract to enhance the program it developed. The resulting system was developed as “freeware” – a product free of charge to first responders at all levels of government.

The contracts at issue in Alluviam’s bid protest were not awarded until 2013 and 2014 – the Broad Agency Announcements (BAA) were issued in 2013 and 2014, seeking development of technologies related to chemical, biological, radiological, nuclear, or explosives. Alluviam submitted a proposal to the 2013 BAA but was eliminated from competition at an early stage, which it did not protest; Alluviam declined to submit a bid for the 2014 BAA. Both contracts were awarded to GTARC and are now near completion.

In February 2016, Alluviam filed an agency protest challenging the 2014 contract claiming that the agency improperly used the BAA procedure and that a member of the agency staff had a conflict of interest with GTARC. After the protest was denied at the agency level, Alluviam filed the protest at the Court of Federal Claims.

The Court, in determining that Plaintiff lacks standing to bring this bid protest, noted the fact that Alluviam did not protest the agency’s rejection of its proposal under the 2013 BAA, nor did it submit any proposal for the 2014 BAA. The Court further found that Alluviam is essentially challenging the Government’s procurement method in developing an already available commercial product, but Alluviam should have challenged that method when the agency begun this process in 2004 – now, nearly twelve years later, Plaintiff lacks the standing to object to the completed contracts.

The agency made its decision to approach the development of hazardous material response programs nearly twelve years ago when it awarded its first contract to GTARC in 2004, and the work performed is now nearly complete. Because Alluviam was aware of this development approach since 2004, it lacked standing to bring the protest. The Court also found that the completion of the contracts rendered the case moot.

Alluviam , LLC v. United States, et al., Fed. Cl., No. 16-614C, 9/26/16, available at https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2016cv0614-87-0.

Kim Kardashian Has Made It to the Supreme Court – Kind Of

In more fun news – thanks to Justice Stephen Breyer, Kim Kardashian will be forever included on the transcript for a Supreme Court case.

On October 4, 2016, Justice Breyer brought up the celebrity in oral arguments in the matter of Shaw v. United States, a case involving whether the bank-fraud statute’s language “scheme to defraud a financial institution” requires proof of a specific intent to cheat a bank. Specifically, the case involved the appeal of Lawrence Shaw, who was convicted of bank fraud after transferring $300,000 to his account from another’s.

In discussing the necessary intent for bank-fraud and questioning whether the defendant must have the intent to cause the bank to lose money, Justice Breyer analogized the situation to more recent events (for those of us that don’t keep up with the Kardashians, Kim was recently robbed of nearly $10 million in jewelry while in Paris): “Even Kardashian’s thief, if there is one, believes that all jewelry is insured. Indeed over insured. So it’s not theft?” Breyer continued, “I’m asking you, if the local person comes to the door and says, dear Miss Kardashian, I am your local jewelry cleaner. Please give me your jewelry. She does. And that’s not fraud. He wanted to get the jewelry. He tried to get the – he also believed that the friend has just loaned it for the evening, that she’s triple insured, and that she won’t even lose any money because the publicity will be worth it. Okay?”

A full copy of the Supreme Court transcript is available at https://www.supremecourt.gov/oral_arguments/argument_transcripts/15-5991_7648.pdf.

About the Author:

Heather Mims | Centre Law & Consulting in Tysons VA Heather Mims
Associate Attorney

Heather Mims is an associate attorney at Centre Law & Consulting. Her practice is primarily focused on government contracts law, employment law, and litigation. Heather graduated magna cum laude from the George Mason School of Law where she was the Senior Research Editor for the Law Review and a Writing Fellow.

 

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GSA has finally acted on the request from customer agencies and industry partners to allow Order Level Materials (OLMs), frequently called Other Direct Costs (ODCs), into the Multiple Award Schedule (MAS) program.

GSA is proposing to amend the General Services Administration Acquisition Regulation (GSAR) to establish special ordering procedures per FAR 8.403 (b). These new procedures will clarify the authority to acquire OLMs when placing an order or establishing a BPA against a Federal Supply Schedule contract.

As background, currently most commercial Indefinite-Delivery/Indefinite Quantity (IDIQ) contracts have the flexibility to acquire OLMs. This authority extends to contracts awarded pursuant to FAR Part 12 and orders awarded pursuant to FAR Subpart 16.5 and 8.4. However; Subpart 8.4 was never updated and as a result the ability to acquire OLMs was never fully implemented in the MAS program.

