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Just when you thought government contracting was about to get fun, again, the General Services Administration decided boring is the right approach.

That’s right, I’m saying government procurement and fun in the same sentence because we had an upcoming contract that had so many possibilities intertwined with it. GSA has been planning the follow-on to its highly popular and successful OASIS contract for the past year. It started by calling the vehicle BIC MAC—best-in-class multiple award contract. Oh the possibilities there!

The agency moved to Services MAC for the last few months. And with both of those names, unlike its more traditional and unexciting names like Alliant or Millennial or 8(a) STARS, these names had so much potential for fun in headlines and leads and so much more.

But GSA decided — and I’ll blame the lawyers here, only because it’s always fun to blame lawyers — to pick the name OASIS+, or maybe Oasis-Plus, for the new governmentwide contract, ending any real chance of bringing fun back to federal procurement.

“The name echoes a successful brand that our customers have come to know and trust, reflects the expanded scope of services that will be available through the new program, and embodies the contract’s flexible domain-based structure,” wrote Tiffany Hixson, the assistant commissioner in GSA’s Office of Professional Services and Human Capital Categories in the Federal Acquisition Service, in a blog post from June 15. “The new program will have a broad scope. As their respective ordering periods conclude, the new program will be able to fulfill requirements currently met by GSA’s One Acquisition Solution for Integrated Services (OASIS); Human Capital and Training Solutions (HCaTS); and Building, Maintenance, and Operations (BMO) contracts. In addition, new scope areas include environmental, intelligence services, and large enterprise solutions. Plus, we’ll build-in the flexibility to expand scope as customers identify new federal services needs.”

All kidding aside to the good folks at GSA, the decision around OASIS+/Oasis-Plus is seems small, but important. It’s clear there is recognition in FAS that the current contract is popular, in part because GSA has spent the better part of a decade promoting, creating a brand and working with everyone from the Air Force to the Homeland Security Department to the Army to commit to putting hundreds of millions of dollars through OASIS.

Since 2015, agencies have spent $48.8 billion on OASIS, OASIS small business and OASIS 8(a) through more than 3,200 task orders.

The Air Force remains the largest user, issuing more than 1,000 task orders worth more than $28 billion. The Army is the largest user by total sales with more than $30 billion across 458 task orders.

The updated vision for OASIS+ also recognizes the struggles of the HCATS contract.

GSA awarded HCATS to 109 vendors in May 2016. The 10 1/2 year contract has a ceiling of $11.5 billion and replaced the Training and Management Assistance (TMA) contract run by the Office of Personnel Management for the last two decades. After a series of bid protests, GSA finally issued the notice to proceed for HCATS in September 2016. Over the last almost six years, agencies have not used the contract like may believed they would, awarding 300 task orders worth $764 million.

Six contracts with five for small business

Sheri Meadema, the acting assistant commissioner of GSA’s Office of Professional Services and Human Capital Categories in the Federal Acquisition Service, said during the Coalition for Government Procurement spring conference that the changes to OASIS-Plus also acknowledges what GSA’s customers have said about the draft details of the new contract over the last few months.

“We had originally envisioned one contract with small business reserves, and working closely with the Small Business Administration and our Office of Small and Disadvantage Utilization Office and our customers, quite frankly, we ended up switching that strategy. So the plan is to now award six separate contracts, five of those being for small businesses and the six being unrestricted,” she said. “The second change is scope. Oasis will cover all of the scope areas in Oasis currently today, plus HCATS and building maintenance and operations as those contracts expire. In addition, in the initial stages of the contract, there are additional scope areas that we’re adding on to include environmental intelligence services and a domain we’re calling enterprise solutions, which will be unique to the unrestricted vehicle. That domain is for very large, complex, high-dollar value, non-commercial type work.”

The domains is another change for OASIS+. GSA will add or remove domains based on customer needs and usage throughout the life of the contract.

That gives us a lot more flexibility as things change and customers’ needs change to introduce new scope areas,” Meadema said. “We are trying to keep the solicitation open continuously after we initially close it to deal with solicitation protests. This is all about our ability to onboard industry partners at any time during the contracts life.”

The onramp for OASIS was far from a smooth process, beset by protests and delays.

Meadema said the new contract will make it easier for companies who grow out of the small business size standard to apply to get on the OASIS+ unrestricted version.

“The evaluation criteria will drive the highly qualified pool of vendors that we’re trying to attract. We’re not recreating the Multiple Award Schedules. We are setting the bar relatively high,” she said. “That being said, we are giving careful consideration to how high we set the bar for unrestricted. So again, we can allow companies who re-represent their size to move on to another vehicle.”

Price not a key evaluation factor

As part of the evaluation factors, GSA will be applying the authority it received under Section 876 of the 2018 Defense Authorization bill, where price is most important at the task order level, not at the main contract level.

GSA stated in recent answers to industry questions that OASIS-Plus will not have a total dollar ceiling attached to it, joining Polaris as the only other contract do deviate from the Federal Acquisition Regulations in the last nine years.

Meadema said GSA expects to release some new or updated draft sections of OASIS-Plus for industry comment over the summer and then release the full draft request for proposals in early fiscal 2023. GSA expects to issue the final solicitation in the second quarter of 2023.

The new name, scope and domain changes are important steps for GSA in this journey, but they still don’t necessarily answer all the questions about how OASIS+/OASIS-Plus isn’t just creating a new type of schedule contract. The Coalition has expressed concern over the last year about possible duplication with the schedules, cross-walking what OASIS+ will include and what the schedules already provide.

The next key stop in this journey is when GSA releases the draft RFP for industry comments to see how it differentiates from the schedules and whether it alleviates any concerns in industry about duplication. Most would agree that last thing industry or government needs is another contract that doesn’t add value and meet agency needs.

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The return of in-person conferences still is a bit weird. As most attendees will say, it’s great to see people in person, but it’s less fun to wear “real” clothes and shoes. The “business on the top and vacation on the bottom (dress shirt and shorts)” doesn’t work well when you are in a hotel or conference center for most people.

Maybe the best part of the return to in-person events, at least for intrepid reporters, is the ability to ask follow-up questions after a presentation or speech. That is when you turn a story that is likely to be a lemon into sweet lemonade.

At the recent Emerging Technology and Innovation Conference sponsored by ACT-IAC in Cambridge, Maryland, the lemonade was flowing thanks to the bevy of speakers who were willing to talk about all the good things happening in their agency.

From Army chief information officer Raj Iyer offering an update on his digital transformation efforts to Sonny Hashmi, the commissioner of the Federal Acquisition Service in the General Services Administration, talking about the latest contract to buy cloud services, to Stacie Alboum talking about her new job at the Federal Deposit Insurance Corporation as deputy director of enterprise strategy, the news flowed like, well lemonade.

But here are three items you may have missed from the event.

AFWERX moving back to DC

The Air Force’s innovation arm missed the Washington, D.C. metro area after all.

AFWERX closed its offices in Arlington, Virginia during the pandemic, figuring it would use its offices in Las Vegas and Austin, Texas as places to recruit innovative companies.

But like in Godfather Part III, AFWERX may have been screaming  “just when I thought I was out, they pull me back in” to Washington, D.C.

Garrett Custons, a Spark cell director at AFWERX, said the organization is looking for new space in the D.C. metro area.

“It’s really a blank slate with what it could look like,” Custons said. “We want to build out an incubator in the D.C. area. We’d love it to be co-located with other organizations in the government innovator space. We don’t just the space, but a place where tools and products can be tested.”

AFWERX, which the Air Force launched in July 2017, focuses on accelerating agile and affordable capabilities by teaming innovative technology developers in the private sector with Airman and Guardian talent.  In 2020, the Air Force split AFWERX into three different branches: AFVentures, Spark and Prime. The Spark branch is focused on empowering innovation at the operational edge.

Custons said the decision to rethink the need for an office in the D.C. area is based on two factors. The first is internal growth of staff. The second is number of vendors in D.C. metro area.

“This is where the decision makers are,” he said. “It’s a logical progression of the lifecycle of AFWERX to help companies get into the federal market.”

AFWERX has money set-aside for the office space, but isn’t against the idea of sharing space with other agencies or innovation cells.

Custons said one option would be to share space with the Office of the Undersecretary of Defense for Research and Engineering and the National Security Innovation Network in Arlington, Virginia.

“If a government organization has office space, we’d like to talk to them. It’s hard to know what is available and what’s out there,” he said. “We are talking to the General Services Administration because they have collaboration space that isn’t being used as much as they thought, so maybe partnership play there.”

Commerce BIS sprint to the cloud

You’d think moving to the cloud would by now would be passé. Agencies have been talking about it for more than a decade.

For the Commerce Department’s Bureau of Industry and Security, cloud services represent an entirely new way of doing business.

Mike Palmer, associate chief information officer for BIS, said the goal of moving to the cloud is, of course, IT modernization. But the bigger win will for BIS is how the cloud services will free up data and break down silos.

“We’ve focused over the last six months on upgrading our infrastructure. In January, we decided to take our entire infrastructure to the cloud and out of this archaic on-premise based infrastructure,” he said. “By July 1, our six month move of our entire infrastructure to the cloud should be complete. In the meantime, in parallel, we are starting to do some interesting things with data. It gives us more flexibility to make quicker decisions.”

Palmer said BIS is launching a pilot program around a data warehouse and data sharing platform to improve how they work with the intelligence and law enforcement communities as well as conducting a pilot to take some of its data from licensing offers and turn it into export control impact.

“One of the things we believe in is trying things on a smaller scale and expand it from there so  quick, small investment to prove out a concept,” he said. “The next phase of our product lifecycle modernization effort is to do a lot of user research over the summer as part of our enterprise modernization activities.”

A BIS spokesperson offered a few more details by email.

The spokesperson said the move to the cloud will set the foundation for a broader modernization journey that includes creating new data sharing capabilities, public-facing digital services and a zero trust cybersecurity architecture.  The move to the cloud is expected to improve BIS’s operational resiliency and security, reduce costs, and provide modern tools for developing new software applications that will improve the BIS customer experience.

Palmer said at the event that one of the biggest challenges for BIS is getting the workforce comfortable with using cloud services and no longer being in a physical environment.

BIS expects the infrastructure modernization to save money, but Palmer said the CIO’s office still is finalizing those details.

Coast Guard less disconnected

The Coast Guard Commandant’s tech revolution will not be televised, but it now will be on Zoom or Microsoft Teams.

That’s right, major cutters now have enough bandwidth to use video teleconference platforms.

Brian Campo, the Coast Guard’s deputy CIO, said the service recently upgraded the communication bandwidth for all major cutters, which are out to sea 180 to 200 days a year.

“The Coast Guard has been going out with Navy fleets for the last several years into places like Indo-PACOM and around the horn of Africa, but also going up into the Arctic. These are places were communications are really challenging. So one of the thing we have been trying to do is upgrade equipment, working with industry partners and looking at different communications links we could use,” he said. “One of the most amazing things have done in about the last year is we’ve doubled connectivity to the major cutters. What we have been able to do is upgrade them so that they have enough bandwidth so now on the morale side in some of the mess decks and personnel areas, they can actually get what we would call ‘dirty’ internet to be able to send email back to loved ones. Just recently we just doubled their internet again so they can actually do video teleconferences using Teams and Zoom to actually reach back and talk with their loved ones.”

Former Coast Guard Commandant Adm. Karl Schultz, who retired on June 1, made the increase of bandwidth to cutters a central part of his Tech Revolution plan.

The Tech Revolution Plan includes four other priorities: Data to decisions, software, mobility and the cloud, cyber readiness and command, control, communications, computers, cyber and intelligence (C5I).

Campo said the Coast Guard now is adding two new lines of effort command and control and navigation.

“Each of those two new systems are game changing to the Coast Guard. They are systems we have been leveraging from the Defense Department that we will be retiring in the next few years,” he said. “We are trying to build out some new replacements for those systems and taking a different approach. We are leveraging what we did in the first half of the tech revolution bringing in things like data, making data part of what we do for our C2 systems, making sure as we develop navigational systems we are leveraging the technology through commercial satellite communications. We are thinking about how we can use artificial intelligence to actually build out navigation systems that can manage these over congested ports and work with the shippers to give them more information as they come into a port.”

