Page 1

March 2015 / The Voice of the Government Services Industry

The Government of Things?

How the Internet of Things could Power a Revolution. 6

Sounding board: technology and business revolution

8

ALso inside:

The PSC 2015 policy agenda

12

government‘S preferred supplier programs

24

labor executive orders


March 2015 T h e Vo i ce o f t h e G ove r n m e n t S e r v i ce s I n d u st r y

8

6 Sounding board: technology and business revolution

12 The 2015 Policy Agenda

Cover montage/illustration: Studio25

4 President’s Letter 19 Leadership Summit 21 Bill Tracker 27 Policy Spotlight

30 Council Corner 32 Member News 34 PSC Scene & Heard

the government’s preferred supplier programs

24 the labor executive orders

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: Bryan Bowman

P S C S ta f f

Stan Z. Soloway President & CEO soloway@pscouncil.org Alan Chvotkin Executive Vice President & Counsel chvotkin@pscouncil.org Donald Baumgart Manager, Vision Forecast baumgart@pscouncil.org Bryan Bowman Senior Manager, Marketing bowman@pscouncil.org

Matt Busby Director, Membership busby@pscouncil.org Joe Carden Vice President, Marketing & Membership carden@pscouncil.org Elise Castelli Senior Manager, Media Relations & Publications castelli@pscouncil.org Charlene Dowdy Membership Associate dowdy@pscouncil.org

Professional Services Council

Paul Foldi Vice President, International Development foldi@pscouncil.org Karen L. Holmes Office Manager/ Receptionist holmes@pscouncil.org Ryan Jennings Executive Assistant jennings@pscouncil.org Michelle Jobse Director, Vision Forecast jobse@pscouncil.org

Roger Jordan Vice President, Government Relations jordan@pscouncil.org Jeremy Madson Senior Manager, Public Policy madson@pscouncil.org Andrea Ostrander Director, Events ostrander@pscouncil.org Melissa R. Phillips Vice President, Events & Operations phillips@pscouncil.org

Robert Piening Vice President, Finance piening@pscouncil.org Jerome Punderson Senior Vice President, Defense & Intelligence punderson@pscouncil.org Ivory Smith Marketing Associate smith@pscouncil.org Jean Tarascio Senior Manager, Events tarascio@pscouncil.org

Matthew Taylor Manager, Public Policy taylor@pscouncil.org Dave Wennergren Senior Vice President, Technology Policy wennergren@pscouncil.org Erin Whittaker Senior Manager, Events whittaker@pscouncil.org

Service Contractor / March 2015 / 3


PRESIDENT ’S LETTER

A New Era Change.

The word itself may be one of the most ubiquitous terms in our language today since it describes virtually every aspect of the world in which we live. Of course, our marketplace and, indeed, PSC itself, is no different. Change surrounds us. This issue of Service Contractor zeroes in on a few notable and impactful current changes. For our regular Sounding Board feature we asked three members of the PSC Board of Directors to share their perspectives on how the “Internet of Things” is driving real, perhaps even transformational, change in the logistics and supply chain management arena, including the increasing shift to an “as a service” environment. We are most grateful to Trey Obering (Booz Allen Hamilton), Darryl Scott (The Boeing Company), and Tom Eldridge (SAIC) for their expert insights on the question. Change is also afoot across the procurement landscape. We have highlighted a number of those changes in previous issues of Service Contractor. In this issue, PSC’s Vice President of Government Relations, Roger Jordan, takes us inside a set of interconnected changes that are not receiving as much attention as perhaps they might deserve. How do the Navy’s “Preferred Supplier Program” and other emerging vendor management initiatives work together— or not? Similarly, Jennifer Flickinger of member company Baker Tilly takes a deeper look into how the most recent labor executive orders could change our marketplace. And how do these and other changes drive the broader PSC agenda? Executive Vice President and Counsel Alan

4 / Service Contractor / March 2015

Chvotkin takes us through a crosswalk of PSC’s policy agenda and how it connects within and across the new PSC operating model and councils. And Senior Vice President Dave Wennergren offers his perspectives on the Federal Information Technology Acquisition Reform Act (FITARA) and what it portends for the next phase of PSC advocacy and leadership around technology acquisition. Finally, since our last issue, one other significant change has occurred at PSC. As of February 1, PSC is now the home to all of the activities and offerings that were previously within the portfolio of the TechAmerica Foundation, including the foundation itself, the annual Vision Forecast and Conference, the CIO Survey, the Defense Strategic Planning Forum, and the American Technology Awards. We are very excited about what this addition to our portfolio means for the value proposition we can offer our members, for our role as the pre-eminent voice across the federal technology and professional services sector, and for our leading role as an interlocutor with our government colleagues. I hope you will join us as we seek to both sustain and enhance the value of these unique programs. Change. It’s there. We know it. And our job, with your help, is to stay on top of it.

Stan Soloway President & CEO

Professional Services Council


Professional Services Council

Service Contractor / March 2015 / 5


SOUNDING BOARD: In each issue, PSC asks members of our board of directors

to offer their perspectives on key challenges facing the government services industry.

A Technology and Business rEvolution How are tech trends, including the “Internet of things,” 3D printing, etc., changing the world of logistics and supply chain management?

W

Henry A. “Trey” Obering III

Senior Vice President, Booz Allen Hamilton

e have all witnessed the explosion of technology into our lives as more and more of our everyday appliances and household devices are made “smart” with the use of microchips and sensors. Increasingly, these devices are becoming networked so you can monitor and control them using your smartphone. This same technology explosion promises to have a profound effect on supply chain management and logistics. Technology has dramatically advanced capabilities in three general areas: manufacturing technologies; collaboration and improved networking; and the application of business intelligence and associated advanced analytical tools. Imagine if you could manufacture spare parts as you need them at the operating location. In the area of manufacturing technologies, additive manufacturing (AM), often referred to as 3-D Printing, promises exactly that. AM is a rapidly growing technology with the potential to become a major part of today’s supply chain serving the government in defense, civil, and continued on page 14

I

3D

Tom Eldridge

Senior Vice President, Government Affairs,SAIC

continued on page 16

Printing has very important implications for the worlds of manufacturing, logistics, and supply chain management. 3D printing is a technique that uses a device to create physical objects from 3D digital models layer by layer. Computer controlled machine tools use Computer Assisted Design (CAD) files to automatically create objects. Since the object can take virtually any shape or geometry, most objects can be perfected to have ideal weight to stress ratios. Among the segments analysts project will see large increases in demand for 3D printing are consumers who want to make items at home, businesses and government agencies making prototypes, and even large scale industrial producers of finished goods. As printer costs drop, printing speeds improve, and demand in these areas increases, 3D printing is on course to change significantly the nature of multiple industries and markets. continued on page 18

6 / Service Contractor / March 2015

Professional Services Council

Illustration: Studio25

Darryl Scott

Corporate Vice President, Contracts, The Boeing Company

t used to be that companies made money by finding out what products—the “stuff ”— customers wanted, making the stuff, and selling it at a price the market would bear. If the firm did its marketing well, and produced efficiently, profits usually followed. But now, new business models are gaining momentum, driven by an explosion in information technology. “Big Data” has changed the game so that value flows as much from what firms know about their customers as from what stuff they sell. Firms may be tracking buying habits so they can offer up suggestions for other purchases. They might track repair service calls to ensure spare parts are positioned where they’re likely to be needed most. Or companies might even be using incidence-of-repair and replacement data to redesign products to be more reliable and perform better. Predictive analytics is also redefining customer service. A blend of technology advancement and industry knowledge has enabled businesses to do more with data, changing


What don’t we do for the US Military? While we don’t fly the helicopters or captain the aircraft carriers, EMCOR has plenty of boots on the ground to keep our troops and their facilities safer, more efficient and ever-ready. Below is a just sample of how we help the Military accomplish its missions…

It’s all about support—24/7/365 our people are on-call for virtually every type of on-site operations and maintenance service demanded by today’s complex base operations.

EMCOR Government Services takes many forms— our people support key facilities for the Army, Navy, Air Force, Marines, U.S. Coast Guard, and U.S. Customs and Border Protection and more.

High-tech, high-performance facilities deserve a higher caliber of preventive maintenance and repair— we are proud to provide vital services and Base Operations Support nationally.

MISSIONS ACCOMPLISHED WHAT CAN WE ACCOMPLISH FOR YOU? emcor_info@emcor.net 866.890.7794

Professional Services Council

www.emcorgroup.com

Service Contractor / March 2015 / 7


2015 Policy

Agenda

By Alan Chvotkin, PSC Executive Vice President and Counsel 8 / Service Contractor / March 2015

T

hree key words underpin PSC’s 2015 policy agenda: Advocate. Educate. Facilitate. And three interrelated activities have come together to form that 2015 PSC policy agenda. The first is the work of the five councils that now form the core of the PSC operating model and that serve as our primary policy focal points. Each of the councils are guided by a chair who also serves on the PSC Executive Committee and an Executive Advisory Board of PSC member company executives who are steeped in the issues of those councils. Each council has already developed a set of priorities and an action agenda targeted at their market area. These topics have been refined by the full membership of each of the councils and are evolving as the substantive work on that action agenda is progressing. In addition, the council chairs, working with the senior PSC staff supporting each of these councils, regularly look across the entire agenda to ensure a consistency in the work being accomplished and to minimize any duplication of effort.