The proposed GSA rule includes some of the following amendments (a full list can be found in the proposed rule):

  • Add to GSAR 515.408 (c) that “offerors are not required to complete the commercial sales practices disclosure for order level materials”
  • Prohibiting order-level materials from being the primary basis of the order
  • Limiting the total value of order-level materials to 33 % of the overall order value
  • Require the order-level materials to be purchased under a separate Special Item Number (SIN) to allow GSA to monitor sales and evaluate use
  • Requiring the ordering activity contracting officers to determine that all prices for these materials are fair and reasonable
  • Include controls to ensure any ceiling increases have been justified and approved in accordance with FAR 8.405.6.

The final rule will only apply to the following GSA Schedules:

  1. Federal Supply Schedule 03 FAC: Facilities Maintenance and Management
  2. Federal Supply Schedule 56: Buildings and Building Materials/Industrial Services and Supplies
  3. Federal Supply Schedule 70: General Purpose Information Technology Equipment, Software, and Services
  4. Federal Supply Schedule 71: Furniture
  5. Federal Supply Schedule 84: Total Solutions for Law Enforcement, Security, Facilities Management, Fire, Rescue, Clothing, Marine Craft, and Emergency/Disaster Response
  6. Federal Supply Schedule 00CORP: All Professional Services
  7. Federal Supply Schedule 738X: Human Resources and EEO Services

The proposed GSAR rule was published September 9, 2016 and is open for a 60 day comment period.

About the Author:

Maureen Jamieson | Centre Law & Consulting Maureen Jamieson
Executive Director of Contracts and Consulting

Maureen Jamieson has more than twenty-five years of experience managing federal contracts. She is highly experienced in solving client pricing problems and implementing effective pricing strategies for placing products and services on GSA Schedule contracts.

 

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Employees are expensive. It’s little surprise market forces incentivize companies to search for a way to get the same work out of people without paying for holidays, accommodating disabilities, and paying overtime, among countless other requirements. Imagine if you could save all this money within the law and avoid the risk of employment discrimination lawsuits. With all these savings your company could lower the price of your services/goods and edge out the competition. Figure out how to replace the lion’s share of your workforce as independent contractors and you could be living the dream, right?

Well, if your current company is currently staffed entirely by “independent contractors,” then madam/sir I am happy to meet with you to discuss both your unique staffing model and your likely immediate need for outside legal services.  Very rare is the government contractor that truly has “no employees” (though we’ve seen a few try).

That said, statistics show that there are currently an estimated 40 million independent contractors in America.  Clearly not everyone who takes money from you in exchange for a service should be called your employee. But where is the line between my contracting with a freelance plumber and a commercial company drawing billions in revenue from hundreds of thousands of its drivers? As we’ve discussed in prior blog posts, the government contracts industry is rife with the use (and abuse) of independent contractor status; and federal regulators have been tightening the screws on the use of the status.  This past year, arguably more than ever, the courts and legislators across the country are wrestling with the employee/independent contractor distinction with messy results.

Federal courts have increasingly grown skeptical of massive independent contractor agreements but don’t seem sure how to address it given the long precedent defining the relationship. One way is to decrease the incentives of an independent contractor relationship like the 1st Circuit recently did in Oliveira v. New Prime, Inc., restricting the use of mandatory arbitration agreements on independent contractors. In California, the court forced an extra $15 million out of Lyft in a settlement agreement designed to avoid the costly test of their independent contractor classification.

Coast to coast, states are trying to get a handle on independent contractors too. New York’s recent “Freelance Isn’t Free Act” requires that all entities that engage a freelance worker for $800 or more in services execute a written agreement. Where Nevada is attempting to tackle the problem industry by industry rather than with general rules.  Not everyone wants to put breaks on the independent contractor train though. Alaska and Florida have more clearly defined boundaries in favor independent contracting status, though it may just add problems for employers still wrestling with federal regulations on the same issues.

Perhaps the most hopeful part of the confused situation, is this wide variation in responses. There will certainly continue to be growing pains as the legal standards develop, but the unique effects of these policies may offer a chance to evaluate which can keep independent contractor status alive and appropriately limited.

 

About the Author:

Tyler Freiberger Headshot | Centre Law & Consulting in Tysons, VA Tyler Freiberger
Associate Attorney

Tyler Freiberger is an associate attorney at Centre Law & Consulting primarily focusing on employment law and litigation. He has successfully litigated employment issues before the EEOC, MSPB, local counties human rights commissions, the United States D.C. District Court, Maryland District Court, and the Eastern District of Virginia.