But that preparation focused mainly around kinetic warfare where Marines or soldiers would have to face an enemy that was, relatively speaking, close and understood.

Todd Harrison, a senior associate in the Aerospace Security Project and Defense Budget Analysis for the Center for Strategic and International Security (CSIS) wrote in a 2021 report that “For some types of non-kinetic attack, third parties may not be able to see that an attack has occurred, or the party being attacked may not know right away who is attacking. For these reasons, non-kinetic attacks may be perceived as less escalatory in some situations, although this remains a point of debate. It can be difficult to determine if some non-kinetic forms of attack are effective, particularly if the effects are not publicly visible. And some methods of attack — such as exploiting zero-day vulnerabilities in a cyberattack — may have a limited period of effectiveness before an adversary develops defenses against them.”

The non-kinetic attacks are not limited to just weapons systems, but logistics to move supplies and troops, communications to make data sharing more difficult and GPS jamming and spoofing.

Today, the Marines are preparing for an environment that is disconnected, denied, intermittent and/or with limited bandwidth (DDIL) where the enemy could be hundreds of miles away, behind screens and impacting both kinetic and non-kinetic capabilities.

The Marine Corps awarded General Dynamics IT (GDIT) a task order under the Defense Enterprise Office Solutions (DEOS) contract to test out how they can receive Microsoft Office capabilities both on-premise and in the cloud in a classified environment approved at the secret level.

The Defense Information Systems Agency and the General Services Administration awarded GDIT the 10-year DEOS contract that has a $7.6 billion ceiling in August 2019. DISA began migrating users to DEOS in January 2021 after protests and corrective action delayed the implementation.

Navy leading DDIL working group

Jim Matney, vice president and general manager of the DISA and Enterprise Services Sector for GDIT’s defense division, said in an email to Federal News Network that GDIT already is supporting an unclassified environment for these services that is rated at impact level 5 (IL5). He said through this proof of concept that mainly will be done in a lab environment, the Marines will be able to see how the enterprise collaboration tools can work in DDIL environments.

The six-month project is worth under $1 million.

The Marine Corps Tactical Systems Support Activity (MCTSSA) has put together a DoD DDIL lab environment where GDIT will evaluate these proposed architectures and developed capabilities.

GDIT says it also will partner with Microsoft to test capabilities, investigate scenarios and provide applicable recommendations for mission partners deployed in a DDIL environment.

“[T]hese collaboration services must also operate on-premises. As cloud service providers are providing more software-as-a-service (SaaS) offerings to support collaboration, such as Office 365, users must have access to the cloud to leverage these capabilities,” Matney said. “The challenge then becomes ensuring the on-premises solution used to support DDIL in an outside the continental U.S. (OCONUS) environment can interface with the enterprise capability that is being used in CONUS.”

Matney said the on-premises collaborative capabilities, such as Microsoft Exchange, Skype for Business and SharePoint, must remain and integrate with the cloud-based services.

GDIT says the proof of concept will include testing several different scenarios to access capabilities including word processing and spreadsheets, email and calendar and file sharing and instant messaging.

All of this is helping the DoD figure out how to deploy DEOS in DDIL environments, where reliable and timely connectivity to warfighters at the tactical edge is critical.

Refine requirements, develop use cases

This task order proof of concept with the Marines is part of the DoD chief information officer’s effort to find technology capabilities that provide seamless operations in denied, degraded, intermittent and limited bandwidth environments.

In 2021, the DoD CIO designated the Department of Navy CIO as the executive agent to lead a cross-service joint working group focused on DDIL.

“These low bandwidth and high latency conditions are prevalent at the tactical edge and experience regular disconnects from the broader network, including cloud services, often for substantial periods of time,” the DON CIO’s office wrote in late 2021. “Network server software and hardware exist at the tactical edge to provide critical IT services and data in these DDIL environments, along with a variety of spectrum communications and unclassified and classified network transports leveraging satellite links and low-Earth Orbit (LEO), Wi-Fi, cellular/4G LTE, millimeter wave/5G and others.”

The working group is leaning on industry for help in refining DoD requirements and use cases to develop standardized architectures and capabilities in these austere environments.

“These tools operate as a hybrid capability, which will allow users access to the full feature set when cloud connectivity is available, but remain productive locally within the DDIL environment,” the DON CIO wrote.

Matney said GDIT is currently supporting multiple agencies across the DoD, civilian, and intelligence sectors with on-premises collaborative capabilities that may be considered and tested as potential DDIL approaches.

The challenge that the Marines are trying to solve isn’t just a Marines or DoD challenge. It’s one nearly every agency from the departments of Treasury to Homeland Security to Justice face. And with so much dependency on email communication and collaboration tools, having access no matter the network environment is critical.

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Clarification: Several smart readers pointed out that GSA’s OASIS multiple award contract was actually the first governmentwide contract not to have a total dollar ceiling. GSA issued a FAR deviation for that vehicle in 2013. 

For most of the past 18 months, the federal contracting community has expected the Polaris small business governmentwide acquisition contract to have a ceiling of $50 billion. It’s unclear whether it was an estimate from a market research firm like Deltek or Bloomberg Government, or just a rumor that took off on its own, but for much of the past year, every story and every discussion about Polaris by multiple media organizations highlighted this $50 billion number.

Then a few weeks ago, the General Services Administration suddenly asked for a correction on a story about Polaris that says it has this $50 billion ceiling. The request was a bit surprising given the 18 months of stories and discussion, and never a request for a correction previously.

Well like any good journalist, I put on my investigative hat and found out why.

GSA quietly issued a class deviation to the Federal Acquisition Regulations in March removing the requirement for Polaris to have a minimum or maximum quantity under the indefinite delivery, indefinite quantity (IDIQ) type contract. By the way, and to be clear, FAR deviations are rarely big news items that deserve big fanfare and press releases. But you’d think that with Polaris being in the news and garnering attention like it has, GSA may have wanted to alert folks of the significant change.

A GSA official said in an email to Federal News Network that while they issued the deviation in March, it was planning for some time to remove the ceiling requirement.

“GSA incorporated a number of good-for-government key features in the Polaris GWAC program. An important one that we’ve seen misrepresented in the media is the mention of a contract ceiling on Polaris,” said the official, who requested anonymity in order to talk about an active procurement. “In fact, designed to ensure ongoing availability for customers and maximum opportunity for vendors, Polaris will not have a contract ceiling at the master contract level.”

This is the first time  in nearly a decade that GSA, or any agency for that matter, created a multiple award, IDIQ type contract that didn’t have a ceiling.

Sonny Hashmi, the commissioner of the Federal Acquisition Service, said GSA is using the authorities Congress granted them under Section 876 of the 2018 National Defense Authorization Act where costs only matter at each individual task order level and not at the master contract level.

“The two or three things that historically have defined how we’ve done large, multi agency or governmentwide vehicles, there’s always been a ceiling, on-ramps have been very few and far between and typically we’ve always had price negotiation at the master contract level. All three of those things are done for the right reason and they follow well-trodden paths and the Federal Acquisition Regulation. But all those three things, many times come together to cause unnecessary friction and heartburn for the industry,” Hashmi said in an interview with Federal News Network. “For our customers, ceilings are great when you can have perfect predictability, what the future is going to look like. We’re living in a world where we can’t predict what the future looks like. Digital is going to be a more central part of how the government operates. Organizations at state local tribal level are going to be going through digital modernizations and that is going to continue to accelerate. So we don’t know what the number looks like. So why come up with an artificial boundary that requires people to do artificial work at some point in the arbitrary future?”

Hashmi said GSA wants Polaris, and really all its acquisition vehicles, to solve problems.

“If it’s highly adopted, that’s a great thing because it means that it’s solving real business problems for people,” he said.

Jeff Koses, GSA’s senior procurement executive, signed the deviation because the Federal Acquisition Streamlining Act (FASA), now codified at 41 USC § 4103, says a solicitation for a task or delivery order contract “shall include [among other things] the maximum quantity or dollar value of the services or property to be procured under the contract.”

In the memo, Koses wrote that the authority to issue the FAR deviation is based on the IT Category’s plan to “on-ramp” new contractors to the Polaris program at least every three years.

“Such on-ramping opportunities do not need to cover all pools, but ITC is encouraged to consider an annual on-ramp, opening a different pool each year,” the memo stated.

Top-line ceilings going away

Polaris isn’t the only contract GSA is planning not to have a ceiling for.

In its response to industry questions about the Services MAC, GSA says it will issue a FAR deviation to remove the minimum and maximum requirements.

Hashmi added that these two will not be the last ones where GSA will seek the FAR deviation.

While he didn’t specifically call it out, it’s easy to see the Ascend cloud blanket purchase agreement fall into the similar category as Polaris and the Services MAC.

Federal procurement experts were surprised about the FAR deviation for Polaris or for any of the other vehicles.

As one federal procurement attorney said, “In light of this [FASA and USC code language], I don’t see how GSA can waive the maximum quantity/dollar value requirement.”

Another said, the Office of Federal Procurement Policy (OFPP) may want to consider asking GSA for a business case as a contract with no ceiling may harm small businesses by reducing other means for competition. The expert added that the agency also is taking on increased risk of protest by unsuccessful bidders.

The other reason for removing the ceiling of Polaris likely is related to the challenges GSA faced with the 8(a) Stars II program. In May 2020, GSA announced the popular contract would reach its $15 billion ceiling 16 months before the end of the contract. GSA had to increase the ceiling size by $7 billion but had to limit the period of performance for contracts as a result.

Polaris update

By not having a ceiling with Polaris, GSA can avoid this potential problem over the life of the contract.

And speaking of Polaris, Hashmi offered a bit of an update. GSA just started reviewing industry feedback on its suggested updates to the evaluation criteria that came out in May.

“You can’t solve for every single use case, so we’re going to try to find the best approach that creates opportunity for the most small businesses that we can,” Hashmi said. “There’s going to be a trade-off that we need to find and that’s just reality. Depending on the feedback that we get, and then to what extent we need to completely change strategy will determine the timeline. I’m hoping that the adjustment that we’ve made or proposed in our updated criteria is it meets the expectations of industry. If that’s the case then we should be able to release the RFP for official response by the end of June timeframe but although don’t hold me to that because all of that depends on the feedback that we get and what adjustments we have to make.”

There are a lot of eyes on Polaris already so it’s understandable why GSA didn’t play up the FAR deviation for Polaris, but at the same time finding out “by accident” because of a request for a correction also makes one wonder whether GSA was trying to downplay another way Polaris is breaking many of the old rules for GWACs.

The proliferation of political appointees across government focused on cybersecurity is both a signal of the threat and a recognition of the level of attention the topic needs.

There are three political appointees at the White House alone. Anne Neuberger is the deputy assistant to the President and deputy national security advisor for Cyber and Emerging Technology on the National Security Council. Chris Inglis is the national cyber director. And finally Chris DeRusha is the federal chief information security officer in the Office of Management and Budget and last November took on an additional role as the deputy national cyber director.

The Cybersecurity and Infrastructure Security Agency in the  Department of Homeland Security is led by Jen Easterly, another political appointee.

The National Security Agency and U.S. Cyber Command are led by not only a general, Gen. Paul Nakasone, but he also is confirmed by the Senate.

The Commerce Department, the Federal Communications Commission, the Department of Veterans Affairs and many others have similar cyber-focused leadership positions that require presidential appointments and some are Senate confirmed too.

The one missing from this list is the Energy Department’s Office of Cybersecurity, Energy Security and Emergency Response (CESER). The Senate is required to confirm the assistant secretary who typically runs the office. But the Biden administration and Energy Secretary Jennifer Granholm have decided not to make the position a political appointee, raising concerns across the spectrum from Capitol Hill to industry executives to former CESER officials.

They call that decision shortsighted and damaging at a time when the energy sector is facing an increased level of threats.