The second is the research work PSC has undertaken, including our 2014 Acquisition Policy Survey and the research in support of the market briefing we offer our members. In fact, it is not surprising that our membership is a valuable source of information about what’s happening in our market. In addition, in early February PSC had the unique opportunity to accelerate plans to develop its own 501(c)(3) research capability by acquiring the TechAmerica Foundation, which we will soon rename, and its related programs and initiatives. From its signature Vision Forecast and Conference to its Defense Strategic Planning Forum to the annual survey of federal CIOs, the research coming out of Professional Services Council


Enhanced PSC Value from the TechAmerica Foundation Acquisition

these program will provide a valuable supplement to the existing PSC research and offer empirical evidence as we execute PSC’s advocacy agenda. The foundation further enhances the strong value proposition of PSC membership: (1) enhancing retention value for current members, (2) attracting new member companies who had previously found value in TechAmerica or who are not currently members of either association, and, (3) expanding company engagement opportunities. The third is the guidance from our association leadership, as validated at the 2015 Leadership Summit. Held each January for the past four years, this summit provides an opportunity for the senior leaders of our companies to come together for an in-depth discussion of policy issues affecting the industry. Their valuable input provides another important validation of the key principles that PSC should advocate.

With the validation from the PSC councils, our research and the 2015 Leadership Summit, PSC’s policy agenda has four major objectives. First, “improve the federal acquisition and technology workforces.” Unquestionably, the skills and capabilities of the workforce are key to obtaining successful outcomes from the government’s acquisition process. While PSC’s extensive experience justifies an intensive focus on significantly reforming how the federal acquisition workforce is attracted, retained and trained, industry also faces many of these same challenges and must act accordingly. Second, “enhance the federal services market.” Federal spending on services has declined over the past four years and PSC has always viewed helping to “preserve, protect and defend” the market as part of our mission. This cerProfessional Services Council

PSC’s acquisition of the TechAmerica Foundation delivers immediate benefits to our members through these programs and initiatives. • The Vision Forecast and Conference covers the full breadth of the federal marketplace, significantly expanding our capacity to deliver comprehensive market analyses and serving as a rich information sharing effort for our technology, defense and intelligence, civilian, and international development councils. It also represents a unique opportunity for member engagement because the survey research is done through in-person interviews conducted by member company representatives. To participate, email Michelle Jobse at jobse@pscouncil.org. • The Annual CIO Survey is produced in coordination with PSC member company Grant Thornton and complements our biennial Acquisition Policy Survey. This report enhances our ability to identify key issues and trends faced by federal CIOs, the federal IT community, the administration and Congress. The CIO Survey has long been considered a valuable resource for understanding the challenges and opportunities facing federal CIOs and as a resource to identify areas for further government-industry collaboration. To learn more, email Donald Baumgart at baumgart@ pscouncil.org. • An expanded Defense Acquisition University partnership through lectures at various information technology courses that provide an industry perspective on the government’s acquisition strategies and how industry responds to government initiatives. This action builds on prior PSC lectures to DAU classes relating to general contracting practices. PSC is already engaging DAU to expand our partnership with them. To learn more, email Alan Chvotkin at chvotkin@pscouncil.org.

Service Contractor / March 2015 / 9


tainly does not mean that we endorse a view that would expand services contract spending merely for the sake of doing so. After all, the bedrock of our agenda— and our credibility—is our commitment to advocating for policies we believe are in the best interests of the government. Thus, this agenda topic covers a wide range of issues and challenges, from battling insourcing to ensuring a level playing field for a competitive market and opposing efforts through which arbitrary limits on contracting are imposed. Third, “promote the ‘industrial base’ for services.” PSC has long recognized the significant value that comes from a broad base of firms competing for opportunities, including small, mid-tier and large companies. The PSC membership is reflective of the market and PSC’s advocacy agenda is tailored to endorse initiatives that broaden the base of firms willing and capable of competing for contracts while opposing arbitrary market allocations. Fourth, “rationalize and incentivize the acquisition policy ecosystem.” This policy statement addresses the whole spectrum of contracting provisions, compliance burdens, audit and oversight policies and contract administration requirements. PSC’s research has shown that the federal acquisition ecosystem —the entirety of the government-contractor business relationship—must be reformulated to incentivize quality outcomes that meet agency mission needs rather than focus on procedural perfection of the contracting process. Hence, our focus is on a combination of immediate, near term changes and improvements as well as longer term transformation that will enable us to collectively meet the demands of the future. Each of these four foundational pillars provide the benchmark against which PSC undertakes our own advocacy initiatives and against which we evaluate our support or opposition to any specific federal policy initiative. What is missing from 10 / Service Contractor / March 2015

Get Involved with PSC Want to get involved with one of PSC’s councils, committees, working groups or networks? It’s easy! Just follow these simple steps: Log in to your pscouncil.org profile. Select the “committees and preferences” tab (next to “contact information”) on your profile page. Choose the desired options from the list of councils, committees, working groups and networks. Click “SAVE” at the bottom of the page to record your preferences.

this list? Congress and the administration. And that is intentional. Clearly, a great deal of our time and resources are committed to fighting against bad ideas and bad policy. But those reactive battles do not set our agenda; they are reflective of others’ agendas. Our agenda is proactive and forward looking, even as we also use our resources to work against policies we know are contrary to the public’s interest. We encourage all PSC member companies to engage with us on the PSC 2015 policy agenda and, of course, to take an active role in any one or number of our councils, working groups and initiatives. - David Wennergren, PSC Senior Vice President of Technology, contributed to this article. Professional Services Council


“We need a lender who understands that coming in second isn’t an option.”

WELLS FARGO CAPITAL FINANCE Our Government Services team provides financing to support: Working capital Recapitalization Refinancing Growth Turnaround situations

Government contracts are unique. And so is your business. Knowing this, we strive to provide solutions that meet the one-of-a-kind challenges you face at every stage. That’s why it’s smart to put the experience, resources, and knowledge of the Government Services Group at Wells Fargo Capital Finance to work for you. We offer different financing options so we can craft a solution that best fits your needs. To give your business the competitive advantage it needs to succeed, let’s start a conversation today. Learn more at wellsfargocapitalfinance.com/government or call 1-866-703-4932.

© 2015 Wells Fargo Bank, N.A. All rights reserved. Products and services require credit approval. Wells Fargo Capital Finance is the trade name for certain asset-based lending services, senior secured lending services, accounts receivable and purchase order finance services, and channel finance services of Wells Fargo & Company and its subsidiaries. WCS-1244825

WCS-1244825 WFCF-Government-ad-updates.indd 1

3/30/15 3:19 PM


Professional Services Council

Service Contractor / March 2015 / 11


by Roger Jordan, PSC Vice President, Government Relations

Incentivizing Contractors & Reducing Burdens for All

12 / Service Contractor / March 2015

Professional Services Council


Photo: shutterstock.com/Sergey Nivens w/ additional photo editing by Studio25

H

owever major or minor, it’s wellknown that changes are coming to the federal acquisition system. A key element of those reforms could, and should, focus on eliminating barriers to entry into the federal market, as well as reducing costs for all that already sell their goods and services to federal customers. Just about every entity or person that is vested in acquisition reform has highlighted the need for focus on these areas, as this can be a win-win situation for both the government and industry. However, proposals are already emerging that shy away from tackling this significant challenge and instead focus on offering relief to only a select number of companies or business sectors, potentially creating future disparities. One area where disparity is emerging concerns how government incentivizes its industrial base. We often hear industry’s complaint that the government doesn’t understand what incentivizes industry. To its credit, the complaints have not been lost on acquisition leaders as initiatives have been undertaken over the past several years to try to enhance the incentives. Yet few have really taken off. Some efforts have focused on recognizing performance by contractors already participating in the federal market, others have focused on incentivizing “non-traditional contractors” to join the federal market. The Navy’s Preferred Supplier Program (PSP) is an example of the former, while the president’s fiscal year 2016 budget proposal to create a new set-aside program for small tech companies is an example of the latter. Then there is the “incentive” that comes in the form of oversight, because there are those that strongly believe that the ability to compete in the federal market place is the incentive itself. This is not to suggest that one approach is better than the other. Each stakeholder will develop its own views based its circumstances. But these narrow approaches don’t serve the entirety of the community. There needs to be a constructive dialogue with the various camps to avoid taking “path of least resistance” approaches to reform that perpetuate an un-level playing field within the market. At one end of the spectrum is the president’s fiscal year 2016 budget proposal for emerging tech companies and the proposal to raise the simplified acquisition threshold that build on the existing small business set-aside structure with which we Professional Services Council

