Hiring Government Employees as Part-Time Consultants - There May Be Prohibitions

Government contractors need to be careful about who they hire and Government employees need to be discerning about the companies from whom they take part-time employment.

In a recent Justice Department press release, a "former" employee of the Army Corps of Engineers pled guilty to lying to law enforcement agents. What did she lie about? She lied about her part-time employment from Army contractors who she had oversight responsibilities as a Government employee.

Ms Sellers was a civilian employee of the Army Corps of Engineers. She was a biologist who's duties included coordinating and advising on environmental issues related to Army Corps projects. Part of her responsibilities included reviewing products from environmental consulting companies.

Federal ethics laws and regulations prohibit federal employees from engaging in outside employment that conflicts with employees' official duties. For about five years, while employed with the Army Corps, Sellers engaged in outside employment with a consulting company despite being part of a team that oversaw that company's work for the Corps. Ms Sellers used her personal non-Government email account to share sensitive, internal draft Government documents that she received in her official capacity with her part-time employer. She also used her personal email accout to participate in private email conversations with employees of the company and used her personal email and social media accounts to assist the company in contract negotiations.

Ms Sellers kept this part-time employment a secret from colleagues and management and tried to keep it a secret from investigators. Earlier this year, Ms Sellers falsely and willfully misled federal agents about her outside involvement with the consulting company. Where the federal agents got the information in the first place is not part of the publicly available documents. What is interesting to note however is that investigators seemed to have real time access to her private email because right after the interview where she lied to investigators, the investigators discovered another email she sent to the contractors stating "I can't do any of this work for you. I am on admin  leave from usace. Conflict of interest. May be fired."

The Government's Use-it or Lose-it Spending Spree

American Transparency (website: OpenTheBooks.com) is a public charity who's Government oversight reports present hard data so citizens can "follow the money". Its stated goal is to enhance public discourse with delineated facts.

The group recently published an oversight report entitled: The Federal Government's Use-It-Or-Lose-It Spending Spree - How the Federal Government Spent $97 Billion in One Month. True to its goal, American Transparency doesn't try to blame anyone or any organization in particular for wasteful spending but just points out the facts related to (fiscal)  year end spending. But the listing of items purchased does give one pause to wonder why the Government needs fidget spinners, alcoholic beverages, crab and lobster, and expensive furniture ($50 thousand chair).

American Transparency believes that the use-it-or-lose-it mentality has been a problem forever. Agencies feel that they need to spend their budgeted funds in order to secure at least the same amount the following year. That's not necessarily true. It could be that Agencies are holding back funds during the year to cover unforeseen contingencies and as the year progresses and those contingencies do not materialize, are comfortable spending the funds on other needs. Or, perhaps there is just more pressure on contracting officers to get contracts awarded by year-end. Some in the Government feel that contractors intentionally drag their feet in negotiations knowing that if they wait until year-end they will be able to negotiate a more favorable price because of pressure on contracting officers to finalize contracts by year-end.

The report contains two appendices that list the top 100 spending categories and the top 100 contractors receiving year-end spending spree funds. You can download and read the full report here

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The Inaugural Air Force Pitch Day was Considered a Success

Last week, the Air Force awarded contracts to 51 companies in a matter of minutes at its inaugural "Air Force Pitch Day".

The Air Force Pitch Day is modeled after commercial investment pitch competitions that attempts to deliver a faster (and presumably smarter) approach to compete for ideas in technology. The process is a significant departure from the lengthy contractual process typically expected of the military. If focuses on rapidly awarding Phase I SBIR (Small Business Innovation Research) contracts to companies based on a simpler streamlined evaluation of white papers and in-person presentations.
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How does a pitch day work?

Prior to the pitch day, Air Force contracting officials reviewed 417 submissions received during a 30-day application period and then invited 59 businesses to pitch their proposals in person. Of those 59 companies, 51 received an initial award of up to $158 thousand with an initial payment within minutes of their presentations.

