Terry Gerton It has been a tough year for the federal workforce. I don’t think that’s an understatement, but here on the Federal Drive, we focused a lot on the impacts on individuals. And with you I want to take it up a level and really talk about leaders and managers. What have been the biggest challenges for federal managers throughout this year?

Laurin Parthemos I would say without a doubt, it’s the uncertainty that people are seeing within the day to day. As a leader, having to navigate a field where you don’t know what is going to come next is increasingly difficult, especially in times where you don’t have necessarily the number of resources that you truly need to get the job done. And we’re seeing that really play out in terms of both performance, in terms of how things are getting produced, how quickly they’re getting produced, but also just on the health from a psychological standpoint of the individual employees that are within the workforce and especially on the federal side. And how do we really make sure that we create, as leaders, a space where we can allow them to thrive as much as possible in this particular scenario? And how do we suppress that survive response to all the uncertainty and all of the nuance that is happening in the day to day that we’re seeing?

Terry Gerton We have talked a lot here about organizational health and how organizational health depends on individual worker health and how that health often depends on mental health. Seems like all of those connection points are under a lot of stress.

Laurin Parthemos I, Yeah, unequivocally agree with that. Realistically speaking, at Kotter, our research validates that point that organizations that are anchored in adaptability and resilience are those ones that outperform. And as we see, especially in the federal space, it’s difficult to build that resiliency consistently because of the amount of uncertainty that we’re seeing. And so because there’s that pull dragging people down, the level of anxiety, the lack of ability to actually meet your day to day needs as we’re seeing shutdowns happen, there’s an end-level performance there that’s happening at the department and agency level that as leaders, it’s [about] trying to figure out how we can give as much stability as possible to our teams without necessarily knowing what we’re capable of promising. And how do we make sure that we’re communicating in a way that we’re not just waiting until we have a definitive answer, but we’re walking alongside our team saying, I also don’t know. But here’s what we’re going to do.

Terry Gerton You mentioned a term earlier, psychological safety. Can you break that out for us and tell us what it means both from the employee perspective and the leader-manager perspective?

Laurin Parthemos Absolutely. From that psychological safety perspective, we see the massive erosion in the sense that as people are showing up to work, what was once seen as an incredibly stable job and a mission-driven job working for the federal workforce. Some of those tenets about why people joined the service are no longer there because that stability is no longer there. Don’t know if layoffs are coming. We don’t know if we’ll be in another shutdown. And what that really boils down to is how do I feed my family? How do I make sure that I can pay my own bills? And without that level of safety, of knowing that I have stability in my job and I can think through how do I perform and I can think through creative, innovative ways to get things done. Without that, you won’t see any level of performance. And it’s really been a sticking point for many people that I’ve been speaking to within the agencies.

Terry Gerton  Are you seeing that agencies have groups of employees maybe pitted against each other? We had furloughed and accepted folks. So many people worked but without pay and others didn’t work and, you know, are there internal issues that leaders and managers are going to need to deal with?

Laurin Parthemos None that anyone has openly admitted to me. I will leave it at that. But it is a natural feeling to say, if we’re working on a skeleton crew, so to speak, and some of our team is furloughed while others are not, what does that look like when we all rejoin together? There’s going to be those who are frustrated because they’ve had to work so hard during that furlough time without pay. There’s those that are — that were not furloughed that had to depend on each other that maybe their teammates weren’t showing up in a way that they necessarily resonated with because they might not have been giving their full selves because of the frustration of what they were dealing with. So I wouldn’t say it’s necessarily that people are pitted against each other, but more so that there’s an understandable level of frustration given the ecosystem that they were subjected to. And how do you work through that as a leader saying, for this time, we are all together. There is a potential that we will be in another shutdown. And what does that look like? And how can you really work with your team to make sure that you’re front-running any of those issues and thinking through the scenario planning to make sure that you have what you need and your team members understand the purpose and what we’re really trying to accomplish at its core so you can prevent any of those frustrations as they bubble up.

Terry Gerton I’m speaking with Laurin Parthemos. She’s a principal and public sector lead at Kotter. Laurin, the shutdown has come up a couple of times in our conversation. We’re deep into the holiday season that comes with its own kind of stress. And when everybody’s sort of fully back in January, they’ll be staring potentially at another shutdown across several agencies. So if you’re a leader in this scenario, maybe what’s on your New Year’s resolution list to think about how do you reset for the work beginning in January?

Laurin Parthemos I think that’s a great question because as I’ve talked to many leaders throughout this time, a lot of people are talking through what does Q1 look like or what does it immediately look like for what I need to accomplish? But we really need to be thinking longer term than that. And we really need to be thinking through what are our priorities and what are we deprioritizing? Because as we think about the impact that the shutdown had, I believe it was the Professional Services Council that has a statistic that it takes three to five days, not business days, but days to reset for each day of shutdown in terms of an agency’s performance, considering that it was 43 days. That’s up to seven months in order to get back to a stable state. So we’re going to be working in an environment that is over capacity and behind with significant backlog. So making sure that if you’re anchoring on a, why are we doing what we do, what is our goal as a team and anchoring each task underneath that to that why, it will help prioritize what needs to be accomplished while simultaneously actively advocating for what no longer needs to be done during this time of prioritization. And that act of advocating needs to happen within your own team. Across teams and also going up the chain as well to make sure that there’s a consistent understanding of what are we trying to accomplish? Because if you only focus on one small group, there’s going to be a lack of understanding more broadly. And that will help teams as they go into January with the potential of another shutdown. So knowing what are we trying to accomplish, what happens if we do, what happens if we do not shut down? And how can we come together to make sure that despite the headwinds, we are going to accomplish whatever we can. And I will say a key for this is it’s not just the priorities that we need to accomplish, but it’s also how do we, as leaders, implant short-term wins, as we like to call them at Kotter. So what are some small things to show that we’ve accomplished something? We’ve been successful. No matter how big or small, it does not matter, but it’s something that you can celebrate around and rally around to get people energized. So it’s not just a heavy weight of a continual backlog, but saying we did something and we’re making progress.

Terry Gerton  What might be one or two things that a team leader or a mid-level manager could actually do to get their team refocused on the why, on the priorities, on the outcomes? Should they have a potluck? Should they like have a team day? What are some things that you recommend, actual steps?

Laurin Parthemos What I would say is it’s very team dependent, to be quite honest with you, because you could say, let’s do a pizza party. And that will resonate so well with some groups, and others will see it as tone-deaf in a way, saying, that’s great that there’s food here, but do you not see what’s happening around us? And so I would say, first and foremost, as you’re thinking about the state that individuals are in, it’s that heavy survive of freeze, likely. And it’s making sure that as you think through what state these individuals are in, you’re going on a listening tour, so to speak, to figure out what they actually need and want and then respond in kind to the culture of that particular group. So it very much could be a potluck. It could be that part of your planning as you’re thinking about going into January, you know your team will have heavy amounts of furloughs. And realistically speaking, the median federal employee only has about a week of pay in their bank account. So is it that we know this team is going to be furloughed? So let’s think about meal trains. Let’s think about how we can support each other in ways that are not just from a work perspective, but from a human element, because we are here for a mission. You’re not joining the federal service to become the most rich and famous. You’re doing it because you believe in the cause. So come together around that cause and find ways to truly support your people in the ways that you’ve find that they need to be supported as a leader.

Terry Gerton  I’ve been speaking with Laurin Parthemos. She’s a principal and public sector lead at Kotter. Laurin, thanks so much for grounding us back in what’s really important. Absolutely. Thank you for having me. We’ll post this interview at federal newsnetwork.com slash Federal Drive. Listen to the Federal Drive on your schedule and on your device. Subscribe wherever you get your podcast.

 

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Interview transcript

Terry Gerton We’re going to talk about the National Defense Authorization Act. It’s in its final stages. It’s not a short read, 3100 pages. But there’s a lot of particular detail in there, especially around changes to cost and pricing rules. Start kind of at the headline level. What’s the big news that you want people to know?

Zach Prince Sure. So we’re still digesting this. So, you know, I wanna caveat that, you know, it is 3,100 pages and there’s a lot here, and it might not become final. But I think Congress has been listening while industry over the past many years has been saying that they’re reluctant to invest too heavily in defense when Congress makes programs subject to annual appropriations that might, for seemingly no apparent reason, go away after major investments have been made, when huge regulatory burdens can get imposed, like the cost accounting standards, which deviate substantially from generally accepted accounting principles or GAP, and things like certified cost of pricing data are required and just a slew of regulatory requirements that come with doing business with the government. These are real burdens to industry and real burdens to investors thinking about getting involved in the space. So listening to all of that, Congress took quite a bit of action in this NDAA.

Terry Gerton Let’s talk about some of those. You mentioned cost accounting standards. One of the biggest shifts is bumping that threshold from $50 million to $100 million. Who does that help? And what kind of burden does it remove?

Zach Prince So just as a bit of background, the cost accounting standards are accounting rules that apply to certain contractors, contractors that have contracts over size thresholds when otherwise exemptions don’t apply. They were imposed starting in the late ’60s, an effort spearheaded by the late Admiral Rickover and this I think mistaken belief that contractors were using accounting practices to get something over on the taxpayer. And so all these rules mostly came into effect in the ’70s and have stayed essentially the exact same since then, with some slight tweaks around the edges. But they deviate substantially from the accounting practices that most companies would otherwise have implemented. So they require really sweeping shifts in the way that you do a lot of your basic accounting as a company, and they apply on a contract by contract basis. So you might only have one or two contracts that are subject to CAS as opposed to your general gap rules. But because it’s very challenging to have two different sets of books and records, you might just have to implement these very annoying onerous rules across your entire organization, at least across your segment. I don’t want to go too far into the weeds. There’s a lot of complication here. It’s a burden and It doesn’t apply to small businesses, but it does apply to quite a lot of companies that would have large government contracts. And companies don’t want to trigger the threshold that gets them into CAS-covered contract performance because of the burden.

Terry Gerton And so by raising it to a $100 million, more folks will not have to worry about that conversion, right?

Zach Prince Yeah, that’s right. But the — I’d say the bigger item here that’s kind of buried, and if you look at the congressional report that they issued from the conference, it kind of ignores this, even though I think it’s a much bigger deal. It raises the exemption floor. So there are two different types of CAS coverage. There’s modified CAS coverage and there’s full CAS coverage. The full is the much more onerous one, but a contract is entirely exempt from CAS, full and modified if it’s below certain dollar threshold. So the $100 million, formerly $50 million, that’s for full CAS. But a contract is totally exempt from CAS no matter what under the previous rules, if it was below $2 million or $2.5 Million, with the threshold changed. Now they’re raising that to $35 million. So huge, huge difference. And it makes a difference not just for modified CAS, but also for full CAS, because full CAS coverage is triggered by either a single contract of $100 million or greater, or net $100 million in the prior cost accounting period. So if you had $200 million in contracts in the prior year, none of which exceeded $35 million under this new regime, you still are not going to have a contract subject to full CAS. So I don’t know what the numbers exactly are in terms of impacted contractors, but I have to imagine that this is gonna exempt. A whole slew of contracts that previously would have been subject to CAS.

Terry Gerton I’m speaking with Zach Prince. He’s a partner at Haynes Boone. So some people may be wiping their brow and thinking they’re gonna get a reprieve here. But Congress has asked for a report on how many of these changes are gonna play out. What would success look like? What do you think they’re hoping the impact of some of these changes will be?

Zach Prince So I think that they’re hoping this is going to spur greater investment, particularly by successful commercial technology companies and by successful investors in the defense space and particularly cutting edge defense tech. If you look at the multi-year appropriation provisions that are part of this NDAA, I mean they touch on some of the really interesting and important areas for advancement, like material composition issues, hypersonics, things along those lines, autonomous programs of various sorts, that we really are concerned that we could lose an edge to competitors overseas and that there needs to be substantial private sector money to go into because there needs to be huge scientific breakthroughs and that stuff’s costly.

Terry Gerton Tell us a little bit more about the multi year provision because you mentioned up front that companies are reluctant to invest if they’re gonna be on an annual appropriation cycle.

Zach Prince Yeah, and we’ll see how some of this plays out. But I think we all are familiar with major defense programs over the years that have been abruptly cut back for various reasons. But if you look at the Zumwalt class destroyer, for example, where there was a huge buy that was initially authorized and that was then cut back, which of course means that suddenly the R and D costs that were distributed over, say 20 ships, are now bunched into three or four. And now the program looks like it costs way more than initially was planned on a ship by ship basis, which technically is true, but is not really true overall and it results in scrutiny and program cancelation. So yeah, I think from my experience talking to folks in the private sector, they hear about programs like that where there’ve been huge investments that things are then abruptly cut, and they don’t want to get involved in the ecosystem that has those problems. And they know that, especially recently, when we’ve got CR after CR, you can’t rely on Congress necessarily to provide funding in a timely fashion, even for pretty important programs.

Terry Gerton There’s another newsy bit in here. You and I talk quite a bit about contract protests. There’s a provision that allows DoD to withhold payments during protests. Spin that out for us a bit.

