Deltek Insight 2010: Government Contracting Industry Outlook

XT-204: Government Contracting Industry OutlookPresented By:

Alan Chvotkin, Professional Services Council

Peter Lauria, Baker Tilly

• Federal spending history & outlook

• Key acquisition policy initiatives and trends

• Increased oversight and accountability of contractors

• DCAA and OIG update

• Strategies to mitigate contract compliance risk

• Shared Experiences

Agenda

• Federal spending trends

• Impact of increased scrutiny during the “War on Contractors”

• New and proposed acquisition policy legislation and regulations affecting contractors

• Practical advice and examples for mitigating contracting risks

Key Session Takeaways (Session Objectives)

Federal Spending Trends

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• Continued tough fiscal realities• Mandatory spending vs. discretionary spending

• Mandatory Spending + Interest at 62% of budget – Headed to 74% by FY19

• Interest on debt continues to grow! Projected 84% of the deficit by FY19

• There is little room for “needs” let alone “wants”

• Defense vs. civilian agency spending• Three year planned growth of “security agencies” spending unsustainable

• Impact of non-security agency “freeze” just the start; lots of “losers”

• Professional services market unpredictable

Federal Spending Trends

Key Acquisition Policy Initiatives and Trends


• Obama’s continued focus on contracting policy and efficiency• Presidential Memo on Govt. Contracting (March 4)

• Three 2009 OMB memos on implementation

• 12/19/09 OMB report on interim success

• 3/31/10 proposed OFPP policy letter on “Work Reserved for Performance by Federal Government Employees”

• Four Executive Orders on labor matters issued in 2009• 3/19/10 Implementing Labor Dept rule on non-displacement of

employees

(continued)


• Executive Order on reducing greenhouse gases and leveraging federal procurement (10/5/09)

• Presidential memos• Tax Delinquencies

• Overpayments

• Insourcing / role of contractors• FY11 National Defense Authorization Act

• HASC Defense Acquisition Reform Panel recommendations

• Small business contracting initiatives/programs parity


Increased oversight and accountability of contractors


• Continued transparency & accountability trends– False Claims Act revisions

• Conflicts of Interest Increased– Organizational

– Personal

• Contractor Systems Compliance– DFARS Business Systems rule

– Federal Awardee Performance and Integrity Information System (FAPIIS) final FAR rule and proposed grants rule

• DFARS “class deviation” regulations• Ethics, Ethics, Ethics! • Compliance, Compliance, Compliance!

Oversight and Accountability of Contractors

DCAA and OIG Update


• DCAA actions

• New director but no new direction!

• Binary determination of “adequate” or “inadequate”

• Audit Guidance on the Status of Contractor Systems of Internal Controls (10/22/09) [Where audit of relevant internal control system is not current, prior opinion on the adequacy of the system shall be excluded from the audit report and report should indicate that a current audit of the system has not been performed.]

• Resolving significant disagreements when CO does not concur with DCAA

DCAA and OIG Update

• OIG actions• Proliferation of special IG offices:

o TARP

o SIGAR

o Recovery Act

• Use of IG testimony, reports and recommendations

DCAA and OIG Update

Strategies to Mitigate Contract Compliance Risk


• Early identification, planning and management of regulatory changes

• Regular meetings with advisors to properly address and manage issues

• Actively position yourself to play offense, not defense– Accounting policy

– Internal Control Environment

– Operating practices

• Implement corrective actions promptly

• Do front-end work versus back-end– Staying out of trouble costs less than getting out of trouble

• Participate in appropriate advocacy activities

(e.g. join PSC and be active!)

Strategies to Mitigate Contract Compliance Risk

• What are YOU experiencing?

• How are you dealing with the changes?

• What can we learn from each other?

• Open Question & Answer Session

Shared Experiences

For more information please contact us.

Alan Chvotkin Peter Lauria

[email protected]@bakertilly.com

703.875.8059703.923.8662

Call to Action

mailto:[email protected]

mailto:[email protected]