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I just saw an article from National Defense magazine. According to their survey, the most important thin that the Government can do to help the defense industrial base is to "streamline the acquisition process." (35% of respondents) Number two was "ensure budget stability." (32% of respondents) Among other things, the article recommends increasing the SAT to $500,000.

I know. We've all been here before. But the National Defense Industrial Association wants to keep the topic in their cross-hairs.

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5 hours ago, Vern Edwards said:

Here's a headline from a 1962 issue of Aviation Week and Space Technology:

"Defense to Speed Development, Cut Costs: Services ordered to revamp research, procurement procedures to reduce lead time and avoid overruns"

And so it goes.

 

First, that's really funny and I would love to see a copy of that article.

Second, when did you become Kurt Vonnegut?

 

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14 hours ago, Vern Edwards said:

@here_2_helpI just sent the article to you.

Thank you, sir. I was both horrified and grimly amused at how much the 1962 DoD policy changes paralleled -- or, perhaps more accurately, mimicked -- recent DoD policy imperatives. It is nearly 60 years later and, quite literally, nothing has changed.

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1 hour ago, Vern Edwards said:

I don't think something in 1962 can mimic something in 2021. I think it's the other way 'round. 😎

Corrected by Vern.

And so it goes.

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Rickover

Speaking of 1962 era acquisition policies, I performed this Google search the other day: “Did Hyman Rickover advocate the Truth in Negotiations Act ? “

I remember that one of my 1981 USACE “Negotiating Construction Contracts” class instructors told us that Admiral Rickover had been instrumental in development of TINA due to his legendary battles with the Nuclear Navy industry. My instructor was a retired, prominent USACE,  contract negotiator. He was a GS-18 at the time of his retirement. I remember him emphasizing that one of the intents was to provide an administrative procedure within the contract to recover defective pricing amounts. This was intended to avoid the government having to prove intent, which is necessary to establish criminal fraud, false statements or false claims.

The search produced many articles. Here are three interesting examples:

https://www.energy.gov/sites/default/files/2018/04/f50/DuncanRickoverandtheNuclearNavyComplete_1.pdf

https://www.nybooks.com/articles/1982/03/18/advice-from-admiral-rickover/

https://www.gao.gov/assets/plrd-83-37.pdf

P.S., Two of my friends had been assigned to Navy Nuclear subs, one as a Ships Captain on a Boomer and the other as an enlisted nuclear reactor/propulsion specialist on an Attack sub. My Former Captain friend has told me about his personal Rickover selection interview, as described in some of the Google search results.

Extremely interesting stuff, plus provides some perspective to the Congressional interest and concerns  during 1962 timeframe that led to TINA.

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I can see why TINA could have originally been intended to provide an administrative alternative to criminal prosecution or lawsuits. It was the height of the Cold War. It would not make sense to go to great lengths to criminally prosecute the Defense Industry in order to be able to fairly negotiate contracts and Mods. . They were critical to the Nation’s Defense. 

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2 hours ago, joel hoffman said:

I remember that one of my 1981 USACE “Negotiating Construction Contracts” class instructors told us that Admiral Rickover had been instrumental in development of TINA due to his legendary battles with the Nuclear Navy industry.

Rickover was not instrumental in the enactment of TINA, which happened in 1962, following the lead of the Air Force in 1959. TINA was a response to DOD's emphasis on the use of incentive contracts. The GAO and Congressman Carl Vinson were instrumental in the enactment of TINA.

See Roback, "Truth in Negotiating: The Legislative Background of P.L. 87-653," Public Contract Law Journal, (July 1968).

Rickover was instrumental in the creation of the Cost Accounting Standards Board, 1968 - 1970.

See Pownall, "An Empirical Analysis of the Regulation of the Defense Contracting Industry: The Cost Accounting Standards Board," Journal of Accounting Research, (Autumn 1986).

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2 hours ago, joel hoffman said:

I can see why TINA could have originally been intended to provide an administrative alternative to criminal prosecution or lawsuits. It was the height of the Cold War. It would not make sense to go to great lengths to criminally prosecute the Defense Industry in order to be able to fairly negotiate contracts and Mods. . They were critical to the Nation’s Defense. 