are all familiar. The premise is straight-forward—reduce the burdens for small businesses to enter the market as an incentive to get them to join it. But what’s been overlooked, perhaps not unintentionally, is that under the proposals, relief would essentially be offered almost exclusively for small businesses under setaside contracts. What of other firms with valuable solutions? At the other end of the spectrum, the Navy’s PSP relies on publishing a ranking of its top industry partners as both a way to recognize high performers and, perhaps, shaming “less-than-high performers” to do better. Yet one of the intended purposes behind the creation of the PSP was to reduce burdens for companies that have a proven record of delivering quality outcomes to the government while also navigating the compliance gauntlet. To date, no such relief has been implemented. Herein lies the discrepancy between the two initiatives. While there is a proven list of companies that are recognized for their ability to perform well under the weight of the current system (remember, with significant added costs) through the PSP, there is a separate administration proposal to eliminate a slew of burdens for a set of companies that have never participated in the federal market nor proven themselves capable of serving federal clients and meeting government contract requirements. Those companies may, in fact, be able to deliver, but it is striking that government is choosing to incentivize unknown entities over the ones that we already know can deliver, particularly given past administration support for expanded use of PSPs. Add to that the fact that there is a large number of mid-tier firms that may be able to offer superior solutions that probably won’t show up on the radar of the preferred supplier programs and will either be excluded from competition, or put at a significant competitive disadvantage because of the compliance relief initiatives in the budget reserved for their smaller competitors. Surely there is a way for the communities to come together to achieve efficiencies that benefit firms of all sizes, but it’s going to require a thoughtful approach that gets individual groups away from thinking about how they can best improve their situation and instead working collaboratively to tackle the burden affecting everyone.

Additionally, it’s imperative that we don’t pile on new burdens to replace any that are discarded. That is why it’s also important to engage meaningfully with the oversight community. A prime example of where gains may be wiped out by new federal policies is the Fair Pay and Safe Workplaces Executive Order (read more about the order on page 24). There will be huge costs imposed on the acquisition system, both on the government and industry side, to comply with the order as it is currently written. Given that no meaningful costs have been eliminated from the broader compliance regime, the costs will be purely additive. Clearly the administration believes it needs to address a problem, and industry shares the view that companies that intentionally and pervasively violate labor laws should undergo comprehensive review to evaluate their present responsibility. With that common goal as a foundation, there is reason to be confident that the oversight community and industry could have worked together to develop a less-rigid, more efficient solution. But we weren’t asked for our views until after the executive order was issued, and now industry is left with trying to fix a problem with the implementing agencies that have little flexibility because of the order’s prescriptive approach. What these various proposals fail to consider is the impact they have on the entire acquisition ecosystem and that is why, despite some limited value they bring, they do not pass muster. In short, if now is the time for acquisition reform, blinders have to be removed and holistic approaches, with all stakeholders engaged, must be embraced. It’s not too late to do so. 3

Service Contractor / March 2015 / 13


Trey Obering

continued from pg. 6

security markets and the commercial sector as a whole. Despite its recent surge in popularity, additive manufacturing has been around since its invention in the late 1980s. But, in the early to mid-2000s, AM printing technology began to quickly take off. New AM processes including precision printing using wax, a direct metal deposition (DMD) process that allowed users to repair parts using metal powder, and the first multi-color AM printer, resulted in several advanced countries taking note of additive manufacturing’s promise. These advancements quickly expanded the impact that additive manufacturing could have on all parts of the supply chain. Companies specializing in additive manufacturing began appearing all around the world. Before the end of the decade, metallic additive manufacturing processes became fully available, representing just one of the many new materials that could now be printed using additive manufacturing techniques. Advances in these new materials, as well as improvements in additive manufacturing systems, has led many businesses across a wide range of industries to realize the capability that additive manufacturing has to reduce costs and to optimize designs throughout the supply chain. In the Department of Defense, there are many pilot projects underway in forward warfighting locations that are exploring how AM can provide an immediate capability to produce critical repair parts for weapon systems and equipment vs. wait for shipment from the supplier. In addition, AM is being explored to dramatically improve rocket engine parts reliability while driving down costs. Today, a major focus in the integration of additive manufacturing into the supply chain is on the standardization of the processes and the materials that are being used. This standardization is necessary in order to effectively integrate the ability to quickly produce 3D printed parts with the demand for such products. As we progress further into the 21st century, additive manufacturing will continue to see an increased role in the manufacturing process, allowing companies to cut costs and reduce wasted time throughout the supply chain. A second area where an impact of technology on the supply chain is evident is improved networking of stakeholders and the ability to share critical information. This improved networking can be attributed to two factors, the first being the evolution of enterprise resource planning (ERP) solutions which has caused organizations to evolve from functionally aligned (vertically managed) to “systems” thinking (horizontally managed) operations. This change has improved communication, coordination, and decision 14 / Service Contractor / March 2015

making. The second factor is the flow of data and information throughout all nodes of the supply chain. This capability has primarily been enabled through the development and deployment of hardware (e.g. sensors) and software (e.g., mesh networks) that are strategically positioned throughout the supply chain. Sometimes referred to as the “Internet of Things” (IoT) it describes a state where every day physical objects and devices— “things”— are connected to the Internet. These “things” are everywhere, and include modes of transport such as cars and airplanes, utilities like traffic lights and gas pipes, and even wearable fitness trackers. IoT goes beyond simply connecting objects to the Internet; it enables devices to intelligently self-identify and communicate with other devices. This creates a new model of information-sharing among people, facilitated by our devices. The IoT concept may enable the supply chain to achieve greater value and service by communicating and ultimately providing actionable information to decision makers. The Department of Defense is expanding the use of sensors to collect weapon system data as a part of its Condition Based Maintenance (CBM) initiative. CBM will drive performance and reliability improvements through necessary engineering changes to assemblies and components. At Booz Allen, we are delivering IoT solutions to market in such verticals as healthcare, transportation, energy and defense based platforms. We are also working to extend development to offer a broad range of IoT products and services to demonstrate how core IoT capabilities come together in a secure platform. The third area where technology is impacting supply chain efficiency involves the rapid evolution of advanced business intelligence and associated analytical tools that enables effective decision making by supply chain managers. With the improvement in the ability to collect data through sensor technology and share the data with decision makers across the supply chain through the application of mesh and other advanced networks, a concurrent requirement exists to synthesize vast amounts of data, channel the data into meaningful functional “buckets,” and apply business intelligence tools to interpret, predict, and visualize the results. In summary, multiple government and industrial organizations are undergoing a transformation of supply chain business processes. This transformation is critical in keeping the U.S. in the lead in the race for customer satisfaction superiority. -Booz Allen Hamilton Principal Ronald Treusdell and Lead Associate Kevin Burke contributed to this article. Professional Services Council


WALL STREET CAPABILITIES. MAIN STREET SENSIBILITIES. We created Regions Securities to provide small- to mid-cap companies with high-quality service and advice from talented, relationship-oriented bankers. That means your business gets our dedicated “A Team” every time. Our seasoned team of bankers understands your company’s desire for growth, and our capital markets experience enables you to receive creative, customized solutions tailored to meet your company’s strategic and financial objectives. From capital raising in the debt and equity markets to mergers and acquisitions advice, our bankers can set things in motion for your company.

David Sozio | Defense & Government Services Group Head david.sozio@regions.com

Corporate Banking | Capital Markets & Advisory Services | Dedicated Industry Experience © 2015 Regions Securities LLC. Investment banking and business advisory services are offered through Regions Securities LLC, 1180 W. Peachtree St. NW, Suite 1400, Atlanta, GA 30309. Member FINRA and SIPC. Regions Securities LLC is an affiliate of Regions Bank. | Regions and the Regions logo are registered trademarks of Regions Bank. The LifeGreen color is a trademark of Regions Bank.

Professional Services Council

Investment and Insurance Products: Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value Are Not Deposits | Are NotContractor Insured by Any Federal Government Service / March 2015 Agency / 15 Are Not a Condition of Any Banking Activity


Darryl Scott

continued from pg. 6

traditional approaches to demand-driven supply chain management. Companies able to proactively identify and address potential risks in the supply chain can establish themselves as an indispensable business partner and not just another supplier. Innovative leaders in the supply chain industry, such as Amazon, integrate products and services into a user-friendly solution. Amazon analyzes massive amounts of consumer behavior data to improve service for its customers, who are drawn to the seamless, simple transactions and desired results that Amazon provides. Combining the ability to anticipate customer purchases, clear visibility of its supply chain health and a global supply network that can ensure fast delivery times, Amazon transforms complex, traditional retail logistics into a simple service model for the customer.

