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News Digest: July 30

Jul. 29, 2012 - 02:39PM   |  
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Report: Spending up on multiple-award contracts

Federal procurement spending through multiple-award contracts increased 4 percent last year, despite an overall drop in contract spending, a new report by Bloomberg Government shows.

Multiple-award contract spending hit $132 billion in 2011, according to the report, which Bloomberg released Thursday.

MACs, which include the General Services Administration's federal supply schedules, enable agencies to hold a competition among a pre-selected pool of vendors for each order.

Total federal contracting, however, dropped slightly — less than 1 percent — from $534 billion in 2010 to $530 billion in 2011, according Bloomberg.

Agencies are increasing the number of vendors that can compete for federal business on MACs, which increases competition for orders.

“Agencies are awarding more slots on non-schedule MACs, in part to expand their supplier base and in part to drive down prices by adding competitors,” the report says. “By selecting more companies, agencies also reduce the likelihood of bid protests — which can delay orders on a newly awarded MAC by months.”

Bloomberg Government reported in December that nearly 700 MACs have sprouted up across the government in the last five years.

White House to change rules for managing grants

The White House will change how the government's $600 billion grant programs are managed in the coming months, Office of Management and Budget Controller Danny Werfel said this week.

The proposed guidance would change how federal grant recipients are audited, administrative costs and reporting requirements.

Among the changes that OMB is considering:

• Raising the audit threshold for grant recipients to $1 million and performing more focused audit on recipients that receive between $1 million and $3 million in federal grant funds. Currently agencies must audit people and organizations who receive more than $500,000 in federal grants.

Raising the threshold would allow agencies to focus their audit resources on recipients that receive more money and are higher risk, OMB said in a notice of proposed guidance in February. Focusing the audits on recipients who receive between $1 million and $3 million would enable agencies to tighten their oversight on the highest risk areas, the notice said.

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• Creating a flat rate for indirect costs, such as facility and administrative costs, instead of negotiating rates. A flat fee would reduce negotiation costs and the administrative burden associated with rate preparation and negotiations.

• Allowing grant funds to pay for costs associated with detecting and recovering improper payments, when the anticipated amount of recovered funding more than justifies the expense of collection.

The proposed changes build on comments received after OMB posed questions to grant recipients about the changes in February. OMB will publish the proposed guidance with another comment period before issuing final guidance, Werfel said.

The proposed changes arose from conversations with grant recipients, such as nonprofit organizations, state and local governments, and colleges, and OMB's Council on Financial Assistance Reform, which was created last October, Werfel told the Senate federal financial management subcommittee during a hearing Wednesday. The council is made up of the eight largest grant-making agencies plus one rotating member to represent the smaller agencies.

The council is focused on reducing the burden of grant-related paperwork, reducing errors and increasing transparency, Werfel said.

For example, the administration is trying to pull back on the amount of paperwork required to track federal funds. However, auditors and inspectors general rely on that paperwork for their investigations, Werfel said. The council is working to strike the right balance between alleviating administrative burdens but still collecting needed information, he said.

GAO: Cost estimates are typically faulty on major IT projects

Managers are routinely using faulty cost estimates when making key decisions affecting major information technology projects, a new audit has found.

Sixteen IT projects, valued at a combined $52 billion, are using unreliable cost estimates, according to a July report by the Government Accountability Office.

Most of the cost estimates “did not provide a sound basis for informed program and budget decisions,” GAO said.

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Fifteen of those programs failed to apply best practices when developing cost estimates, the report found.

“It is reckless to enter into a contract without knowing how much what you are buying should cost,” said Sen. Susan Collins, R-Maine, in a statement to Federal Times. Collins requested that the GAO examine the reliability of project cost estimates.

“It is alarming to discover that, despite past cost overruns and failed IT projects, agencies still have not put in place effective cost estimate policies. The time for a dramatic improvement in acquisition planning is now,” she added.

The GAO report reviewed IT projects at the Environmental Protection Agency, Agriculture, Commerce, Defense, Homeland Security, Justice, Labor, and Veterans Affairs departments.

Projects reviewed included VA's Veterans Benefits Management System, the Unified Financial Management System at Justice, and Agriculture's Web-based Supply Chain Management program.

The Navy's Consolidated Afloat Networks and Enterprise Services, a program to provide a common network system for its fleet, was the only program that fully complied with best practices for developing cost estimates, the report said.

The program's cost estimates provided government and contractor costs for the life of the program. The cost estimates reflect the current acquisition strategy, and the program's schedule, labor rates and inflation indexes are documented, according to the report.

Of the agencies reviewed, most do not require key personnel to have cost estimating training, and they have not created a central and independent cost estimating team, which are best practices.

All but the EPA agreed with GAO's recommendations to modify cost-estimating polices and update future cost estimates for the major programs reviewed.

IG: Justice Department bureau rife with nepotism

The Justice Department's management division is plagued by nepotism, a new investigation has found.

Eight senior managers there — all either at the GS-15 or Senior Executive Service levels — secured jobs for various relatives between May 2008 and September 2010, flouting hiring and ethics rules in the process, said the report, released Thursday by the Justice Department's inspector general.

