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Navy delays NGEN award until May

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The Department of the Navy will not award a contract next month for its Next Generation Enterprise Network as planned.

Navy officials had originally planned to award one or two contracts by Feb. 12 to develop the massive private network, known as NGEN, but the award date has been pushed back to May 2013.

“Due to the complexities of the NGEN requirements, we are changing our contract award estimate in order to ensure a complete and thorough review of offerors’ bids,” Ed Austin, spokesman for the Program Executive Office for Enterprise Information Systems, said in a statement.

Three companies have already announced their intent to bid on the NGEN contract: HP; Computer Sciences Corp.; and its partner, Harris Corp.

So far, the continuing resolution and looming threat of automatic sequestration budget cuts have not impacted NGEN’s contract award schedule, the Navy said Thursday. But that could change in the future.

NGEN will replace the Navy-Marine Corps Intranet (NMCI), a contractor-owned network serving more than 700,000 Navy and Marine Corps personnel.

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Does your office have WiFi?

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How would access to cellular or wireless services in your building help you do your job better? What challenges do you face today without those services, and does your agency have a plan for increasing mobility within its own walls?

Federal Times wants to hear from you. Contact Nicole Johnson at 703-750-8145 or via email at njohnson@federaltimes.com.


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At the Postal Service, new reports reveal the strain of change

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“A change would do you good,” according to that noted management consultant, Sheryl Crow. But for the U.S. Postal Service, change has been wrenching,  particularly when it means shaking the habits acquired during years as a complacent semi-monopoly. A couple of recent reports highlight the rigors of reinvention for USPS leaders, not just in chasing new revenue and overhauling slipshod management practices, but in ultimately retooling their sprawling operation to survive in the digital age.

You might think, for example, that the Postal Service enjoys an inside track with its sister agencies in the federal government. Instead, it’s taking a beating from private-sector rivals in competing for a big part of agencies’ shipping business, according to  a review by the Postal Service’s inspector general. This is the piece awarded under General Services Administration schedule contracts that last year generated almost $337 million for participating shippers.

The Postal Service’s share of that pot amounted to $4.8 million, or 1.4 percent. Federal Express led with $190.1 million (56.4 percent), followed by UPS with $138.7 million (41.2 percent). If there’s any upside to be found, it’s that the Postal Service’s cut increased markedly from the year before. (It should be noted, incidentally, that the Postal Service got another $96 million worth of agencies’ shipping last year outside of the GSA schedule.)

In part, USPS prices just weren’t competitive, a fact that the inspector general blamed on a requirement that products like Express Mail and Priority Mail cover their costs (i.e., no using them as loss leaders to attract other business). But the Postal Service also didn’t bother to compete via the GSA schedule until 2009, eight years behind FedEx and UPS. “Consequently many federal agencies have long-term relationships with competitors and are reluctant to switch to the Postal Service,” the IG found.

Why were USPS execs so slow to look for customers in their own backyard? The report doesn’t give a reason, but they evidently just weren’t interested, lacking even ”a sales force or market strategy that targeted the federal sector.”  It has a sales force now, but the IG questioned whether the 13-member squad is adequate to meet agencies’ specialized needs.  In a written response, USPS executives acknowledged the need to be more nimble, but there’s obviously plenty of catch-up ahead.

Inertia of a different sort is evident in the findings of a separate IG audit that examined the Postal Service’s handling of its two largest advertising contracts, worth a combined $136 million in fiscal 2011. But for an organization in crisis, the Postal Service didn’t do a very good job of overseeing how that money was spent, the audit found. To take just one example, USPS officials signed off on almost $632,000 in “questionable” bonuses to the two contractors in fiscal 2011 and 2012 “even though the process for evaluating contractor performance was not clear.”

Also a problem: Keeping track of where money went and why. Some $4 million in invoices were missing from the contracting officer representative’s files and another $2.3 million worth of bills had not been certified properly. On the larger of the two contracts, the Postal Service went beyond the standard federal maximum to pay hourly rates of more than $302. While the agency was within its rights, the IG said, “the magnitude of these rates–particularly considering the Postal Service’s recent financial challenges–necessitated a corresponding amount of oversight to protect the Postal Service’s financial interests.” By the IG’s reading, that scrutiny was lacking; the relationship between the Postal Service and its ad companies was apparently so cozy that one of those firms was leaked a draft copy of the IG’s report. That no-no is under further investigation, according to the report.

