Source: David Dayen, The Intercept, November 2, 2017
… Instead of getting yelled at by lawmakers, Amazon is on the verge of winning a multibillion-dollar advantage over retail rivals by taking over large swaths of federal procurement. Language buried in Section 801 of the House-passed version of the National Defense Authorization Act, which is being hashed out in a conference committee with the Senate, would move Defense Department purchases of commercial off-the-shelf products to “online marketplaces.” Theoretically, that means any website that offers an array of options for paper clips or office furniture; in reality that signals likely dominance for Amazon Business, the company’s commercial sales platform. Section 801 stipulates that the program should be designed “to enable Government-wide use of such marketplaces.” Scale, then, is key. Over time, this change would give platforms like Amazon access to all $53 billion in federal government commercial item purchases.
… “It seems like Amazon wrote it,” said Stacy Mitchell of the Institute for Local Self-Reliance, which has written critical reports about Amazon in the past. “It will accelerate the transfer of more and more government spending to Amazon.” The online marketplace provision, which still has to get through a House-Senate conference, coincides with a significant ramp-up for Amazon Business, which only launched in 2015. … But federal procurement is the holy grail, the lucrative market to tap. Perhaps that’s why, for the head of Amazon Business’s public sector division, the company hired Anne Rung, who ran the Office of Management and Budget’s Office of Federal Procurement Policy until fall 2016. This made Rung effectively the top purchasing officer in the United States. … Indeed, Section 801 has been informally dubbed the “Amazon amendment,” and experts believe only one or two companies would have the wherewithal to participate. That means monopoly or duopoly control of $53 billion in federal purchasing. The online marketplaces, which can be given no-bid contracts, explicitly eliminate the need for government procurement officers to seek out competitive bids for commercial products. …
Source: Emma Whitford, Gothamist, July 12, 2017
Legislation that the Department of Transportation predicted could shave years and millions of dollars off of critical Brooklyn Queens Expressway repairs floundered in Albany this session, to the frustration of local politicians, policy groups, labor unions, pro-business groups, and residents who live alongside the decaying BQE triple cantilever in Brooklyn Heights. … There is a basic resistance in Albany, and upstate generally, to what is considered privatization of the state contracting process,” she added. “The main opposition comes from public service unions that are concerned about their jobs somehow disappearing or being diminished.” (“We wanted to ensure that men and women in the state workforce, who are perfectly trained and qualified to do the work, didn’t lose their jobs because of design build outsourcing,” stated Emily Cote, director of communications for the Civil Service Employees Association.) …
Source: Charles S. Clark, Government Executive, July 10, 2017
A contractors group has welcomed a bipartisan House bill placed in the hopper last month aimed at curbing agency use of lowest price technically acceptable contracts. The Promoting Value Based Procurement Act (H.R. 3019), introduced by Reps. Mark Meadows, R-N.C., and Don Beyer, D-Va., would amend the Federal Acquisition Regulation to require civilian agencies to align themselves with the Defense Department and stiffen their rationales for resorting to lowest price technically acceptable contracts, which have grown in use in recent years but are controversial. …
The Challenge of Applying the LPTA Process to the Procurement of Complex Services
Source: TASC, Inc., 2012
From the press release:
Increased reliance by government customers on the Lowest Price Technically Acceptable (LPTA) acquisition strategy poses unnecessary risks such as budget overruns, delivery delays and, in the worst cases, mission failure. According to a new report by TASC, Inc., the LPTA process can be appropriate for commoditized services with clearly defined requirements, but not for complex services that support sophisticated, high-risk missions. In cases where the government does elect to use the LPTA process, it should rigorously define and evaluate technical acceptability and past performance to avoid compromising the performance of the program or system and, ultimately, the success of the mission….
