Category Archives: Purchasing

FEMA faulted for failed contracts to deliver hurricane aid

Source: Associated Press, April 10, 2018

The Federal Emergency Management Agency awarded contracts for hurricane supplies without adequately researching whether winning bidders could deliver what they promised, according to a new investigation by Democrats on a Senate oversight committee. The investigation followed disclosures by The Associated Press in November that a newly created Florida company with an unproven record had won more than $30 million in FEMA contracts to provide 500,000 tarps and 60,000 rolls of plastic sheeting for repairs after Hurricane Maria damaged tens of thousands of homes in Puerto Rico. That vendor, Bronze Star LLC of St. Cloud, Florida, never delivered those urgently needed supplies. The report from Democrats on the Senate Committee on Homeland Security and Governmental Affairs described failures by the Trump administration that prevented timely delivery of tarps and sheeting to hurricane victims after the summer’s storms. It focused on the Bronze Star contract and another awarded to Global Computers and Networks LLC of Fort Washington, Pennsylvania. …

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Lawmakers seek probes of award for Hurricane Maria tarps
Source: Tami Abdollah, Associated Press, December 1, 2017

Democrats in Congress are pushing for investigations into how the Federal Emergency Management Agency awarded contracts worth $30 million to a fledgling company for Hurricane Maria disaster supplies that it failed to deliver to Puerto Rico. The senior Democrat on the Senate Homeland Security and Governmental Affairs Committee, Claire McCaskill of Missouri, wrote Thursday to FEMA Administrator Brock Long, seeking more information about how FEMA evaluated Bronze Star LLC of St. Cloud, Florida. The Associated Press reported this week that FEMA awarded the small firm contracts for tarps and plastic sheeting that were never delivered. The agency ultimately terminated the contracts earlier this month without paying any money, but the episode caused a delay of four weeks. …

… Meanwhile, Rep. Sean Maloney, D-N.Y., wants the Homeland Security Department inspector general to investigate. He sought the review in an amendment to the Disaster Recovery Reform Act of 2017, which cleared the Transportation and Infrastructure Committee on Thursday. Maloney’s amendment cleared the committee with unanimous bipartisan support, though it was unclear when the House will vote on the measure. The amendment specifically requests an inspector general audit of all contracts awarded for tarps and plastic sheeting for the U.S. territories of Puerto Rico and the Virgin Islands. The review would include the contracting process used to evaluate bidders and award the contracts; the assessment of past performance and technical capacity to fulfill the contracts; and how FEMA ensures the contractors meet the terms. …

FEMA Contract Called for 30 Million Meals for Puerto Ricans. 50,000 Were Delivered.

Source: Patricia Mazzei and Agustin Armendariz, New York Times, February 6, 2018
 
The mission for the Federal Emergency Management Agency was clear: Hurricane Maria had torn through Puerto Rico, and hungry people needed food. Thirty million meals needed to be delivered as soon as possible.  For this huge task, FEMA tapped Tiffany Brown, an Atlanta entrepreneur with no experience in large-scale disaster relief and at least five canceled government contracts in her past. FEMA awarded her $156 million for the job, and Ms. Brown, who is the sole owner and employee of her company, Tribute Contracting LLC, set out to find some help. … By the time 18.5 million meals were due, Tribute had delivered only 50,000. And FEMA inspectors discovered a problem: The food had been packaged separately from the pouches used to heat them. FEMA’s solicitation required “self-heating meals.” …

Hurricane Harvey, Irma, and Maria Contract Spending Revisited

Source: Project on Government Oversight, January 8, 2018

Back in October, the Project On Government Oversight did a top-level analysis of federal government spending on Hurricane Harvey, Irma, and Maria recovery contracts, as reported by the Federal Procurement Data System (FPDS). The FPDS spreadsheets contain a wealth of data that allow the public to track billions of dollars in federal contract expenditures in precise detail: the agency awarding the money, the amount, the purpose, and the recipient. At that time, the government had spent a total of $1.65 billion on contracts. However, FPDS imposes a 90-day delay on the release of Department of Defense (DoD) data, so we were missing a big piece of the spending puzzle. Now, DoD numbers are starting to trickle in and we are getting a more complete picture of federal contracting outlays for the recovery efforts in Texas, Louisiana, Florida, Puerto Rico, and the Virgin Islands. The federal contract award total now stands at $3.3 billion: $1.2 billion for Harvey$726 million for Irma, and $1.4 billion for Maria. … Federal expenditures on Hurricane Harvey, Irma, and Maria contracts have now surpassed the $3 billion spent for Hurricane Sandy and are steadily approaching the $20 billion total for Hurricane Katrina. As the total grows, so too will the misuse of those funds. To that end, POGO plans to release a database that will track all federal spending relating to Hurricane Harvey. …

