Mom told me not to put all my eggs in one basket.
Contractor’s U.S. Ties Tough to Break After Vetting Lapse
USIS has won at least $588 million under U.S. government contracts set to expire within a year, according to data compiled by Bloomberg. USIS has at least 40 federal contracts for work related to investigations, 14 of which are scheduled to expire by Oct. 1, 2014, according to federal procurement data compiled by Bloomberg. The company performs background checks and other investigative work for the Federal Bureau of Investigation, U.S. Immigration and Customs Enforcement and the Department of Agriculture, among other agencies.
The agreements include a lucrative deal with the U.S. Office of Personnel Management, which is responsible for most federal background checks. While the expiring contracts might provide agencies with opportunities to begin dropping USIS, replacing the government’s top provider of background checks might lead to more chaos in an already overburdened system.
“USIS provides the heart, the limbs and the guts of the operation for the Office of Personnel Management,” said Tiefer, now a law professor at the University of Baltimore.
The number of people with security clearances ballooned to about 5 million last year, and contract investigators have struggled to keep up with the demand for background checks, according to security specialists.
The government increasingly has relied on USIS for that vetting. Dumping a firm like USIS, a unit of Falls Church, Virginia-based Altegrity Inc. that has more than a half-billion dollars in federal contracts running out in a year, could create as many problems as it solves. It might shift a backlog of cases to two other companies, which could lead to more vetting lapses.
Shifting the load to competitors such as Arlington, Virginia-based CACI International Inc. (CACI) or KeyPoint Government Solutions Inc. -- a unit of Veritas Capital, a New York-based private-equity firm -- might worsen the situation, Tiefer said.
“There are not a lot of players in this field,” Brian Friel, a Bloomberg Industries analyst, said. “The government doesn’t have a lot of options.”
USIS’s prominence as a background-check contractor is due to its origin as the Federal Investigations Division of Office of Personnel Management. The unit, originally known as U.S. Investigations Services Inc., was privatized in 1996 as part of then-Vice President Al Gore’s effort to “reinvent” government by reducing the size of the civil service, according to a 2011 report by the Congressional Research Service.
Contracting out security reviews was designed to save the government money and offer new work for about 700 investigators no longer needed because of a declining clearance workload as the Cold War ended. Instead, demand for security clearances surged after the Sept. 11, 2001, terrorist attacks.
USIS was given a non-competitive, three-year contract for investigative work with the personnel office and granted free access to federal computer databases that weren’t available to other firms.
Since 2006, at least 20 investigators have pleaded guilty or have been convicted of falsifying background-check reports for the personnel office, according to the agency’s office of the inspector general.
Ten of those were contractors. Eight of them worked for USIS.
Surely there must be some way to generate more competition with the industry behemoths? Not all of America's innovation is limited to the IT industry, is it? There is a cost to contracting with too-big-to-flail, and it includes creating complacency as well as dependency. And myopia.
Noting that USIS was at one time a government agency, I am reminded of the many instances mentioned in James Nagle's A History of Government Contracting which illustrates the many times when American government has instigated industrial innovation, including the industrial revolution. He reminds us that "good enough for government work" was not originally the pejorative it now is, but indicated the gold standard of workmanship.
For another exposition of that proposition, see 'The Entrepreneurial State': Apple Didn't Build Your iPhone; Your Taxes Did, by Mariana Mazzucato, with some excerpts as follows.
Throughout history, strategic government expenditures have played a key role in spurring economic growth. private finance is too risk-averse -- afraid -- to engage with industries characterized by high technological and market risk. The fear explains why we have seen venture capital entering, in industry after industry, only decades after the initial high risk has been absorbed by government.
Mission-oriented public investment put men on the moon, and later, lead to the invention and commercialization of the Internet, which in turn has stimulated growth in many sectors of the economy. Indeed, as I describe in the longest chapter of my book, the U.S. government has been a leading player in funding not only the Internet but all the other technologies -- GPS, touchscreen display, and the new Siri voice-activated personal assistant -- that make the iPhone, for example, a miracle of American technology.
Casting the public sector as the villain and business as savior has relieved the private sector from any obligation to increase its own commitment to the innovation process. There simply are not enough large businesses today playing the role that Xerox PARC (the Palo Alto Research Center) and AT&T (Bell Labs) played in the past.
Today's big companies, like Cisco and Pfizer, spend almost as much on share-repurchase schemes (which enrich those who own stock) as they spend on research. Interestingly, the big "repurchasers" (the biggest being in oil and pharma) often justify such buybacks with the claim that there are no other "opportunities" for their investments. But really? No opportunities in health for pharma these days? Nothing for oil companies to invest in? What about safe and clean renewable energy?
When building innovation "eco-systems," then, it is important to make sure the role of business is symbiotic, not parasitic. That means, if we want to rebalance the economy, we need to rebalance the story we tell about who the innovators really are. Interestingly, it was the venture capital lobby in the mid-1970s that pushed for the capital gains tax to fall by 50 percent (from 40 percent in 1976 to 20 percent in the mid '80s). It has been falling ever since, based on the narrative that only thus will the entrepreneurial "risk-takers' do their thing and enrich us all.
But that narrative is false. The entrepreneurial state has funded the radical innovation behind much if not most of modern economic growth. Denying government today the resources to do its thing endangers us all.
2nd SC contract provides more monitoring for less
The State paid $12 million to the credit bureau Experian through a no-bid contract that Gov. Nikki Haley negotiated after state officials learned of a cyber-theft last October. That service, dubbed Protect My ID, provided daily monitoring of the three credit bureaus for newly opened credit accounts.
Budget and Control Board director Marcia Adams said Monday the state intends to award Texas-based CSIdentity Corp. the next contract. The contract calls for the state to pay up to $8.5 million, depending on how many people sign up over the next year and when.
