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GAO Reports a Significant Increase in Bid Protests

In a recently published report, the GAO stated that there was a 20% increase in bid protests in FY 2009, as compared to FY 2008.

As protest regulations have evolved, the government has seen a steady increase in the number of protests since FY 2006, but this increase from 1,652 protests in FY 2008 to 1,989 protests in FY 2009 appears especially noteworthy. The GAO, however, stated that this increase was expected for three reasons. First, the option to protest task order opportunities was granted due to the growing use of contract vehicles such as EAGLE, NETCENTS, and SeaPort; second, federal employees were allowed to protest the decision to outsource requirements; and finally, the Transportation Security Administration (TSA) opportunities became susceptible to bid protests in FY 2009. Previously, TSA fell under the Federal Aviation Administration's (FAA) regulatory procedures. Below is a chart depicting the GAO Bid Protest statistics in recent years:

GAO Bid Protest statistics for FY 2005 through FY 2009

FY2009 FY2008 FY2007 FY2006 FY2005
Cases Filed 1,989 1,652 1,394 1,326 1,356
Cases Closed 1,920 1,582 1,411 1,275 1,341
Filed based on Merit (Sustain/Deny decisions) 315 291 335 251 306
Number of Sustains 57 60 91 72 71
Sustain Rate 18% 21% 27% 29% 23%

Source: GAO

Below is a list of current or recently determined opportunities that have been affected by the surge of bid protests. For TSA's Information Technology Infrastructure Program (ITIP) in particular, the awarded contractor has endured numerous work stoppages because of management authority disputes in protest handling between GAO and TSA. These delays can and have caused major funding issues in the form of bridge contracts and extensions until a final decision is made:

Title Agency Value ($K) Status
ITIP TSA/DHS $493,000 Protest
SBINet Program Integration and Management Support Services CBP/DHS $98,000 Protest
Field Office Support Services USCIS/DHS $120,175 Protest
Public Assistance and Technical Assistance Contracts (PA-TAC) FEMA/DHS $500,000 Protest
AFRICAP Program State $1,500,000 Protest
Material Management, Unit Readiness Mission & Distribution Management Center Army Sustainment Command $128,124 Protest
Goddard Unified Enterprise Services and Technology (GUEST) NASA $85,000 Protest

As bid protests on federal contract awards are likely to continue increasing, the need to shorten the process will also increase. Bid protests can extend the timeframe for award up to 6 months with the net results being delays in program schedule, fiscal complications, and general strain among government and private personnel. If protests are to be minimized, contracting personnel will likely have to take extra steps when sole-sourcing and/or assigning the competition type. They will also undoubtedly be stricter when evaluating proposals resulting in vendors having to be as clear, concise and accurate as possible during the bid and proposal process.

Andrew Endicott also contributed to this report.

State of the Union Address – Noteworthy Themes for Government Technology Contractors

As president Obama put it last night during his State of the Union Address, "The worst of the storm has passed, but the devastation remains." In an attempt to re-establish America's confidence in his administration and Washington, and to put the U.S. back on the road to prosperity, Obama outlined a number of strategies to support the U.S. economy and middle class families:

  • Create Jobs
  • Implement Financial Reform
  • Encourage American Innovation
  • Increase Exports
  • Invest in Skills and Education
  • Relieve the Burden on the Middle Class
  • Reduce the Federal Deficit
  • Reform Politics
  • Support National Security

Most noteworthy to government technology contractors are Obama's plans to support innovation, continue to sustain national security, and reduce the federal deficit.

President Obama supports passing a Clean Energy & Climate bill that would create more clean energy jobs, build clean, safe nuclear power plants, and would increase investment in bio-fuels and clean coal technology. Efforts in the area of clean energy would continue to support companies and government contractors that have strong research, development, and technology innovation capabilities. Look for more Congressional action in this area which could result in new contracts and grants from the Department of Energy and Environmental Protection Agency.

Continuing to support national defense remains a high priority for the administration. GovWin predicts continued investments in homeland security, terrorism initiatives, and defense war-fighting technologies. President Obama also renewed his commitment to support veterans and military families, which could result in technology investments related to services supporting these groups such as health care, counseling, education, and benefits systems.