The average amount of time to award contracts and pay companies (using a Government credit card) was a mere 15 minutes. Under traditional contracting practices, the average amount of time to award SBIR Phase I contracts is 90 days - a period where many small businesses and startups cannot survive through without funding.

Besides the 51 contracts awarded on the spot, the Air Force, the previous week, through a series of "rapid contracting sprints", awarded 122 Phase I SBIR contracts and 69 Phase II contracts. The Air Force wants to organize and do more of these type of activities all across the country where the Air Force performs acquisitions.

The prospect of obtaining funding immediately upon contract execution is a great benefit to small businesses who, with funding in place, can concentrate on contract performance rather than figuring out cash flow problems.

Poor Internal Controls Lead to Embezzlement

The Armed Forces Foundation, a non-profit organization based in Washington D.C. was formed in 2002 by a former Navy Sea-bee to protect and promote the physical, mental, and emotional wellness of military service members, veterans, and their families. Within a year, Patricia Driscoll took over leadership of the organization. Driscoll resigned in June 2016 after media reports emerged alleging mishandling of funds. In October of that year, the Foundation announced they were ceasing operations after an audit into Driscoll's financial management and her indictment on federal charges of stealing from the non-profit, defrauding donors and lying to the IRS and the public about her compensation.j

This week, Driscoll was found guilty by a Federal jury of those charges. On the organization's tax return, Driscoll failed to include the fact that she received commissions from fundraising, the amounts of commissions that she received from fundraising, and other benefits that she received. She categorized expenses in the Foundation's books as being for the benefit of veterans, troops, and their families, when in fact, they were for her own private benefit. She concealed from the Foundations's accountants the money she took form the charity, such as rent that was paid for the use of office space in a building that she co-owned. She also falsified the amount of donations received by inflating the amount and incorrectly listing the types of donations.

In total, the Government estimated that Driscoll misappropriated $900 thousand to personal expenses such as shopping trips, legal fees, and other bills for her private security company business (Frontline Defense Systems, LLC). Personal expenses included vacations to Paris and Morocco, personal credit card bills, legal fees relating to child-custody and domestic violence.

Driscoll's schemes might never had been uncovered had it not been for an investigative reporter who obtained foundations records that raised questions about Driscoll's handling of Foundation funds. See (Tax document shows AFF's ex-leader accused of pilfering funds for personal use).

The Foundation claimed that 95 percent of all contributions went directly to those it intended to help. A news article indicated that only a small fraction of that percentage actually went to help military service members, veterans, and their families.

The lesson in this for Government contractors is to ensure that internal controls are in place and operating effectively. Make sure that there is oversight and that the board of directors are more than perfunctory rubber-stamps.

Are You Still Running Kasperksy Anti-Virus?

Government contractors have until October 1st to completely scrub their networks and computers of the Kasperksy software.

As we reported back in June (see Prohibition on Usinbg Kaspersky Hardware/Software), the Fiscal Year 2018 NDAA (National Defense Authorization Act) prohibits Government contractors from providing any hardware, software, or services developed or provided by Kaspersky Labs or its related entities, or using any such hardware, software, or services in the development of data or deliverables first produced in the performance of the contract. Congress, among others believe that Kaspersky software presents an information security risk because of the Company's Russian connections.

We've recently come across a couple of articles stating that many contractors are unprepared for this deadline. In some cases, contractors are not even aware that Kaspersky is running on their networks because it came pre-installed with unrelated software. In other cases, contractors have attempted to remove Kaspersky but missed  some instances because complete removal is more complicated that simply uninstalling the program. There is even a concern that some contractors don't believe the ban applies to them, when it most certainly does.

DHS (Department of Homeland Security) has been worried about Kaspersky for some time and directed all civilian agencies to remove the software from their systems by last July. The NDAA added Government contractors to the list of entities whose use of Kaspersky is banned and gave them until October 1st to comply.

By the way, this ban also applies to subcontractors and makes it the prime contractors responsibility to ensure compliance. 

