This is what is wrong with government contracting.

[here_2_help]

Let's eliminate the Anti-Deficiency Act, for starters

[Matthew Fleharty]

2 hours ago, here_2_help said:

Let's eliminate the Anti-Deficiency Act, for starters

Why?

[Jamaal Valentine]

It is rare that anyone is held accountable for a violation. Check out the remedial actions from 2015, here.

I had a trainer (lawyer) say you have to be anti-deficient at the appropriation level to be truly anti-deficient. (If the funds are available in the agency - you are not anti-deficient.) If this is true, how often does this occur for most offices?

[Guest Vern Edwards]

Repeal of laws is hard. How about amendment?

1. Truth in Negotiations Act -- raise the dollar threshold to $50M for contracts and $10 for mods under contracts for which certified cost or pricing data were required.

2. Cost Accounting Standards--raise the dollar threshold to $50M for negotiated contracts with large businesses and with high likelihood of mods in excess of $10M.

3. Competition in Contracting Act--eliminate requirement to use specific contracting methods; permit certain awards without consideration of price; raise SAT to $1,000,000; set SAT at $100,000 per unit for quantity buys; raise micro-purchase threshold to $50,000; eliminate mandatory use of sealed bidding.

4. Amend OFPP Act and Small Business Act to raise synopsis threshold to $50,000.

5. Amend protest statutes to forbid changing venues after filing; forbid protest to GAO then to COFC; limit COFC jurisdiction to protests of $50M or more.

6. Service Contract Act--raise dollar threshold to $150,000 for contracts not covered by collective bargaining; make inapplicable to all contracts for commercial services.

7. Davis-Bacon Act--raise dollar threshold to $1,000,000.

[Lionel Hutz]

4 hours ago, Jamaal Valentine said:

I had a trainer (lawyer) say you have to be anti-deficient at the appropriation level to be truly anti-deficient. (If the funds are available in the agency - you are not anti-deficient.) If this is true, how often does this occur for most offices?

That's not true.  The ADA imposes prohibitions at the appropriations level (31 U.S.C. § 1341(a)(1)(A) and (B)), at the apportionment level (31 U.S.C. § 1517(a)), and at the formal subdivision level (31 U.S.C. § 1517(a)).  So, a violation at any of those levels would be a violation of the ADA.

[apsofacto]

Quote

apsofacto,

Which laws would you like to see repealed?  Which regulations would you like to see removed?

Hello, Navy,

How about 25 USC 1544?  Seems like a scam.  Subchapter D looks like a target rich environment.

 

6 hours ago, Vern Edwards said:

Repeal of laws is hard. How about amendment?

Yes, all of those are more practical that my earlier rainforest torching thought. 

It may be worth indexing all of those dollar thresholds to inflation so they would self-adjust over the years? 

[Jamaal Valentine]

3 hours ago, Lionel Hutz said:

That's not true.  The ADA imposes prohibitions at the appropriations level (31 U.S.C. § 1341(a)(1)(A) and (B)), at the apportionment level (31 U.S.C. § 1517(a)), and at the formal subdivision level (31 U.S.C. § 1517(a)).  So, a violation at any of those levels would be a violation of the ADA.

Thanks for the info. I may have misunderstood or mistated what was said…I remember that they were insistent that as long as the agency had the correct type of money available - you were not deficient.

Maybe they said you were not deficient if you had funds at the agency level (not the appropriation level).

DoD FMR defines an apportionment as a distribution made by the Office of Management and Budget of amounts available for obligation in an appropriation or fund account into amounts available for specified time periods, program, activities, projects, objects, or any combination of these.

[here_2_help]

13 hours ago, Matthew Fleharty said:

Why?

Because compliance contributes to the creation of a myriad of additional rules and procedures and processes, and because it creates funding uncertainty for contractors. Funding uncertainty is one of the top contributors to suboptimal program/contract outcomes and impacts military readiness. That's not my opinion, it's the opinion of contractors and military leadership.

"Eight years of continuing resolutions — and a year of sequestration — have caused budget uncertainty that has resulted in additional cost and time requirements for 'just about everything we do,' Chief of Naval Operations Adm. John Richardson told the Senate Armed Services Committee at a hearing on long-term budget challenges... "

Yes, it's not just about the ADA, but the ADA is my starting point because I can't repeal Congress.

[Matthew Fleharty]

58 minutes ago, here_2_help said:

Yes, it's not just about the ADA, but the ADA is my starting point because I can't repeal Congress.

What's the alternative? Or is there one? I'd imagine there would have to be because, according to the Constitution, Congress has the power of the purse...