However, President Obama's vow to reduce the federal deficit is likely to have the greatest impact on the government contracting community. Starting in FY2011, the president proposes a three year freeze on discretionary spending, not to include defense, homeland security, social security, or Medicare. This amounts to approximately one-sixth of the total federal budget, and the category where most government information technology investments reside. A step in the right direction, maybe, but this move does little to tackle the skyrocketing deficit.

Additionally, the president is calling for more transparency in government earmarks, and asking all of Congress to publish earmarks on-line. Even in the face of a $1.4 trillion deficit, earmarks remain alive and well in Washington. In the FY2010 Defense appropriations bill, lawmakers set aside more than $4 billion in earmarks. According to Tax Payers for Common Sense, the FY10 Omnibus bill contained more than 5,224 disclosed earmarks totaling $3.9 billion. Curbing Congressional earmarks would add to deficit trimming measures, but would likely negatively impact large defense contractors.

Unwilling to accept the Senate's blockage Tuesday of a proposal to establish a bipartisan fiscal task force, President Obama plans to issue an executive order to create such a fiscal commission. In Obama's words, "The commission will have to provide a specific set of solutions by a certain deadline." If modeled after the Senate plan, the commission will consist of the Secretary of Treasury, an officer of the executive branch, eight members of the Senate, and eight members of the House. It will have the authority to enter into contracts with federal and state agencies, private firms, institutions, and individuals for the purposed of performing its duties and responsibilities. The commission will submit a bill and final report to the President, the Vice President, the Speaker of the House, and the Majority and Minority Leaders of both Houses, no later than November 15, 2010.

Contractors should note that recommendations from such a commission could greatly impact federal spending and therefore contracting dollars. Vendors should monitor commission recommendations.

Lastly, President Obama's address also offered several implications for state and local governments and their contractors:

  • Stimulus is still ramping up and will continue to provide opportunities, especially in transportation and transit related spending.
  • The passage of a jobs bill would help state and local economies by creating jobs and strengthening small businesses through financing and tax credits.
  • Renewal of the Elementary and Secondary Education Act and expansion of its reforms to all 50 states could open the door to education related technology contracts.
  • Continued reforms and subsidies for the housing market will bolster state and local revenues via property value/tax increases.
  • Freezing discretionary spending may adversely affect non-exempt programs such as state and local grants.
  • GovWin will be analyzing the President's FY2011 Budget Request (expected next week) to determine how these priorities will impact budget and technology initiatives.

As High Speed Rail heats up, it’s not too early to see State and Local implications

Part of the American Recovery and Reinvestment Act (ARRA) of 2009 included $8 billion in grant funding for new high speed rail projects across the country, not exactly pocket change. Just last week, at the St. Regis Hotel in downtown Washington D.C., the Japan International Transport Institute hosted a seminar dedicated to the high speed rail and just a day after the State of the Union address, President Obama visits Tampa, Florida to announce plans for the high speed rail initiative. While the implications of such a plan are numerous, including increased energy efficiency, convenience and more mobility, the benefits to the state and local government may be slightly less clear so soon.

Part of the high speed rail plan is to develop and build these projects across the country in specific corridors and eventually build out to encompass the country. State and local governments that are part of the first roll out will likely have to determine what types of security and other technological aspects will be necessary. The early build out of tracks and system infrastructure will provide a much needed economic boost in those cities, and further down the road, public safety agencies, emergency management offices, among others, will need to formulate their strategic plans to provide security for the new system. Technologies such as biometrics, card readers and scanners, surveillance equipment will all be required.

As more funding becomes available in the future, as part of new grants and Department of Transportation funding, vendors will need to work with cities and counties to develop short and long range plans to make the transition easier and more efficient. It may be soon to start designing closed caption tv systems for these high speed rail sites, but it's not too soon to start planning.

