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The West Sound NCMA President's Corner
September 22, 2009
Where did the summer go? The glorious weather came upon us and hopefully will be with us for a little bit longer (I’m still hoping for what we used to call Indian summer well into October).
While we were off doing other things, the world of contracting did not slow down one bit. The FAR has numerous new subparts and clauses. Numerous regulations have been issued implementing the new statues such as the Recovery Act, changes to the Fraud statutes. The government’s e-verify system finally went into effect on September 8, 2009. The drumbeats continue to roll for more fixed price contracts awarded competitively and for more stringent justifications for any deviations from those requirements.
Numerous contractors, especially hunting for work in this economy, are looking to team with small businesses. Government people are still overworked. Fortunately (???), many of our older hands, the baby boomers who had planned to retire by now, are now looking at a few more years of work as we saw our 401Ks and other savings dwindle.
If a health care reform package passes, in whatever form, that will have drastic impacts on the government’s contracting apparatus. New agencies will be formed or old ones greatly expanded, which will be another avenue for upward mobility for contracting professionals.
More contracting positions keep opening but the number of qualified applicants is limited. So please bring your “newbies” to our meetings to help in their education process.
June 3, 2009
As I woke up this morning, I realized I had achieved a life-long goal. My net worth was greater than General Motors! Somehow that doesn’t seem to be as big a deal as it was when I was teenager. The fact that GM and Chrysler are now in bankruptcy shows how the world is shifting. I point that out to you because as the West Sound Chapter takes its summer break, we have no idea what tremendous developments will occur before we convene again in September. The economy is in shambles. We’re fighting two wars. The Korean Peninsula is in turmoil. Our largest state, California, is technically bankrupt. Congress seems to be passing new procurement statutes with virtually no examination. Items that are in the Recovery Act may well become permanent by September. There may be new restrictions on cost type contracts and greater requirements for competition.
Contractors who have never dealt with government contracts at all or to a very minor degree are flocking into federal procurement to take advantage of the sources of funds. Contracting managers are being flooded with dollars and timetables to award contracts with those dollars that are unrealistic in terms of the speed and complexity. Oddly enough the recession has had one blessing for contract management. Many of the most experienced contract managers probably would have retired by now, but as they saw their 401K’s and investments dwindle, they decided to stick around for a few more years.
Our profession has always been dedicated and competent, but in the most hectic times they have been nimble. They have been able to roll with the punches, adapt, and in the most trying circumstances adapt to new statutes, regulations and circumstances. Whatever we confront when we assemble again in September, we’ll be able to deal with it. In the meantime have a wonderful summer.
January 9, 2009
As I write this, the inauguration is less than two weeks away and the economy is tanking.
Obviously, the government will use government spending to jump start the economy. One way to circumvent the credit crisis is to give people government contracts. Then, through such time-honored vehicles as the Assignment of Claims Act or progress payments, contractors will be able to get the necessary funding to perform contracts, hire workers, and buy the necessary supplies and services.
So, while there is great debate in the Nation’s capitol and throughout the country as to the particulars of the stimulus program, no one really doubts that a stimulus program is coming and that it will be many hundreds of billions of dollars. While some of it will be focused on tax cuts, there is a growing and overwhelming impetus for more infrastructure projects – roads, bridges, dams, etc. That will mean a flood of federal construction projects, and a great many contracts for the supplies and services that those projects will need – steel, paint, concrete, etc. Additionally, our new President and Congress will probably shift typical military procurement away from weapon systems designed to face the Soviet Union and more to those needed in the war on terror. All of this will mean a cascade of dollars flowing into government contracts, not only on the federal level but also, through grants, through state departments of transportation, etc.
For those of you who remember your history of federal procurement, government contracts really received a boost in the 1930s during Franklin Roosevelt’s New Deal. That was when the Bureau of Reclamation and other federal agencies began building the dams that we still use today, Hoover, Bonneville, Grand Coulee, and the Department of Interior improved many of our national forests. Many young men worked for the Civilian Conservation Corps in our national forests and many artists and writers painted murals on our federal buildings and wrote travel guides for our states.
