Interview transcript:
Terry Gerton Okay, so Congress is back, but limited number of work days before the end of the FY. So with the threat of government shutdown or continuing resolution, what are you advising to your stakeholders?
Stephanie Kostro So, I love that you’re bringing this up so early in September, Terry, because the end of September will get here before you know it. And as you pointed out, days in which both the House and the Senate are in session, where they can actually get things out of committee and off the floor, are few and far between. And I do know that the National Defense Authorization Act is scheduled to come up in the House mid-month here. So there’s a lot on the docket. Before I talk about advice, I just like to highlight to folks, I did my research — since fiscal year 1977, there have only been three years where we did not start with a CR. Those years, for those of you playing along at home, are 1989, 1995, and 1997. It has been that long, and on average, we have two to four continuing resolutions before we get a full-year appropriation. And obviously, here for FY25, we never got to a full-year appropriation, we have a full-year CR. So how are we talking to contractors about how to prepare for this? We have on our pscouncil.org website a checklist for contractors. And it’s for members only, but it answers the questions of what should you be talking to your contracting officer and program officials about before a shutdown and then also during a shutdown and then after shutdown so that you come out whole. I’ll give you a sample of a few things that you do before. You look at the OMB website or the pscouncil.org website and look at what agency guidance has been out there. And you submit all possible invoices. Do that now. Don’t wait til the end of September. For work performed, submit invoices now and confirm that they’ve been received. That’s the first big piece, Terry.
Terry Gerton That makes a lot of sense. What comes next?
Stephanie Kostro So for discussion with your contracting officers, you really need to figure out whether they will be deemed essential. That’s where this year is a little tricky, Terry, because we don’t know who’s going to be deemed essential with the new leadership in the White House and elsewhere. And so who will be deem essential? Will they even be picking up their phone or answering emails during a shutdown? So figure that out before you get there. And what happens if your contracting officer isn’t available? Who do you talk to then? What happens if you can’t get into the building because you work on site in a federal agency? Who do you talk to? And then we have a whole list of things to talk to your internal folks and colleagues in your company about cashflow requirements, where are your employees, how much leave do they have built up? If you’re going to ask them to take leave instead of working, et cetera.
Terry Gerton Thinking about a shutdown is tricky enough, but year-end close this year may be tricky as well. Normally the last couple of weeks of September are rushed to get every every dollar out the door, but that may not happen this year.
Stephanie Kostro That likely won’t happen this year. I think that’s a great point that no one is talking about. The other piece is the fact that we have a lot of overdue invoice payments out there too. People have submitted invoices and agencies are delaying payments for those. And so what happens? Again, that will impact cashflow for companies and it will impact their level of certainty and their risk profile going forward. So, we’re not seeing this to be a typical September. It wasn’t a typical August in terms of the rush of solicitations to get things under contract or at least obligated before the year end, so it is an unusual year.
Terry Gerton And so what are you hearing from your constituents about this uncertainty? Is there any opportunity to get clarity?
Stephanie Kostro Again, it’s all about communication. It’s communication with your contracting officer, your program office, et cetera. We are also combing media to figure out what is being said publicly. We at PSC are trying, there’s a big push to have meetings with the highest level of officials at different agencies, Department of Defense, Department of Veterans Affairs, elsewhere. And I think as we move forward, communication is going to be key because in this period of uncertainty, we’re looking for any hard facts that we can find. And it’s been hard so far, but I’m hoping that as September rolls through, we’ll get more information, like that agency guidance I mentioned earlier on the OMB website.
Terry Gerton I’m speaking with Stephanie Kostro. She’s the president at the Professional Services Council. Well, Stephanie, let’s shift gears a little bit and talk about a different kind of guidance. The FAR rewrite continues to come out in segments. Couple of segments came out towards the end of August. From PSC’s vantage point, what’s the biggest news?