New Cyber Czar is Part Promoter, Part Peacekeeper

With little more than a week in his new role as federal cybersecurity coordinator under his belt, Howard Schmidt made his first industry appearance yesterday at the annual State of the Net conference in Washington, DC. In contrast to the many opinions reported in the media that the position, as structured, has insufficient authority to be effective, Schmidt asserts that he has the President's ear and his support. The impression he gave was someone who has broad practical expertise combined with the diplomatic skills necessary to build consensus among diverse constituencies across the federal bureaucracy and beyond. It is likely he will need both skill sets to succeed at the challenge ahead.

As special assistant to the president and senior director for cybersecurity Schmidt reports directly to the head of the National Security Council and is also a member of the National Economic Council, reflecting the Administration's connection between cybersecurity and economic security. He has a staff of ten supporting his efforts.

In the speech Schmidt covered little new ground, but rather reemphasized several of the key priorities that were laid out when his appointment was announced in December, including:

  • Updating a comprehensive security strategy to protect federal networks
  • Developing an organized, unified response to future cyber attacks
  • Strengthening public-private partnerships and international cooperation
  • Grow R&D investments in the next generation of cybersecurity technologies
  • Launch a national campaign to promote cyber awareness and education

Schmidt laid out one objective as effective risk management rather than the impossible task of risk elimination. He is also looking to bring security improvements to several areas, including supply chain management, cloud computing and identity management.

Regarding the move of IT services to the cloud, Schmidt said the key is to do it right from the onset by establishing specific agreements between the parties involved, including what services move to the cloud and where and what level of authentication is needed to ensure security.

Will the Virginia-NG dustup amount to anything?

So, here's where we stand on Virginia IT outsourcing controversy with Northrop Grumman.

  • The state turned over all of its IT infrastructure to NG for a promised return of $20 million per year for ten years.
  • Since then, the project has hit some bumps in the road, resulting in the state's CIO, who was overseeing the contract, summarily losing his job when he tried to enforce some penalties.
  • Whether he lost his job as result of trying to enforce the contract or due to the fact that his tenure was winding down anyway is a matter of insider baseball.
  • Current negotiations between the state and NG could hinge on a potential $20 million increase in the state's obligation to the company for what NG calls "services outside the contract." Of course, this could negate the entire ROI justification for the contract in the first place.
  • NG has recently announced that they will be relocating the 300 people who work in the company's L.A. headquarters to the "DC area." Expect a showdown between Virginia and Maryland on this one.
  • While relocating 300 people doesn't seem like much, it's easy to figure that the total compensation for this group would easily exceed $20 million annually. NG's CEO, Ronald D. Sugar, received $16.6 million in compensation according to a 2009 study.
  • Virginia is currently looking at an overhaul of its IT governance with SB 236.
  • SB 236 does two things: 1) rebrands the existing Information Technology Investment Board (ITIB) as the Information Technology Investment Council (ITIC) and 2) moves the appointment of the state CIO away from the IT investment board/council to the governor.

GovWin's Take

  • Virginia's governance overhaul does not represent a radical reaction to the outsourcing difficulties. The new governance structure is quite common among the states and typically vague in terms of the policy and enforcement powers it bestows on the new ITIC. This could be a case of one structure working for the transitional phase when the commonwealth's one-term governor needed legislative buy-in. However, since the governor will ultimately take the heat for any difficulties during the operational phase, it makes sense for him have appointment power over the CIO.
  • While NG's competitors might be tempted to paint the CIO dismissal as a negative for NG, they should not underestimate the chilling effect this situation had on state CIO opinion nationwide. (This was certainly on the mind of state CIOs at last fall's NASCIO conference.) All vendors should expect state CIOs to be even more picky than usual when formulating major outsourcing deals. The nature of public contracting and unlimited liability already dictate a guilty-until-proven-innocent business environment for vendors. Blowback from NG's struggles affects the entire IT infrastructure outsourcing market.
  • If Virginia lands the NG HQ, Gov. McConnell could easily declare no-harm no-foul, allowing the commonwealth and NG to move on from this dustup. Whether it saves any "real" money over the long-run will be a matter of debate. With a $1.3 billion budget deficit to deal with, Gov. McConnell has bigger fish to fry.
  • The vendor community must come together with public-sector IT leaders to articulate some contracting principles for arbitration that will allow for reasonable discovery during major project implementation. Otherwise, the news is going to be littered with failures and the reputation of IT as a transformative money-saver for government will be irreparably damaged at a time when it is needed most.

