The White House has created an interagency working group to stop counterfeit goods from entering the supply chains that support Defense Department weapons systems and private sector electronic goods, the nation’s first intellectual property czar said on Tuesday.
“The implications of DoD procuring counterfeit goods are negative and obvious,” said Victoria Espinel, the U.S. intellectual property enforcement coordinator at the Office of Management and Budget. “Our understanding is that this is a problem that a number of our agencies are struggling with.”
Espinel made her comments at an event hosted by the nonpartisan Information Technology and Innovation Foundation, before the start of a panel discussion on strengthening enforcement of IP rights in countries that systematically extort intellectual property. Congress created the IP coordinator position in 2008, to respond to concerns that government agencies responsible for protecting intellectual property were not coordinating.
This summer, the White House issued a joint strategic plan to combat IP theft that called for establishing a governmentwide working group to study how to reduce the risk of agencies procuring counterfeit parts. The framework stated the task force should include representatives from the National Security Council, Defense, NASA, General Services Administration, Commerce Department, Small Business Administration and Homeland Security Department.
A January 2010 Commerce survey found that nearly 40 percent of entities across the procurement supply chain discovered counterfeit electronics between 2005 and 2008. The semiconductor industry has aired concerns that counterfeit chips mislabeled as military-grade can lead to fatal malfunction in military and aerospace parts, according to the White House’s strategic plan.
On Tuesday, Espinel observed the IP problem is one issue where there is consensus in Congress. “I feel very lucky to be working in an area where there is great bipartisan support,” she said. Democratic Sens. Tom Carper of Delaware and Sherrod Brown of Ohio in an Aug. 6 letter to Ashton B. Carter, undersecretary of Defense for acquisition, technology and logistics, expressed fear about the potential for counterfeit parts to delay military missions and seriously affect the integrity of weapons systems.
The senators’ letter referenced the Commerce study and a March Government Accountability Office report that found Defense did not have specific procedures for detecting and preventing counterfeit parts from infiltrating the supply chain.
China, the country most frequently identified as the source of counterfeit items, should be treated with “a carrot-and-stick approach,” Espinel said. “China is both an economically sensitive issue and a political sensitive issue.”
– by Aliya Sternstein - 09/28/10 – NextGov.com – © 2010 NATIONAL JOURNAL GROUP, INC., ALL RIGHTS RESERVED
The small business contracting parity debate is finally over.
On Monday, President Obama signed legislation that re-establishes equality among each of the small business subcategories that competes for government contracts.
The 2010 Small Business Jobs Act, which also provides tax cuts for undersized firms and creates programs to support private sector lending, makes a technical revision to the 1953 Small Business Act by replacing the word “shall” in the Historically Underutilized Business Zone statute with the word “may.”
The old language in the Small Business Act stated that a procurement officer shall award contracts based on limited competition to HUBZone small businesses. But, the statutes creating the service-disabled veteran-owned small business program and the Small Business Administration’s 8(a) Business Development Program used the word “may” when referring to set-aside contracts.
The Government Accountability Office and the U.S. Court of Federal Claims determined the difference unambiguously established a preference for HUBZone firms.
The Small Business Administration lobbied lawmakers for months to support legislation that would place contractors in the 8(a) and service-disabled veteran-owned small business programs — and the pending women-owned small businesses program — on equal footing with HUBZone companies. HUBZone companies are located in economically depressed neighborhoods.
“This clarification will help federal agencies meet each of the government’s small business contracting goals,” said SBA spokeswoman Hayley Matz.
The agency now will work with the Federal Acquisition Regulatory Council to “put in place, as expeditiously as possible, provisions implementing parity among all of SBA’s contracting and business development programs,” Matz said.
But, some small businesses are worried the new legislation could spell the end of the HUBZone program. “This is going to seal the fate of the HUBZone program,” said Jim Slagle, executive vice president for sales and marketing at Mission Critical Solutions, a Tampa, Fla. HUBZone firm that first challenged the parity statute in court. “They are not going to prioritize HUBZone firms. I don’t know that we will survive this.”
The federal government has not met its goal of awarding 3 percent of all contract dollars to HUBZone small businesses, while it generally exceeds its 5 percent goal for small disadvantaged businesses — a category that includes the 8(a) program.
Sen. Olympia Snowe, R-Maine, and ranking member of the Small Business and Entrepreneurship Committee, sponsored the parity language in the Small Business Jobs Act. Snowe, however, did not vote for the overall legislation because of its cost and questions surrounding the structure of several lending programs.
