Contracting

Did the government actually reach its annual small business contracting goals?

Reports are surfacing that maybe the government did not reach its annual small business contracting goals, as the Small Business Administration has boasted.

Tom Temin@tteminWFED

September 22, 2020 12:09 pm

7 min read

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They say no good deed goes unpunished, or at least unchallenged. Now reports are surfacing that maybe the government did not reach its annual small business contracting goals, as the Small Business Administration has boasted. Alan Chvotkin, executive vice president and counsel at the Professional Services Council, wonders why we’re still questioning data from the Federal Procurement Data System in the first place. He joined Federal Drive with Tom Temin to discuss.

Interview transcript:

Tom Temin: Alan, before we get to the small business, I want to do a quick lightning round with you on a couple of other policy issues that are floating around and morphing week by week. First is the cmmc. The contractors obligation to have that cybersecurity maturity model in place, there’s a little turmoil on that front.

Alan Chvotkin: Well, there is Tom and good morning, thanks for the opportunity to join you again, lots of things going on with the cybersecurity maturity model certification program, the CMMC. First of all, as we’ve talked before, there is an accreditation body board of directors of an independent group that’s responsible for putting the training and month and certification of companies did take on that work three board members that now left that accreditation body since the start of the year, and two of them last week, either resigned or were dismissed, depending on your sources of information. And we have three new added to the original board members, including a new chairman. So there’s clearly some change taking place in the oversight body, the body charged with responsibility for implementing the CMMC standard. In addition, the CMMC accreditation body has completed the first tranche of provisional assessors that had gone through training. So that’s an important benchmark for what’s coming. And finally, and significantly, none of this can go into effect for contractors until a DFARS ruling, Defense Federal Acquisition Regulation Supplement is issued. This rule has been pending at the Office of Information Regulatory Affairs since April. We now understand that that’s been cleared by OIRA, sent back to DoD for publication. But it may come out as an interim rule rather than as a proposed rule. And that would be a real regret because none of us have seen that rule. We’ve been promised an opportunity to comment on it, and commenting after the fact isn’t very satisfying.

Tom Temin: Yeah. So as an interim rule, then it’s in effect, so you don’t get to comment before it gets into effect.

Alan Chvotkin: That’s correct. And the longer it takes to resolve comments, the more challenging it becomes to make significant changes. Our member companies have never liked significant interim rules. And the longer it takes, the less desire there is to make changes because they’ve already had to adopt the regulations and adapt their systems.

Tom Temin: And on the 889 front, that is the ban on Chinese telecommunications equipment in the supply chain, those comments are in for a rule everyone’s already living with.

Alan Chvotkin: Yes, the comments are in. They were due last Monday, the 14th. PSC submitted our comments, as did other activities, other trade associations and organizations. But here again, we’ve had an interim rule that was put into effect on August 13, published on July 14, and effective August 13. So we got 60 days for public comment. But here again, the rule is in effect, and companies have already tried to operationalize it. We raised a lot of questions, as we have seen from the outset over two years now about some of the provisions in 889, and hoping that the regulations would provide clarity to them. Unfortunately, they did not. We highlighted those in our comments. But in addition to that, under the current law, there are opportunity for the director of national intelligence to issue waivers in urgent circumstances. Three agencies, the Department of Defense, the Department of State, and the Agency for International Development, USAID, have all received variations of approval for a waiver covering slightly different topics. Those expire on September 30, and I know that all three agencies have requested an extension, but have not yet been granted that extension past September 13. So the clock is ticking on those agencies, and the failure to get that that waiver extension would have a significant impact on the business operations of all three of those agencies.

Tom Temin: Then we’ve got the issue we lead with which is Small Business Administration touting the fact that the government met its small business goals, but now there’s an ID report from the General Services Administration questioning that. Tell us what you’ve learned?

Alan Chvotkin: Well, the IG report came out last week as well, September 14, and it raised some questions on how a portion of GSA, the Federal Acquisition Service, whether they were properly recording their performance for Small Business Awards, and the Federal Procurement Data System. You and I have talked about this for a long time, is it not a great system, but it’s the only one we have. And we’re dependent on contracting officers to accurately report data into FPDS. Not just on small business performance, but contract awards, modifications, task orders across the whole range of issues. The big report raised some questions about whether the Federal Acquisition Service had properly recorded small business performance in the FPDS data, and asked the Federal Acquisition Service to take a look at that. FAS raised some questions about the IG’s report, it was a fairly small sample, but it is a constant drumbeat we hear from small businesses and others, that the data isn’t properly recorded. And as we do our research around small business performance in the federal government, we find lots of issues about data being either mischaracterized or improperly recorded in FPDS. This is a systemic issue. It’s not just a single source, but it does call into question the precision of some of the reporting that SBA does annually in their small business scorecard.

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Tom Temin: I guess the errors could run both ways, and so maybe on average, the government is meeting its goals.

Alan Chvotkin: Yeah, I’m not questioned whether they’re meeting their 23% government wide goal, or even most of the sub goals that exist for the various classes of small business or categories of small business. But again, everybody does not just Professional Services Council, not just me, but everybody is dependent on the accuracy of the data in that system. Lots of companies make decisions based for hundreds of millions of dollars based on the information that’s in that system. The more we question the veracity of the data, the less value it’ll have for decision making, both for governments as well as for industry.

Tom Temin: Alright. And the other issue I wanted to ask you about, of course, is now the Senate is preoccupied, you might say, now that we have lost Supreme Court Justice Ruth Bader Ginsburg. And so you’re a little concerned about what action they will be able to accomplish between now and the end of the fiscal, and between now and the end of the calendar.

Alan Chvotkin: That’s right. It’s obviously just a few days since her untimely passing, and lots yet ahead. But just given the the chatter, both in the industry as well as and the press about this, my preliminary thought here is that the full Senate will probably not vote on a Ginsburg replacement until after the election. But in between nothing except the most essential, and it may come down to only one item, which is the continuing resolution to keep the government open, that almost nothing else that gets through the Senate before that final vote. And depending on the outcome of that final vote and maybe the outcome of the presidential elections, maybe nothing gets done until after a new Congress is sworn in on January 3. And so while we would generally expect to see a lot of legislation cleared at the end of a Congress, members who are retiring or those who are defeated, tried to push their favorite legislation to get that through and significant policy issues like the National Defense Authorization Act, or the intelligence Authorization Act, or extensions of other programs see only minimal action until some of this dust settles. This will be an interesting time to be watching policy formation, particularly in the United States Senate.

Tom Temin: I guess maybe the lame duck will be a dead duck.

Alan Chvotkin: Could very well be.

Tom Temin: Alan Chvotkin is executive vice president and counsel at the Professional Services Council. As always, thanks so much.

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Alan Chvotkin: My pleasure Tom.