Last fall, well before the report’s official release, the Postal Service had opted not to renew the larger contract with Michigan-based Campbell-Ewald (neither contactor is identified in the report, but the termination was reported in the advertising trade press). It has also redesigned its marketing and sales organization and is following up on the IG’s recommendations to improve oversight, according to a written response from Nagisa Manabe, who joined the Postal Service as its top marketer last year.

Of course, assuming that the IG’s findings are on base, the question is why it took so long to clean up basic business practices. At a time when management is pressing rank-and-file employees for concessions, these are the kinds of lapses that set the average clerk’s teeth on edge.

As Postmaster General Pat Donahoe frequently points out, he doesn’t have full command over the agency’s destiny. Congressional action (or inaction) will play a outsized role in the Postal Service’s long-term direction, not just in cutting costs but in finding new ways to adapt to a world that’s buying a lot fewer stamps.

This month, the Government Accountability Office released a handy overview of USPS efforts to boost revenue and move ahead with both new non-postal services and experimental postal products. The survey found plenty of ferment that so far hasn’t translated into a big effect on the bottom line. While the Postal Service is currently pursuing 55 new initiatives, most of them build on existing products and services, such as letting customers handle address changes through mobile phones. For fiscal 2011, non-postal revenue was $173 million. Nothing to sneeze at, but still a tiny fraction of that year’s total of $65.7 billion. And it’s hard to see non-postal income growing significantly without some help from Congress.

Under current (somewhat complicated) law, the Postal Service can introduce new non-postal products if they fall under the umbrella of something it’s already doing, subject to approval of the Postal Regulatory Commission.  Under the category of licensed retail products, for instance, post offices can sell items like stamp dispensers and framed postal art. But the Postal Service decided not to pursue more than two dozen other ventures, mainly on the grounds that they needed too much up-front investment or weren’t likely to be profitable.

USPS leaders see money-making potential in three other areas: Shipping alcoholic beverages, performing services for state and local governments, and selling non-postal services. But those would all require legislation, and involve knotty questions about competition with private business and other issues. In these times, however, lawmakers have a tough time dealing with relatively routine measures, let alone more complex ones. And those proposed new business avenues would be no cure-all. While postal leaders saw the potential to improve the agency’s financial position, the report said, “they emphasized that these additional innovations will not be sufficient to return USPS to financial solvency.”

Meaning more change–and more pain–lies ahead.

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With potential successor reportedly in the wings, Zients running OMB as deputy director

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Jeff Zients is still in charge of the Office of Management and Budget, but it turns out that he quietly lost his “acting director” title four months ago. Under the Vacancies Reform Act, which generally limits acting gigs to 210 days (or about seven months), Zients’ tenure ended in September, OMB spokeswoman Jessica Santillo said in an email.

He then reverted to his previous job as OMB deputy director for management. Even so, Santillo said, Zients “continues to lead OMB and his authorities and responsibilities have not changed.” For what it’s worth, Zients’ profile on the White House blog still lists him as “acting director.”

Zients had taken over as acting director in January 2012 when Jack Lew left to become White House chief of staff. Under the Vacancies Reform Act, his term was extended into September because the Senate was not in session when it otherwise would have expired.

Following Lew’s departure, the Obama administration never nominated a permanent OMB chief. In part, observers speculated, that was because it didn’t want an election-year confirmation fight that would have drawn attention to politically charged budget issues, and in part because the White House was comfortable with Zients, who had done a previous tour as acting director in 2010.

Over the weekend, however, several outlets—citing unnamed sources–reported that  President Obama is likely to name Sylvia Mathews Burwell, who worked in the Clinton administration and now heads the Walmart Foundation, to the job. A White House spokeswoman did not respond to voicemail and email messages yesterday seeking confirmation.

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Union: EPA stonewalling on sequestration planning info

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In a memo earlier this month, the Office of Management and Budget ordered agencies to step up planning for across-the-board budget cuts set to begin in March.  Along the way, OMB added, agencies should involve employee unions “to the fullest extent practicable” in any decisions on hiring freezes, furloughs and other measures to cut workforce costs.

John O’Grady questions whether that message made it to the Environmental Protection Agency.  O’Grady heads the American Federation of Government Employees local that represents some Chicago-area EPA staff and is also treasurer for the union’s national council of EPA locals. He sees little evidence that the agency is making much effort at outreach.

“It’s maddening,” he said last week after joining in an agency conference call that, by his account, produced little of note. “People are sitting in their cubes, they’re waiting for this hammer to go down and nobody’s giving them any information.”