States Invest in Infrastructure for Social Service Programs– Top Initiatives in 2010

Throughout 2010 states will continue to expand use of technology to support social services programs, given budget constraints are forcing the need to deliver services with lower operational expenses. Whether agencies are seeking to determine eligibility or delivering services for Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), Child Care, Child Support ,and/or Child Welfare, state leaders are actively and aggressively restructuring their business processes. Widespread unemployment has strained legacy Unemployment Compensation systems , creating the need for system redesigns in some states and even giving rise in some regions to consider new approaches, such as cloud computing and Software as a Service (SaaS) solutions.

Continued expansion and sophistication of calls centers enables governments to lower costs in the delivery of human services. While some social workers continue to operate in state and county offices meeting with applicants face-to-face, a growing number of workers are providing support in a call center environment, reaching a wider array of citizens throughout the state. Doing more with less has been a resounding theme throughout government and more pervasive use of technology is a driving force for agency leaders to meet increasing demands for services. Just as critical as lowering operation costs, states must adhere to required federal and state legislated guidelines for programs. These requirements often led agencies at the helm of human service programs to institute more fraud detection and management systems for the purpose of identifying erroneous claims and payments. As Information Technology (IT) leaders plan system modernizations, they often engage consultants to provide expertise before embarking upon major changes, a critical step to avoid disasters. Many agencies utilize state contracts for professional services when sourcing consultants.

Social Service projects throughout 2010 include:

  • California Child Support Maintenance and Operations RFP anticipated February/March – Estimated contract value $72 million

    California's Department of Child Support Services needs technical support services for system operations, application maintenance, and IT support with fully integrated state/contractor technical teams. A Request for Proposal (RFP) for the Child Support Enforcement System (CSE) Maintenance and Operations Services will include requirements for automated services to approximately 10,000 users statewide, collecting and disbursing more than $2.3 billion annually in child support payments.

  • Florida – Unemployment Compensation Modernization

    RFP anticipated February - Estimated contract value $68 million

    Florida's Agency for Workforce Innovation (AWI) will release a RFP for development of a web-enabled, integrated information system to support Florida's workforce. A Request for Information (RFI) was released in October 2009 and the state is currently evaluating feedback from participating vendors. The project includes development of a web-enabled, integrated information system to provided unemployment services. Deployment of the system will require strong interconnectivity with multiple agency environments and systems maintained by the AWI in addition to managing eligibility functionality.

  • Oregon – Human Services Modernization RFP anticipated February/March - Estimated contract value $30 million

    Plans for major changes are underway for the Children Adults and Families Self Sufficiency Modernization Program (CAF-SSM), managed by the Oregon Department of Human Services. Key areas of development in the program include: the rollout of consolidated online eligibility estimators, automation of eligibility determination for Medicaid medical care and consolidation of the caseworker service portal. Much of the project will include planning and design of a unified Self Sufficiency Case Management system which requires development of a self sufficiency data warehouse.

  • Pennsylvania – IT Services Strategic Business Systems RFP anticipated March - Estimated contract value $30 million

    The Pennsylvania Department of Public Welfare (DPW) released a Draft RFP for IT Services for DPW's Strategic Business Systems in October 2009. This solicitation followed the RFI the state issued in March 2009. The agency is seeking a vendor to provide "top-tier" support and management assistance in the planning IT needs and to assume responsibility for managing the maintenance and operations of the systems included in the scope of this RFP.

  • Washington State Electronic Benefit Transfer (EBT) RFP anticipated March/April - Estimated contract value $20 million

    The Washington State Department of Health (DOH) recently completed a feasibility study for the Electronic Benefit Transfer (EBT) System. The Department is now engaged in completing an Advanced Planning Document for the initiative.

  • New Jersey– WIC Statewide Client Service System RFP anticipated March/April - Estimated contract value $5 million

    New Jersey currently has a contract with CMA Consulting for Women, Infant and Children (WIC) for their Automated Client Centered Electronic Service System (ACCESS), which expires on May 31, 2010. ACCESS has reportedly reached the end of its useful product lifecycle and the state has submitted an Advanced Planning Document (APD) to United States Department of Agriculture (USDA). A RFP is being developed and is anticipated for release in 2010.