That's not correct. Among other things, TINA is not an "administrative" remedy and it was not intended to be an alternative to criminal prosecution. It is strictly a contractual remedy unless a false claim in involved. Defective pricing might be entirely inadvertent.

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3 hours ago, Vern Edwards said:

That's not correct. Among other things, TINA is not an "administrative" remedy and it was not intended to be an alternative to criminal prosecution. It is a strictly a contractual remedy unless a false claim in involved.

My choice of words was incorrect. it is a contractual remedy. I said it was an administrative remedy.

However, the government does not have to prove that there is a false claim to obtain the contractual remedy. I also discovered that the FCA was substantially amended in 1986 to make it easier for the government to recover funds lost through fraud than it was in 1962. The contractor doesn’t have to act with a specific intent to defraud in order to be liable, as long as the submission was “knowing”. The definition of “knowing” was clarified to not require a specific intent to defraud.

And I read that the FCA is not a criminal statute. I also read that as it was originally enacted in 1863, defendants could be subject to both criminal and civil  actions under the law. https://www.bafirm.com/2019/03/false-claims-act-also-known-lincolns-law-progress/

I’m certainly not a lawyer. But the current FCA isn’t the same FCA as it was in 1981 , 1863 or 1962 either. 


See:https://fcaexpert.com/articles/fca-faq.html

Edited by joel hoffman
Typo dates
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1 hour ago, Vern Edwards said:

Rickover was not instrumental in the enactment of TINA, which happened in 1962, following the lead of the Air Force in 1959. TINA was a response to DOD's emphasis on the use of incentive contracts. The GAO and Congressman Carl Vinson were instrumental in the enactment of TINA.

See Roback, "Truth in Negotiating: The Legislative Background of P.L. 87-653," Public Contract Law Journal, (July 1968).

Rickover was instrumental in the creation of the Cost Accounting Standards Board, 1968 - 1970.

See Pownall, "An Empirical Analysis of the Regulation of the Defense Contracting Industry: The Cost Accounting Standards Board," Journal of Accounting Research, (Autumn 1986).

Thanks, Vern. I read earlier today about Admiral Rickover’s testimony in 1962 to Carl Vinson’s committee or subcommittee in support of enactment of TINA legislation but can’t find that article now. At any rate, my memory and/or my instructors memory were apparently inaccurate concerning the extent of his involvement in Enacting TINA.

I will have to visit my lawyer friend’s office to read your cited references. I no longer have direct access to the law library. 

 

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4 minutes ago, Vern Edwards said:

@joel hoffmanI can email the articles to you, but you'll have to send me your email address through Bob. Don't type it here.

Ok, thanks, Vern 

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On May 12, I ran across this excerpt from the March 18, 1982 issue of The New York Review:

“Advice from Admiral Rickover

“Admiral Hyman G. Rickover

However, I couldn’t locate it again until this evening. Plus, one must subscribe to the New York Review in order to be able to read the entire article.

“Following is a substantial part of Admiral Hyman Rickover’s prepared statement to the Joint Economic Committee of Congress on January 28. He testified before the committee shortly after meeting with the Secretary of the Navy who told him, as Admiral Rickover put it, that “he wanted my termination with the Navy within three to six months.”

“Excerpts from Admiral Rickover’s testimony follow the text of his statement.

“…How to promote greater efficiency and economy in the Defense Department? As you know, I have testified often before congressional committees, including yours, on various aspects of this problem. In some cases, Congress implemented my recommendations for reforms. Eventually, however, defense contractor lobbyists have generally learned how to get around them or have them rescinded.

“Former Congressman Chet Holifield, working with the House Armed Services Committee, was instrumental in enacting the Truth-In-Negotiations Act of 1962. I assisted him in that venture. Today there are still contractors that are not in compliance with the act”...