[Guest Vern Edwards]

H2H:

Repeal of the ADA is dead on arrival. The law implements the Constitution's grant of the power of the purse to Congress. You want Congress to repeal the ADA so the Executive can fearlessly engage in Constitutional overreach and ungoverned spending--the same Executive that cannot manage programs like the F-35 and the Littoral Combat Vessel?

Have a drink or two and get real.

Besides, the problem isn't the ADA, but the inability of the political Left and the Right to reach agreement on a theory of government and budgeting, so that Congress and the Executive can agree on annual appropriations. The problem is much, much bigger than acquisition reform.

[Junius]

While we're on the subject, can we get rid of FAR 19 and the applicable sections of its statutory basis? 

I'll settle for a study on whether or not the policies implemented through FAR 19 provide a net macroeconomic benefit.

[metteec]

1 hour ago, Junius said:

While we're on the subject, can we get rid of FAR 19 and the applicable sections of its statutory basis? 

I'll settle for a study on whether or not the policies implemented through FAR 19 provide a net macroeconomic benefit.

I could not disagree more.  The small business preference programs incentivize job creation and provide a major source of income to the American economy.  You want a study?  Take a look at this... In 2014, small businesses in Maryland had a marginal tax rate of 49.1-percent.  No state in the union had less than a 40-percent average marginal tax rate for small businesses. You may be interested in this chart from the Tax Foundation on the tax burden on small businesses: 

http://taxfoundation.org/blog/small-businesses-and-their-income-tax-burden

Now, compare that to the tax burden of other than small businesses that the Government typically works with.  Between 2008 and 2010, Lockheed Martin had a marginal tax rate of 20.2-percent.  Raytheon had a 13.7-percent marginal tax rate.  AT&T, 8-percent.  Boeing, despite its billions in Government contracts, had a NEGATIVE 1.8-percent marginal tax rate because of its deferred taxes.  These numbers are from Citizens for Tax Justice research (source: http://ctj.org/ctjinthenews/2013/04/the_huffington_post_here_are_the_effective_tax_rates_of_17_companies_pressuring_congress_to_cut_corp.php)

Those small businesses represent major sources of income for millions of American citizens.  Further, small businesses are more likely to invest their revenue further into their communities and businesses.  Small businesses typically do not have access to the high-class accountants available to large businesses.  That means less money funneling through foreign banks, tax shelters, and questionably legal tax loopholes.  By investing in small businesses, you are investing in America. 

Are there flaws in the small business programs?  Do some small businesses exploit the internal controls on subcontracting and commit fraud?  Sure.  But that happens with large businesses, as well.

[Junius]

Let me be more specific with my question.  I’ll preface with a statement:

Logically, if a small business concern truly provides best value for a specific acquisition, they will receive the contract award regardless of whether or not the acquisition is set-aside for small business concerns.  Therefore, by setting aside acquisitions for small business, the Government, at best, only matches the value that it would receive under full and open competition, but there’s also the chance that the Government receives sub-optimal value.

What evidence do we have that small business preference programs provide enough surplus benefit to overcome this issue,  or are taxpayers subsidizing small business concerns at the expense of the economy as a whole?

I am specifically interested to know if there is a study that addresses this question or something similar to it.  I’m not interested in *any* study.  The relative tax burden of small businesses and corporations don’t tell me whether or not taxpayers, as a whole, derive a net-positive economic benefit from FAR 19.  I want data, not rhetoric.

[Guest PepeTheFrog]

1 hour ago, Junius said:

are taxpayers subsidizing small business concerns at the expense of the economy as a whole?

Yes, under the assumption that the proliferation and flourishing of small businesses (artificially defined by the SBA and NAICS code system) "helps the economy."

Purposefully staying within a NAICS code (revenue or employees) is 100% the result of the artificial, exogenous constraints. It's unusual for a business turn down work (even if it is to maintain a competitive advantage). The small businesses either stay small and avoid growth beyond a certain point, or they are absorbed (bought out) by larger corporations, further contributing to consolidation (going against the purpose of "helping small business"). This undercuts the entire economic and philosophic argument for the small business programs.

The federal contracting marketplace is bimodal, devoid of a strong "middle class." There are always a lot of small businesses, forever staying young in their NAICS codes, and then you have the (truly) large contractors, which win the lion's share of all federal contracts. It's an imperfect system.

 

[Boof]

Lets get rid of the ratification process.  It always punishes the contracting personnel and the vendors instead of the program offices it is supposed to wake up. 