“The problem is I’ve served as both a career and as a political across multiple administration and being a political appointee gives your office a presence by law,” said Sean Plankey, a former director of cyber policy at the White House’s NSC and the former principle deputy at CESER. “You are part of the conversation and subject to Congressional oversight, which helps ensure there isn’t mismanagement, but also ensures you are responsible for results. For the most part, a career official is likely not have that seat at the table to ensure they have resources or in whatever meetings. If you are a career official, you are never going to be in that ‘trusted circle’ of the secretary.”

Plankey, who now is director of cyber missions at DataRobot, other former career CESER officials, as well as other cyber experts say not having a political appointee to lead the office sends a bad message internally and externally to the agency employees and the overall energy sector.

Threats to energy sector on the rise

And that message comes at a time when threats against the energy sector are increasing.

President Joe Biden issued a statement in March urging critical infrastructure providers, many of which are from the energy sector, to “harden your cyber defenses immediately” in light of threats by Russian hackers.

Dragos, a cybersecurity firm, found in its 2021 ICS/OT Year in Review report that of the 18 worldwide threat groups that it tracks, two of the three newest ones focused on industrial control systems (ICS) intrusions with “a focus on access operations and data theft over disruption. This shows that adversaries are willing to spend time, effort, and resources targeting, compromising, and harvesting information from ICS/OT environments for future purposes.”

Jeremiah Baumann, the deputy chief of staff of the Office of the Under Secretary for Infrastructure, where CESER resides, said in an interview with Federal News Network that having a career official and not politicizing the office will make it more effective.

“It has been a deliberate decision that this position is too important to leave subject to the whims of shifting politics, and we need to have steady leadership in the job. That’s been the consideration from day one,” he said. “I think in my experience of this administration, at least, is when you’ve got strong skilled leaders who bring the right kind of expertise to the table, I haven’t really seen a huge distinction on who is a political appointee and who’s not a political appointee. The secretary works with both political and career leaders on all sorts of matters. They sit at the same table have an equal voice, and I say the same thing in interagency processes. I think our career leader for the CESER office is among the most respected people in D.C. when it comes to cybersecurity and I don’t think there’s anybody you can’t sit at a table with and hold his own.”

Currently Puesh Kumar is the director of CESER. He’s highly respected for his knowledge and background.

Energy created CESER in 2018 with $96 million from the appropriations bill with a goal of elevating “the department’s focus on energy infrastructure protection and will enable more coordinated preparedness and response to natural and man-made threats.”

Karen Evans was the only politically appointed and Senate confirmed assistant secretary of CESER. She started in September 2018 and lasted about 18 months before leaving in February 2020. Since then, CESER has had either acting or career deputies in charge.

Career not equal to political appointees

Experts say Kumar would be an excellent choice to be the political appointee, but as the career official, he’s at a disadvantage when he walks into a meeting with Easterly, Neuberger, Inglis or with CEOs from top energy companies.

Plankey, who also worked at BP as a global cyber intelligence advisor, saw this happen first hand.

“You try to bring the same level of official to the table. If the CEO of multi-billion dollar organization is sitting down with career official who isn’t at that level, that’s a problem,” he said. “I’m not taking anything away from that career official, but if you are not the designee through political appointment status it’s hard to curry that same level of focus and attention.”

Nick Andersen, the chief operating officer at Invictus International Consulting, a non-resident senior fellow in the Cyber Craft Initiative at the Atlantic Council and a former principal deputy for CESER, called Energy’s rationale for having only a career person at the helm a “little disingenuous.”

“All positions in Energy have senior career deputy to provide continuity. That is part of what we do with transition planning,” he said. “We are not having this debate with any other cyber or critical infrastructure positions across the government. Not at CISA or at FEMA. If you look at where cyber and resiliency mission sits in the Defense Department, they have an appointee who is a deputy assistant secretary and a Senate confirmed assistant secretary for defense for homeland defense and global security. It sends a strong message about internal prioritization of missions. When you are willing to take that level of visibility away from the office, it makes it more difficult to be on level playing field with other departments, which are maintaining level of importance for same mission areas.”

The increase in threats to the energy sector caught the attention of Congress, particularly in the wake of the Russian invasion of Ukraine.

Lawmakers expressing concerns

In March, lawmakers passed the Cyber Incident Reporting for Critical Infrastructure Act of 2022 as part of the Consolidated Appropriations Act of 2022.

The legislation establishes mandatory cyber intrusion reporting requirements for critical infrastructure companies, including companies in the energy sector. While Congress gave CISA the role to implement the law, Energy, under existing authority, remains as the sector risk management agency (SRMA) for energy sector cybersecurity.

A recent letter from House and Senate oversight committees, the Committee on Energy and Commerce and the Committee on Energy and Natural Resources, respectively, wrote to Granholm in early April expressing concern about DoE’s role in remaining the cybersecurity lead for the energy sector.

“CESER’s mission and responsibility has grown a lot in the last few years and a lot of it is attributed to work it has done over the last few years,” Andersen said. “It has taken on work at the tactical level by coordinating with the sector or providing cyber threat information with intergovernmental partners. It has expanded the expertise it provides. And CESER is looking at strategic risk to drive one consolidated view of where risk is and how shore it up, especially within the research and development and supply chain areas.”

The letter by Senate and House members to Granholm isn’t the first expressing concerns. In March 2021, 11 Senators wrote to the secretary pressing her to name a political appointee to lead CESER.

“It is imperative that the department does not march backwards on its responsibilities to the energy sector and the protection of our critical infrastructure given the persistent, growing and significant threat cyber attacks pose to our nation’s economy and national security,” the lawmakers wrote.

Some sources say one reason that Energy isn’t making the CESER position a political appointee is there are only a limited number of slots available and Granholm and/or the White House have decided to allocate the positions differently.

Energy’s Baumann and other Energy officials referred to studies that found more than 1,200 political appointees across all agencies and the time it takes to get someone confirmed.

“We actually think that certain things are so critical and so important that they shouldn’t be left so vulnerable as to be sitting around vacant for months at a time just because of whatever political spat of the day means a single senator doesn’t want to confirm someone,” he said. “We think it’s absolutely critical that there be steady leadership, someone who can be in place, regardless of the politics to work on things like emergency response and cybersecurity. We don’t think it would be good to have situations like the Texas grid going down or the Colonial Pipeline getting hacked, and there’ll be no leadership in place because of politics.”

Funding, resources easier to come by

Mark Montgomery, the former executive director of the U.S. Cyberspace Solarium Commission and now a senior fellow at the Foundation for Defense of Democracies, pushed back against that rationale, too.

He said when you have an assistant secretary that is politically appointed ad Senate confirmed, the organization does better with funding and other resource allocations, which, he said, is management 101.

“If you value something, and think it’s important for your mission, then you assign an increasingly senior person to manage that issue. DOE over last several years has made a lot of good decisions. They have worked well with Congress on the infrastructure act and got significant cyber resources. As it gets more responsibilities and more grant programs to manage, that lends itself to more senior and accountable leadership.”

Montgomery added it’s also easier to hold the office accountable when there is a political appointee at the helm. Typically, administrations aren’t keen on letting career officials testify before Congress so a political appointee is preferred both from an accountability perspective as well as operational one.

“Over at the White House or on Capitol Hill, it helps to be a presidential appointee to argue for your agency’s or the President’s priorities, and it’s the same on Capitol Hill,” he said. “And if you’re working with the private sector, they understand where the lines of responsibility are. CEOs are more comfortable with an assistant secretary than a deputy assistant secretary. We should want this person meeting with CEOs to be in the ‘C suite’ because this is a C suite issue and is a C suite engagement.”

The federal shared services effort is about to undergo yet another revival.

The 20-plus year initiative to get agencies to move to common, back-office systems for financial management and human resources will, once again, try to convince agencies they have the cure to the legacy system disease.

“Many of the new solutions the government is or will be working on are digital products and services. This means that they are and must be designed with certain human best practices in mind. Those include human centered design, agile delivery, and frequent iteration in response to user feedback, which is critical to the work that we do,” said Krystal Brumfield, the associate administrator in the Office of Governmentwide Policy at the General Services Administration, at the recent ACT-IAC and Shared Services Leadership Coalition 2022 Shared Services Summit. “As we work on new shared services, we also want to continue to increase the adoption of existing and established shared services. If you have worked with federal services, and some of these might sound familiar, GSA fleet smart pay and the Enterprise Infrastructure Solutions (EIS) vehicle. I’m happy to report that all 24 CFO act agencies have adopted GSA SmartPay. This is a big win for shared services. We will continue to work with the senior accountable points of contact at each CFO and agency to promote federalwide shared services. We will also actively reviewing other federalwide share services to see if they are willing and meet the criteria to be included in the existing shared services portfolio.”

Brumfield joined the long-list of federal officials offering the “this time will be different” speech about shared services.

A quick history: The Office of Management and Budget kicked off this idea of shared services in 2001, added the Lines of Business initiatives in 2004 and by 2019, added at least three more memos, a new strategy, which created the quality service management office (QSMO) approach. During every one of these instantiations, the level of frustration grew among users and the number of legacy systems continued to increase.

And despite all this hard work, time and effort, many agencies still need to modernize back-office systems — financial, human resources, grants and acquisition — to name a few. The Treasury Department found in 2021 that at least 56 federal financial systems are approaching the end of their useful life.

The number of human resources systems facing a similar fate is not yet known. The Office of Personnel Management is about to launch a survey of the state of HR systems to help direct their future strategy and marketplace.

Shared services challenges remain the same

With the exception of the Cybersecurity and Infrastructure Security Agency at the Homeland Security Department, the QSMO effort suffers from the same maladies as previous attempts ranging from a lack of a clear mandate to no direct funding to oversight and accountability that ebbs and flows from OMB and from Capitol Hill.

Former and current federal officials who worked on shared services say while some mandates may be necessary, the key to this effort continues to be answering the “what’s in it for me?” question.

Jacqueline Jones, the deputy assistant secretary for administrative services at the Interior Department, said at the conference shared services providers, which the Interior Business Center is a governmentwide provider, must show agencies why moving their functions to another agency will be valuable.

“Are you going to take me to the next level for data analytics? How will you support my mission in a future state? How are you keeping up with everything that seems to change?” Jones said. “What I’ve experienced is it was always ‘that’s great, but it seems repetitive’ to what the agency is already doing. So we can’t just offer repetitive work. It must be mission focused work.”

Beyond the move to four e-payroll providers in the early 2000s that OMB mandated, there are only a handful of successful financial management or human resources shared services efforts. Even the latest attempt to modernize those payroll providers fell apart in November when one of the teams that the General Services Administration awarded a place on a multiple award contract dropped out.

The question then is, why is this latest revival different?

The answer, of course, is it may not be. Hopefully, the lessons of 20 years of fits and starts will drive the new efforts in the financial management and human resources areas to start.

Financial marketplace close to launch

The financial management QSMO led by the Bureau of Fiscal Service in Treasury is furthest ahead of the other non-cyber initiatives. The Fiscal Service just finished a two-year assessment to be ready for the future of financial management.

As part of that analysis, Commissioner of the Bureau of Fiscal Service Tim Gribben decided that they needed to run this QSMO marketplace as a business.

Tami Perriello, the deputy commissioner for finance and administration at BFS, said, the marketplace will be required to be competitive, control costs, focus on quality service delivery, be innovative and constantly looking at customer experience. She said the Administrative Resource Center (ARC), where the financial management shared service offering lives, now reports directly to Gribben.

Perriello said BFS will launch the FM QSMO marketplace with public and private sector providers later this year.

“We’re establishing and, very nearly there, partnering with our colleagues at GSA a more standards-driven marketplace that’s designed to meet common needs at a baseline of capability. We are collaborating with government and industry to establish those baselines and included in them all of the things that everyone could think of, which is going to be challenging for all of you providers of services and solutions to government,” she said. “The idea behind all of this is to reduce burden on agencies to adopt these shared services solutions. If it meets the basic standards, then the fewer, more unique requirements you have can be plugged in. But you can be confident that after we’re done reviewing it and it’s available on the marketplace, that service or solution is going to meet the basic governmentwide reporting needs and capabilities that all of us have to have to meet.”

GSA and BFS announced in April it would refresh the multiple award schedule with a new special item number for financial management quality service management office (FM QSMO) core financial management solutions and IT professional services.

