Infotech and the law: Homeland security contracting

Richard Rector

Homeland security contracting has emerged over the past 18 months as an area of intense interest in the contracting community. Many large systems integrators have shuffled priorities and resources to go after this growing market, and hosts of smaller companies, many of them new to the government market, have set their sights on entry into this field.

From my work with clients large and small, I have a list of "lessons learned" for homeland security contracting. Some are obvious, others are more subtle. All are grounded in the realities of selling to federal, state and local governments.

First, you should continue to work existing customers and agencies at various levels: senior management, users, program management and procurement personnel.

This is particularly true for the 22 constituent agencies and organizations that comprise the Department of Homeland Security. It will be months, perhaps years, before Homeland Security functions with a cohesive vision and centralized authority. Until then, it is most important to work the constituent agencies.

Second, if you are small or new to public contracting, you should consider teaming or alliance relationships with prime contractors that already know the evolving requirements and programs, as well as the key stakeholders and decision-makers, within each agency. Most large primes have created an organization to focus on homeland security contracting, and they routinely field inquiries and proposals from potential teammates and subcontractors.

Third, where appropriate, help the agency identify and secure funding through liaison with the legislative and executive branches. This is not always necessary or suitable, but we have had success in this area when the client's technology and the agency's mission were well aligned.

Fourth, it's imperative that you understand and take advantage of the sales channels and contracting vehicles available in public procurement. Federal Supply Schedule contracts and governmentwide acquisition contracts, known as GWACs, are the vehicles of choice in federal procurement. You are playing with one hand tied behind your back if you do not have access to one of these vehicles.

In the right circumstances, you should also pursue sole-source and limited-competition procurements, which are available under both federal and state laws.

Fifth, you should understand and take advantage of the flexible acquisition authorities provided by the Homeland Security Act. For example, the act provided both the Department of Homeland Security and all federal agencies with the ability to use simplified acquisition procedures for homeland security contracting. In addition, it provided the agency with the authority to use "other transactions" authority for research and prototype development, and it modified the rules on unsolicited proposals.

Sixth, you must limit your liability for products and services to be used for homeland security. Your liability could be enormous if your product or service is alleged to have failed in some way in connection with a terrorist event in which there is extensive personal and property damage.

Depending on the context, protecting yourself could be contractual limits on liability, indemnification by the government against third-party claims or inclusion on Homeland Security's "qualified list" of anti-terrorism products, which entitles a company to cap its liability for defective products or services in the event of a terrorist attack. The draft regulations creating the qualified list recently have been finalized, so contractors should be actively developing their applications for access to the list.

Finally, be patient and have reasonable expectations. There is no silver-bullet strategy for success in the area, and there are limits on the funding available for new technology. Nonetheless, for companies that work smart and hard, there is real opportunity.

Richard Rector is a partner in the Government Contracts Group of Piper Marbury Rudnick & Wolfe LLP in Washington. His e-mail address is richard.rector@piperrudnick.com.

 

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