What the new Minimum Wage Executive Order means

In late April, President Biden signed an executive order, requiring government contractors to increase the minimum wage to $15 per hour by 2022. Censeo Consulting Group analyzed the effect of the federal worker minimum wage increase. They determined that approximately 30,520 contracts will require modification. In addition, they expect the modifications to add 450,000 additional contracting office, workload hours. This equates to about 240 additional full-time positions. (ExecutiveGov May 27, 2021)

The executive order will impact federal spending from between $1 and $2 billion. Agencies can prepare by:

  • Segmenting contract portfolio by delivery location and spend category, highlighting impacted contracts
  • Developing a policy and process for addressing impacted contracts
  • Analyze internal pricing to identify contracts requiring modifications (ibid)

The departments of Veterans Affairs, Defense, Agriculture, and State are most impacted by the executive order and are likely preparing to make their contract modifications on or before the 2022 deadline.

Do you need to modify your contract? Give us a call.

 

Small business and startups are front and center

Boosting small businesses and software for DoD are priorities for the Biden administration and their nomination for the Defense Department’s technology efforts.  Heidi Shyu, nominated for undersecretary of defense,  recently introduced her priorities to modernize the military during her confirmation hearing. She stated, “In order to rapidly transition the latest software, we need to have an open architecture that isolates the software from the hardware then allows rapid user testing.” (Defense Systems May 26, 2021)

Shyu told the senate that DOD should be investing so that development and procurement are 70% of their costs for a new weapons system. Shyu proposed buying more emerging tech such as artificial intelligence, synthetic biology and hypersonics rather than investing in older systems. Shyu said, “today, sustainment makes up 70% of total weapon system cost, with development and procurement making up 30%.” (ibid)

During Shyu’s hearing, she mentioned small businesses, especially startups working on new technologies, repeatedly. Shyu feels they are necessary for the Defense Department’s success. Shyu did not lose sight of the inability of the acquisition system to shift prototypes into programs. Shyu plans to institute a clear transition path. (ibid)

Shyu said, “part of the reason there is a valley of death for technology is that a lot of the technology programs are being developed by small companies, and unless you had the foresight two years ago to understand that the technology is going to be mature within two years time, by the time you get the money to buy that technology it’s two years old now.” (ibid)

Shyu said, “I saw a six-person company that’s developed any type of fuel as input and the output is a DC-plug. Those are the types of creative, innovative companies we need to nurture. And they are struggling to figure out who to talk to in the DOD.” (ibid)

Are you an innovator or a small business looking to work with the Department of Defense? Give us a call.

 

 

 

 

The FY 2022 Budget Request is good news for contractors

In early April, the Office of Management and Budget released the Biden administration’s first cut at the fiscal year (FY) 2022 Discretionary Budget Request. The proposed budget includes $1.5 trillion in discretionary budget requests for federal departments and agencies. (Federal Times May 12, 2022)

The Department of Defense budget slightly increased by 1.6 percent or $715 billion up from $703.7 billion in Fiscal Year 2021. The civilian agencies, however, will see a 16 percent increase. Education will potentially increase by 40.8 percent, Commerce 28.1 percent, Health and Human Services 23.1 percent, EPA 21.7 percent, and the National Science Foundations rounding out at 20 percent. (ibid)

The Biden budget shows continued growth in spending to revive the economy. This comes after record-breaking stimulus spending. With the uptick in spending comes an increase in contract awards to Small Disadvantaged Businesses and programs supporting women, people of color, and underserved entrepreneurs. (ibid)

There are a few things contractors should keep front of mind while reviewing the FY 2022 budget:

  • Congress may be conservative with spending after the number of stimulus bills recently passed
  • Expect to see opportunities from DOD for the Internet of Things and Artificial Intelligence
  • Look for DOD to switch up their resources from legacy systems to priority technologies, cybersecurity, and cloud computing (ibid)

An increased budget suggests additional spending and an increased number of contracts awarded throughout 2022. Contractors who understand the spending priorities and policies will benefit most.