GSA and the QSMO will hold a webinar on May 18 for vendors to learn about the technical evaluation requirements for SIN.

GSA and Fiscal Service are trying to make sure they answer the “what’s in it for me?” question too.

Brumfield added GSA is collaborating with agency and industry partners to create a performance management framework to measure the impact of the QSMO services.

“This framework will take a balanced scorecard approach to ensure that we’re able to measure how the marketplaces are performing,” she said. “The scorecard will roll out in three phases to validate what we’re doing, to make sure that there’s value in the work that we’re doing based on industry feedback. We will modify our business standards based to allow for public comment. These standards are placed on Regulations.gov.”

Brumfield said GSA also is looking for other shared services options from agencies. But, and going back to the value comment from Jones, Brumfield made it clear that “our lens should focus on what our customers want and their experience says from start to finish, this administration is committed to building an effective, equitable and accountable government that puts the public first.”

Technology a differentiator this time?

Perriello, a former CFO at the Small Business Administration, said the value question was one she often wrestled with in that role.

She said CFOs must be able to demonstrate to leadership that moving to shared services will make the agency mission more efficient and effective.

“One of the things that new technologies has brought to us is the ability to bring disparate systems together. New technologies allow not just a general ledger sitting there with dead transactions in it, but that bring that data in with all of the loan systems, the procurement system and the other systems that are providing transactions, and looking at all of the across all of those feeder systems and bringing that data together is now possible because of the advances in technology,” she said. “But not everybody can afford to do that, so making that available is incredibly important to meet both the unique needs of an agency and to achieve the benefits of standardization that a shared services can provide.”

It’s a positive sign that GSA and the Fiscal Service are talking about the needs of the customer and taking a human-centered design approach as they develop the marketplace. But what will matter in the short term is getting agencies to buy in to that concept and get some successes from a few early adopters.

Four months after NSA lost what many believe to be its first ever protest of a contract award at the Government Accountability Office, it re-awarded the 10-year cloud contract, known by the distinctive moniker, which could be worth as much as $10 billion to Amazon Web Services.

The spy agency made the re-award in February, but details just surfaced in the last week.

An NSA spokesperson confirmed the agency’s decision.

“This contract is a continuation of NSA’s Hybrid Compute Initiative to modernize and address the robust processing and analytical requirements of the agency,” the spokesperson wrote in an email to Federal News Network. “Consistent with the decision in [the GAO protest] case, the agency has reevaluated the proposals and made a new best value decision.”

Sources also confirmed that Microsoft, which won the initial protest at GAO in October, decided not to protest the re-award to AWS, despite what many believe is a titled playing field.

A source, who requested anonymity in order to speak to the press, said a new protest would’ve just delayed the process, which would be detrimental to NSA and possibly national security.

But the source added, NSA’s decision does raise concerns about another single award contract for cloud services, in this case classified and top secret instances. Experts continue to question NSA’s decision especially after the controversial JEDI acquisition collapsed under immense pressure and scrutiny of its single award plan, and the move by the intelligence community from a single vendor — AWS — under the C2S vehicle to multiple cloud vendors under the C2E vehicle.

Additionally, sources highlight NSA’s decision again continues to, at least, offer the perception of special treatment for AWS. Sources says under the C2S contract, NSA and its intelligence community partners supported the development of AWS’s secret cloud instance while other cloud service providers received no financial or other type of benefit.

15 month acquisition saga

As for Wild and Stormy, NSA issued the solicitation in November 2020 and made the award to AWS in July under a two-phased best-value trade off approach.

AWS and Microsoft advanced to phase 2. NSA rated AWS higher and offered more value than Microsoft despite a base price of $482 million compared to $422 million, according to GAO’s bid protest decision.

Microsoft filed a protest on July 21 claiming NSA misevaluated proposals under the technical factor, under the management factor and around total price. Microsoft claimed that “the agency’s best-value selection decision was improper, and that NSA failed to meaningfully consider Microsoft’s lower price as part of the price/ technical tradeoff.”

GAO sustained Microsoft’s protest and recommended “NSA reevaluate technical proposals, consistent with this decision, and based on that reevaluation, perform a best value tradeoff and make a new source selection decision.”

NSA declined to offer any more details about how it reevaluated the proposals and how it came to the new award decision.

Joe Petrillo, an attorney with Smith Pachter McWhorter, told the Federal Drive with Tom Temin in December that GAO’s recommendation didn’t require NSA to reopen discussions or the Microsoft and AWS to revise bids.

“It’s up to NSA to decide how to implement this. They may have valid reasons for wanting to reopen and reevaluate the proposals,” Petrillo said. “One of the issues, interestingly enough, that wasn’t successful, although GAO did note, NSA should take it into account was there was a question about how the evaluated prices were developed, and how they were evaluated. They consisted of three sample task orders, and then prices for five different benchmarks. Those were all totaled, although it seemed that the benchmark prices, which were very small in comparison to the task order prices, in actual performance, those benchmark prices would constitute much more of the total price. Somehow the evaluation system didn’t take that into account. And NSA might want to fix that, but that would probably require a new round of proposals.”

What NSA exactly did this second time around may only be known by a handful of people involved in the procurement, but given the lessons learned with JEDI, C2S and the broad move to multi-cloud in the public and private sector, the single award is perplexing. It may make perfect sense to NSA now, but it’s hard to imagine locking any organization in to even one top secret cloud offering when others are obviously available is a smart decision over the long term.

A few months ago, Sultan Meghji walked out the door of the Federal Deposit Insurance Corporation for the last time. The FDIC’s first chief innovation officer gave up after just 12 months of effort to try to bring some innovation to the federal financial sector.

If you read his commentary in Bloomberg published the day he left, it was clear he was frustrated and had a sense of despair.

Meghji told the Federal Drive with Tom Temin in April about why he left with what he called a “bruise on his forehead.”

“[T]he vast majority of people and systems in our regulatory environment are designed for the analog era, not the digital era,” he said. “In the op-ed, I wrote, I specifically called out that we have a lot of analog people making digital decisions. And it’s a real uphill battle. And I came to the conclusion that it doesn’t really matter where you are in a lot of these agencies, you’re not actually going to be able to impact the change.”

Meghji’s frustration and decision to move on from federal service is unfortunate, but also not surprising.

There are plenty of examples of private sector experts who came in to federal service with the best of intentions only to fall flat for a variety of reasons. Sometimes it’s not understanding the culture of the organization. Other times it’s the frustration with how slow agencies can move.

In Meghji’s case, it may have been a case of all of the above and more.

Meghji’s commentary got me thinking: What does it take for successful innovation in the federal sector?

The Partnership for Public Service created a federal innovation council, toolkits and released a host of reports looking at what makes innovation successful in agencies.

PPS came up with 10 organization characteristics that foster innovation, including the usual like leadership support, empowering creativity among employees, creating a culture of change and the usual broad based ideas that we all think we already do well. The partnership said the 2020  Best Places to Work in the Federal Government® data shows that just under 67% of public servants feel encouraged to come up with new and better ways of doing their jobs — more than seven points lower than private sector employees.

So I asked two former federal executives, who like Meghji came to government with limited or no previous public sector experience, took on entrenched bureaucracies and found a path toward innovation.

Ryan Cote was the Transportation Department’s chief information officer from February 2019 to January 2021. After serving in the Marines for four years, Cote worked in the private sector at Northrop Grumman, Contract Lumber, IBM and Gartner.

Marcy Jacobs served as a digital service expert for the U.S. Digital Service from February 2016 to January 2018 and then was the executive director of the Department of Veterans Affairs’ digital service from May 2017 to October 2019. She is now an associate partner at McKinsey and Company. Previously, she worked at SRA International and was a web designer.

FNN: What makes innovation in government possible at both the operational and strategic levels?

RC: Two main ideas come to mind here. The first, of course, is people and culture. The second is finding great partners and technologies who/that can help you execute the work. In order to innovate (and in many ways that means modernize) IT systems, particularly in the federal government, it requires people who have the skills, passion, energy, vision and stamina to see difficult projects through from inception to completion. This is one of the reasons the federal government struggles in many ways, in places, to innovate and/or modernize. They simply lack enough great people, for a variety of reasons. Some of these reasons are external forces at work, but some are frankly self-inflicted. I’ll take this opportunity to grumble just a bit about one of the most frustrating aspects of my time in government. And that is the labor unions. In my opinion, the federal government will never attract, train and retain top talent as long as unions are allowed to operate in the government space. Firing unproductive and unsuccessful employees is nearly impossible in the federal government and everyone knows it. Which is why the bar to perform is set so low. Too many individuals know that they can perform at a minimal effort level and still stay employed. The desire to exceed expectations and push the limits of performance were almost never on display during my tenure in government.

Stop and think about the numbers from our own Department of Labor, Bureau of Labor Statistics. On average, in any given month in America, 8% of the civilian workforce is fired, quits or voluntarily separates (leaves or retires) from their job. In the federal government, it is 1.5%, most of which are retirements. The federal government almost never fires anyone, which means (by logical deduction) they believe they are the best in the country when it comes to recruiting, interviewing and hiring personnel. In the real world, in business, most human resources folks know that they make bad hires all the time. Sometimes people are just not a good fit, or they simply “don’t work out” and are asked to move on. But because the federal unions protect the bad employees, we are forced to accept the notion that the federal government never makes hiring mistake? Which we know on the face of it is just not possible. So, we are often left with under-performing employees, which makes innovation and modernization projects difficult to begin and complete successfully. OK, OK, I’ll get off my soapbox and return to the main question.

The only way innovation is possible is for leaders to seek out, find and align with the highest performing individuals in their organizations. And there are some really great people working in government, there are simply too few of them. Find your thought leaders, empower them, motivate them, support them, encourage them to think and act with boldness and energy and then let them loose to unleash their inner greatness.

After you’ve found and identified that team of teams, equip them with the tools they need to be successful. That means partnering with integrators and technologies who have a proven track record of success. Get your people the tools and the technical expertise they may be lacking and support their efforts at all times. Whether you are innovating and modernizing operational systems or planning your next 3-to-5 year strategic roadmap, your success or failure will be a direct result of the amazing (or not) people doing the work and the positive (or negative) culture you help shape and build.

MJ: Innovation is born of a need to solve a problem or to do things differently. Innovation requires a mindset of experimentation and iteration — my team at the VA was focused on bringing new ideas to the table — new approaches and new ways of working. Showing progress and results built momentum and credibility.

FNN: What were 2 things you did during your time in government to promote/accomplish innovative projects? Please describe the before and after in terms of impact on mission and/or people.

RC: Probably one of the best decisions we made was to create (for the first time) a position of chief innovation officer within the Transportation Office of the CIO. My tenure ended before we had a chance to fill that position, but I’ve heard that my successor, Cordell Schacter (doing great things there also I hear), has hired the former chief innovation officer from the city of Dallas, Texas, Laila Alequresh and she is well on her way to establishing a great new culture of innovation throughout the department. It’s crucial to have someone at a very high-level pushing innovation and a “modernization revolution!”

One fantastic and innovative project we were able to develop and deliver during my tenure at DOT was to build a grants database visualizer leveraging a visual analytics platform called Tableau. We built an interactive map of the U.S. (underpinned with all the historical and real-time grants data we had) and built a friendly user interface that allows anyone, with just a few clicks, to find any and all Transportation grants data going back over a decade. Users can drill down to the congressional district level anywhere in the U.S. and find data on all grants awardees and dollars given out. It was very well received by leadership and my understanding is that it is being copied and replicated at other federal government departments and agencies.

FNN: What were some of biggest obstacles you had to overcome? Discuss why you were able to overcome them.

MJ: Agencies are very risk cautious (with good reason), but frequently maintaining the status quo is seen as the lower risk option, even if the results have been mixed, than trying a new approach. Creating the space and cultivating the executive support and air cover were big priorities.

RC: The biggest obstacles were always people and budget. Simply put, (related to my earlier complaint) there aren’t enough really smart, motivated, passionate, great federal employees! Too few rock stars in the misfit band that is the [1.8] million federal bureaucrats at work in the federal government today. Somehow, and I don’t claim to have this answer, the federal government really needs to do a better job of recruiting, training, supporting and retaining the top technical talent available in today’s workforce.