Acquisition Workforce Competency Survey Report

Every company that contracts with the Federal Government will come into contact with the Government's acquisition professionals. These would include the contracting officers, contract specialists, contracting officer's representative, and people in the program office including project managers. And lets not forget the contract auditors.

Every contractor develops their unique impressions and opinions as to the overall skills and competency of their Government counterparts. And the Government acquisition professionals do  contractors likewise. Sadly, there is room for improvement on both sides of this most highly regulated process. We know. We've been on both sides.

The Government just published the results of its 2018 Acquisition Workforce Competency Survey (AWCS) administered by the Office of Federal Procurement Policy (OFPP) and the Federal Acquisition Institute (FAI). This survey was limited to 23 Civilian agencies (the Defense Department performs its own surveys).

The FAI's goal is to ensure the acquisition workforce professionals broaden their skills and capabilities to become more effective and efficient in their roles to meet government-wide needs and their organizations' missions. To that end, this new survey revealed several key findings about current acquisition workforce strengths and competency gaps. Among the key findings were:

Proficiency in competencies rated highest included

• Issuing changes and modifications, awarding contracts, and competition
• Inspection and acceptance and business acumen and communication (by contracting officer representatives)
• Leadership

Proficiency in competencies rated lowest included

• Negotiating forward pricing rate agreements
• Pre-award communication and contract negotiations
• System engineering

Workforce satisfaction increased from the last survey performed in 2016

There was a strong correlation between time spent in a given area and the level of competency proficiency.

The full report is available on-line here.

Government Procurement Satisfaction Surveys

The FAR (Federal Acquisition Regulation) Council is considering an addition to FAR to establish a survey to solicit voluntary feedback from companies who bid on Government contracts. They are seeking public input on the potential benefits and burdens of voluntary feedback surveys. There shouldn't be any burdens really. When we're asked to respond to a survey, we always answer 'no' or delete the email. That's not much of a burden. The real question concerns the benefits that can be derived from surveys and whether the Government is willing to, or is permitted to, take action or make changes to the procurement system based on survey results. A related question is whether the Government should make changes based on survey results. Voluntary survey results are not statistically valid, are they? We suspect companies that have issues with the procurement process are over-represented in the universe of participants.

In any event, the FAR Councils believe that establishing a standardized process for obtaining voluntary feedback following a contract award will provide more meaningful insight on ways to strengthen the contracting process than can be derived by relying on ad hoc or periodic agency satisfaction surveys. Voluntary participation would not bestow respondents any direct benefits or protections in the acquisition process or any subsequent protests. There are other mechanisms and protections for appeals.

The draft survey is available at this site for a time. We don't know how long the page will be active. The survey is divided into three sections; the requirements development process, the solicitation phase and the award execution and debriefings stage. Responses are on a scale of 1 to 5 ranging from extremely satisfied to extremely dissatisfied. There are also selections for 'not applicable' and 'no answer'. Survey questions include:

Requirements Development Process - How satisfied were you

• with the agency's vendor engagement methods (e.g. FRIs, draft RFP, pre-award conferences) in fostering early communication and exchange before receipt of proposals?
• That the exchange offered by any industry day(s) offered valuable information that improved your understanding of the agency's requirements?
• With the agency's understanding of your firm's marketplace?
• With the clarity of the final requirements?

Solicitation phase - How satisfied were you

• That the agency kept vendors informed about any delays in the solicitation process (considering both the initial release and any subsequent delays)?
• That the solicitation included clear proposal submission instructions that sufficiently guided offerors or respondents in preparing proposals or responses to requests for information?
• That the government chose an appropriate contract type?
• That the government chose an appropriate source selection methodology?
• That the agency answered questions regarding the solicitation is such a way that it helped you to prepare the proposal?
• With the opportunity to propose unique and innovative solutions (i.e., the solicitation promoted innovation)?
• With the clarity of the solicitation's evaluation criteria?
• With the amount of time the agency gave to submit a proposal?
• That the solicitation's evaluation criteria allowed for the best selection among competing proposals?

