MILLER ON PROCUREMENT.

***COURT CASES***

GSA FSS often loses in court. They are often pinheads. Yet they have free legal advice-taxpayers provided - unlike you and I, hence they freely go to court. If you have never read the Data Translation Inc case and the Komatsu case do so if you are interested in schedules and Govt contracts. Now comes a new case - Xerox, GSBCA 15190.

Years ago, CDC was a giant in the industry and one of our clients. They also had a GSA. They got audited one year and the audit people found one invoice in 22,000 where CDC had offered a commercial firm a 2% 10 day PPD and had not reported it to GSA.

Now the federal PPD rules did not allow an agency to evaluate a PPD of less than 20 days. No matter. The auditors wanted to sue CDC. Cooler heads prevailed, but this is the pin head mind set which often rules at GSA. I worked for FSS years ago and think I understand this process. How many of your people have ever worked at GSA?

Quick quiz. How can the GSBCA rule on this case with Xerox. Wasn't the Brooks Law repealed? Yes. But the ownership of the GSBCA to hear contract's protests was not rooted in the Brooks Law. And that has been repealed. But the GSBCA was not abolished. They still hear contract disputes for GSA and several other agencies.

The GSA auditors took this one to the GSBCA. It seems Xerox was not paying the 1% IFF fee for the value of trade-ins and GSA wanted it. GSA is aggressive and greedy. Years ago GSA sued Burroughs over an IT contract because the firm had offered free hours on a main frame in a bid which was a winner. The free hours were never used and FSS wanted a rebate. They lost in court. Are you seeing a pattern here. GSA very often loses these suits. The problem is most firms never sue. They roll with the punch and endure and don't sue. The schedule program probably has five or six winning lawsuits waiting to be brought.

GSA lost this suit on the 1% IFF on trade ins. Much can be learned from this 22 page decision dated July 27,2001 if you are interested in trades or schedules. You can get this from the GSBCA or your lawyer or send us $10 and it is on the way.

And remember the audit people at GSA have tunnel vision and absolutely no sense of humor. I had a client audited years ago and the auditors found that GSA owed them $160,000. They are none too smart straight shooters. I have had a number of less than illuminating experiences with these yo-yo's.

And the taxpayers paid for another Govt screw up plus Xerox stockholders. Where is the English plan where the loser pays the winner's legal costs?

***CREDIT CARDS***

Most vendors love credit cards. Why? They get business fast with little fuss. Most of the procurement reform crowd crows about how wonderful all aspects of reform are and especially credit cards. What is the truth. No one knows yet. But a few things are emerging.

When the program began I was very concerned about the following.

1. I knew the Govt would have very little or totally inadequate training. I was right. You are a captain and here is your card seems to be the norm. This leads to big problems including failure to rotate suppliers for even mundane items like air conditioners and bolts. The card was barely out and a friend from DLA called me with word of their first abuse. A cardholder got a new roof at home.

2. I assumed there would be little review. Apparently also true. Fraud is not uncommon. One sergeant spent $20,000 on his card and then left the service without paying the bill. Credit card firms have been stuck with large amounts of unpaid bills. Yet the Govt seems to have no system of review and punishment including withholding from pay, from retirement funds, court materials, letters of reprimand etc. I will bet $1000 they have no central database of all employees which have abused their cards. They apparently don't want to know. I will bet $1000 GSA had nothing in the credit card RFP about the millions companies would have to absorb. One firm got stuck for $5.9 million.

3. Credit card with limits up to $100,000 were issued with no credit checks. There seems to be no review of whether or not the purchase is legitimate. When Capt. Shooker is giving all of his IT business to a single or a couple of firms something is wrong. He is being bribed, his girl friend works there or he is stupid.

Now comes Sen. Grassley who is concerned about all of this as well he should be. He is only three years late. And it appears to me that it is often not the Feds who get defrauded re unpaid bills but the card company. Of course, if the Feds pay an illegal bill they defraud themselves because of their lack of review.

A $200 charge for the Boogie Woogie Motel is suspicious. Rep Steve Horn is also concerned. How bad is it? How does it compare to civilian usage problems? How are employees punished? Why not take the dough from their retirement checks?