Providing

resPonsive legal counsel with a

strong focus on all asPects of government contracting, small business Programs,

litigation, emPloyment, and corPorate issues

PrinciPal Practice grouPs

HigHligHting: litigation

Government Contracts Law Business and Corporate Law Small Business Programs Labor and Employment Law Litigation Intellectual Property Law

• • • • • •

General Civil Litigation Contract Disputes Shareholder/Owner Disputes Defending Employee Claims Mediation Alternative Dispute Resolution

Our lawyers pursue each case with tenacity in a cost effective way. We litigate cases nationwide. Guiding growth. Securing success.

888 17th Street, NW 11th Floor | Washington, D.C. 20006 202-857-1000 | www.pilieromazza.com pmpllc@pilieromazza.com

16 / Service Contractor / March 2015

Digital technology is transforming supply chain logistics in the aerospace industry as well. New aircraft are being designed to record massive amounts of operating data which can be converted into performance metrics through data analysis. These analytical services assist airlines in generating better operational value from their aircraft. Services such as Boeing’s GoldCare, for example, potentially transform the relationship with customers from one that simply provides parts and engineering services, to one that establishes performance targets that support aircraft availability goals and offer predictable maintenance costs. The payoff for customers is both streamlined operations and reduced costs throughout their fleets’ lifecycles. In effect, services, enabled by information, supplant the product “stuff ” as the basis for the customer relationship. But it’s deep insight about the “stuff ” that makes the enhanced services possible. This complementary relationship creates more value by driving down upstream costs and making outcomes more predictable. When governments partner with industry to take advantage of a data-enabled global supply chain the results are just as impressive: Customers receive more for their money while freeing up limited resources from managing day-to-day transactions. An example: The U.K. Ministry of Defense replaced a traditional transactional supply chain model for their fleet of Chinook helicopters, and employed a knowledge-enabled supply chain model provided by Boeing. Results: a 60 percent increase in flying hours, 12 percent increase in availability, 10 percent cost reduction, and 58 percent reduction in maintenance cycle time. The Chinook example above and a similar long-term service partnership for C-17 fleet support (by which the U.S. Air Force raised fleet mission-capable rates to 85 percent while reducing flying costs by nearly 30 percent) share certain features: A commitment to a long term partnership between the government and its suppliers that allows both parties to focus on their core expertise; use of shared metrics to drive performance; and contract vehicles that provide a stable business environment. Sounds easy, doesn’t it? It’s easy if you have a government and contractor workforce that is trained on and embraces the new business models. Maintaining a workforce and culture that can keep the pace as technology blurs the line between “stuff ” and services may sound hard, but whoever can keep up with these supply chain advances stands to separate themselves from the pack. 3 Professional Services Council


Problem Solved.

ConsultWithIntegrity.com

703.349.3394

Large-scale programs have multiple twists and turns. If you don’t plan carefully, you can go down a few blind alleys. Integrity’s innovative acquisition, financial, and program management strategies help Federal agencies set priorities and create efficiencies that save time and money. Find the optimal path to solutions when you work … with INTEGRITY.

Professional Services Council

© 2014 Integrity Management Consulting, Inc. All rights reserved.

Service Contractor / March 2015 / 17


Tom Eldridge

continued from pg. 6

Today, experts assess that 3D printers can produce highgrade metal parts with properties that meet or exceed the properties of cast metal parts; can manufacture very complex parts that cannot be made any other way; and can costeffectively produce small numbers of parts because there is no need to create a separate or unique tool, such as a mold. (Wohlers Associates). As an example of the second category, NASA redesigned one of its rocket engine injectors to be made by 3D printing technology. NASA reported that the number of parts required to produce the injector went from 115 to 2, while meeting the same rigorous engineering testing standards, and it took one third the time and cost 30 percent of what it would have cost to produce using traditional methods. NASA is very interested in the ability to do 3D printing in space, but the technology also has implications for remote or resource-constrained environments here on Earth. According to the tech blog Gizmodo, the Navy could put 3D printers on ships, using aircraft carriers as “floating factories.” Similarly, the Army could forward deploy 3D printers to rapidly respond to troop requests for spare parts in short supply or to alter a part in need of improvement, rather than wait for their delivery by air freight, or send back instructions to make modifications at their factory of origin. CAD designs can move at the speed of light across satellite links, saving time and lives in the field. (StrategyWorld). From a research and development/manufacturing perspective, 3D printing enables government and industry to develop prototypes rapidly and iterate through several design evolutions within a week versus what has traditionally taken several months. And it would enable rapid reverse engineering—from a 3D scan, to a CAD file, to a printed part. 3D printing also has the potential to transform logistics and supply chain management in certain areas. For example, it could make inventory more efficient. Rather than stocking many different types of parts, inventory would consist of printer raw materials. Transportation costs and lead times would be reduced. It could also improve the selection and availability of parts, particularly for obsolete parts. It may also have beneficial environmental affects if it produces less waste and uses less energy. 3D printing also could be quite “disruptive” to relationships between government agencies in traditional supply

18 / Service Contractor / March 2015

chains, as well as between government and industry, and between companies. Within DoD, each service could develop its own areas of expertise around 3D printing based on their individual mission needs. Their ability to print their own goods, or the ability of the contractors they hire to produce the goods in-house, would make both less dependent on external suppliers for certain goods. And a distributed production network of 3D printers could alter the relationships between agencies and their large-scale supply organizations who today achieve efficiencies for their government customers through economies of scale in purchasing. The ability to simplify complex products would reduce the number of parts needed and, therefore, reduce demand from specialized suppliers for some parts, challenging the industrial base. 3D printing also would accelerate existing challenges the government faces tied to obsolescence management. The government would need to develop new testing regimes to handle a much broader initial experimentation and production base—both internal and external to the government—and to manage testing of new and replacement parts that could never have been built before. This could cause tensions among government agencies over who controls engineering, testing, and certification of 3D printed parts. The government will have to grapple with what a trusted supplier network looks like in a 3D printed world. Industry will need to decide where to focus their efforts and investments in 3D printing markets. Will they focus on designing and selling 3D printers and software using maintenance and support contracts to print spare parts? Focus on design development, including design of the new supply chain systems for the materials and machines needed for 3D printing? Or perhaps focus on securing from cyberattack the information supply chain—data, systems, and infrastructure—needed to support a global 3D printing enterprise? Who will own the intellectual property associated with innovation in this area? How will industry calculate return on investment for these various markets? To sum, 3D printing, while still an immature technology, shows tremendous potential to transform manufacturing, logistics, and supply chain management in the coming years, and is likely to pose important challenges and opportunities for both industry and the government. 3

Professional Services Council


2015 PSC Leadership Summit

1

The Ritz-Carlton, Washington, D.C. January 25-26, 2015

2

3

5

4

1. PSC Board member Anne Altman of IBM makes a statement during the working lunch to draft the 2015 PSC agenda during the Leadership Summit on January 26. 2. Adm. James Winnefeld Jr., vice chairman of the Joint Chiefs of Staff, was the keynote speaker at our 2015 Leadership Summit on January 26.

Professional Services Council

3. Douglas Holtz-Eakin, an economist and former director of the Congressional Budget Office discussed whether anything will change with fiscal policy, taxes and budgets in the new Congress, at the 2015 PSC Leadership Summit’s opening reception dinner on January 25. 4. Jim Dyer, a principal at the Podesta Group, and Julie Dunne, the senior counsel for the House Oversight and Government Reform Commit-

tee, discuss appropriations, defense acquisition policy, and congressional oversight, during their presentations at the 2015 Leadership Summit on January 26. 5. Outgoing GSA Administrator Dan Tangherlini and Deputy Administrator Denise Turner Roth talk about the road ahead for the agency as it restructures its offerings, during the 2015 Leadership Summit on January 26.

Service Contractor / March 2015 / 19


See the forest and the trees. Gain big picture insights while you manage details at every level with Unanet: the one software for managing projects, people and financials. Operating in compliance and reducing overhead rates, professional services firms of all sizes can grow with confidence by knowing where they stand, with immediate insights from one single source of truth. For more information, visit unanet.com/one or call 703-689-9440. 20 / Service Contractor / March 2015

Professional Services Council


Bill Tracker: 114th Congress-First Session (2015) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

Rightsizing Activities of Intelligence Non-Governmental Contractors Act of 2015, NEW Jackson Lee (D-TX) Summary Would mandate a 25 percent reduction in the number of contractors with top secret security clearances that are engaged in intelligence activities. Would direct the Director of National Intelligence to conduct a study to determine the extent to which contractors are used in the conduct of intelligence activities and the type of information that they can access. STATUS Referred to Intelligence Committee on 1/6/2015.

