Strengthening Defense Services for the Future Force

Fall 2019

Strengthening Defense Services for the Future Force

ALSO INSIDE: 6

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FAHEY: ADAPTIVE THE DIGITAL ACQUISITION FRAMEWORK ENVIRONMENT & WARFARE Professional Services Council

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PHALEN: DCSA LAUNCH & PRIORITIES

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VISION FORECAST Service Contractor / Fall 2019 / 1

Can your government contracts stand up to the scrutiny of a DOL investigation?

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Navigating the Government Contract Compliance LandscapeProfessional Since 1991 2 / Service Contractor / Fall 2019 Services Council

Fall 2019

36 TIPS AND TRENDS ON EXPORT CONTROLS & SANCTIONS COMPLIANCE

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40 Accelerating Innovation to Meet Future Force Needs

4 President’s Letter 6 Adaptive Acquisition Framework

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18 11 Taming the Costs of Sustainment 20 12 Disrupting Sustainment Services Via Data 14 Accelerating Innovation to Meet Future Needs 32 15 How the Digital Environment Changes Warfare 33 34 16 Policy Spotlight: Are You Ready for DoD Cyber 42 Certification

Working for You: Strengthening the Government-Industry Partnership DCSA Launch: Transfer, Transition, Transform Bill Tracker Prohibiting LPTA—For Some Vision Federal Market Forecast 2019 Phase Two of Section 889 Implementation Member Value 45 Event Happenings

SECURING THE SUPPLY CHAIN

44 EVENT SPOTLIGHT: TECH TRENDS

Cover illustration: Allison Weinstock

Service Contractor

is a publication of the Professional Services Council 4401 Wilson Blvd., Suite 1110 Arlington, VA 22203 Phone: 703-875-8059 Fax: 703-875-8922 Web: www.pscouncil.org All Rights Reserved For advertising or to submit articles or items for the Member News section, contact: Ashlei Stevens stevens@pscouncil.org

P S C S TA F F David J. Berteau President & CEO berteau@pscouncil.org Alan Chvotkin, Esq. Executive Vice President & Counsel chvotkin@pscouncil.org Cate Benedetti Vice President, Government Relations benedetti@pscouncil.org Joe Carden, CAE Vice President, Marketing & Membership carden@pscouncil.org

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Paul Foldi Vice President, International Development foldi@pscouncil.org Ryan McDermott Vice President, Defense & Intelligence mcdermott@pscouncil.org Melissa R. Phillips, CMP Vice President, Events & Operations phillips@pscouncil.org

Robert Piening, CPA, CGMA Vice President, Accounting & Finance piening@pscouncil.org Bradley Saull Vice President, Civilian Agencies saull@pscouncil.org Matthew Busby Director, Membership busby@pscouncil.org Michelle Jobse Director, Vision Forecast jobse@pscouncil.org

Cassie Katz Director, Marketing katz@pscouncil.org Andrea Ostrander Director, Events ostrander@pscouncil.org Ashlei Stevens Director, Media Relations stevens@pscouncil.org Jean Tarascio Senior Manager, Events tarascio@pscouncil.org Donald Baumgart Manager, Vision Forecast baumgart@pscouncil.org

Karen Holmes Office Manager holmes@pscouncil.org Daniel Catlin Associate, Membership catlin@pscouncil.org Alexandra Gomez Executive Assistant gomez@pscouncil.org Allison Weinstock Associate, Digital Marketing weinstock@pscouncil.org

Service Contractor / Fall 2019 / 3

PRESIDENT ’S LETTER

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elcome to the Fall edition of Service Contractor, the quarterly magazine from the Professional Services Council for the business of government contracting. This issue arrives in time for our annual Vision Forecast conference, and we welcome attendees and participants to this signal event.

On November 21, PSC will host our first-ever Defense Services Conference, with senior executives from the Department of Defense (DoD) and the associated contracting community discussing current initiatives aimed at accelerating innovation and delivering capabilities to the future force. In parallel with that, we highlight defense services in this edition of the Service Contractor.

The Chair and Vice-Chair of PSC’s Defense Services Conference, Jim Jaska of Valiant Integrated Services and Maria Proestou of DELTA Resources Inc. provide previews, offering helpful insights on current themes across the defense services industry. Jaska provides his take on accelerating innovation to address DoD’s strategic priorities and emerging threats, while Proestou highlights how the digital environment is changing warfare. When we think of sustainment, major weapons systems are often top of our minds, but leaders from NT Concepts take a look at how data is disrupting sustainment as a service. I also offer my take my take on how DoD can use contractors to reduce costs and improve readiness in sustainment of existing systems.

In this issue, you’ll also hear directly from the Honorable Kevin Fahey, Assistant Secretary of Defense for Acquisition, as he offers a deep dive into DoD’s Adaptive Acquisition Framework and how it is revolutionizing acquisition culture. Charlie Phalen, Acting Director of the Defense Counterintelligence and Security Agency (DCSA), lays out priorities for the newly established agency and how DoD will work towards its goal to achieve an “end result of continuous monitoring of our trusted workforce and industry.”

New cybersecurity requirements are coming for defense contractors next year. To help you, our Policy Spotlight by Alan Chvotkin, PSC EVP and Counsel, describes how contractors can prepare. Ryan McDermott, PSC VP for Defense & Intel, expands on this and similar policy changes at DoD and how

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PSC engages with the defense and Intelligence Communities on behalf of our member companies to ensure industry’s voice is represented.

Supply chain issues continue to permeate national security discussions at DoD and in the Congress. Last year’s Fiscal Year 2019 National Defense Authorization Act prohibited federal agencies from purchasing telecommunications and video surveillance equipment or services from certain foreign adversaries. Baker Tilly examines the next phase of implementation of this ban and what it means for contractors, and Andrew Razumovsky of CANDA Solutions offers his take on securing the supply chain through integrated risk management. Additionally, Phoenix Management’s Gary Giarratano discusses progress on reducing the misuse of a certain type of contracts known as LPTA, for Lowest Priced Technically Acceptable. In addition, BDO USA gives you the latest details on export controls and sanctions compliance for services contractors.

This wealth of useful information is one of the benefits of membership in PSC, and we warmly welcome our newest members, listed on page 42. We want all of our member companies to get the most value from membership. Matthew Busby describes the best ways that senior leaders can maximize their company’s participation. This issue also includes other member news, including photos from PSC’s 2019 Tech Trends Conference, as well as from our numerous meetings with top federal agency leaders over the past quarter. These events reflect the content-rich information we provide to members, along with our advocacy work on the Hill, in the agencies, and with the media.

As always, I welcome your ideas on how we can improve PSC and help the federal government become a smarter customer and a better buyer. Thanks for your continued support of PSC and our mission to strengthen the federal contracting industry’s capabilities and help the government meet its current and future needs.

David J. Berteau

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DoD’s Transformational

Adaptive Acquisition Framework

by The Honorable Kevin M. Fahey, Assistant Secretary of Defense for Acquisition

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he Office of the Under Secretary of Defense for Acquisition and Sustainment (OUSD(A&S)) is revolutionizing the overall acquisition culture and redefining the way we do business. In December of this year, we plan to publish the most transformational change to acquisition policy in decades that will embrace the delegation of decision-making, tailor program oversight to minimize unnecessary bureaucratic processes, and actively manage risk based on the unique characteristics of the capability being acquired.

Delivering warfighting capability at the speed of relevance is critical to ensuring our warfighters are equipped with the capabilities they need to maintain a competitive edge. Our goal is to shift our approach to acquisition policy away from the traditional ‘one size fits all’ architecture, to an adaptive, flexible system that holds Program Managers (PMs) accountable for critical thinking, tailored strategies, and risk management. The DoD’s new Adaptive Acquisition Framework (AAF) does just that by streamlining a 170-page document to better enable the Department of Defense (DoD) to field effective and affordable acquisition outcomes, while simultaneously emphasizing transparency, speed of delivery, continuous adaptation, and frequent modular upgrades.

The Honorable Ellen Lord, Under Secretary of Defense for Acquisition and Sustainment, hosted an Adaptive Acquisition Framework Training Event last month for over 150 attendees, including hand-selected PMs and Program Executive Officers (PEO) from across the Department, to discuss with senior leaders the re-designed DoD 5000 series on acquisition policy ahead of formal staffing and signature. She told these members of the acquisition workforce, “When I look at what my job is, I think it’s really twofold. One is to get capability downrange to the warfighter as quickly and cost-effectively as possible, and secondly, to ensure that we have a growing, resilient, and secure industrial base.” To achieve these objectives and keep the readiness of our warfighter at the forefront of our efforts, it is imperative we develop policy 6 / Service Contractor / Fall 2019

that lays the groundwork for a culture of innovation and enables creative compliance and critical thinking. The AAF is intended to achieve that objective.

The goal of the Adaptive Acquisition Framework is to empower innovation and common-sense decision making throughout the decision-making process, while also maintaining discipline in our practices and procedures.

The AAF structure allows Programs Managers to utilize a single pathway or a combination of pathways to achieve their objectives based off of the capability being acquired. No longer will PMs be overburdened by hundreds of pages of what they must do, but instead, will be encouraged and empowered to use creative thinking, innovative processes, and authority to look at what they can do. Collectively, the pathways reflect Ms. Lord’s intent to simplify acquisition policy, employ tailored acquisition approaches, conduct data driven analysis, actively manage risk, and emphasize life-cycle sustainment. This thinking extends to the Department’s new policy on Intellectual Property which we rolled out in October. The Adaptive Acquisition Framework capitalizes on advanced acquisition methods while also improving the DoD’s ability to benefit from commercial innovation. (See Figure 1) Within the AAF’s six pathways, the Urgent Operational Needs (UONs) and other rapid capability providers give warfighters the capabilities urgently needed to overcome unforeseen threats, achieve mission success, and reduce risk of casualties. As this is the DoD’s highest priority, the objective is to plan for the capability within a few weeks, conduct development and production within a few months, and field the capability within two years.

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Adaptive Acquisition Framework Enable Execution at the Speed of Relevance

Tenets of the Defense Acquisition System

Urgent Operational Needs DoDI 5000.xx

Urgent Develop Production and Need Solution Deployment DD

OD

< 2 years

Rapid Fielding

Middle Tier of Acquisition DoDI 5000.xx

Rapid Prototyping

< 5 years

< 5 years

Major Capability Acquisition DoDI 5000.xx

MDD

MS A Material Solutions Analysis

0

Software Acquisition DoDI 5000.xx Defense Business Systems DoDI 5000.75

MS B

MS C Engineering and Manufacturing Development

Technology Maturation and Risk Reduction

S1

Execution Phase Sn Sn

S2â&#x20AC;Ś

MVP

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Production and Deployment

< 1 year ATP Capability Need Identification

ATP Solution Analysis

Sn MVCR

Rn

ATP Functional Requirements and Acquisition Planning

Acquisition Testing and Development

Legend: DD: Disposition Decision OD: Outcome Determination

ATP

MDD: Material Development Decision Capability Support

MS: Milestone IOC: Initial Operational Capability FOC: Full Operational Capability

Business Capability Acquisition Cycle

Acquisition of Services DoDI 5000.74

IOC

1 Planning Phase

Path Selection

Cybersecurity DoDI 5000.xx

OD

OPERATIONS AND SUSTAINMENT

DoDD 5000.01: The Defense Acquisition System DoDI 5000.02: Operation of the Adaptive Acquisition Framework

1. Simplify Acquisition Policy 4. Data Driven Analysis 2. Tailor Acquisition Approaches 5. Active Risk Management 3. Empower Program Managers 6. Emphasize Sustainment

S: Sprint MVP: Minimum Viable Product

1 Form the Team

2 Review Strategy

3 Market Research

4 Define Rqmts.

5 Develop Strategy

6 Execute Strategy

7 Manage Perf.

MVCR: Minimum Viable Capability Release R: Release ATP: Authority to Proceed July 2019

Figure 1 For acquisitions which require a PM to rapidly develop fieldable prototypes to demonstrate new capabilities and/ or rapidly field production quantities of systems with proven technologies that require minimal development, the Middle Tier Acquisition (MTA) pathway can be utilized. This pathway allows PMs to conduct rapid prototyping within six months, and field that capability in an operational environment within five years.

The Major Capability Acquisition pathway can be used to acquire and modernize military unique programs that provide enduring capability. As a PM maneuvers through this pathway, they may find the need to acquire software intensive components by integrating the Software Acquisition Policy, into the Major Capability pathway. This is just one example in which the PM can customize the path to their desired end-state.

As advanced software is becoming critical within our technologically advanced landscape, the Software Acquisition pathway has been designed to facilitate software intensive systems and/or software intensive components or subsystems, focusing on rapid and iterative software capability to the Professional Services Council

user. Capitalizing on active user engagement and leveraging enterprise services, software is rapidly and iteratively delivered to meet the highest priority user needs. Tightly coupled mission-focused government-industry software teams leverage automated tools for development, integration, testing and certification to deploy software capabilities to the operational environment.

The Defense Business Systems (DBS) Acquisition pathway assesses the business environment and identifies existing commercial or government solutions that could be adopted to satisfy DoD needs. This pathway applies to all defense business capabilities and their supporting business systems, including financial and financial data feeder, contracting, logistics, planning and budgeting, installations management, human resources management, and training and readiness systems. Additionally, mission-focused government industry software teams leverage automated tools for development, integration, testing, and certification to iteratively deploy software capabilities to the continued page 8 operational environment.

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from page 7

The final pathway, Defense Acquisition of Services, allows the PM to acquire services from the private sector to include knowledge-based, construction, electronics and communications, equipment, facilities, logistics, medical, research and development, and transportation. This pathway is intended to identify the required services, research the potential contractors, contract for the service, and manage performance.

The goal of the Adaptive Acquisition Framework is to empower innovation and common-sense decision making throughout the decision-making process, while also maintaining discipline in our practices and procedures. We are changing the culture within the A&S community alongside these transformational policies. We have the acquisition and contracting authorities we need, we just need to think about doing it differently. Our acquisition system is designed to acquire quality products that satisfy warfighter needs with measurable improvements to mission capability. The AAF will shorten cycle times, enable programs to rapidly develop, acquire and deliver capabilities to the warfighter while also

providing a new and effective policy mechanism to achieve our fundamental mission.

These significant policy changes are designed to change the culture of our acquisition professionals, but they should not be viewed as the panacea for improving our collective ability to deliver capability downrange to the warfighter.