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FAR Updates That May Impact Your Small Business | Centre Law & Consulting in Tysons VA
 
On January 13, 2017, several Federal Acquisition Regulation (FAR) updates went into effect that you should be aware of if you have a small business. The highlights of each rule include:

  • Uniform Use of Line Items – A revised policy statement that requires the use of line items and, as necessary, subline items to improve accuracy, traceability, and usability of procurement data.

Acquisition Threshold for Special Emergency Procurement Authority – The simplified acquisition threshold for special emergency procurement authority has been raised from $300,000 to $750,000 within the United States and from $1,000,000 to $1,500,000 outside the United States for acquisitions that, as determined by the head of agency, are used to support a contingency operation or facilitate defenses against or recovery form nuclear, biological, chemical, or radiological attack.

Contractor Employee Internal Confidentiality Agreements – This change prohibits the use of appropriated funds to entities that require employees to sign confidentiality agreements that prevent the lawful reporting of fraud, waste, or abuse.

Contracts Under the Small Business Administration 8(a) Program – Offers and acceptances are required for individual orders under multiple award contracts that were not set aside for competition among 8(a) contractors.

Prohibition on Reimbursement for Congressional Investigations and Inquiries – No new requirements on small businesses, but records will need to be maintained.

 
About the Author

Michael Glazer | Centre Law & Consulting in Tysons VA Colin Johnson
Contracts Manager

Colin Johnson is a Contracts Manager who focuses on business development and federal contracts management. His expertise is in preparing quotes and responses for both government and commercial entities for training and legal support services.

 

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New Overtime Rule Blocked by Federal Judge | Centre Law & Consulting in Tysons VA
 
Hopefully you had already heard by now that the Department of Labor issued a new overtime rule that would require employers to pay time and a half to employees that worked more than forty hours a week and earned less than $47,476 a year. This raised the minimum earning level by about two times – from the current standard of $23,660 – and would have affected about 4.2 million American workers. The rule also established an automatic updating mechanism that would adjust the minimum salary level every three years. It was supposed to take effect on December 1, 2016; however, this rule has been blocked from going into effect by a federal judge in Texas.

U.S. District Judge Amos Mazzant issued a preliminary injunction on November 22 in a case filed by several states (twenty-one to be exact) challenging the rule against the Wage and Hour Division of the Department of Labor. The state plaintiffs argued that that new rule would cause an increase in government costs in their states and would cause businesses to have to pay substantially larger salaries.

In issuing the preliminary injunction, Judge Mazzant found that the plaintiffs have shown a likelihood of success on the merits because the rule exceeds the Department’s authority under Chevron. He further found that the plaintiffs will suffer irreparable harm if the preliminary injunction is not granted as agencies operating within budget constraints will have to comply with the rule to the detrimental effect on government services that benefit the public.

Furthermore, the judge found that the balance of hardships favors the plaintiff because: “(1) the States will be required to spend substantial sums of unrecoverable public funds if the Final Rule goes into effect; and (2) the Final Rule causes interference with government services, administrative disruption, employee terminations or reclassifications, and harm to the general public.”

In issuing the injunction, Judge Mazzant found a nationwide injunction to be proper as the new overtime rule is applicable to all states, not just the states participating in the suit. Furthermore, it is unclear the duration of this nationwide preliminary injunction. Specifically, Judge Mazzant enjoined the Department from implementing and enforcing the new overtime regulations “pending further order of this Court.”

In a prepared statement, the Department of Labor stated that it “strongly disagrees with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans.”

The statement goes on to read, “The Department’s Overtime Final Rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.”

Read the statement in full or find more information, including Judge Mazzant’s order.

About the Author:

Heather Mims | Centre Law & Consulting in Tysons VA Heather Mims
Associate Attorney

Heather Mims is an associate attorney at Centre Law & Consulting. Her practice is primarily focused on government contracts law, employment law, and litigation. Heather graduated magna cum laude from the George Mason School of Law where she was the Senior Research Editor for the Law Review and a Writing Fellow.

 

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By Maureen Jamieson

As quoted by Norman Bates in Psycho – “She just goes a little mad sometimes. We all go a little mad sometimes. Haven’t you?” I’m not naming names, but I have worked with many clients who have gone quite mad when working to ensure compliance with their GSA Schedules.

Having just celebrated Halloween, I am reminded of some frightening misconceptions surrounding GSA Schedules. Maintaining compliance with your schedule can be a grueling experience. Let’s not forget that blood-curdling stress as you prepare to meet or talk to your Industrial Operations Analyst (IOA) or that bone-chilling realization that you forgot to pay your Industrial Funding Fee (IFF) on time.