Zach Prince Yeah, this is one that I’ve been watching pretty closely for a while, and we’ll see how it plays out, but there’s been a concern I continue to maintain that this concern is not supported by the data, but concern that incumbent contractors will protest at GAO, which has a mandatory stay that kicks in, in order to take advantage of a bridge contract that might be issued. Then the government says, Okay, well, you’ve lost the contract, but you’re still doing the work, we need the work to continue. We can’t go ahead and override the stay without some scrutiny. So we’ll just give you a 100-day bridge contract while this plays out. You’ll get whatever revenues you’re gonna get from that period, and continue. You know, I do think that this is a non-issue. it ignores the fact that protests are very expensive. The revenues you might get over a 100-day period are really not particularly significant in the grand scheme of things, especially when you’re irritating your customer. The data don’t show that this is abused very much, other than the idea that incumbents do protest more, but they also win more, which suggests that they’re in a better position to know when their problems in a procurement. But set all that aside, DOD in prior years has said, Well, Congress, we can’t require disgorgement of profits for these bridge contracts, which is what Congress had considered before as something that might remedy the situation because we don’t track the data. How do you calculate what a profit is for this period of time? So in response, Congress has come back and said, okay, so we’re just going to authorize contracting officers to withhold payments, period, under these bridge contracts up to 5 percent of total amounts that would be owed, and that those amounts up to that 5 percent threshold, which I think they established because it’s a rough order of magnitude of what profits might be, that could be deemed forfeit if there’s a decision ultimately that the protest lacked any legal or factual basis. So there are a lot of terms here that are gonna need careful definition and a lot of uncertainty of who’s implementing this, how you’ll challenge it, where you’ll challenge it. I mean, I think that this is a can of worms to address a problem that’s not real, but nonetheless, this is this is what Congress ended up doing.

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Interview transcript

Terry Gerton Deloitte’s got a new report out that suggests that inefficiencies and mission support functions are diverting resources from war fighting. Can you start by walking us through the central argument there? How do you connect those dots?

Tom Muir Sure, it’s a great topic, and certainly one that’s timely, not just for the Department of War, but other federal agencies. We think we’re at a unique point in time for government agencies, particularly with artificial intelligence, machine learning, an empowered and upskilled workforce to deliver on the promise of back office services. We won’t call them back office services in this report. We call them mission support services. Because at least when they’re the Department of War, Department of Defense, it is absolutely critical that they make the most of their budget and their priorities to focus on the mission of the department and the priorities to meet the national defense strategy and to enable our national security. We think we have a unique period of time for the department to deliver at speed and scale. They’re doing this in their mission. Secretary Hegseth talked about this about a week ago about acquisition transformation. And they can do that, take that same approach to mission support services that enable the mission of war fighters, improves readiness, enables the department to do their mission, and from an employee perspective, improves the ability of employees to leverage new technologies to deliver on their tasks in support of the mission.

Terry Gerton So you and I both spent some time wandering the halls of the Pentagon on the OSD stack. Many enterprise reform efforts have failed or come up short when it comes to being deployed in DOD. Talk us through some of the cultural difficulties and the organizational difficulties in doing this kind of reform.

Tom Muir Well, as you and your listeners know well, the department is budgeted and funded through appropriations under Title X, right? Military departments are funded to drive the performance of their military departments aligned with Department of War, Department of Defense priorities and national defense strategy. So part of the budget process would argue against this, but in order for them to achieve the efficiencies and effectiveness that the department needs to drive its mission capabilities, there’s a consolidation that’s critical for them to achieve that speed and skill we talked about earlier. We think that this is a unique opportunity because for the first time in, at least in my experience working in the Pentagon and agency supporting the Pentagon, they have a number of private sector leaders that are present in key leadership positions across the Department of War and Department of Defense that this be this is second nature to them. Improving performance, delivering on customer experience, reducing costs, recapitalization and empowering and upskilling the workforce is what they have done in private sector. And they’re bringing that same experience and insights to their government positions now inside the Pentagon. So we think because of technology, leadership and the current environment of cost savings and delivery on mission, this is the right time to have this conversation.

Terry Gerton People have said for years that Fortune 100 global companies can do this and are incentivized to do this, but the military operates under different constraints. So all of those private sector folks sometimes run up against some real obstacles in the military. What are some of the lessons that you think from the corporate world get that can realistically be applied inside DoD?

Tom Muir That’s a great point. You know, we cannot expect to apply all the lessons from private sector to the Department of Defense or Department of War. It’s just, it — particularly not carte blanche. It is a unique mission. It is critical to our national security. It is critical to our economic security globally. And so the Deloitte team has significant experience throughout the years working with Fortune 100 companies to stand up technology-driven multifunctional back offices. So this brings together HR, IT, finance, and acquisition of the four that we’ve specifically focused on in terms of our mission support services in this paper. And our work in private sector, we enable that consolidation, centralization, and mission focus of these cross-functional teams. Many agencies in private sector or companies in private sector call this a global business service. We tend to refer to it in Deloitte as sort of a center office concept, not a back office, because these offices and functions are critical to the mission of the performance of government agencies. For the private sector, we call them business units. Critical in the performance of business units, lowering cost, driving efficiencies, delivering on profit and loss statements to enable shareholder interest. In government, we think it’s more critical. It’s delivering on mission. This is not just about cost effectiveness and performance and efficiencies, it’s delivering on mission.

Terry Gerton I’m speaking with Tom Muir, he’s a specialist executive with Deloitte. So Tom, one of the big recommendations in your report is that all of this can be AI enabled, taking an AI-first approach. Talk us through how that would work. Is that sort of a way to bridge what kind of have been long running cultural differences between the services and the DOD staff? And what safeguards need to be in place if you’re going to deploy AI in a defense sector?

Tom Muir That’s a great question. You know, the Department of Defense is accelerating the adoption of advanced AI right now and machine learning in support of military capabilities to address their national security challenges. That same approach applies for these functional areas of HR, IT, finance, and contracting. Many of us employ AI routinely in our daily lives, and the workforce ought to be able to employ AI in their workforce lives to deliver on mission. We think AI can immediately apply to a wide range of DoD missions. But when we think about AI to improve audit readiness, right? The Department of Defense is under a statutory requirement to get a clean audit by December of 2028. And the Department truthfully has struggled with that remediation projects over the previous years. There’s a unique ability right now with the technologies available in AI and machine learning to drive that audit readiness, audit remediation, enterprise data management, acquisition of common goods and services at a lower cost point, at greater efficiency and greater performance. There’s an ability for them to gain significant momentum in some of these projects that they’ve already undertaken and pilots that they have advanced for the use of AI and ML technologies and deliver those tools to their workforce and upskill this workforce to use those tools to deliver better performance. We think we’re at a unique point, rather, for our agencies to do this within the Department of Defense, within the Pentagon.

Terry Gerton So Tom, I looked at the back of the report and there’s a ‘what DOD can do today’ page and I thought we could have pulled this from 1990 or 2000 or 2010 or 2020. What makes today’s environment different where Deloitte thinks that this is actually achievable?

Tom Muir The delight team has taken this approach, particularly with the Department of War, Department of Defense, because we think it’s based on three things. The first is, it is a tech forward approach to solving some of these pervasive problems that you and I just talked about, Terry, that have been very difficult for government agencies to move forward over decades. Right? We’ve done a bunch of shared services initiatives that have not gotten the department very far, not just the Department of War, Department of Defense, but other agencies as well across the federal government. We think there’s a second piece to this, and that is it’s a show not tell. We think there’s an ability for AI and ML to deliver to workers and workforce to not study the problem, but to demonstrate very rapidly in matters of weeks and months, not six months to a year, and implement technologies and, as you mentioned earlier, safeguard those technologies, right? There’s a cybersecurity discussion and an ethical use of AI discussion to this to this challenge. And we think the department is putting together policies that do just that. And the third piece is focus on outcomes, not processes, not business processes, but transforming business processes to deliver outcomes for the war fighter in the Department of Defense, Department of War’s discussions. But for other agencies, it’s deliver outcomes for their departments, agencies and bureaus. In business, it’d be deliver, you know, outcomes for the business units and profit and loss statements. That same discussion applies just to the bureaus and the agencies across the federal government.

Terry Gerton So let’s assume that DoD takes Deloitte’s recommendations and moves out on them and implements them. Five or 10 years down the road, what would look different and how would you measure or demonstrate that the efficiencies have actually improved readiness?

Tom Muir The great question. You know, in our minds, at least as we discuss this amongst our teams and as we share this with our clients in the Pentagon and in other federal agencies, we think looking back, right, 10 years from now, what does success look like? We think success is a consolidated mission support focused organization that delivers and manages standardized processes at speed and scale, leveraging technology to upskill the workforce, to allow them to live, to focus on cost and performance. We think when you look at the memorandums and the guidance that has come out recently from the Pentagon about recapitalization of the workforce, about acquisition transformation, it’s about delivery of the skill necessary to defend our nation, to deter threats and defeat them if necessary. We think that that’s critical when you look back, you know, from where we are today to that journey that they’re gonna undertake. And they’ve already taken many actions that’ve already begun. As you and I, who both worked in the Pentagon together, many of these actions are already in place. It’s just a matter of bringing that capacity and a consolidated, multifunctional mission support organization that allows them to deliver on the mission of supporting war fighters more effectively, more efficiently, at higher performance and lower cost. And then those cost savings can be put into critical capabilities necessary for war fighters at the front lines.

Terry Gerton How much of this can DoD do on its own without asking permission from Congress and how much does Congress officially need to support?

Tom Muir I believe that the Department has had an ongoing conversation with Congress, you know, particularly the oversight committees, both the HASC and the SASC in particular, and the appropriations committees on their outcomes that they’re looking to achieve by their transformation plans. We saw the first one just brought forward by the secretary of war last week. Secretary Hegseth discussed where he thought the department needed to move with acquisition transformation. I think we’re starting to see more of those in terms of direct report program portfolio management offices and how the department is tackling some of these large national security challenges. That dialog is ongoing. I think the department can do all of this within its budget and take that budget and put it back towards war fighting missions, right? The cost savings that come from this multifunctional shared service delivery services in support of their mission can be put towards that frontline war fighting mission. So I think that this is savings to the department that they can then put against mission and delivery for war fighters.

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Interview transcript

Terry Gerton We’re gonna talk about military supply chain and logistics. A lot of defense leaders are still warning that supply chains are fragile despite some modernization, despite post pandemic recovery. From your perspective, how can AI play a role in building the resilience of those defense supply chains?

Jon Garrity I think AI plays a critical role. And the reason is that supply chains are intrinsically very complex. There’s a lot of information. It’s hard to grapple with all of it. You have end users who have some visibility into what they might have at a Ford supply point. And you’ve got the manufacturers who are receiving signals from higher level commands and from headquarters. And there’s a lot of latency between those different points of signal. And so AI presents an opportunity to effectively coordinate and orchestrate across that supply network, optimize decisions on everything from purchasing to stocking to mobilization, transportation, all different elements of supply chain logistics operations. So it really is a new paradigm the way that supply chain logistics can be orchestrated.

Terry Gerton The Defense Logistics Agency tells us that they’re now rounding dozens of AI models to monitor supplier risk and to forecast disruptions. When you think about the options out there, what do you think the most promising AI-driven approaches are to identifying vulnerabilities early and fixing them before they become problems?

Jon Garrity So a lot of the traditional approaches to using machine learning and supply chain applications come into things like demand forecasting or identifying patterns in the data. And obviously the zeitgeist now is all around large language models and how those can be applied. But the challenge is when you look at the initial attempts, you know, you’re focused on a very small set or subset of the logistics enterprise, which again could be demand forecasting, but that’s just a piece of the puzzle. And on the flip side, you have these very general models like a large language model that can answer very general questions in incredible ways. But they aren’t grounded in the realities of supply chain. They don’t have ways to reason over or optimize over such a large-scale system. So the the new opportunity and one we’re focused at with Tagup is building a world model, it’s called. So basically providing structure such that you can reason effectively over these large scale systems, right? What is the relationship between the receipt of materials and the the use of those materials, of transportation from a manufacturer and expiration of material downrange, right? Hard questions to reason about at scale for humans and even for legacy approaches. But now with these world models, you can effectively reason at that scale.

Terry Gerton We’re talking about supply chain here, but we’re also hearing from the Air Force and the Army who are investing heavily in AI-enabled predictive maintenance to cut down on downtime and improve readiness. How do predictive analytics, sort of like what you were just talking about, your world model and supply chain, how can that apply to traditional maintenance models?

Jon Garrity Yeah, very directly. So predicting a specific component failure on a specific asset is is very difficult, right? Even if you have it very well instrumented, it’s a hard problem. But it’s a useful demand signal. And certainly when you aggregate it over a fleet, you can get very high levels of accuracy and understanding, okay, in aggregate, how many replacement transmissions will we need for this program, right? As an example. And the reason is it’s it’s similar to you know picking stocks. It’s hard to pick the one stock that’s going to get you 100x returns. So you buy a portfolio and you’re going to have one that’s going to give you that high return. Similarly, if you have a fleet of vehicles or or a fleet of aircraft, you don’t know which one is going to have that catastrophic engine failure, but you know across the fleet that prediction that of that event will occur with some level of certainty, and that can inform upstream in the world model what decisions are being made. So, in short, it’s a very useful input to the overall optimization, but it’s just a piece of the puzzle.

Terry Gerton When you think about the array of military equipment, I mean everything from water filtration units to F-35s and aircraft carriers, how complicated is it to scale an AI model to cover that scope of inventory?

Jon Garrity Yeah, great question. The answer is that there are, regardless of what asset or platform you’re looking at, there’s a lot of commonality, right? They all have parts that are installed on them, the replacement parts, they have distribution around the world, they have certain patterns of utilization, maintenance requirements. So the world model can encode these basic rules that relate these elements and then can take the data that exists today. And I think that’s a big, big opportunity, right? When you look even at predictive maintenance, there’s so much data that exists in existing IT systems related to service requests, parts required, requisition, all kinds of things. And there’s a lot of signal in it. But to employ that signal effectively, you need to be able to provide that structure. And so in short, in spite of the scale, it actually is the strength for these AI models, because if you can apply that structure, the models can get better much faster because of the scale of the enterprise. So that’s that’s the opportunity with that scale.