It seems whenever we try to make things better, faster and easier new problems spring up. Remember FedNet?

**MARINES**

I have dealt with this agency for decades and have mostly not been impressed. I have seen them employ some nefarious tactics including leaking prices to the favorite vendor.

I have great respect for the agency from a military standpoint and would rank them with the best of the Turks, ROKs and Gurkhas. But from a procurement standpoint they fall far short of my standards.

In a recent RFP some lessons could be learned. First, the RFP fairly begged multiple pricing offers to protect yourself from their self-imposed ignorance. Many vendors don't take enough advantage of multiple technical and/or pricing proposal.

Miller's Rule #2 is never single bid. Send us an e-mail if you want the full set of rules. This rule means that most RFP's contain problems, errors and flaws and a smart vendor will offer several proposals to counter these problems. The most I have ever submitted on an RFP was five and the fifth one won. The most I have ever seen was an IRS RFP which got 27 proposals from the winning vendor.

The second aspect of this RFP was section M which did not comply with the FAR and case law. The agency is required to provide the relationship between price and technical and it is not sufficient to say technical is more. More than 90% of DOD RFP's I have reviewed in the past ten years fail this simple test. I suspect half of it is ignorance and the other half arrogance. In the latter cases they challenge you to go to court with a protest. And most of you vendors fail this test as most of you haven't filed a protest in years, if ever. So vendors fail to protect themselves and agencies grow bolder gradually.

This RFP list the factors to be evaluated as price, technical approach and past performance. That is all they provide. What would you do?

The biggest problem with this RFP is the fact that they have no clue how many they want or when and they refuse to put in the CPI clause. But in this case this actually plays into the vendors hands. I know vendors who prefer stupid agencies. One friend told me he loved DSS-W, the most stupid of all.

The reason this plays into the vendors hands is the CPI in recent years is pretty stable and wouldn't adequately cover most specialized products such as IR, telecom, data bases, specialty steel, genetics etc.

Remember Rule #2.

**SUE GSA**

Have you ever done this? I have twice. Won both suits. GSA does not have a sterling record when sued. You only need to look at the Komatsu and the DTI cases to realize this.

If you have a schedule you know some of the problems. But you need to devour the Photon case and the DTI case and figure out if your problems are dealt with in these cases or if you need a new suit.

Here is one example. You sell the Wombat II commercially and to agencies for $4500. But because you are a reseller GSA wants to put you on schedule at cost plus 10%. Assume that would be about $4200.

And to make it worse someone else has the Wombat II on GSA for only $4100. GSA has no concern that his tech skills are inferior to yours and he is about to go Chapter 11 because his margins are so low.

If you sell in quantity to the commercial world for $4500 you should be able to get a GSA for $4500 less 3 or 5 % discount. If you are the manufacturer of Wombat software and your margin is 88% you can easily get it on GSA for $4400.

This situation is ripe for a lawsuit against GSA. I will bet $10,000 you will win. But you choose the right law firm and it is not in Omaha or Phoenix.

**PROCUREMENT REFORM**

It is starting to show some cracks. FACNET was a horrible failure. The charge card is often abused according to a GAO report. Small firms are being shut out by bundling. 8(a) firms are struggling. But the big boys like it as to the perfumed princes of procurement policy who always are more concerned about the White House view than the taxpayers.

Reform was done with little study and the endorsement of a few large vendors who smelled an advantage with fewer rules and the enthusiastic endorsement of government users and techies who would prefer no rules at all.

In spite of the freedom things are not going so well. What happened to Almers? To the FAA airport modernization plan? In a few more years the abuses and waste will be so obvious that the pendulum will swing back again. Nowhere is the abuse more obvious than in schedule orders. Take another look at the pathetic Army people in the ATA Defense Industries court case. Did any of them lose their job?

**Hazardous Duty**

This book by Col. David Hackworth is one of the most thought provoking ones about the military I have seen. I highly recommend it. It is an overview of the errors he alleges from Korea to Somalia and is a thoughtful read. If you don't agree with him it is still an excellent source. He makes a lot of sense to me.