GovCon Updates of the Week Part 6

5/6/2021 - By Saltmarsh, Cleaveland & Gund

Emerging Tech: If You’re Not First, You’re Last: So far, 2021 is setting up to be a year of technological innovation, at least from a Federal spending perspective. A bipartisan bill is hitting the Senate floor, which would include authorizing $100 billion in research and development in emerging technologies considered critical to give the U.S. a competitive edge.

The “Endless Frontier Act”, led by Senate Majority Leader Chuck Schumer, D-NY, Sen. Todd Young, R-IN., and Reps. Ro Khanna, D-CA., and Mike Gallagher, R-WI, aims to position the U.S. as the leading technological powerhouse for years to come. The bill calls for the creation of a Technology and Innovation Directorate within the National Science Foundation (NSF), which would be tasked with implementing strategies and enabling basic and translational research opportunities to “advance key modern technological areas such as quantum computing and information systems, artificial intelligence, biotechnology, semiconductors, robotics and more.”  “Whichever country wins the competition in key technologies and supporting capabilities will be the superpower of the future,” the lawmakers wrote in a two-page summary of the 160-page bill.

The bill surfaced at quite an opportune time, as the U.S. deals with the global semi-conductor chip shortage, as well as a study finding that major U.S. artificial intelligence (AI) players are not on the same page as the Government. The study was conducted by the Center for Security and Emerging Technology and found that leading private sector tech company investments in AI may not ensure “long-term national competitiveness.”  Research agendas of companies such as Apple, Amazon, Microsoft, and Google were mapped across 60 AI areas, including robotics and grasping to optimization, and “none of the leading companies examined in this analysis appear to be prioritizing work on problem areas within machine learning that will offset the broader structural challenges the United States faces in deploying and benefitting from the technology when competing against authoritarian regimes.” U.S. policymakers are encouraged to “take into account the state of play of corporate investments’ in AI in formulating national AI policy, and suggests the U.S. Government position itself as a “gap filler” by addressing certain machine learning areas.

The increased funding in these key modern technological areas could very well serve as this “gap filler” identified in the study.  If passed, the increased funding could lead to significant opportunities for contractors in these key technology sectors. Those interested should continue to monitor the news, as well as, The BDO GovCon Week Ahead for developments with the bill.

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A One-Stop-Shop for All Your Space-Based Needs, Welcome to the Space Systems Command: There’s no pumping the brakes on the newest armed forces branch, the Space Force. The first and only of its kind, independent space force has been a proverbial fan favorite since its inception in late 2019, harking back to the days of Reagan’s Strategic Defense Initiative or “Star Wars” program. This agency has seen exponential investment and expansion in its short life and now is urging Congress to help consolidate its structure of command under Space Systems Command (SSC).

The SSC component of the Space Force was started in April 2021 and is tasked with the acquisition, development, and research of space-based systems. Many of the offices that fill these needs, including the Space Development Agency (SDA)—which is currently buying satellites for its Tranche 0 program and plans to put out an RFP in August 2021 for its 150-satellite Tranche One program—and Space Rapid Capabilities Office (Space RCO) do not report to the SSC, but, rather, the Chief of Space Operations. The Vice Chief of Space Operations, General David Thompson, has noted that the “Space Force is looking for ways to evolve and it thinks transitioning those offices over to SSC will be the best move for the future.”

In addition to an expected integration of various space-based offices, the SSC plans to gain control of the Space and Missile Systems Center, the Commercial Satellite Communications Office, and there are even ongoing discussions to consolidate the Army and Navy’s space-based components under the SSC’s control. Finally, and in accordance with this pattern, the SSC is taking the helm of the Space Enterprise Consortium, a collection of companies working with the Government on space contracts and research.

As the Space Force continues to consolidate the acquisition, development, and research of space-based systems under the Space Systems Command, contractors both big and small working on space-based systems may finally have a single “point person” for all of their upcoming Government work.

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Consistently Inconsistent - Consortia-Managed OTAs: Acquisitions made using Other Transaction Authority (OTA) are the preferred method for research, prototypes, and production, as a follow-up to prototype agreements, with the Department of Defense (DoD). They are preferred, as they give the Government buyer and the non-traditional Defense contractors an opportunity to work out a deal, while avoiding the tome of definitions, requirements, and flow down clauses like the one that requires contractors to inform their vendors that the Government highly frowns upon texting while driving, that is the Federal Acquisition Regulation (FAR). Additionally, many OTAs are not made directly between the non-traditional Defense contractor but rather, are made between consortia, or groups of companies /contractors and the non-traditional Defense contractor.  Seems like an even less-restrictive acquisition process, right?  Well, the DoD Office of Inspector General (DoD OIG) recently released audit findings that some of these agreements probably should have been slightly more restrictive.

The DoD OIG’s report details an audit of 13 OTAs with a combined value of $24.6 billion, that turned out to be an audit of 718 projects with a combined value of $8.7 billion, which culminated in 13 recommendations made to Defense Pricing and Contracting (DPC). Some of the findings that DoD OIG had were the following:

  • Failure to ensure that acquisition officers were fully trained on OTAs and the applicable laws
  • Failure to ensure that consortium fees were negotiated in a consistent manner
  • Failure by the DoD to report on the use of OTAs to Congress timely
  • Failure to ensure that OTAs were approved at a consistent authority level

As aforementioned, DoD OIG made 13 recommendations, in all, and DPC agreed with 12 of them. As a result, companies looking at a potential OTA should expect less flexibility in future OTAs and should not expect the pendulum to swing entirely to FAR-based awards, as 2,136 OTA actions, valued at $15.8 billion were issued in Government fiscal year 2020.

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