Terry Gerton I’m speaking with John Garrity. He’s the founder of Tagup Inc. One more maintenance question just because maintenance is near and dear to my heart. Congress and DOD are pushing right to repair provisions to let service members fix their own equipment using digital manuals and 3-D printing. How do you see AI intersecting with that approach?

Jon Garrity In a couple of important ways, right? One we’re we’re looking at now is changing the way that you — so take 3-D printers as an example. Where do you put 3-D printers? Right. There are now platforms where they have 3-D printers and containers, that can be moved around the world. But where should you put those sources of supply, right? And so if you have data from maintainers as to what parts are required, you can ensure that, via an optimization, you locate the sources of supply, the advanced manufacturing, other capabilities close to the point of use. And so I think that’s one way that AI will improve the maintainer experience is making sure they have the tools and the parts that are necessary closer to the point of use and and basically ultimately reduce non-mission capable rates due to supply and and and maintenance.

Terry Gerton Okay, let’s take one step back from the military units themselves and talk about manufacturing capacity. Companies are using AI and advanced manufacturing to compress production timelines and reduce parts counts. How do you see these technologies then changing surge capacity, industrial base opportunities? Sort of, what’s next on the front there?

Jon Garrity And actually I think it is intimately tied in with military as the ultimate customer, right? What’s what’s critical is avoiding whiplash effect and having visibility upstream so that manufacturers have access to what demands are they and how can they be satisfied. And I think the opportunity is and it’s coming to play now where if you can track use of equipment, of parts at the tip of the spear, you know, downrange and provide visibility back to the manufacturers across the enterprise. Now the OEMs, the manufacturers, can understand how their equipment that they manufacture is being used, where it’s being used, where there are issues, and that can inform their investments. if you could — right now the purchasing for these programs is done in the current fiscal year, right? There’s not visibility over many years into the future. That’s a huge lost opportunity, both for negotiating better prices with the manufacturing base, but also ensuring that the capacity exists into the future. So I think that’s one of the most exciting opportunities for these sorts of systems at scale is giving visibility to the manufacturers as to what are the demands in out years.

Terry Gerton And that seems to take us right back to where we started, which was with supply chains and making sure that not only the military supply chain, but the commercial supply chain stays safe, secure, predictable.

Jon Garrity [The] most interesting applications in my view of these new AI systems is the ability to identify systematically what links in the supply chain provide the most risk against readiness or other operational requirements. And so you can be very systematic in identifying, okay, how can we store up capacity or ensure that we have redundancy and supply to avoid getting just hammered on our readiness rates. And I think that’s one of the, again, the ultimate aim, in my view, from these sorts of systems is to be able to tie tactical use of the end users, aggregated at its scale, and provide that visibility and signal back to the industrial base all the way back to the supply chain. And by doing that, we can strip out a lot of the inefficiency in the system and drive higher quality service to the end customer.

Terry Gerton Real time decision making inside the system that you just described has always been sort of the holy grail of military logistics. As you think about the future of integrating AI into each of those pieces and parts, are there any concerns that you have about the cultural obstacles or individual training obstacles that might make it difficult to optimize the value?

Jon Garrity I think there’s been — it’s certainly a paradigm shift in sort of the user experience, right? So yeah, I’m sure you’ve long, history and experience, Terry, in military logistics and and in the private sector too. You know, ERP systems have been with us for many years, right? Enterprise resource planning systems, they track what we have and where we have them. And you know, you have to know a lot of different codes and keyboard shortcuts to be able to efficiently navigate these systems and then ultimately, you know, you put those into reports that you can summarize up to your commanding officers. And what’s changing now is that, as you’ve maybe seen with ChatGPT related technologies, now you can you can just ask questions directly and get answers. The challenge of course, operationalizing those for defense applications and supply chain is grounding it in the reality of the situation, making sure you you’re not hallucinating, right? You can’t just ask chat GPT for docking policies. So there there is risk that needs to be mitigated to make sure, and that’s something we provide explicitly by providing that structure in the world model that you can make sure that the answers you’re getting, the COAs that are recommended are grounded in reality. But I do think there’s going to be a bit of a learning curve that I think will be tempered by the fact that a lot of people are using large language models now. There’s a familiarity in private use with these sorts of technologies. I think in many ways it will be a more intuitive user experience, but it will be a transition from the historical way of interacting with IT systems and log IT systems specifically.

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Terry Gerton You’ve got some new guidance out that says procurement is where AI’s potential becomes reality. Talk to us about what you mean there and why the buying process is so critical to make sure that we have successful AI adoption in government.

Kathrin Frauscher Absolutely, and what a great question. Thank you so much. We really think that flexible and responsible procurement will make AI work for the public. So if you care that artificial intelligence delivers for your government workforce or for the residents that you serve, it really matters that you pay attention how you purchase AI and how you implement AI.

Terry Gerton Tell me more about flexible procurement practices. What are you suggesting?

Kathrin Frauscher What I’m suggesting is using a non-technical term to mean that you can adjust your procurement processes to what you’re buying, that you can make them short and quick, so that they work for your specific purpose. Experts sometimes call that agile, but I think we in the normal world just would call it flexible.

Terry Gerton And why is the speed piece of that so important?

Kathrin Frauscher Speed matters because procurement has the reputation, but also indeed often is rather slow and bureaucratic. But technology moves fast. So if you want something, you know, quickly or something that can remain adaptable to your environment, you need to make sure that your purchasing methods and vehicles are equally fast and flexible.

Terry Gerton Well, speed comes into play in another aspect of this because there’s a lot of hype maybe and a lot of attention around building custom AI solutions, but that is not fast. And your research shows that most agencies want to buy off the shelf tools. So talk to us about what that might mean then for the procurement teams and the processes.

Kathrin Frauscher Yeah, I would love to. That was actually one of the big surprises. We did this research project for about a year. And when we went into it, we also expected that we would find out that there are a lot of custom products out there, a lot of what they call requests for proposals, where you really take time to buy the technology that you need for a specific purpose. What we found out is that most people buy technology through existing platforms, vehicles at the central level. So that changes the game of how both I get my AI technology, but also what I need to pay attention to along the way.

Terry Gerton One of the reasons that a traditional procurement process is so slow is because it’s pretty risk averse. And there are a lot of risks associated with AI, we hear about them all the time, bias, hallucination, all kinds of things. So how can leaders, especially procurement leaders, then, balance caution and risk aversion with the need to move quickly to make sure that they’re getting current AI technology?

Kathrin Frauscher Absolutely, you said it there yourself. I think the key word is balance. You have to balance caution and urgency. I like to say you … can’t move too slow so that you’re missing out on things, but you can’t move too fast so that you’re not ready. So it’s all about the balance of being fast enough so that you get what you need, but slow enough so that you’re ready.

Terry Gerton Is there a governance role involved in that and what would you suggest?

Kathrin Frauscher Absolutely. One of the things that our research found is that being AI ready and having the needed governance frameworks is one of the most important things that governments can do. And a good governance framework is clear, you know, it’s written in plain language. It balances this level of risk of being fast but also being prepared. And then I would say the key thing is to train your people on those frameworks. So don’t just have it on a piece of paper, but make sure that people know how to use it.

Terry Gerton We’re talking specifically about buying AI tools, but what about using AI tools in the process of buying AI tools?

Kathrin Frauscher Absolutely. We see an equal hype about that than we see about everything around AI. We also see a similar trend that honestly for now a lot of the use cases are still pretty boring, I would say, you know, in terms of, help me write an RFP, help me work faster but don’t make the decisions. But as I like to tell my kids, you know, boring things are very important too. So we are paying attention to how that is unfolding and how governments again can get the best use of AI while making sure it delivers the best outcomes for their residents.

Terry Gerton I’m speaking with Kathrin Frauscher. She’s deputy executive director at the Open Contracting Partnership. Kathrin, one of the things that you also talk about is that the procurement, the IT, and the project teams often struggle to work together, especially when it comes to AI procurement. What recommendations do you have to improve that relationship?

Kathrin Frauscher Yeah, great question. We really think procurement is a team sport and you need an extra strong team when you’re purchasing AI technology. So the biggest advice is to come together early throughout the process and make sure that all of you are AI ready.

Terry Gerton What does AI ready mean to you in that sense?

Kathrin Frauscher Yes, one of the biggest requests that we actually got from our procurement partners was, we want to learn more about AI. We don’t think we know enough yet to make good purchasing decisions. And I think that is true for many government officials.

Terry Gerton The general services administration is trying to centralize some of this. Do you feel like they’re doing a good job in defining AI and what the tools might be for the procurement and IT teams to be able to use?

Kathrin Frauscher Yeah, they are following a trend. centralized purchasing of AI is definitely something that we see around the world. It has the advantage of giving you speed and standards. What you need to pay attention to is that the implementation and the use is still effective and adapted to each agency and that each agency has the capacity to use AI well.

Terry Gerton Well, speaking about not knowing enough about AI, one of the other issues that has come to light is vendors sometimes exaggerate a little bit about what their AI products can do. So if you were coaching procurement teams around this, what sort of questions should they be asking to kind of cut through the hype there and make sure they’re getting real value that they understand what they’re buying?

Kathrin Frauscher Absolutely. We have some great questions for that in our guide. And I think one — the main thing I would ask my vendor counterpart to do is show me where you have done it successfully. Let me try first. So we are big believers in prototypes, demonstrations. Sometimes they have fun names like “bake offs” because if you see it work, then you know that it might help you better.

Terry Gerton Tell us more about the specifics in your guide.

Kathrin Frauscher The guide. Yeah. The guide is really driven by many, many questions we got from governments around the world, especially procurement teams, that said we have this need to buy AI, you know, sometimes because we are curious, because we need it, or because we’re being told to buy it. But how do we do it well? How do we do it in such a way that it serves our government workforce and maybe most importantly our residents and our citizens? So that’s really what the guide is about. It starts with telling procurement officers, procurement directors, the foundations about AI, because like I said before, they really wanted to learn more about that. And then how you can be a good team player, what we already also talked about. How can procurement have this role of bringing everyone together so that they can align around the goals and the use cases, the terms, the payments and what you’re getting.

Terry Gerton It’s got some really interesting scenarios I think in there that walk people through the process. Tell us maybe about one of those.

Kathrin Frauscher Yeah, absolutely. So we have these pathways because it does depend on what you’re trying to achieve with your technology, but also what purchasing vehicles are available to you, right? We sometimes like to think, if you think about it like a car, right? Oh today, I need, you know, the minivan or my small car or the bus, but in reality procurement teams are often being told you have to use the bus. So we also have in the guide some hacks that if you use the bus but you actually wanted to use a Jeep, what you can still do to get there?

Terry Gerton It sounds like folks will find something in there that relates in some way to every situation that they’re facing.

Kathrin Frauscher We hope so. We really wanted to make it practical and not, you know, a theoretical piece of work.

Terry Gerton So Kathrin, we’re really just at the dawn of folks buying AI for government application. If you transport yourself five years down the road, what do you think will be different and what do you think the lessons learned at that point will be?

Kathrin Frauscher Yes, great question. Honestly, I think we don’t know what it will be like in five years from now. I think AI is changing and evolving at a speed that we haven’t seen that often before. But I think that also means that your procurement process needs to be ready to evolve and like we said in the very beginning, it needs to be flexible so that if AI evolves, you can still get what you need and you’re not stuck with something from two or three years ago.

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Interview transcript:

Terry Gerton We’re going to talk about a recent GAO report that’s certainly timely. The use of the Department of Homeland Security and Custom and Border Protection’s use of soft-sided facilities for joint processing centers. Tell us a little bit more about the situation and what motivated GAO’s assessment of how this process is going.

Travis Masters Well, Terry, as you probably are aware, most of our reviews are initiated at the request of Congress. And so in this case that was the case. The Homeland Security Committees in both the House and the Senate requested that we take a look at DHS’s contracting and use of soft-sided facilities at the southwest border for holding apprehended individuals and processing them. In the 2019 to 2024 time frame, the number of individuals at the border that were apprehended increased over that time frame from about 850,000 individuals in 2019 to a peak in 2022 of about 2 million individuals. That’s a lot of people. CBP’s facilities were dealing with overcrowding issues, and so they put these temporary, tent-like structures known as soft-sided facilities up to help alleviate that. There was a lot of money associated with that as well. The cost for the facilities went from $170 million in 2019 to $1.4 billion dollars in 2024. So given the numbers of individuals and the size of the cost, Congress was interested in having us take a look at how those contracts were being were being managed and the facilities were being run.

Terry Gerton In the course of this assessment, your team visited multiple sites. You went onsite to see what was happening. What were the most significant findings about how CBP planned for and provided oversight of these facilities?

Travis Masters We visited four facilities. At the time of our review, CBP had seven total soft-sided facilities along the southwest border. We visited four of those. And we looked at eight contracts out of the 69 they had for those. The primary takeaway for us in all of that was that there were areas where CBP could have done a little bit better with regard to analysis and planning for requirements for those facilities, with regard to numbers of personnel needed for certain functions. For instance — porters, who are folks that move individuals’ possessions around within the facility and other items within those facilities. As part of our review, we pointed out that they had, in some cases, too many individuals in a facility and in other cases, too few. And they didn’t really have a staffing model methodology for helping with those fluctuations. And in fact, during our review, our questions about that actually prompted CBP to go back and revisit that, which resulted in a real-time savings: $2.7 million per month between August 2024 to March of 2025, for about a savings of $18 million. So, you know, things of that nature. It was about doing better planning and having better analysis that was really kind of the broad takeaway for us.