Taxpayers affected by last fall's massive hacking at South Carolina's Department of Revenue should get more identity theft protection services at a lower cost to the state under the new contract for state-paid monitoring. But the service provides more extensive surveillance to catch other ways stolen identities are used, including payday loans, sex offender registries and online chat rooms where cyber-thieves sell and buy information. Addresses will be monitored to catch the possibility of mail being fraudulently redirected, while court documents will be tracked in case criminals use an enrollee's stolen ID when they're arrested. The tracing of Social Security numbers should alert enrollees to someone creating a false address or alias using their information.
Legislators were critical of the no-bid contract and its limited credit notifications. They approved extending services and designated $10 million in the 2013-14 budget toward a second year, but they required the state to seek more consumer protection services through the procurement process. "Gov. Haley's main goal has always been to provide the very best in protection and monitoring at the least possible cost and that is exactly what the state will be getting with CSID," said Haley spokesman Doug Mayer.
Read more here: http://www.star-telegram.com/2013/09/23/5187494/2nd-sc-contract-provides-more.html?rh=1#storylink=cpy
I always thought that, in principle, transparency was a central tenet of US procurement. But, obviously, only in a controlled and restricted sort of way.
PSC calls for 'fundamental' procurement reforms
The Professional Services Council is lobbying members of Congress and administration officials for “fundamental” acquisition reforms across government. Officials for the trade group, which represents government services contractors, said it’s too early to say how the bid protest process might be reformed, but industry leader joined in the chorus of complaints long echoed by government officials.
One idea floated by PSC would call on the government to release information to contractors that otherwise only would be disclosed during the discovery process of a bid protest or lawsuit. That way, contractors, armed with better quality post-contract information, might realize they have little to protest.
“It’s not until they get through that discovery process that they find out the information they’d need [to decide] if there’s really enough worth protesting,” PSC CEO Stan Soloway said.
One of these days, maybe, the protest process won't just be a game of Battleship.
Battleship (also Battleships or Sea Battle) is a guessing game for two players. Before play begins, each player secretly arranges their ships on their primary grid.
After the ships have been positioned, the game proceeds in a series of rounds. In each round, each player takes a turn to announce a target square in the opponent's grid which is to be shot at. The opponent announces whether or not the square is occupied by a ship, and if it is a "hit" they mark this on their own primary grid. The attacking player notes the hit or miss on their own "tracking" grid, in order to build up a picture of the opponent's fleet.
When all of the squares of a ship have been hit, the ship is sunk, and the ship's owner announces this (e.g. "You sunk my battleship!"). If all of a player's ships have been sunk, the game is over and their opponent wins.
This post keys off the following article from Wales, involving changes in the UK procurement rules for professional legal services.
UK Government's big change to legal plans after protest by lawyers
The UK Government has scrapped plans to award legal aid contracts to the lowest bidders after protest from lawyers who warned high street firms could go bust.
Justice Secretary Chris Grayling announced there would be a set number of contracts for duty work – such as that picked up in police stations – and these would be assessed on the quality and capacity of firms bidding for them. Under the original proposals, price would have been a key factor. There will be an unlimited number of contracts available for own client work, providing minimum quality requirements are met.
The Government stated that “providers delivering services in Wales would be required to ensure that services are accessible to, and understandable by, clients whose language of choice is Welsh”.
Andrew Thomas QC, who has practised across North Wales, welcomed the changes. He said: “The Government had proposed handing the work to big national companies looking to provide a cut-price service. “The intention was to take away the public’s right to choose a lawyer they know and trust, forcing them to accept the provider which had bid the lowest. Quality of service would have gone out the window.
The ABA Model Code provides a variety of "methods of source selection", that is to say, procurement mechanisms. In each, price plays, of course, a key relevant role, but in different ways. There is the common "competitive sealed bid" process whereby bids are assessed against objective criteria and specifications, and the contract goes to the lowest submitted price, without negotiation. It is, in essence, a plain vanilla auction.
The 1979 version of the ABA Model Code contained two different "proposal" methods, one called a competitive sealed proposal (let's call it the RFCP method: request for competitive sealed proposals) and the other a proposal for professional services (let's say RFP: request for proposals). The pricing mechanism differs. In the RFCP method, price is given a particular points weighting in the RFCP solicitation, and is negotiated along with other elements of the solicitation but is not re-weighted, with the best ultimate points winner getting the nod.
In the RFP method, price is not initially considered or even disclosed. Given the classically described in-elasticity of professional service of economics models, price is not a factor in the first instance of choosing the best service available. In the first instance, the quality of the service required relative to the outcome needed is the only consideration. Offerors are ranked in terms of deemed "best offer" of service, from best to least. At that point, the critical price factor comes in to play. The first best offeror is chosen to engage in negotiation for a fair and reasonable compensation. If a fair and reasonable price is agreed upon, the award goes to that offeror. If fair and reasonable price is not obtained from the first best, negotiations begin anew for compensation with the next best offeror.
What draws this story to my attention is the need to have a mechanism for obtaining professional services where quality of service is the foremost first objective. The story illustrates the desirability of a source selection method that places primacy of the professional service factor over price.
The ABA has jettisoned the separate old RFP system, subsuming it within the RFCP method, which requires a careful understanding and use of the weighting process by the procurement officer. It is a decision that is rarely if ever second-guessed, so can lead to less than ideal results, if not abuse.
Guam, which has adopted most of the ABA MC model, curiously kept the RFP method but years ago, soon after adoption, jettisoned the RFCP method, most likely because it is not easily an objectively verifiable selection process and easily subjected to abuse. I would think there is room in the quiver for both arrows, each more useful than the other in particular instances.