Defense Acquisition is fundamentally a team sport; one in which the acquisition community plays a critical but inextricably interdependent role with all other stakeholders across the Defense Acquisition Enterprise. This includes the requirements and budgeting processes as well as the test community, Congress, and Industry. For example, the Department released its first policy on Intellectual Property in October to incentivize delivery of world class capabilities at affordable costs. Significant change in Defense Acquisition is not possible without a unified approach that encompasses the broader “Big A” enterprise. These acquisition policy changes should thus be viewed as one critical step in redesigning the entirety of the enterprise. 3

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Taming the Costs of Sustainment

by David J. Berteau, PSC President and CEO

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he U.S. Department of Defense (DoD) spent $360 billion on contracts in Fiscal Year 2018, with half of the total going for products and half for services.

Some of the products were items to be used and disposed of, such as tires or fuel, but the majority of the money is for major items that will be used for decades: ships, aircraft, ground vehicles.

These major systems require work to sustain them. In fact, it has long been known that 70% of the total lifecycle cost of a major weapon system is the cost to keep it running and to modernize and upgrade it after the system is designed, developed, and fielded.

These sustainment costs are part of why DoD needs services contracts. Repairs, upgrades, software updates, spare parts, and labor costs make up that 70% lifecycle cost.

The First Problem

Despite this huge expenditure over the multi-decade life of a weapon system, DoD does not focus enough on ways to reduce lifecycle cost. During my last tour in the Pentagon, I searched to find the contracts for major systems that were awarded to the company that proposed big lifecycle savings. I found none; there appeared to be no such contracts. Therefore, the first problem in taming lifecycle costs is that DoD does not reward companies that—from the beginning—can design lower longterm costs into systems.

The first step in reducing lifecycle costs would be to design lower lifecycle cost into systems from the beginning.

This seems such an obvious step that we have to ask why DoD doesn’t do this all the time. The answer is that it takes upfront investment dollars to design and build a more reliable system that will lead to lower costs for sustainment. Given the global threats that America faces, programs think they need to invest more in higher performance rather than lower lifecycle costs. That’s a tradeoff that may make sense when considered one weapon system at a time, but in the aggregate, it adds tens of billions of dollars each year in increased DoD sustainment costs.

A better way would be for the Pentagon to require (and pay for) upfront investments that reduces lifecycle cost. In the aggregate, this would free up much-needed future funds to

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invest in technology and innovation, maintaining our edge over competitor nations’ armed forces.

There is more that can be done, however.

The Second Problem

Even if DoD started today to award new system development contracts to companies that can reduce lifetime sustainment costs, current systems will need support for many decades to come.

What can be done to reduce operating and support costs for those existing systems? The second problem in taming lifecycle costs is reducing the long-term burden of current systems.

The next step in reducing lifecycle costs would be to find ways to reduce costs once a system is fielded and operating.

Addressing this problem is not as simple as the first problem seemed to be, in part because the structures for sustaining systems are embedded across DoD and are hard to change.

DoD could take better advantage of its services contractors and their capabilities in ways that could reduce support and operating costs. Companies understand opportunities for incorporating process changes, improvements in technology, and innovations in using information and data to increase readiness and reduce operating and support costs while speeding return to use.

In some cases, policy changes would be needed to expand ways to incorporate contractor ideas and concepts. In other cases, DoD could move out today. Contract vehicles are often already in place that would quickly support such actions.

The Third Problem

DoD could address the first two problems and still be a long way from reducing lifecycle costs enough. Why? Because the third problem is the difficulty DoD has in incorporating innovation into existing systems.

Typically, improvements are added through programs of modernization (often called “mods”) and upgrades of current platforms. Often, those improvements can lead to improved performance at less cost than building new systems.

Why doesn’t DoD do this better? There are at least four constraints: continued page 12 Service Contractor / Fall 2019 / 11

Disrupting Sustainment Services Via Data

by Michele Bolos, Chief Executive Officer Darin Powers, President and Chief Operating Officer, NT Concepts, Inc.

NT

Concepts is a data solutions company. We curate enterprise data and automate mission workflow to enhance national security outcomes. Through this lens, we believe sustainment is barreling towards significant disruption.

Sustainment is transitioning from a platform-centric industry to a data-centric business model. The implementation of a genomic mindset, specifically the curation of a “platform DNA registry” and the subsequent democratization of vetted access to that data, will transform the sustainment services industry.

At its core, sustainment is a prediction business, seeking to preemptively answer, “What needs to be where and by when?”

Quality prediction, and thus cost-efficiency and full-lifecycle planning, is fueled by credible data. Data-centric national and Department of Defense (DoD) policy, combined with data-enabling technological development are advancing the creation of credible data repositories and accelerating the pace of predictive innovations for sustainment. Analogous to the disruptive change occurring in genomic-driven, personalized medicine, we can create and leverage

a “platform’s DNA” – the granular record of an individual platform’s lifecycle contextualized against the records of others in its class. This will transform the way we think about sustainment services.

Moving towards a “platform DNA registry,” the sustainment industry will transition from a hardware-based, platform-centric model to a data-centric R&D, acquisition, and delivery model.

Within an appropriate security framework, the government will “democratize the data,” allowing approved, third-party, non-OEM defense industrial base pioneers access to the registry. These nimble, digital engineering practitioners will virtually design, validate, and proactively develop innovative sustainment services at a scale not seen in our currently constrained access environment. As is occurring in the genomic-based personalized health market, access to “platform DNA” will exponentially accelerate discovery and innovation.

Under this “platform DNA” model, the near future will evidence a significant reduction in full life-cycle sustainment costs and dramatically increased weapon platform readiness. A fundamental disruption to sustainment services is on the horizon. 3

from page 11

1. DoD has its own internal industry, the maintenance depots, which helps schedule these upgrades. However, their planning cycle is often longer than the cycle of innovation.

2. If DoD does not ensure upfront sufficient access to intellectual property (IP) associated with existing systems, it can be it too expensive for upgrades later.

3. Too often, available funds are of the wrong type to use for incorporating innovations.

4. It is harder for DoD to find and access innovations from outside DoD that can be used in upgrades.

Each of these constraints require different steps to address.

Here are two.

1. Congress can change how money is appropriated and can be used to improve upgrades. Initial steps on this for software can be expanded more broadly.

12 / Service Contractor / Fall 2019

2. DoD’s new IP policy may encourage better upfront decisions on IP, but an expanded policy will be needed to solve the problem of existing systems.

Solutions

Overall, though, the most improvement can come if DoD solicits, encourages, and rewards innovations from contractors that should be brought into weapon systems during scheduled mods and upgrades.

Many of the solutions to the three problems come down to this: the services contractors who already support DoD systems are in a superior position to propose, organize, and execute steps to reduce lifecycle cost. The industry stands ready to support these actions. DoD needs to act. 3

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PARTNER WITH PAE

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he federal government has been on a path to reform and and the need for senior oversight on its management and use. modernize for some time now. Yet, the call to action has spurred The CDO is tasked with producing a strategy for their agency or more urgency with the President’s Management Agenda, which department to exploit their data, make it available, gain insights, was released last spring, to accelerate the process of creating a 21st and improve the way they do things. This isn’t just about policy century government. To this end, forward-looking federal IT leaders and governance; it is about digital transformation. are thinking differently, moving to the cloud, and leveraging new Digital transformation is far reaching for federal agencies. and emerging technologies to enable a true digital transformation.

Transformation in how a warfighter improves situational In September, I have the honor of participating in PSC’s 2019 awareness or maintains their equipment. Transformation 1 Tech Trends Conference , which brings together leaders from in how we use weather data. Transformation in how we help government and industry to discuss how we can collectively help farmers increase their yield. The possibilities are limitless. the federal government achieve their mission and fuel innovation As agencies modernize, digital transformation must be a key across agencies. As the head of the conference committee this year, requirement. And automation is the underlying tenant to digital I’ll have the pleasure of kicking off the session, which includes transformation. Only automation will let agencies glean insights speakers from the Office of Management and Budget, General from their data and apply it to how they execute their mission.

Services Administration, the Department of Justice, and the From here, with data as the most powerful asset, we open the Department of Defense. Together, we’ll dig into progress that has door to emerging technologies that allow for the transformation been made to date, and what is needed to succeed in the future. to come to fruition. This includes collecting data from the This year, our committee considered the key technology Internet of Things (IoT) where systems are interconnected trends that will have an impact on federal innovation. One to leveraging tools to help manage, store and maintain vast of the main trends that I’ve seen across the board with our amounts of data. It also enables the rise of artificial intelligence customers has been the rise of data and the impact that it and machine learning to quickly analyze and provide insights on has on IT modernization efforts. It wasn’t too long ago that the data, so that agencies can take action. Data is at the core of The Economist hit the nail on the head with its cover story each one of these emerging technologies. highlighting “The World’s Most Valuable Resource.”2 The story Very quickly we will see that agencies are well on the way to implied that data has become the new oil, creating resources that achieving the digital transformation, which will help us maintain are incredibly valuable to any organization. In fact, I believe that advantage over our adversaries, help better serve our citizens, and PAE merges advanced right behind an organization’s people, data istechnology the most valuable with enable the rapid change that isbusiness needed for a 21st century government. asset to most companies and organizations. And government I hope that you will join me and our great line up of practices delivering faster, smarter and agencies are following the path of many digital companies – like speakers at the Tech Trends Conference 2019, on Sept. 16 in Uber, Netflix, Airbnb – in realizing the powerefficient of data.

Washington,services.

D.C., to learn more about how to fuel innovation more managed In an effort to protect and manage its data, earlier this year, and help achieve a 21st century government. 3 a law was passed to mandate the role of the Chief Data Officer3 Rob Stein is Vice President of U.S. Public Sector at NetApp and a member (CDO). The federal government clearly sees the potential of data of the PSC Board of Directors. Read more about Stein’s thoughts on being a data visionary here , and at www.govdatadownload.com.

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Accelerating Innovation

to Meet Future Force Needs

by James Jaska, Valiant Integrated Services, President and CEO; PSC Defense Services Conference Chair

R

eadiness. It is the hallmark of our nation’s great military mission and legacy; it is the foundational expression of what our fighting men and women depend upon to uphold the enduring American principles of freedom and liberty in a dangerous world.

As the U.S. military rises to meet the challenges of preparing for, and confronting more complex and asymmetric global threats, its methods, systems, equipment, technology and training must evolve. This is not a matter of conjecture, but one of necessity to ensure that our troops are well equipped for 21st century warfare and peacekeeping.

PSC’s Defense Services Conference in November convenes a distinguished group of senior leaders from the U.S. Department of Defense and the federal contracting community to discuss current initiatives and programs that can accelerate innovation, solutions and capabilities required to meet the future challenges faced by the future force. More importantly, the conference will develop a further understanding on how the defense services industry can best provide leading-edge solutions that meet or exceed government customers’ ever-changing requirements and demands of the future force. The ultimate goal is to have a force ready to meet their current and future threats and challenges.

For those of us in the defense services industry, it’s important that we understand the vital interplay of innovation and implementation among our national defense customers.

We have to be at the ready to adapt our extensive expertise and capabilities to the needs and high standards of America’s armed forces. This has been abundantly evident as defense customers regularly meet the existing and evolving challenges of game-changing and technologically-driven military mission requirements. Geopolitical, technological, and mission specific demands continuously pressure the innovation of the force and its supporting services industry.

In the spirit of this inaugural conference theme — Strategy, Needs & Solutions for the Future Force: A-Government -Industry Partnership — leaders in the Army, Navy, Air Force and Marine Corps will define what their future force requirements will entail and discuss strategies on how the private sector services industry can best collaborate on meeting readiness goals contained within both modernization requirements and mobilization demands.

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Our military is under constant pressure to do more with less. I believe the defense services community can support our customers’ future requirements, but we, too, will have to operate on a higher level. This will involve finding answers to complex issues: • How do we align future technologies to future national security and defense requirements?

• How do we incorporate advanced predictive technology applications into future requirements that are constantly changing?

• How do we ensure the right level of technical competency, training and readiness of the force demanded by these advanced systems and ever-changing technologies and solutions?

While we tend to think of innovative solutions in terms of new technology, solutions can also come in the form of new types of services that offer improvements on the old ways of doing things, meet previously unidentified needs, or fill gaps in the requirements or market. More often, innovative solutions use technology to support and dispatch new services; often the best solutions are a combination of technology and services.

Innovative solutions can also be essential to the future force requirements, which are tasked with partnering with companies to create a culture of innovation and create meaningful solutions to highly complex issues.

The partnership by government and industry to address these issues and others is more urgent than ever given the rate of change in the military readiness of our adversaries, both large and small, as they utilize sophisticated technology and weaponry.

These are the issues and ideas our panel of experts will discuss at the conference. Don’t take my word for it, come see and hear for yourself. Join me and our great line up of speakers at the 2019 PSC Defense Services Conference. I look forward to seeing you there. 3

Join PSC’s inaugural Defense Services Conference “Strategy, Needs & Solutions for the Future Force: A Government-Industry Partnership” November 21, 2019 | 8 a.m. - 1 p.m.

NRECA Conference Center in Arlington, VA Register today at www.defenseservicesconference.org

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How the Digital Environment Changes Warfare

by Maria Proestou, President, DELTA Resources, Inc., A Division of VT Group; PSC Defense Services Conference Vice Chair

T

he digital environment has fundamentally changed the character of modern warfare. Operational and warfighting successes require that we be ready to prevail in a security environment that is changing quickly and becoming increasingly complex. The growing importance of the digital world on our national security resulting from the rapid rate of technology development, the ease of new technology adoption, and the proliferation of information systems has enabled multiple global players to challenge U.S. superiority.

“Going Digital” is the broad integration of data and application of analytical tools to improve human decision-making, making forces more lethal, more agile, more data-informed, and more warfighter-focused. A true digital transformation accelerates and improves our ability to deliver better outcomes in warfighting, readiness, and speed to capability. Warfighters will use automation, machine learning, artificial intelligence, and advanced analytic tools to speed and improve their actions and decision-making for a variety of applications, but above all, to defeat our adversaries.

Spurred in part by the Defense Innovation Board’s Software Acquisition and Practices (SWAP) study1 with its recognition that software is never done being developed, major changes to acquisition policy, processes, test and certifications are well underway across Department of Defense (DoD) services and are moving at an accelerated pace. DoD’s Chief Information Officer (CIO) established the DoD DevSecOps Initiative (DSOP) and DevSecOps Community of Practice that is already accelerating digital transformation through its focus on security-first modern software development practices, automation, acquisition, education, and commonality of purpose that will drive deep and lasting culture change, agility, and innovation. DevSecOps is a security-focused culture change, merging previously siloed disciplines of development, security, and operations into a cohesive whole. DevSecOps applies advanced practices and automated tooling, accelerating the rate of transformation while reducing software vulnerabilities and risk.