Terry Gerton Simultaneous to your report, DHS received millions of dollars to construct additional hard-sided or permanent facilities. What did you find about the cost effectiveness of the temporary structures compared to permanent joint processing centers?

Travis Masters The permanent facilities don’t exist yet. DHS is in the process of building the first one in Laredo. They received just over $300 million from the Congress in 2022 to build this permanent facility. What we found was similar in that sense, that the analysis and planning up front for choosing where that facility might go, how big that facility might be, lacked in some areas regarding requirements and cost estimating. They made a decision to put the facility in Laredo; they didn’t really document clearly the rationale or the criteria for why that was the location selected versus other locations. And they didn’t have a comprehensive cost estimate in place before that. And so again, it really boils down for us to just doing good upfront homework to make sure that you understand that the investment you’re making is well-informed and that it’s the most efficient investment and effective one possible, which again requires you to understand the requirements and things of that nature. So in that sense they were similar. They both JPC and the soft-sided facilities needed some additional study up front.

Terry Gerton I’m speaking with Travis Masters, he’s a director for contracting and national security acquisitions at GAO. In the course of this assessment, GAO made six recommendations documenting lessons learned, focusing on those lifecycle cost estimates. Which of these do you see as the most important for DHS to act on right away?

Travis Masters I think the lessons learned aspect, conducting the analysis necessary to kind of inform future decisions, is probably the biggest. We made some other recommendations as well, regarding oversight of the contract and training of contract oversight officials, which are also important. But the lessons learned piece and the study and analysis piece regarding the joint processing center, I think are the keys. In March of 2025, CBP closed the soft-sided facilities that it had. The number of apprehensions went down, the soft-sided facility contracts were not extended. And so CBP kind of has an opportunity right now — now that there’s sort of a lull in the in the number of individuals being apprehended — to take some time to think forward about, how would they plan for and react when numbers increase again? Because history shows us that the numbers do increase and decrease over time, and it’s likely that the numbers will increase again at some point in the future. So we see that as really a target of opportunity for CBP to take some time to retrospectively look and document lessons learned so they can prepare for the future.

Terry Gerton That’s a great point. DHS did concur with all of the recommendations, but you bring up an important point about capacity. Do they have the capacity and the skill sets to do this cost analysis, to do this planning? What would it take for DHS and CBP to really fully implement your recommendations?

Travis Masters Well, just simply assigning the people to do the work, having an organization within DHS to take a look at the numbers historically, the contracts that were in place at the time, the data, very similar to the information that we collected and analyzed for our report. And then taking some time to sit down and look at — there are a number of best-practice documents. GAO has best practices, for instance, for analysis of alternatives that we cite in the report that could help DHS as it plans for its joint processing center investments, figuring out what’s the best alternative, cost-effective wise or requirements-wise. And so just taking some time to sit down and actually do the analysis, and then we’d like them to document that. I think it’s important to document those lessons, not just simply have them in some individual’s head or maybe in a collective group of heads, but have it on paper for you know, for the future individuals that will have to make those decisions as well, so that it’s memorialized.

Terry Gerton DHS has other detention functions across other portions of its organization. Do you see a cross-fertilization of this skill set and making sure that they’re considering the same factors as they’re planning for other detention facilities?

Travis Masters Absolutely. I mean I think these are just general, basic, good analysis, good informed decision-making kinds of things that would apply regardless of the organization. Our report was focused on CBP specifically, but as you know and others know, ICE also has detention facilities that it manages and contracts for, and I think that these same principles, these same ideas are applicable to them as well.

The post With billions spent on temporary border facilities, GAO says DHS needs better plans first appeared on Federal News Network.

Interview transcript: 

Terry Gerton You’ve reported on an incident that happened just before Thanksgiving, when the Justice Department demanded a massive collection of data from U.S. attorneys. Tell us what they were asking for and why they got such a short deadline to provide it.

Ben Penn Yes, so the Deputy Attorney General’s office on the Monday before Thanksgiving asked all 93 U.S. attorneys’ offices for a collection of basically data points, samples of all the cases that they’re working on that show progress on a variety of White House directives and memos from the political leadership of the Department of Justice. And this was basically, it’s not all that abnormal to do something like this, which is called a data call, for the DOJ headquarters in Washington to seek statistics and basically hold the U.S. attorney’s offices feed to the fire and show them and give them specific data points that demonstrate progress on some of the prior year’s policy priorities. But this one did come across as a little bit grueling given the timing with such short turnaround. They were all told they had only two days before to turn around the data and respond by the Wednesday night before Thanksgiving, and just the sheer volume of all the data and stats that was being asked for. I did hear from folks that that was a little bit noteworthy, but overall, I think what’s interesting here is the request serves as a snapshot, it’s sort of a window into, what are the policy buckets that enforcement, in particular, that this administration is most keen to provide examples of to show the White House that it’s fulfilling its objectives.

Terry Gerton So you sound like there’s two conflicting thoughts there. One is, this is a normal end-of-year data call to get a comprehensive perspective of all the work that DOJ has done over the past year and yet they really had about a 72-hour timeline to do it. Did somebody forget to send the email three weeks earlier, or what’s going on there?

Ben Penn I don’t have any insight there. I will say that it could simply be, we could speculate as to whether the White House, given all that’s been going on this year, with the White House moving DOJ’s agenda closer to its own, if it came from the White House asking to, maybe expressing frustration about, why aren’t there more cases, for instance, on lawsuits against sanctuary city jurisdictions, or, where are political violence cases pursuant to an EO, or executive order that Trump put out after Charlie Kirk was murdered? But we don’t know for sure, and it is possible that this is just, that to be a U.S. attorney is not an easy job and having a tight deadline may just be part of the process.

Terry Gerton You mentioned a couple of specific situations there that they were looking for data on. Tell us more about the investigation of organized political violence after Charlie Kirk’s murder.

Ben Penn Yeah, so in September and shortly after Kirk was assassinated, there was a, it was, I called it an EO earlier, it was actually technically a presidential memorandum that came out and instructed the Attorney General Pam Bondi to basically ensure that there were cases that were being brought that specifically looked at organized political violence and domestic terrorism issues that have been priorities of the department in the past, but specifically in this case it seemed to direct request for information about left-leaning groups and funding sources like the George Soros’ Open Society Foundation, and to look at Antifa and to try to investigate all the possible sources of organized political violence. So that was one of them. There was also a request for information on open cases that had a nexus to cartels or transnational criminal organizations, which stemmed from an Attorney General Pam Bondi memo back in February. There’s also requests for all cases that are all examples of dismissals or cases that were closed in the aftermath of Deputy Attorney General Todd Blanche’s memo earlier this year that called for basically scaleback enforcement of the cryptocurrency industry. Those are just some examples.

Terry Gerton I’m speaking with Ben Penn. He’s a senior reporter at Bloomberg Law. So what are the kinds of documents that DOJ should be expecting to get back from this data call?

Ben Penn Yeah, well presumably, assuming all 93 U.S. attorneys’ offices were in compliance with the deadline, they have basically, I would say it’s both numerical and there are probably narrative examples of the types of cases that the department is in the midst of pursuing into cartels or into foreign terrorist organizations. So, but you would also see counts of say, all the U.S. attorneys’ offices combined have brought, say, the X number of lawsuits against sanctuary jurisdictions, or have brought X number of cases under, there was a specific request, for instance, to show the number of cases, criminal prosecutions of adults who sponsored unaccompanied migrant children. That was another recent policy from the Deputy Attorney General asking U.S. attorney’s offices to take a harder stance on looking for any crimes that an adult sponsor of an unaccompanied migrant child may have committed. So they’re looking to tally up all the examples that show how the extent to which the U.S. attorneys’ offices are implementing what the administration wants them to be doing.

Terry Gerton Given now that the data call itself is public knowledge, what would you expect to happen with the data as it’s collected? Will that also be public, do you think? Or will lawmakers want access to it, and what conclusions will people draw?

Ben Penn I would love to provide some transparency into this, Terry. Unfortunately, I would not expect it unless anybody would like to disclose the results to me or to any other member of Congress or reporter. But the existence of this request was an internal email that I obtained. And I believe, it is, at the same time, I could see if the Attorney General, Deputy Attorney General are pleased with the results, you could see them highlighting it in an end-of-year summary of success that we’ve had in enforcing the president’s priorities. That’s something that you would see, but there is no obligation for them to show their work, if you will.

Terry Gerton And might Congress be interested in it as a matter of oversight?

Ben Penn Yeah, I could certainly see that, whether both supporters or critics of this administration would have an interest in knowing the extent of enforcement into political violence, into sanctuary jurisdictions, into cryptocurrency industry. That’s all information that you could expect in an oversight request. Or, subject to the next time one of the senior DOJ officials is testifying on the Hill, we could see questions along those lines. So I’m all about transparency. I would love to see as much robust data that shows what came of this request as possible.

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Interview transcript: 

Terry Gerton I want to talk with you about the Equal Employment Opportunity Commission. They were pretty quiet during the shutdown, but they’ve got a full quorum now. They haven’t had that in a while. And they’ve got funding. You work with them quite a bit. What do you think is going to change in the near term?

Debra Leder I think we’re going to see a lot of changes, at least over the next several weeks, until there might be another issue with funding down the road. But I think that we can expect the EEOC to come out of the gate running to accomplish some of these tasks that they have been anxious about doing since the current administration took hold in January of 2025. And so although there’s now a new member who makes the quorum for the EEOC Commission, the now chair who was acting chair and previously commissioner, I think has made the priorities well known. And now that there is a quorum, the agency will actually be able to take official action and vote. Things of those nature will make a big difference.

Terry Gerton So talk us through the priorities of the EEOC under this administration and maybe where there are major differences from the prior administration.

Debra Leder So, we are going to see a lot of realignment and adjustment of where the EEOC focuses its attention and its resources. Some of the big ticket items for the new EEOC commission is to align the agency’s policies with the executive orders that were issued, several of the executive orders which were issued in January of 2025 and forward. Those issues including the ferreting out DEI that may be counter to the law in the EEOC’s view, as well as the pregnant workers’ protection regulations in the EEOC’s view, maybe going too far from what Congress passed as the protection act for that, and also to maybe roll back certain protections for certain previously thought to be protected categories, including those of the LGBTQ+ community in terms of sexual orientation and transgender status, gender identity type thing.

Terry Gerton  So those shifting priorities can come into play in a variety of ways. Do you anticipate more aggressive litigation on the part of the EEOC? Maybe just more policy memorandums? How do you think those priorities will actually be put into practice?

Debra Leder  I think in terms of priorities for the regulations, the rules that had been put out during the past administration, including the harassment guidance that was, I think, officially published in April of 2024, and the pregnant workers’ guidance, I think as a first measure or order of business, the EEOC is going to either do a wholesale retraction or an overhaul revision of both of those guidances, for sure. And in terms of litigation resources, we’ll be seeing more priority pattern in practice and systemic litigation, targeted perhaps in ways that it hasn’t been over the past few years, including to what the commission may view as illegal DEI initiatives that employers may have, and then also helping to clarify its view of what employers are obligated to do, especially in the area of religious accommodations and whether or not, and how, to balance religious accommodations versus other interests that are sometimes competing in the workplace.

Terry Gerton So would you anticipate the order of those activities being first publication and education and communication about these new priorities, or new angles on the rules and then moving to enforcement?

Debra Leder  I think the publication angle has already been well disseminated, even though the EEOC didn’t have a quorum. Now, Chair Andrea Lucas has been very vocal about what she sees as the driving priorities of the agency and in her speaking, as well as in the budget that was submitted in May of 2025 in terms of where they’re going to allocate the dollars to that. So I think the agency is already kind of gassed up and ready to go out of the station in terms of that. It’s just how long will it take to undo some of these regulations, given that there is a commenting period and they’re also subject to court challenge, as we’ve seen in the past several years. So knowing that that might not be as fast a process as the EEOC might hope, we’ll at least see a displacement of the disclaimer language and archived language we now currently see on the banner page for the EEOC, and it’s either work under construction or, stay tuned for new upcoming guidelines. But in the interim, I think we’ll see it in the way that the agency works on a day-to-day basis, how they accept charges, which charges they investigate fully, and which they may serve to litigate, and so that, as well as continuing to do the education and outreach to let the community know what their priorities are, what the EEOC is expecting to spend its resources and efforts on.

Terry Gerton  I’m speaking with Debra Leder. She’s a partner in labor and employment law at Akerman. Following on with that assessment of what the priorities are going to be and where you expect to see action, for the employers who deal with EEOC issues, what should they be doing in the near term to prepare for this change in focus from the EEOC?

Debra Leder Hopefully, employers have already been staying aware of, on top of the changing priorities, the realignment from the current administration. And so being insightful, those employers most likely have already started to review their policies, to review their websites, to review their hiring criteria, as well as how they handle compensation issues and to just make sure that the policies are going to be step-in-step alignment with what the EEOC and what the executive orders have asked for. But in terms of really getting up to speed, aside from continuing to monitor what regulations may be updated and not just formal guidance, but we may see more enforcement guidance or Q and A type format from the EEOC to help employers get up to speed on doing that. Employers need to make sure all of their documentation has been reviewed and is ready in the event of what might be a very broad, all encompassing request through the investigation stage of some of the EEOC’s priority issues. So to just buckle up and be ready for that ride.