…The TASC report makes the case that using the LPTA approach in the acquisition of complex mission services can compromise mission success and increase total program costs over time when factoring in rework and related costs. To achieve the best value, TASC recommends that solicitations for complex services adopt a classic best-value, cost-technical tradeoff approach that considers innovation, scheduling rigor and program cost containment. When the government does use the LPTA process, technical and past performance requirements should be defined precisely. In addition, applying detailed technical criteria using scenario-based evaluations, high standards of past performance and price-realism analyses are essential to mitigate the risk of unsuccessful performance on a given contract solicited on an LPTA basis. The TASC report offers examples of solicitations that utilize these recommendations….
Source: Doug Donovan and Jean Marbella, The Baltimore Sun, May 10, 2017
Maryland’s court system has failed for years to properly monitor how it spent tens of millions of dollars in contracts and lacked adequate oversight to prove it was getting the most cost-effective deals for taxpayers, a state audit released Friday has found. The Maryland Judiciary lacked “sufficient documentation” to support four contract awards totaling $26 million between July 1, 2012, and Dec. 20, 2015, the audit reported. … Auditors said the judiciary did not provide adequate cost-benefit analyses to support the award of two contracts to existing vendors: a five-year, $21 million contract for Internet services, and a four-year, $2.1 million contract for a digital recording system. In the latter contract, there was a competing bid for almost two-thirds less, $736,000, according to the audit. Additionally, the judiciary didn’t save information about the losing bidders’ proposals for three contracts totaling about $5 million. … The audit also raised concerns about the number of staff allowed to access the purchasing and payment system; the security of its financial management system and database; the processing of traffic citations; and the controls over its equipment and warehouses. … The findings come as the Maryland Judiciary is beginning to prepare a report requested by the Department of Legislative Services to explain “the apparent pattern of overbudgeting” for the state’s Clerks of the Circuit Court offices, according to budget analysis documents. Between 2012 and 2016 the clerks offices were allocated up to 9 percent more than they spent, a surplus that funded other efforts “without the opportunity for the General Assembly to vet those purposes,” according to the legislative services analysis. …
Source: Randy Ludlow, Columbus Dispatch, May 14, 2017
State spending on information-technology consultants, contractual employees and other private services has ballooned to $452 million a year, while the number of generally less-expensive state IT employees has dropped. As part of a preliminary inquiry into no-bid contracts uncovered by The Dispatch, the office of Ohio Auditor Dave Yost reports that spending on IT “personal services” has more than doubled from $207 million in 2011-12. … A Dispatch investigation published last month revealed that Administrative Services officials overrode the concerns — both legal and financial — of agency purchasing analysts to award millions of dollars in no-bid contracts, including to a company employing former state IT executives. Supervisors deny disregarding the agency’s purchasing policy and sidestepping the protocol of the state Controlling Board, a bipartisan group that approves major state outlays. The House-passed state budget includes language authored by Rep. Keith Faber, R-Celina, requiring state officials to seek bids on all IT consultants and purchases. The provision also would require such contracts to be submitted to the Controlling Board for its approval.
Source: Jane Edwards, ExecutiveGov, March 15, 2017
The Government Accountability Office has found that the U.S. opened $837 billion in contracts to foreign competition during 2010 under the World Trade Organization’s Agreement on Government Procurement compared with $381 billion in combined GPA-covered contracts that the next five largest trading partners reported in the same year. GAO said in a report published Monday those five GPA parties include Canada, Japan, Norway, South Korea and the European Union. The report also showed that the U.S. recorded $1.7 trillion in total government procurement contracts in 2010, while the five largest GPA partner countries reported $2.4 trillion in contracts combined. The agency also found lapses in the way U.S. free trade agreement and GPA partner countries statistically report government procurement data. … The congressional budget watchdog offered several recommendations to the U.S. Trade Representative to change the way it reports government procurement data under U.S. FTAs and GPA. …
Read full report.