  • Texas – Workers Compensation System RFP anticipated February/March - Estimated contract value $10 million

    The Texas Department of Insurance (TDI), Division of Workers' Compensation (TDI-DWC) is planning to migrate a legacy system to a new platform. A RFI was released in March 2009 specifying requirements that replacement systems will need to be compatible with its existing web-based technology platform and the primary focus of the effort is to drive efficiency for users of the compensation system. The project requires development of web-enabled applications for use by staff and external system participants. System modules will need to be rewritten in programming languages compatible with web-development tools and existing database architectures.

  • North Carolina – Families Accessing Services – IV&V

    RFP anticipated March/April - Estimated contract value $ 4 million

    North Carolina's Department of Health and Human Services released a Request for Proposals for the NC Families Accessing Services through Technology, (NC FAST Case Management Solution )integration project and proposals will be submitted February 1, 2010 (Opportunity #52354). The Independent Verification and Validation Services (IV&V) for NC FAST will be needed to support and validate case management processes for case managers and workers in the county social services departments. The project will include software performance testing and quality assurance.

  • Wisconsin – Automated Child Care Attendance Tracking System RFP anticipated March/April - Estimated contract value $ 4 million

    Planning is underway with the Wisconsin Department of Children and Families (DCF), Division of Enterprise Solutions, for an Automated Child Care Attendance Tracking System. The state plans to release a RFP after all system requirements are established and funding is finalized. In addition to automated attendance reporting, the agency is interested in linking automated payments to child care providers with a real-time attendance system, and to other cash payment systems such as Food Share, Child Support, or TANF benefits. A solution could likely incorporate payments into a single "smart card" system.

WIC EBT Planning Across the Country

The United States Department of Agriculture (USDA), Food and Nutrition Services (FNS), recently provided grant monies to States to perform planning work for Women, Infant and Children (WIC) Electronic Benefit Transfer (EBT) services. States will be looking for vendors experienced in WIC EBT consulting, feasibility studies, Implementation Advanced Planning Document (IAPD) development, Quality Assurance, and Project Management. Here's a look across the country at the states that GovWin is tracking that are in the WIC EBT planning process:

Alabama: The State of Alabama is part of the Crossroads State Agency Model (SAM) Project along with North Carolina, Virginia, and West Virginia. The project is a new web-based system that is designed to expedite most aspects of the WIC participant clinic experience. The North Carolina Department of Health and Human Services contracted with CSC Covansys for the design and development of the SAM WIC system, which is anticipated to be implemented in 2012. Alabama is using the EBT planning grant separate of the Consortium.

Arkansas: The Arkansas Department of Health engaged Burger, Carroll & Associates for their WIC EBT system feasibility study in November 2009. Burger, Carroll & Associates will compare the design, technology and performance capabilities of SPIRIT with system requirements for electronic benefits issuance and tracking.

Colorado: The Department is planning on using their $444,000 FNS grant for EBT planning. They hope to release a Request for Proposals (RFP) for a planning contract within the next month or so.

Delaware: The State of Delaware Department of Social Services, Division of Public Health, currently has a RFP for WIC EBT Planning, released in early January. Proposals are due by February 26, 2010.

Florida: Imadgen LLC was awarded the Florida Department of Health WIC EBT feasibility study contract in April 2009. According to the WIC Program Data System RFP released in December 2009, Florida WIC intends to seek State and Federal approval to begin procurement of a WIC EBT system during FY 2010-2011 (July 2010-June 2011).

Illinois: The Illinois Department of Human Services received $637,767 to conduct the planning phase of the WIC EBT process in-house. The feasibility study presentation and recommended solution is due by August 2011.

Missouri: The State of Missouri Department of Health and Senior Services received a grant from the United State Department of Agriculture (USDA), Food and Nutrition Services (FNS), for Women, Infant and Children (WIC) Electronic Benefit Transfer (EBT) planning. The State has written and sent to USDA for review and approval an Invitation to Bid (ITB).