Terry Gerton And so what will you be watching for as the EEOC really gets its feet under it and and moves out? Are there particular cases or activities that you think are going to be significant here in the short run?

Debra Leder Well, the significant cases are waiting to see how the EEOC is going to interpret, we kind of already know, but from the Bostock versus Clayton County case in terms of transgender, gender identity and sexual orientation protections and whether or not the EEOC is going to — we know the EEOC in their updated guidance on harassment is going to remove those types of protections. We already know that the EEOC, I believe, has not taken any additional charges or is not investigating charges that assert claims on those grounds, although there’s still private cause of action to get a right to sue to bring those issues to the forefront. But bringing it back to what employers can do, they need to continue to be mindful of what might be the federal policies that they’re seeing and how that might compete with state and local laws that are also a moving target on a day-to-day basis, or at least a week-to-week basis. So employers definitely have a challenging thing, but as a lawyer and as the co-editor of my HR Defense blog, which I have to put a pitch in for, we try to stay on top of all these issues and push out information that employers need to know.

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Interview transcript:

 

Terry Gerton Congratulations on being a newly elected fellow of the National Academy of Public Administration. What does that honor mean to you?

Jamie Morin Well gosh, the number of folks that I have admired over the years who are fellows of the Academy is pretty impressive. And so it was it was humbling, but really a wonderful recognition. I was I was deeply honored.

Terry Gerton Well, it reflects a lifetime of service. Tell us about what motivated you to begin public service in the first place.

Jamie Morin  I take it back to family influence, for one. I was raised with a really strong tradition of making the community stronger. My mother’s a school teacher, has worked with autistic children for most of her career, still working in that field. And both my parents just had a really strong commitment to the community. So it starts with that, right? And then for me I grew up in the late Cold War, and that built in me a really strong interest in national security. And so I was struck that a meaningful way to serve and to strengthen the nation was to work in a career in national security. And it’s been just enormously rewarding and fulfilling.

Terry Gerton As you think back across that career — you served in the Air Force, you served at DoD level. What stands out as one of your most meaningful accomplishments in the public administration space?

Jamie Morin Well, you said accomplishments, but let me start with a moment. You know, I guess this will sound hopelessly naive in these cynical days, but the first chance I had to take the oath to uphold the Constitution — when as a graduate student, I guess I was 22 or 23 years old, I was offered the chance to work in the Pentagon on requirements and plans — to be pulled into something much bigger than yourself, to be pulled into incredibly consequential matters, and to do it with a devotion to those principles in the Constitution. Just being in that moment as a young person was a tremendously shaping experience for me. So that that’s where I would have to start. I’ve probably taken that oath personally six or seven times since. I’ve administered it dozens of times. I had the privilege of presiding at a graduation ceremony from basic military training with hundreds of young people starting a career in military service. But you keep coming back to: We are offered an opportunity in this nation to uphold a constitution that’s bigger than any of us, bigger than the politics of the moment. And that that’s a great starting point. You know, to the accomplishments, I’ve worked mostly in resource management, in making smart decisions with the taxpayers’ money. Chief Financial Officer for the Air Force, Cost Assessment and Program Evaluation for the Department of Defense as a whole. So the biggest opportunities for impact in roles like that are when you can get something started on the right foot. And the things we do in national security, particularly in developing technology — it takes time. We’re trying to do really hard things. But I had the opportunity with both the Air Force and working for the Secretary of Defense to get a few really consequential and major programs started, thinking about the B-21 bomber for the Air Force, for example. It’d been a long time since the U.S. Air Force had been able to buy a bomber on something approaching planned cost and planned schedule. And it looks like we’re on a path to be pretty darn close to that on that program. And so that’s a tremendous thing to be able to look back and say, “hey, we’ve been working on this, it’s a big deal, billions of taxpayer dollars, critical to the success of the joint force. And I was able to have my fingers all over that at the outset.” So that’s a significant one. Moments of crisis. We’ve recently gone through a government shutdown. I had the challenge of operating through a few of those as Air Force CFO and working in OSD, and some close calls as well as actual shutdowns. Those are searing moments where leaders have to make tough decisions — again, with the Constitution first and foremost in our mind. Our system isn’t always perfect, but it is ours and it’s our responsibility to operate within it and to make it better. And then finally, I guess I would highlight people, in that the public service is an important calling. It demands things of people that are different than what we ask of people in the private sector. And because it’s sometimes hard for people to get their feet under them in the complexity of an organization like the Department of Defense or many of the other federal agencies, we have to make long-term investments in our people. So being able to be involved in hiring and developing talent and giving people an opportunity to really accomplish their potential and then to also send them forth to go do bigger and better things, whether in government or outside, those have been just tremendously rewarding for me.

Terry Gerton I’m speaking with Jamie Morin. He’s Vice President of Defense Strategic Space at the Aerospace Corporation and a newly elected fellow of the National Academy of Public Administration. Jamie, you told some great stories there, but early in that last response, you mentioned the oath of office and allegiance to the Constitution. You’ve seen in your service firsthand how trust in government can be tested in times of fiscal uncertainty and strategic transition, and we’re certainly in that right now. How do you view the current state of public administration and what can it do to help increase public trust in government?

Jamie Morin I think approaching public administration as an exercise in continuous improvement is really important. We have to always be willing to question the “how” of how we get things done. Take advantage of new technology, take advantage of new concepts and approaches. We have to do that, still, with an eye to the core principles, right? Public service is a public trust. We have to conduct ourselves in public administration in such a way that there is no question about the integrity with which people work and that they are doing things with the right ends in mind. We’re talking about a nation approaching its 250th birthday. So the timelines and the time horizon that the public administration has to think about is different than what we as individual humans have to think about, or what even, you know, long-lived companies have to think about. We have to take that long-term perspective for the betterment of the nation. But again, you’ve got to balance that with responsiveness to changing needs. The needs that the public administration meets in a time are shaped by the time. They’re shaped by the technology, they’re shaped by the psychology of the citizens, they’re shaped by the external environment that we operate in. So continuous improvement, willingness to adapt, but founded on those core principles of what government is about and the constitution we uphold. I think that’s the bottom line for me.

Terry Gerton Well, and you also mentioned the importance of people. If you were speaking to someone just starting out in public service, perhaps in defense analysis or budgeting, what advice would you give them about building a career that really makes a difference?

Jamie Morin I would start with coming in for the right reasons. Every once in a while I run into people who are entering public service with a plan to sort of hop, skip and jump their way through it. I’m not sure that’s the right approach. I think that there are certainly great opportunities for people to come and depart from government service and have careers that cross those boundaries. I think that’s very useful. But, you know, it really should be about the mission of the agency and the national interest, not so much the personal interest. So I find that people that come in with that perspective generally do better. If you’re thinking about, how can I accomplish things for the citizens, how can I deliver on the promises of government? Those people are more likely to both enjoy themselves and have a positive impact than those who are, you know, kind of climbing their way up a ladder. But the other piece I would suggest is that reputation matters. People’s ability to get things done in complex environments, whether big bureaucracies or just very difficult missions with lots of factors that have to come together. It depends on credibility. It depends on creativity. It depends on being seen as a team player. Someone who’s willing to make sacrifices to get the right things done. And that’s a hard-earned reputation — and it’s one that’s also easy to lose if you make bad choices. As someone who is an adjunct professor at Georgetown now and teaches students who are really interested in public service, these are conversations I have all the time. I encourage people to look at the career and I encourage them to look at it from a mission accomplishment perspective, because that’s how it’s going to be most rewarding for them and for the mission that they’re trying to actually support.

The post Jamie Morin helped shape defense strategy from inside the Pentagon. Now he’s being honored for his contributions to public service first appeared on Federal News Network.

Interview transcript:

 

Terry Gerton OASIS+ enters Phase II with five new service domains and draft scorecards expected December 16, ahead of a January 12 solicitation date. The expansion could reshape competition and compliance for federal contractors, especially small businesses. Stephanie Kostro, president of the Professional Services Council, is here to share her insights. We’re going to focus a little bit more than we usually do today on things that are happening in the small business world. So let’s start with December 4th. GSA announced the launch of the OASIS+ Phase II expansion. First of all, tell us what’s noteworthy there.

Stephanie Kostro This is long anticipated, Terry, and I will say thank you very much for focusing on small business today. It has been an area where a lot of our contracting friends have looked for guidance and information from the executive branch and from the legislative branch, to be honest, about where small business policy is going. And so thanks so much for raising this important issue area. OASIS+ has been in the works for so many years now, and there are hundreds, if not thousands, of vendors very interested in this expansion. And what I’ll tell you very quickly is Oasis+ had been eight domains or eight categories of services. It is now 13. And the five that they’ve added in this new tranche are very interesting. It is things like business administration, financial services, human capital, marketing and public relations, and social services. So this is a dramatic increase in the scope of Oasis+. It expands from eight domains, service domains to 13. And we have a lot of interest here in the contracting community about how they can support the executive branch through these new domains.

Terry Gerton Those new domains seem tailor made for small businesses. What are you hearing about how small business might be able to participate now?

Stephanie Kostro Again, it’s very exciting. It looks like the solicitations will be open here in January, mid-January of 2026. We’ll have to see what the actual words on the paper, if I can be that mundane about it, say about small business participation. But this is exactly the kinds of domains that small businesses excel. The marketing and PR, the human capital, financial services, etc., where they can partner with large companies in either in a joint venture or as a mentor-protege. So we’ll have to see what GSA decides will be the allowable partnering arrangements going forward. I would also note that this is a reflection of an executive order that the president signed out early on, and it was back in March, it was called Executive Order 14240, Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement. So really this is the migration of some of the domains from other vehicles over to Oasis+, which really makes Oasis+ a must-have vehicle for contractors.

Terry Gerton What should small-business owners and leaders be looking at between now and January to help them prepare?

Stephanie Kostro They really should check out Oasis+ Phase I and see what came out in the solicitation documents for that. They should monitor the GSA websites very, very closely to see if any blog posts there will give them insight into what will be allowable. You know, a lot of times PSC has voiced concern about final requests for proposals not hewing very closely to the draft that they had released as an RFP. And so sometimes you have to scramble as a small business to figure out who can you partner with? Because the final RFP does not really look like the draft RFP. I’m hoping that GSA decides to move forward with a final RFP that looks very similar to a draft RFP so that our small businesses can plan accordingly. It has been a rough year in 2025 for small businesses. Some of them have seen contract terminations or de-scoping or rescoping. Some of them have been asked to offer up discounts that really cut into the muscle, not just the fat, if there was fat for a small business. But we need the innovation that comes from small businesses. And I think this is a great opportunity for them to provide an offer that is really beneficial to the government and to the small business community.

Terry Gerton I’m speaking with Stephanie Kostro. She’s the president of the Professional Services Council. Stephanie, speaking of small businesses, there was a bill that passed the House last week, the SBA IT Modernization Reporting Act. What are you watching here?

Stephanie Kostro Oh, now we can really dork out, Terry, on all of this stuff. So I as I mentioned in our previous conversation here, we’re talking about HR and financial services, or rather human capital and financial services, etc. The IT Modernization Reporting Act is a really interesting piece of legislation that looks at recommendations offered by the Government Accountability Office back in 2024 about reporting on agencies’ IT systems. And so they really want the Small Business Administration to help address risks tied to the Small Business certification platform that can help reduce the project risk, so that it can actually improve project risk management, establish a risk mitigation plan and resolve cybersecurity vulnerabilities. Now, Terry, as you know, we are seeing a host of cybersecurity requirements come out from the Department of War and their Cybersecurity Maturity Model Certification program, but also elsewhere. And it hits small businesses hard. You know, some of this is basic cyber hygiene, but some of it is really, really burdensome on small businesses that don’t have the resources and can’t spread resources out between, say, a commercial side and a government side. And so as we look at the implementation of this legislation, it’ll be interesting to see how small businesses can reduce the risk and reduce their vulnerabilities across and what SBA can do to support them in that.

Terry Gerton This is obviously the beginning of its legislative process. It still has to pass the Senate. It still has to get signed. But are there things that you would want small businesses to be looking at now with the expectation that this bill will eventually be passed?

Stephanie Kostro That is a great question, Terry, and it actually leads me to something that your listeners probably just learned about recently, which was the House and Senate released their National Defense Authorization Act for fiscal year 2026, where that act, and it’s in its final stages, this is the conference bill, right? And so now it just has to pass House and Senate and get signed by the President. I say “just,” but it takes a few days for that to happen. That bill was released on December 7. And I would note that in it actually establishes more firmly Project Spectrum, which is a Department of War effort to help small businesses with their cybersecurity. I encourage small businesses to look at Project Spectrum if they are a Department of War contractor. But even if you’re not, take a look at what those offerings are. See what you can get the government to support you and to help pay for in terms of cyber hygiene and cybersecurity. I’m encouraging the companies to do that even in advance of any of this SBA IT Mod act. As we move forward, it’s going to be a huge cost for companies and anything the executive branch puts in place to mitigate those costs or help minimize those costs is going to be a good thing.

Terry Gerton Stephanie, you’ve already alluded to a couple of big changes that small businesses are facing as a result of so many of the new policies and programs coming out of the Trump administration this year; 2026 is going to look very different for small businesses than 2025. Give us a feel for the change in the business market, the government contracting market for small business, and what do you think the year ahead brings?