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On 5/19/2021 at 12:56 AM, joel hoffman said:

“Former Congressman Chet Holifield, working with the House Armed Services Committee, was instrumental in enacting the Truth-In-Negotiations Act of 1962. I assisted him in that venture. Today there are still contractors that are not in compliance with the act”...

Joel:

I did extensive research on P. L. 87-653 and even remember Carl Vinson getting one of those new fangled color TVs on the floor of the House for his 50th anniversary serving in the House.  I think that might have been before the transistor.  I read the article from the New York Review and I was surprised at the quote.  Rickover may have attended a hearing or so but he was not a significant factor in P. L. 87-653.  I also read interviews with Chet Hollifield and he showed little interest in P. L. 87-653 or its passage.  Even when he was specifically asked about it. 

During 1965, Hollifield was busy with the Hollifield Hearings during which he beat GAO up so that it would curtail its contract pricing audits and not request refunds from contractors that overpriced contracts.  There was some talk about the Hollifield Hearings among the press such as:  Drew Pearson wrote that Hollifield was "strangely found on the side of luxurious shuffleboard courts, table tennis facilities, a scenic mall, out-door dining rooms for [a federal contractor] all paid for by the taxpayer."

The driving force behind P. L. 87-653 was Carl Vinson, not Chet Hollifield.  Maybe that is why Carl Vinson has his own aircraft carrier.  I don't know.  I believe the hearings discussing the fixed-price incentive contracts that were involved in P. L. 87-653 were televised.  The contracts may have been with Ford or GM.  I can't remember that.  In the 1970's, Hollifield did sponsor and was the Vice Chair of The Commission on Government Procurement.

Vern correctly mentioned that GAO played a sifnificant role in P. L 87-653.  Here is a prepared statement by GAO's General Councel in 1968.

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When I was doing my research in GAO's microfiche room that I mentioned above, another name kept popping up.  It was Edward Hébert.  He is mentioned in Robert Keller's statement that I linked above.  That statement is why I remembered him.

I had pounds and pounds of microfiche paper to support my research on 87-653 but it no longer exists.  I had the same for FPASA and that is gone too.

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Bob, the article that I sent you about history of the GAO audits between 1937 and 1975 and “voluntary refunds of excessive profits” as virtually the only contractual vehicle before TINA, short of proving fraud or false statements, etc. was really interesting.

 

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Yes it is Joel.  I have a hard cover book by a GAO historian that includes the Hollifield hearings which were held in 1965.  I looked at the book a bit.  Hollifield's Hearing was an ambush.  At the end of the hearing, 2 GAO individuals had a chance to speak and be criticized.  Before them was a small army of people from DoD and DoD contractors that aired their complaints against GAO.  The 2 GAO individuals tried to provide answers at the table but after a while, I'm sure they realized they were only there to take a beating. 

The real problem may have been the writing of the Hollifield report on the hearing.  GAO claimed that the report was filled with errors and falsehoods.  It probably was.  That's all part of an ambush. 

I joined the General Procurement Group of the Procurement and Systems Acquisition Division in 1972 after I completed my training assignemnts in GAO's Civil Division.  The General Procurement Group did contract pricing reports.

Before the Hollifield hearing the contract pricing reports were done and then dent sent to the Department of Justice for action with contractors names.  That built up a lot of resentment from contractors.

After Hollified, GAO's pricing reports, if they found anything, were sent to DoD with a recommendation that the contracting officer take action, if he/she sees fit.  If that is not exactly the way we did it, it is close.

I remember asking why were we doing pricing reports.  The answer was so they know we were still in that business.  I think the pricing reports ended in the 1970s.

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Yeah, I couldn’t read the whole report in detail, so skimmed part of it. I always wondered by the clauses give “GAO” the right to review contractor’s files but not us or DCAA. I didn’t realize that GAO did audits. I think they were post pricing  price reports or audits weren’t they? And it looked like if the contractors made “too much “ profit, somebody would request - quite publicly naming  (to embarrass ?) the firm and ask for a refund.

Is that the way it worked? 
I think the audit program was cancelled in 1975 but am going sailing so can’t reread it now. 

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