One key focus of the initiative is enabling Enterprise “software factories,” offering automated software tooling, security automation, common services, and standards so warfighter systems and business system developers can more rapidly build, test, deploy, and operate applications that are secure, flexible, and interoperable. The benefits of this common Enterprise approach include eliminating barriers to continuous authorization to operate (ATO) under the DoD Risk Management Framework.

On Sept 12, 2019 DoD’s Chief CIO published the first version of the DoD Enterprise DevSecOps Reference Design to the public, providing a roadmap to practitioners on the practical application of concepts, practice and tooling. This Reference Design will soon be supplemented with a series of playbooks embodying common practices and implementation guidance for DevSecOps and achieving continuous ATO. These foundational tools will help achieve commonality of practices.

DoD’s digital transformation is a revolutionary development and seeing the pace of change unfolding is remarkable in an area that is consistently thriving on change and new developments.

Leadership is actively driving to remove obstacles to success including tackling critical software licensing challenges. While much DevSecOps software tooling is open source, open source does not mean free and many of the most important tools are expensive.

To ensure success, DoD must adopt a flexible Enterprise-wide licensing approach covering a wide span of critical DevSecOps tools similar to what was done with Host Based Security System (HBSS) and Assured Compliance Assessment Solution (ACAS), but much broader in scope and not limited to a handful of vendors.

Approaching our licensing challenges in this way will help DoD to reduce costs while enabling teams to leverage best of breed tools to accelerate transformation without having to separately contract for software while simultaneously speeding adoption.

DELTA Resources is supporting DoD in laying the foundation of the Digital Force by providing Acquisition and Systems Engineering Services to enable more agile, scalable, flexible and composable capabilities. DELTA Resources is assisting DoD components in the focus on and development of the architectures which will form the foundation for the Operational Environment (OA) (where the warfighter fights) and Developmental Environment (DE) (where the tools and services are developed).

In addition, our company is involved in critical Digital-leaning projects like Naval Tactical Grid Exercise to provide operational context to integrate, consolidate, and rapidly deploy digital capabilities. We are also providing Systems Engineering Services support to offices, developing standards for future weapon system development, and supporting the first DoD Business Systems to leverage DevSecOps in a DISA-approved commercial cloud environment.

Along with the support of PSC and the critical work by other PSC member companies, these are among the many ways we are collectively enhancing the digital ecosystem to change warfare. 3 1

Professional Services Council

http://bit.ly/softwareisneverdone

Service Contractor / Fall 2019 / 15

Policy Spotlight

Are You Ready

for DoD Cyber Certification?

by Alan Chvotkin, PSC Executive Vice President and Counsel

B

ig changes are in store for the defense industrial base next year.

By October 1, 2020, all 300,00-plus contractors and suppliers for the Department of Defense will need to be certified in a new, unified cybersecurity model.

The new requirement, known as the “Cybersecurity Maturity Model Certification (CMMC),” will measure the maturity of an entity’s cybersecurity practices and protocols against a fixed set of capabilities and is mandatory for any party seeking to do business with DoD.

What will CMMC look like?

How has PSC been engaged?

PSC has been actively engaged with the Department throughout this process to ensure that our member companies’ voices are heard as the cybersecurity requirements are developed, issued and implemented. We have also provided the Department with productive feedback and provided impacted companies with the information they need to help make compliance decisions.

PSC hosted a webinar—”What Contractors Need to Know About DoD’s CMMC”—with Department representatives on July 17, provided initial feedback on the CMMC model on Sept.

25, and sent additional questions to the Department on Oct 15 in response to a request for information (RFI) addressing the CMMC. The PSC Foundation also submitted a response to the Department concerning the planned certification process.

What are the issues DoD must still address?

While PSC supports DoD’s efforts to create a unified cybersecurity standard based on best practices to secure the industrial base, we have concerns regarding the implementation of this plan and are urging DoD to address a number of programmatic issues, including: • CMMC governance, training, & accreditation: DoD needs to clarify, and provide additional public information on CMMC’s structure and certification. A clear governance structure is key to

16 / Service Contractor / Fall 2019

promote value and consistency, and reduce long-term costs to the government and the industry.

• 3rd party certification: If DoD chooses to enlist independent third party organizations to conduct audits and provide the vendor certifications, the Department needs to specify how the certifiers will be chosen, how they will operate in a fair and transparent manner, how much they are charging vendors, and how to ensure consistency and uniformity in their reviews.

Reciprocity is also key.

• Flow-down responsibilities. There are simply too many unanswered questions regarding the flow-down requirements and the responsibilities of the primes and subcontractors. DoD needs to ensure that guidance is sufficient to protect companies through contract execution and the auditing process.

• Adaptability of cybersecurity and innovation: For CMMC to remain an effective tool for securing the industrial base, it needs to be updated in a timely fashion to reflect new technologies available in the marketplace as well as the changing threats and methods used by our adversaries.

PSC will continue to work with the Department and our member companies to ensure that industry is represented as this process moves forward to and during implementation. With a final framework expected to be issued in January of 2020, we urge companies to participate in PSC’s Cybersecurity Policy Working Group. You can add yourself to the Working Group through your PSC profile, or email mcdermott@pscouncil.org. 3 Professional Services Council

shutterstock.com/NicoElNino

While the DoD initiative is still a work in progress, the Department has initially identified 18 domains that describe key sets of capabilities for cybersecurity and create five certification levels based on compliance with certain best practices and processes.

An entity’s certification will fall into one of five tiers: Level 1 will represent the most basic cybersecurity hygiene, while Level 5 will represent the most sophisticated capabilities. Each vendor can only bid on contracts for which they have the appropriate certification tier or higher.

The final framework is expected to be issued in January of 2020.

According to DoD, contractors can expect the requirements to be included in RFIs next June and in RFPs at the end of that fiscal year.

Working for You:

by Ryan McDermott, PSC Vice President for Defense and Intelligence

Strengthening the Government-Industry Partnership

P

SC will host the inaugural Defense Services Conference November 21, with the theme “Strategy, Needs, & Solutions: A GovernmentIndustry Partnership.” This event capstones a year of activity demonstrating a strengthened partnership between government and industry to deliver solutions that support our national security. This partnership has been made possible by leaders in the Pentagon who have prioritized industry relations and an active PSC Defense & Intelligence Council that has increased engagement in 2019.

At a May 2019 press conference, Ellen Lord, Under Secretary of Defense for Acquisition and Sustainment, said “quarterly, we meet with CEOs from small, medium and large companies that are part of PSC, NDIA, and AIA, so that we can have a dialogue.” The Department of Defense (DoD) is undertaking many initiatives to reform its acquisition strategies, from Cybersecurity Maturity Model Certification (CMMC) and software acquisition to revising the Operations of the Defense Acquisition System, and drafting a department-wide intellectual property (IP) policy.

Since the beginning of Ms. Lord’s tenure, PSC has been engaged with both DoD and our member companies on every one of those initiatives to shape their direction. The level of engagement by the current Pentagon leadership reflects a high-water mark for a productive government-industry partnership focused on adopting reforms to fulfill the National Defense Strategy.

Earlier this year, Ellen Lord publicly stated that rewriting the DoD Instruction on the Operation of the Defense Acquisition System (sometimes referred to as the “5000 series”) was one of her key objectives.

This revision, referred to as the Adaptive Acquisition Framework, is intended to improve key tenants of the defense acquisition system by simplifying acquisition policy, relying on data-driven analysis, emphasizing sustainment, empowering program managers and tailoring acquisition approaches. PSC has been engaged to ensure our members’ concerns, questions and suggestions are heard by DoD. Furthermore, PSC continues to engage on revisions being made to elements of the Framework.

For example, the rewrite will also involve changes to software acquisition with tailored pathway programs. While PSC supports efforts to streamline the acquisition system and speed up contract actions and procurements, we have been concerned about life cycle costs and are actively engaging with DoD to address those issues and to seek updates from DoD before they finalize the new directive. The 5000 series includes developing a department-wide IP policy to manage and protect IP with standard clauses and requirements for sustainment and development.

The Army issued Army Directive 2018-26, (Enabling Modernization through Management of Intellectual Property) on December 7, 2018, that provides IP acquisition management instructions for that military department only. PSC continues to engage DoD on the implementation of the department-wide policy that was released on October 16. PSC previously outlined several issues for DoD’s consideration regarding this policy, including industry retention of IP rights, deferred ordering and delivery of IP, sustainment and life-cycle costs, expertise, and IP evaluation.

As a trusted DoD partner, PSC is also involved in other initiatives such as the Army’s Advanced Manufacturing (AM) policy, the DoD Small Business Strategy, and the DoD Human Capital Initiative’s PublicPrivate Talent Exchange Program. In June, PSC hosted a listening session Professional Services Council

with Dr. Alexis Ross, Deputy Assistant Secretary of the Army (Strategy and Acquisition Reform), regarding the Army’s Advanced Manufacturing policy that was then signed by the Secretary of the Army on September 18. During the June session, PSC members addressed Advanced Manufacturing-related topics that had not yet been resolved, such as impact to vendors’ business and competition, the organic industrial base, incentivizing industry investments and developing the digital thread.

PSC continues to engage with the Army as implementation guidance for the Army’s AM policy is finalized and implemented.

In September, PSC hosted a session with DoD officials on the developments of a DoD Small Business Strategy, as required by Section 851 of the FY19 NDAA. PSC discussed DoD’s priorities for the strategy, including implementing a unified management structure, aligning DoD’s small business activities with national defense priorities, and improving entry points for businesses. PSC continues to facilitate industry participation in the DoD Public-Private Talent Exchange Program (PPTE) 2020 cohort. This two-way exchange pilot provides a platform for DoD and private sector participants to gain a better understanding of and perspective on each other’s business operations.

For 2020, DoD will harness the lessons learned from the inaugural launch to further expand the program and its future opportunities.

The PSC staff continues to engage directly with DoD on cybersecurity policy implementation, both with staff-level engagements with the Defense Contract Management Agency (DCMA) and other contracting officials. On September 25, PSC responded to the request for comment on the DoD released draft of the CMMC. PSC applauded DoD’s effort to create a unified cybersecurity standard but outlined concerns, recommendations, and questions regarding the implementation process, such as the planned governance structure and certification flow-down, 3rd party certification, and impact on competition.

PSC also participates in regular meetings with the Office of the Director of National Intelligence (ODNI) Trade Association Partners (TAP), where government officials discuss key issue with industry partners. This venue helped PSC connect with Ms. Joyce Corell, Assistant Director, Supply Chain and Cyber Directorate, National Counterintelligence and Security Center (NCSC). In June, Ms. Corell spoke at PSC’s Federal Acquisition Conference, providing remarks on “Acquisition at the Intersection of Supply Chain, Cybersecurity and Counterintelligence.” PSC will continue to engage the ODNI TAP to expand connectivity across the Intelligence Community (IC).

PSC applauds the DoD leadership for its investment in a strong government-industry partnership. While PSC and DoD do not agree on every issue, there is a strong commitment to a productive partnership that best supports our national security. In the months ahead, we will continue to expand engagement in DoD and into IC. Just as the Defense Services Conference seeks to showcase the solutions our member companies provide the DoD, we have many companies that provide unique solutions for the IC. PSC will continue to explore opportunities to highlight the importance of the work our members provide across the Defense & Intelligence communities. 3 Service Contractor / Fall 2019 / 17

The Defense Counterintelligence and Security Agency is set

to “Transfer, Transition, Transform”

by Charlie Phalen, Acting Director, Defense Counterintelligence and Security Agency

O

n October 1, the Defense Counterintelligence and Security Agency (DCSA) became the single largest security agency in the federal government with the merger of the Defense Security Service (DSS), DoD Consolidated Adjudication Facility (DoD CAF) and National Background Investigations Bureau (NBIB). With this ‘Transfer,’ DCSA: • Conducts background investigations for more than 100 departments and agencies, to include adjudicating three quarters of background investigations for the federal government; • Provides industrial security oversight services to 12,500 contractor facilities and 14,000 contractor information systems on behalf of 33 government agencies; • Identifies and thwarts counterintelligence threats to U.S. technologies and programs in cleared industry; • Provides comprehensive education, professionalization, and training services for security professionals across the federal government and in industry.

Now that we are past October 1, the next phase for DCSA will be ‘Transition’ and I expect to be in this phase for the next year.

DCSA is organized around two main mission sets — Personnel Vetting and Critical Technology Protection. There is a natural connection and synergy of these mission sets: ensuring a trusted workforce and trusted workspaces (real and virtual) that produce trusted work. While we will continue to perform these fundamental missions, we must also look to the future and how we will ensure synergy occurs.

My priorities during the ‘Transition’ phase include: • Following Trusted Workforce 2.0. DCSA will play a role in developing TW 2.0 processes and policies to include the true introduction of Continuous Vetting (CV); • Understanding the full threat landscape with our Critical Technology Protection mission and more tightly aligning acquisitions in the process. This includes partnering with industry to ensure cleared industry is postured to handle unique threats and vulnerabilities on a continuous basis; • Evaluation of our processes and policies – operational and administrative – to ensure that we’re operating as 18 / Service Contractor / Fall 2019

effectively and efficiently as possible. Both NBIB and DSS were implementing transition initiatives before the DSCA merger became a reality. We need to continue with these and incorporate growth efforts that have been proven to be most successful; • The continued development and implementation of the National Background Investigative Service (NBIS). NBIS will be an end-to-end, national-level information technology that will support trusted workforce activities; • Listening to our workforce, customers, and consumers to validate and verify that we in fact did not break anything along the way.

All of these priorities are designed toward an end result of continuous monitoring of our trusted workforce and industry.

Our final phase will be ‘Transformation’. We are transforming operationally and we want to do business smarter. For instance, in the Critical Technology Protection mission, we want to apply the lessons learned from improving the personnel security process to the facility clearance process.

This may involve establishing adjudicative criteria for companies so we can adjudicate a facility clearance much as we do a personnel security clearance. We also need to gain a deeper understanding of foreign influence in the National Industrial Security Program and turn our focus to a secure supply chain.

In the Personnel Vetting mission, we are poised to begin implementing minimum standards for CV. We are also looking at the 1.4 million people already enrolled in Continuous Evaluation and how this will evolve and move to CV. Finally, we will seek to leverage technology. We believe the proper use of technology can lead to improved access to individuals and sources, easier issue resolution and reduced travel time.

Our success in all of these efforts will depend on our partnerships and collaboration with our customers and stakeholders who strengthen our progress and ensure our national security. DCSA is committed to finding additional opportunities for more engagement with industry. We are optimistic about our future and pleased to have industry with us on this journey. 3 Professional Services Council

Nov. 21, 2019 â&#x20AC;˘ 8 a.m. - 1 p.m. â&#x20AC;˘ Arlington, VA Hear from senior executives across the Department of Defense and federal contracting community discuss current initiatives aimed at accelerating innovation and delivering capabilities to the future force.