Stephanie Kostro Small businesses have, again, seen a lot of changes here in 2025, not least of which has been calling into question the socioeconomic set-asides that we have in place. There’s the 8(a) program, which is for disadvantaged businesses, but there are also women-owned small business, veteran-owned small business, service-disabled veteran-owned small business, hub zone, etc. So we have ratcheted back, as a nation, back to the statutory requirements. The Biden administration and others had grown the set-aside amounts and thresholds for these kinds of small businesses. Those are back down to the statutory requirements. In addition, we have heard about this audit of the 8(a) program, which was launched months ago, but more recently, contractors have been receiving documentation requests from their customers to help justify 8(a) program awards, etc. So they’ve seen that as well. As we go into 2026, I imagine we will see more of this audit-like activity to make sure the companies that certify themselves as small are in fact small and qualify for these set-asides. I would also say under the revolutionary FAR overhaul, which is this FAR rewrite we’ve been undergoing for a few months, all of the class deviations, part by part of the FAR, are out there. The agency supplements are being changed. We are awaiting formal rulemaking for some of these things. But it does appear that the “rule of two” upon which a lot of small businesses base their business strategies is also changing. I’ll just succinctly summarize it by saying right now, if the revolutionary FAR overhaul goes through the rulemaking process and nothing else is changed, that “rule of two” applies only to the contract level, not to the task-order level, which is a significant change. It also allows the contracting officers to have a little bit of flexibility in terms of what can be deemed for a set aside, and then also not necessarily requiring companies to recertify their status. And so a lot of these changes are going come to be executed in 2026, and it is again going to be a year a little of some upheaval for small businesses.

Terry Gerton So if you’re a small business owner or leader and you’re thinking about your strategy or your business plan for 2026, what are the key things that should be at the top of your consideration list?

Stephanie Kostro The first one is obviously to monitor everything that the government, the executive branch is saying in terms of what the requirements are for a small business. I would also make sure that if you have an opportunity to get on a vehicle yourself as an organic small business or as a joint venture, go ahead and get on, because I’m not sure what on-ramping opportunities are going to look like in the future for some of these larger vehicles. And also make sure that you have all of your documentation in a row, all your ducks in a row for documentation. And that includes not just, “hey, you’ve got an 8(a) contract award and you may be getting required to submit some documentation,” but to certify yourself to make sure that the platforms are in place where you can certify yourself quickly with the SBA and making sure that you have all of that documentation in line. This is also an interesting dynamic for any new entrants to the market who have not experienced what existing small businesses experienced here in 2025. They may look at this and go, the juice is not worth the squeeze. It’s too hard to do work with the federal government. I think it is a business decision that if folks want to come and talk to those of us at the Professional Services Council and we can give them a little bit of a taste of what the dynamics are, we’re happy to talk to them about, is this a good market for you to explore? I think it is. Particularly, for example, we talked about at the top of this discussion, the Oasis+ expansion. The new five domains are for services, are great for small businesses. How do you compete for that? Come talk to us and we can help you out.

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Interview transcript:

Terry Gerton You have been in public service and in safety net programs for over 33 years. As we come out of this shutdown, it really exposed both the importance and the fragility of these programs. Give me a sense from your experience what you saw, and maybe, what did we learn about these programs in the last 43 days?

Clarence Carter Well, I hope what we learned is the essential nature of the these programs. The first couple of weeks of the shutdown were pretty lukewarm. But as it got to the place where we saw the potential challenges to the Supplemental Nutrition Assistance Program, things got serious. And quite frankly, I never thought it would get to the moment where we were not in a position to provide the most basic of the safety net services to the 42 million consumers that are desperately in need of those. I am glad that we were able to ultimately clean that up. But having that, if you would, anvil over the head of individuals that desperately need that most basic support I think showcased the importance of the safety net and of some of the programs we administer.

Terry Gerton You’ve just written a book called “Our Net Has Holes in It.” When you look at these programs, I know you’ve worked in housing assistance, now you’re supporting all kinds of human assistance programs there in Tennessee, what are the most enduring lessons that you want to bring forward about making sure these critical programs work for people?

Clarence Carter Terry, the most I would think enduring message that I have is that we clearly in this nation, we have a desire to help our neighbors that are living in the margins. We spend annually, and this is federal government alone, $1.49 trillion annually in service to vulnerable Americans. My argument, and “Our Net” lays out this argument, that what we have to do is shift our intention, shift our design, and shift our execution. It’s not about us not caring enough. It’s not about us not spending enough. It is about flawed intention, design and execution.

Terry Gerton As you think about those three principles, let’s take design first because that’s the structure that we’re working with.

Clarence Carter That’s right.

Terry Gerton What are the core features that need to be reformed?

Clarence Carter  The first core feature is that all of the 114 means-tested programs are, they were designed singularly to address one aspect of the human condition. And they weren’t designed to work in conjunction with anything else. But many of the consumers that the system serves has multiple challenges that need to be remediated. And the system wasn’t designed to take that kind of comprehensive approach. And so one of the first things that has to happen is the system has got to be reformed so that all of the programs can be enabled to operate as tools in a toolkit, but that can be connected to allow us to take a more comprehensive approach to the issue of human well being, not simply the administration of programs.

Terry Gerton I’m speaking with Clarence Carter. He’s currently the commissioner of human services for the State of Tennessee. Clarence, that’s a huge design issue. I want to talk also about execution because human services programs and assistance are state-federal partnerships. You’ve worked on both sides of that. What are the execution issues there and how can we overcome them?

Clarence Carter Okay, and so Terry, you lay that out perfectly. And the challenge is the states and localities administer the programs and utilize the funding with some state add-on. And the states administer the programs. And so what ends up at the state level is you end up executing the flaws of design of the federal system. And so the state doesn’t have an opportunity to do it differently. They have to administer the rules of the programs as they have been given. And so my life’s work has been a journey to call out the dysfunction of design that begins at the federal level and then works its way all the way down the food chain until it gets to the consumer, who then is quite frankly in a place where they are being served by a system with great intention, but really poor execution and design.

Terry Gerton Alright, so the third portion that you mentioned was intention and you’ve worked across party lines, you’ve worked with leaders of both parties across the partisan lines. One would think that vulnerable assistance would be an important bipartisan issue, but it gets tangled up in politics. How do we separate the value of the programs and the intent of the programs from the politics around the programs?

Clarence Carter Terry, I think that we have to do that by shifting our focus from the politics to the programs. And I feel like, and we lay this out in “Our Net,” it begins with intention. Our intention has to be that we meet our neighbor in their vulnerability with the intention to grow them beyond the vulnerability, not simply provide benefits, goods and services as long as they meet the criterion to be served. And I believe that if we begin with that intention, we can check our partisan weapons at the door and focus on, okay, if it’s our intention to grow people beyond, then how do we architect the system to achieve that objective? We have to begin with this shared vision of understanding that we will always have, every society known to humankind has, that we will always have neighbors amongst us that suffer from some manner of economic, social, developmental vulnerability. And so we have to design an efficient, effective system that understands vulnerability with the intention to grow our citizenry beyond that vulnerability, and success has to be in a system like that. Not that I delivered a benefit, good or service, but that the consumer got healthier for it. We measure right now, we measure outputs. I can tell you, as a administrator of the SNAP program, what I get held accountable for is, did I deliver the SNAP benefit to who was entitled to receive it? Did I deliver it in the right amount? And did I deliver it in the right time frame? Nobody asks me, did that family get to a place where we grew their capacity so that they don’t need it? I get judged on efficiency measures. I think that we need to add to efficiency measures, we need to add human wellbeing metrics, and that that needs to be the true determinant of success.

Terry Gerton Clarence, you’ve laid out a powerful vision there. What would be the top one or two or even three policy priorities that you would put on the table for Congress to help strengthen the safety net and achieve that vision of wellbeing?

Clarence Carter The first would be connectivity. And what I mean by that is that the 114 means-tested programs of the safety net need to be able to be connected so that they become tools in a toolkit to achieve the objective of growing people beyond. So connectivity is important. But before we get to connectivity, we have to begin with a shared vision. And that shared vision, our argument in “Net” is that that shared vision has to be helping individuals achieve the highest degree of freedom possible. And so if we set out with that intention to help individuals achieve the highest degree of freedom possible, and we connect the tools so that those tools can work together, then we can have a system and we measure what counts. We measure human capacity. Those things coming together can create a profoundly different system of public supports.

The post Can our safety net programs survive stress and deliver more than short-term relief? first appeared on Federal News Network.

Terry Gerton Well, as we speak, the shutdown is at least temporarily over, but it left some major disruptions in its wake and one of those programs that we want to talk about today is the National Flood Insurance Program. Can I ask you first to tell us what that program is, but then also talk about how the shutdown and the extension of the shutdown affected that program?

Nicole Upano Sure. The National Flood Insurance Program is an important program for single-family home buyers as well as multifamily owners and operators. It is a backstop to ensure that borrowers have flood insurance even in areas where there is elevated risk, and private insurance companies may be less likely to offer coverage in that area without having some sort of elevated cost because of their risk. So it’s a very important program for many Americans.

Terry Gerton  And it really provides a a stability in markets that are flood prone, right?

Nicole Upano That’s exactly right, Terry. It is an important program for many Americans. It provides stability in the market if there is a national disaster to ensure that money flows back into that community for rehabilitation and repair.

Terry Gerton And during the shutdown, NFIP’s borrowing authority dropped dramatically. What does that mean in terms of practical terms?

Nicole Upano That means that, as I had mentioned previously, this program is an important — or, flood insurance is an important part of home sales and multifamily sales. And without that borrowing authority, those purchases could not move forward since it is a contingency to home buying. And there also is that greater risk that if a natural disaster could occur, that there wouldn’t be an ability to fill those claims and push financing back into those communities.

Terry Gerton So the way that works then is in a disaster FEMA actually uses that borrowing authority to pay out the claims that it may receive. Is that correct? That’s right. So then how did the lapse in the NFIP operations affect home buyers who rely on that flood insurance to maybe close on a mortgage?

Nicole Upano We have certainly seen this across the federal government for many HUD-assisted or agency-assisted programs, that it put a pause in those home sales until the government is back up and running and doing the people’s business.

Terry Gerton So we’re in a continuing resolution now. Did the CR provide additional borrowing authority for FEMA through the National Flood Insurance Program?

Nicole Upano Yes, it sure did. It reauthorized it since September 30. And there is a piece of bipartisan legislation that was also offered that would reauthorize the program until 2026 to provide even greater certainty for homebuyers and and renters across the country.

Terry Gerton Does that mean that folks who were kind of in limbo for the last 40+ days of the shutdown can renew their policies or maybe submit their claims? Does that open the window back up? Yes, it certainly does.

Terry Gerton I’m speaking with Nicole Upano. She’s the AVP for housing policy and regulatory affairs for the National Apartment Association. So, Nicole, let’s go back to this, the program itself, even with existing policies still active, there were some limits. What do policy holders need to know about their coverage, their claims, and their change in funding if we should find ourselves in another funding lapse, perhaps?

Nicole Upano Sure. So if someone had a valid policy during the shutdown, those remained valid throughout the shutdown. But if in terms of a new policy or a renewal, that’s where the rub would be, as well as potentially processing any claims, there would be limitations on that.

Terry Gerton Did you see any misconceptions or misunderstandings on the part of policy owners about what services and coverage would be available to them during the shutdown?

Nicole Upano NAA represents professionally-owned and managed housing across the country. And so they kept the shutdown and any implications very much top of mind and continue to use NAA as a resource to get the most up to date information.

Terry Gerton And so you’re dealing with apartment owners, condo owners, those kinds of things. What are some of their biggest questions when it comes to the NFIT program?

Nicole Upano Well, for our members, they are looking across the federal government at all the implications. For example, HUD and FHA, they provide financing and backing not just for affordable housing but for market rate housing as well. So there was an issue with those closings. And while Section 8 and USDA rural housing — you know, rural housing benefits for renters and their families in rural areas — while those benefits did benefit from an advanced appropriation, there was that similar issue, similar to the NFIP, that renewals and new applications could not be processed and there would have been payment uncertainty for those renters and their families. And so having government back up and running and doing the people’s business is important to both housing providers and renters to ensure the stability of those properties and that renters in those communities remain stable.

Terry Gerton NAA is obviously very sensitive to the real estate market, especially in flood prone or disaster prone areas. Beyond NFIP itself, what does this moment really reveal about the fragility of our disaster response programs and how people can get relief if they’re affected?

Nicole Upano Sure, that’s a great question. Many of the federal government’s housing programs are not mandatory appropriations. And we’ve seen that with other industries, that they are seeking now opportunities to have a backstop if and when this happens again to ensure that agencies can access reserves or that they can expand their budget authority in these times, knowing that eventually the government will be back up and running. And folks will be repaid

Terry Gerton How should policymakers then or legislators be thinking about long-term resilience and continuity for programs like NFIP, especially as climate risks grow and shutdowns maybe remain a threat?

Nicole Upano We would certainly encourage policymakers to reevaluate whether some of these programs should have a mandatory appropriation so there won’t be disruptions. We never know what’s going to happen, certainly with climate risks and change across the country, and so having that certainty is critical.

Terry Gerton So what is NAA’s message then to housing providers and renters on navigating these kinds of disruptions? What do they do to stay informed? How do they make sure that they’re current? What’s your advice?

Nicole Upano Yeah, so NAA continued to release live updates on our website to our members. We continue to encourage our members to work with their residents as their business allows and provided them with resources and how to navigate those conversations. We were pleased to see that the the CR does include a reversal of the rifts that happened during the shutdown. And especially for folks in the DMV, this is extremely helpful to ensure there’s certainty for those residents and that housing providers can know they have a stop gap at the end of the day.

Terry Gerton And what are you hearing from lawmakers? Are they inclined to support those kinds of proposals?