As it relates to budget, there were always too few dollars allocated to the IT budget (particularly in the cyber budget) to adequately address all the modern threats out there today. I was able to get a slight increase in the DOT cyber budget as I was leaving, and I understand that that has grown even more since I left, but Congress needs to keep increasing the funds in this particular area because new threats keep emerging every day.

At the end of the day, I’m not sure that I can claim any great victory in overcoming these two particular obstacles. I’d like to think that by sheer force of will I was able to have small successes here and there. But overall, these two aspects of the job were constantly frustrating to me and makes the job more difficult than it should be.

FNN: What advice would you give to other executives coming into the government for the first time about how they can be successful in innovating processes and technologies?

RC: There’s a lot to comment on here, but I’ll try to keep things succinct. Get ready for a wild ride! It’s both thrilling and terrifying to understand the scope of responsibilities and the challenges you’ll face. Never accept the status quo! Always believe that change isn’t only possible, but it is achievable with requisite effort! These institutional, monolithic, static departments and agencies are difficult to change, but change is exactly what they need and you’re being hired to almost always push change! Push yourself and your teams to discover untapped talents and reserves of energy and intellect to push the performance boundaries like never before. As soon as possible, find your thought leaders, your rock stars. Promote them. Empower and support them. Figure out who the naysayers and “dead weight” are and marginalize them. Ignore their negativity and surround yourself with only the best and the brightest, most positive folks in your office. Quickly work to forge successful alliances in HR, finance/budget, and legal offices. Make friends fast and try to avoid making enemies. Constant and steady leadership led by principle and expertise will allow you to effectively lead innovation and change!

MJ: Innovative ideas happen at all levels of an organization, especially at the front lines with customers – either on the phone or in person. Make the time and space to understand where there are opportunities for improvement and leverage and elevate great ideas from career staff who have likely been thinking about challenges for a long time but maybe didn’t have the avenue to actually try a solution.

It’s hard to remember a previous time when FAS was dealing with so many moving pieces. From the long-awaited move to the Universal Entity Identification number from the DUNS number, to the now much-maligned Polaris small business governmentwide acquisition contract (GWAC), to the unexpected challenges brought on by inflation which impacts nearly every aspect of the public and private sectors, the changes and updates have come fast and furiously since January.

So in case you missed some of the important work GSA has been doing over the last few months, here is a recap. This isn’t all-encompassing, but just highlights some of the significant memos, opportunities and items you may have missed.

Federal Marketplace Strategy 2022

Sonny Hashmi, the commissioner of the FAS, continues to make simplifying the buying and selling experience through the schedules and GWACs the organization oversees.

To that end, GSA said it will launch a new buyers’ experience effort based on human-centered design.

“This development will reduce pain points that federal agency buyers, suppliers and GSA acquisition professionals have mentioned in feedback,” GSA said in an April 13 release. “The updated buyer experience will offer buyers access to acquisition tools and market research solutions, as well as documents, templates and pricing resources to help plan acquisitions.”

GSA said its goals with these news tools are typical, reducing burdens, simplifying the customer agency’s experience and the like.

But digging deeper, FAS is trying to address some long-standing complaints about the menu of items it offers.

“That strategy will help to clarify government procurement options, qualification requirements, and the process of preparing to submit an offer,” GSA said. “Further, GSA is working to update the Multiple Award Schedule (MAS) Roadmap to simplify suppliers’ onboarding processes. Federal acquisition professionals have been working with industry to make it easier to get on the GSA Schedule, and GSA launched the new Vendor Support Center earlier this year so that all prospective and current MAS contract holders can find information and resources they need to do business with the government.”

While the specific details about the strategy are to come, if you review what Hashmi and FAS have been pursuing in the fall 2021 strategy it’s not difficult see what’s on tap.

Inflation adjustments still coming

GSA responded fairly quickly to contractors calling for help to deal with the 7.9% inflation the nation is facing.

On March 17, Jeff Koses, GSA’s senior procurement executive, and Mark Lee, the assistant commissioner in FAS’s Office of Policy and Compliance, temporarily changed requirements around the Economic Price Adjustment (EPA) contract clauses.

The four changes Koses and Lee outlined in the memo are:

• Lower the approval for price increases above the EPA clause ceiling from the contracting director to one level above the contracting officer;
• Relax time limitations on EPA increases;
• Relax limitations on the number of EPA increases a contractor may request; and
• Clarify that if a contractor has removed an item from their Schedule contract, GSA will not enforce the limitation on adding the same item back at a higher price.

“While EPA clauses normally act to protect GSA’s interests, in the current marketplace they make it harder for Federal agencies to acquire needed goods, services, and solutions. Contractors are removing items from the Federal Supply Schedules contracts to avoid selling at a loss. This particularly hurts new entrants and small businesses, the very firms the President’s initiatives around procurement equity are designed to support,” Koses and Lee wrote in the memo. “To ensure that GSA is able to continue offering a full range of products, services, and solutions, GSA must be flexible in how it applies these EPA contract clauses. Even with this added flexibility, contracting officers remain responsible for evaluating price increases and may accept them, negotiate them, or remove items from the underlying contract.”

GSA said the memo remains effective through Sept. 30.

While contractors applauded GSA’s quick action, the Coalition for Government Procurement recently raised some concerns about how FAS contracting officers are implementing the memo.

“Members are reporting that contracting officers are overlaying arbitrary (as in nowhere to be found in the Acquisition Letter) information requirements on contractor EPA submissions, effectively capping prices at certain levels without any nexus to contractor experiences in the market,” Roger Waldron, the Coalition’s president Roger Waldron wrote in an April 1 blog post.  “In addition, the scope of these information requirements is broad, indeed, broader than would exist otherwise and seeking information that is beyond the right of contracting officers to request. All told, even if contractors were to comply with such information requests, the administrative delay associated with them would be onerous.”

The challenge with any of these memos is trying to drive it down to the contracting officers, and then once they know it exists, ensuring consistent implementation can be another hurdle.

The fact FAS seems to be struggling to drive down the consistent changes to its contracting officers is a bit concerning, especially given agencies have not planned well for inflation and the impact it’s having on vendors.

The Defense Department, for example, expected inflation to be 4%. DoD senior leaders told Congress on April 5 that the military is currently feeling the impacts of a higher inflation rate than assumed. However, DoD has not released any calculations on reduced buying power.

It’s worth watching how big of a factor inflation becomes over the next few months, especially as agencies must spend 12 months worth of funding in six months.

Price remains a factor on Schedules

One final decision GSA made that may have slipped under your radar came in February and was made public in March.

GSA decided not to use its authorities to remove price as an evaluation factor when awarding a contract, provided by under Section 876 of the 2019 Defense Authorization Act, for its schedules program.

After a series of listening sessions with industry and agency customers, GSA decided keeping pricing at the contract level, versus the task order level, preserves the MAS program’s current value.

“Customer agencies expressed deep concerns about moving the pricing negotiation requirement from the contract level to the order level. Most agencies stated that this move would significantly reduce the value that MAS contracts give them,” GSA wrote in a March 23 blog post. “Industry stakeholders were split. Some acknowledged it would save time. Others had concerns about their internal market research and increased procurement acquisition lead time (PALT) at the order level.”

In a white paper outlining its decision, GSA said an integrated project team conducted six listening sessions among agency and industry customers and came up with a “pros” and “cons” list as well as risks.

Among the reasons why GSA should implement 876 authorities under the schedules program included is the potential to reduce the workload of its contracting officers as well as industry support for the change.

Meanwhile, the list of reasons not to implement 876 authorities were much longer. These included GSA already ensures prices at the contract level are competitive and agencies can ask for further discounts at the order level based on volume buying, and contracting officers wouldn’t have to conduct a formal, negotiated procurement, as required under FAR Part 15, at the order level.

“Early talks with industry during the Office of Governmentwide Policy (OGP) listening sessions indicated the risk that there may be some level of industry backlash as a result of not implementing Section 876. While the IPT acknowledges that compared to customer agencies more of our industry partners are open to implementing Section 876, this initial discovery phase did not produce any solid evidence that industry would turn away from MAS if Section 876 was not implemented,” GSA wrote. “Instead the opposite was stated by some industry partners during the IPT’s interview. Some voiced the fear that implementation of Section 876 would put more burden on customer agencies and deter them from using the MAS Program. In addition, while some stated that they would rather be able to develop pricing at the order level, the majority of industry partners interviewed by the IPT acknowledged that there were benefits to having pricing at the contract level.”

GSA has used, or plans to use, Section 876 authorities for several large multiple award contracts, including the awards under ASTRO, the multiple award vehicle for manned, unmanned and robotic platforms. It’s also strongly considering its use for the upcoming new services multiple award contract.

Two more points emerged from the listening session. The first is that GSA should review the use of the Price Reduction Clause and Commercial Sales Practice. Both are seen as historical drags on the program. GSA has been working on moving away from the PRC and CSP for almost eight years, but hasn’t quite pulled the plug.

The second recommendation is the ability to manage Service Contract Labor Standards wage determinations and pricing at the task order level, rather than the contract level.

Roberts, who announced in December he would leave at the end of the 2021, delayed his retirement for a few months but now is ready to move on.

A TSA spokesman has confirmed that the agency has chosen Yemi Oshinnaiye, the deputy CIO at the U.S. Citizenship and Immigration Services (USCIS), as its new permanent CIO.

Roberts will retire at the end of May and Oshinnaiye will start in early May to ensure there is an easy transition.

Oshinnaiye has been the deputy CIO at USCIS since March 2019, but worked at DHS previously from 2012 to 2017. He went into the private sector for a short stint before returning to USCIS.

During his tenure at USCIS, Oshinnaiye helped lead the effort to consolidate and improve how the agency uses cloud services.

In 2021, USCIS launched an effort called “clean my cloud.”

“There are so many cloud services at some point, we’re going to be a plethora of different clouds integrating and underlying our network. We took a step back and took a look at that and now anytime we move or build a new workload, we’re looking at what’s in the cloud already. That has enabled us to optimize. Now we have this thing where we’re looking at, our CTO called it ‘clean my cloud.’ So we’re looking at it every month. When you put something in cloud, if you haven’t done something to optimize it, we kind of call you out. So we gamified it a little bit,” Oshinnaiye said during a March 2021 panel.

That optimization effort led to savings that USCIS can put into other modernization initiatives.

Oshinnaiye said using virtual machines and automation are some of the ways his office increased the value of technology while reducing complexity and costs.

In coming to TSA, Oshinnaiye inherits a huge organization in the midst of a technology transformation.

Research firm Deltek estimated that TSA’s IT budget request for fiscal 2023 would be $967 million. This is less than the $1 billion IT budget it received in this year, but $161 million more than it received in 2021.

One of TSA’s big requests for 2023 is enterprise cybersecurity. The agency asked for $23.5 million to support 17 employees.

“This funding will enable early detection to dramatically improve the cybersecurity of TSA networks and provide a better ability to protect TSA’s sensitive data,” the DHS budget request stated. “In 2021, TSA investigated 2,412 cases in the calendar year, which subsequently yielded 84 confirmed incidents. A significant number of these cases (over 72%) were sourced from security logging, which captured unauthorized/malicious activity in TSA’s networks. TSA recognizes that to keep pace with today’s dynamic and increasingly sophisticated cyber threat environment, decisive steps are necessary to increase visibility into threats while adopting security best practices for logging and performing threat remediation via enhanced investigation tactics and increased resources. In addition to implementing one of TSA’s key strategic priorities, these funds support requirements described in Executive Order 14028.”

Along with TSA, the Justice Department’s Executive Office for Immigration Review has a new CIO, and a familiar face at that.

Sanjay Gupta joined EOIR in March after more than five years the Small Business Administration’s chief technology officer.

Gupta became at least the fourth former SBA technology executive to move into a larger role over the last 18 months. He joins Guy Cavallo, who is now the CIO at the Office of Personnel Management, Nagesh Rao, who is now the CIO at the Commerce Department’s Bureau of Industry and Security, and of course Maria Roat, the former SBA CIO and recently retired deputy federal CIO, in leaving the agency for bigger opportunities.

