the fundamentals of mas contract compliance building a foundation for success n.
Skip this Video
Loading SlideShow in 5 Seconds..
The Fundamentals of MAS Contract Compliance: Building a Foundation for Success PowerPoint Presentation
Download Presentation
The Fundamentals of MAS Contract Compliance: Building a Foundation for Success

Loading in 2 Seconds...

play fullscreen
1 / 43

The Fundamentals of MAS Contract Compliance: Building a Foundation for Success - PowerPoint PPT Presentation

  • Uploaded on

The Fundamentals of MAS Contract Compliance: Building a Foundation for Success. Roger Waldron, Coalition for Government Procurement Jason Workmaster, McKenna Long Jonathan Aronie, Sheppard Mullin Room: 207 B Tuesday 1:00pm - 3:45pm  Wednesday 1:00pm - 3:45pm.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

The Fundamentals of MAS Contract Compliance: Building a Foundation for Success

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
    Presentation Transcript
    1. The Fundamentals of MAS Contract Compliance: Building a Foundation for Success Roger Waldron, Coalition for Government ProcurementJason Workmaster, McKenna LongJonathan Aronie, Sheppard Mullin Room: 207 BTuesday 1:00pm - 3:45pm Wednesday 1:00pm - 3:45pm

    2. Introduction: The Current Environment • “The failure of agencies to use tools already available to them to prevent waste, fraud, and abuse suggests that tougher Congressional oversight is needed, and the Homeland Security and Governmental Affairs Committee will be knocking on doors to ensure these new guidelines are followed.” (Sen. Joe Lieberman) • “DoD’s current approach is not working, and we need far more vigorous enforcement to protect taxpayers from massive fraud.” (Sen. Bernie Sanders) • “There is no doubt that mandatory disclosure is a ‘‘sea change’’ and ‘‘major departure’’ from voluntary disclosure, but DoJ and the OIGs point out that the policy of voluntary disclosure has been largely ignored by contractors for the past 10 years.” (FAR Council) • “Whether due to budgetary pressures or a desire to be perceived as tough on fraud, Congress is stepping up investigative efforts to combat alleged wrongdoing by those who receive government funds.” (BNA Article, January 2011)

    3. How You Will Spend The Next 2 Hours • Introduction • The Parade of Horribles • High Risk Compliance Areas • Commercial Sales Practice Format (CSPF) • Price Reductions Clause (PRC) • Trade Agreements Act (TAA) • Contractor Team Arrangements • Labor Qualifications • Scope/Open Market • GSA Schedule Policy Update • Compliance Program Best Practices • Conclusion

    4. A Schedule Contract Is Not Commercial • Full disclosure to Government prior to negotiation • Government audit rights • Unique terms and conditions • Price Reductions Clause • Economic Price Adjustment Clause • Trade Agreements Act • Code of Business Ethics • Significant (civil and criminal) penalties for noncompliance

    5. Parade of Horribles . . . • Breach of contract • Price adjustments (retroactive) • Price reductions (prospective) • Cancellation/Termination • Civil False Claims Act • DOJ initiated • Relator initiated • Suspension/Debarment • Collateral suspension/debarment • Criminal prosecution

    6. Civil False Claims Act • Civil War era anti-fraud statute • Currently Government’s primary civil fraud statute • “Qui Tam” provisions permit suits to be brought by “relators” on behalf of Government • Relators can be part of the alleged fraud • Significant damages / penalties

    7. Elements Of An FCA Action • A contractor violates the civil False Claims Act when it makes a material false statement or submits a material false claim to the United States • Elements of the False Claims Act • A claim • That is false • That is submitted to • (1) the United States government; or • (2) a contractor, grantee, or other recipient, and the money/property is spent/used on the government's behalf or to advance a government program or interest, and the government provided the money/property or will reimburse the contractor/grantee/recipient for the money/property demanded • That is made “knowingly” • Intentionally • With deliberate indifference • Recklessly

    8. Damages / Penalties • Treble damages • $1M actual damages costs you $3M in damages • Up to $11,000 Penalties per violation • $1 overcharge on 100 invoices costs $300 in damages, plus $1,100,000 in penalties • Plus Plaintiff’s attorneys fees in some cases • Plus your own attorneys fees • Plus collateral damages

    9. Illustrative MAS FCA Settlements $199M $128M $98M

    10. “Firms that hold government contracts should know that the government expects and is entitled to the same price reductions the company provides other customers and that the government will investigate and prosecute those companies that fail to provide those discounts to theUnited States.” Former Assistant Attorney General Frank Hunger “Every indication we have, including hotline calls and qui tam actions filed under the civil False Claims Act, is that defective pricing is currently alive and well at GSA, although the contractual right to audit for it is not.” Former Counsel to GSA IG Kathleen S. Tighe The More Things Change The More They Stay The Same