Nicole Upano Yeah, as you can see from the bipartisan legislation to reauthorize the program in 2026, this program has long had bipartisan support. We just want to use this time to encourage policymakers to take that next step.

The post The federal flood insurance program is key to stable housing markets, the shutdown revealed its fragility first appeared on Federal News Network.

Interview transcript

Terry Gerton John, I wanna start with you. You’ve been with the shared services concept for a long time. You’ve seen Trump 1 and Trump 2. Tell us how their approach differs across the different administrations.

John Marshall Well, thanks, Terry. It’s a great question. We’re not really sure what the approach is for the current administration yet because they haven’t released a president’s management agenda, but we can get some signs from what we’ve seen out there and kind of reading the tea leaves a bit. But the first Trump administration had a very clear plan. It was announced in OMB Management Memorandum M-19-16 and included an innovative approach to creating a marketplace of shared services providers through four quality service management offices, or QSMOs, that were set up to manage financial management, human resources, cybersecurity, and grants marketplaces. Those were allowed to continue through the Biden administration. They weren’t really expanded or empowered very strongly or resourced, but they still have existed. But we haven’t seen the Trump administration, the second Trump administration, endorse or expand them. They seem to be continuing the financial management and grants. We’re not sure about cybersecurity and HR. So, a lot is yet to be seen. What we have seen from the new, the second Trump administration is a strong focus on centralization and consolidation of common services. They don’t seem to include some of the key features of shared services that we’d like to see, but they’re heading in a positive direction and we like most of what we’ve seen so far.

Terry Gerton Well Steve, let me turn that to you then because in addition to what John’s talking about the centralization approach, the Trump 2 administration has issued executive orders around acquisition, HR and financial management. Are you seeing that approach get traction in any particular way?

Steve Goodrich They are a little bit. As you know, GSA is also revamping the FAR and actually to include shared services within Section 8 of the new FAR when it’s issued. GSA is focused on procurement, OPM is focused on HR, Treasury is focused on finance. They all are starting to make traction in a centralization model, and they’re at at different levels or different stages right now. But they’re certainly getting there. OPM has their RFP out to try to develop a centralized approach for government-wide HR support services. GSA is pulling procurement into GSA more and more. And Treasury is at its beginning stages working with its QSMO actually to develop and make sure they have the systems and the foundation before they can start operations down the road.

Terry Gerton So John, in Trump 1 you made the point that there was a lot of it space for initiative and choice in the marketplace. Centralization seems to be pulling that back. Are you seeing agencies respond in a positive way?

John Marshall I don’t think we have really a lot of great feedback coming from the agencies yet. They haven’t been very communicative about their adoption or their plans for centralization to shared services. So a lot has yet to be seen. We’re kind of reading between the tea leaves right now and trying to determine how things are gonna sort out and what the agency responses will be.

Terry Gerton In market theory, markets will be more efficient than a centralization model. What do what do you have as an expectation here?

John Marshall Well, we have a lot of reasons to prefer a market-based approach because of competition, and particularly a marketplace would allow industry service providers to participate and compete with government service providers. We’re a little uncomfortable with the idea of just consolidating everything in centralized, government-delivered, government-operated functions because they tend to — over time they become monopolies and pretty bureaucratic. And so we like the idea of having a more open marketplace where competition can drive continuous innovation and customer choice and let the marketplace then sort out the winners and losers.

Terry Gerton I’m speaking with John Marshall. He’s the founder and CEO of the Shared Services Leadership Coalition. And Steve Goodrich, [who] chairs the SSLC board. So Steve, let me come back to you then. Shared Services Leadership Coalition has proposed a more competitive standard-based model. Tell us about that and how your proposal differs from what you’re seeing the administration currently implement.

Steve Goodrich Well, the administration is trying to move fairly quickly right now and with technology solutions, frankly, before they get processing governance and policy and data reform in place. So they’re moving out fast. The centralization model, as John says, may not be the optimal model to get there. What we’re proposing is a strong mandate for shared services. Because as you know, it’s come and gone from over the last forty years from administration to administration. And to get there, we need Congress really to mandate it so we can consolidate the common services across government to get there. Two, we need a strong governance structure to be able to operate, lead this across agencies and get the right mandates and security and systems and so forth and so on. Within that, we then need to do the right analysis and design of the right approach to make sure we’re consolidating appropriately, that we’re getting the duplication of systems and processes down and we can actually measure the outcomes that we’re getting to make it happen and then have an effective transition process.

Terry Gerton Tell me about your governance model. Who would be in charge of oversight there?

Steve Goodrich Well, our proposed model we have the OMB DDM as the policy director, if you will, for this and the authority. We have GSA leading the operations through a management center. And then there’s roles for the PMC, there is roles for the agencies advisory going through this as well. And you have the operating centers to make sure this is done and done right.

Terry Gerton Are you hearing from any of those agencies that they’re interested in taking on that governance role?

Steve Goodrich There’s — GSA would have interest in getting there. As you know, OSP, which has been drawn back over the years, was the original design, as the M-19-16 says, is the coordinating element. But our proposed legislation would actually give it the authority it needs, led by a commissioner within GSA for government operations with which to get there.

Terry Gerton So John, let me come back to you because you mentioned something in your last response that I think ties in with this governance piece. When you get a government centralized service function, it tends to become a monopoly, but it’s also really hard to invest in technology modernization. How would you see this centralization model staying current and actually addressing the service concerns of the federal agency constituents?

John Marshall That is a great question. And I think that the flip side of that question sets up the response that we would like to see, which is the marketplace, because if you had a marketplace with industry and government service providers, you would have continuous competition across the service providers and customer choice, which would — which should provide the incentives to drive innovation in the marketplace by all those providers. So it’s a really important feature that we think ought to be incorporated. And we’re concerned that government centralized services haven’t had access to appropriations or technology modernization funds for modernization. So we’re concerned that they would follow the example that we’ve seen too often of centralized service providers not modernizing, not keeping up and becoming non-responsive and antiquated over time.

Terry Gerton Steve, you want to follow up?

Steve Goodrich Yeah, I would. You can look at good models like Canada, Texas has done a pretty good job of developing partnerships with industry. And so that moves away from the traditional FAR firm-fixed price contract approach, where as technology advances, as process or new policies advance, the companies involved, the partnership involved are responsible for the implementation and bringing those two new technologies to the forefront without contract change orders and things like that, it’s built into the process.

Terry Gerton So Steve, as you look forward, what sorts of policy or legislative change is SSLC recommending?

Steve Goodrich So, it really tees off what I was saying before, putting a piece of legislation in place that mandates shared services, that sets up the governance structure, that ensures that there is metrics, both performance and outcome metrics that are measured and reported back to Congress and the President that involves the PMC in this process and builds the strong demonstrated consolidation of common services across government to save money, to improve data, to reduce duplication, to get us there finally with a modernized system of policy, process and data.

Terry Gerton So John, I wanna wrap up with you. Legislative change is sometimes an interesting windmill to tilt at, but in the absence of that change, if the administration continues with its policy of centralization, what should agencies and industry partners be doing to prepare for that?

John Marshall Watching and seeing what comes out from the administration and and following suit. But we we’d like to see more interest in Congress and it’s hard to get legislation passed in this area. We’ve been trying at this for 10 years. We’ve seen the history of legislation, the CFO Act, GPRA and so many other landmark pieces of management legislation. They take a long time and the incubation period is a long time. So we’d like to see industry working with us and agencies showing support for a more fundamental transformational approach like we’re offering. And don’t forget, Terry, what we’re proposing is a mainstream business model that’s used by 80 or 90 percent of Fortune 500 companies for managing common services. And the potential savings are tremendous. We’ve estimated $75 to $100 billion dollars in potential savings. So that’s really what’s on the table for the value, not just improved services for employees and for customers of the government and taxpayers. This is a great opportunity that the government shouldn’t miss.

Terry Gerton Steve, let me give you the last word.

Steve Goodrich Yeah, John and I like to joke sometimes that — and it’s true, it’s not a joke — for over 40 years we’ve been sitting in meetings around shared services with OMB and oversight agencies, and it ebbs and flows from administration to administration, or they just dance around the edges. A bill passed and signed by the president will finally give it the energy and resources it needs to move it forward.

The post Centralization is back in vogue, but is it the right model for government shared services? first appeared on Federal News Network.

Terry Gerton This might be a big week on the Hill. The House is planning to bring the National Defense Authorization Act to the floor for a vote. It’s obviously a topic we talk a lot about, but last week there were a lot of let’s just say, conversations about what might be in it and how it might go. So tell us about what’s going on behind the scenes.

Loren Duggan Well, this bill is a must pass piece of legislation. They’ve been doing it for decades and they always want to get it done by the end of the year. And this year there aren’t a lot of other end-of-year vehicles, so it’s kind of become an attractive venue for discussions about a number of issues. So that’s kind of what’s been going on. It’s probably less about the core part of the NDAA and more about some of the ancillary things or related things that people want to get in there or keep out of there as the case may be. We saw a particularly big dust up you might be referring to between Elise Stefanik, who’s a member of leadership, but was mad at her own leader, Speaker Mike Johnson, about trying to keep something out. And in the end they worked something out and that was getting resolved toward the end of the week. But that was just one of the flashpoints that leaders were dealing with trying to assemble this very important bill.

Terry Gerton It is normally a bipartisan bill. Is there a chance that, you know, that that’s not going to be true this time, even with the slim majority in the House?

Loren Duggan It may still be bipartisan because they do try to work things out. And, you know, sometimes the initial versions that come out of the House are particularly partisan because of riders or language that the minority party might not like. But they were reaching for consensus here. They were trying to get the four corners to agree on things before they went in. That’s the chairman and ranking member of the House and Senate committees, not just the defense committees in this case, but sometimes the other committees that had legislation that was in the mix. So they’re trying to get a bipartisan package that can get through because you might lose people on either side, but maybe you have the consensus you need to get something through. So we’ll be watching that vote counting very closely as they move toward the vote.

Terry Gerton Is there any aspect of the move forward on the NDAA that is also impacted by the hearings on the Hill last week about the counter drug operations in the Caribbean?

Loren Duggan Those two things seem to be on different tracks. I mean, obviously they’re related. It’s about the Defense Department and the defense secretary and what people might think there. But the legislation and setting policy is sort of moving in one direction, but some of the same players are also very much involved in reviewing what had happened with the ordering of these strikes and the chain of command and all the issues. We had the members watching the video over on the Senate side and reacting to that last week. I think that will continue. It may be brought up in the context of the debate or larger questions, but I think the bill will move regardless of that. And Congress can — because they do this every year — revisit it in next year’s NDAA or perhaps in other legislation because we’ve already seen members talking again about maybe war powers or other things they might tap into there.

Terry Gerton Well we’ll see how that comes about. But speaking of votes, there is also supposed to be a vote in the Senate this week on the health care premium subsidy extensions. What’s the prognosis there?

Loren Duggan Well, this was part of the agreement to reopen the government was that there would be a vote by I think December 12th was it, so Friday, on some sort of vote around the ACA extensions that are expiring at the end of the year. Chuck Schumer, the Democratic leader in the Senate, said he’d aim for a three-year extension, which would take us obviously beyond the next election. That’s a different proposal and one of many proposals that are floating around. We’ll be watching to see, does the GOP answer with their own proposal, and what does this mean for the House, if anything? So, going toward the end of last week, there was still no consensus on how this would be fixed. It will have to be bipartisan, obviously, to get over the line and we may not be there by the end of the week. But maybe we’ll have some discussion and votes ahead of that.

Terry Gerton And Mike Johnson’s trying to put a package together on the House side as well, right?

Loren Duggan Right. And there’s more than just the ACA being talked about here. There’s health savings accounts ideas or other things that members might want to pursue. You kind of got this short term issue of, what do you do with the subsidies for next year, but then there are a lot of people who are trying to bring in, what does this mean overall about the Affordable Care Act, the nature of the markets, does there need to be a broader sweep of changes? … There’s not really consensus on anything broader than this. And we’ll have to see if there can even be consensus on the smaller question of what to do with the subsidies.

Terry Gerton I’m speaking with Loren Duggan, deputy news director at Bloomberg Government. Well, Loren, at this time of year, every time we talk, we talk about the status of the rest of the appropriations. Shutdown, or [the] continuing resolution expires at the end of January. What are you seeing in terms of the move forward on the other bills?

Loren Duggan I’m sort of seeing a kind of a whimper on that going into the end of the year. To be honest with you, January 30 is a long time away. There’s been a lot of talk about what would be in a next minibus package that the Senate might consider, but that hasn’t been moving forward. Votes haven’t been scheduled. And without that sort of end-of-the year deadline or mid-December deadline that often drives that activity, they have more time, and usually work expands to the time allotted. And I think we might see that here. So, not clear that we’ll get more votes by the end of the year on that. There are a lot of issues they’re trying to work through. But that will be, if they don’t do it now, obviously top of mind when they return in early January, ’cause the clock will be ticking.

Terry Gerton Loudly at that point. A different topic, and we don’t cover the court very often, but there’s a very important case on the Supreme Court docket for today dealing with the president’s effort to fire a member of the Federal Trade Commission. Tell us what your team is watching there.

Loren Duggan Well, part of our organization is Bloomberg Law and they cover many court developments around the country and certainly at the Supreme Court. They’re watching this very closely because it has huge implication for independent regulators. As you mentioned, Kelly Slaughter, who was a FTC commissioner, was fired by the president and has had a court battle that’s now reached all the way up there. And it goes back to a precedent called, I think it’s Humphrey’s Executor — which there are many people in this building who are far more versed than I in that. But it’s gonna be closely watched because what is the nature of an independent regulator? What is their power vis-a-vis the rest of the executive branch? Big questions there that have effects on a lot of different institutions, and therefore a lot of different regulated entities by those institutions. So we’ll be watching the arguments and then the decision whenever that comes will be very closely watched.