H.R. 55

H.R. 234

Cyber Intelligence Sharing and Protection Act, Ruppersberger (D-MD) NEW Summary Would establish cyber threat intelligence sharing procedures between the intelligence community and certain private sector entities. STATUS Referred to Armed Services, Homeland Security, Intelligence, and Judiciary committees on 1/8/2015.

H.R. 312 Glen Anthony Doherty Overseas Security Personnel Fairness Act, Lynch (D-MA)

NEW

H.R. 479 American Jobs Matter Act of 2015, Etsy (D-CT)

NEW

Summary STATUS

Would amend the Defense Base Act with respect to payment of death benefits otherwise due a widow, widower, or surviving child of an individual employed at a military, air, or naval base outside of the United States who dies as a result of a war-risk hazard or act of terrorism occurring on or after September 11, 2001. Referred to the Education & Workforce Committee on 1/13/1015.

Summary Would allow contracting officers to consider information regarding domestic employment before awarding a federal contract. STATUS Referred to Armed Services Committee on 1/22/2015. Security Clearance Reform Act of 2015, Lynch (D-MA) H.R. 490 Would prohibit the Director of the Office of Personnel Management (OPM) from awarding a contract NEW

Summary

STATUS

to any entity for investigative support services or background investigation fieldwork services if such entity has another contract in effect with the federal government to provide such services. Referred to the Judiciary and Oversight and Government Reform committees on 2/19/2015. Related bill: S. 434.

SAVE Act, Murphy (D-FL) H.R. 614 Would require OMB to issue government-wide savings goals for the strategic sourcing of goods NEW

Summary

and services by executive agencies and would require agency CIOs to report to OMB on agency efforts to identify and eliminate potentially duplicative information technology investment. STATUS Referred to 11 committees on 1/28/2015.

H.R. 810

National Aeronautics and Space Administration Authorization Act of 2015, Palazzo (R-MS) NEW Summary Would require NASA to revise the Administration Supplement to the Federal Acquisition Regulation to provide uniform guidance and recommend revised requirements for organizational conflicts of interest by contractors in major acquisition programs.

STATUS

Passed the House (voice vote) on 2/10/2015.

Professional Services Council

Service Contractor / March 2015 / 21


Bill Tracker: 114th Congress-First Session (2015) NEW

Newly introduced since last issue

Major action taken since last issue

Bill became law since last issue

Ensuring Pay for Our Military Act, Heller (R-NV) S. 103 Would require the government to continue to provide pay and allowances to members of the NEW

Summary

armed services, DoD civilians and contractors providing direct support to the armed services who perform active service during a government shutdown. STATUS Referred to the Appropriations Committee on 1/7/2015.

S. 434

S. 456

NEW Security Clearance Reform Act of 2015, Tester (D-MT). Summary Seeks to strengthen the accountability of individuals involved in misconduct affecting the integrity of background investigations, to update guidelines for security clearances, and to prevent conflicts of interest relating to contractors providing background investigation fieldwork services and investigative support services. STATUS Referred to the Homeland Security and Governmental Affairs Committee on 2/10/2015. Related bill: H.R. 490.

Cyber Threat Sharing Act of 2015, Carper (D-DE) Summary Seeks to enable better sharing of cybersecurity threat indicators both within the private sector and between private and government entities. STATUS Referred to the Homeland Security and Governmental Affairs Committee on 2/11/2015.

NEW

Stay up-to-date on the state of our industry and get engaged with PSC:

Schedule a

PSC Market & Policy Briefing or a Membership Engagement Session Visit bit.ly/PSCbriefing to schedule yours today!

22 / Service Contractor / March 2015

Professional Services Council


THE NEWEST BUSINESS INTELLIGENCE OFFERING FROM Professional Services Council

The Voice of the Government Services Industry

GET INVOLVED SHARE YOUR VISION!

VISION FEDERAL MARKET March 23, 2015 FORECAST KICKOFF McLean, VA The 2015 Vision Forecast, in its 51st year, is a unique and insightful analysis that spans the defense, civilian, and federal information technology markets. Each year, volunteer teams made up of senior industry executives gather, collate, and analyze information for the Vision Forecast, including analyses of 200+ interviews conducted with key government agency executives, congressional staff, industry members, think tank analysts and Wall Street analysts. As a member of a Vision Forecast study team you will play a key role in developing a unique and valuable report on how the market is changing and where the future money and opportunities are heading. Moreover, you will gain your own insights through your participation in the extensive interview process.

Register at www.pscouncil.org.

Contact Erin Whittaker at whittaker@pscouncil.org for more information.

Professional Services Council

Keep an eye out for more details on our fall conference where we unveil the reports! Service Contractor / March 2015 / 23


Assessing the President’s

What Contractors Need to Know by Jennifer Flickinger, Principal, Baker Tilly

F

rustrated by lack of action in Congress, President Obama declared 2014 “a year of action” and issued two executive orders (EO) and a presidential memo-

randum that either significantly affected compensation for employees working on certain federal government contracts or significantly expanded federal contractor reporting requirements. Beginning in 2015, many contractors must EO, implemented via FAR 22.19. Contractors must also ready themselves for new regulations implementing the Fair Pay and Safe Work Places EO and the Advancing Pay Equality through Compensation Data Collection memo. Once implemented by new regulations and contract clauses, contractors will face even more scrutiny by the Department of Labor (DoL) and its Office of Federal Contract Compliance (OFCCP). This article provides a brief overview of President Obama’s directives, identifies key risks, and offers several implementation considerations. 1

Executive Order 13658 –

Minimum Wage for Federal Contractors Effective January 1, 2015, federal contractors must pay a minimum wage of $10.10 to all direct and certain indirect employees on newly awarded contracts or bilateral modifications of existing contracts with remaining durations in excess of 6 months to Service Contract Act (SCA) and Davis-Bacon Act (DBA) covered contracts.1 At first blush, the requirement seems insignificant, especially to contractors in major metropolitan areas where pay rates routinely exceed $10.10; however, DoL estimates that more than 200,000 employees will be affected by this EO, particularly in eco-

The DoL final rule also applies to certain concession contracts and contracts in connection to federal property or lands and related services. Importantly, Davis-Bacon and Related Acts contracts are specifically excluded.

24 / Service Contractor / March 2015

Professional Services Council

Magnifying Glass: shutterstock.com/La Gorda

comply with the Minimum Wage for Federal Contractors


nomically depressed areas where many wage determination labor categories are impacted. Additionally, FAR 22.19 changes the game for contractors accustomed to paying wage determinations only to direct SCA or DBA employees. These new rules extend the minimum wage to any employee who indirectly supports more than 20 percent of their time on covered contracts, calculated on a week-by-week basis. For example, the minimum wage may apply to the accounts payable clerk who processes invoices in support of a covered contract or a security guard who monitors a facility in which a DBA-covered contract is performed. While these newly covered indirect employees must receive the new federal minimum wage, they are not covered by the SCA or DBA fringe benefit requirements. Needless to say, contractors will face significant challenges identifying these indirect employees and measuring their time relative to this weekly 20 percent threshold. Complicating matters further, DoL’s published wage determinations may still reflect labor category minimum wages of less than $10.10 due to DoL’s internal process to update and issue wage determinations. Contractors must pay the new minimum wage as of January 1, 2015, regardless of an otherwisecurrent wage determination showing a lower wage. DoL has indicated that future wage determinations will include an asterisk (*) and note stating that the $10.10 applies. Contractors may easily be tripped up by this inconsistency when preparing bids or calculating payroll. Contractors are also required to flow down the new FAR 52.222-55 clause, making guidance to often less sophisticated subcontractors critical since the prime contractor retains all compliance responsibility. Finally, beginning January 1, 2016,

and annually thereafter, the applicable minimum-wage for federal contractors may be increased by the secretary of Labor in correlation with the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers. If applicable, the secretary must publish the new minimum wage at least 90 days before its effective date. The final rule allows contractors to submit a request for price adjustment annually following the effective date of the new minimum wage determination. Because the new minimum wage determination applies to all contractors without allowing for phased submissions, contracting officers may find themselves overwhelmed by the number of price adjustment submissions and subsequent contract modifications may be delayed. Contractors, including GSA schedule contractors with covered employees, will now need to prepare and submit two price adjustment requests each year.

addressing wage and hour, safety and health, collective bargaining, family and medical leave and civil rights protections” for the prior three years when submitting bids to the government. Contracting officers must then assess the information submitted and determine if the contractor is a responsible source or if they should be restricted from contract award. Compiling this large amount of data is certain to vex most contractors, especially where local offices handle resolution of these issues with local DoL offices and no corporate-wide tracking system exists.