Montana: The Department has confirmed that they will be conducting a feasibility study with their funding and will be utilizing an outside vendor. They are planning for the study to begin in June/July 2009.

Pennsylvania: The State of Pennsylvania, Department of Health, Bureau of Information Technology, is currently engaged in planning activities for a WIC EBT system project. The Department intends to work on an Advance Planning Document and system feasibility.

Virginia and West Virginia: The State of Virginia, Department of Health and the West Virginia are currently engaged together in planning activities for a WIC EBT system, called e-WIC. The states contracted with Maximus for the feasibility study, planning documents, and design specifications. GovWin anticipates a possible EBT RFP in FY 2011. They may also require Quality Assurance services for e-WIC, being tracked here.

Wisconsin: In September 2009 the Wisconsin Department of Health Services awarded Imadgen LLC a contract to conduct a WIC EBT feasibility study. The Imadgen contract has an 18-month base, which would mean a 2011 WIC EBT RFP release date if found to be beneficial to the State. Ciber Inc developed, supports, and hosts the WIC Program's web based data collection system.

NASCIO CLC Conference Call Features Massachusetts CIO

The National Association of Chief Information Officers (NASCIO) held a Corporate Leadership Council call on January 20, 2010, featuring guest speaker, Massachusetts Chief Information Officer Anne Margulies. Margulies openly discussed the Massachusetts' IT Strategic Plan, and fielded questions regarding key projects and initiatives currently underway within the Commonwealth.

Within the IT Strategic Plan, Margulies highlighted the Commonwealth's 7+4 practice, in which of the 11 initiatives included in the plan, four have been prioritized. The first of these prioritized initiatives, and perhaps the most challenging as Margulies pointed out, is IT consolidation. Beginning in February 2009, the IT consolidation effort included a restructuring of governing authority in regards to IT endeavors, taking approximately 100 different IT groups and agencies and rolling them into 8 IT organizations, each reporting to a Secretary within the Governor's cabinet, and then to CIO Margulies. Coupled with consolidation in leadership, the initiative also includes an infrastructure consolidation. One of the key aspects of the infrastructure consolidation is the new data center to be built in Springfield, Massachusetts (GovWin Opportunity 59058). Margulies proudly discussed the new data center's projected energy efficiency as she boasted it would be 40% more energy efficient than the existing data center. The new data center remains in the design phase, however a wiki has been dedicated to follow all coverage regarding the extensive project.

Margulies briefly touched on other initiatives included in the Strategic Plan, such as the Commonwealth's efforts in security, network architecture, and an enhanced procurement process. Margulies also mentioned in her discussion the Commonwealth's Open Government initiative, which though slowly developing, allows for citizens to not only access important information regarding their government, but also provides an outlet for citizens to provide feedback and assistance. Margulies hinted at high hopes for the initiative as she mentioned the Commonwealth's efforts to collaborate with local governments for further development.

Perhaps a more unique topic, Margulies brought up the Commonwealth's IT Capital Plan for which Governor Patrick filed an IT bond bill in 2007 to fund a five-year investment plan for technology. The plan includes roughly $450 million of Capital funds to cover a five-year span and to provide for 34 new systems and system upgrades. Large systems and projects supported by the Capital Plan include a new tax system, child support system, public safety network, and insurance system (GovWin Opportunities 47378, 41388, 58728, and 60110 respectively). With the Capital funding, Margulies brought up the addition of greater oversight for the funded projects, which includes a monthly review to make sure Commonwealth funds are spent wisely. Such oversight was included to reassure legislative leaders who were reluctant to allocate funds for perceived risky technological developments. A question was posed to Margulies as to why other states do not allow for Capital funding for IT initiatives. Though Margulies was unable to provide an answer – however pointing out the reluctance by legislative leaders even within the Commonwealth – she was all praise for how the long-term investment has thus far proven beneficial in Massachusetts.

From Margulies' updates, it seems clear the Commonwealth of Massachusetts has made big steps and still has bigger steps ahead of them to improve their overall IT infrastructure. Vendors should remain on the look-out for an increase in IT activity as major initiatives will likely generate smaller projects, all of which will be required to facilitate the achievement of the Commonwealth's Strategic Plan.