    11. The Price Reductions Clause • The Price Reductions Clause serves to maintain the relationship between three prices: • The GSA price • The BOA price • The commercial list price • Changes to the relationship subsequent to award trigger the Clause

    12. What Could Trigger The PRC? • A revision to the pricelist “upon which award was predicated” that reduced prices • Wide-spread discounts to non-federal customers whether or not the pricelist is formally revised • Special discounts to BOA customers • Special discounts to non-BOA customers beyond those identified during contract negotiations • Each event could entitle the Government to a contractually required price reduction.

    13. How Does One Compute A Price Reduction?

    14. How Does One Compute A Price Reduction?

    15. How Does One Compute A Price Reduction?

    16. What Does NOT Trigger the Clause? • Sales to Federal agencies • Sales outside the basis of award (if within disclosed commercial practices) • Sales of products/services not on Schedule • Certain fixed price, high dollar value orders • Certain “spot discounts” provided equally to the Government • Quotation or billing errors, properly reported to GSA • Other disclosed and pre-approved sales

    17. Commercial Sales Practice Format (CSPF) • Purpose • History • Tension: Ease of negotiation vs. ease of compliance • Strategy: Disclose, disclose, disclose! • Comparative goals (GSA vs. Vendor) • Selection of BOA • Common mistakes

    18. Negotiation/Renegotiation Environment • The players • Selecting an “Authorized Negotiator” • Key terms • Commercial Sales Practices Format (CSPF) • Basis of Award • Price Reductions Clause • The process • Timing

    19. CSPF Question 4 • (3) Based on your written discounting policies (standard commercial sales practices in the event you do not have written discounting policies), are the discounts and any concessions which you offer the Government equal to or better than your best price (discount and concessions in any combination) offered to any customer acquiring the same items regardless of quantity or terms and conditions? YES____ NO_____. (See definition of "concession" and "discount" in 552.212-70.) • 4(b) Do any deviations from your written policies or standard commercial sales practices disclosed in the above chart ever result in better discounts (lower prices) or concessions than indicated? YES ____ NO_____. If YES, explain deviations in accordance with the instructions at Figure 515.4-2, which is provided in this solicitation for your convenience .

    20. CSPF Matrix

    21. TAA Overview • All Schedule products and services must comply with the Trade Agreements Act (TAA) • Products must be “substantially transformed” in an eligible country • Services must be performed by a company “established” in an eligible country • Schedule contractors must take TAA compliance seriously

    22. Summary of Eligible Countries • United States • Caribbean Basin Countries • Free Trade Agreement Countries • Least Developed Countries • WTO Government Procurement Agreement Countries • See FAR Part 25 for a current list of eligible countries.

    23. Partial List of Ineligible Countries • Malaysia • China • South Africa • General rule: If it’s not expressly eligible, it’s ineligible.

    24. Substantial Transformation Guidelines • Origin of components is generally (but not always) irrelevant where there has been a substantial transformation. • Assembly operations that are minimal or simple generally will not result in a substantial transformation. • Components packed together as a set are not necessarily substantially transformed by virtue of being so packed. • Products sold as “optional” configurations still may meet TAA requirements • “Substantial transformation” requires something more than mere assembly. • The TAA substantial transformation test is somewhat different from the NAFTA test.

    25. Contractor Team Arrangements • MAS contractors can team • Facilitates award of large, complex tasks • Facilitates small business participation • CTAs vs. subcontracts • Key compliance considerations • All members must be MAS contractors • Each member must sell at its own Schedule price • Each member must pay its own IFF • GSA now permits single POC for invoicing/billing

    26. Questions To Ask Before Teaming • What are our goals in teaming? • Do we need a team arrangement? • Whom do we want as a teammate? • Will the team arrangement adversely affect our competitive position in the future? • What advantages does my teammate bring to the team?