Executive Order 13673 – Fair Pay and Safe Workplaces

Estimated to impact 24,000 large and small businesses employing 28 million employees, this EO requires contractors bidding on contracts exceeding $500,000 to collect and submit data related to labor law violations. The EO mandates contractors to report this data in conjunction with contract proposals and regularly thereafter. Ostensibly, the Fair Pay EO aims to “crack down on federal contractors who put workers’ safety and hard-earned pay at risk.”2 Ultimately, the EO, significantly changes the risk profile of doing business with the federal government. The EO requires contractors and covered subcontractors to report violations of “14 covered statutes and equivalent state laws includ[ing] those

The EO also requires agencies to designate a senior official as the Labor Compliance Advisors to assist agencies with evaluating contractor labor compliance. These advisors will have sweeping authority to monitor and enforce labor requirements and play an important role in the evaluation of potential contractors as either willful violators or responsible contractors. While all parties can agree that eliminating “bad actors” who repeatedly and willfully disregard labor regulations and employee safety is a good thing, the ambiguity of the EO leaves much for contractors to be concerned about. First, the EO directs the secretary of Labor to develop guidecontinued on page 26

1

White House Fact Sheet, dated July 31, 2014.

Professional Services Council

Service Contractor / March 2015 / 25


lines as to what types of violations will be judged to impact a contractor’s responsibility. In the absence of these yet-to-be-developed guidelines, contractors are apprehensive. Contractors routinely settle minor alleged violations. How will these be treated under the forthcoming regulations? Additionally, the EO is ambiguous about the certification requirements surrounding these new reporting requirements. Contractors are justifiably concerned that inadvertent reporting errors by themselves or their subcontractors could be twisted into False Claims Act violations. Perhaps in recognition of the complexity and difficulty in adopting these new requirements, no fixed timetable has been established for implementation of this EO. The administration states that they expect the requirements to be implemented in phases during fiscal year 2016. But contractors can’t just wait and see. It is not too early to begin preparations for the data collection and reporting that will come.

troublesome for the contracting community. Summary data by its nature cannot capture the information that justifies differences in compensation, such as length of service and meritorious performance. In addition, the data collection as proposed will aggregate compensation data for exempt and non-exempt employees, potentially skewing the reported data depending on a contractor’s labor mix. Moreover, the NPRM’s proposal that OFCCP compare contractors by industry does not account for the many differences in employee labor classifications that legitimately affect compensation practices. In fact, because of difficulties in standardizing these practices, OFCCP proposes using the EEO1 job categories for summary data collection. Yet the NPRM does little to address contractor concerns that aggregating data across these job categories—often containing more than 50 census occupation codes—only clouds the picture.

Presidential Memo –

Summary

In conjunction with his Non-Retaliation for Disclosure of Compensation Information EO, which prohibits contractors to penalize employees who disclose pay information, the president issued a memo directing DoL to issue regulations requiring federal contractors and subcontractors to submit summary compensation data, including by sex and race. In August, DoL issued a Notice of Proposed Rulemaking (NPRM), which proposes that contractors supplement their EEO-1 reporting with compensation paid for each labor category, broken down by sex, race and ethnicity. In addition, contractors would be required to provide the number of hours worked and the number of employees. The NPRM states that collection of compensation data “is a critical tool for eradicating compensation discrimination” and that it enables “OFCCP to direct its enforcement resources toward entities for which reported data suggest potential pay violations.” The fact that DoL openly states that it will use the summary data to select contractors for audit and review is

The EOs and presidential memos significantly increase the risk of non-compliance for federal contractors. The immediate requirement is for contractors to adopt the new minimum wage requirements and implement controls ensuring that they pay their employees correctly, price proposals accordingly, and—perhaps the most difficult—identify newly covered, indirect employees. On a longer term basis, contractors must begin to prepare for the impending implementation of the Fair Pay EO and the presidential memo. Contractors should evaluate the impact of collecting this data and whether their current systems collect the data required to support these new reporting requirements. Most importantly, contractors should continue to monitor the NPRMs and participate in the rulemaking process. OFCCP has made it clear that this reported information will be used to target contractors for audit and determine responsibility for contract award, meaning contractors cannot sit idly by awaiting agency implementation of these presidential directives. 3

Advancing Pay Equality Through Compensation Data Collection

26 / Service Contractor / March 2015

Professional Services Council


Policy Spotlight

We have FITARA . . . now what? by David Wennergren, PSC Senior Vice President, Technology

Photo: shutterstock.com/Marychenko Oleksandr

T

he Fiscal Year 2015 National Defense Authorization Act (NDAA) included the enactment of the Federal Information Technology Acquisition Reform Act, or FITARA. While FITARA ironically excludes the Defense Department from many of its provisions, the NDAA proved once again to be a convenient vehicle to gain passage of information technology (IT) legislation. PSC opposed the initial FITARA draft because provisions that would have inappropriately commoditized complex IT solutions and would have granted broad new IT policy and procurement authorities to a single entity under OMB, thus potentially undercutting well-functioning IT contracts already in use within the agencies. That said, PSC worked with the sponsors to create a version we could support and PSC was also first out of the gate to express our support for revised versions of the bill. As enacted, FITARA has a number of provisions designed to improve transparency, accountability and effectiveness, including: • Ensuring CIOs have a strong role in the budgeting, management, approval and certification of IT investments. • Improving transparency by publicly identifying and tracking high risk investments and denying funding if risks aren’t addressed. • Requiring portfolio management reviews geared towards eliminating duplication and increasing efficiency and effectiveness. • Requiring agency reporting on a multiyear strategy to consolidate and optimize data centers and achieve cost savings through the Federal Data Center Consolidation Initiative. • Improving the knowledge and skills of agencies’ IT acquisition personnel. • Encouraging strategic sourcing and improving access to government software purchasing and licensing agreements.

Professional Services Council

FITARA provides some necessary next steps for federal IT management and it is encouraging to see Congress enact some IT legislation. However, FITARA is but a small step on the longer journey towards substantive IT reform. The time has come for both a significant overhaul of government IT legislation and a national call to action for improved cybersecurity. It’s time to do spring cleaning on 20 years of federal IT legislation and start fresh with guidance that enables the rapid insertion of new technologies and innovative solutions. Much important legislation has been written over the last two decades, starting with the passage of the landmark Clinger-Cohen Act in 1996. But, as is often the case, new provisions have been layered upon prior statutes in a way that now drains speed and agility, placing too much focus on reporting requirements and oversight actions rather than on approaches that break down barriers and encourage new thinking. Through all of these actions, what has been lost is the underlying Clinger-Cohen Act’s goal of creating a federal continued on page 28

Service Contractor / March 2015 / 27


from page 27

It’s a new and different world, and legislative action must enable

Photo: shutterstock.com/Maxim Kabakou

better and faster mission delivery across government rather than just incremental change and additional oversight.

acquisition ecosystem that enables access to innovative and cost effective commercial IT solutions. Periodic labor-intensive certification and accreditation packages must be replaced by risk management, continuous monitoring and managed security services. There is an imperative to embrace best practices like service oriented architecture, Web 2.0, agile methodology, open architecture,

Because everywhere this flies, everything is changing. Salient provides the IT, training, engineering, and analytic services our government and commercial customers need most – so they can meet the challenges they face now.

www.salientfed.com

28 / Service Contractor / March 2015

convergence in the marketplace and consumption-based buying. The rapid adoption of commercial solutions and incentive structures that encourage new ideas and new technologies must be the norm, not the exception. It’s a new and different world, and legislative action must enable better and faster mission delivery across government rather than just incremental change and additional oversight. We must ensure the use of new approaches and the alignment of government IT delivery to the best practices widely used in the commercial sector. This means reassessing how the government aligns the planning, budgeting, and acquisition cycles in an environment where technology is rapidly evolving, such as with regard to cloud-based solutions. It also means taking a step back from individual proposals that seek to remove barriers for only certain categories of businesses, such as small or “non-traditional” contractors, and instead adopting policies that reduce unnecessary burdens for all companies that wish to compete in the federal market. It would be a significant accomplishment to celebrate the 20th anniversary of Clinger-Cohen with bold new legislation that reflects the reality of technology deployment and use in the 21st century. In addition to re-thinking legislation for government IT management and delivery, there is an even more compelling need for comprehensive cybersecurity legislation for our nation. It is encouraging that both the House Oversight and Government Reform Committee and the Senate Armed Services Committee have both announced expanded cyber agendas. One need look no further than recent headlines to be reminded of the need to take action. Cyber legislation must address information sharing, liability issues and raise the bar on security—protecting citizens, preserving intellectual property, and maintaining the competitive advantage of this great nation. 3 Professional Services Council


PSC’s Service Contract Act Training The Service Contract Act is one of the most technically challenging aspects of competing for the award of, and successfully administering a federal service contract. SCA sets minimum pay and benefit rates for many service occupations.