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The officials involved included top officials in the division's human resources office and Facilities and Administrative Services Staff, or FASS.

In one instance, Pamela Cabell-Edelen, the division's then-assistant human resources director, repeatedly and improperly “advocated for her daughter's appointment” to various DOJ positions, ultimately landing her a job as secretary for FASS Director Edward Hamilton in November 2009.

Around the same time, Hamilton began lobbying on his son's behalf. Cabell-Edelen soon hired him as a GS-5 payroll specialist in January 2010, the report said.

Likewise, Rodney Markham, then-director of the human resources office, improperly sought jobs for his cousin and a nephew in 2009, the report said. The cousin received a position in the division's budget office; the nephew won a paid summer internship in the national security division with the help of his uncle's recommendation.

In the second quarter of 2010, six of 11 human resources internships went to applicants related to people already on the payroll, the report said.

Cabell-Edelen and Markham both left the Justice Department last year; Hamilton remains FASS director, the report indicated.

The inspector general faulted Mari Barr Santangelo, deputy attorney general for human resources and administration, for failing to act on warning signs of nepotism.

The IG urged department leaders to discipline employees that broke rules, strengthen anti-nepotism training, and require applicants for management division jobs to disclose whether they have relatives working for the department.

In a written response, Lee Lofthus, DOJ's top administrator, called the report “very disappointing,” adding that the department has already developed the recommended disclosure forms and will pursue disciplinary measures and other actions “as appropriate.”

TSP gets active in collecting owed child support

The Thrift Savings Plan today said it is increasing its cooperation with a Health and Human Services Department office to garnish TSP savings of employees who are behind in their child support payments.

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TSP has always been able to garnish funds to pay for child support, but until 2010 almost never used that power. In August 2010, TSP signed a memorandum of understanding with HHS' Office of Child Support Enforcement to share data and help them collect unpaid child support.

TSP has processed an average 1,138 child support court orders per month so far this year, according to Tom Emswiler, general counsel for the Federal Retirement Thrift Investment Board, which manages the plan. That is up from a monthly average of less than 500 in 2011, four in 2010, and “basically zero” in previous years.

At the board's monthly meeting Monday, Emswiler said 35,000 TSP participants are behind on their child support payments. In all, he said, 78,544 federal employees who have TSP accounts owe child support, though not all are behind on their payments.

Another roughly 7,500 federal employees owe child support, but do not have TSP accounts.

TSP was required by law to help HHS collect the money, and HHS covered the roughly $50,000 in costs needed to set up the matching program.

Also, a strong performance in June by the TSP's three stock funds helped bring the overall fund balance up to record $313 billion. The fund balance dropped 2 percent in May to $305 billion.

The I Fund's international stocks increased 7 percent, and the C and S funds' domestic stocks increased 4 percent and 3 percent, respectively.

Kids of same-sex partners to get health coverage

The Office of Personnel Management wants to extend health care coverage to the children of same-sex spouses and domestic partners of federal employees.

Those children would be defined as stepchildren under a newly proposed regulation, making them eligible for the Federal Employees Health Benefits Program and Federal Employees Dental and Vision Insurance Program. OPM published the regulation on July 20 in the Federal Register and is accepting comments until Sept. 18.

The federal government employs an estimated 34,000 gay and lesbian workers who are in domestic partnerships, but it is unknown how many of those domestic partners have children who would benefit from this change.

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The change is the latest in a string of benefits extended to the families of gay and lesbian feds by the Obama administration. In 2010, OPM allowed employees to add their same-sex partners to their long-term care policies, and made their partners and partners' children eligible for child care subsidies and services, credit union membership and other forms of employee assistance.

But the new regulation would not cover feds' same-sex spouses and partners, who will remain ineligible for federal health coverage. The Obama administration said it wants to extend FEHBP to gay feds' spouses and partners, but is prevented from doing so by the Defense of Marriage Act.

Under the Affordable Care Act, gay and lesbian feds' partners' children would be eligible for FEHBP coverage until they turn 26, like all other feds' children.

Report: 4.9 million feds, contractors hold security clearances

Almost 4.9 million people held security clearances last year, according to a new report by the Office of the Director of National Intelligence.

Of those, 3.5 million were federal employees and 1.1 million were contractors. The report included more than 320,000 “other” clearance holders who could not be classified as either government or contractor based on the available data.

Steven Aftergood, a secrecy expert at the Federation of American Scientists who posted the report online Monday, said that all clearance holders must fall in one of those two categories.

This is the second year that the intelligence office has counted the number of clearance holders in response to a congressional mandate in the 2010 Intelligence Authorization Act. The 4.9 million figure represents a 3 percent increase over the previous year when there were 4.7 million clearance holders.

Despite last year's overall increase, the number of contractors with clearances fell about 8 percent in comparison with 2010, while government clearance holders rose more than 4 percent, the report indicated.

The report underscored the need for agencies to speed up the investigations and adjudications needed to get employees a clearance. It took more than a year to get clearance decisions for 5,000 cases affecting employees and contractors at the CIA, Defense Intelligence Agency and five other intelligence community agencies.

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