If you have questions about agency spending trends or if GSA is right for you, please give us a call.

Three DoD DFARS will soon become permanent rules

According to a recent statement by Katie Arrington, the Pentagon’s CISO for acquisition and sustainment, three Defense Federal Acquisition Regulation Supplements (DFARS) for the Department of Defense’s Cybersecurity Maturity Model Certification (CMMC) will soon be permanent rules. (MeriTalk April 15, 2021)

The CMMC program enforces cybersecurity standards in the Defense Industrial Base (DIB) supply chain. The certification requirements will be part of all DoD contract requirements by 2026. (ibid)

The soon-to-be-permanent rules are:

  • DFARS Provision 252.204.7019 requires contractors to complete self-assessments and upload them into the DoD’s Supplier Risk Performance System (SPRS)
  • DFARS Clause 252.204.7020 takes place upon contract completion, allows DoD access to systems, facility, and personnel if DoD assesses the necessity due to risk
  • DFARS Clause 252.204.7012 requires all contractors to maintain adequate security of defense information that is “processed, stored or transmitted” on their network (ibid)

According to Arrington, 300,000 contractors need to get CMMC certified within the next five years. She said, “we have thought carefully about this, and making cybersecurity foundational to acquisition wasn’t something that we just thought “Let’s do it one time.” It has to be an enduring capability.” (ibid)

Questions concerning CMMC certification? Give us a call.

 

CPARS is getting a refresh

For over a decade, the Office of Federal Procurement Policy (OFPP) has encouraged government agencies to increase their research and evaluation of contractor performance on contracts, with little effect. (Federal News Network April 12, 2021)

The general consensus is that the current Contractor Performance Assessment Reporting Systems (CPARS) is broken. Contractors and Contracting Officers feel it inaccurately rates performances while also being burdensome. For the past two years, Mike Smith, a former DHS director of strategic sourcing and now an executive vice president at GovConRx, has led an effort to rebuild CPARS. His goal, “make sure it results in good information and the information is more strategic and tactically used.” (ibid)

What are some of the problems with CPARS? Many contracting officers rate contractor performances as satisfactory because it takes too much of their time to verify exceptional or outstanding performance and too much time trying to explain why a rating might be below average or poor. (ibid)

DHS is looking to solve this problem through a pilot application of artificial intelligence (AI). DHS recently awarded contracts to five companies to demonstrate their ability to build production-ready software. User groups will view demos using software-as-a-service (SaaS). The user groups are, The departments of Commerce, Energy, Interior, Veterans Affairs, and Health and Human Services as well as GSA, NASA, the Air Force, and the U.S. Agency for International Development. The agencies gave the 5 companies in the pilot, 50,000 anonymous procurement records, to assist in training the AI. The goal is to decide which technologies will move to phase 3 in June with an actual launch in January 2022. (ibid)

GSA has some barriers to overcome too. Contracting officers must see the value in vendors providing self-assessments on certain projects. GSA senior procurement executive Jeff Koses sent a memo in February recommending the use of vendor self-assessments s one step in the overall CPARS process. The memo is a permission slip, of sorts, for contracting officers to begin asking for self-assessments as one part of the CPARS process. This should alleviate some of the burden on contracting officers.(ibid)

Mike Smith, a former DHS director of strategic sourcing and current executive vice president at GovConRX said, “you wouldn’t believe how many contracting officers refuse to take input from industry because they think they aren’t allowed to. As a contracting officer, I’d rather have a back and forth at least by midyear, if not before, so we can adjust course and have a common understanding at the end of the performance period and there are no surprises about ratings and the basis of that rating.” Most agree that good contractors will jump at the opportunity to do a self-assessment because they will finally be able to have input into the process. (ibid)

CPARS should also help small businesses. When contracting officers see the small business has done larger jobs and done them well, through a relevancy search and high CPARS, they are a lot more likely to award them a contract. This in turn helps the contracting officer make better-informed decisions through the use of data. (ibid)

Questions concerning self-assessments and the intricacies involved? Give us a call.