In the Jan. 14 memo, acting OMB chief Jeff Zients declared that agencies had already engaged in “extensive planning” for the possible cuts, formally known as sequestration.  Based on documents that O’Grady shared with FedLine, EPA officials either aren’t very far along or aren’t willing to explain what’s in store for EPA’s 18,000-strong workforce.

In an extensive request for information last month, for example,  O’Grady asked the agency for a list of functions nationally that could be downsized if the cuts—formally known as “sequestration”—take effect as scheduled March 1.  The union also sought a list of all contracts and a rundown of any contractor-performed functions that could be transferred to federal employees in the event of sequestration.

In its reply this month, EPA declined to provide any answers. “The union’s request is overly broad, unduly burdensome and the union has failed to state a particularized need for the requested information,” wrote Mitch Berkenkemper, the agency’s director of labor and employee relations.

This could be seen as typical labor-management sparring, but the information blackout at EPA and other civilian agencies stands in sharp contrast to how the Defense Department is proceeding. In the last two weeks, the military services have outlined a host of steps–including civilian hiring freezes, layoffs of temporary employees and possible furloughs–that are under way both to prepare for sequestration and the possibility of a year-long continuing resolution.

This could be seen as prudent planning that might have the side benefit of reminding members of Congress that the cuts would have a nationwide impact. The consensus is growing, however, that lawmakers and the Obama administration will fail to reach the agreement needed to avert the reductions, at least initially.

The latest to sound that view was House Budget Committee Chairman Paul Ryan, R-Wis. “I think the sequester is going to happen,” Ryan said yesterday on the NBC talk show, “Meet the Press.”

EPA is already taking some small downsizing steps. Last month, the agency offered $25,000 buyouts and early retirement for up to 29 employees in its Washington, D.C. Office of Environmental Compliance and Assurance, and another 88 for staff throughout its San Francisco-based Region 9 bailiwick.

“Region 9 sought the authorities to facilitate the restructuring of enforcement work into a single enforcement division,” Regional Administrator Jared Blumenfeld wrote in a Dec. 3 memo. “The retirements will help us achieve voluntary staffing reductions and create opportunities to recruit entry-level employees.”

An EPA spokeswoman referred FedLine’s emailed questions on sequestration planning last week to OMB, which did not respond to a request for comment.

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DC offices to open at noon Monday

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The Office of Personnel Management this evening announced that federal offices in the Washington area will open at noon on Monday. The DC area is expected to face icy conditions during rush hour, and OPM advises federal employees to stay off the roads until 10 a.m.

Closely watched Defense Department personnel case will get rehearing

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There was some noteworthy news out of the judiciary today: the U.S. Court of Appeals for the Federal Circuit has thrown out a three-judge panel’s decision from last year that would curtail federal employees’ ability to challenge agencies’ decisions on suitability to hold certain national security jobs. Instead, the full court of about 15 judges will rehear the case, with the first round of briefs due in early March, according to the four-page order.

As Federal Times reported last year, the case dates back to 2009 when Defense Department agencies barred two employees–one a GS-5, the other a GS-7–from  jobs involving access to “sensitive” information. The two sought recourse from the Merit Systems Protection Board, which is charged with hearing appeals of employee firings and other disciplinary measures. But in its 2-1 ruling last August, the appellate panel applied the logic of a 1988 Supreme Court decision that gave deference to agencies when deciding who deserved a security clearance and essentially stripped the MSPB of its ability to take appeals of clearance denials. The same was true for workers who hold “sensitive” positions, even if those jobs don’t involve access to classified information, the panel ruled last year.

In today’s ruling, however, the court signaled its interest in exploring that issue. Among the questions that it wants lawyers on both sides (the Office of Personnel Management is representing the government) to address: “What problems, if any, would the MSPB encounter in determining adverse action appeals for employees holding ‘sensitive’ positions, not requiring a security clearance; to what extent should the agency defer to the agency’s judgment on issues of national security in resolving such adverse action appeals?”

If the government ultimately prevails, federal employee unions and whistleblower advocacy groups worry that the repercussions could go well beyond DoD because agencies not normally considered part of the national security establishment–such as Customs and Border Protection–are making greater use of “sensitive” positions.

But the denouement could be some time off. Kevin Owen, an attorney who practices before the MSPB but is not involved in this case, expected a ruling by the full appellate  court some time late this summer. And whichever way the majority goes, “I don’t think it’s going to be the end of the discussion,” Owen said in an interview, with the losing side likely to appeal to the Supreme Court.