S C A

The SCA affects many different decisions made by many different people in a company. Everyone, from executive leadership to proposal writers, to accountants, project managers, and human resource specialists, needs to be conversant with the requirements of the act. This course will give your staff the knowledge to be SCAsavvy in opportunity identification, capture strategy, bid/no-bid decisions, contract pricing, contract price adjustments, wage determinations, and fringe benefit calculations. PSC is pleased to offer the only SCA training conducted in partnership with the U.S. Department of Labor, Wage & Hour Division.

Upcoming sessions held at the NRECA Conference Center 4301 Wilson Blvd., Arlington, VA:

July 14-15, 2015 November 3-4, 2015 This course has been approved for 12.5 CLE or HRCI credits!

Visit www.pscouncil.org for more details and registration. Professional Services Council

Service Contractor / March 2015 / 29


Council Corner Technology Council Using the feedback from our PSC Tech Council kick off meeting in October, we’ve launched five council committees and working groups to address Tech Council priorities. All committees and working groups have held their first meetings and are hard at work implementing the Tech Council’s 2015 work plan. Our Tech Innovation Committee was the first to meet on January 27. This group will identify and champion new ideas, technologies and disruptions that will change the face of the federal technology market. The group plans to make recommendations on new federal initiatives to include TechFAR and the Digital Services Strategy. The following day the Tech 45 Working Group began developing its recommendations for the next administration’s technology agenda and near-term legislative actions. The Tech Best Practices Committee met on January 30 to begin its work to help ensure that federal agencies have access to and understanding of industry technology best practices. The committee’s near-term efforts will focus on identifying best practices, suggesting demonstrations, and developing a consumption-based acquisition online course. On February 2, the Cybersecurity Committee also gathered to establish priorities and deliverables around key cybersecurity topics facing the federal government, such as FedRAMP, incident reporting, continuous monitoring, metrics and the cybersecurity workforce. And finally, the Cloud Computing Case Study Group met on February 17 to begin gathering data for its report high-

lighting the value of consumption-based buying for cloud computing and documenting how to successfully contract for cloud services. Opportunities abound to make a difference in the federal technology market and we welcome your participation in this important work. —Dave Wennergren, PSC Senior VP Technology

Acquisition and Business Policy Council Following its launch meeting in December, the Acquisition and Business Policy Council moved forward with its first five working groups, charged with advancing the council’s agenda in specific topical areas. The working groups are chaired by senior leaders from PSC member companies, but are open to participation by all PSC members. The ABPC’s first five working groups are as follows: • Acquisition Workforce; Chair: Phil Kangas, Grant Thornton LLP • Educating Leaders & Long-Term Environmental Shaping; Chair: Michael Fox, Accenture Federal Services • Improving Pre-Award Acquisition Planning; Chair: Rod Buck, VistaTSI • Outcomes Orientation in Acquisition; Chair: Brad King, Robbins Gioia • Smart Contracting Policies; Chair: Dyson Richards, RGS Additional working groups will be added as needed. We are currently considering a group on innovation and the future of acquisition. The working groups held their first meetings during

30 / Service Contractor / March 2015

the second and third weeks of February, and reported their initial objectives at the second full ABPC meeting on February 26. That meeting also featured a conversation with federal agency leaders on “Big-A” acquisition challenges facing the government, which touched on many of the topics the ABPC working groups are addressing. Those leaders were Darren Ash, deputy executive director for corporate management at the Nuclear Regulatory Commission; Lesley Field, deputy administrator of OFPP; and Kevin Youel Page, deputy commissioner of GSA’s Federal Acquisition Service. —Jeremy Madson, PSC Senior Manager, Public Policy

Council of International Development Companies 2015 promises to be a year of great opportunities for PSC’s Council of International Development Companies. Following our successful 2014 annual conference last November, our Executive Advisory Board hosted a follow-on meeting with USAID’s Deputy Administrator, Ambassador Alfonso Lenhardt, who had keynoted the conference. That late December meeting’s importance was quickly elevated when, just a few days prior to the event, USAID Administrator Raj Shah announced he would be stepping down in February 2015. Given the uncertain timing of the nomination and confirmation process of Shah’s still-unnamed successor, our engagement with Lenhardt could not have been more fortuitous. Our discussions focused on core CIDC/ Professional Services Council


USAID management-related issues, particularly lengthy Procurement Action Lead Times (PALT), the continued and growing move away from contracts toward cooperative agreements, and the need for improved accuracy in the agency’s quarterly business forecast. Members continued to stress these same issues during January’s monthly CIDC meeting. Our speaker, USAID’s Procurement Executive and head of the Office of Acquisition and Assistance, Aman Djahanbani, stressed that he had tasked O/AA officials with improving communications between his office and the agency’s private sector implementing partners. Greater outreach possibilities ranged from a formal, regular O/ AA newsletter to an “Ask the Procurement Executive” column. Additionally, Djahanbani announced the agency’s Management Bureau worldwide conference would be held in Washington the first week in March. On March 3, CIDC members had their own panel to discuss issues of concern with attendees, most of whom were from USAID missions overseas. On February 19, CIDC hosted USAID’s General Counsel Doug Kramer, who has been a key player within the agency on issues related to compliance and “value for money.” He and his staff addressed these issues as well as the agency’s interactions with the new Congress. Speaking of Congress, PSC held its March 19 CIDC meeting on Capitol Hill with House/Senate members and their staffs to raise awareness of our issues.

Civilian Agencies Council

Defense and Intelligence Council

Civilian agency acquisition leaders previewed their 2015 plans and priorities at the first meeting of PSC’s Civilian Agencies Council on February 2. DHS Chief Procurement Officer Soraya Correa, DHS Acting Deputy CPO Dennis Smiley, Department of Energy Director of Headquarters Procurement Services Mark Brady, and HHS Deputy Assistant Secretary for the Office of Grants and Acquisition Policy and Accountability Nancy Gunderson addressed the challenges facing civilian agencies. Among these are hiring and developing the workforce, communication and collaboration with industry, IDIQ contract management and competition, and allocating work to small businesses. Following the panel, the council discussed its 2015 agenda and the working groups formed to address concerns with acquisition workforce, conflict of interest policies, FISMA/ data privacy, properly selecting and administering contract type, and allocating work to IDIQ contracts. The Civilian Agencies Council will hold its next full council meeting on April 28.

The Defense and Intelligence Council held its first meeting on February 5, with Jennifer Walsmith, the senior acquisition executive at the National Security Agency (NSA), as the keynote speaker. The council will hold quarterly meetings, each with a speaker from the defense or intelligence space providing valuable insight on the challenges and opportunities they see in their sector. At the meeting, attendees vetted and established the council’s issue priorities and objectives, forming four committees to handle the work: the Defense Acquisition Committee, chaired by Neil Albert of MCR; the Intelligence Community Task Force, chaired by Matt Carroll of Fluor and Charlie Sowell of Salient Solutions; the Contingency Contracting Committee, chaired by John Gastright of Dyncorp International; and the Defense Audit and Oversight Committee, whose chair will be announced soon. The committees have been meeting to establish their short- and long- term goals, priorities, and deliverables. Together, these committees, and the full council, will address the plethora of issues confronting contractors working in this market and enable the government to access the best solutions industry can provide.

—Jeremy Madson, PSC Senior Manager, Public Policy

—Matthew Taylor, Manager, Public Policy

—Paul Foldi, PSC Vice President, International Development

Get Involved:

PSC members can register for any meeting or sign up to participate on any of the PSC councils, committees and working groups by signing up on the PSC website. For registration, visit the PSC Calendar of Events. To sign up for a council, committee, working group, or network, visit your profile page on the PSC website and click on the “Committees & Preferences” link next to “Contact Information.” Make the desired selections and hit “save” at the bottom of the page to record your picks. Professional Services Council

Service Contractor / March 2015 / 31


MEMBER NEWS COMPANY NEWS Sabre Engaged in Strategic Partnership Discussions with IA Technology

Sabre Systems, Inc. announced on January 27 that it is engaged in discussions with U.K.-based IA Technology Ltd. to form a strategic partnership for the purpose of providing innovative technology solutions to defense and federal government customers in global markets. Senior leaders from both organizations met in Sabre’s Alexandria, Va. office to discuss the possibilities of a strategic partnership. As British and American allies, Sabre and IA Technology are two companies working together to equip allied forces with the best technology and products available. The meeting supported the long-standing special relationship between the U.S. and U.K. and furthered efforts to meet shared security challenges between the two countries.

Marstel-Day CEO Receives DOD Patriotic Employer Award

Marstel-Day CEO and President Rebecca R. Rubin was recognized as a Department of Defense Patriotic Employer for her support of employees in the National Guard and Military Reserves, the company announced. Rubin received the Patriotic Employer award at the Fredericksburg headquarters of the environmental consulting company during a January 20 presentation by Employer Support of the Guard and Reserve Virginia Area Chair Richard Ridge and Colonel Kathy Kahlson, who is vice wing commander of the 192nd Fighter Wing. Marstel-Day policy provides paid leave of up to 10 days a year for drilling Guard and Reserve Members, and the Company has a strong record of employing military veterans and retirees, including individuals who have obligations as members of the Guard or Reserve. Marstel-Day currently employs 148 people; 24, or 16.2 percent of the staff, are military veterans.