Award Execution and Debriefings - How satisfied were you

• with the agency's resolution of issues/concerns related to the contracting process?
• with the robustness of the agency's debriefing (i.e., it allowed you to understand how to improve on similar efforts in the future)?

The survey also asks the respondents for an assessment of their overall experience on this acquisition.

New FAR Definitions for Emergency and Major Disasters

The FAR (Federal Acquisition Councils) recently published a proposed regulation designed to expand special emergency procurement authorities for acquisitions of supplies or services that facilitate defense against or recovery from cyber attack, provide international disaster assistance under the Foreign Assistance Act of 1961, or support response to an emergency of major disasters. This regulation is needed to implement provisions of the 2017 NDAA (National Defense Authorization Act).

Essentially, the regulation will allow for higher micro-purchase and simplified acquisition thresholds for acquisitions of supplies or services that facilitate defense against or recovery from cyber attack.

One of the key features of the new regulation is new definitions for "Emergency" and "Major Disaster". Although those terms have been intuitively understood, the definitions will help everyone to be act with more precision when higher purchasing threshholds are appropriate.

Emergency means any occasion or instance for which, in the determination of the President, Federal assistance is needed to supplement State and local efforts and capabilities to save lives and to protect property and public health and safety, or to lessen or avert the threat of a catastrophe in any part of the United States.

Major disaster means any natural catastrophe (including any hurricane, tornado, storm, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought), or regardless of cause, any fire, flood, or explosion, in any part of the United States, which, in the determination of the President, causes damage of sufficient severity and magnitude to warrant major disaster assistance under the Stafford Act to supplement the efforts and available resources of States, local governments, and disaster relief organizations in alleviating the damage, loss, hardship, or suffering caused thereby.

The increased thresholds are $20,000 and $750,000 for micro purchases and simplified acquisitions respectively. The amounts are higher than these if performed outside the U.S.

Prohibition on Using Kaspersky Hardware/Software

Back in September of last year, the Department of Homeland Security (DHS) directed all civilian Government agencies to remove Kaspersky software from their systems within three months. The order did not apply to the Defense Department but the Department has just issued an interim rule following suit.

So what's wrong with Kaspersky anti-virus software? There is concern among the "experts" that Kaspersky software presents an information security risk because of Kaspersky's Russian connections. A report out of the University of Illinois College of Law provides the evidence:

1. Russian law outlines a legal obligation by Kaspersky to assist Russian FSB (their Federal Security Service) in the execution of their duties including counterintelligence and intelligence activity.
2. Russian law also permits FSB personnel to be embedded in private enterprises
3. Because Kaspersky qualifies as an organizer of the dissemination of information on the Internet, it is required to provide the FSB with metadata and is also required to provide Russian officials with decryption keys for its data transmissions.
4. Under Russian law, Kaspersky is required to install equipment for the FSB to monitor data transmissions.

Those facts raises concerns that the Kaspersky is too closely tied to the Russian Government and creates an unacceptable risk to the U.S. Government.

Kaspersky is suing the U.S. Government to remove the restrictions already in place.

Under the new FAR interim rule, which is a result of the 2018 NDAA (National Defense Authorization Act), the restrictions go into effect on July 16th, 2018 and prohibits contractors from providing any hardware, software, or services developed or provided by Kaspersky Lab or its related entities, or using any such hardware, software, or services in the development of data or deliverables first produced in the performance of the contract.

Contractors must also report any such hardware, software, or services discovered during contract performance. This requirement also flows down to subcontractors.

Contractors should be aware of the implications of this prohibition. If, for example, a contractor is developing software for a Government program, the contractor may not do so with any Kaspersky software installed on their development platforms, even though such software is not integrated into the deliverable.

To read the full interim rule, click here.