[here_2_help]

11 hours ago, Vern Edwards said:

H2H:

Repeal of the ADA is dead on arrival. The law implements the Constitution's grant of the power of the purse to Congress. You want Congress to repeal the ADA so the Executive can fearlessly engage in Constitutional overreach and ungoverned spending--the same Executive that cannot manage programs like the F-35 and the Littoral Combat Vessel?

Have a drink or two and get real.

Besides, the problem isn't the ADA, but the inability of the political Left and the Right to reach agreement on a theory of government and budgeting, so that Congress and the Executive can agree on annual appropriations. The problem is much, much bigger than acquisition reform.

Vern if the Constitution were so clear we wouldn't need an implementing statute, enacted 100 years after the country's founding. So obviously there's something other than Congress' "power of the purse" going on.

In my view, the ADA acts to give the government an "out" with respect to fulfilling its obligations under a contract to which it is a party. It permits the Federal government to enter into a contract and then welsh on the deal, using the excuse that Congress hasn't appropriated sufficient funds. As we all know and as you noted, the additional problem is that Congress has over the past decade or so proven unable to execute with any consistency its Constitutional duty in that regard.

Rather than accept the status quo I advocated the position that a contract is a contract, and that doing away with the ADA would return the parties to a more equal footing. You don't like my position? Fine. Doesn't mean my point isn't valid. (Though I accept my suggestion would be rather difficult to implement.)

Go now and enjoy Paris. Hoist a glass to von Steuben and to Koscuisko.

[Guest Vern Edwards]

4 hours ago, here_2_help said:

In my view, the ADA acts to give the government an "out" with respect to fulfilling its obligations under a contract to which it is a party. It permits the Federal government to enter into a contract and then welsh on the deal, using the excuse that Congress hasn't appropriated sufficient funds. As we all know and as you noted, the additional problem is that Congress has over the past decade or so proven unable to execute with any consistency its Constitutional duty in that regard.

Rather than accept the status quo I advocated the position that a contract is a contract...

Emphasis added.

 

A contract is not a contract if the person who signed it exceeded his or her authority. The ADA makes that clear. It's no different in that regard than any number of laws and legal doctrines, e.g., the Christian Doctrine and the cardinal change doctrine, except that it provides criminal penalties for those who violate its terms. If you do business with the Government you've got to know the limits of its officers' authority. That's the price of doing business with the sovereign.  If you work for the Government, you've got to know the limits of your authority or maybe pay a different price.

 

 

I'm enjoying Paris. The weather is beautiful, the food is great, the wine is superb, and the art is magnificent. I'm also enjoying poking holes in pointless recommendations. A proposal to repeal of the ADA is dead on arrival. Stillborn.

 

You know a lot about this business. Now that you've proven your boldness bona fides, how about proposing something that has even a slim chance of being considered.

[Guest PepeTheFrog]

On 9/24/2016 at 0:30 AM, here_2_help said:

In my view, the ADA acts to give the government an "out" with respect to fulfilling its obligations under a contract to which it is a party. It permits the Federal government to enter into a contract and then welsh on the deal, using the excuse that Congress hasn't appropriated sufficient funds. As we all know and as you noted, the additional problem is that Congress has over the past decade or so proven unable to execute with any consistency its Constitutional duty in that regard.

Rather than accept the status quo I advocated the position that a contract is a contract, and that doing away with the ADA would return the parties to a more equal footing.

You are more accurately criticizing and advocating for the elimination of an important distinction in government contract law: apparent authority vs. actual authority. The agents of the government (contracting officers) can only bind the government with actual authority (not apparent authority). The actual authority is limited by authorized programs with appropriated funds and the contracting officer's "warrant." The ADA did not create this distinction.

Your (restated) idea is interesting, but consider its unintended consequences. If apparent authority applies in government contract law, contracting officers could obligate the taxpayer beyond what Congress intended. The Executive Branch is supposed to be subject to the "power of the purse" of the Legislative Branch. Allowing the government and taxpayers to be bound by the apparent authority of contracting officers would weaken the separation of powers.

On 9/24/2016 at 4:56 AM, Vern Edwards said:

A contract is not a contract if the person who signed it exceeded his or her authority.

PepeTheFrog is 1,000% certain Vern Edwards knows this, but only wants to clarify for the other readers: This rule applies to government contracts, but not to private contracts. In private contracts, an agent can bind its principal in a contract even if that agent exceeded its authority.

Example: Everyone in Springfield knows that Smithers is the right-hand man of C. Montgomery Burns. Smithers signs and negotiates deals for Burns all the time, and Burns holds out Smithers as his agent. One day, Smithers signs a contract for $2 million even though Burns told him he couldn't sign the contract for more than $1.75 million. The contract is valid and binds Burns, even though Smithers did not have actual authority. Smithers had apparent authority and Burns cannot "welsh" on the deal.

