As technological improvements continue to change the way the
world does business, it is critical that we look ahead to what the future may
hold. To remain competitive in an ever-changing market, government contractors must
adapt, learn, and grow. To this point, The National Association of Contract
Management (NCMA) has recently released a white paper titled, “Preparing for
the Future of Contracting,” that makes some daring predictions.
This white paper outlines key findings that are essential to
the success of government contractors moving forward. First, contractors will
need to become well-versed, even subject matter experts in emerging fields to
adapt to the changing landscape. Some examples given were machine learning,
supply chain systems, and artificial intelligence.
The technology already exists that would allow agencies to
replace jobs requiring repetitive tasks typically performed by humans with
robotic process automation (RPA) and artificial intelligence (AI). For
contractors to be on the right side of this trend, a working knowledge of the
technology and an understanding of how to implement it would be paramount to continuing
to win contracts in administrative fields. Acquisition professionals would be able to
utilize this technology in the future as well, allowing them to free themselves
from monotonous tasks and concentrate on more strategic issues.
Kraig Conrad, CEO of The National Association of Contract
Management (NCMA), argues that considering the recent COVID-19 crisis, it is
going to more important than ever to leverage the latest technology to improve
response time and react to immediate government needs. Things like innovation,
business acumen, data analysis, market supplier and supply chain intelligence
are extremely valuable in times of crisis. The government will look to improve
upon all of these areas in the wake of COVID-19.
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The General Services Administration’s 8(a) STARS II program
has been one of the most popular governmentwide acquisition contracts (GWAC) in
history. So much so, that for the first time since the GWAC has been around, it
hit its $15 billion ceiling.
Other notable GWACs for reference would be Alliant at $50
billion, Networx at $20 billion, and Veterans Technology Services (VETS) GWAC
at $5 billion. Note of said contract vehicles have hit or even come close to
reaching their respective ceilings.
What makes the 8(a) STARS II GWAC’s milestone so significant
is that it reached its $15 billion ceiling 16 months before the end of the
contract, which is set to expire August 30, 2021. While the popularity may seem
like an overall positive, it can also have negative implications for those
small businesses which credit high percentages of their earnings to STARS II.
Should an 8(a) small business seek to acquire the follow-on to one if its
contracts, for example, it would be ineligible if the contracting office
released it via the 8(a)STARS II GWAC.
With this in mind, there are a number of avenues that may be
taken by the GSA, and some that small businesses should consider. First, 8(a)
small businesses should seek out other contract vehicles with which to obtain
8(a) contracts. Should STARS II not up its ceiling, 8(a) companies can convince
their customers to procure follow-ons through these alternate contract
vehicles.
The GSA may also increase the ceiling by $5-7 billion. “GSA
is exploring its options regarding the 8(a) STARS II GWAC; however, at this
time, there is no guarantee of additional contract value being made available.
In the interim, agencies should contact GSA regarding short term options such
as VETS and the GSA Schedule,” said Bill Zielinski, the assistant commissioner
for the Office of Information Technology Category. “GSA intends to issue the
solicitation for 8(a) STARS III in fiscal 2020. GSA has developed an aggressive
solicitation and evaluation timeline to award 8(a) STARS III as soon as
possible.”
While 8(a) STARS III may be a beacon of hope, it is a light
at the end of a long tunnel. Despite releasing the draft solicitation last summer,
little movement has been seen on the contractor end.
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Artificial intelligence stands to revolutionize government agencies — as long as they understand how to procure, implement and use it, according to a new report.
The Administrative Conference of the United States
commissioned the report, titled “Government by Algorithm: Artificial
Intelligence in Federal Administrative Agencies,” from researchers at Stanford
and New York Universities. Released in February, it found that 45% of federal
agencies have experimented with AI and related machine learning tools and that
those agencies are already improving operations in myriad ways, such as
monitoring risks to public health and safety and enforcing regulations on
environmental protection.
“The growing sophistication of and interest in artificial
intelligence (AI) and machine learning (ML) is among the most important
contextual changes for federal agencies during the past few decades,” the
report stated.
The Department of Justice’s Office of Justice Programs had 12
AI use cases — the most of the responding agencies. The Securities and
Exchange Commission and NASA follow with 10 and 9, respectively. In total, the
researchers documented 157 use cases across 64 agencies after studying 142
federal departments, agencies and subagencies.
More broadly, the top three policy areas where AI is used
were law enforcement, health and financial regulation. In terms of government
tasks, regulatory research, analysis and monitoring clocked in at about 80 use
cases, while enforcement had about 55, and public services and engagement had
about 35.
The report also found that agencies were at different stages
of AI and ML use. Fifty-three use cases, or 33%, were fully deployed, whereas
roughly 60 were in the planning phase and about 45 were piloting or have
partially deployed. More than half — 53% — of the AI and ML use cases were
developed in-house, while roughly a third were built by commercial contractors
and about 13% involved collaboration with non-commercial entities such as an
academic lab.
One agency that uses AI for enforcement is SEC, which has a
suite of algorithmic tools to identify violators of securities laws. For
example, to detect fraud in accounting and financial reporting, the agency
developed the Corporate Issuer Risk Assessment, which has a dashboard of about
200 metrics that can find anomalies in the financial reporting of more than
7,000 corporate issuers of securities. An ML tool identifies filers who might
be engaging in suspicious activities by using historical data to predict
possible misconduct.
