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A Capitol View: August 2020 - Q&A with Dennis Padilla

Aarzu Maknojia and Richa Patel, Thursday, August 27, 2020

Updates from SMI

Q&A with Contracts Specialist Dennis Padilla 

by: Roger Mellado and Richa Patel 

Intern Roger Mellado had his next Q&A session with SMI’s senior contracting specialist, Dennis Padilla. Mr. Padilla has over 30 years of experience in government contracting, including as the former Director of Contracts and Grants for the Office of Naval Research (ONR).  
Below is the recent Q&A session. This interview has been edited and condensed for clarity. 
Roger: Can you tell me a little bit about what you do as SMI’s Senior Contracting Specialist?
Dennis: I advise clients on their federal business issues, which can range from the proposal preparation to analyzing the solicitations that they respond to, as well as helping during the negotiation processes.
A lot of clients are start-ups or commercial companies doing business with the government for the first time. There are a lot of unique federal business processes that they have never dealt with before, so I go in and ‘demystify’ the process for them and explain the various twists and turns while guiding the clients through their activities as they go about trying to procure a contract.
Roger: What experience did you bring from your role as the former Director of Contracts and Grants for ONR?
Dennis: Now, I’m able to directly help clients, and I am able to break down the federal process for clients and provide guidance on issues they can confront. When I worked for the government, there were limits to how much assistance I could give by regulation, largely because I was called upon to preserve the competitive process. I wasn’t interacting with different firms very often, and my relationship with contractors was a lot more distant during that time.
I was primarily a steward of federal expenditures, which comes with a lot of caution and distance. But as SMI’s advisor, I can make more concrete and specific recommendations to clients about business matters at hand.
Roger: How long is the process normally from the solicitation being released to the award being made?
Dennis: Traditionally, from the time proposals are due it could take anywhere from 3-6 months to get under contract. A lot of that depends on the availability of federal assets. Procurement folks in the government are tremendously overworked and a lot of times the lead-time is affected by their availability.
Roger: How has this timeline changed due to the pandemic and what other things is the Department of Defense doing differently during the pandemic? 
Dennis: COVID-19 has thrown the timeline up in the air. Some projects have been expedited almost instantly. These have been done under emergency situations. Coronavirus countermeasure activities are generally put forward through BARDA or NIH.
I’ve seen the use of a lot more Undefinitized Contract Actions (UCA), which are actions that are awarded prior to the submission of the proposal or before the proposal is negotiated. On a Department of Defense level, I’ve seen a lot of use of UCAs to deal with the emergency needs of the various coronavirus related activities.
Roger: Have you found the queries you get by clients have changed since COVID-19?
Dennis: No, because the questions I receive are timeless, such as IP questions, cost sharing issues, allowable costs, what represents a direct cost or indirect cost, etcetera. These haven’t been affected by COVID-19. 
Roger: Do you see a pivot in the near future concerning the equipment needs of the military and the research contract requests coming from academic institutions due to the pandemic? 
Dennis: There very well could be a strengthening in the advanced tech areas at the expense of basic and applied research. If this takes root, other academics and private entities will need to partner earlier with the commercial sector in order to ensure that they can bring earlier forms of research and development into basic systems. 
Roger: Do you think that COVID-19 has an impact on the amount of contracts being awarded?
Dennis: In the short term, it will definitely increase with a lot of projects being focused on combatting COVID-19. Whether these will sustain is anyone’s guess, but I would say that coronavirus related actions will likely not go away. I imagine we would be facing activities that range from helping establish a domestic PPE provider community to the R&D necessary to come up with antidotes to the virus and other related viral activities. 

Updates from Washington 

DoD Working to Make Section 3610 Reimbursements Easier for Contractors to Access

by: Aarzu Maknojia 

On August 21, the Pentagon issued a new memo that would shrink the period of time during which defense contractors can seek reimbursement through Section 3610 provision from January 31, 2020 through September 30, to March 27 to September 30. Industry is unsure of the magnitude of the impact from this decision and are advocating for extending it again, though this appears to be unlikely. 
Earlier this month, Ellen Lord, Under Secretary of Defense for Acquisition and Sustainment said that the DoD is working on a plan that may allow it to reimburse contractors with lump sums rather than negotiating many smaller settlements. Lord also said that the DoD has developed a streamlined path for low dollar value reimbursements under $2 million. She said that the DoD consulted industry and have incorporated their comments into the final guidance that is now awaiting approval from OMB. 
Section 3610 of the CARES Act which became law March 27 allows federal agencies to modify the terms and conditions of an existing federal contract to reimburse contractors for additional expenses incurred as a result COVID-19.
When speaking to the House Armed Services Committee (HASC) in June, Ms. Lord noted that while Section 3610 authorized these reimbursements, it did not appropriate additional funds. According to a white paper send from Congress to the Pentagon, the DoD would need an additional $11 billion to provide these reimbursements. Otherwise, it would be forced to dip into its modernization and readiness accounts. 
Senior Democrats including HASC Chairman Adam Smith (D-WA) and the Senate Appropriations Subcommittee on Defense Chairman Dick Durbin (D-IL) have criticized the DoD’s request for additional funding. They have argued that because the DoD has substantial unobligated funding, this would set an “irresponsible precedent.” They furthered in a Defense News op-ed that “we cannot panic and hand out blank checks to defense contractors.”
Ms. Lord, earlier this month refuted this argument and again reaffirmed the need for contractors to receive additional funds to make established delivery dates and timelines.

Coronavirus Relief Package Update

by: Richa Patel 

At the end of July, jobless benefits and the federal moratorium on evictions expired. Before the House and Senate went into recess, they failed to pass a new aid package for coronavirus relief. 
In negotiations, Democrats offered to come down $1 trillion from their $3.5 trillion stimulus package dubbed the HEROES Act that had been rejected by the Republican-controlled Senate; Senate Republicans prefer a package closer to $1 trillion.
Senate Republicans have begun floating the idea of a ‘skinny’ version of the $1 trillion package that had been proposed by Senate Majority Leader Mitch McConnell. This bill would include $300 in weekly federal unemployment benefits until December, more money for the Paycheck Protection Program, additional funding for the U.S. Postal Service and liability protections, as well as money for education and testing.
Leading Democrats have rejected calls for narrower legislation.
The Senate is due to return from recess on September 8 and the House on September 14. 

The NDAA Compromise: Differences Between Senate and House Bills

by: Richa Patel 

Both National Defense Authorization Act (NDAA) bills from the House and the Senate adhere to the budget deal negotiated by congressional leaders and the White House last year, but there still remain issues that will need to be negotiated for the compromise version.
Issues of disagreement include removing the name of Confederate leaders from Army bases and efforts to block President Trump from removing U.S. troops from Germany and Afghanistan.
The House NDAA also sets aside $1 billion to improve the military’s response to pandemics where the Senate would authorize $44 million for coronavirus vaccine and biotechnology research and relief for troops affected by the stopping of troop movements during the pandemic. 
Both parties believe the Navy’s shipbuilding budget request is not large enough to achieve its goal of a 355-ship fleet. Both authorize billions more for ships; the House also approved a second Virginia-class attack submarine that topped the service’s off-budget priorities list. The Senate also authorizes funding for an increase of 16 Lockheed Martin F-35 fighters from the budget request, where the House adhered to the budget request of 79 and trimmed funding for the program.
The differences between the House and Senate NDAA are not as pronounced as last year, but negotiations are sure to be hung up on an election year with talks likely to go past the November election.
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