Featured Sessions: Strategy-Driven Defense Services for Supporting the Future Force

Hear about recent developments and how DoD is working closer with industry to rapidly deliver new capabilities to the warfighter.

Modernizing DoDâ&#x20AC;&#x2122;s Systems for Improved Training, Logistics, and Readiness

This session will address recent developments by DoD and industry in harnessing state of the art technologies to achieve mission outcomes.

Solutions for Sustaining Deployed Forces

Learn more about DoD and contractor solutions for sustaining deployed forces, including a focus on planning and developing needed contractor capacity.

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Professional Services Council

Service Contractor / Fall 2019 / 19

Bill Tracker: 116th Congress-First Session (2019) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

H.J. Res. 28

Further Additional Continuing Appropriations Act of 2019, Lowey (D-NY)

SUMMARY Provided continuing FY19 appropriations to several federal agencies through February 15, 2019, and reopened the government following a lapse in appropriations on December 22, 2018.

STATUS Signed into law on 1/25/19; P.L. 116-5.

H.J. Res. 31 Consolidated Appropriations Act of 2019, Roybal-Allard (D-CA)

SUMMARY Provided funding for federal agencies operating under a continuing resolution through the remainder of FY19.

STATUS Signed into law on 2/15/19; P.L. 116-6.

H.R. 190 Expanding Contracting Opportunities for Small Businesses Act, Marshall (R-KS)

SUMMARY Would raise the threshold for sole-source contracts to disadvantaged small businesses to $7 million for manufacturing and $4 million for others, and eliminate option years from the cost consideration.

STATUS Passed the House (415-6) on 1/16/19. Related bill: S.673.

Encouraging Small Business Innovation Act, Rouda (D-CA)

H.R. 206

SUMMARY

STATUS

Would allow Small Business Investment Companies (SBICs) to invest in small businesses that participate in SBIR and STTR programs; and allow SBA to increase the past performance rating of contractors in SBIR and STTR programs and mentor a business seeking to participate in one of those programs.

Passed the House (voice vote) on 1/14/19.

H.R. 226 Clarity on Small Business Participation in Category Management Act,Velazquez (D-NY)

SUMMARY

STATUS

Would require the SBA Administrator to report federal spending on best-in-class vehicles and the number and the dollar amount of small business contracts.

Passed the House (414-11) on 1/9/19. Text included in H.R. 2500, the National Defense Authorization Act, which passed the House (220-197) on 7/12/19.

SUMMARY

STATUS

Allows prime contractors to choose to count lower-tier contracts with small businesses toward their goals, requires federal agencies to collect additional data on subcontracting goals, and establish a dispute resolution process for payment issues between subcontractors and prime contractors.

Passed the House (voice vote) on 1/8/19. Text included in H.R. 2500, the National Defense Authorization Act, which passed the House (220-197) on 7/12/19.

H.R. 227 Incentivizing Fairness in Subcontracting Act,Velazquez (D-NY)

H.R. 246 Stimulating Innovation through Procurement Act, Finkenauer (D-IA)

SUMMARY Allows federal agencies to help businesses that participate in the SBIR or STTR programs with

commercializing their research and to provide those small businesses with technical assistance on bids.

STATUS Passed the House (voice vote) on 1/14/19. Text included in H.R. 2500, the National Defense

Authorization Act which passed the House (220-197) on 7/12/19.

H.R. 247

Federal CIO Authorization Act, Hurd (R-TX)

SUMMARY Makes the federal chief information officer and chief information security officer positions,

making both presidential appointments, and directs the CIO to submit a proposal to Congress for consolidating and streamlining IT across federal agencies.

STATUS

Passed the House (voice vote) on 1/15/19.

20 / Service Contractor / Fall 2019

Professional Services Council

Bill Tracker: 116th Congress-First Session (2019) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

Low-Wage Federal Contractor Employee Back Pay Act, Norton (D-DC)

H.R. 339

Would require the federal government to compensate employees of federal contractors that provide retail, SUMMARY

food, custodial, or security services who are placed on unpaid leave as a result of a lapse in appropriations.

STATUS

Referred to the Committee on Oversight and Reform on 1/8/19.

H.R. 424

Department of Homeland Security Clearance Management and Administration Act,

Thompson (D-MS)

SUMMARY Would require DHS to review and adjust, as necessary, all sensitivity level designations for security clearances throughout the department, and conduct additional reviews every five years.

STATUS Passed the House (voice vote) on 1/29/19.

Service-Disabled Veterans Small Business Continuation Act, Chabot (R-OH) H.R. 499

Would allow all surviving spouses of service-disabled veterans to retain the federal contracting SUMMARY

preference, amending current law which allows for the contracting preference for spouses of 100% service-disabled veterans.

STATUS Ordered to be Reported by the Committee on Small Business 7/17/19.

require federal agencies to consider contractor training programs during contract

H.R. 533 Toawards,

Brown (D-MD)

SUMMARY

STATUS

Would require the head of each executive agency to consider the existence of comprehensive training and education programs to develop a contractorâ&#x20AC;&#x2122;s workforce in the evaluation of offers for any contract in an amount greater than $25 million.

Referred to the Committee on Oversight and Reform on 1/14/19. Amended text included in H.R. 2500, the National Defense Authorization Act which passed the House (220-197) on 7/12/19.

A bill to establish the Office of Critical Technologies and Security, Ruppersberger (D-MD)

H.R. 618 Would establish an Office of Critical Technology and Security in the Executive Office of the

SUMMARY

STATUS

President to coordinate policy and actions that will maintain United States technological leadership with respect to critical emerging, foundational, and dual-use technologies and ensure supply chain integrity and security for such technologies.

Referred to the Committees on Armed Services, Foreign Affairs and Intelligence on 1/24/19.

Related bill: S.29.

Fair Compensation for Low-Wage Contractor Employees Act, Pressley (D-MA)

H.R. 678 Would provide back pay to certain low-wage contractor employees from the lapse in

SUMMARY

appropriations that began on December 22, 2018.

STATUS Referred to the Committees on Appropriations, and Oversight and Reform on 1/17/19. Related bill: S.162.

Text included in H.R. 3055, a five-bill omnibus appropriations act, which passed the House on 6/25/19.

Fairness for Federal Contractors Act, Norcross (D-NJ)

H.R. 824

Would provide back pay to certain contractor employees from the lapse in appropriations that SUMMARY

began on December 22, 2018.

STATUS Referred to the Committees on Appropriations, and Oversight and Reform on 1/28/19.

H.R. 1016 Pay Workers What Theyâ&#x20AC;&#x2122;ve Earned Act, Horsford (D-NV)

SUMMARY Would cover certain costs incurred by federal employees and contractors as a direct result of a covered lapse in appropriations, including expenses for loans and credit cards, and any fees, fines, or interest.

STATUS Referred to the Committee on Oversight and Reform on 2/6/19.

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Service Contractor / Fall 2019 / 21

Bill Tracker: 116th Congress-First Session (2019) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

H.R. 1065 Social Media Use in Clearance Investigations Act, Lynch (D-MA)

SUMMARY Would direct the Office of Management and Budget to report on the feasibility and legality of

allowing the federal government to examine social media activity during security clearance investigations.

STATUS Passed the House (377-3) on 2/11/19.

H.R. 1076 Fair Chance Act, Cummings (D-MD)

SUMMARY

STATUS

Would “ban the box”, by prohibiting the federal government and federal contractors from requesting that an applicant disclose criminal history record information before the applicant has received a conditional offer.

Ordered to be reported by the Committee on Oversight and Reform on 3/26/19. Related bill: S.387. Text included in H.R. 2500, the National Defense Authorization Act, which passed the House (220-197) on 7/12/19.

SUMMARY

STATUS

Requires the Office of Management and Budget, within one year after the date of enactment, to issue guidance that requires each agency to accept electronic identity proofing and authentication processes to qualify for prior written consent for the disclosure of the individual’s records when requested by a Member of Congress.

Signed into law on 8/22/19 (P.L. 116-50).

H.R. 1079 Creating Advanced Streamlined Electronic Services for Constituents Act, Graves (R-LA)

H.R. 1177

Stop the Shutdowns Transferring Unnecessary Pain and Inflicting Damage In The Coming Years (Stop STUPIDITY) Act, Spanberger (D-VA)

SUMMARY Would automatically renew funding for federal departments and agencies, at the previous year’s

funding levels, in the event of a future lapse in appropriations, with the exceptions of the legislative branch and the Executive Office of the President.

STATUS Referred to the Committee on Appropriations on 2/13/19. Related bill: S. 198.

H.R. 1204 OIRA Insight, Reform, and Accountability Act, Mitchell (R-MI)

SUMMARY Would codify current practices at the Office of Information and Regulatory Affairs for centralized

review of regulations and expand OIRA reviews to previously excluded agencies.

STATUS Referred to the Committees on Oversight and Reform, and Judiciary on 2/13/19.

H.R. 1212 Federal Contract Deadline Fairness Act, Thompson (D-CA)

SUMMARY Would prohibit agencies from including a contractor’s inability to deliver goods or complete work

on schedule as a result of a lapse in federal appropriations in any past performance database.

STATUS Referred to the Committee on Oversight and Reform on 2/13/19.

H.R. 1213

Federal Contract Worker Fairness Act, Thompson (D-CA)

SUMMARY Would provide that each federal contract worker impacted by a lapse in appropriations in the Federal

Government shall receive compensation.

STATUS Referred to the Committee on Oversight and Reform on 2/13/19.

VA Procurement Efficiency and Transparency Act, Wittman (R-VA)

H.R. 1577

Would require the Department of Veterans’ Affairs Secretary to record information in FPDS on the SUMMARY

amount of any cost or price savings realized by using competitive procedures in awarding such contract.

STATUS Referred to the Committee on Veterans Affairs on 3/6/19.

22 / Service Contractor / Fall 2019

Professional Services Council

Bill Tracker: 116th Congress-First Session (2019) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

Verification Alignment and Service-Disabled Business Adjustment (VA-SBA) Act, Kelly (R-MS)

H.R. 1615

Would move the certification of SDVOSB applications from the Department of Veterans Affairs to SUMMARY

the Small Business Administration.

STATUS Ordered to be Reported by the Small Business and Veteransâ&#x20AC;&#x2122; Affairs on 7/17/19.

H.R. 1648 The Small Business Advanced Cybersecurity Enhancements Act, Chabot (R-OH)

SUMMARY Would establish small business cybersecurity assistance units within each small business development center to receive and share cyber threat indicators and defensive measures.

STATUS Referred to the Committee on Small Business on 3/8/19.

H.R. 1668 The Internet of Things Cybersecurity Improvement Act, Kelly (D-IL)

SUMMARY

STATUS

Would require the Director of the National Institute of Standards and Technology to develop recommendations for appropriate use and management of Internet of Things devices and require OMB to issue guidance that agencies and contractors must meet based on NISTâ&#x20AC;&#x2122;s recommendations.

Ordered to be Reported by the Committee on Oversight and Reform on 6/12/19. Related bill: S.734.

SUMMARY

STATUS

Would require the Department of Homeland Security to maintain acquisition documentation that is complete, accurate, timely and valid for each major acquisition program (defined as having total expenditures of at least $300 million over its life-cycle costs).

Passed the House (voice vote) on 5/14/19.

H.R. 1912 DHS Acquisition Documentation Integrity Act, Torres Small (D-NM)

H.R. 2022 The ESOP Business Act, Bucshon (R-IN)

SUMMARY Would deem certain Employee Stock Ownership Plan (ESOP) companies as a small business concern for the purposes of any Federal procurement programs.

STATUS Referred to the Committees on Oversight and Reform, Armed Services, and Small Business on 4/2/19.

H.R. 2083 Homeland Procurement Reform Act, Correa (D-CA)

SUMMARY Would require the Secretary of DHS to procure one-third of items for a frontline operational component from small businesses, to the maximum extent possible.

STATUS Passed the House (voice vote) on 6/10/19. Related Bill: S. 1055.

H.R. 2109 Boosting Rates of American Veteran Employment (BRAVE) Act, Rice (D-NY)

SUMMARY

STATUS

Would allow the VA Secretary when awarding contracts to give preference to companies that employ veterans on a full-time basis. Any misrepresentation of status may result in debarment from VA contracting for not less than five years.

Passed the House (voice vote) on 6/24/19. Related bill: S. 1621.

H.R. 2290 Shutdown Guidance for Financial Institutions Act, Wexton (D-VA)

SUMMARY Would require financial regulators to issue guidance encouraging financial institutions to work with consumers and businesses affected by a Federal Government shutdown.

STATUS Passed the House (voice vote) on 9/19/19.

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Service Contractor / Fall 2019 / 23

Bill Tracker: 116th Congress-First Session (2019) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

H.R. 2342 Retain Act, Ryan (D-OH)

SUMMARY Would provide a contracting preference for an offeror that certifies they will retain jobs performed in the U.S. and uses products substantially manufactured in the U.S.

STATUS Referred to Armed Services and Oversight and Reform Committees on 4/18/19.

H.R. 2344 Small Business Payment for Performance Act, Stauber (R-MN)

SUMMARY

STATUS

Would permit contractors to submit an invoice after a federal agency issues a unilateral change order on a construction project and request the agency pay 50 percent of the billed costs when the change order is complete.

Referred to the Committee on Small Business on 4/18/19.

SUMMARY

STATUS

Would require the Small Business Administration to issue a final rule implementing the Small Business Runway Extension Act of 2018 (Public Law 115–324) by December 17, 2019.

Passed the House (voice vote) on 7/15/19. Text included in H.R. 2500, the National Defense Authorization Act, which passed the House (220-197) on 7/12/19.

H.R. 2345 Clarifying the Small Business Runway Extension Act, Stauber (R-MN)

H.R. 2500 National Defense Authorization Act for Fiscal Year 2020, Smith (D-WA)

SUMMARY Authorizes appropriations for Fiscal Year 2020 for military activities of the Department of Defense, military construction, and defense activities of the Department of Energy, and for other purposes.

STATUS Passed the House (220-197) on 7/12/19.

H.R. 2740 First House Omnibus Appropriations Package, DeLauro (D-CT)

SUMMARY Combines four appropriations bills—Labor, Health and Human Services, Education, Defense, State, Foreign Operations, and Energy and Water Development—and provides funding for FY20.

STATUS Passed the House (226-203) on 6/19/19.

H.R. 2794 Defense Small Business Advancement Act, Torres Small (D-NM)

SUMMARY Would permanently reauthorize the Department of Defense’s Mentor-Protégé Program.

STATUS Referred to the Committee on Armed Services on 5/16/19. Text included in H.R. 2500, the National Defense Authorization Act, which passed the House (220-197) on 7/12/19. Related Bill: S. 1320.

