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Legal Potpourri: The Underground Economy, Guidance, Please, AND When Branches Collide

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Legal Potpourri: The Underground Economy, Guidance, Please, AND When Branches Collide

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    1. Legal Potpourri: The Underground Economy, Guidance, Please, AND When Branches Collide Mike Finn Long-term Civil Service Drudge and Contract/Fiscal Law Attorney-Advisor

    2. DISCLAIMER “The views expressed herein should be in no way attributed to the Department of Defense, the Department of the Army, or to any rational adult in Government service. They are STRICTLY my own.”

    3. Overview This stuff is hard. If it was easy, they wouldn’t need us. Are there grownups anywhere in the process?

    4. Underground Economy - US We are the Oversight Group. - Comptrollers - Lawyers, Auditors, IGs, CID - Contracting Officers - Finance Officers - Some logisticians/personnelists. Our world is logical, orderly, and rule-bound. The lines are our friends.

    5. Underground Economy - THEM THEY are the Operators. - Subordinate Commanders - Staff elements (2-9, less 8) - Command Sergeants Major - First line leaders and troops, civ and mil - Most Engineers Their motto:…

    6. “Git ‘er done!”

    7. Underground Economy WE are not THEIR enemy. We, and our rules, sometimes impede them. But if Saddam couldn’t slow them down, why do we think we can? Hence,… The Underground Economy.

    8. Underground Economy Two Examples: Iraq in April 2003 Government Purchase Cards *GPC is only used as an example of a larger issue.

    9. Underground Economy Iraq, April 2003 Scene-setting: Saddam’s statue is down ORHA becomes CPA Commanders fresh from battle “own” huge swaths of terrain and populations Little guidance or help

    10. Underground Economy Iraq 2003 What to do? Use Saddam-era ration cards as population resource control tool. Take action with local leaders. Make use of in-house resources (ROWPUs, Engineers, Medical, etc.) Make use of operational funds. Use what is available (see CERP) In other words,… Git ‘er done!

    11. Underground Economy – GPC History Before GPC, buying a box of pencils took an act of Congress. Implementation of GPC – LTG Funk Whole new culture of the bazaar created

    12. Underground Economy – GPC The Bazaar Cross-Fiscal year Funding of Contracts and GPC regulated by procedures/guidance from higher, CRA, EOFY close-out schedules. GPC and small purchases required to compete and use contractors from various socio-economic preferences. Do any of these stop the Bazaar from its operation? Or even slow it down? “NO” and “MAYBE”

    13. Underground Economy – GPC What Goes Wrong Usually, nothing. Mission continues smoothly. These can expose the underground economy: - Surprise audit or inspection. - In-house player blows the whistle. - Vendor gets unhappy, blows the whistle. - Misadventure stops merry-go-round at top. When this happens, what is our role?

    14. Underground Economy - GPC The guy behind the elephant We clean it up. We investigate: - Figure out who/what went wrong. - See if we received value. - See if we could buy the widget. - Look for systemic fixes Then we take action to correct. Til next time.

    15. Underground Economy Conclusions Not condoned or condemned; just exists. No contract or funding operation is or can be adequately surveilled/administered/ overseen. Not an accusation, just an economy of force operation. While we may mitigate the worst excesses, we will never stamp it out.

    16. Guidance, Please In- or Out-Sourcing Genuine Issue: How do we decide? A-76 an Eisenhower-era program Compare contract/in-house costs over 5 years Reagan era: Enthusiasms/inefficiencies Bush 41 era: Hiatus Clinton era: Re-inventing Government Bush 43 - 2008 era: We’re at war NDAA 2008 – Obama era: Prefer in-source

    17. Guidance, Please Preference v. Direction Congressional preference is clear, but the way ahead is not. 10 US Code Section 2463 (2006) directed us to devise and implement procedures to bring new and contracted functions in-house. OMB Cir A-76 and AR and DA Pam 5-20 contain procedures, but… - They are oriented toward original cost comparison. - They are not in-source-friendly or relevant.

    18. Guidance, Please Acting on Preference As money tightened, various DoD components determined to act With Congressional intent clear, civilian authorizations were approved for functions currently performed by contract As contracts neared expiration, questions arose regarding whether or not procedures were in place to determine sourcing strategy.

    19. Guidance, Please Rock and a Hard Place Planners who granted authorizations for civilian spaces noted that new post-A-76 guidance is not out. Contracts are expiring without follow-on, and authority/procedures to replace in-house are questionable. Administrative Procedures Act 5 US Code Sections 551-559, generally requires the Government to follow its own rules.

    20. Guidance, Please Recent Issue Rohmann Services, Inc. multi-media for USAF in San Antonio USAF announces it will go in-house Rohmann sues, claiming inter alia that cost comparison was done wrong USAF determines to continue contract USAF was in tenuous position.

    21. Guidance, Please Conclusion Congressional intent alone is not necessarily enough to spur and support action. As a hierarchical organization, we must know and understand the procedures we have to follow to get where Congress wants us to be.

    22. When Branches Collide Cast of Characters We are Executive Branch creatures. We share this “big tent” with Small Business Administration (SBA), Department of Justice (DOJ), OMB, and many others. Government Accountability Office (GAO) is a legislative branch creature. The Court of Federal Claims (COFC) is a judicial branch creature.

    23. When Branches Collide Bid Protests, Normally Executive Branch bid protests to GAO or COFC Protests cover a lot of terrain involving bidders’ or offerors’ rights in a procurement, and Gov procedures used to determine an awardee. SBA usually determines socio-economic issues. GAO announces a decision/recommendation We nearly always follow it w/some exceptions.

    24. When Branches Collide Mission Critical Solutions, Inc. (MCS) MCS is both HUBZone and 8a At contract renewal, MCS outgrows 8a but remains HUBZone. Army ICW SBA determines to award to an Alaskan Native Corporation under 8a. MCS protests, saying HUBZone takes priority. GAO agrees.

    25. When Branches Collide Next SBA disagrees, and refers thru OMB to DOJ Office of Legal Counsel (OLC). DOJ OLC agrees with SBA, binds Executive Branch to SBA interpretation MCS protests to COFC COFC agrees w/GAO and MCS; enjoins DA & declares award “unlawful.”

    26. When Branches Collide Whither Now? Executive Branch may appeal COFC decision to Court of Appeals for the Federal Circuit (CAFC.) Until accepted, injunction remains in effect for the MCS contract. DOJ – OLC opinion also remains in effect If the issue comes up, we must keep an eye on the case and be prepared to defend the DOJ – OLC direction.

    27. Conclusion We are a team of oversight professionals. With issues of an underground economy, a lack of guidance at some times and an overabundance of conflicting guidance at others, we earn our pay.

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