Stephanie Kostro So the biggest is they have released so many Model Class Deviations. If you look at the different parts of the FAR, we’ve had at least 24 or 25 Class Deviations be released for public comment. Twelve of them were released in August. And so as we move towards the rulemaking, which we understand will happen in the next, say, month or six weeks, eight weeks, we’re going to have to submit comments on these Class Deviations. They did outline this as a way forward, which was release all of the Class Deviations, one for every part of the FAR, talk through it, have a 30-day comment period or at least 30 days. We’re going through that right now, but I would say with the flooding of the Class Deviation market, so to speak, with 12 of them coming out in August alone, we are scrambling to figure out how they all work together. And so that’s what we’re focusing on, is the interconnectivity of all of these different pieces that are moving.
Terry Gerton Well, and as we just talked about with shutdown, you think you might have eight weeks, but you might have four.
Stephanie Kostro There is that, exactly, exactly.
Terry Gerton One of the big focuses of some of these changes, especially in August, was around commercial solutions. What impact might that have on the contract community?
Stephanie Kostro We’re seeing a lot of push towards commercial products and services. And I think there’s been a lot of air time spent in the media on this. From a professional services standpoint, we are looking at that Class Deviation for FAR Part 12 that talks about clarifying the simplified acquisition procedures and thresholds, et cetera, but also emphasizing the use of best in class, governmentwide acquisition contract vehicles. So in many cases in the past, agencies would create their own vehicle or contract mechanism to go forward and procure the good or service that they want. The proposed revision to this part of the FAR talks about using best in class. We call them BIC, a B-I-C or GWACs, which is governmentwide acquisition contract vehicle. And so it’s going to be interesting to see if you want to procure something, you want to go commercial first. If it’s not commercially available, then what do you do? And you really do emphasize these BIC GWACs, so to speak.
Terry Gerton So contractors really could be advantaged if they’re on one of those shared vehicles.
Stephanie Kostro That is exactly the advice that we’re giving. We’re looking at sort of the GSA schedules or the Federal Supply Service, et cetera, and saying, if you’re not on those and it makes sense, please get on them right away. But also look at these governmentwide acquisition contract vehicles and the best-in-class vehicles and see, does it make sense for the future of the work that you want to perform for you to get on those as quickly as possible.
Terry Gerton What do you think the biggest opportunities are given all of the FAR rewrites that have come out so far and the ones that have yet to drop?
Stephanie Kostro We are all very supportive of streamlining the FAR. It is an enormous set of documents. And so to figure out what the compliance requirements are, it is the lifeblood of these companies. As we move forward, I think the biggest opportunity is to have a say in what requirements make sense and which are outdated, which were developed in the late 90s or just 20 years ago and figure out, does that make sense anymore? We also see opportunity in, as they move towards these vehicles, making sure that you’re on it, that is an opportunity in and of itself. If you focused a lot on agency-specific vehicles in the past, it might take time to look at these, as we mentioned.
Terry Gerton As we kind of wrap up here in September, we talked about the uncertainty of Congress, we talked about who knows how September will roll out or the new year will start with a CR. But you’ve got an event coming up on the Hill on September 16th. What do you want to talk to members of Congress about?
Stephanie Kostro So we are very much interested in talking to members of Congress on both the Senate and the House side, as well as staff, about the border barrier and border security writ large. PSC member companies are very active in the national security space. Everything from the technology, detection, identification, tracking, et cetera, that could be of interest to folks at the Department of Homeland Security or at the Department of Defense. But we want to make sure that our legislators and their staffs are up to speed on what is the latest technology, what are the solutions that are in the art of the possible. And so PSC is hosting an event in the Rayburn House Office Building on September 16th. We’ll have folks who are member companies — not demonstrating, that’s too strong a word, because it’s really hard to get equipment into federal buildings, as it should be — but they are going to be there to talk about their cutting-edge technologies and solutions. And I think it’s a great opportunity for personal office staff, for committee staff, and for members themselves to get smarter on what has been in the news and actually talk to people who operate and develop those solutions.
Terry Gerton It sounds like your timing will be perfect as the NDAA will be in its, hopefully, final stages of discussion.
Stephanie Kostro At least on the House side. We’re still waiting for some clarity on the Senate side, but we’re hopeful that we’ll get an NDAA that helps on the streamlining acquisition piece. Because there’s the SPEED Act and there’s the FoRGED Act on the Senate side. So hopefully, fingers crossed, we’ll get some legislation through to authorize these programs.
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