[This post has been updated.]


More contractors see decline in federal revenue

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For the first time in a long time, more federal contractors reported decreases in their government contracting revenue last fiscal year than those who saw increases, according to a Grant Thornton survey of about 100 contractors.

Thirty-eight percent of contractors suffered reductions in revenue over the past year, compared with 36 percent that saw revenue increases and 26 percent that experienced no significant change, according to the annual Government Contractor Survey released last week. Professional Services Council sponsored the survey.

“This year’s survey shows more revenue shrinkage than growth and a plunge in net profit, with the majority of contractors seeing a tiny profit or none at all,” the survey said. “This despite reducing headcount and overhead, holding wages at generally the same level as in the last two years, cutting [general and administrative expenses] and benefits, and doing just about all a company can do to sustain profits. Contractors are up against costs that can’t be slashed and must be absorbed: indirect, health care, overtime and, for many, out-of-scope work.”

Companies said that 84 percent of their revenue came from federal business, which is the lowest reported over the past six years. Last year, federal business made up 93 percent of companies’ revenue.

Defense Department contractors were the hardest hit. Revenue from DoD contracts dropped 16 percentage points to 47 percent. However, revenue from civilian agencies rose 7 percentage points to 37 percent. State and local revenue accounted for 7 percent and commercial revenue made up 9 percent of companies’ revenue.

The survey assumes that reduced defense spending, changing priorities for the administration and insourcing are to blame for contractors’ revenue decline.

Overall, the median turnover rate for companies was 8.5 percent. Most of the companies surveyed sell professional services to the government, which may explain the high turnover rates. It’s common for employees to accept jobs with the winning vendor if their company loses a follow-on contract, the survey said.

When asked how often their companies won non-sole-sourced contracts, the median rate was 30 percent. When the company was the incumbent, that number rose to 50 percent.

In some cases, however, bid protests are triggered when incumbent vendors receive far lower scores than their competitors, despite having a stellar performance record, the survey said. “It should be noted that with the increased use of lowest price, technically acceptable contracts, the incumbent’s advantage is virtually erased.”

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Despite expired term, SSA Commissioner Astrue still working

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For anyone who’s wondering, Social Security Administration Commissioner Michael Astrue remains on the job, even though his six-year term officially ran out last Saturday.

In an email today, SSA spokeswoman Kia Anderson cited the federal law that allows Astrue to stay until the Senate confirms his successor. Given that President Obama has yet to even nominate a possible replacement, Astrue could continue to lead the agency for some time to come. Also remaining in place is Deputy Commissioner Carolyn Colvin.

Astrue, a Massachusetts lawyer and published poet (how many top-level feds can claim that kind of life experience?), was named Social Security commissioner by former President George W. Bush and has held the job since early 2007. In the email, Anderson noted that Astrue has said repeatedly that he would not seek reappointment to another term.

Because Astrue has not spoken with Obama “about the precise timing of his return to Massachusetts . . . ,” Anderson added, “it would be inappropriate to speculate about that subject.”


Postal Service: Accelerated mail processing plant downsizing not linked to new board directive

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On Monday, the Postal Service announces that its governing board has given orders to accelerate cost-cutting measures. On Thursday, the Postal Service notifies the National Postal Mail Handlers Union that it is speeding up the shutdown of mail processing operations at 18 plants.

Contrary to what some might assume, though, “the decision is not part of the package directed by the USPS Board of Governors,” postal spokeswoman Sue Brennan said in an email. “But because we have had the flexibility to consolidate operations in the past—when we could do so—we’re following through now as the opportunity exists.”

For employees at the affected plants—which include facilities in Florida, Texas and Wyoming—that may be a distinction without a difference. Under the Postal Service’s three-year plan to halve the size of its processing network, the 18 were supposed to be axed next year. Under the new timetable, they’ll join 82 other facilities set for consolidation between  this month and July.  In an interview, John Hegarty, president of the mail handlers union, was hopeful that the departure of thousands of workers under two early-out programs in the last year will lessen the number of employees who will have to move to keep working for the Postal Service. In any case, he said, the union will continue to stress that dislocation be kept to a minimum.

For anyone who’s wondering, incidentally, postal officials still aren’t saying exactly what they will be doing in response to the Board of Governors directive. Information on that score will come “as soon as possible,” another spokesman said.