Gupta helped lead the SBA’s technology transformation, moving applications and systems to the cloud, testing out leading edge cybersecurity tools and embracing more digital services delivery.

In joining the Executive Office for Immigration Review, Gupta enters an entirely new sector where he will be supporting lawyers and judges who are adjudicating immigration cases. EOIR conducts immigration court proceedings, appellate reviews and administrative hearings.

EOIR’s IT organization has four directorates:

• Chief architect
• Operations services
• Governance, planning and support
• Software development

In case you missed these CIOs on the move

There has been a lot of other agency CIOs coming and going over the last few months. Here are some others that you may have missed.

FEMA CIO Lytwaive Hutchinson is retiring after 41 years of federal service.

Hutchinson joined FEMA in April 2019 after spending her entire career with the Defense Department. She served 21 years in the Army and then spent 17 years working in various senior leadership roles in the DoD CIO’s office.

The CIA named La’Naia Jones as its new CIO and the director of the Information Technology Enterprise (ITE) within the Directorate of Digital Innovation at the CIA in February.

She took over for Juliane Gallina, who moved to a new role in February. Gallina is now the deputy director of the CIA’s Directorate of Digital Innovation. Jones came to the CIA after serving as the deputy CIO at the National Security Agency for the past year. She also served as the deputy CIO of the intelligence community in the Office of the Director of National Intelligence for two years.

Finally also in March, Director of National Intelligence Avril Haines selected Adele Merritt to serve as CIO for the Intelligence Community.

Merritt was most recently program manager at DreamPort, a cyber innovation nonprofit created by U.S. Cyber Command.

Michael Waschull had been acting IC CIO for the past year. Haines said he would stay on as Merritt’s deputy.

Two other job openings

The Office of Justice Programs finally put out the job announcement to fill its vacant CIO position.

Brian McGrath, who had been CIO at OJP for six years, retired in October.

OJP said in its job announcement that the CIO “[h]as full responsibility for the oversight and management of all OCIO functional areas, including enterprise architecture, application development, infrastructure and engineering, cybersecurity, policy and planning and project management. Ensures the implementation of an integrated enterprise through coordination of resources across the agency and collaboration with other components to deliver a fully integrated capability that supports internal and external customers. Develops performance metrics and data to determine goals and decides methods, plans and schedules work, adjusts staffing and procedures to allocate resources, sets and adjusts priority, and assigns work based on priority.”

The application deadline was April 15.

The National Highway Traffic Safety Administration (NHTSA) is looking to hire a chief data officer.

NHTSA outlined seven roles the CDO will fill, including “developing and continually updating a comprehensive data and information product portfolio strategy, and developing and implementing a data services strategy to maximize use of NHTSA data for internal users, including data warehouses, data sets (e.g. MAX data), business intelligence tools, utilizing DOT shared services offerings whenever possible and practical.”

Applications for the position are due by May 5.

Finally, Oki Mek, the former chief artificial intelligence officer and chief technology officer for the Department of Health and Human Services, is back after a short time off.

Mek announced he joined Equideum Health as its chief information security officer. The company says Mek ensures that Equideum Health’s critical infrastructure is protected through cybersecurity capabilities and uses artificial intelligence (AI) and blockchain technologies.

CORRECTION: Treasury, USAID and Labor do not have MGT Act IT-WCF, but have requested authority for the fund in 2023. 

December will mark the fifth anniversary of President Donald Trump signing the Modernizing Government Technology Act into law.

While many in government and industry still love to focus on the Technology Modernization Fund as a big win from that bill, the ability to create IT working capital funds will, over the long term, be former Rep. Will Hurd’s (R-Texas),  Reps. Gerry Connolly’s (D-Va.) and Robin Kelly (D-Ill.) true crowning achievement.

It’s clear today that Hurd, Kelly and Connolly overestimated the appropriators’ enthusiasm for and acceptance of IT WCFs. Only a handful of agencies have been able to convince House and Senate money managers to approve these bank accounts, and most agency CFOs have been reluctant to just set these rainy funds up without prior approval.

And like with most things on Capitol Hill, change comes slowly, but it does come.

The latest example comes in President Joe Biden’s fiscal 2023 budget request to Congress.

The number of IT WCFs is growing, albeit much more slowly than is needed to address $7 billion or more in technical debt across the government.

The Treasury Department is the latest agency to ask lawmakers grant  them the ability to create an IT working capital fund. The agency would like to retain up to 5% of its appropriation to this new bank account and it can remain available until Sept. 30, 2026.

Treasury, at least at the headquarter level, has been a cautious mover to the cloud, and many expect its modernization effort to pick up steam with the impending award of the T-Cloud program, which seeks to establish a Treasurywide set of cloud services through multiple providers.

2 MGT Act working capital funds

There still are only two agencies with specific IT working capital funds using authorities under the MGT Act. The Small Business Administration, which was first, and the Office of Personnel Management  received appropriators’ blessings.

The budget request details how much money, or at least, what percentage they hope to have in their accounts.

Labor, for example, expects to spend its $3 million if it receives approval for a IT WCF this year.

USAID would expects to have up to 5% or $30 million available pulled from six different accounts. The money also will be available for three fiscal years.

OPM and SBA plan to use the IT-WCF authority this year. OPM can save up to 5% of their extra funding into the IT WCF account, and it will be available through Sept. 30, 2026.

SBA said it will retain up to 3% of its funds from two different accounts and it will be available through Sept. 30, 2026.

Other agencies such as the departments of Education and Commerce also have requested IT WCF authority over the years, but haven’t received approval.

HUD, EPA also funding IT modernization

Along with these specific IT WCF, several other agencies also are putting money in existing working capital funds to address IT modernization.

The Department of Housing and Urban Development has an IT fund for “the development, modernization and enhancement of, modifications to, and infrastructure for departmentwide and program-specific information technology systems, for the continuing operation and maintenance of both departmentwide and program-specific information systems, and for program-related maintenance activities…”

HUD said in the budget that it expects to have $382 million, of which $339 million will be available to Sept. 30, 2024 and $43 million will be available through Sept. 30, 2026, which seems to connect back to the MGT Act.

The Environment Protection Agency is taking a similar approach to HUD.

It’s using a working capital fund created in 1997 and the authorities under the MGT Act to modernize IT services, including “agency postage costs, Cincinnati voice services, background investigations and enterprise human resources IT services managed by the Office of Mission Support; financial and administrative systems, employee relocations and a budget formulation system managed by the Office of the Chief Financial Officer; the Agency’s Continuity of Operations (COOP) site managed by the Office of Land and Emergency Management; legal services managed by the Office of General Counsel; regional information technology service and support managed by EPA Region 8; and multimedia and agency servicing contracts managed by the Office of the Administrator.”

EPA expects to have $414 million in the WCF in 2023.

The Department of Homeland Security is dissolving its working capital fund and instead “will transfer funds to the servicing management lines of business for fee-for-service and governmentwide mandated services.” DHS says it still expects to have $139 million in the working capital fund in 2023 as it liquidates pre-existing obligations that occurred against the fund and wind down activities.

Aside from working capital funds, the White House offered mixed support for IT modernization.

Overall IT spending for civilian agencies would rise to $65.8 billion in 2023 from $58.4 billion this year. OPM, SBA and DHS are among the biggest winners with significant increases in funding requests.

Meanwhile, the Office of Management and Budget requested “only” $300 million for the TMF. This is down from $500 million it requested in the 2022 budget. But the lower request comes after Congress zeroed out the TMF in the 2022 omnibus bill, citing needing to spend the remaining $700 million currently in the TMF, most of which came from the American Rescue Plan Act.

“With the continuously evolving IT and cyber landscape, these investments are an important down payment on delivering modern and secure services to the American public, and continued investment in IT will be necessary to ensure the United States meets the accelerated pace of modernization,” OMB wrote in the budget request.

OMB, GSA’s other IT funds to see boost

But two other related IT modernization funds would see boosts in 2023.

OMB’s IT Oversight and Reform Fund (ITOR) asked for $14 million in 2023, up from $12 million. The U.S. Digital Service, which like the TMF benefited from a windfall in the American Rescue Plan Act of $200 million, asked for no new funding.

Congress approved $8 million for the ITOR fund in 2022.

USDS is using the ARPA money to increase its full-time employees to 271 in 2022, up from 161 the year before. It says the larger number of employees will enable “USDS to quickly address technology emergencies, ensure access and equity are integrated into products and processes, and help agencies modernize their systems for long-term stability.”

At the General Services Administration, the administration is seeking a huge increase for Federal Citizen Services Fund to $115.8 million. GSA requested $59.2 million in 2022 and $58.4 million in 2021.

Congress approved $55 million in 2022.

Additionally, GSA’s Office of Governmentwide Policy is seeking a modest increase to $70 million, from $68.7 million that Congress allocated in 2022.

GSA says it also would spend $12 million on the acquisition workforce training fund and $10.9 million would go into a working capital fund to continue the e-rulemaking modernization project.

Beyond the funding requests, OMB also laid out some policy objectives in the budget.

After being fairly quiet over the last two years, OMB re-initiated the concept of shared services.

Along with the Quality Service Management Office efforts at the Cybersecurity and Infrastructure Security Agency (CISA), which were most active over the last few years, OMB says the Grants Management QSMO, led by the Department of Health and Human Services, released its initial marketplace in fiscal 2021, identifying a dozen systems.

“The Grants QSMO is now working to verify that the functionality of these systems is consistent with the agreed to grants standards,” the budget states. “The remaining QSMOs are working to release their marketplaces as soon as possible, potentially as early as fiscal 2023.”

Of course, all of these figures are just that and lawmakers will take this request and do what they will with them. This is why the more agencies who receive permission for the IT-WCF will have a better chance of getting out of technical debt and delivering modern services to citizens and businesses.

Hundreds of small businesses are now in an unenviable position of having to make a tough decision — to bid or not to bid on the Polaris governmentwide acquisition contract.

For those small businesses not in a mentor-protégé joint venture relationship with a large business, they now have to weigh their chances of winning based on a last minute change to the solicitation for this potential 10-year contract with a $10 billion ceiling.

This decision point came because many experts believe the General Services Administration swung the pendulum too far in an effort to give small businesses more opportunities under another massive governmentwide IT contract.

On March 18, GSA released new details under the section for joint ventures and mentor-protégés that removes any requirement for the small business to submit any relevant experience or past performance as part of the bid.

“The [mentor-protégés joint ventures (MP-JV)] with a large business can max out their scores because now you have small businesses competing with multi-billion dollar corporations, and they just can’t win. The MP-JVs can max out almost every category based on the experience of mentors,” said Stephanie Mitchell, co-owner of BD Squared, a bid and proposal consulting firm. “The optics are terrible here. This will be a small business vehicle controlled by large businesses when they already have Alliant 2 and now rolling into Alliant 3. Based on the new information from GSA, they are not evaluating small businesses at all in Polaris, since the information in the bids will mainly come from large businesses.”

Experts question whether Polaris will end up just being a pass-through contract for large businesses given this change as well as the fact GSA is letting small businesses subcontract out as much as 60% of the work on any single task order.

First two Polaris RFPs are out

On Friday, GSA issued the solicitation for the first two pools under Polaris, for small businesses and women-owned small businesses with these changes to the mentor-protégé and joint venture requirements.

The Small Business Administration lists more than 1,500 mentor-protégé teams, though not all of them include a large business mentor.

Brian Friel, also the co-owner of BD Squared, said if the large business mentor can bring all the relevant project and past performance experience, it’s nearly impossible for a non-MP-JV small business to compete for any of the expected 100 spots under the Polaris small business pool.

Mitchell, small business owners and other experts say GSA’s last minute change means that for many companies the bid-no bid decision comes at the expense of months or more of work and tens of thousands of dollars in preparation.

One small business owner, who requested anonymity so as not to potentially anger GSA, said they have spent about $80,000 over the last 12-15 months preparing to bid on Polaris. Now, the owner said, they may not bid because the chances of them winning are so small.