We may well be returning to those days. So the concept of socio-economic contracting will return to its original meaning, not just to help isolated specific segments of the economy, but to help the economy as a whole, by spreading federal dollars throughout the system so that companies can hire new workers and pay them decent wages as set by Davis Bacon or the Service Contract Act. So those workers will then be able to buy food, clothes and shelter for their families.
November 11, 2008
These are exciting times to be in contract management. As I write this, just one week ago today, two developments of potentially enormous consequence to contracting occurred.
First, was the election of a new President. Whenever a new administration comes in, especially one of a different political party, everything in government comes up for review. So we can expect a re-appraisal of the entire contracting process as new people take over, not only in the White House, but at all the levels of government. Many of these new policy-makers have decided positions against cost reimbursement contracting and sole source awards. So we can expect some major changes there.
The next development that happened on November 4, 2008, was something that has not hit public awareness yet. On that date, the Court of Appeals for the Federal Circuit, the Supreme Court of government contracting, declared unconstitutional the federal statute that mandated that the Defense Department have a goal of awarding five percent of its contract dollars every fiscal year to small and disadvantaged businesses (SDBs).
The court concluded that when Congress passed the statute it did not have sufficient evidence to justify such an action. So it constituted unjustified racial discrimination. While this only dealt with one statute involving the Defense Department, the ramifications can be enormous. What the government will do (appeal to the Supreme Court, ask the Court of Appeals to reconsider, or ask Congress to reenact the Act but with better evidence) is still up in the air. But it will certainly cause a stir once the new Congress convenes. [Click here for more details] Stay tuned................
September 8, 2008
Well, here we are at the start of another year. As you know, we normally go from September until about May or June.
Managing contracts is not getting any easier. The war on terror is having a cascading effect on all aspects of contracting, straining budgets, creating terrible turnover in contracting personnel, exponentially increasing the number of scandals as people involved in the contracting process on both sides of the table are convicted for bribery, kickbacks, false claims, and the nation struggles with the very fundamental issue of how much of our security and war fighting should be handed over to contractors.
Also problematic is that Congress seems to view procurement as a process onto which they can, with no ill effect, keep adding requirements, such as checking contractor employee immigration eligibility, or making sure they’ve paid taxes, even those totally unrelated to a government contract. All these measures may make good sense individually, but there are only so many items that you can expect one horse to carry. Beyond a certain point, these new requirements have the effect of increasing cost, decreasing competition, and slowing down the procurement process.
Reaching crisis point is the fact that the baby boomer contracting professionals, especially on the government side, are retiring. Many are then coming back as retired annuitants or are being employed by contractors. A third group is setting up shop as contractors themselves to perform contract closeout services, etc., for overworked and understaffed contracting offices. These former contracting officers and contract specialists will do all the necessary paperwork and then prepare it for the current contracting officer for signature.
All-in-all these are very challenging times to be contract managers. The old curse “may you live in challenging times” is certainly true today in contract management. All of this may well be the calm before the storm as whatever happens in the election, a new administration will take place in January 2009, so we can expect a flurry of new statutes, executive orders, regulations, memos, etc.
This chapter is all about you. Please let us know what you want us to do. If there are any particular topics or speakers that you want to hear about, please tell us. Because many of our members are involved in federal contracting, that has been a primary focus of our meetings and newsletters, but we must also address state, local, private and international contracting because you also need to be aware of that. We shall also focus on all facets of contracting (supply, services, construction, research and development) and at all tiers: government/owner, prime/general contractor, subcontractor.
If you are aware of other people who would be interested in joining or simply attending one or two of our meetings on subjects that might interest them, please invite them to do so. If you have any thoughts whatsoever on the subject, please let us know. If you become aware of new articles, new studies, new websites, new cases, a contract clause that you have used or seen in the past that has worked out very well, please send them to us for dissemination. If you have ideas for new places to have our meetings or any special events you would like us to participate in, please let us know.
It is trite to say that our success depends on you, but it does. I look forward to working with all of you this year.
Sincerely, Jim Nagle
701 Pike Street, Suite 1700 Seattle, Washington 98101-3930 Phone: (206) 623-3427 Fax: (206) 682-6234
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