Tuesday, January 6, 2009
Introducing the Insider
The Industry Defined
HUBZones: Anyone Can Play
Beyond Reproach: The Incumbent's Bind
Breaking Wave: Human Resources BPO
Cooperative Personnel Services: Differentiating Not a Problem
Adventures in Marketing
Policy & Regs: Can We Satisfy the Appetite for Cleared Personnel?
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Posted on April 2
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An unusually bad alignment of the planets has caused us to declare a noticeable step up in the risk and difficulties of operating successfully in the government services business. The indicators include government's competence (the announced re-do of GSA's Alliant proposal evaluations); the suspension of IBM (maybe necessary, but a sign of unusual activism by US Attorneys, maybe with a hair trigger, on investigations and prosecutions); the Boeing aerial tanker protest (demonstrating a major firm's denial and pushing for injecting politics and domestic job needs into acquisition decisions, with members of Congress clambering to run roughshod over the process); the presidential elections (which promise, no matter who wins, some increased scrutiny and regulation); the FAR and DFAR Councils' trial balloon for contractor ethics regulations to address pervasive mistrust of contractors; and the ejection of HUD Secretary Alphonso Jackson, reportedly for alleged political interference in contracts and grants (good in the immediate sense and will help level part of the playing field, while suppressing the goodwill that some firms may have earned, playing within the rules,from elected and appointed officials).
Despite near airtight security on the deal, we can still discern some factors that have been making things a little bumpy, extending gestation time for the transaction an additional one to two months. The stage is set for a Carlyle purchase of a large proportion of equity in a new, stand-alone company comprised of Booz Allen's government business. Alongside that, Carlyle, from information reach us, is arranging for large-scale medium-term debt financing from banks, to be applied to buying out the equity interest of BA commercial partners in the firm's government business. The kind of debt financing we understand is being used would require disclosure of business details to the lending banks. This runs up against the sensitivities and classification needs of the firm's national security clientele.
Plan Bs are often pretty tough to conceive and prepare for. Though we believe the odds favor the Carlyle-Booz Allen deal being closed, we've highlighted some considerations for Plan B, just in case the deal collapses.
We'd be ticked if our files were browsed, but we don't expect contract nirvana from the State Department. And we're not surprised about the brouhaha. Yes, there will be Waxman hearings and audits. But the incidents stand as familiar symptoms of a much larger concern for the industry—and for government executives, e.g., the IRS officials who catch hundreds of tax file "browsers" among employees every year.
You know how the credit card issuers decide your credit limit and interest rate from your credit history and score. Don't look now but the government is on its way to providing the means to do the equivalent for contractors' "responsibility," as determined by contracting officers. Alan Chvotkin tells you what's happening and how to prepare.