H.R. 2944 Training Acquisition Leaders and Elevating New Talent Act (TALENT Act), Cisneros (D-CA)

SUMMARY

STATUS

Would establish a public-private exchange program for the acquisition workforce to temporarily assign a member of the acquisition workforce to a private-sector organization or an employee of a private-sector organization to the Department of Defense.

Referred to the House Committee on Armed Services on 5/23/19. Text included in H.R. 2500, the National Defense Authorization Act which passed the House (220-197) on 7/12/19.

H.R. 3014 Accelerating Defense Innovation Act, Thornberry (R-TX)

SUMMARY Would permanently reauthorize the Department of Defense’s Mentor-Protégé Program.

STATUS Referred to the Committees on Armed Services, Small Business, and Science, Space, and Technology on 5/23/19.

24 / Service Contractor / Fall 2019

Professional Services Council

Bill Tracker: 116th Congress-First Session (2019) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

H.R. 3055 Second House Omnibus Appropriations Package, Serrano (D-NY)

SUMMARY

STATUS

Combines five appropriations bills—Commerce, Justice, Science, Agriculture, Rural Development, Food and Drug Administration, Interior, Environment, Military Construction, Veterans Affairs, Transportation, and Housing and Urban Development—and provides funding for FY20.

Passed the House (227-194) on 6/25/19.

Financial Services and General Government Appropriations Act for fiscal year 2020,

H.R. 3351

Quigley (D-IL)

SUMMARY Would provide appropriations for the Department of the Treasury, the General Services Administration, the judiciary, the District of Columbia, and several independent agencies for FY20.

STATUS Passed the House (224-196) on 6/26/19.

Supplemental Appropriations for Humanitarian Assistance and

H.R. 3401 Emergency

Security at the Southern Border Act, Lowey (D-NY)

SUMMARY

STATUS

Provides emergency funding and policy direction for Customs and Border Protection, Immigration and Customs Enforcement, and the Federal Emergency Management Agency for operations at the southern border.

Signed into law on 7/1/19 (P.L. 116-26).

SUMMARY

STATUS

Would provide certain acquisition authorities for the Under Secretary of Management at DHS, including designating the USM as the Department’s Chief Acquisition Officer responsible for approving, pausing, modifying, or canceling major acquisition programs.

Reported by the Committee on Homeland Security on 8/30/19.

H.R. 3413 DHS Acquisition Reform Act, Crenshaw (R-TX)

H.R. 3428 Contracting Credit Equality Act, Velazquez (D-NY)

SUMMARY

STATUS

Would provide prime contractors with the ability to double the value of a subcontract for purposes of the subcontracting goals when they contract with a business in Puerto Rico.

Referred to the House Committee on Small Business on 6/12/19. Text included in H.R. 2500, the National Defense Authorization Act which passed the House (220-197) on 7/12/19.

H.R. 3494

Damon Paul Nelson and Matthew Young Pollard Intelligence Authorization Act

for Fiscal Year 2020, Schiff (D-CA)

SUMMARY Authorizes appropriations for the intelligence community’s programs for fiscal year 2020.

STATUS Passed the House (397-31) on 7/17/19. Related bill: S.1589.

H.R. 3633 Women and Minority Equity Investment Act, Kelly (D-IL)

SUMMARY

STATUS

Would amend participation requirements for SBA’s 8(a) and 8(m) programs to allow a socially or economically disadvantaged individual or individuals to retain 51 percent or more ownership stake to qualify.

Referred to the House Committee on Small Business on 7/9/19. Related bill: S. 1981.

H.R. 3638 Small Business Acquisition Transparency Act, Houlaham (D-PA)

SUMMARY

STATUS

NEW

NEW

Would provide contracting officers with the ability to provide unsuccessful offerors of certain task or delivery orders a brief explanation as to why the offeror lost the award.

Referred to the House Committee on Oversight and Reform on 7/9/19. Text included in H.R. 2500, the National Defense Authorization Act which passed the House (220-197) on 7/12/19.

Professional Services Council

Service Contractor / Fall 2019 / 25

Bill Tracker: 116th Congress-First Session (2019) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

H.R. 3802 American Business for American Companies Act, DeLauro (D-CT)

SUMMARY

STATUS

NEW

Would prohibit the head of a federal agency from awarding a contract to any foreign incorporated entity that is an inverted domestic corporation or any subsidiary, or any joint venture if more than 10 percent of the joint venture is held by a foreign incorporated entity that is an inverted domestic corporation.

Referred to the Committees on Oversight and Reform, and Armed Services on 7/17/19. Related bill: S.2139.

H.R. 3877 Bipartisan Budget Act, Yarmuth (D-KY)

SUMMARY

STATUS

Increased the FY2020 and FY2021 discretionary budget caps on defense and nondefense spending implemented by the Budget Control Act of 2011, and suspended the public debt limit through July 31, 2021.

Signed into law on 8/2/19 (P.L. 116-37).

H.R. 4147 Whistleblower Act, Connolly (D-VA)

NEW

SUMMARY Would extend current whistleblower protections for federal contractors and grantees to subcontractors and subgrantees

STATUS Referred to the House Committee on Oversight and Reform on 8/2/19. Related bill: S.2315.

H.R. 4277 Department of Defense Ethics and Anti-corruption Act, Speier (D-CA)

NEW

SUMMARY Would impose new requirements on government contractors, including extended employment bans for DoD and industry, additional reporting on lobbying activities, and subjecting defense contractors to FOIA.

STATUS Referred to the Committees on Armed Services, Judiciary, and Oversight and Reform on 9/10/19.

Related bill: S.1503.

H.R. 4328 Protecting Innocent Consumers Affected by a Shutdown Act, Waters (D-CA)

SUMMARY Would amend the Fair Credit Reporting Act to prevent adverse actions against federal, DC, and contractor employees impacted by partial government shutdowns with respect to their credit reports.

STATUS

Ordered to be Reported by the House Committee on Financial Services on 9/20/19.

H.R. 4378 Continuing Appropriations Act, 2020, and Health Extenders Act of 2019, Lowey (D-NY)

SUMMARY STATUS

Provided continuing FY20 appropriations to all federal agencies through November 19, 2020.

Signed into law on 9/27/19 (P.L. 116-59).

H.R. 4459 Secure and Trusted Communications Networks Act, Pallone (D-NJ)

SUMMARY

STATUS

S. 24

NEW

Would require the Federal Communications Commission (FCC) to publish a list of companies deemed by federal authorities as posing national security risks to telecom networks and prohibits federal funding to purchase, rent, lease, or otherwise obtain any covered communications equipment or services from companies on that list.

Referred to the Committees on Energy and Commerce and Oversight and Reform on 9/24/19.

Government Employee Fair Treatment Act, Cardin (D-MD)

SUMMARY Provides furloughed federal employees with back compensation for any lapse in appropriations that begins on or after December 22, 2018.

STATUS Signed into law on 1/16/19; P.L.116-1.

26 / Service Contractor / Fall 2019

Professional Services Council

Bill Tracker: 116th Congress-First Session (2019) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

S. 29

A bill to establish the Office of Critical Technologies and Security, Warner (D-VA)

SUMMARY Would establish an Office of Critical Technology and Security in the Executive Office of the President to coordinate policy and actions that will maintain United States technological leadership with respect to critical emerging, foundational, and dual-use technologies and ensure supply chain integrity and security for such technologies.

STATUS

Referred to the Committee on Homeland Security and Governmental Affairs on 1/4/19. Related bill: H.R.618.

S. 92

Regulations from the Executive In Need of Scrutiny (REINS) Act, Paul (R-KY)

SUMMARY Provides that major executive branch rules shall have no force or effect unless a joint resolution of approval is enacted into law.

STATUS Referred to the Committee on Homeland Security and Governmental Affairs on 1/10/19.

End Government Shutdowns Act, Portman (R-OH)

SUMMARY Would provide continuing appropriations to prevent a government shutdown if appropriations bills or a continuing resolution has not been enacted. The bill would reduce the appropriations by 1% after the first 120-day period and by an additional 1% for each subsequent 90-day period until appropriations legislation is enacted.

STATUS Referred to the Committee on Appropriations on 1/10/19.

S. 104

Freedom to Compete Act, Rubio (R-FL)

S. 124

Would prohibit employers covered by the Fair Labor Standards Act from using non-compete SUMMARY

agreements in employment contracts.

STATUS Referred to the Committee on Health, Education, Labor, and Pensions on 1/15/19.

S. 154

Department of Veterans Affairs Contract, Leadership, and Ensuring Accountability and

Reform (CLEAR) Act, Tester (D-MT)

SUMMARY Would require VA services contracts to include measurable metrics regarding cost, schedule, and

fulfillment of contract requirements, and a plan of action and milestones for the provision of the service.

STATUS Referred to the Committee on Veteransâ&#x20AC;&#x2122; Affairs on 1/16/19.

Fair Compensation for Low-Wage Contractor Employees Act, Smith (D-MN)

S. 162 Would provide back pay to certain low-wage contractor employees from the lapse in

SUMMARY

appropriations that began on December 22, 2018.

STATUS Referred to the Committee on Homeland Security and Governmental Affairs on 1/16/19. Related bill: H.R.678.

Stop the Shutdowns Transferring Unnecessary Pain and Inflicting Damage In The Coming

Years (Stop STUPIDITY) Act, Warner (D-VA)

SUMMARY Would automatically renew funding for federal departments and agencies, at the previous yearâ&#x20AC;&#x2122;s

funding levels, in the event of a future lapse in appropriations, with the exceptions of the legislative branch and the Executive Office of the President.

STATUS Referred to the Committee on Appropriations on 1/22/19. Related bill: H.R. 1177.

Modernizing the Trusted Workforce for the 21st Century Act, Warner (D-VA)

SUMMARY Would require agencies to update procedures for security clearances that will help to reduce the backlog and wait times, enable better information sharing with industry, expand innovative techniques and remote technologies for investigations, and support a shift to continuous evaluation.

S. 198

S. 314

STATUS Referred to the Select Committee on Intelligence on 1/31/19. Text included in S.1589: Damon Paul Nelson and

Matthew Young Pollard Intelligence Authorization Act for Fiscal Years 2018, 2019, and 2020.

Professional Services Council

Service Contractor / Fall 2019 / 27

Bill Tracker: 116th Congress-First Session (2019) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

S. 387

Fair Chance Act, Booker (D-NJ)

SUMMARY Would “ban the box,” by prohibiting the federal government and federal contractors from requesting that an applicant disclose criminal history record information before the applicant has received a conditional offer.

STATUS Reported by the Committee on Homeland Security and Governmental Affairs on 4/10/19.

Related bill: H.R.1076.

S. 429 Cyber Security Exchange Act, Klobuchar (D-MN)

SUMMARY Would establish a voluntary exchange program between applicable federal agencies and private sector institutions for cybersecurity positions.

STATUS Referred to the Committee on Homeland Security and Governmental Affairs on 2/7/19.

S. 469 Emergency Relief for Federal Contractors Act, Cortez Masto (D-NV)

SUMMARY Would allow certain contractor employees to take penalty-free distributions from retirement accounts during a lapse in appropriations in the federal government.

STATUS Referred to the Committee on Finance on 2/13/19. Related bill: H.R. 766.

S. 492

Disabled Veterans Rebuilding Infrastructure to Vitalize our Economy Act, Peters (D-MI)

SUMMARY Would create a goal that five percent of certain transportation spending be extended to Service- connected Disabled Veteran Owned Small Businesses.

STATUS Referred to the Committee on Environment and Public Works on 2/14/19.

S. 673

Expanding Contracting Opportunities for Small Businesses Act, Ernst (R-IA)

SUMMARY Would raise the threshold for sole-source contracts to disadvantaged small businesses to $7 million for manufacturing and $4 million for others, and eliminate option years from the cost consideration.

STATUS Referred to the Committee on Small Business and Entrepreneurship on 3/6/19. Related bill: H.R.190.

S. 734

The Internet of Things (IoT) Cybersecurity Improvement Act, Warner (D-VA)

SUMMARY Would require the Director of the National Institute of Standards and Technology to develop recommendations for appropriate use and management of Internet of Things devices and require OMB to issue guidance that agencies and contractors must meet based on NIST’s recommendations.

STATUS Reported by the Committee on Homeland Security and Governmental Affairs on 9/23/19.

Related bill: H.R.1668.

S. 1055 Homeland Procurement Reform Act, Shaheen (D-NH)

SUMMARY

STATUS

Would require the Secretary of DHS to procure one-third of items for a frontline operational component from small businesses, to the maximum extent possible.

Referred to the Committee on Homeland Security and Governmental Affairs on 4/4/19.

Related Bill: H.R. 2083.

SUMMARY

STATUS

Would create a pilot program where each Service Acquisition Executive recommends a major defense acquisition program for a “skunk works” pilot program as described in the Department of Defense’s Better Buying Power 3.0 memorandum.

Referred to the Committee on Armed Services on 5/1/19. Amended text included in S. 1790, the National Defense Authorization Act, which passed by the Senate on 6/28/19.

S. 1271 Defense Acquisition Decision Making Streamlining Act, Rounds (R-SD)

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Professional Services Council

Bill Tracker: 116th Congress-First Session (2019) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

S. 1320 Defense Small Business Advancement Act, Heinrich (D-NM)

SUMMARY Would permanently reauthorize the Department of Defense’s Mentor-Protégé Program.

STATUS Referred to the Committee on Armed Services on 5/6/19. Text included in S. 1790, the National Defense Authorization Act, which passed by the Senate on 6/27/19. Related Bill: H.R.2794.

S. 1385 Contracting and Tax Accountability Act, Kennedy (R-LA)

SUMMARY Would prohibit government from awarding a contract or grant unless the contractor or grantee

certifies in writing that the contractor or grantee has no seriously delinquent tax debts.

STATUS Referred to the Committee on Homeland Security and Governmental Affairs on 5/9/19.

S. 1503 Department of Defense Ethics and Anti-corruption Act, Warren (D-MA)

SUMMARY

STATUS

Would impose new requirements on government contractors, including extended employment bans for DoD and industry, additional reporting on lobbying activities, and subjecting defense contractors to FOIA. Referred to the Committee on Armed Service on 5/16/19. Related bill: H.R.4277.

S. 1589

Damon Paul Nelson and Matthew Young Pollard Intelligence Authorization Act for Fiscal Years 2018, 2019, and 2020, Burr (R-NC) SUMMARY

STATUS

Authorizes appropriations for the intelligence community’s programs for Fiscal Years 2018-2020 and includes provisions to reform and modernize the security clearance process.

Reported by the Select Committee on Intelligence on 6/11/19. Text included in S. 1790, the National Defense Authorization Act, which passed the Senate on 6/27/19. Related bill: H.R. 3494.

