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.

15% Goal for Small Disadvantaged Businesses

When it comes to Diversity, Equity, and Inclusion (DE&I) the Biden administration is making good on its promises. The administration issued an executive order rescinding the Trump administration policies that weakened the diversity, equity, and inclusion training programs at agencies and federal contractors. In addition, the Office of Management and Budget issued a request for information (RFI) searching for DE&I solutions to enhance a number of government activities. (Government Executive May 19, 2021)

This particular RFI appears to be a crowd-sourcing application for policy solutions. It shows that the current administration is very serious about DE&I and their willingness to accept changes and an openness to new and different ways of viewing the inner workings of the government. (ibid)

It appears the administration is looking for better ways to leverage the government’s spending capability. To make sure all receive their fair share and to help close the income, wage, and opportunity gaps. The administration has initiated a 15% goal for federal contract dollars to go to small disadvantaged businesses. Although this looks like a great opportunity it is actually quite hard to measure how many dollars actually funnel through prime contractors to their subs. Figuring out how to measure the dollar flow would be a good start, then putting the 15% goal into effect. Progress is measurable at that point. (ibid)

So where are we today? Can the administration succeed with its DE&I goals? The question becomes, “how do we know?” Steps are clearly headed in the right direction, however, a commitment and a baseline are needed to end up where we want to be.

Are you a small disadvantaged business looking into GSA? Give us a call.

 

Procurement vs. Purchase

If we can be certain of one thing, it is that the pandemic wreaked havoc on many businesses and their business models. We tend to see government procurement growth during times of crisis. Once the media blasted us with headlines of medical device and personal protective equipment shortages, procurement officials found themselves in a precarious position. How to get supplies and get them fast.

Rick Grimm, chief executive officer of NIGP, the Institute of Public Procurement worries that procurements may slow down, now that shortages are being met. According to a brief from NIGP, “when skilled, professional procurement is buried within an organization and disconnected from the decision-making process, key business opportunities efficiencies and full value for money may be lost.” (Route Fifty May 7, 2021)

We witness the word “purchasing”  being substituted for the more comprehensive term “procurement.” Many believe this field should cover a broad scope of activities such as developing suppliers, strategizing to enhance supplier relationships, actively managing acquisitions and supervising contracts, and evaluating supplier performance. (ibid)

State governments made great inroads with suppliers during the pandemic. Many incentivized the private sector. In Maryland, where weapons systems are made for the Department of Defense, producers pivoted to make ventilators. Hand sanitizers were also retooled and made locally. (ibid)

The challenge to governments was understanding how vendors could best be utilized. There was no way to work with overseas manufacturers. Local product lines were evaluated and swiftly shifted. (ibid)

What does the future hold? Hopefully, the speed of procurement progress over the past year will not be in vain. Grim stated, “leveraging the value of procurement in achieving the government’s mission, helps you achieve those goals and becomes procurement’s mission as well. The big challenge, still, is getting the bosses of procurement to understand its strategic value.”(ibid)

Ready to get into federal procurement? Give us a call.

 

 

GSA is going green!

GSA is off and running to make the May 27, White House deadline to deliver a plan around clean energy vehicles and green electricity. According to the executive order, GSA must deliver a plan to address clean energy vehicles and green electricity. (Federal News Network, April 28, 2021)

Sonal Kemkar Larsen, the senior adviser to the GSA administrator on climate said, “one thing that is really important to us at GSA across the board is to be looking at how we can decarbonize our entire supply chain. We procure a lot of different things: Energy, buildings, government goods, and vehicles. In all of those, we need to look at our supply chains, the manufacturers, the businesses we are working with all the way to the design and installation in all of this. There is carbon from the beginning to the end so decarbonization is going to be a big lift as we look across the supply chain. A new focus for us is to look across all aspects of procurement.” (ibid)

Under the order, GSA must address how it will attain:

  • A carbon pollution-free electricity sector by 2035
  • Clean/zero-emission vehicles for federal, state, local, and tribal government fleets, including Postal Service vehicles
  • Additional legislation required to accomplish these objectives
  • Certifying the U.S. retains the union jobs integral to and involved in managing and maintaining clean and zero-emission fleets while adding union jobs in the manufacture of the clean fleets (ibid)

Katy Kale, the acting GSA administrator, said the Federal Green Building Advisory Committee created two new task forces – the environmental justice and equity task group and the federal building decarbonization task group. (ibid)