Do you understand GSA’s current terms and conditions? Do you have the knowledge to ensure compliance with your GSA Schedule? Take Centre’s True or False quiz (with answer key below) beginning with our teams most frequently asked questions:

  1. The Maximum Order Threshold (MOT) established for a GSA Schedule contract serves as a limit on the dollar value of individual task orders placed under that Schedule.
  2. GSA contractors must accept the Governmentwide purchase card for orders under the micro-purchase threshold ($3,500).
  3. The 0.75% Industrial Funding Fee (IFF) is already included in the price of items on GSA Advantage!.
  4. An advantage for sellers under Federal Supply Schedule (FSS) orders is that the Government has no audit rights.
  5. Participating Dealers on a Schedule contract may bill the government directly on behalf of the Schedule holder.
  6. A digital certificate is required to report sales and pay the Industrial Funding Fee (IFF) in the new Transactional Data Reporting (TDR) FAS Sales Reporting System.
  7. GSA/VA Schedule Price Lists submitted via the Schedules Input Program (SIP) are automatically posted to GSA Advantage.
  8. Multiple modification actions such as economic price adjustments and deletion mods can be combined in one modification and submitted via the eMod system.
  9. Only authorized negotiators with signature authority and digital certificates are permitted to submit certain modifications and sign modifications in the eMod system.
  10. Digital certificates automatically renew every two years.

Not maintaining compliance with the terms and conditions of your GSA Schedule can cost your company money, time and unwanted stress. If you’re feeling GSA stress or just want to learn more about GSA Schedules, consider attending our GSA Boot Camp on November 14 and 15 at Centre’s office located in Tysons, VA. See our website for details.

ANSWER KEY: 1) False 2) True 3) True 4) False 5) True 6) True 7) False 8) False 9) True 10) False

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Earlier this week, the Equal Employment Opportunity Commission (EEOC) issued a publication related to the rights of individuals with disabilities under the Americans with Disabilities Act (ADA) when requesting leave from work as a reasonable accommodation. While the ADA clearly requires employers provide qualified disabled individuals with a “reasonable accommodation” to permit the individual to perform the essential functions of the job, the entitlement to leave as such an accommodation has been a focus of the EEOC and litigation in recent years. The EEOC noted in its press release, that “[d]isability charges filed with the EEOC reached a new high in fiscal year 2015, increasing over 6 percent from the previous year” and that the EEOC has identified a “prevalence of employer policies that deny or unlawfully restrict the use of leave as a reasonable accommodation.” Thus, the publication seeks to provide general information related to assessing requests for leave under the ADA and also provides examples of leave requests and the EEOC’s determination of appropriate action.

Employee requests for leave linked to medical conditions (e.g., stress, depression, etc.) have been on the rise including, for example, requests for telework, breaks, reduced schedules, and extended time off. Given the ADA’s now more expansive definition of disability, these requests must be assessed by employers for compliance with ADA in addition to other various state or federal laws prior to making a determination. Being informed about the ADA requirements is essential in ensuring these requests are handled in an appropriate manor. The required “interactive process” is not a one-size fits all approach and specifically contemplates a review of whether alternative forms of reasonable accommodations may be effective in meeting the employee’s needs. Thus, while an employee may seek leave as an accommodation, the employer may propose other accommodations that may permit the employee to return to work sooner or be more productive while at work.

In addition, while the EEOC still has not provided a bright-line on what length or frequency of leave may become an undue burden, it is worth repeating that when an employee requests “indefinite leave” (i.e., leave without any indication as to when or whether the employee will return) the EEOC has determined that such leave would be an undue burden and, thus, not required to be provided by the ADA.

This publication supplements other available resources available from the EEOC and should be consulted by those responsible for reviewing reasonable accommodation requests and company leave policies. The publication also covers modifications to existing leave policies, maximum leave policies, communication with employees on leave (including when returning to work from leaves covered by FMLA), the “interactive process” in assessing reasonable accommodation requests, and undue hardship considerations.

About the Author:

Marina Blickley | Centre Law Group Marina Blickley
Associate Attorney

Marina Blickley focuses on the Government Contracting and Non-Profit industries. She regularly assists clients in all aspects of employment and labor law including employment discrimination, harassment, retaliation/whistleblower, compensation practices, and wage and hour violations. Marina also represents companies in commercial litigation matters concerning contract disputes, restrictive covenants/non-competes, business conspiracy, misappropriation of trade secrets, and computer fraud and theft.