S. 1621 Boosting Rates of American Veteran Employment (BRAVE) Act, Baldwin (D-WI)

SUMMARY

STATUS

Would allow the VA Secretary when awarding contracts to give preference to companies that employ veterans on a full-time basis. Any misrepresentation of status may result in debarment from VA contracting for not less than five years.

Referred to the Committee on Veterans’ Affairs on 5/22/19. Related bill: H.R. 2109.

S. 1790 National Defense Authorization Act for Fiscal Year 2020, Inhofe (R-OK)

SUMMARY

STATUS

Authorizes appropriations for Fiscal Year 2020 for military activities of the Department of Defense, for military construction, and for defense activities of the Department of Energy, and for other purposes.

Passed the Senate on 6/27/19. Related Bill: H.R. 2500.

S. 1877 Government Shutdown Accountability Act, Lankford (R-OK)

SUMMARY

STATUS

Would impose an automatic continuing resolution in the event of a lapse in appropriations and prohibit Members of Congress from receiving salaries and conducting unrelated floor actions until appropriations legislation is enacted.

Reported by the Committee on Homeland Security and Governmental Affairs on 6/19/19.

S. 1981 Women and Minority Equity Investment Act, Cantwell (D-WA)

SUMMARY

STATUS

NEW

Would amend participation requirements for SBA’s 8(a) and 8(m) programs to allow a socially or economically disadvantaged individual or individuals to retain 51 percent or more ownership stake to qualify.

Referred to the Committee on Small Business and Entrepreneurship on 6/26/19. Related bill: H.R.3633.

Professional Services Council

Service Contractor / Fall 2019 / 29

Bill Tracker: 116th Congress-First Session (2019) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

S. 2139 American Business for American Companies Act, Durbin (D-IL)

SUMMARY

STATUS

S. 2315

NEW

Would prohibit the head of a federal agency from awarding a contract to any foreign incorporated entity that is an inverted domestic corporation or any subsidiary, or any joint venture if more than 10 percent of the joint venture is held by a foreign incorporated entity that is an inverted domestic corporation.

Referred to the Committee on Homeland Security and Governmental Affairs on 7/17/19.

Related bill: H.R.3802.

Whistleblower Act, Braun (R-IN)

NEW

SUMMARY Would extend current whistleblower protections for federal contractors and grantees to subcontractors and subgrantees.

STATUS Reported by the Committee on Homeland Security and Governmental Affairs on 6/19/19.

Investment, and Controls Review for Computer Hardware, Intellectual

S. 2316 Manufacturing,

Property, and Supply Act, Crapo (R-ID)

NEW

SUMMARY Would require a plan for strengthening the supply chain intelligence function and would establish

a National Supply Chain Intelligence Center.

STATUS Referred to the Select Committee on Intelligence on 7/30/19.

S. 2421 Disaster Contract Transparency Act, Scott (R-FL)

NEW

SUMMARY Would require state and local governments to have an advance contract for debris removal

services to be eligible for assistance for debris removal under the Stafford Act.

STATUS Referred to the Committee on Homeland Security and Governmental Affairs on 8/1/19.

and Water Development and Related Agencies Appropriations Act, 2020,

S. 2470 Energy

Alexander (R-TN)

SUMMARY

STATUS

Would provide $48.9 billion and policy direction for U.S. Army Corps of Engineers, the Department of Energy, and independent agencies such as the Nuclear Regulatory Commission, for Fiscal Year 2020.

Passed the Committee on Appropriations on 9/12/19.

S. 2474 Department of Defense Appropriations Act, 2020, Shelby (R-AL)

SUMMARY Would provide $622.5 billion and policy direction for the Department of Defense for

Fiscal Year 2020.

STATUS Passed the Committee on Appropriations on 9/12/19.

Transportation, Housing and Urban Development, and Related Agencies

S. 2520 Appropriations

Act, 2020, Collins (R-ME) SUMMARY

STATUS

Would provide $74.3 billion and policy direction for the Department of Transportation (DOT), the Department of Housing and Urban Development (HUD), and several related agencies, for Fiscal Year 2020.

Passed the Committee on Appropriations on 9/19/19.

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Professional Services Council

Bill Tracker: 116th Congress-First Session (2019) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

S. 2522

Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2020, Hoeven (R-ND)

SUMMARY Would provide $23.1 billion and policy direction for the Department of Agriculture, the FDA, and

related agencies, for Fiscal Year 2020.

STATUS Passed the Committee on Appropriations on 9/19/19.

S. 2524 Financial Services and General Government Appropriations Act, 2020, Kennedy (R-LA)

SUMMARY Would provide $24.2 billion and policy direction for the Department of the Treasury and several

independent agencies including OPM, for Fiscal Year 2020.

STATUS Passed the Committee on Appropriations on 9/12/19.

of the Interior, Environment, and Related Agencies Appropriations Act, 2020,

S. 2580 Department

Murkowski (R-AK) SUMMARY Would provide $35.8 billion and policy direction for the Department of the Interior, the

Environmental Protection Agency (EPA), and related agencies, for Fiscal Year 2020.

STATUS Passed the Committee on Appropriations on 9/26/19.

S. 2581 Legislative Branch Appropriations Act, 2020, Hyde-Smith (R-MS)

SUMMARY Would provide $5.1 billion and policy direction for the Legislative Branch, including the

Congressional Budget Office and the Government Accountability Office, for Fiscal Year 2020.

STATUS Passed the Committee on Appropriations on 9/26/19.

S. 2582 Department of Homeland Security Appropriations Act, 2020, Capito (R-WV)

SUMMARY Would provide $53.2 billion and policy direction for the Department of Homeland Security for

Fiscal Year 2020.

STATUS Passed the Committee on Appropriations on 9/26/19.

of State, Foreign Operations, and Related Programs Appropriations Act,

S. 2583 Department

2020, Graham (R-SC)

SUMMARY Would provide $47 billion and policy direction for the Department of State, including the U.S.

Agency for International Development (USAID), for Fiscal Year 2020.

STATUS Passed the Committee on Appropriations on 9/26/19.

S. 2584 Commerce, Justice, Science, and Related Agencies Appropriations Act, 2020, Moran (R-KS)

SUMMARY Would provide $70.8 billion and policy direction for the Departments of Commerce and Justice, as

well as the science-related agencies, for Fiscal Year 2020.

STATUS Passed the Committee on Appropriations on 9/26/19.

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Service Contractor / Fall 2019 / 31

Prohibiting LPTA—For Some Gary Giarratano, President & CEO, Phoenix Management

I

n the current contracting environment of Lowest Priced Technically Acceptable (LPTA) procurement strategies, is the government really getting what they need? In many cases, it seems the government is asking for the moon, but doesn’t seem to know how to guarantee this outcome.

We have seen procurements for multi-year, multi-million dollar service contracts solicited without providing adequate information for offerors to construct a reasonable submittal.

We have also seen solicitations without requirements for contractors to provide past performance information. In some cases, past performance may be requested, but if an offeror has no experience, they may not be scored either favorably or unfavorably. So how does this assure the government that the contractor can indeed perform? Sadly, often it does not.

Section 880 of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year 2019 directs the civilian agencies to avoid using LPTA source selection criteria for the acquisition of “information technology services; cybersecurity services; systems engineering and technical assistance services; advanced electronic testing; audit or audit readiness services; health care services and records; telecommunications devices and services; or other knowledge-based professional services; personal protective equipment; or, knowledgebased training or logistics services in contingency operations or other operations outside the United States, including in Afghanistan or Iraq.” A proposed FAR rule covering civilian agencies was published on Oct. 2, 20191. A similar statute enacted earlier covers the Department of Defense (DoD), and a DoD final rule was published Sept. 24, 20192.

While these laws and regulations will have a positive impact on these sectors of the contracting industry, service contractors who primarily perform typically blue-collar functions may not benefit from the required shift away from LPTA. For example, section 880 lists five factors that must be considered in order for the Government to utilize LPTA as the source selection criteria. The first factor is that “An executive agency is able to comprehensively and clearly describe the minimum requirements expressed in terms of performance objectives, measures, and standards that will be used to determine acceptability of offers …”

This factor alone is one of the major stumbling blocks for both the Government and for service contractors; unless requirements 1 2

are “comprehensively and clearly” described, it is almost impossible to put together an adequate responsive proposal. It is incumbent on the service contractor to attempt to extract the data needed to construct a viable response. This involves asking questions, and follow-up questions, to the answers received. This exchange may result in the needed clarifications. But often times not – and offerors must then make a bid/no bid decision regarding the solicitation without that needed information.

Another factor in Section 880 states that LPTA may be considered if “the executive agency has a high degree of confidence that a review of technical proposals of offerors other than the lowest bidder would not result in the identification of factors that could provide value or benefit to the executive agency …”

Neither this factor—nor any of the other factors—address the performance capability of the offeror. Unless experience and past performance criteria are specifically detailed and required as part of the evaluation, how can the government determine that the lowest bidder would provide equivalent value or benefit than a higher priced bidder? Too often this scenario has resulted in failed performance on the part of an inexperienced contractor – a loss for both the contractor and the government, who then has to re-compete the contract, or do without.

What can the service contracting community do to counter this short-sighted approach to procurement? What can be done—once all the pertinent questions have been asked—to drive the government to amend the solicitation without result?

One option that is certainly available to offerors is to protest the solicitation. Protests can be expensive and lengthy, but can garner results. A well-framed and timely protest of an extremely flawed solicitation might cause the government to rework the solicitation so that offerors have a reasonable opportunity to submit a substantive proposal – and the successful offeror and the government can both win. Likewise, a timely protest against an award made to the low bidder who has no experience and has underbid the effort might result in a win for the protesting offeror and a win for the government, who will then have a partner who has a higher probability of delivering what the government needs.

Companies should consider all options to move agencies away from the inappropriate use of LPTA as a source selection evaluation methodology. 3

http://bit.ly/2oAsvdL http://bit.ly/FinalDoDLPTARule2019

32 / Service Contractor / Fall 2019

Professional Services Council

Vision Federal Market Forecast Highlights for 2019

U

ncertainty around a continuing resolution, appropriations and potential shutdown, workforce issues, Contracting Officer shortages, the impact of clearances on hiring, lack of civilian cyber standards, and the pervasive impact of vacant political billets. No matter the federal agency with which your company offers services, both contractors and federal officials can agree that these issues are at the top of everyone’s mind and resonate across the industry.

PSC’s Vision Federal Market Forecast Conference highlights these issues and more, as it annually brings together more than 300 attendees from 150 different companies, as well as dozens of government attendees hailing from roughly 35 different agencies— many of whom were interviewed for the Vision forecast. Now in its 55th year, Vision is the only non-profit federal market forecast that is for industry, by industry. The 2019 Annual Forecast captures insights from hundreds of government executives, think tank experts, congressional staff and Wall Street analysts who took part in non-attribution interviews, which then provided quantifiable assessments of the budgets, programs, priorities, and issues across various markets. Here are a few highlights from the 2019 Vision Conference, held Oct. 28-29 in Falls Church, Va.

Macro-economic and Defense Topline

Team Lead: Lou Crenshaw • The 2019 Bi-Partisan Budget Agreement is a high-water mark for topline discretionary spending growth • Year-long continuing resolution is possible due to Congressional distractions • Parity continues to be a factor in budget negotiations but will depend on election results • Near-term debt appears to be a non-factor, as long as interest rates stay low, but outyears are a concern • Possibility of an economic slowdown 12-18 months away with slow recovery due to limited options.

Federal IT Budget Outlook

Team Leads: Greg Lobbin, Steve Vetter • President’s Management Agenda efforts continue to drive enterprise-wide behavior and transformative capabilities • IT Modernization is increasingly being driven by agency mission outcome discussions

• Personnel availability and management processes are the two biggest challenges for CIOs • Current trend suggests that civilian agencies’ growth is steady and Department of Defense (DoD) growth is increasing, but not as fast as prior years.

Defense Services

Team Leads: Jason Dombrowski, Chris Meissner • Some, but not a lot, of changes in the DoD priorities; • Readiness continues to be a priority • Without stable senior leadership, no significant changes in priorities • The War for People • People, or lack thereof, is likely the #1 concern for our industry going forward • Flat growth: winners mean losers • With projected growth below inflation, any changes in mission will necessitate reallocation of funds.

Acquisition Trends

Team Leads: Kitty Klaus, Mark Youman • Contracting Officer shortage is getting real • Approaching breaking point with fewer contracting officers & reduced assisted acquisition services • Best-in-Class Contracts are an increasing “must have” • New acquisition methods gain traction • Pentagon OTA spending could top $7 Billion in FY 2019 with nothing from the Hill this year to change the trajectory.

Did you miss the 2019 Vision Conference or would you like more info?

Visit pscouncil.org/vision to view a recap of the event—including photos and media coverage— review the Conference Intelligence Report, and purchase a copy of the video library.

Professional Services Council

Service Contractor / Fall 2019 / 33

Tick, Tock: What Contractors Should be Considering in Advance of Phase Two of the Section 889 Implementation

by Leo Alvarez, CFCM, Senior Manager, Government Contractor Advisory Services and Jeff Clayton, Principal, Government Contractor Advisory Services, Baker Tilly Virchow Krause, LLP

I

n the face of rising uncertainty over data security and surveillance by foreign adversaries, the FAR Council released an interim final rule on August 13, 2019, banning Federal agencies from purchasing telecommunications and video surveillance equipment or services from certain Chinese entities. This “Phase One” rule implements paragraph (a)(1)(A) of Section 889 of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year 2019.

Phase One of Section 889 Implementation: Section 889(a)(1)(A)

Phase One, effective August 13, 2019, bans purchases of covered equipment, applications, and services from five Chinese tech giants – including, most notably, Huawei Technologies Company and ZTE Corporation. The prohibition on Huawei products in particular, is expected to impact federal contractors because it has been ranked as the world’s top telecommunications supplier1 and number two phone manufacturer.2 The ban casts a wide net covering items and services that are “a substantial or essential component of any system, or as critical technology as part of any system”. Additionally, the rule requires companies to provide a disclosure of the presence of the banned items in their supply chain (including subcontractors / suppliers at any tier), applies below and above the simplified acquisition threshold, and covers purchases of commercial off-the-shelf items (COTs). Contracting Officers have already begun implementing the FAR provision in new contract solicitations to implement the prohibitions, including solicitations slated for award on or after August 13th. Those new provisions are: • FAR 52.204-24 “Representation Regarding Certain Telecommunications and Video Surveillance Services or Equipment,” and • FAR 52.204-25 “Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment.