    27. GSA’s Suggested Elements Of A Quality CTA • Identify participants, responsibilities, schedules, items • Define key terms • Identify scope, performance period, termination provisions • Identify fees, etc. • Identify administration functions and process • Establish license and other proprietary rights • Establish representations and warranties • Identify confidentiality provisions • Identify indemnification provisions • Identify governing law • Establish how disputes will be resolved

    28. Labor Qualifications • Build in flexibility • Accuracy is essential • Audits now focus on the issue • Maintain up-to-date resumes • Documents all agreements with ordering activity to deviate

    29. Scope Of Contract Issues • Two key questions • Is the product/service within the scope of your Schedule? • Is the product/service on your Schedule? • Terminology • “On Schedule” or “Schedule Item” • “Non-Schedule” or “Non-FSS” • “ODC” • “Ancillary Item” or “Incidental Item” • “Open Market” • GSA’s investigative focus in this area • Bid protests

    30. GSA ExpoPolicy Update Roger Waldron President The Coalition for Government Procurement

    31. Agenda • Budget Outlook • GSA Outlook • Key Interagency Regulatory Changes • Congressional Items • Small Business Initiatives • OMB Management Initiatives

    32. Budget Outlook • 2014 Budget • Based on the President’s State of the Union address, we will likely see the same priorities on jobs, small business development, clean energy, and veterans. • Reorganization of the government to more efficiently manage those programs. • Sequestration

    33. GSA Outlook • Next Generation Schedules • OASIS (One Acquisition Solution for Integrated Services) • Federal Strategic Sourcing Initiative (FSSI) • Leveraging Spending on Schedules to Respond to the Current Budget Constraints • Data Collection • Blanket-Purchase Agreements (BPAs)

    34. Key Interagency Regulatory Changes • Small Business Set-Aside – Interim Rule • Directs OFPP, SBA, and GSA to develop regulatory guidance under which agencies may at their discretion set-aside contracts and/or orders for small businesses under multiple-award contracts • FAR implementation of Section 1331 has been expanded to include the Federal Supply Schedule contracts • Additional SBA guidance addressing the discretionary authority is anticipated to be issued in the next 4 to 5 months

    35. Key Interagency Regulatory Changes • New FSS Ordering procedures- Final Rule FAR 8.4 • Requires additional competition for orders >$150,000 • notice to all contractors or as many as reasonable to insure 3 offers • eBuy cited as one method to provide notice to all • BPAs restricted • Preference for multiple award BPAs • New restrictions on single award BPAs

    36. Congressional Items • HR 2146 Digital Accountability and Transparency Act (Passed the House) • to create yet another Oversight Board for Government with investigative powers- modeled on the Recovery Act Transparency and Accountability Board (RAT Board) • S 1736 Acquisition Savings Reform Act • A condition for reverse auctioning and a push for greater use of Federal Strategic Sourcing Initiative contract vehicles

    37. Small Business Legislation • The House Committee on Small Business has approved 2012 Contracting Legislation • Raising the small business prime contract goal from 23% to 25% • Increasing reporting on how contracts were awarded, not simply the dollars awarded, and requiring analysis of subcontractor industry distribution • Changing limitation on subcontracting requirements to price rather than cost • Providing small business with standing to challenge insourcing decisions • Directing SBA to help businesses identify and explore affiliation issues so that they can make the correct size representation through a publicly available website

    38. OMB Management Initiatives • Myth-Busters Campaign • Development, Review and Approval of Business Cases for Certain Interagency and Agency-Specific Acquisitions • Reducing Contract Spending for Management Support Services by 15% • See next slide for the 12 product and service codes (PSCs) affected • Federal IT Shared Services Strategy

    39. List of Management Support Services

    40. Coalition Priorities • Myth-Busters Dialogue • Contract Duplication • Other-Direct Costs (ODCs) • Price Reductions Clause (PRC) • Training • MAS Basic Training – June 14th & 15th, 2012

    41. Establishing An Effective Compliance Program

    42. Elements Of An Effective Internal Control System (from the FAR) • An effective awareness program, including broad-based training • Standards and procedures to • Facilitate the timely discovery of improper conduct in connection with Government contracts; and • Ensure corrective measures are promptly instituted and carried out. • Responsibility for the program at a sufficiently high level to ensure effectiveness • Adequate resources dedicated to the program to ensure effectiveness • Reasonable efforts undertaken not to include principals who have engaged in conduct that is in conflict with the Contractor’s code of business ethics and conduct • Periodic reviews, including • Monitoring and auditing to detect criminal conduct • Periodic evaluation of the effectiveness of the program and internal controls • Periodic assessment of the risk of criminal conduct • Internal reporting mechanism, such as a hotline, which allows for anonymity or confidentiality • Disciplinary action for improper conduct or for failing to take reasonable steps to prevent or detect improper conduct • Timely disclosure of MDR-covered conduct, in writing, to the agency OIG, with a copy to the Contracting Officer • Full cooperation with any Government agencies responsible for audits, investigations, or corrective actions.

    43. Thank You!