According to Kale, “the decarbonization task group will explore opportunities for reducing greenhouse gas emission in buildings in the federal real estate portfolio through the use of renewable energy, energy efficiency, electrification, and smart building technologies. They will provide some recommendations to GSA this fall so we can begin to develop a roadmap for the decarbonization of federal buildings. The environmental justice and equity task group will improve engagement with diverse communities and key partners throughout the design, construction, operations, renewal, and occupancy. We believe this engagement will lead to increased inclusion, opportunities, and green jobs in the federal sustainability building process.” (ibid)

Kale went on to say, “when we are talking about decarbonization in building, it’s all of the things that we need to do to reduce and eliminate greenhouse gas emissions that are caused by the operation of the building. That could include replacing gas boilers with solar hot water or using ground source heat pumps. Really we need to make sure we are including every efficiency measure that we can, including using smaller, more local equipment for heating and cooling, making sure motors are high-efficiency motors, adjusting control strategies to reduce peak loads. It’s A to Z, we’ve got everything covered.” This is quite a large opportunity for GSA as 60% of its leases held are going to expire between fiscal 2019 through 2023. (ibid)

The other area of “green” opportunity for GSA is through the vehicles it manages. GSA owns and manages over 670,000 cars and trucks and manages more than 200,000 leased vehicles. As of today, GSA has a fleet of 16 types of battery-operated vehicles and 5 plug-in electric vehicles. (ibid)

According to Charlotte Phelan, the assistant commissioner of the Office of Travel, Transportation, and Logistics in the Federal Acquisition Service (FAS), “the biggest challenge that we are looking at is actually the charging infrastructure. We need to deploy electric vehicle infrastructure to make sure we are able to do large-scale vehicle deployment while also ensuring agencies are able to accomplish their mission.” Phelan expects a plan to address the charging infrastructure to be out in the coming months. (ibid)

According to Sonny Hashmi, the commissioner of the FAS, the goal is to get to zero emissions.

Are you looking to be part of GSA’s mission to decarbonize its supply chain? Give us a call.

 

 

Not everyone is sold on the Transactional Data Reporting (TDR) pilot

Almost five years ago GSA launched the Transactional Data Reporting (TDR) pilot to replace the Price Reduction Clause (PRC). GSA’s goal is to use the data received, to obtain better pricing from contractors. GSA calls TDR a success, critics are not so quick to agree. (Federal News Network May 10, 2021)

Jeff Koses, GSA’s senior procurement executive said, “GSA has successfully demonstrated the value of TDR under the existing scope of the pilot. It has shown steady progress over the past four years, met most of the pilot’s objectives in the most recent year, and has made the necessary investments to leverage TDR’s potential in the years to come. We will continue to make improvements, especially in contracting officer usage.” However, Koses made no mention of using the TDR information in 2019 or 2020 (ibid).

Some argue that TDR works on paper, but not in reality. Many contracting officers are reluctant to use the data for decision-making. One industry expert went so far as to say, “I have not experienced any negotiations based on TDR data in order to form an opinion.” Others have suggested that the data is incomplete and that GSA has no strategy to back the pilot. (ibid)

One consultant pointed out that as more companies participate in TDR, the IG’s ability to audit prices before an award is made is more difficult. She noted, “under the TDR pilot, the population of auditable contracts has ostensibly been cut in half. When you remove the major resellers and the integrators, what remains are largely professional service contractors and products companies under Schedules 84 (Law Enforcement), 71 (Furniture), and 66 (Scientific). The audit threshold for annual sales is also reduced due to the smaller pool of contracts from which the OIG is selecting. Small businesses who would never have been a blip on the OIG’s radar are now at much higher risk of pre-award audit.” (ibid)

Another complication is GSA’s move toward unpriced contracts under Section 876 of the 2018 National Defense Authorization Act. The Act makes the Price Reduction Clause as well as TDR less necessary because the burden is on vendors to provide the lowest price possible as part of contract negotiations. (ibid)

Koses said GSA will refine and consider:

  • The ability of Federal Supply Schedule contracting officers to use transactional data for price negotiations in lieu of commercial sales practices and price reduction clause disclosures
  • The impact of an expanded data collection on GSA’s ability to use the data it currently collects
  • The impact on current/future GSA schedule contract holders
  • Communication to industry partners
  • Training and tools for category managers not impacted by TDR
  • Possible impacts on other FAS initiatives such as the National Defense Authorization Act (ibid)

So when will the pilot move to production? The waters remain murky. Whether the IG will move from the production stage should be made more clear when the Inspector General report on the TDR pilot is released, in the coming weeks. Vendors should be ready to invest in systems to collect and report pricing data, should the TDR pilot go into production.

Questions concerning how to collect and report pricing data? Give us a call.