We know that PSC submitted extensive comments on this interim rule.3 But that’s not all. http://www.delloro.com/telecom-equipment-market-2018-2/ http://www.idc.com/promo/smartphone-market-share/vendor 3 PSC’s Oct. 22, 2019 Press Release on Supply Chain Regulation comments http://bit. ly/35RN5qV 1 2

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Phase Two of Section 889 Implementation: Section 889(a)(1)(B)

Phase Two, slated to go into effect on August 13, 2020, requires separate rulemaking, but is intended to extend these prohibitions to contractors themselves. This means that the federal government will be prohibited from contracting with organizations that use these banned items or services as a substantial or essential component of any system, or as critical technology as part of any system.

Given the prevalence of sourced components and technologies from companies concentrated in China, federal contractors, particularly in the information technology and telecommunications space, should carefully consider vendor management practices and any exposure of their supply chains to these prohibited sources.

But where should they begin?

Getting Ahead of Curve on Phase Two: Driving Action Based on Risk

How federal contractors respond to the upcoming regulation is challenging because of the ubiquity of the prohibited items. Even organizations with tight control and visibility into their suppliers may have difficulty knowing whether prohibited items are in use if they are purchasing items where a prohibited source is an Original Equipment Manufacturer (OEM)4 or if an item has been “white labeled” and repackaged under a different brand.

Contractors will want to consider a risk-based approach calibrated to the unique characteristics of their supply chain and contractual requirements in scoring their review. For instance, contractors may want to examine the frequency by which they engage in projects that may rely on covered telecommunications equipment, applications or services to support contract performance. The greater the frequency, the higher the risk, and the more important careful due diligence becomes. Several recommended activities for contractors investigating the presence of covered telecommunications and surveillance equipment in their own supply chain and/or business infrastructure include:

Supplier Expenditure Review: Federal contractors may find value in examining supplier expenditures over a specified period of time (for example, a 12 to 24 month period) to uncover specific 4

In this context, an OEM is defined as an organization that produces equipment or components that are ultimately marketed by another manufacturer (selling the finished item to end users).

In some cases/markets, this term may refer to the organization itself that is incorporating the components from other manufacturers into a single end product.

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banned equipment or sources that are considered to be higher risk (distributors or resellers with ties to the specified banned Chinese entities). Shipping records and invoices can also be helpful in identifying OEM relationships where they are not apparent, and inventory records can help isolate higher risk equipment. Additionally, some MAC Address and OUI lookup applications5 can be used to identify the manufacturer associated with certain kinds of equipment (for example, IP cameras).

Vendor Agreement Review: At this point it is difficult to know precisely what Phase Two rulemaking will look like. But assuming there are similar representations to those required in FAR 52.20424, from the August 13, 2019 interim rule, contractors should talk to their suppliers and service providers around the presence of covered equipment in their supply chains. Building ‘right to audit’ considerations into their purchasing process and requiring suppliers and services providers to behave similarly may also be worthy of consideration. Keep in mind that the Phase One rule effectively flows down to all tiers, and suppliers should be encouraged and expected to be active participants in securing the supply chain. Mandatory monitoring activities and reporting to the prime may also be helpful in supporting the prime contractor’s responsibilities in this area.

Supply Chain Remediation and Transition Plan: Given the possible reporting responsibilities, primes and higher-tier contractors should be ready to take remedial action to change vendors should it be discovered that it is purchasing critical technologies or services from a banned source, or from a subcontractor who is using covered equipment. In some cases this may mean engaging with a subcontractor or supplier while working to identify a different vendor. However, organizations would be wise to think about modeling the impact to service delivery (delays and shortages) and

potential impacts to cost, while outlining a tactical plan for handling transitions (linkages to logistics and communications systems, transfer of information, and training), should a new supplier or subcontractor need to be identified and integrated quickly.

In addition to these recommendations, contractors should take steps to assess their own telecommunications and video surveillance infrastructure to identify equipment from banned sources. This way they are prepared to make representations should they be required under Phase Two rulemaking.

Tracking Compliance Cost: As effective control and oversight of supply chain becomes increasingly difficult for federal contractors, an appropriately designed gap assessment could provide additional assurance and help prevent threats to business continuity. Federal contractors with significant risk in this area may want to consider this framework. Contractors should also carefully track the compliance and implementation costs of adhering to these new requirements as they may be reimbursable on fixed-price and cost-reimbursement contracts.

As cybersecurity and surveillance threats become more ever-present, contractors should expect to see increasingly strict federal government requirements to secure and strengthen the federal supply chain. The key is to understand the regulations, suppliers and service providers, and remain vigilant about the central role the prime contractor plays in this area. By assessing the impact early on and having an ‘eyes-wideopen’ approach to the Section 889 requirements, contractors can avoid disruption, minimize compliance risk, and best position themselves to continue delivering value to the federal buyer. 3 5

Organizational Unique Identifier (OUI), assigned by the Institute of Electrical and Electronics Engineers (IEEE), is the first 24 bits of a MAC address for a network-connected device, which indicate the specific vendor for that device.

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Tips and Trends on Export Controls & Sanctions Compliance for Defense Services Providers

by Johny Chaklader, Practice Lead, Export Controls and International Trade and Joseph Ziegler III, Associate, Industry Specialty Services Group - Government Contracts, BDO USA

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efense contracts for the vast array of services PSC members proudly provide to the federal government routinely include Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS) clauses that explicitly or implicitly reference U.S. export controls and sanctions requirements.1 But what do enforcement actions look like? How much does it cost? And how do contractors handle potential instances of non-compliance and navigate the voluntary disclosure process? Let’s take a deeper look at recent enforcement trends as we give you the required information on export controls and sanctions compliance for defense services contractors.

Enforcement actions for alleged violations of these requirements often involve companies that were either unaware of the requirements altogether, mistakenly believed their “domestic” operations did not constitute “export” activity, and/or or engaged the services of noncompliant subcontractors that acted without the contractor’s knowledge. Another common contractor error is to conflate the security requirements of confidential or classified information with those of export controls and sanctions programs.

U.S. export controls and sanctions requirements arise under a strict liability regime, in which intentional conduct is not required for a finding of violation. Inadvertent non-compliance may still result in steep civil and criminal penalties, commercial liability, contractor debarment, loss of export privileges and significant reputational damage.

Regulatory Landscape: Defining Key Terms

U.S. export controls requirements arise under the International Traffic in Arms Regulations (ITAR)2 and the Export Administration Regulations (EAR)3. The ITAR governs 1

For example, common export and sanctions related clauses include FAR 52.225-13, DFARS 252.204-7008, DFARS 252.204-7009, DFARS 252.204-7012, DFARS 252.2097004, DFARS 252.225-7002, and DFARS 252.225-7048.

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the export of defense articles, defense services and controlled technical data to any foreign destination, or to any foreign person, whether domestic or abroad. Under the ITAR, “defense service”4 entails providing or furnishing assistance (including training) to foreign persons, whether in the U.S. or abroad, in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing, or use of defense articles. If a contractor’s services are performed in connection with U.S. or foreign militaries and the use of articles, software or data described in the U.S. Munitions List (USML)5, the service 22 C.F.R. § 120 et seq.

15 C.F.R. § 730 et seq.

4 22 CFR § 120.9.

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22 C.F.R. § 121.1.

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shutterstock.com/Aleksandar Malivuk

Enforcement, Errors, and Export Control

provider should implement protocols to track and satisfy ITAR applicable requirements. A contractor may be required to obtain one or more ITAR authorizations from DDTC before they can perform under the contract.

The EAR governs the export of commercial and dualuse goods, software and technology, including hardware and software containing certain encryption algorithms. If services are performed in connection with commodities, technology, or software described in the Commerce Control List (CCL)6, contractors should implement procedures to verify fulfillment of EAR requirements. A contractor may be required to obtain one or more EAR authorizations before they can perform under their contract.

For purposes of the ITAR and EAR, the term “export” covers a broad range of activities that includes the transfer of products, services or information. Typically, one may think of an export as the physical movement of hardware across borders. While this is certainly the case, the term also broadly covers any transfer to any non-U.S. person, either within or outside of the U.S., of controlled items, technology, software, or information, by physical, electronic, oral, or visual means.

As such, sending an e-mail with controlled information to an overseas colleague may constitute an export requiring prior authorization. An export may have occurred if a nonU.S. person providing facilities maintenance services in a U.S. facility had physical or visual access to controlled information.

Such personnel may need to be identified on one or more authorizations prior to starting work. Certain contracts may prohibit the employment of non-U.S. citizens in any capacity.

Research collaborations where non-U.S. persons or U.S. persons located overseas have shared access to electronic files and folders may also give rise to export activity requiring prior authorization.

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) administers country-specific economic and trade sanctions7 that restrict or prohibit transactions with and exports to targeted countries and persons in furtherance of U.S. foreign policy, national security and economic objectives. U.S. government contractors may be required to obtain authorizations from the U.S. government before they can perform under a contract if targeted parties are directly or indirectly involved. Any time a third-party vendor or supplier is expected to provide goods or services in support of a defense services contract, the contractor is responsible for performing due diligence on the third party and carrying forward any/all flow-down clauses that may apply.

Counting the Cost and Tracking Trends

So, what’s the penalty for non-compliance and what could it cost? If a defense services provider learns of unauthorized export activity or activity involving a restricted party, the company must

Supplement No. 1 to Part 774 of the EAR. 31 C.F.R. § 501 et seq.

8 See Appendix A to OFAC’s Economic Sanctions Enforcement Guidelines at 31 C.F.R Part 501.

9 See BIS Administrative Enforcement Guidelines, 83 FR 706 (January 8, 2018).

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investigate the issue. Failure to identify and correct compliance problems can be costly. Under the ITAR, civil penalties may be levied up to $1,000,000 per violation with criminal penalties up to $1,000,000 and/or 20 years of imprisonment. Under the EAR, civil penalties could be $300,000—or twice the transaction value per violation—with criminal penalties up to $1,000,000 and/or 20 years imprisonment. Under the OFAC regs, civil penalties vary by program. Generally, these penalties may be levied up to $250,000 per violation, with criminal penalties up to $10,000,000 and/or 30 years of imprisonment.8 Under all three frameworks, government contractors may receive significant penalty mitigation (50% or more) if they voluntarily disclose instances of potential non-compliance to the authorities and implement effective corrective actions.9 Over the past few years, regulatory authorities have continued to aggressively enforce the requirements of ITAR, EAR and OFAC programs.10 Some common themes stand out: in nearly all cases, defense services providers subject to enforcement did not realize that their activities required an authorization, lacked adequate training on export and sanctions requirements, and/or failed to appoint compliance personnel with adequate knowledge or institutional decision-making authority to implement effective controls. Defense services providers often did not have compliance policies in place nor periodically stress test their compliance programs. Providers interfacing with third parties occasionally failed to have consistent compliance measures to govern interparty liability. Failure to properly classify products and data under the USML or CCL and poor management of specific provisos in issued licenses are a recurring liability source for contractors. In some cases, the excessive delay in submitting voluntary disclosures from the date of discovery also served as a penalizing factor.

Lessons Learned

The key lesson for defense services providers: be proactive and not reactive. Having a U.S. government entity as the primary customer is by no means a shield from the requirements. Many defense service providers’ activities will not be subject to licensing requirements. However, there should be a well-documented and standardized approach to deciding whether and to what extent the requirements apply to a defense service providers’ business activities. Remember the following to stay on top of export controls and sanctions compliance: periodically examine business process; have measures in place to respond to identified compliance issues; communicate process enhancements to all personnel and train employees accordingly; disclose potential non-compliance in close coordination with the company’s legal team; and be forthright in those disclosures. So when it comes to export controls and sanctions compliance, be sure to have all the right information to make the most informed decisions.. 3

See DDTC Penalties & Oversight Agreements (http://bit.ly/2pOmiez); BIS Annual Report of Enforcement (http://bit.ly/2MAzlcB); and OFAC Civil Penalties and Enforcement Information (http://bit.ly/2MCro6B).

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KEY EVENTS Defense Services Conference Nov. 21, 2019 ▪ Arlington, VA Hear from senior executives across the Department of Defense and federal contracting community discuss current initiatives aimed at accelerating innovation and delivering capabilities to the future force.

7 th Annual

Development

Conference

Development Conference Dec. 3, 2019 ▪ Arlington, VA This unique half-day conference gathers international development companies and government agencies to identify and share critical missions and objectives while exploring the factors that shape the evolution of international capacity Holiday Reception and Member Meeting Dec. 12, 2019 ▪ Arlington, VA PSC invites you to attend the combined semi-annual open meeting of the PSC Board of Directors and annual membership meeting, followed by a holiday reception.

Leadership Summit Jan. 26-27, 2020 ▪ Washington, DC This unique, exclusive event is by invitation only for the PSC Board of Directors and C-level executives from regular PSC member companies.

DEFENSE STRATEGIC PLANNING FORUM

Vision Defense Strategic Planning Forum Feb. 18, 2020 ▪ Arlington, VA Get best practices for executing an effective strategic plan and how to hone your corporate strategy. Discover the major challenges facing the federal contracting industry and the longer-term market impact on defense.

Law Enforcement Conference Feb. 25, 2020 ▪ Arlington, VA Given the administration’s focus on law enforcement and security, this is an opportunity for industry to engage with key government executives on law enforcement challenges.

Speakers from DHS, DOJ, and other law enforcement agencies will discuss their priorities and industry leaders will discuss where the market is headed.

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Mark Your Calendar!

FedHealth Conference FedHealth Conference March 25,March 2020 ▪25, Silver Spring, MD 2020 ▪ Silver Spring, MD Senior executives from across industry government discuss discuss Senior executives from acrossand industry and government critical industry andpolicy acquisition priorities priorities in civilian in and criticalpolicy industry and acquisition civilian and military health.

Speakers from HHS,from DoD, andDoD, VA will discuss military health. Speakers HHS, and VA willtheir discuss the needs andneeds challenges. and challenges.

PSC Annual PSCConference Annual Conference April 26-28, 2020 ▪ Greenbrier, WV April 26-28, 2020 ▪ Greenbrier, WV The PSC Annual Conference is the premier for event government The PSC Annual Conference is theevent premier for governmen contractors.

Open to members only, attendees are joinedare byjoined by contractors.

Open to members only, attendees government leaders toleaders examine most the important issues facing government to the examine most important issues facin the government professional and technology services industry. the government professional and technology services industry.

Federal Acquisition Conference Federal Acquisition Conference July 13, 2020 ▪ Arlington, VA July 13, 2020 ▪ Arlington, VA How the government solicits, buys, andbuys, manages services and How the government solicits, and manages services and technology today will lay the foundation for the federal markettechnology today will lay the foundation for the federal marketplace of the future.

Join government executivesexecutives and industry place of the future.

