A small business recently derailed an attempt by the government to insource jobs willy-nilly.
Rohmann Services, Inc., a San Antonio-based company, had been doing multimedia and audiovisual work for the Air Force at Edwards Air Force Base in California since 1997. However, in October 2009 the Air Force began moving toward insourcing the work, according to a report from the Venable law firm.
The Defense Department has the authority to review contracts to see whether it can do the same work in-house for less money. Nevertheless, DOD’s insourcing procedures require the military services to maintain a contract if a cost analysis indicates that a contractor can perform the work cheaper. The Air Force did the cost analysis, but its analysis didn’t include the gamut of costs. In addition, officials omitted certain positions in their calculations, as well as overhead costs, fringe benefits and overtime costs, according to Venable. As a result, the figures showed that DOD itself could do it cheaper.
Because of those errors, the small contractor filed suit in the U.S. District Court for the Western District of Texas and argued that insourcing rules guaranteed fairness to all parties and that the Air Force didn’t follow the procedures. Accordingly, the military decided to withdraw its insourcing decision and to extend Rohmann’s contract term.
Although the Air Force's withdrawal rendered the case moot, Venable offered its take on what it means.
“This case demonstrates that although the Obama administration may be seeking to insource much of the services the federal government currently fulfills through private contractors, it will not be allowed to do so in a carte blanche manner,” Venable wrote.
Furthermore, and as importantly, in reading Venable’s tips for practitioners, the battle lines are being drawn between the government’s steps to insource and contractors' barricades around their livelihood.
The case “signifies the real threat of insourcing to government contractors, as well as the tools and defenses available to them in defending their contracts,” Venable wrote. “As a result, government contractors should be mindful of the government insourcing efforts and take steps to protect their contracts and document their true cost.”
Posted on Mar 18, 2010 at 1:06 PM0 comments
One research institute says the economic stimulus law isn’t doing much for businesses owned by minorities and women, even a year after President Barack Obama signed it.
Businesses owned by blacks, latinos, and women represent 5.2 percent, 6.8 percent, and 28.2 percent, respectively, of companies in the United States. But as of Feb. 1, those companies had received only 1.1 percent, 1.6 percent, and 2.4 percent of all federally contracted stimulus money, according to a recent report titled, “ARRA and the Economic Crisis: One Year Later.”
Also, less than $2.4 billion, or 5 percent, of the $45 billion in direct federal contracts allocated by Feb. 1 were given to those types of businesses, the report states.
“Figures from federal procurement indicate very troubling and disparate contracting patterns when reviewing data on procurement to minority- and women-owned businesses,” according to the report by the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University.
The dollar amounts are federal funds based on federal procurement data. The institute found no widely available state level data on stimulus law contracting to minority firms.
Posted on Mar 16, 2010 at 2:29 PM3 comments
Federal officials who find themselves tempted to bundle multiple contracts into one nice, big package should take note.
Saving money isn’t an acceptable reason for contract bundling.
Neither is the otherwise admirable notion of relieving an overloaded contracting officer.
And even the idea of reducing the costs of the acquisition process isn't going to cut it.
At least Sen. Jon Tester (D-Mont.) isn't buying those excuses. And he is proposing to make such rationale unacceptable under the law too.
On March 10, Tester introduced the Level Playing Field Contracting Act (S. 3101) because he wants to give small businesses and contractors a real chance in the federal marketplace by breaking up bundled contracts, or stopping any mergers before they begin to come together.
Tester said the big companies are getting the big contracts, leaving the small businesses on the sidelines.
“The Level Playing Field Act will open the door for smaller companies to get some skin in the game,” Tester said.
Under Tester's bill, civilian agencies couldn’t bundle contracts into one that would be worth more than $2 million. The Defense Department couldn’t combine contracts to create a $7.5 million acquisition.
Ultimately, Tester would give agencies’ competition advocates, who challenge barriers to competed contracts, and agencies' small business offices a shot of authority in the arm.
Posted on Mar 12, 2010 at 12:03 PM2 comments
The Obama administration is considering giving advantages in competitions for federal contracts to companies that pay more money to their employees.
A Wall Street Journal editorial describes what a proposed presidential executive order may look like:
“The proposed Executive Order is being drawn up by [Vice President] Joe Biden’s Middle Class Task Force. It would oblige government procurement agencies to give contracts to ‘responsible contractors’ who pay workers well and offer higher health, pension, sick leave and other benefits.
“At each federal agency, a new labor commissar tasked with making these judgments will also have discretion to award an advantage to companies which, by some calculation, treat employees better. Under Democrats, this would tilt toward unionized companies. And these labor standards would have to be enforced across a company, not just at the unit bidding for a contract. This is opening the back door to government-mandated labor standards, another union dream.”
Pay attention, and expect President Barack Obama to release a wage-based executive order. It will have wide-reaching implications for companies big and small.
Posted on Mar 10, 2010 at 1:05 PM3 comments