Sabre Offering STEM Scholarships to High School Students

For the third year in a row, Sabre Systems, Inc. will offer STEM (Science, Technology, Engineering and Math) scholarships to graduating high school seniors, the company announced. Sabre launched the scholarship program in 2013 to support students planning to further their education in one of the STEM disciplines. In an effort to help reduce the financial burden associated with pursuing a STEM-related career, Sabre will award four $1,500 non-renewable scholarships to deserving students. Scholarship recipients will be selected based upon a thorough review of each applicant’s academic record, personal statement, STEM experience and letters of recommendation. Until April 10, the company

32 / Service Contractor / March 2015

will accept applications, and the winners will be announced later in the spring. In order for a student to qualify for the scholarship, the student must be graduating from a high school located in Hartford County, Md.; the southern Maryland tri-county area (St. Mary’s, Charles or Calvert); Thomas Jefferson High School for Science and Technology in Alexandria, Va.; or Central Bucks East, Central Bucks West, Central Bucks South, Archbishop Wood, William Tennant or North Penn, which are located in the Philadelphia area. For more information, visit http://www.sabresystems.com/ About/Corporate-Giving.

NeoSystems Establishes Presence in Orange County Florida

NeoSystems Corp. will create a presence in Orange County, Fla., creating more than 37 new jobs over the next three years and also making a $424,000 capital investment in the region, the company announced January 6.

On the Move Vistronix Hires Industry Leader, Alan Stewart, as New Chief Financial Officer

Vistronix announced that Alan Stewart joined the company as Chief Financial Officer (CFO). Responsible for providing corporate-wide financial leadership, he is an industry veteran with over 38 years of financial and operational experience. He was instrumental in the IPOs of several companies, including the $63 million IPO of ICF International Inc. in 2006 and an $88 million secondary offering in December 2009, as well as the $32 million IPO of Deltek Systems, Inc. in 1997. Prior to joining Vistronix, he served for more than four years as CFO of Oceus Networks Inc. (formerly Ericsson Federal Inc.).

NeoSystems Names New CFO

NeoSystems Corp. appointed Mike Dunn as its Chief Financial Officer (CFO). Dunn is a highly accomplished and well-respected financial executive with a successful track record of helping build companies, leading M&A initiatives, and propelling strategic financial plans, the company said in a press release. Dunn was also a finalist for the Northern Virginia Technology Council’s CFO of the Year Award for 2013, the company said.

Capital One Bank Appoints New SVP for Government Contractor Banking

Capital One Bank announced that Joshua Dearmon joined its Middle Market lending team as a senior vice president and relationship manager in Government ContracProfessional Services Council


MEMBER NEWS tor Lending. In this new role, Dearmon will advise middlemarket and corporate government contractors in capital structure, syndications, senior debt facilities, debt capacity, acquisition finance, cash management and other banking products. He will report to Diane Zanetti, senior vice president and market manager for Government Contractor Lending.

Salient Promotes Four to Sr. Management Team

Salient Federal Solutions promoted four employees to its senior management team, according to Washington Technology. They are: • JD Kuhn to senior vice president and controller, finance. • Larry Rose to senior vice president, contracts and procurement. • Paul Bander to vice president, contracts and pricing. • Sean Delaney to vice president, capture and proposal operations.

Sabre Names New Executives

Sabre Systems, Inc. has promoted or appointed the following employees in the last quarter, the company announced. They are: • Glen Ives to chief operating officer (COO). • Phil Farrell to vice president of special projects. • Retired Navy Captain James B. “Jim” Hoke to serve as vice president of the Mid-Atlantic Region.

Have a story for Service Contractor’s Member News section? E-mail Bryan Bowman

at bowman@pscouncil.org.

When you’re ready to ensure full contract performance. You are ready for American Public University. APU offers more than 190 career-relevant online degrees and certificates, including: • B.A. in Government Contracting and Acquisition* • MBA, concentration in Government Contracting and Acquisition

Visit StudyatAPU.com/service

BEST ONLINE PROGRAMS BACHELOR’S

2015

*This program takes advantage of the Contract Management Body of Knowledge (CMBOK) as defined by the National Contract Management Association (NCMA). We want you to make an informed decision about the university that’s right for you. For more about our graduation rates, the median debt of students who completed each program, and other important information, visit www.apus.edu/disclosure.

Professional Services Council

Service Contractor / March 2015 / 33


PSC: SCENE & HEARD 1

2

5 6

3

4

7

1. OFPP Administrator Anne Rung was the inaugural speaker at the first meeting of PSC’s Acquisition and Business Policy Council on December 3. 2. Jennifer Walsmith, NSA’s senior acquisition executive discussed her priorities and the agency’s challenges at the inaugural meeting of PSC’s Defense and Intelligence Council on February 5. 3. DHS Secretary Jeh Johnson was the keynote speaker at PSC’s Board of Directors and Annual Membership Meeting on December 18. 4. Government acquisition professionals presented their 2015 priorities to attendees at the inaugural Civilian Agencies Council meeting on February 2. Pictured from left to right: DHS CPO Soraya Correa, DHS Acting Deputy CPO Dennis Smiley, Department of Energy Director of Headquarters Procurement Services Mark Brady, and HHS Deputy Assistant Secretary for the Office of Grants and Acquisition Policy and Accountability Nancy Gunderson. 5. Aman Djahanbani, USAID’s senior procurement executive, chief acquisition officer, and director of the Office of Acquisition and Assistance, met with members of PSC’s Council of International Development companies on January 15. 6. Deputy USAID Administrator Alfonso Lenhardt addressed PSC’s Council of International Development Companies Executive Advisory Board on December 19. 7. PSC EVP Alan Chvotkin, PSC President Stan Soloway, and Grant Thornton Principal Phil Kangas presented the findings of the 2014 Acquisition Policy Survey to the press on January 22. 8. PSC Board Chair Ellen Glover presented Kevin Beverly of Social & Scientific Systems with a PSC Outstanding Achievement Award for his contributions as chair of the PSC Annual Conference Committee, during the December 18 Board of Directors and Annual Membership Meeting. The Board also presented outstanding achievement awards to Jim Boomgard (DAI), Deepak Hathiramani (Vistronix), and Rod Mateer (Deloitte). 9. PSC members expressed a range of concerns with GSA’s upcoming Human Capital and Training Services (HCaTS) acquisition, during a January 16 meeting of nearly 100 member company representatives.

34 / Service Contractor / March 2015

8 9


Compliance have you seeing double? If you have SCA employees, you know that compliance with federal labor laws is a complex and important part of your business. Are you asking your TPA compliance-specific questions? Do you carry an SSAE-16 audit? l Are you up-to-date on the new Executive Order? l Is your compliance team trained on ERISA and ACA? l Who responds to Medicare Secondary Payor inquiries? l

The Boon Group has been designing client-tailored, compliant fringe benefit plans for government contractors for more than 30 years. Come visit us in Austin, Texas. Surprise us. Always ready — guaranteed, or we pay your travel expenses.*

866 831 0847 * We guarantee to always be ready for visitors. We will provide an office tour, presentation on Boon history and focus, and meeting time with acquisition and retention team members to discuss opportunities. Travel expenses cover two airline tickets up to $500 each and two rooms for one night stay.


Professional Services Council 4401 Wilson Blvd., Suite 1110 Arlington, VA 22203

An ounce of prevention is worth a pound of cure.

Invest in $78 billion worth of experience. Baker Tilly clients have a combined total of more than $78 billion in government contracts. They rely on our valuable insights, rooted in deep government and industry experience, to tighten procedures and facilitate ongoing compliance. Our experience as CPAs, financial statement auditors, contracts management professionals, former government auditors, and disputes consultants translates into expertise that spans all aspects of the contract life cycle.

Connect with us: bakertilly.com/governmentcontractors Tony Fuller, GovCon practice lead 703 923 8688 | tony.fuller@bakertilly.com

Š 2015 Baker Tilly Virchow Krause, LLP. Baker Tilly refers to Baker Tilly Virchow Krause, LLP, an independently owned and managed member of Baker Tilly International.

Profile for Professional Services Council

PSC's Service Contractor Magazine - March 2015  

In this issue: The 2015 PSC Policy Agenda Sounding Board: A Technology and Business Revolution The Government's Preferred Supplier Progra...

PSC's Service Contractor Magazine - March 2015  

In this issue: The 2015 PSC Policy Agenda Sounding Board: A Technology and Business Revolution The Government's Preferred Supplier Progra...