Join government and industry leaders atleaders PSC’s 2020 Federal Conference to exploreto explore at PSC’s 2020Acquisition Federal Acquisition Conference the trendsthe shaping policies and their and effects oneffects o trendsfederal shapingacquisition federal acquisition policies their your business. your business.

C

NFERENCE

Tech Trends TechConference Trends Conference Sept. 22, 2020 ▪ Washington, DC Sept. 22, 2020 ▪ Washington, DC Gain insights on federal IT priorities—hearing first-hand from Gain insights on federal IT priorities—hearing first-hand from government IT leaders. Share ideas and engage on issues and government IT leaders. Share ideas and engage on issues and opportunities for government adoption of innovative solutions opportunities for government adoption of innovative solutions and commercial best practices. and commercial best practices.

Vision Federal Market Forecast Conference Vision Federal Market Forecast Conference Oct. 28-29, 2020 ▪ Falls Church, VA Oct. 28-29, 2020 ▪ Falls Church, VA Be the first to get the results and analyses of PSC's annual Vision Be the first to get the results and analyses of PSC's annual Vision Federal Market Forecast that delivers insights from hundreds of Federal Market Forecast that delivers insights from hundreds of government executives, think tank experts, Wall Street analysts government executives, think tank experts, Wall Street analysts and more. The forecast covers topics such as budget assessments, and more. The forecast covers topics such as budget assessmen programs, and priorities in a rapidly changing environment. programs, and priorities in a rapidly changing environment.

View more details at www.pscouncil.org/calendar Sponsorships available for these events.

Professional Services Council Contact sponsorship@pscouncil.org for more information. Service Contractor / Fall 2019 / 39

Securing the Supply Chain through Integrated Risk Management

by Andrew Razumovsky, Principal, CANDA Solutions, LLC

“Deliver uncompromised aims to protect critical technology from cradle-to-grave by establishing Security as a fourth pillar in acquisition, on par with Cost, Schedule, and Performance, and to embrace security, not as a “cost center” but as a key differentiator.”-Defense Security Services (DSS)

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agility in response to deep uncertainty. It requires considerable effort and is dependent on the variety of crucial-to-success elements such as leadership, culture, people, processes and infrastructure. Another huge step towards the IRM goal is breaking organizational risk silos in order to achieve a comprehensive, company-wide security posture.

One established approach to enterprise-wide risk is based on the security convergence model, bringing all business functions (IT, Security, HR, Legal, CISO, acquisitions, physical access and compliance) together to break down stove-piped systems.

It is the only possible way to understand Enterprise in one holistic view. Strategic risk needs to be constantly defined based on the policies and procedures in place, with access, and measured vulnerabilities remediated. C-Suite and boards will drive Risk Management programs not just because of the mitigation planning, but on creating value and differentiators for the organization as a whole.

Today there are more than 300,000 companies that are part of the Defense Supply Chain, ranging from small to major enterprises. And all of them are facing a multitude of issues from cybersecurity to compliance. Solutions for solving them

“Top 10 Factors for Integrated Risk Management Success” | Gartner, 2017 “Is Everything Under Control? Audit Committee Challenges “ | KPMG, 2017

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shutterstock.com/Ahmetov Renat

D

SS shared with industry its plans to execute on Deliver Uncompromised. A few key initiatives under way are the passage of Public Law 115-390; The SECURE Technology Act; NIST 800–171, DFARS 252.204-7012; and the establishment of a DoD Cybersecurity Maturity Model Certification (CMMC), where a required CMMC Level (potentially 1 through 5) will be contained within RFP sections L&M and will serve as a gate of entry to bid on a contract. All these requirements are targeted at lowering supply chain risk.

One approach for the Defense Industrial Base (DIB) to consider as it competes within a Deliver Uncompromised environment is through Integrated Risk Management (IRM).

According to Gartner1, by 2021 more than 50% of large enterprises will use an IRM solution set to provide better decision-making capabilities.

KPMG recently conducted a survey2 of more than 800 audit committee and board members and found that the top challenge facing companies is the effectiveness of their risk management program. Many noted that, increasingly, the focus should be on “key operational risks across the extended global organization – e.g. supply chain, Information Technology (IT) and data security risks, etc.” In order to manage complexity of the risks, executives have a multitude of options.

Some could consider a “top-down” approach to link their strategic efforts to an organization’s risk profile. Others might put efforts in the “bottom-up” method, primarily focusing only on the individual lines of business. The key to IRM success is the dependency on the integrated view built on a solid foundation of framework, metrics and systems.

Another major trend is building up an Organizational Resilience capability which increases business resilience and

should be secure, nimble, affordable, and scalable. Cybersecurity challenges give rise to bad actors; social engineering attacks drive new decision-making where defending network perimeter simply is not an option.

Dynamic, context-aware trust is necessary in such projects.

Many vendors are answering this call to action by providing risk or trust scoring as a part of their next generation firewalls or endpoint services. What is needed to maintain this is Continuous Adaptive Trust (CAT), acting as an arbiter or orchestrator of that trust providing context beyond cyber data streams and that looks beyond basic User and Entity Behavioral Analytics (UEBA) capabilities.

Use of these types of systems and their integration capabilities can provide a much lower capital and operational cost to the DIB by allowing them to maintain a single system of record, collapse networks, access tokens, and help link the need for access with personnel security systems. Additionally, this approach ensures that the user is still the same user who was originally authenticated, and deemed trustworthy by the system.

The government’s Trusted Workforce 2.0 initiative will bring changes to Adjudicative Guidelines, Tiers, Policy, Continuous Vetting, etc. which will drive need for integrated, dynamic context of the workforce. This goal will be on the management forefront and could only be achieved by governing the end-toend employee lifecycle, from onboarding to retirement. Key challenges will be change management, increased compliance, and privacy. With limited budgets and resources, one viable

7th Annual

Development

solution is embracing a holistic view of the dispersed systems steered by data-driven decision-making, automation, metrics and standardized processes.

Deploying IRM solutions supporting combined personcentric and device-centric architecture provides a way to further close the supply chain security gap between the person, their personnel/industrial security profile, and their exposure to classified contracts, critical technologies, secure facilities, and the government agency purchaser.

The Integrated Risk Management approach empowered by a Trust Engine enables a security convergence model and risk mosaic which should be evaluated by different parts of an organization to enable meaningful risk assessment, mitigation and enforcement.

In summary, as the DIB prepares to compete in a Deliver Uncompromised environment, they should take a closer look at CAT and Trust Engines implementations for solving complex supply chain challenges and uncertainty while remaining innovative, competitive, compliant and profitable. 3 Andrew Razumovsky is Principal of CANDA Solutions, LLC providing Cloud, Security and Agile software development service to both, public and private, sectors. Andrew is heavily involved with Fresh Haystack platform, an innovative solution for providing Insider Threat Defense and Integrated Risk Management. Andrew brings more than 22 years of information technology, startups, security, risk management and business experience.

FEATURED SPEAKERS

Conference Presented by

DEC. 3, 2019 8 A.M. - 12 P.M. ARLINGTON, VA Premier Sponsors:

Mark Green Administrator USAID

David Bohigian Executive Vice President, OPIC

Jim Richardson Director of U.S. Foreign Assistance Resources Dept. of State

WALK AWAY WITH: A better understanding of the current climate of USAID and State Insights into procurement updates New connections in the international development community

www.developmentconference.org

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Member Value: The Importance of Executive Leadership and Engagement

by Matthew Busby, PSC Director of Membership

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articipation by C-Suite and Senior Executives supporting PSC through membership plays a central role in ensuring that we deliver on our promise to you when you join.

PSC offers significant opportunities specifically designed to enhance value for this cohort of members. Let’s take a look at a few of these executive leadership engagement opportunities.

Our Leadership Summit, held each January, is an excellent opportunity for senior leaders to share an information exchange and dialogue with high-level government leaders, offering a view into PSC’s policy priorities and advocacy on our members’ behalf. The most engaged PSC leaders matriculate to support PSC as association leaders, helping shape the programs for our key conferences, supporting PSC as members of council Executive Advisory Boards, and serving the broader membership community as a representative on our Board of Directors and Executive Committee.

The PSC membership journey is designed to engage members based on your agencies of interest, policies, and functional interests relevant to your line of work. Our implementation of this model has helped members quickly determine where their teams can participate by finding the intersection of these interests coupled with corporate strategic priorities. Helping members define this is an extraordinary factor for ensuring a return on your membership investment. But executive leadership and engagement in this process solidifies the requisite buy-in for strengthening engagement at all levels of the company.

When the senior leaders are engaged and encouraging their staff to engage: • high-level issues are added to our priorities; • participation levels increase, and the individuals on your team can derive more value and information from PSC engagement;

Welcome New Q3 PSC Members!

Welcome New PSC Second Quarter Members!

For more information on PSC membership, contact membership@pscouncil.org.

For more information on PSC membership, contact membership@pscouncil.org.

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• emerging leaders take on more active participation in PSC; • and staff level members apply the resources they receive from PSC to support their professional development as well as corporate growth and success.

The team at PSC works diligently to provide opportunities for members to get involved and maximize your exposure to our valuable engagement streams. Whether a C-suite exec or a member at any level, we encourage you to actively explore our Membership Engagement Resource Center, which offers tools to help educate members on the various opportunities.

Our Membership Engagement Map illustrates engagement across your organization, providing the visibility you need to allocate your time and resources effectively along the

engagement continuum. We’ve worked hard to develop direct communication bridges between PSC members and our subject matter experts. As a result, we have engaged more members as we expand our offering to satisfy the needs and interests of an expanding body of executive leaders and emerging government contracting leaders.

There is no end to the resources we offer your team and our broader membership to ensure that engagement is among our top priorities. Via the dynamic participation of executive leadership, we hope this will create a membership culture where engagement flows from the top down. Our objective is to maximize your engagement and deliver value for all parts of your organization. 3

DECEMBER 12, 2019 T H E W E S T I N A R L I N G TO N G AT E W AY

SPONSORED BY

N E T W O R K I N G 3 : 3 0 P. M . ● B O A R D M E E T I N G 4 P. M . ● H O L I D AY R E C E P T I O N 5 : 3 0 P. M .

Re g i s te r at w w w. p sco u n ci l .o rg /c a l e n da r Professional Services Council

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Event Spotlight

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A wide range of top government technology and policy officials spoke at the 2019 PSC Tech Trends Conference on Sept. 16. More than 200 attendees heard directly from senior government officials on emerging technology and related issues (1). The Honorable Margaret Weichert, Deputy Director for Management, Office of Management and Budget, highlighted her key focus areas of the President’s Management Agenda (2). A featured panel of Chief Information Officers (CIOS) described the emerging technology landscape (3, L-R): Jose Arrieta, CIO, Department of Health and Human Services; Joseph Klimavicz, CIO, Department of Justice; and David Shive, CIO, General Services Administration. The newly confirmed Office of Federal Procurement Policy Administrator, the Honorable Dr. Michael Wooten, debuted his strategic priorities for OFPP and for government-wide acquisition initiatives (4).

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Martha Dorris, from PSC member company DCI, lead a “fireside chat” on data as a business driver with Chief Data Officers Kris Rowley from GSA and Eileen Vidrine from the Air Force (5). A panel of Department of Veteran Affairs leaders in customer experience described the digital transformation imperative for veterans (or for any organization) to have a quality experience interacting with the organization. The Honorable Thomas Modly, Under Secretary of the Navy discussed his “Top 10” list of priorities for the Navy (6). Special thanks to the PSC Tech Trends Conference Committee, co-chaired

by Rob Stein (formerly with NetApp; now with Salesforce) and Alan Balutis (Cisco), who created an engaging agenda that was a mustattend for everyone in the federal technology community. Purchase the video library of the conference, which includes recordings of all sessions and keynote speakers at www.pscouncil.org/techtrends.

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Event Happenings

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4 1. On July 16, PSC hosted a 2019 Hurricane Season event in Arlington, VA where government officials discussed emerging needs and trends regarding FEMA operations and mission delivery. Brian Kamoie, Associate Administrator for Mission Support, FEMA, provided the keynote address.

2. PSC leadership hosted executive roundtables at the PSC Office in Arlington, VA on July 17, August 14, Sept. 18, and Oct. 16 for senior executives from regular member companies. The roundtables are by invitation only and provide executives the opportunity to network and discuss hot-button issues.

3. On July 18 in Arlington, VA, members had the opportunity to learn about Contractor Performance Assessment Reporting System (CPARS) trends, their impact on contractor past performance ratings, and the consequence they have on winning federal contracts. [L to R] Alan Chvotkin, PSC; Katrina Brisbon, DHS; Jeff Thomas, NOAA; Shanna Webbers, IRS; and Michele Foster, VA discussed CPARS government policy and practices during one of the event sessions.

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6 4. On July 24, the Contract Finance and Cash Flow Committee hosted Bruce Propert from the DoD Office of Defense Pricing and Contracting. Bruce discussed opportunities and challenges associated with contract closeout, including implementation of the May 2 DFARS Class Deviation. Attendees also discussed relevant provisions in the Senate- and House-passed NDAA and other related information.

5. PSCâ&#x20AC;&#x2122;s two-day Service Contract Act Training on July 25-26 provided important information to attendees to ensure companies are successfully competitive, maintain compliance following award, and avoid unexpected payroll and benefit liabilities.

6. On July 30, PSC President and CEO David Berteau met with the Director of Human Capital Initiatives (HCI) for the Under Secretary of Defense for Acquisition and Sustainment, Mr. Jose Gonzalez, and thirteen participants in the DoD-led Public-Private Talent Exchange (PPTE) Program.

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Event Happenings

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10 7. The Cybersecurity Policy Working Group met on Sept. 20 to review recent developments on the Cybersecurity Maturity Model Certification (CMMC).

8. The Council of International Development Companies (CIDC) welcomed Katie Stohs, Chief of Compliance Division, USAID, to their monthly meeting on August 15 in Arlington, VA. 9a-b. More than 100 PSC members and friends attended the annual PSC Golf Tournament on Sept. 25 at the Westfields Golf Club in Clifton, VA. 10. On Sept. 26, PSC hosted Dave Basham from U.S. Citizenship and Immigration Services, for a discussion on the E-Verify federal contractor rule and how it applies to the federal contractor community.

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11 11. Fred Nutt, USAID Assistant Administrator for Management (R), and Mark Walther, USAID Acting Director, Office of Acquisition and Assistance (L), were the featured speakers at the Council of International Development Companies Oct. 17 monthly meeting in Arlington, VA. PSC’s Alan Chvotkin (C) presented them with an award recognizing USAID’s Business Forecast as one of the top-rated in the federal government. CIDC members also met with officials from USAID’s Action Alliance to Prevent Sexual Misconduct (AAPSM).

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