Source: Michele Mackin, US Government Accountability Office, GAO-16-810 September 16, 2016
What GAO Found:
GAO found opportunities for the Department of Veterans Affairs (VA) to improve the efficiency and effectiveness of its multi-billion dollar annual procurement spending in several areas including data systems, procurement policies and oversight, acquisition workforce, and contract management. Shortcomings in VA’s recording of procurement data limit its visibility into the full extent of its spending. A recent policy directing that medical-surgical supply orders be captured in VA’s procurement system is a step in the right direction, but proper implementation is at risk because procedures are not in place to ensure all obligations are recorded. VA’s procurement policy framework is outdated and fragmented. As a result, contracting officers are unclear where to turn for current guidance. VA has been revising its overarching procurement regulation since 2011 but completion is not expected until 2018. Meanwhile, contracting officers must consult two versions of this regulation, as well as other policy related documents. Clear policies are key to ensuring VA conducts procurements effectively on behalf of veterans. The figure below depicts the various sources of regulations, policy, and guidance. Managing workload is a challenge for VA’s contracting officers and their representatives in customer offices. A 2014 directive created contract liaisons at medical centers in part to address this issue, but medical centers have not consistently implemented this initiative, and VA officials have not identified the reasons for uneven implementation. VA can improve its procurement processes and achieve cost savings by complying with applicable policy and regulation to obtain available discounts when procuring medical supplies; leveraging its buying power through strategic sourcing; ensuring key documents are included in the contract file, as GAO found that more than a third of the 37 contract files lacked key documents; and ensuring that compliance reviews identify all contract file shortcomings.
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Source: Corina Curry, Rockford Register Star, September 21, 2016
Rock Valley College will explore outsourcing and the elimination of paid days off as it continues to face state budget uncertainty. RVC President Mike Mastroianni informed members of the college’s Operations Committee tonight that he would like to get a financial analysis on the outsourcing of auxiliary services — functions such as snow plowing, landscaping, information technology, publishing, printing and purchasing co-ops. … The number of employees that could be affected by outsourcing is not known at this time, Mastroianni said. The college went for almost a year without state aid payments. It was anticipating $7.1 million to support college operations for FY 2016 and ended up getting $1.2 million in April after several months of receiving no revenue. Rock Valley made about $1.3 million in staff cuts in December. Classes and educational programs remained intact, but students lost men’s and women’s tennis and men’s golf programs. The college also placed a moratorium on unnecessary travel, community sponsorships, catering expenses and cellphone allowances. In March, it approved a nearly 9 percent tuition increase. …
Source: Kawika Pierson & Fred Thompson, Government Information Quarterly, June 24, 2016
Research suggests that governments should rely on standardized information technology solutions rather than custom built ones. We find that, for many categories of taxes, states that have contracted out the development of their tax-processing systems to providers offering standardized solutions see statistically and economically significant increases in collections relative to states that have not. We find no evidence that financial administration expenditures increase for these states. At the same time, there are several categories of taxes where we do not find a positive impact. We reconcile these findings by developing a qualitative argument that standardized solutions in tax administration may be most effective for the types of taxes that are the most difficult to enforce.
Source: S. C. Christopher, R. D. Vese, M. A. Boyd, A. D. Reddy, A. P. Mulhollen, D. E. Zand and T. F. Leslie, Growth of Change, May 15, 2016
Harrington and Campbell (1997) previously illuminated the pattern of producer services’ suburbanization in the Washington, D.C., metropolitan area between 1970 and 1992. Their results showed producer services growing at a faster rate at locations farther from the central city. We revisit the topic utilizing data from 2004 to 2010, assessing not only changes in the distribution of producer services since their work, but also the impact of massive increases in defense spending on producer services’ growth throughout the first decade of the twenty-first century. Multivariate linear regression is used to estimate per capita growth of producer services employment using six independent variables. Our results reveal producer services employment during the time period has grown significantly more quickly in the urban D.C. core than the outer suburbs, contrary to Harrington and Campbell’s research. Additionally, we find per capita producer services employment is self-limiting over the study period: locations with more producer services employment in 2004 experienced significantly less producer services growth over the period. We find federal procurement has no correlation on producer services overall, with limited effects on some subsectors. Analyzing a select group of producer services subsectors revealed that no sectors followed the overall model exactly, suggesting that targeting producer services for growth must be done carefully. None of our models show employment diversity to be a factor in differentiating economic growth at the intra-metropolitan level.