Education Department chooses firm with ties to Betsy DeVos for debt-collection contract

Source: Charlie May, Salon, January 14, 2018

Education Secretary Betsy DeVos once had financial ties to one of the two companies selected by the Department of Education to assist the agency in collecting unpaid student loans. The company, Performant Financial Corp., has also been criticized by other contract bidders for having inadequate ratings in the past. Performant and Windham Professionals were the two firms that were awarded contracts, out of almost 40 other bidders, and the deal is expected to be worth as much as $400 million, the Washington Post reported. The decision was touted by the Education Department as “the most advantageous to the government,” however, Performant’s past ratings have contrasted that assessment. Prior to her job with the Trump administration, DeVos was listed as an investor to LMF WF Portfolio, a limited liability company linked to Performant. …

Lockheed Martin, Boeing aerospace venture bilked U.S. for $90 million, lawsuit says

Source: Kirk Mitchell, The Denver Post, January 8, 2018

A whistleblower has settled a lawsuit filed against a Centennial aerospace company formed by Lockheed Martin and The Boeing Company that claimed the company defrauded the U.S. government out of at least $90 million by grossly overcharging for employee work hours. Whistleblower Joseph Scott filed the lawsuit on behalf of himself and the government against United Launch Alliance and United Launch Services, under the Federal Civil False Claims Act. Scott is a former ULA employee. … This wasn’t the first time ULA practices have come under scrutiny. In December 2016, ULA paid the government $100,000 to settle allegations that a subcontractor paid its employees kickbacks in order to win contracts. As a result, the U.S. paid higher costs to subcontractor Apriori Technologies between 2011 and 2015, Troyer has previously said. …

… ULA used a system called the Keith Crohn model that creates a grid using the cost of equipment to reach an employee cost. A labor value was placed on the grid for every item ordered through the company’s purchasing department. For example, any item that cost between $1 and $1,000 would be assigned a labor value of 8 hours. It didn’t matter what part it was, the lawsuit said. The U.S. bans arbitrary cost estimates when actual data is available that establishes the cost. ULA took advantage of the government’s practice of not auditing smaller projects. On projects above $100 million, the government audits bids and can reduce the contract price if the Defense Contract Audit Agency discovers discrepancies, the lawsuit says. In the first five to seven years of its existence, ULA often failed those audits. For larger audited launches, ULA began using historic data of actual prior labor costs, the lawsuit says.
But for smaller bids, ULA continued using its flawed estimates, knowing that it wouldn’t be audited, the lawsuit says. …

Pennsylvania lurches from one software boondoggle to another

Source: Joseph N. Distefano, Philly.com, December 1, 2017

The phones stopped working again at Pennsylvania’s unemployment-compensation offices Tuesday. “Due to vendor-related technical issues,” the state Department of Labor and Industry said. The same department has had to rely on what state auditors in May called “antiquated” software, written in the COBOL language used by punch-card programmers in the 1970s, since spending more than $160 million on a replacement system that failed. Elsewhere in Harrisburg, the Department of Human Services paid benefits to a couple of thousand dead people after computer systems failed to flag them as ineligible, auditors found last year. At the Department of Environmental Protection, the last full audit found water-quality reviews used “decades-old” data updated by hand. And after contractors were paid $800 million over the years, more than four times its projected cost since the 1990s, the Pennsylvania Statewide Radio Network still doesn’t work as designed.

… So Mr. Grove is sponsoring House Bill 1704, which would combine most state departmental IT offices and their short- and long-term planning, procurement, and cyber-security protection into a single Office of Technology. It would be part of the governor’s Office of Administration, under a director with the power to kill or suspend projects that run over budget or below standards. Pennsylvania IT contracts need “better controls” and “stronger clawback mechanisms” (performance bonds), so taxpayers can get their money back when the systems they buy don’t work, elected Auditor General Eugene DePasquale, a Democrat like Gov. Tom Wolf, said at a Nov. 14 hearing on the bill. … But Mr. Wolf’s appointees worry that the new office could “duplicate” and “conflict with” current procurement rules, Curt Topper, Mr. Wolf’s Department of General Services chief, told Mr. Grove at the hearing before Rep. Daryl Metcalfe’s Government Affairs Committee. …

The “Amazon Amendment” Would Effectively Hand Government Purchasing Power Over to Amazon

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. …

Authorization To Fix The Crumbling BQE Faster Stalls In Albany

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.) …

Lawmakers Aim to Restrict Use of Lowest-Price Contracts

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. …

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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….

Maryland Judiciary fails to monitor contracts, audit finds

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. …