 

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VA Reduces Administrative Burden on SDVOSBs and VOSBs | Centre Law & Consulting in Tysons, VA
 
The Department of Veterans Affairs (VA) published an Interim Final Rule in the February 21, 2017, edition of the Federal Register, increasing the period for re-verification examination by VA’s Center for Verification and Evaluation (CVE) of Service-Disabled Veteran-Owned Small Business (SDVOSB) and Veteran-Owned Small Business (VOSB) program participants from two years to three years.

Purpose

The purpose of this change, effective February 21, 2017, is to reduce the administrative burden on SDVOSBs and VOSBs participating in VA acquisition set-aside for these types of firms pursuant to the authorities of Public Law 109-461, the Veterans Benefits, Health Care and Information Technology Act of 2006 (the Act), implemented by the VA as the “Veterans First Contracting Program.”

The Act requires VA to verify ownership and control of SDVOSBs and VOSBs in order for those firms to participate in acquisitions VA sets aside for SDVOSBs and VOSBs. VA has continuously administered the verification program since February 2010, at which time re-verification was required annually. In June 2012, the re-examination period was extended to two years.

In changing from a biennial re-examination eligibility period to three years, VA believes it adequately balances maintaining program integrity while reducing the administrative burden on SDVOSBs and VOSBs. In reaching this determination, VA cited statistical data from Fiscal Year 2016, which showed out of 1,109 reverification applications, only ten were denied, ergo, only 0.9 percent of reverification applications were found to be ineligible after two years.

VA relies very heavily on its initial eligibility examination of firms, which it describes as robust, and as such believes the integrity of the program will not be compromised by extending the period for reverification.

Process

As part of its initial examination, VA CVE reviews personal and company documentation to verify ownership and control by Veterans of the business applying for verification. Documents include personal and company financial statements; Federal personal and business income tax returns; personal history statements; articles of incorporation/organization; corporate by-laws or operating agreements; organizational, annual, and board/member meeting records; stock ledgers and certificates; State-issued certificates of good standing; contract, lease, and loan agreements; payroll records; bank account signature cards; and various licenses.

Additionally, VA conducts random, unannounced site examinations of participants in order to examine or further examine a participant’s eligibility, including upon VA’s receipt of specific or credible information that the participant is no longer eligible. Additionally, VA contracting officers and competing SDVOSBs and VOSBs have the right to raise a SDVOSB/VOSB status protest to VA’s Office of Small and Disadvantaged Business Utilization should either have a reasonable basis upon which to challenge the SDVOSB/VOSB status of a VA CVE-verified firm.

VA regulations mandate program participants maintain eligibility during its tenure, and if ownership or control changes occur, participants are required to notify VA’s CVE of any changes which would adversely affect the participant’s eligibility as a VA CVE-verified SDVOSB/VOSB.

VA maintains the Vendor Information Pages (VIP) Database, a database of firms verified by CVE and eligible to receive awards under the Veterans First Contracting Program. As of February 24, 2017, the VIP Database list 9,287 firms (6,917 SDVOSBs and 2,370 VOSBs).

VA’s current Veteran Small Business Regulations are codified at 38 C.F.R. Part 74.

Comments

Written comments on the Interim Final Rule must be submitted on or before April 24, 2017. Comments may be submitted directly to VA at the address shown in the Federal Register Notice or at www.regulations.gov. Comments should indicate they are submitted in response to “RIN 2900-AP93—VA Veteran-Owned Small Business Verification Guidelines.” Note that all comments received will be available for public inspection at VA’s Central Office in Washington, DC.

About the Author:

Wayne Simpson | Centre Law & Consulting Wayne Simpson
Consultant

Wayne Simpson is a seasoned former Federal executive and acquisition professional who is also a highly-motivated and demonstrative small business advocate, with nearly 38 years of Federal Civilian Service with the U.S. Department of Veterans Affairs (VA), and its predecessor organization, the Veterans Administration.

 

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Bid Protest: “Professional Compensation” Sinks Contract Award | Centre Law & Consulting in Tysons, VA
 
Last week, the Government Accountability Office (GAO) released the public version of its decision sustaining the protest of contractor A-P-T Research, Inc. with respect to a procurement with the National Aeronautics and Space Administration (NASA) for various support services. In addition to a potential impaired objectivity organizational conflict of interest, the protest was sustained because the awardee’s proposed professional compensation was at the low end of the experience and compensation scales used for evaluation. With that, the contemporaneous record lacked a reasoned basis for finding the professional compensation and related costs to be acceptable or realistic.