Everybody Has a Mission Statement - Even DoD Procurement

One of the most useless provisions in last year's National Defense Authorization Act (NDAA) was a requirement to publish a statement of purpose for DoD acquisition in the DFARS (DoD FAR Supplement) (see Section 801 of Public Law 115-404).

The specific statement of purpose prescribed by the NDAA reads as follows:

The defense acquisition system exists to manage the investments of the United States in technologies, programs, and product support necessary to achieve the national security strategy prescribed by the President pursuant to section 108 of the National Security Act of 1947 and to support the United States Armed Forces.

The investment strategy of DoD shall be postured to support not only the current United States armed forces, but also future armed forces of the United States.

The primary objective of DoD acquisition is to acquire quality supplies and services that satisfy user needs with measurable improvements to mission capability and operational support at a fair and reasonable price.

Honestly, who comes up with this stuff? What good does it do? Will it facilitate DoD acquisition? Will anyone read it? Will they take action on it? What action is expected? Will it save money? Will it make acquisition more efficient? Less burdensome? Will it encourage non-traditional companies to enter the defense marketplace? Why is DoD unique among other Government agencies? Why do they get a purpose statement and not anyone else?

If someone thinks DoD acquisition needs a purpose statement, how about this one: "We buy things we need and try to get the best price". That ought to do it.

Wonder what the Section 809 Panel thinks of this addition to the DFARS?

You can read more about this new regulation here.

Concerns Surrounding Boarder Wall Contract

Last November, we learned that FEMA (Federal Emergency Management Agency) awarded a $300 million contract to a three-person firm from Whitefish Montana to restore electricity in Puerto Rico. That contract came under suspicion and was quickly terminated. Then, last month, we learned that FEMA awarded a $156 million contract to a one-person firm to provide 30 million emergency meals to Puerto Rico. That contract was terminated within three weeks when it became obvious the contractor had no hope of delivering that quantity.

Now, the AP is reporting a similar incident involving a tiny Nebraska startup (SWF Constructors) with one employee having been awarded an $11 million contract to replace two miles of a boarder wall between California and Mexico. The AP reported that its investigation left unclear why SWF was listed as the contractor rather than its parent, Coastal Environmental Group, its owner. But its really not too hard to figure out. Coastal has been sued repeatedly for failing to pay subcontractors and was also accused in a 2016 audit of shady billing practices. A lawyer who represented one of Coastal's subcontractors speculated that creating a new company to dodge scrutiny of past legal problems is a relatively common practice in construction projects.

The Interior department audit of Coastal's contracts with the U.S. Fish and Wildlife Service to clean up two wildlife refuges in the wake of Hurricane Sandy resulted in about $200 thousand in billings that were not supported. Coastal agreed to repay the Government that amount. But according to the Interior IG (Inspector General), that audit required the Interior Department to file a negative "past performance report" that would have flagged it to other Government agencies. That report was never filed.

The AP also reported that Coastal's new company, SWF, is not registered in Nebraska which is required for any company doing business within the state. Nebraska officials are investigating whether SWF violated state registration requirements.

Its a good time to be a small business Government contractor. You can get millions of dollars in contracts with seemingly no questions asked about past performance, cost estimates, or ability to perform.

You can read the full AP article here.

Congressman Introduces Bill to Pay Some Contractor Employees During Shutdown

Congresswoman Norton (representing Washington DC) introduced a bill before Congress that would provide for compensation of Federal contractor employees that may be placed on unpaid leave as a result of any Federal Government shutdown. She calls it the "Low-Wage Federal Contractor Employee Back Pay Act of 2018".

Under this proposed legislation, if a Federal contractor that provides retail, food, custodial, or security services for the Federal Government places employees on unpaid leave as a result of any lapse in appropriations which begins in Fiscal Year 2018, the Government shall provide compensation to those employees at their standard rate of compensation for the period of such lapse.

The proposed legislation is not any more specific with respect to which contracts and/or which contractor employees are covered. The language presented is very generic and implementation will be open to interpretation (or through regulation).