The jobs act also:
- Directs SBA to establish a mentor-protégé program to assist small businesses owned by women, service-disabled veterans and those operating in HUBZones. The initiative would be modeled after the 8(a) mentor-protégé program.
- Requires OMB’s Office of Federal Procurement Policy to establish a governmentwide policy for contract bundling — a process in which several small contracts are consolidated and awarded to one firm, often out of the reach of small businesses. Prior to bundling a contract, procurement officials would be required to conduct market research and to have a senior acquisition official sign off on the decision. The rationale for bundling then would be publicly disclosed.
- Instructs OFPP to develop guidance that would allow agencies to set aside orders placed against multiple-award contracts exclusively for small businesses. The policy would apply to indefinite delivery-indefinite quantity contracts and task and delivery-order awards.
- Establishes a pilot program for collaboration and joint ventures involving small business contractors. Under the five-year program, $5 million in federal grants will be awarded to eligible small business teams seeking to compete for larger procurement contracts.
- Mandates small businesses recertify their size status annually. The law also establishes a governmentwide policy for prosecuting companies that fraudulently disclose themselves to be a small business.
The parity controversy was sparked in May 2009 when Mission Critical Solutions, which had lost out on an Army IT contract to an 8(a) minority-owned small business, filed a protest with GAO. The company argued, and GAO agreed, that HUBZone firms were legally at the top of the small business pecking order and the government should have given Mission Critical Solutions the first crack at the contract.
The ruling sparked a fury of activity, with the Office of Management and Budget and Justice Department issuing rare contradictory memos instructing agencies to disregard GAO’s nonbinding decision because it could “significantly limit the discretion” of contracting officers.
In a separate case, the Court of Federal Claims, a body whose rulings are binding, later decided in favor of Mission Critical Solutions. Justice has appealed that decision, although it is unclear how the new legislation will affect that case.
GAO since has ruled in favor of two HUBZone firms that filed similar contract protests. And in August the Court of Federal Claims issued its second ruling on the matter, arguing the Air Force first should have considered DGR Associates Inc., a HUBZone firm, before awarding a contract at Eielson Air Force Base in Alaska to an 8(a) small business.
– By Robert Brodsky – GovExec.com – September 27, 2010
Ignoring calls to scrutinize troubled contractors, the U.S. military has awarded a portion of a $490 million contract to an American corporation that’s under investigation for possible fraud.
The Army Corps of Engineers awarded the contract to Louis Berger Group, a New Jersey-based company that federal prosecutors have acknowledged is being investigated for allegedly overbilling the U.S. government.
The contract will be shared with Cummins Power Generation and is for providing generators, building power plants and installing high-voltage transmission systems in “conflict and disaster response locations worldwide,” according to a news release posted last week on Louis Berger’s website.
The decision to continue doing business with Louis Berger has fueled criticism that the Obama administration is willing to overlook criminal allegations in its zeal to rebuild Afghanistan and Iraq. Louis Berger is handling some of the most important U.S. projects in Afghanistan, and it and Cummins also have a seven-year contract with the Army to provide emergency power operations and maintenance in Iraq.
Cummins isn’t under scrutiny in the investigation of Louis Berger.
The overbilling allegations arise from a 2006 whistleblower lawsuit that accused Louis Berger of manipulating overhead cost data and overhead rate proposals submitted to the U.S. government and several states, including Massachusetts, Nevada and Virginia, McClatchy reported Sunday.
Two months after the government learned of the employee’s allegations, the U.S. Agency for International Development tapped Louis Berger to oversee another $1.4 billion in reconstruction contracts in Afghanistan.
Court documents reveal that the Justice Department is negotiating a deal that could “aid in preserving the company’s continuing eligibility to participate” in federal contracting in Afghanistan and elsewhere.
Louis Berger officials have declined to respond to questions about the investigation, but they say it shouldn’t taint their work for the government.
A power plant project in Kabul overseen by Louis Berger and another U.S. firm, Black & Veatch, is $40 million over budget and a year behind schedule because of missteps by the American contractors and the U.S. government, according to an audit by the Office of the Special Inspector General for Afghanistan Reconstruction.
The special inspector general’s office questioned the wisdom of building a diesel and heavy fuel plant that the Afghan government may not have the capacity to sustain.
Officials with the Army confirmed the award of the latest contract but didn’t immediately respond to questions about the investigation or the rationale for granting the contract to Louis Berger.
– McClatchy Newspapers – Sept. 20, 2010