Two other tools — the Advanced Relational Trading
Enforcement Metrics Investigation System and the Abnormal Trading and Link
Analysis System — look for suspicious trading. ARTEMIS hunts for potential
serial insider trading offenders by using an electronic database of more than 6
billion electronic equities and options trading records to study patterns and
relationships among traders. ATLAS analyzes for first-time offenders.
Lastly, the Form ADV Fraud Predictor helps predict which
financial services professionals who manage more than $25 million in assets
annually may be violating federal securities laws. The tool parses Form ADVs,
which those professionals must submit to the SEC annually. Ultimately, it flags
people as high, medium or low priority for further SEC investigation.
Despite the ways these tools help SEC employees, there are
challenges. For instance, many of the documents powering the tools are not in
machine-readable formats, the agency struggles to find accurate ground truth
for algorithm training data, and it must stay up-to-date on what constitutes
wrongdoing.
The report identified a common lack of sophistication across
the use cases. Researchers ranked only 12% as highly sophisticated. “This is
concerning because agencies will find it harder to realize gains in accuracy
and efficiency with less sophisticated tools,” the report stated. “This result
also underscores AI’s potential to widen, not narrow, the public-private
technology gap.”
More understanding about how agencies use and acquire AI and
ML tools is necessary to further adoption, the report said.
“Rapid developments in AI have the potential to reduce the
cost of core governance functions, improve the quality of decisions, and
unleash the power of administrative data, thereby making government performance
more efficient and effective,” the report stated. “Agencies that use AI to
realize these gains will also confront important questions about the proper
design of algorithms and user interfaces, the respective scope of human and
machine decision-making, the boundaries between public actions and private
contracting, their own capacity to learn over time using AI, and whether the
use of AI is even permitted. These are important issues for public debate and
academic inquiry.”
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The General Services Administrations inspector general
issued its annual review this month of 130 pre-award audits of new or renewed
schedule contracts. The report outlines several adjustments to price and
discounts that amount to an alarming $1.1 billion in potential savings that the
agency has missed out on.
“By not effectively using all of the negotiation tools
available, contracting officers are failing to leverage the government’s
purchasing power,” the report states. “While we recognize that negotiations may
not always yield the full amount of cost savings identified in our pre-award
audit reports, FAS’ general disregard of pre-award audit results wasted our
audit resources and forfeited opportunities to save over $900 million in
taxpayer dollars.”
The report is a huge hit to the GSA, as a potential loss of
this magnitude could cause a great deal of trouble for those responsible. This
$1.1 billion figure may not be entirely accurate. These pre-award audits arise
from an analysis of a single data point, and does not take negotiations and
other administrative costs into account.
Experts maintain that, while pre-award audits are helpful,
they may not accurately depict the actual price paid by the agency. To make a
more accurate report, the inspector general’s audits would need to wait to
review post-award information. While this may result in more accurate
information, the delay could wind up allowing agencies to overpay for years
before the issue is identified.
GSA and the IG have been working together to make
improvements to schedule contracts. A GSA official said the Federal Acquisition
Service and the IG formed a working group in 2018 to improve the value of
pre-award audits. The working group helped develop new policies, established
performance metrics that are reviewed quarterly, which led to a 22% improvement
in audit timeliness, and more than 2,100 hours of training for the acquisition
workforce.
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For many across the country, across the world for that
matter, the effects of COVID-19 have had a significant impact on everyday
businesses. For most, this impact is negative, costing tens of millions of
Americans their jobs and forcing small businesses to hang on for dear life. Within
Federal contracting, contractors have had the fortunate of performing the needs
required by the country maintain the status quo in the ability to perform daily
task, showing improved results from previous years.
Even with trillions of dollars being allocated for stimulus
and small business relief, the Navy reported a 30% increase in contract
spending as compared to last years figures. As of Tuesday, April 28, 2020, the
Department of the Navy obligated $96.9 billion towards contracts in April,
compared to $74.7 billion in April of 2019, even though more than 95% of its
contracting workforce is working remotely. During the same month, those
acquisition professionals also increased their use of distance learning for
ongoing workforce development by more than 65%.
This increase is undoubtedly a result of the Navy’s efforts to
combat this virus, spending more dollars-on-contract to ensure our country’s
safety and supply chain efficiency. The increase also shows that the Navy has
seen research and development efforts, as well as acquisition efficiencies pay
off. “I’m seeing some remarkable efficiencies,” said James Geurts, the
assistant secretary of the Navy for research, development and acquisition, on a
conference call Tuesday. “I think a lot of that is getting rid of layers of
bureaucracy that weren’t needed. Some of it is also creating better
partnerships with industry so that we can leverage cost and pricing data we
already have, and we don’t have to send out an RFP and get a proposal back just
to confirm that data. And some of it is just a continued sense of urgency and
mission focus.”
The Navy’s efforts, along with the contractors who continue
to fulfill critical contract obligations, are paying off in fighting this
unprecedented virus. It is encouraging that we are seeing an increase in
spending, especially since it illuminates improvements in reaction time and efficiency,
areas that are integral in keeping our country safe.