Its like getting additional paid vacation.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

Contractor Couldn't Deliver under $30 Million Contract

Bronze Star LLC was founded in 2015 by two brothers. Its business line includes apparel and textile products. After Hurricane Maria damaged tens of thousands of homes in Puerto Rico, Bronze Star, a very young company with an unproven track record won more than $30 million in contracts from FEMA(Federal Emergency Management Agency) to provide emergency tarps and plastic sheeting for repairs.

However, Bronze Start never delivered those supplies. After contract award, FEMA spent the next month trying to get Bronze Star to deliver, without avail. Finally, it terminated the contract for default and has now begun the process of re-soliciting bids for the still, urgently needed tarps.

It is not clear how FEMA determined that the company was capable of fulfilling the contract. Bronze Star had never won a Government contract previously or had otherwise delivered tarps or plastic sheeting. In fact, the company's principle place of business is a single-family home in a Florida subdivision. A FEMA spokesperson said the Agency's review process was somewhat expedited in order to respond as quickly as possible to the emergency. Nine bids were received and Bronze Star's was determined to be the best value. However, a responsibility determination had not been made. No past performance data, no review of infrastructure, inventory, production, or financial capability.

Bronze Star, in its defense, stated that the manufacturer who initially promised to supply the materials, bailed on them and the company could not find another supplier. Blue Star claims that FEMA denied its request to import tarps and plastic from China.

Fortunately, FEMA had not paid any money to Bronze Star under the contract at the time of termination and has now awarded the contract to another company with 20 years of federal contracting experience and has produced such supplies multiple times.

Now, seven Senators are urging FEMA's Inspector General's Office to investigate how a "tiny Florida company won ore than $30 million in contracts.

If the Government needs tarps, they should come to the Pacific Northwest, we've got plenty of them.

Whitefish Contract to Restore Puerto Rico Electricity - Update

This is an update to our posting of November 9 discussing the contract awarded to Whitefish Energy by PREPA (Puerto Rico Electric Power Authority) to help restore electricity on the island (see Whitefish Energy Contract to Restore Puerto Rico Electricity). PREPA awarded a $300 million sole-source contract to Whitefish Energy which, when it was exposed, became immediately controversial for several reasons. At the time of award, Whitefish had only two employees. The contract prices for linemen seemed exorbitant. The contract was was awarded without competition and contained unusual clauses such as the one preventing PREPA (or the Government) access to cost data.

The U.S. Government is interested in this contract because ultimately, it will probably end up paying for the restoration work. Congress is, of course, interested (one Senator called it price gouging) and the FBI has opened an investigation into the matter. Last week, the head of PREPA resigned his position (under pressure, no doubt).

PREPA terminated the Whitefish contract but according to the terms of the contract, there was a 30 day notice requirement which allowed Whitefish to continue working (and billing). However, last week, Whitefish walked off the job claiming that PREPA owed it 83 million and could no longer afford to pay its workers and subcontractors. Earlier this week, PREPA made a payment to Whitefish and the company resumed work.

The New York times reported that Whitefish was paying its senior power linemen $63 per hour and then billing PREPA $319 per hour for the worker. Whitefish claimed that the rate differential does not take into account Whitefish's overhead costs - but no one believes that such a differential is reasonable (more than 400%!).

Whitefish's contract ends on November 30th and PREPA does not appear to have a replacement ready to take over. Meanwhile, more than half of Puerto Rico's electrical customers are still without power.

Whitefish Energy Contract to Restore Puerto Rico Electricity

As promised, we are bringing you an update to our October 30th posting concerning the contract awarded to Whitefish Energy by the Puerto Rico Electric Power Authority (PREPA) to help restore electricity on the island (see Whitefish Energy). This $300 million contract at rates exceeding $240 per hour for electrical linemen awarded to a company with two full-time employees raised a lot of concern by both Democrats and Republicans in Congress as well as several oversight agencies including Offices of Inspector Generals. One Congressman termed it a "sweetheart deal to a fly-by-night company".