“The MP-JVs will just take over the program,” said one small business owner. “If you look at the structure of the self-scoring system, the mentors will give their protégé’s a leg up based on their references, systems like cost accounting or earned value management and purchasing. If the protégés can get everything from their large business partner, then there is no way a small business can compete on Polaris.”

The small business owner said their proposal is about 95% done and now they must decide what to do next given the new information from GSA.

GSA declined to comment on the last minute changes to the mentor-protégé joint venture requirements. A spokeswoman said the agency doesn’t comment on open solicitations.

Waiting for new GWAC for 3 years

Small businesses have been waiting for Polaris since the Alliant 2 small business GWAC collapsed in June 2020. The ordering period for the Alliant small business GWAC ended in February 2019 so it’s been more than three years since agencies have had a large scale small business GWAC for IT services. Agencies have had more specific small business governmentwide contracts to use such as 8(a) STARS II and III, VETS 2 GWAC and others from organizations like NITAAC.

Experts say the changes in the Polaris solicitation seems like the changes are an over-correction by GSA.

Cy Alba, a partner with PilieroMazza, said there are good arguments for both sides.

On one hand, SBA has been pushing agencies to make sure small businesses have more contracting opportunities as it has seen the growth of “best-in-class” (BIC) contracts and category management.

“As agencies are putting more BICs together and making them bigger so it’s less likely small business can secure an award, SBA has been pushing joint-ventures and mentor-protégés to combat that,” Alba said. “That way the government is less likely to say small businesses can’t do the work and therefore it will be set aside. It’s clear the opportunities for joint ventures and mentor-protégé relationships are growing.”

One the other hand, Alba said what has been lost in this discussion is what about those companies who don’t want to be part of a mentor-protégé, joint venture relationship.

“The law, as it currently stands, doesn’t differentiate between MP-JVs with large businesses versus those with small businesses. They are all eligible small businesses and are in one bucket,” he said. “There is no way to separate that out right now, which is part of the concerns we are seeing with Polaris.”

Too strict of an interpretation?

Alba said GSA’s over-correction may come from the experience the National Institutes of Health IT Acquisition and Assessment Center (NITAAC) with its CIO-SP4 solicitation.

NITAAC issued multiple amendments and lost its only protest over its approach and subsequent changes to JV-MPs.

Friel said it seems like GSA is interpreting the policy in a way that says it’s fine for the small business not to have to bring any past performance or relevant experience to the bid.

But, he said, it doesn’t make sense for a small business vehicle to have bids based on large business experience.

“It seems like GSA is interpreting the policy more strictly and against common sense,” he said. “We believe GSA can require the protégé to bring some experience to the table. Maybe they could establish a minimum number of examples like two out of five.”

The small business owner said the timing of the changes also are problematic. If GSA had changed the MP-JV requirements six or nine months ago, it would’ve given companies more time to establish these agreements.

Alba added on average it takes 105 days to set up a formal mentor-protégé agreement through SBA. Firms can set up a joint venture in a matter of days, but that’s assuming everyone agrees to everything, which is rarely the case.

BD Squared and others have sent letters to GSA and members of Congress seeking help and an explanation for the change. But in the week-plus since GSA issued the change, they haven’t heard anything back from agency officials.

Alba and others say they will be watching for small businesses to file pre-award protests over the terms of the solicitation.

“I do think the way the SBA rules are set up allows for use in JVs and MPs where any member’s experience can count so it leaves it up to an agency’s discretion where they are in that process and how many or what restrictions they want to require,” he said. “SBA doesn’t get into that so then it becomes a question for the Government Accountability Office or the Court of Federal Claims to say if it’s unduly restrictive. GSA may say they are increasing competition, but what’s funny they may be also limiting competition in a de facto sense because now people may not bid because they know their chances of winning are so low.”

Mitchell said vendors have invested a lot of time and money since December 2020 and to have GSA spring this change in the last minute is “crushing” to many small businesses.

And after all the challenges GSA had with Alliant 2 small business and the time and effort they put into developing Polaris, it’s a shame that, once again, last minute changes could throw a wrench into this new effort.

“The inflation crunch is especially severe for government contractors, however, because they have traditionally faced a buyer dominated market in which contract terms and conditions are offered on a take it or leave it basis. Once into the period of performance, government contractors consequently confront a formidable bureaucracy characterized by limited flexibility in responding to the radically changed circumstances presented by such developments as double digit inflation. Unlike his civilian counterpart, the government contracting officer has little or no power to adjust contract prices when equity or practical considerations require and his authority in general is limited by a bewildering array of regulatory and decisional law.”

This excerpt is from a research paper by the Washington and Lee Law Review, capturing the impact of inflation on government contractors in 1975. Yes, written 47 years ago and the point made by Richard Johnson and John Pachter, who now are with Smith, Pachter and McWhorter, rings more true today than ever.

In 1975, the inflation rate was 9.13%. In January 2022, it stood at 7.3%.

And just like in 1975, where a gallon of gas was 44 cents on average and milk cost on average $1.57 per gallon, contractors are feeling the brunt of the rising costs of goods and services, and so too are agencies and their ability to meet their missions.

“[The General Services Administration’s] multiple award schedule contractors are being put in an untenable position: continue performance at losses of 15%-to-25% or more on individual products, seek other, more flexible channels to support the customer, or simply exit the government space altogether in favor of the private sector that responds more readily to the forces of the market,” wrote Roger Waldron, the president of the Coalition for Government Procurement, in a Jan. 28 blog post. “This reality is stark, especially for small business whose margins are slim, resources are scarce and channels to the federal buyer are limited.”

And sources say some contractors are actually leaving the federal market altogether, in part, because they are losing so much money.

Heavy burden on contractors

Larry Allen, the president of Allen Federal Business Partners, said the impact on inflation on small businesses is especially hard given tight margins in federal acquisition already.

The issue isn’t just around GSA’s multiple award schedule contracts. Inflation is impacting everything from the Defense Department’s buying of fuel to the Department of Veterans Affairs’ purchasing of healthcare equipment to the Millennium Challenge Corporation’s acquisition of copy paper and toilet paper.

“Price increases have hit every link in the supply chain, including labor, materials, shipping, and energy. Associated with this rise in the rate of inflation (the highest rate in over a generation) is the increase in interest rates as a means to moderate inflation,” Waldron wrote to in a Feb.9 letter to GSA’s Mark Lee, the assistant commission in the Office of Policy and Compliance. “Altogether, these challenging economic circumstances place a heavy burden on contractors and their supply chains, especially small businesses contractors. The damaging effects of inflation on those providing goods and services in the economy cannot be overstated. The current increase in the rate of inflation devalues the currency businesses hold, reducing their spending power, and adding to the cost of doing business. The federal marketplace is a part of the broader economy, and thus, federal contractors are not immune to the impact of these challenges. Indeed, the same cost increases affecting the performance of businesses, especially small businesses, in the private sector exist for businesses performing under government contracts.”

The other related issue that contractors saw in 1975 and are once again feeling the pinch today is the government’s protracted process for vendors to increase prices.

The good news is that GSA is recognizing the inflation challenge and trying to do something about it.

Stephanie Shutt, the director of the MAS program management office, said the Economic Price Adjustment clause isn’t working because the rules are too restrictive. For example, the regulation only lets vendors increase prices no more than three times a year per item and the total annual increase is capped either 5% or 10% depending on the item or service.

“We are working with the Office of Governmentwide Policy and the Office of Policy and Compliance to see what we can do to provide workarounds for industry so you can increase more often throughout the year and increase more often after you have added something to your contract so your pricing can stay current and your pricing can stay fair and reasonable, and so we can make sure you are in a pocket for success,” Shutt said at the Centre Law and Consulting Annual 2022 Review on March 3. “If you are having issues with your pricing, so we can track it better, we do recommend that you email the GSA ombudsman. Please don’t email the ombudsman until you actually have an issue though. We are working really hard to make sure that we provide a lot more flexibility so the supplier journey is easier across the board. It does take time and money for us to process a rejection as much as it is time, money and frustration on your side. We are working very hard to see what we can do to make sure we are doing it well across the board.”

Allen said it’s a good sign that GSA recognizes the need to address prices changes, but need to move more quickly.

“They’re collecting contractor input right now, which suggests that it will be a couple of months before we have something. That’s too long when there is abundant market evidence that inflation is a problem,” he said. “Why not adopt an interim approach now and work toward something more permanent over time? This really impacts small businesses the most, so if GSA is following the administration’s lead on helping such companies, it would make sense to do something quickly.”

Shutt recommended that when vendors come to their contracting officer to ask for a price adjustment, they need to make sure they have all necessary and proper documentation.

“If you come to the table and the contracting officer asks for documentation on how the pricing is effecting your commercial market and you provide something like a firm fixed price invoice that has no detail in it, that’s not going to give your contracting officer enough to go off of. It’s not going to be properly documented in a way the contracting officer can do any type of negotiation from that,” she said. “Some great documentation could include freight charges of raw materials and how it effects your supply chain. Another thing could be for labor categories, with COVID and people coming back to work, there is a need to pay people more so there may be an increase in what you need to pay your employees. That may funnel down as well. So telling and documenting that whole story is really important with pricing.”

Another idea to whip inflation

Shutt didn’t say when GSA would come up with a new workaround or even an interim process change to address the challenges posed by the Economic Price Adjustment clause.

One solution mentioned in 1975 was to invoke the powers under 50 U.S.C. § 1431-35, which dates back to 1958. Johnson and Pachter write that the law lets the President and agency leaders modify contracts and “remove the prohibition against making amendments to contracts without consideration, and vests in the executive branch a wide-ranging discretion to remedy inequities in its contractual dealings, such as those created by the current surge of inflation.”

Given the fact that agencies are still dealing similar regulatory challenges as was the case 47 years ago, turning to a potential short term solution like this may make the most sense.

As Johnson wrote in 1975, “Moreover, a limited broadening of relief under Public Law 85-804 may be less inflationary in the long run than a wholesale exodus of commercial enterprise from the government contracting field. This latter result, which is a distinct threat today, would inevitably reduce competition for government business and increase the prices the government must pay for years to come.”

Those words continue to ring true today.

Ryan McArthur joined the Defense Information Systems Agency (DISA) in February as the JWCC program manager. McArthur moved over to DISA from the DoD chief information officer’s office where he was a senior technical advisor supporting the enterprise/tactical cloud strategy.

Sources say DoD eventually will add a deputy program manager as part of the expectation that the program office will be busy whenever JWCC officially is ready to take orders.

In case you have been in hiding for the past few years, JWCC will replace the Joint Enterprise Defense Initiative (JEDI) that was hamstrung by protests and controversy. In November, DoD issued formal solicitations to Microsoft, Amazon Web Services, Oracle and Google to become a part of JWCC. DoD still must negotiate separate indefinite-delivery/indefinite-quantity contracts with each company, a process the department expects to finalize by the third quarter of fiscal 2022.

Before coming to the DoD’s CIO’s office, McArthur served in the Army for 10 years, working on tactical satellite communication systems and other logistics network applications. He also worked for the Marine Corps and the Agriculture Department in assorted IT project management and strategy roles.

It’s not clear what McArthur’s role exactly entails. DISA’s JWCC page doesn’t discuss the role of his position or potential office, but one could assume it will be to help usher services and defense agencies through the cloud acquisition process using the Account Tracking and Automation Tool, which will keep track of each contractor’s service offerings and prices, and use that information to help decide which vendor should get a particular task order.

New DoD CIO leadership

Along with McArthur, there were several other personnel changes within DoD worth noting.

Kelly Fletcher, who served as the senior executive performing the duties of the DoD CIO for four months starting in September 2021, officially became the principal deputy CIO last month.

Fletcher has worked for the DoD CIO for two years, coming over from the Homeland Security Department in 2020 where she was deputy director of program analysis and evaluation.

She replaces John Sherman, who joined in June 2020, and became the permanent CIO in December when the Senate confirmed him.

Fletcher also served as the acting CIO at the Department of the Navy for over a year and worked previously for DoD from 2011 to 2016.

During her time as performing the duties of the CIO, Fletcher oversaw the implementation of a new zero trust program office and focused on how DoD can succeed in a more complex environment featuring cyber, spectrum and data and artificial intelligence.

