How acquisition hinders national security

Contractors probably know as much about the risks to national security as the Defense and Homeland Security Departments. One view suggests the federal acquisition system hinders those departments from obtaining what they really need. For more, the Federal Drive with Tom Temin talked with Larry Allen, a long time federal sales and marketing consultant.

Interview Transcript:  

Larry Allen Tom, my concern is that while the acquisition system today is focusing on things like socio economic benefits and trying to do everything through the acquisition system, whether it’s Uber compliant, cybersecurity, all of these things are important, but they also all have their place, Tom. And that place is not to hamstring the efficient delivery of critical systems. And as you look around the world today with regional conflicts in the Mideast, brewing trouble in Asia, you’ve got Russia involved in Ukraine. I think this is the time when the United States needs to wake up and say, hey, all of these perceived goods through the acquisition system are really secondary or should be in terms of focus. What we should be focusing on is being able to meet the potential threats that state and non-state actors bring to us and have a more efficient acquisition system, so that our national security agencies have the tools they need to protect us.

Tom Temin There are a lot of requirements for cybersecurity of those contractors, for what they do in terms of their labor practices and diversity hiring, and what they do with respect to carbon emissions. I guess if you have omelet days for your employees and use those gas powered hot plates, you’re going to be in trouble. I’m joking, sort of. But is this the kind of thing you mean that just hinders competitive bidding on reality of what the government needs?

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Larry Allen Yeah, it certainly is. I think there are a couple of impacts of today’s acquisition system and kind of the sideshows, if you will, that, we are, we have to jump through. One of those is that it reduces competition. Even as the administration wants to increase it, particularly among small businesses. Small businesses don’t have the bandwidth to jump through that many hurdles. Even if you’re a larger business, you can provide the things that government asks of you. But the government acquisition system itself is moving more slowly than it should be, because we have to look at all of these side issues. And as I said, I don’t mean to say that they’re not important. They all have their place. Unfortunately, I think that place is now up at the front of the line where it really shouldn’t be. At the front of the line needs to be efficient acquisition. Look at commentators around the U.S., Tom. You see a lot of them saying that we haven’t faced these many threats since the 1930s, and we need to make sure that we’re not flat footed. And having a better acquisition system is really central to that.

Tom Temin Could you maybe comment on what seem to be two canaries, if you will, in the mine shaft of procurement? One is that even though slightly more dollars go to small business year after year, the number of small business vendors is shrinking. The roster is shrinking even as the government tries to encourage more people to come in. What’s the first one?

Larry Allen First one, I think you have to understand, I think there’s a tendency in government to look at small business as a monolith, and small business is not a monolithic entity. There are different types of small businesses. So what you see when you look at the government sales data that goes to small business, you see a lot of successful small companies that get the bulk of that business and a lot of newer and other small businesses that don’t. So look, our small business number is going up incrementally. Yeah that’s great. But that money is going to really a cast of Usual Suspects and then some other people who happen to be close enough to that cast of Usual Suspects. They’re the supporting cast, if you will. And that’s what we get. You have professional small businesses who are dedicated to the government market and professional large businesses, and those are the ones that have the resources and also don’t have any choice but to invest in the never ending stream of special and unique requirements to do business in this market.

Tom Temin We’re speaking with Larry Allen. He is president of Allen Federal Business Partners. And the other canary I wanted to ask you about is the rising use of other transaction authorities, OTAs which take place outside, of course, the Federal Acquisition Regulation in the [Defense Federal Acquisition Regulation Supplement (DFARS)] so far. Congress is ok with it. Everybody’s ok with it. I wonder what scandal is brewing out there that we haven’t seen yet, just having watched this market a long time. But is that another indicator that some things are not what they should be on the regulated side or the more regulated side?

Larry Allen Tom, I think you’re right on the nose with that. You look at the OTAs use, it’s non FAR based acquisition method, where you look at other things that are been here to for used for kind of niche acquisitions like small business innovation research acquisition. And then you look at the Defense Authorization Act and you see that Congress specifically directed the Department of Defense for this fiscal year to look at more commercial solution openings, which is a OTA like acquisition method. If you’re looking for all of these ways around standard acquisition, you have to ask yourself, is the Maine Acquisition Highway just totally bottlenecked all the time? And if it is, what can we do to ease those bottlenecks to get the acquisition traffic on the traditional roads moving more smoothly so that we don’t have to have all of these workarounds that get us where we need to be.

Tom Temin And speaking of that relationship between government and industry, you’re also writing in this week about CISA, the Cybersecurity and Infrastructure Security Agency, and the FBI seeming under some coming rules to be able to get into the systems of contractors and look around in there.

Larry Allen Tom, this is a proposed role. The comment period on this proposed rule just closed. And even though the FAR council extended the comment period, I don’t think there’s some role that a lot of contractors have caught. As you said, this is a rule that would allow CISA and the FBI to look at contractor IT systems any time that there is a cyber breach and it gives those agencies almost unfettered access to contractor IT systems when there’s a cyber breach. The concern is that anytime you give any agency or anybody unfettered access to your information systems, there’s no real way of controlling where they go. They’re going to go poke over here, they’re going to go looked over there. And while they may be originally looking for what happened to cause the cyber breach, they may also inadvertently roll over some things. And, look, we’ve also had incidences where people’s personal information has been breached by the office in both systems maintained by the Office of Personnel Management. You’ve got critical non government contractor information in those systems for your commercial customers. I think that this is a proposed rule that contractors really need to pay attention to. And even though the comment period may have technically closed, go ahead, submit some comment, raise your concerns. Make sure that people know that this could be a real burden for you if, in fact, you think it’s problematic.

Tom Temin The rule is going to happen. Even though they extended the comment period, they don’t propose rules and then suddenly say at the end of the rulemaking comment period, gosh, you’re right, we don’t need this and toss it out. There’s going to be something. So you might as well get in on what commenting is still left.

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Larry Allen Well, I think that’s particularly true in an area where you’re talking about cybersecurity, Tom, cybersecurity is one of those things where people are like, well, we need everything we can get. Well, cybersecurity is really important. It is. But it’s not just important for government contracting. If you’re a company that sells both commercially and to the government, you have every right and your commercial customers have every right to make sure that the information you use and the conduct of your non-government business remains secure. And it’s reasonably safe from a government agency coming in with its camel’s nose under the tent to sniff somewhere else, and then either intentionally or quasi intentionally sniffing down a road that was beyond the original intent of the rule.

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