The offending contract has now been terminated although the full cost through termination will not be known for some time. So far, Whitefish has racked up $60 million in charges and that doesn't include the cost of demobilization and other allowable termination costs.

PREPA defended the Whitefish contract by noting that the unknown, tiny company was the only bidder that didn't require a down payment, and would handle its own logistics. PREPA is bankrupt and $9 billion in debt, and other better-established companies required significant down payments in order to offset the risk that PREPA might not be able to pay off contract work. Whitefish didn't enhance its own reputation by threatening to pull its linemen out of the Mayor's hometown when it was called on to be more transparent.

Meanwhile, the investigations expand. Another Whitefish type contract has emerged - this time, a $200 million contract award to a firm named Mammoth Energy Services' Cobra Acquisitions LLC with similar contractual language.

Whitefish Energy

Last week, it was announced (or revealed) that a tiny company in Montana called Whitefish Energy Holdings had been awarded a $300 million contract from the Puerto Rico Electric Power Authority (PREPA) to restore electricity on the island. That massive size of the contract given the experience and size of Whitefish, has been met with skepticism by Republicans and Democrats alike and amid the outcry, PREPA is now moving to cancel the contract (after a plea from the Governor of Puerto Rico).

Whitefish is a small company which according to reports has been in existence for two years and until recently, had just two full-time employees. Whitefish's CEO disputed that number claiming that the company had 20-40 full-time employees working projects in Arizona, Montana and Washington State. It now has 350 workers on site in Puerto Rico however most of these workers are actually subcontractors. It has been widely reported that the Interior Secretary, friends with Whitefish's CEO had something to do with the award. Whitefish denies this maintaining that contract was made with PREPA through Linked-In.

The contract which has now been made public, will make the controversy even more poignant.  Whitefish charges $240 per hour for a general foreman and $227 per hour for a lineman. Per diem allowances are set at $80 per day for meals and $332 per day for lodging. Airfare is billed at $1,000 each way. For subcontractors (most of the labor), the rates are even higher. A general foreman costs $336 per hour and a lineman $319 per hour. Given that the medium rate for electrical linemen is about $36 per hour, these contracted rates seem beyond the pale.

The contract also has a nice little "no audit clause". The clause reads:

In no event shall PREPA, the Commonwealth of Puerto Rico, the FEMA Administrator, the Comptroller General of the United States, or any of their authorized representatives have the right to audit or review the cost and profit estimates of the labor rates specified herein.

No doubt all Government contractors would like to have this clause in their contracts.

By the way, PREPA is $9 billion in debt, filed for bankruptcy last July and has had a long history of maintenance problems and corruption allegations.

This will be an interesting story to follow and events unfold. Obviously, there is a lot more to the story that what has been made available so far.

Government Employees are (Generally) a Happy and Contented Bunch

OMP (Office of Personnel Management), the Government's HR Department, recently published the results of its 2017 Federal Employee Viewpoint Survey. This survey measures how Government employees feel about their jobs, their supervisors, and their agencies. It also allowed employees to share their opinions on what matters most to them.

Nearly a half million employees responded to the survey representing 80 different agencies. Overall satisfaction rose 3 percentage points from 61 to 64 percent. The questions in the 2017 survey were identical to those in the 2016 survey.

The survey results have been published here and can be searched for additional details. It includes links to even more details, if one is so inclined to study them. Overall DoD agencies are right around the norm for overall satisfaction (64 percent). The Department of Energy is higher (68 percent) and NASA is much higher (80 percent).

From a Government contractor's point of view, its usually much better to deal with Government counterparts that enjoy their work, are helpful, solve problems, and seek better ways to do things.

New Administration Wants to Significant Reduce the Number of Regulations

President Trump told business leaders yesterday that he wanted to cut regulations by 75% or more. That would be a good start and take us back to the early 1970s in terms of number of pages of regulations. Currently, the Code of Federal Regulations (CFRs) is about 180,000 pages (or about as high as the Washington Monument). 