While Fletcher and McArthur are settling into new roles, Nand Mulchandani, the chief technology officer of DoD’s Joint AI Center, decided to leave after two-plus years.

“It still feels like a dream to me — from visiting the Pentagon for the first time to the intense work we did at the JAIC and across the department to help deploy and scale AI and technology through policy, community building, acquisition and, of course, working closely with American technology companies to build and deploy dozens of key ‘leveraged’ products across multiple verticals,” Mulchandani said in a post announcing his decision to leave on LinkedIn. “It was amazing to learn how to launch a brand new agency at the Pentagon from the brilliant Lt. Gen. Jack Shanahan, spend time as acting director of an agency at the Pentagon as the bridge between two three-star generals, and then hand over the JAIC to the awesome, hard-charging Marine Lt. Gen. Michael Groen.”

Mulchandani said the JAIC has transformed into the chief digital and AI office as DoD “is starting to embrace the power of technology to transform the way it operates and to retain our competitive edge.”

Deputy Defense Secretary Kathleen Hicks, in a memo posted on Feb. 1, named John Sherman, the DoD chief information officer, as the new chief digital and AI officer.

Before joining the JAIC, Mulchandani spent more than 25 years in industry, where he was a serial entrepreneur and senior technology executive. He co-founded and was CEO of ScaleXtreme, which was eventually acquired by Citrix, a leading provider of desktop virtualization and networking infrastructure. Mulchandani served as Citrix’s vice president of market development and strategy. He also worked at Cisco, VMWare and started his career at Sun Microsystems as a compiler architect and holds a patent on dynamic code generation.

“For those of you who have the ability to serve, please jump into the fight. It will be tough and frustrating, but you will feel great about your contribution to the country and the common good. As the child of immigrants, I am deeply aware that our system and society that gave me the opportunities I’ve had in my life does not come for free, and paying back through whatever means is a privilege and honor,” he wrote. “Even this short stint as a public servant was extremely gratifying and, as I am realizing, somewhat addictive. There is a strong chance that I might pop back up in another part of the U.S. government focused on national security and technology, and hope to share that news soon.”

AI leadership at HHS

The federal AI community also lost another leader.

Oki Mek, the chief AI officer at the Department of Health and Human Services, also announced he’s leaving federal service after more than 20 years as a federal employee and contractor.

Mek is unsure what he plans to do next, except take some time off. He said he may end up in the private sector.

He became the HHS chief AI officer in December 2020. He spent the previous decade with HHS working in several executive positions including as the senior advisor to the CIO working on Reimagine HHS and the chief technology officer in the acquisition office.

Mek also spent seven years working at the Energy Department as a contractor on web development and IT strategy.

During his time as chief AI officer at HHS, Mek focused on several areas, including training the workforce to better understand what AI and machine learning can do for the agency, ensuring that HHS builds and acquires AI systems in a way that meets legal requirements and developing an ecosystem to support these projects.

Mek oversaw the development of the HHS AI strategy, which he released in January 2021, promoting accelerated adoption and bringing the entire department up to speed on the language of AI, and scaling best practices

There were two other changes of note in the federal community.

First, Robert Sears, the director of the N-Wave Enterprise Network Program at National Oceanic and Atmospheric Administration in the Commerce Department, is the new chairman of the federal internet protocol version 6 (IPv6) task force. He takes over for Ron Bewtra, who left federal services after 18 years in December.

Bewtra wrote on LinkedIn that, as the previous chairman of the task force, “I have a great appreciation of the effort, teamwork and coordination that is required. Thank you for the huge team effort and I know the federal IPv6 initiative is in great hands moving forward.”

Sears and the task force have a lot of work ahead of them. The Office of Management and Budget in November 2020 issued yet another IPv6 memo, detailing new deadlines, including the need to develop an agencywide IPv6 implementation team, an agencywide policy and to identify at least one pilot of an IPv6-only operational system by the end of 2021.

The memo has a goal of having 80% of all IP-enabled assets operating in IPv6-only environments by the end of fiscal 2025.

The task force will help agencies meet those and other goals by sharing best practices, by working with OMB to address the challenges many agencies are facing and providing guidance where needed.

GSA brings back former executive

Finally, the General Services Administration is bringing back a familiar face.

Jim Ghiloni is coming back to GSA’s FedSIM organization to be the director of the IDIQ Labor and Innovation Sector.

“It feels wonderful to be coming home to GSA and especially back to FEDSIM where my federal career began a long time ago. I loved my time at Wolf Den Associates and appreciate how much I learned in my private sector sojourn. I look forward to being the shapee rather than the shaper,” Ghiloni wrote on a post on LinkedIn.

Ghiloni worked previously at GSA for almost 16 years before leaving in 2017 to be a consultant for Wolf Den Associates.

In his previous positions in GSA, Ghiloni served as the deputy associate commissioner of the common acquisition platform, was the program executive officer of the OASIS multiple award contract and director of business operations of the Federal Acquisition Service and Assisted Acquisition Services.

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The Defense Department’s mandated report from President Joe Biden’s July executive order on promoting competition would lead you to think the shrinking supply chain is putting the nation at risk.

“Since the 1990s, the defense sector has consolidated substantially, transitioning from 51 to 5 aerospace and defense prime contractors,” the Feb. 15 report stated. “As a result, DoD is increasingly reliant on a small number of contractors for critical defense capabilities. Consolidations that reduce required capability and capacity and the depth of competition would have serious consequences for national security.”

A week before that report dropped, the National Defense Industrial Association (NDIA) rang the alarm bells that played a similar tune.

NDIA’s 2022 Vital Signs report found the health of the DIB at its lowest point since the launch of the review with five of eight categories falling below the passing grade of 70 out of 100.

“Vital Signs 2022 also reflects the story of recent political and regulatory action against adversaries and their influence over the DIB, and the way in which that has shaped and will continue to shape the future of the warfighter,” the NDIA and Govini found in the report. “This past year has witnessed significant deterioration in the signs including ‘supply chain’ as well as ‘production capacity and surge readiness,’ which almost certainly is a result of the impact of the pandemic. Conversely, the only sign that significantly improved was ‘demand,’ reflecting recent growth in the defense budget.”

But these reports really only tell one side of the story.

Conversely, the data on overall spending, the rate of competition and the total revenue all point to an industrial base that is healthy, wealthy and, hopefully, a little wiser.

Bloomberg Government found in its fiscal 2020 report — the most recent data available — that most of the top 10 contractors across government, not just within DoD, saw their revenue increase over the previous year.

Lockheed Martin, for example, repeated as the top contractor in 2020, bringing in $75.8 billion in federal contracts, up from $43.4 billion in 2019. In 2021, NDIA reported Lockheed earned $74.9 billion, while the other top five DIB vendors, Raytheon, General Dynamics, Boeing and Northrop Grumman all saw decreases between 2021 and 2020.

It’s not just about straight revenue either. DoD reports that the overall competition rate among contractors reached 52% in 2021, more than 1% higher than 2020, but lower or equal to the rate each year since 2012.

The increased competition rate along with the revenue increases comes despite growing concerns about mergers and acquisitions negatively impacting the price for specific products like major weapons systems DoD pays as well as availability of products and services.

“Although studies of this trend have not found a strong correlation between consolidation and increased program pricing, additional risks beyond pricing come with consolidation,” DoD stated. “Growing concentration can reduce the availability of key supplies and equipment, diminish vendors’ incentives for innovation and performance in government contracts, and lead to supply chain vulnerabilities.”

The DoD and NDIA report are part of a growing drum beat across the defense sector warning lawmakers about the growing near peer competition coming from Russia, China and other countries and whether the defense industrial base can keep ahead of them.

As Congress looks to complete its fiscal 2022 spending bill and begins to work on 2023, the reports highlight both real and perceived threats for lawmakers to consider as they parse out the more than $700 billion DoD budget.

“Many of these challenges were there before COVID. The pandemic served to highlight and accelerate these challenges. But it is definitely a wake-up call for the decision and policymakers in our country,” said retired Air Force Gen. Herbert “Hawk” Carlisle, the president of NDIA, during a press briefing on Feb. 2. “The aggressive Russian military buildup on the Ukrainian border and the pacing threat, the rapid military modernization efforts of the People’s Republic of China remind us that our industries work of providing superior products and services to armed services so that they can compete and win and all domains of warfare can never be taken for granted. We owe it to the women and men that serve and defend this nation to give them the equipment, the capability and the training to do the mission we asked them to do and right now in the environment we’re operating in. It’s a challenge and we got a lot of work to do.”

Chinese investment in AI

Tara Murphy Dougherty, the CEO of Govini, added the Vital Signs 2022 report should serve as a “wake-up call” for DoD, Congress and the White House to better understand just how challenging the current federal procurement environment has become over the last decade.

“The challenging environment does not impact just the companies that the Department of Defense is already working with today. The more difficult the dynamics of working with DoD are, the more the department will continue to struggle to bring new entrants into this market. We know as a national security community that the Department of Defense has to bridge the gap between the traditional members of the defense industrial base who today continue to contribute so much into the emerging national security innovation base. DoD has to attract the companies that are working on a bleeding edge technology in the commercial sector of the United States economy,” Murphy Dougherty said. “If we cannot accomplish that, the techno military challenge and competition that we’re facing with China will continue to undoubtedly get more difficult. If you consider comparative investments between the United States and the Chinese Communist Party in these emerging technologies, and the commitment that China has to leveraging those technologies for warfare, it’s clear what DoD needs to do. That begins by improving the environment in which these companies operate in order to serve DoD and the national security efforts of our country.”

It’s the concerns about the gains China and Russia are making is helping to drive this mixed message about the DIB.

Both reports found the number of new entrants coming into the defense sector has steadily dropped. DoD says the reduction is felt most among weapons suppliers, which fell to 5 from 51 in the 1990s.

Wes Hallman, the senior vice president for strategy and policy for NDIA, said the lack of new entrants into the DIB is surprising and concerning, especially during the pandemic.

“Two different studies one from 2008 to 2018, and one that was 2011 through 2018 noted thousands of companies have left the defense industrial base. We’ve noted that the number of new entrants between 2019 and 2020 went from over 12,000 to just over 6,000. We saw another drop from 6,500 down to 6,300 new entrants over the last fiscal year [2020 to 2021],” Hallman said. “When you look at the supply chain issues and the many, many years of a dwindling supply base create more and more fragile networks. Then the pandemic really highlighted the fragility of that. As policymakers look at this, we need to look at what are the incentives and disincentives to come in into this marketplace and really adjust the marketplace so it’s so it’s easier to enter it easier to thrive in it and then produce some resilience.”

More vendors in R&D defense sector

Carlisle added that the drop in new entrants comes despite the defense sector being somewhat protected against the economic challenges brought on by the pandemic.

The one area that has bucked this shrinking trend is research and development where the use of other transaction authority has increased the number of vendors by 9% over the last decade, DoD reported.

Dr. Mark Lewis, the executive director of NDIA’s Emerging Technologies Institute (NDIA ETI), said DoD must reverse the spending decline on basic research as a way to address many of these growing DIB problems.

“We won’t have those the next set of emerging technologies if we’re not investing in the basic research that will, we’ll get there. I think we can certainly highlight some successes of the Defense Innovation Unit, which has been incredibly successful at kind of opening the door for new companies to come into the DoD,” Lewis said. “Very recently, Under Secretary of Defense, Heidi Shyu announced instead of reducing the number of modernization priorities, she’s actually into adding a few modernization priorities, which I think is wholly appropriate. So there’s still, obviously a very keen focus on these emerging technologies, and I think there’s a sense of alacrity, but again, we’re getting some mixed messages along those lines. So it remains to be seen. And I think we’ll certainly see when the 2022 National Defense Strategy is released if it continues to emphasize the importance of these emerging technologies, and especially with a focus on peer competitors, such as Russia and China.”

It’s clear there is no one solution to reinvigorating the defense industrial base. It’s clear the continuing resolutions, the long acquisition cycles and the complexity of the procurement process all play into the challenges. At the same time, DoD and its contractors haven’t done enough to help themselves as spending keeps increasing and companies keep winning more contracts.