Because a cost-reimbursement contract’s cost is driven in significant measure by labor costs, the procuring agency is required to evaluate each offeror’s direct labor rates to ensure that they are realistic. The purpose of a review of compensation for professional employees under the provision at FAR § 52.222-46 is to determine whether offerors will obtain and keep the quality of professional services needed for adequate contract performance and to evaluate whether offerors understand the nature of the work to be performed. As the FAR provision states, the “professional compensation proposed will be considered in terms of its impact upon recruiting and retention, its realism, and its consistency with a total plan for compensation.” Further supporting information including “data, such as recognized national and regional compensation surveys and studies of professional, public, and private organizations, used in establishing the total compensation structure” are to be provided.

In brief, the Agency sustained the protest because “the record contains no meaningful explanation of how [NASA] concluded that [the awardee] would be able to retain” the proposed incumbent employees at the compensation offered, which would result in significant pay decreases. Rather, the record contained only general statements that concerns regarding compensation had been addressed via discussions.

Notably, the Agency did not express a view on the argument that FAR § 52.222-46 requires a direct comparison of proposed compensation and actual incumbent compensation rates. However, it is clear that under-cutting on professional salaries can be a dangerous gambit.

About the Author:

David Warner | Centre Law & Consulting David Warner
Partner

David Warner is a seasoned legal counselor with extensive experience in the resolution and litigation of complex employment and business disputes. His practice is focused on the government contractor, nonprofit, and hospitality industries. David leads Centre’s audit, investigation, and litigation practices.

 

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Over a year ago, GSA published a final General Services Acquisition Regulation (GSAR) rule incorporating Transactional Data Reporting (TDR) into select product and service schedules in the Multiple Award Schedules (MAS) program. Initial participation in the TDR pilot was optional for existing contractors. However, new offerors and existing contractors with upcoming options were required to participate in the pilot.

GSA is now making participation in the TDR pilot voluntary. Any vendor required to accept TDR with a new pilot offer, had a TDR option exercised, or added a TDR SIN to their contract will have an opportunity to opt out of TDR.  If a vendor does not take advantage of this one-time opt out, there will be no additional opportunities to get out. You can also opt into TDR on pilot schedules but remember there will be no additional chances to withdraw once you make this election.

As a caveat, any vendor who voluntarily accepted the TDR Implementation Mass Mod (A509) will be required to stay in TDR.

GSA anticipates refreshing TDR schedules in mid-October. Schedules 03FAC, 51V, 58 I, 72, 73 and 75 will be refreshed to add the legacy clauses back to the solicitation and TDR SINs on Schedules 70 and the Professional Services Schedule (PSS) will reflect the removal of language pertaining to mandatory participation.

Once the solicitations are refreshed and not before, vendors will receive a notification from their Contracting Officer (CO). A vendor will have 60 days to respond to their CO with their intent. If no response is received within the 60 days, a vendor will remain in the TDR pilot.

What will be required if you make the decision to opt out of TDR?

  • Provide updated Commercial Sales Practices (CSP), current pricelist, and any other information requested by the CO
  • Re-establish a Most Favored Customer (MFC) and Basis of Award (BOA) customer
  • Identify a price/discount relationship as required by the Price Reduction Clause
  • Ensure that your pricing is still fair and reasonable
  • Update your contract via a formal modification to incorporate any revised terms and conditions

What are the effective dates for vendors who opt out of TDR and when will Price Reduction tracking become effective?

  • The actual modification opting out of TDR will become effective on day 1 of the next business quarter (January 1st, April 1st, July 1st and October 1st)
  • Price Reduction tracking will begin on day 1 of the business quarter following the date of the modification to opt out
  • The first 72A reporting period will begin on the 1st day of the business quarter following the date of the opt out modification. Continue to remit Industrial Funding Fee (IFF) in the FAS Sales Reporting System (TDR) until that time.

If you have any questions on whether you should stay or opt out of the TDR pilot, please contact a member of the GSA consulting team.

About the Author:

Maureen Jamieson | Centre Law & Consulting Maureen Jamieson 
Executive Director of Consulting

Maureen Jamieson has more than twenty-five years of experience managing federal contracts. Maureen is highly experienced in solving client pricing problems and implementing effective pricing strategies for placing products and services on GSA Schedule contracts. Maureen also frequently works with clients on effective selling and marketing strategies in the federal market space and is highly skilled as a federal contracts capture or proposal manager.

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