Executive order contains 72 initiatives on boosting competition in federal contracting

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The Biden administration has proposed no less than 72 initiatives in a single executive order on competition. The order, earlier this month, is ostensibly to benefit consumers. But if you read far down in the order, there’s a lot there about federal contractors. For analysis, Federal Drive with Tom Temin turned to the President and CEO of the Professional Services Council David Berteau.

Interview transcript:

Tom Temin: David, I think you came up with the count of 72 things to do under this order. Where do contractors come in here?

David Berteau: Well contractors, of course, can be affected by a number of the elements of this. No compete clauses, teaming agreement, competition arrangements, and perhaps the biggest is the overall fundamental approach that more smaller businesses is better than consolidated businesses to move forward. The problem is that we can’t really respond to the elements of the executive order, until we see the draft regulations that will be promulgated as a result of this. And the timetable is both multivariant and many, many different agencies involved in this. If fact, I asked one of the agencies how they were prioritizing the input, because this is executive order 14036, and PSC has been tracking them and trying to keep keep a balanced scoresheet of who has to do what at the agency level, and frankly, I asked them how they’re prioritizing and they said, “Well, we’re working on that.” And so it is a question of, we can’t respond until we see what the proposed rules are. The executive order itself doesn’t give enough precision on that.

Tom Temin: If you look somewhere down here in ‘subparagraph B’ of ‘something section eight’, ‘paragraph Q’, it’s unbelievable the nested outline form in here. But it says acting through the director of the National Institute of Standards and Technology — consider this is the Secretary of Commerce — initiating a rulemaking to require agencies to report to NIST, annually, their contractors utilization activities, blah, blah, blah, on something to do with drugs and interchangeable biomedical products. That’s just one area of contracting. But that gives them a year to come up with that rulemaking. So, like you say, this is a very drawn out process.

David Berteau: It does. And part of the challenge is that there’s a burden in reporting for every rulemaking process. And while OMB technically calculates the impact of that burden on the community, my experience is they often undersell the real burden. They assume you can get the paperwork done in 38 minutes, whereas in reality, it takes a lot more than that, particularly if it’s not any data that you need to run your business, it’s just data that you collect for the government alone. Unfortunately, we have no input into that until it’s done. There’s another piece here, there are a number of agencies where it’s recommended that they undertake activities here, the FCC, the Federal Trade Commission, and so on. And from PSC’s point-of-view, we know that those are technically independent agencies, and the president can’t direct them what to do, but it does appear that the agencies will be promulgating it. This complicates our ability to reflect what our members want to have as part of that input as well.

Tom Temin: And they’re also looking at the defense industrial base, because the secretary of defense has the job of reporting to the White House Competition Council, a new council created under this order, on the level of competition in the defense industrial base. And so that’s, imagine the reporting that will engender.

David Berteau: And you look, Tom, at some of the things where we’ve got challenges. The Made in America executive order from back in January is being implemented now and you’ve got a person in charge of that in the White House staff. We’ve got the challenges of responding to China on everything from 5G to artificial intelligence. And the White House will even say publicly, we need companies that have the ability to go head-to-head and compete against essentially government-backed companies on the Chinese side, where you don’t get there by breaking people up. You don’t get there by minimizing the competence and capability within your companies. And so there’s some competing objectives here. PSC on behalf of our members is going to try to help sort this out.

Tom Temin: Well, that’s what happens when you have academics and thinkers write all of this stuff, and nobody’s ever operated a business before, and maybe that’s part of the problem.

David Berteau: It really is important to focus on implementation, not just on idea.

Tom Temin: We’re speaking with David Berteau, president and CEO of the Professional Services Council, and closer to ground level, speaking of contractor competition, there is the seeming dissolution of the CIO-SP4 from NIH, that big GWAC just seems to get further and further from whatever momentum it had in being awarded.

David Berteau: PSC, last week, sent our latest letter to the acquisition leadership both at NIH and HHS, and shortly after we sent that letter amendment eight was issued. This is an RFP [request for proposal], the so-called final RFP has been out eight weeks, and it’s already had eight amendments. And the amendments completely changed both the requirements in the direction that potential bidders have to go in without giving them enough time to do it. We’ve called for NIITAC, the the sub agency within NIH that runs this process, to essentially suspend the process, issue a consolidated RFP that’s internally consistent, that responds to the issues that bidders have raised, and give people 30 days to put their bids together, not another eight days as amendment 8 did, unless you count weekends, of course, which the government thinks you should be working all the time if you’re bidding.

Tom Temin: Yeah, so this could really stretch deep into the fall if they take this to heart, and maybe start over.

David Berteau: It could, and we’ve heard from many of our members at PSC that this raises questions in their mind as to whether, A)they can submit a compliant bid, and B) whether it’s worth it. Because you can actually reduce competition quite effectively if you make it too hard to bid. And that I hope is not what the government’s intention is. It’s certainly not what’s in the government’s interest.

Tom Temin: No, because CIO-SP3 has been a successful GWAC with lots of contractors and billions of dollars in order. So, they do know how to run these things.

David Berteau: It has been, and of course one of the major focus points of the new one is health care technology and information systems, which if the last year and a half has shown us anything, is we’ve got a crying need to take maximum advantage of what technical capability exists in the private sector and bring it to bear for the government. And that’s what PSC is going to be pushing for here.

Tom Temin: And briefly, we are starting to get some clues from the armed services committees that they are plussing up, surprisingly, I guess, at least on the Senate side, the Biden administration’s requests for DoD accounts in the coming year in 2022.

David Berteau: If you go back to May, you’ll see in the president’s budget request, I think it was May 27, it had very minimal increase for defense, not quite enough to cover inflation, certainly not the inflation we’re seeing in recent weeks here, but a 16% increase for civilian agencies. What the House has done at the appropriation subcommittee level, is mark up roughly consistent with the distribution of that president’s budget request. What the Senate Armed Services Committee did last week in their markup is they said, nope, we’re not going to do that on the on the defense side, we’re going to add another $25 billion. Now, that’s about 2.5% or 3% over and above what the administration requested. What we don’t have, though, is an overall agreement, either within the Senate, or between the Senate and the House, over what the spending levels will be both for defense and nondefense agencies. It’s almost the first of August. We need to get that agreement because otherwise you can’t get bills out the door, and Oct. 1, the start of the fiscal year, is only two months away. And of course, the reset of the debt ceiling is only a week away. It’s actually on Aug. 1. This is typically the budget deal and the debt ceiling deal are part of the same package. The conversation we’re hearing is that the debt ceiling deal will just be part of the continuing resolution. So once again, we’ll start the fiscal year with uncertainty, with no new starts, with a series of continuing resolutions. It’s really time for Congress to get their act together and legislate this. The SASC’s, the Senate Armed Services Committee’s first salvo though says, we’re looking at increasing defense and so we’re paying close attention to that at PSC.

Tom Temin: Well, mama said there’d be days like this, she just didn’t say every day would be like this. David Berteau is president and CEO of the Professional Services Counsel, thanks so much.

David Berteau: Thanks, Tom. You’re welcome.

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