(online source: GW Regulatory Studies Center) 

Within those 180,000 pages is the Federal Acquisition Regulations (FAR) which takes up about 1,500 pages. Within the FAR are cost principles that take up 50 or so pages. Many people make a career of being experts on cost principles which represents 0.028 percent of the CFRs.

Each year for the past three years (at least), the last Administration set new records for the number of pages in the Federal Register. The Federal Register is the official journal for Government regulations and in Fiscal Year 2015, totaled 82 thousand pages. Found on those pages are 3,378 "final" rules and regulations of which 545 are recognized as having effects on small businesses.

Regulations are promulgated to implement legislation passed by Congress and signed into law by the President. Another significant source of regulations are to implement Executive Orders (e.g. Fair Play and Safe Workplaces). "Final" regulations appear in the Code of Federal Regulations.

Regulations resulting from EOs should be easy for the President to eliminate - rescind the EO and the corresponding regulation(s) have no basis. For regulations based on statute (perhaps the majority) however, the new Administration will need help from Congress.

It will be interesting to see what can get done quickly. Certainly a lot of small businesses will appreciate fewer regulations.

Federal Fumbles - 2016 Edition

Oklahoma Senator James Lankford just released "Federal Fumbles Vol. 2, 100 Ways the Government Dropped the Ball". It represents the second annual edition of this football themed publication. We covered the first edition about a year ago (see 100 Examples of Wasteful Government Spending).

The latest publication documents 100 new examples of wasteful, duplicative, and inefficient use of tax dollars. Many of them are examples of wasteful contracts and grants. Its not necessarily the contractors/grantees that are being called out on these programs - its the Government agencies that will fund studies to find out that kids don't like to eat food that has been sneezed upon or a grant to purchase custom "Snuggies". Some agencies should be embarrassed by publication of the kinds of research and contracts they award. The Senator is hopeful that those agencies be forced to make more responsible decisions. Ultimately, the Government decides on what to buy or what research to fund. Contractors are only responding to agencies' so-called needs.

Here are a few examples of questionable spending identified in the report.

• National Institute of Health (NIH) spent more than $1 million on a campaign to tell mothers not to let their teenage daughters use tanning beds.
• Three agencies combined to spend a half million dollars to support a temporary exhibit to share the best of medieval smells.
• The EPA allows federal grant money be used for lobbying effort.
• NIH spent a half million dollars to send text messages that discourage chewing tobacco.
• GSA awarded a $1 million contract for a photograph of Yosemite falls to be hung in a new federal courthouse in California.
• NIH (again) paid $10 million for a series of studies to learn that stress plays a role in illegal drug use.

Anytime the Government wants something, there are plenty of firms willing to take the Government largess. Can't really blame contractors for this kind of spending.

You can access the complete Federal Fumbles #2 report here.

No Longer Permissible to Communicate with the Government Via Telegram

One hundred and sixty years ago, the technology of the telegraph was very hot. Imagine, being able to send cross-country messages is less than a day. Western Union built its first transcontinental telegraph line in 1861 which, at the time, was as incredible as the computer when it first arrived. But technology doesn't stay relevant forever and Western Union sent its last telegraph 10 years ago - back in 2006.

The FAR (Federal Acquisition Regulations) have not kept pace with the demise of the telegram. It is replete with references to the obsolete technology. FAR Part 14 (Sealed Bidding) contains at least eight references to telegrams. Part 49 dealing with contract terminations contains many references including instructions for the Government to expedite a termination notice using telegram. Additionally, many contract clauses (Part 52) contain references to telegrams.

The FAR Councils are finally getting around to removing references to outdated technology. It published a final rule today (November 18, 2016) to replace terms such as "telegram" and "telegraph" with more generic references to "electronic communications".

Someday the term "electronic communications" will seem as quaint as word "telegram" does today. When we are all using telepathy to communicate with one another, the FAR councils will be at it again, replacing "electronic communications" with a more up-to-date term.

You can read the final notice here.