Obama: No New Business for Tax-Delinquent Firms

The Obama Administration has set its sights on contracting firms with delinquent taxes. In yesterday's memorandum to department heads the President gave several directions that could mean major headaches for the affected firms, including:

  • IRS is to review the accuracy of certifications of non-delinquency in taxes that companies bidding for federal contracts are required to submit,
  • OMB and Treasury are to evaluate the Government's contracting practices in dealing with contractors' certifications of their tax status and recommend improvements, including a plan to make these certifications available in a Government-wide database.

The goal: Stop federal contractors with serious tax delinquencies from being awarded any new contracts.

Arming Federal Contracting Officials with Information

The impetus behind the move is research by the Government Accountability Office (GAO) concluding that more the $5 billion in unpaid taxes is owed by federal contracting companies that continue to receive new contracts despite the delinquencies. To help achieve his goal the President wants to add contractor tax certification information to the broad information on contractors currently available to federal contracting officials to inform their award decisions, i.e. deny awards to delinquent firms.

GovWin's Take

The move to crack the whip on federal contractors has several implications:

  • Proposals DOA – Business developers, proposal managers and others will need to be even more diligent to ensure that their tax certifications are accurate and in order when it comes to submitting new proposals to the Government. Tax issues could be nonstarters for proposals and disconnects could result otherwise strong proposals being disqualified out of the gate.
  • Family Feud – The new restriction could create internal strife within companies as some business units are held up while corporate gets its tax house in order. Depending on how a firm is structured, a government business unit could be starved for revenue if a commercial unit is having financial trouble, causing the corporation to fall behind on its taxes.
  • Major Money Squeeze – Firms with significantly delinquent federal taxes could find themselves between a rock and a hard place as they scramble to find the cash flow to pay back taxes while their revenue stream is completely choked until they have done so. The key will be to get paid up in time to not derail potential new contract awards.

The President's latest announcement is part of an overall trend in Washington to overhaul federal acquisition policies and practices. In fact, GovWin just released an in-depth analysis of current acquisition reform initiatives in our report: The Impact of Federal Acquisition Reform. Check it out.

New Mexico's $1 Billion Behavioral Health Delivery System Contract Up For Grabs

Governor Bill Richardson announced on Monday, January 18, 2010 his recommendation for the New Mexico state agency, the Behavioral Health Collaborative to reissue a Request for Proposal (RFP) for the takeover of the $1 billion Behavioral Health Delivery System contract. The project, geared towards the administration and delivery of mental health and substance abuse services, had originally been taken over by Optum Health in July 2009 after the four-year contract with Value Options came to an end in 2008.

The concern was triggered by Optum Health's performance not living up to standards and expectations set by state officials. Issues revolved primarily around the lag time between payments to providers, such as nonprofits and others working with mentally ill or those with substance, even after their services had already been delivered. The root of the problem stemmed from Optum Health's electronic claims management system solution. The system, which went live on July 1, 2009, was unable to keep up with real-time usage, and the influx of claims that were far greater than what the system had been originally been tested with. With that being said, despite New Mexico's current financial situation, the Governor stated that the Behavioral Health Delivery System is in pressing need of being evaluated and fixed. He stated that, "The focus should be on the most efficient and effective manner of administering and delivering these services, while maintaining the highest level of quality."

The Behavioral Health Collaborative, which represents 15 state agencies, including the Governor's office, was created under New Mexico's 2004 legislative session which allowed several state agencies and resource in behavioral health prevention, treatment and recovery to work as one for the improvement of mental health and substance abuse services. Betina McGonzales McCracken, spokeswomen for the Collaborative stated that it could be another year until the new system is in place, in which Optum Health will continue to be the main service administrator in the meantime. Contractors interested in the takeover of New Mexico's new Health Delivery system must guarantee the rudiments of efficiency and effectiveness in their current system solutions. Attention placed on real-time capabilities in addition to the ability process a high volume of claims all at once, is vital and an inevitable requirement of the next contractor providing the services for the Collaborative. The RFP for the new Behavioral Health Delivery System is expected to be released by spring 2010. GovWin is tracking the initiative here.

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