Interview transcript:
Terry Gerton I want to cover a couple of things you guys have been doing sort of in the background, one at NASA. There’s certainly a lot of upheaval at NASA, leadership change, contract uncertainty, but you worked with their office of procurement recently to host a reverse industry day. First of all, tell us what is that and how it worked.
Stephanie Kostro Well, thanks for asking, Terry. PSC is very proud of our strong history in having reverse industry days. And I know the audience listening right now may be well familiar with what industry days are, but less familiar with reverse industry days. And to be frank, it is a really useful tool that we wish more agencies took advantage of. A reverse industry day is basically a learning event where we try to enhance communication and understanding between government agencies and their industry partners. In the ones that PSC hosts, oftentimes the agency will put forward a question and then give industry an opportunity to give their viewpoint, their presentation on issues like what goes into a bid/no-bid decision. And this is specific right now to the one we’re talking about, the NASA reverse industry day that occurred earlier this year in April, where they said, hey, we would love to see a role play – have industry act out what goes into this decision-making process. And then let’s talk a little bit in a panel discussion style of what goes into a bid/no-bid situation. And I will say, NASA has come back with rave reviews about how this reverse industry day went. We’ve had these for Department of Homeland Security, elements of Health and Human Services like NIH, the National Institutes of Health. And so we were thrilled to have NASA approach us. And not only that, but NASA has asked us to reprise our role in the mock bid/no-bid situation, by holding a follow-up reverse industry day here at Cape Canaveral at the Kennedy Space Center in August. Of course, not thrilled about going down to Florida in August, but we will do what is necessary to make sure that NASA understands industry’s perspective on some of these key issues.
Terry Gerton What are some of the questions that other agencies could pose, for example, in their own reverse industry day?
Stephanie Kostro We’ve mentioned bid/no-bid, but some other agencies have asked about, how do you make investment decisions? How do you forecast opportunities before they’re even on the street, and how does industry prepare for addressing those? Things like teaming is a very popular topic to talk about with agencies, pricing, bids, risk mitigation, and solution development. All of those are issues that we’ve discussed, not only with NASA, but with the other agencies I mentioned earlier.
Terry Gerton Sounds like a great way for the current administration to kind of meet their industry base in a low-threat, conversational environment as well.
Stephanie Kostro That’s absolutely right, and I think the event coming up on August 7th at Cape Canaveral will be one of those as well. They’ll have that mock give and take, that skit that they’ll play out. They’ll have a full day of panel discussions. And then the NASA officials will be on a panel saying, here’s what we learned and here are the key takeaways. This event is open to the public. They can register for it. They just have to look for it on the NASA website.
Terry Gerton Well, it sounds like a great practice that perhaps more agencies will take you up on.
Stephanie Kostro I hope they do.
Terry Gerton I want to change topics a bit to the Small Business Administration. The 8(a) program has long been a key to government’s procurement strategy, but SBA is getting ready to start a significant audit of the 8(a) Program. Tell us about what’s going on there.
Stephanie Kostro I would love to. The SBA administrator, Kelly Loeffler, announced a few weeks ago that there’s going to be a full-scale audit of the 8(a) Business Development Program. This is really a program that focuses on promoting small business growth and competitiveness for socially and economically disadvantaged small businesses. So you have to apply for this program, get certified for this program. But there have been some hiccups recently that led to this audit. The Department of Justice undertook an investigation regarding a specific set of circumstances wherein a U.S. Agency for International Development contracting officer was involved in a bribery scheme with some 8(a) contractors. And the bribes reportedly included things like cash, luxury items, tickets, down payments for mortgages, etc. And so enforcement actions were taken. And this really triggered Administrator Loeffler to say, let’s take a strong look at what’s going on in the 8(a) program. Specifically, the audit will go back 15 years. This is not just a current audit but a retrospective audit, and looking at what they’re calling high dollar and limited competition contracts – things like sole-source/set-aside. Specific to our government services industry, though, they are looking at joint ventures to make sure that work share was in line with what work share should have been for the small business, and to make sure that it wasn’t just functioning as a pass-through, possibility for fraud, etc.
Terry Gerton So what sort of things do contractors who might be concerned about this need to know at this point?
Stephanie Kostro That’s a great question. We have encouraged – and I’ll hasten to say PSA does not offer legal or financial advice – but we do say that you can prepare yourself for this audit. We’ve encouraged 8(a) businesses and their JV partners, the large businesses that were partnered with them, to be proactive internally, to look at their own internal reviews, mitigate risks by gathering documentations. And what kind of documentation? You can expect to look at eligibility reviews, certification requirements, performance. Have you complied fully with the terms of your contract, etc., and document, document, document. SBA is going to come with requests for evidence and documentation, and you should have that at the ready.
Terry Gerton That’s a great heads up. I’m speaking with Stephanie Kostro, president of the Professional Services Council. All right, Stephanie, last question probably, but hot off the press, both chambers of Congress have pushed out their versions of the 2026 NDAA, probably the biggest bill that’s going to come out for a while. What are you watching at PSC? What are the key issues for you?
Stephanie Kostro Thanks for asking, Terry. This NDAA, the National Defense Authorization Act, we often like it to a Christmas tree where other elements get hung on it as ornaments, or a plow taking things across a field. It is a huge vehicle. And what we’re talking about right now is both the Senate Armed Services Committee and the House Armed Services Committee have completed their markups of their versions of the bill, and we hear that the Senate Committee version is going to go to the Senate floor. This is something that hasn’t happened in recent years, where senators can offer amendments on the floor. So we’re looking forward to that process playing out. In all cases, the House version has gone to the House floor for amendments. What we are looking for really here is a readiness focus. As we talked about last time, Terry, the reconciliation bill addressed a lot of defense issues, particularly on the procurement side – for example, aircraft modernization. That wasn’t included in these bills because they’ve been addressed elsewhere in the reconciliation bill and other places. And so the readiness issues, maintenance, operational, logistics, etc., should be addressed in these bills, as well as some of the personnel side of the house: base allowance for housing, other benefits for servicemembers.
Terry Gerton Any key differences between the two versions of the bill that you think will be challenging to reconcile?
Stephanie Kostro Both versions have tackled defense acquisition reform. And you may recall that there is an executive order also on defense acquisition reform that the Pentagon is busily working on through various working groups, on requirements process, acquisition processes and acquisition workforce issues. The two committee-passed versions do differ as they tackle defense acquisition reform. PSC is very much looking forward to how this plays out, both on the floor in the Senate and the House and in conference. We are very supportive of what has been included in the House Armed Services Committee-passed bill, things that were in the Speed Act that we talked about a few weeks ago. Things like how can you quickly go from requirements to fielding equipment services and solutions? How can you make sure that companies, including commercial companies, are not constrained? They need to offer their innovative solutions – and making sure that they have the environment in which they can do that.
Terry Gerton And so what do you see as the time ahead for conferencing and maybe, with my fingers crossed, final bill passage?
Stephanie Kostro In an ideal world, Congress would pass the NDAA before the fiscal year ends on September 30th. That hasn’t happened in recent memory. It’s been a very, very long time. I understand that the House may be looking at September for some floor action, and the Senate as well. We are waiting to hear dates on that. We are hopeful that conference will be completed and a bill will be signed into law by the end of the calendar year, at the end of December. That tends to be the timeline for the NDAA, and we see that playing out again this year.
Terry Gerton Well, they’re certainly going to deal with some pretty important issues. So here’s hoping the conference is an effective one.
Stephanie Kostro Fingers crossed.
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