[Navy_Contracting_4]

On 9/23/2016 at 5:31 PM, Boof said:

Lets get rid of the ratification process.  It always punishes the contracting personnel and the vendors instead of the program offices it is supposed to wake up. 

Boof,

How would you propose to deal with the situations that the ratification process handles now?

[here_2_help]

PepetheFrog,

"It is very well to say that those who deal with the Government should turn square corners. But there is no reason why the square corners should constitute a one-way street."

-- Justice Jackson, writing for the four Justices who dissented in Federal Crop Insurance Corp v. Merrill in 1947. I would ask SCOTUS to rehear a similar case and reverse its prior holding.

I know I'm just a dreamer....

[Guest PepeTheFrog]

here_2_help:

PepeTheFrog is with you. While we're dreaming, what do you think about making federal civilian employees at-will? PepeTheFrog is happy to see the occasional political termination if it means ending constipation in federal employment as well. Why should federal employment be (close to) an entitlement?

[here_2_help]

PepetheFrog,

From my (outsider) perspective there are a number of problems with the Federal personnel system. Would some of them be fixed if it were easier to hire and fire? Absolutely. But to my way of thinking the real problem is a lack of leadership with respect to a "human capital" strategy at each department/agency. Taxpayers and Congress should demand that Secretaries and other leaders testify regarding their plans to attract and hire the right people, develop and retain the right people, and rightsize the staff as necessary. Then the leaders should be held accountable for the results against their plans. Accountable how? As in, no budget increases for non-personnel activities until personnel management improves.

While we are dreaming ....

[Guest PepeTheFrog]

here_2_help:

Like Defense Acquisition Workforce Improvement Act (DAWIA)? Top-down human capital "initiatives" cannot be implemented effectively without the power to hire and fire at a decentralized level. These federal initiatives often involve hiring, but never firing. They can throw money at the problem, but they can't throw people out (apart from the highest levels). No organism can survive without the ability to excrete its waste.

Cut the Gordian knot!

Do you want to know the easiest way to gauge a federal employee's competence? Ask what he thinks about converting federal employees to at-will employment. You will have your answer.*

*Not counting scholarly frogs who bring up the patronage system or political influence. Ask them to ignore those concerns.

[Guest Vern Edwards]

1 hour ago, PepeTheFrog said:

While we're dreaming, what do you think about making federal civilian employees at-will?

I think some of you folks should have done less dreaming and paid more attention in the college classes you took in political science and American government. You did take those classes, right? And you paid attention? And you got a passing grade?

Know anything about the old spoils system? Read the history of U.S. civil service reform? Know anything about the Tenure of Office Acts, the Pendleton Act, the Hatch Acts, and the Civil Service Reform Act? Read anything about political appointees in modern government? Thought about how to establish a human capital strategy when Congress and Executive budget and appropriations processes are dysfunctional?

Some background reading:

http://www.govexec.com/management/2015/09/pentagon-plan-move-civilian-workers-outside-civil-service-system-draws-fire/121043/

https://archive.org/stream/hicivilse00libr/hicivilse00libr_djvu.txt

http://www.mspb.gov/MSPBSEARCH/viewdocs.aspx?docnumber=253644&version=253931&application=ACROBAT

http://academic.udayton.edu/richardghere/POL 305/Fall 2010/Condrey and Bat.pdf

http://work.chron.com/can-fired-civil-service-jobs-19492.html

http://www.govexec.com/magazine/briefing/2012/07/wielding-ax/56558/

Scientific American described dreams as "fragmentary, disconnected, and illogical." http://www.scientificamerican.com/article/what-is-dreaming-and-what-does-it-tell-us-about-memory-excerpt/

Wake up. If you think at-will employment policy would fix acquisition you're not dreaming, your hallucinating. If you think democratic republics like ours are capable of effective strategic management planning, you either haven't read any history or you didn't pay attention.

[here_2_help]

Vern,

I know you mean well but you are coming across like that guy in the brainstorming session who keeps criticizing other people's ideas. We seem to have differing ideas regarding the point of the thought experiment.

In related news, your notion to roll-back CAS applicability is a great idea, except to implement it you will have to substantially rewrite FAR Part 31. Approximately 10 of the 19 Standards are invoked by the cost principles as a condition of cost allowability. If you have a contract with 52.216-7 then you are subject to a lot of the CAS requirements, including some of the more onerous Standards, even if you are a small business.

Just sayin'