Terry Gerton So what else are you watching for the coming week?

Loren Duggan Well, we’re watching the Senate try to move forward on another batch of nominees. I think it’s 90 or so. They tried to do it last week, but there was a procedural hiccup, so they’re starting over. But that would be, if they could get that done, another 90 Trump appointees on the job by the end of the year, which Republicans would like. And we’re also watching hearings. There’s a lot of other nominees going through and there’d be a flash of celebrity. Gene Simmons of KISS is actually scheduled to be up on the Hill. So we’d be watching to see what he brings. Always interesting when you have kind of that celebrity star power trying to shine light on an issue.

Terry Gerton That’s a hearing near and dear to the heart of radio broadcasters everywhere. So we’ll be watching it as well.

Loren Duggan Excellent.

The post House drama over the defense bill sets the stage for a high-stakes December on Capitol Hill first appeared on Federal News Network.

Interview transcript

Terry Gerton You have spent a lot of time on the Hill lately talking to lawmakers about ways the VA could modernize access to care. Tell us both what your message is and what you’re hearing from the lawmakers.

Sean O’Connor Yeah. And maybe before that, Terry, just to touch on why we think this is so important or why personally it’s so important to me. And then thank you again for having us, and [I’m] looking forward to having this conversation today. So just at the start, I’m a third-generation veteran. Both my grandfathers fought and served in World War II, one in the Pacific, one in Europe. My father and my uncles all served during the during the Vietnam era. And I’m a 9/11 vet and served during nine eleven. So since the 1940s, my family has been, you know, leaning on and relying on the VA for all kinds of support and care. So, it’s a mission and it’s an institution that’s very important to me personally and very important to the fabric of our country. So, I think it’s no surprise the VA has struggled, you know, being in the early forefront of EHR … adoption to kind of being a laggard now in kind of EHR modernization. And there’s 9 million vets that really struggle to get access to timely care for some of the services they need as the VA works to modernize. So we’ve been spending a lot of time just talking to some of the leadership on the Hill around the momentum that seems to be building to try to modernize finally and kind of make access to care easier for veterans and and trying to make sure that as community care grows and the VA and veterans have more options to seek care both inside and outside the VA, that we really move the needle on reducing time to care and improving efficiency of care delivery for veterans. So that’s where we’re trying to, you know, spend time talking to the folks in SVAC and the Hill about, and learn about some of the strategies people are trying to implement when it comes to the Dole Act and some of the other things that people are trying to advance when it comes to improving access to care for veterans and really, we’re a small technology company that focuses on healthcare access. And we’re just, you know, trying to support improving access to care for veterans wherever and whenever we can because it’s a really important institution. It’s the largest health system in our country. And it’s probably one of the most outdated when it comes to the complexity of modernizing care for scheduling and finding appointments for veterans. And there’s a lot of things that I think we can do to help the VA as they work to improve some of those services.

Terry Gerton You’ve said that the VA was built for the last century and you’ve just mentioned the Electronic Health Record that the VA spent billions of dollars on and still doesn’t have an operational system. What would you recommend in terms of practice for modernizing some of those administrative functions of the VA?

Sean O’Connor Yeah, it’s complicated. So I’m not suggesting this isn’t complicated. It’s, the VA has gone through four different attempts to try to modernize and it’s still not successful yet in trying to get to the end goal of improving access to care for veterans and having a global view of care. So I think the first thing we’ve been talking to folks about is, today everything works in silos. And it’s tough to leverage the size and sophistication of the VA caregivers when everything’s in silos. And there’s close to 130 different VistA instances, a growing number of Oracle instances. And one of the leaders we talked to at the VA last time we were in D.C. said that the complexity of VA care delivery is beyond human comprehension. There’s how customized each of those VistA instances are. They’re all a unique Snowflake. They don’t talk to each other, they don’t share inventory. One of the VISNs we’re talking to now about a project, there’s roughly 10,000 appointments that go unutilized every month in his hospital because these different EHR instances don’t talk to each other. So one of the first things we’re talking about is, you know, trying to break down those data cells to bring all the supply and all the demand into one queue. And this is what we do for some of the other largest health systems in the country, Kaiser and other folks, where we take this global view of inventory and then you can use, you know, AI and some of these sophisticated navigation tools that have been built in the digital age of healthcare since the pandemic, to start to look at how you load balance that network a little more efficiently, how you share resources, how you improve internal utilization, improve efficiency, and reduce care gaps across boards. So I think until the VA finds a way through either a massive conversion to a centralized EHR or finding ways to work with technology entrepreneurs and vendors that can break down some of these data silos, they’ll continue to have the problem of trying to transition to a large EMR system in Oracle and through that process still have these 130 other systems and up to 24 different scheduling solutions that have been customized across the various VISNs, none of them working together, none of them sharing information across each other. So you have the largest health system in the country, 9 million veterans and their family members that we’re supposed to provide and care for, and none of this stuff talks to each other to share capacity, to share utilization, to share best practices. It’s a very fragmented, siloed and complicated environment. So until we find ways to break down those silos and share, leverage the power of tech and data to kind of level that playing field, it’s going to be very difficult to move anything in a substantial manner, we think.

Terry Gerton I’m speaking with Sean O’Connor. He’s a Navy veteran and co founder and chief strategy officer at DexCare. The VA is not the only federal agency that’s bad at a big bang tech deployment. So when you talk about an agency-wide solution that breaks down silos, anybody who’s been around for a while probably rolls their eyes at us. What would intermediate sorts of technology be that could provide some solution while an agency-wide solution is underway?

Sean O’Connor Yeah, we’ve been a big proponent in working with other really large healthcare systems in the country and doing, you know, scalable, strategically thought-out proof of concepts and smaller fragments first and then learning and scaling and iterating and adopting quickly. So I think one of the things the VA has for it is it does have the VISN network and the ability to kind of do proof of concepts in some of these smaller regional health systems, learn, iterate and adopt and then look to scale from there. We think that’s the best way to do this stuff. That’s how we’ve done it with Kaiser and some of these other really large healthcare systems. You do smaller proof of concepts, you learn the integration points that are important to move the needle. You begin with the end in mind and understanding the success metrics that are going to be important to drive this. And then you learn, iterate and scale quickly from there with bottom-down and top-down support is the only way to kind of move these things. And at the same time, being very conscious of the providers as well. So all of the technology companies we’ve built, we built inside of large healthcare systems. And often cases, technology is only 50% of the problem. Understanding the provider and the change management and the amount of pressure that those folks are under to provide care, and not being disruptive to their workflows and making their lives less efficient. You have to be very thoughtful about that, or none of the stuff is going to go anywhere. You can’t just have tech for tech’s sake. It has to understand the provider world and how the provider interacts. And you have to be very purposeful in how you build these things out to scale from the bottom up over time.

Terry Gerton One of the big points that you’ve emphasized is real time access to care, especially for mental health services and especially in rural communities. Those are two big complicating aspects of the VA’s network. How can the VA think about addressing those kinds of issues? Is it a technology solution? Is it a culture solution? How do they get on to real time care, especially in mental health?

Sean O’Connor I think it’s both. And I think the hard part is it’s probably more culture than technology. But it’s a — I don’t know of a bigger issue for us to kind of rally around as a community to try to improve access care of veterans than this. So when I transitioned from the service in 2004, the VA received roughly $21 billion to support its mission, and 17 men and women took their life every day to suicide: friends, brothers, sisters, husbands, wives. Fast forward to 2024, the VA received $121 billion to support its mission, and that number is still the same. Roughly 17 men and women, brothers, sisters, mothers, daughters took their lives to suicide. We’ve lost more people to suicide in the last 20 years than we did in, you know, during the 9/11 era and supporting the 9/11 kind of ground-on combat. So it’s it’s a crisis that’s not talked about. We haven’t really moved the needle on it despite spending over $100 billion more to support the healthcare delivery mission of the VA. So it’s clearly not just a technology issue, but not having — going back to your first question, Terry — not having the ability to share resources across the network and reduce time to care and make it easier for vets to find and get into the services initially is a problem. I won’t say that’s the biggest problem, but it certainly doesn’t help. So … mental health services in the veteran community is a really complicated issue … It’s not just about having access to cares. You know, a big portion of people that need the care aren’t even enrolled in the VA, and then there’s a homeless population that’s not enrolled in the VA. And how do you how do you outreach and bring those folks in that need the help the most? So it’s a complicated issue, but not being able to have one 24/7-365 on-demand network that shares capacity across mental health services for the VA is an issue as well. And the technology issues are easier to address. We just got to have people that are willing to address them. The cultural issues and the stigmatism around, you know, raising your hand for help is a harder issue to address, but it’s just something we gotta continue to talk about because it’s a travesty that in over 20 years, that number really hasn’t moved, despite putting, you know, literally over $100 billion more at the overall global healthcare issue.

Terry Gerton Well you talked about capacity there and certainly building out the community network of care is a big issue and a big initiative for VA. Are there issues on the community participant side of this so, that community care providers don’t understand the VA as much as the VA doesn’t understand community care providers?

Sean O’Connor We’re going to run out of time on your podcast. Yes, so that’s to me like, you know, obviously selfishly, like, we want to help the VA as a technology company, but the importance of improving access to care for veterans is at the heart of everything that we’re trying to do here. So the beauty of the VA to me — I mention I’m a third-generation veteran, it is a unique community. So when I when I first got out of the military, I moved to Seattle, like, it was a tough transition going from the military to the corporate world. I didn’t know anybody up here. My family and I grew up in Jersey, all my family was on the East Coast. I would literally just go to the Seattle VA and hang out in the lobby and just talk to people that you know had their Vietnam hat on. It’s a community and a culture that you know, should be protected in this institution, in this country. And some of the caregivers, you know, we’re talking about the technology piece here. These are some of the most mission-driven caregivers in the world. Like, they can make more money outside the VA. They choose to work with this community and this provider network for a reason. So there is an understanding of that that I think we need to protect because there is an understanding of someone that’s come back from deployment and has been through some serious high optempo stuff that comes back, and you just get a different conversation with your primary care provider in the VA than somebody outside the VA. So I think there’s that element that we have to protect. But there’s also the element, frankly, that you know, as a veteran, I like the option to have choice to go outside the VA for services that they may not be expert in. So certainly, you know, wound care, PTSD, that stuff, I think should stay in the VA. But maybe, you know, I’m a former athlete and tore my knee up and can get into an ortho appointment outside the VA. I want to have that optionality. And some stuff like that, the history isn’t as important to the veteran for some of those conditions. So, to have the optionality to go out there and do that is important. But what we’re seeing, at least for some of the areas that we work with is the community providers, one, they don’t have a lot of excess capacity to share with the VA. Every health system is stretched to the gill. Like there’s not a ton of health systems raising hands saying, hey, we have providers sitting on their hands. It’s six to eight months to get into an ortho appointment in some of these large health systems as it is. So to have that capacity to share with the VA, one, is difficult. Some of those things I think are bigger deals than others to your point of, you know, should there be a continuum to care in the VA? I’d argue some services is, just do it in the VA and some are easily, you know, sourced out. And then there’s the whole issue of, when they’re sourced out, how do you manage the care gaps for the veteran? How do we close some of those care gaps as those services continue to rise and the disparate records continue to grow across the network?

The post The VA’s size and complexity may be keeping top tech minds away, and veterans pay the price first appeared on Federal News Network.

Interview transcript

Terry Gerton We’re a few weeks past the longest lapse in federal appropriations and maybe looking at another one in the end of January. So I want to work with you to put October and November into context. You’ve seen many shutdowns in your time on the Hill and now at Deloitte. How would you say this one differs from previous episodes, especially when it comes to your area of expertise, tax policy?

Anna Taylor Well, I do think it was different than what we’ve seen in years past. And part of that starts with just the way folks on the hill operated in it. I was really shocked that — my first sign that something was different was — I was shocked when I heard reporting that … the members and the staff that work in the Capitol building had left before we even hit midnight the night that we entered the shutdown. That’s not normal. In years past in shutdowns, you have frantic work happening behind the scenes where they’re trying to see if there’s any way to find a deal. And it was just obviously clear to all of them that they were so far away from a deal at that point that there was nothing to do. And so they left the building. And that was my first sign that this one was not normal and we were in for a longer shutdown. You know, in terms of the impact it has on tax administration and tax policy, it’s significant. You know, the fact that you had so many furloughed workers in the federal workforce and specifically at IRS and in Treasury, during that extended period definitely has an effect on customer service. It has an effect on their ability to move forward with their reg writing and guidance plans, which is in this moment, you know, where we’re just getting through a big piece of legislation, the One Big Beautiful Bill Act that was signed into law back in the summer, and they’re in a very significant guidance process to go along with that bill right now. There’s a lot of work that needs to get done … I know that you know, the treasury and the IRS said much of that work went on during the shutdown. So I do think that there was some of that that didn’t stop, which is a good thing for taxpayers, but had to slow it down in some capacity. And when you think about just customer service for taxpayers and not being able to call and find somebody on the phone to talk to, certainly there were challenges there as well. So I do think there was that, you know, kind of tangible direct effect. Now, in terms of effect on tax policy, I think it’s jury still out. Obviously there wasn’t any sort of deal that ended the shutdown with additional legislation. So we didn’t have some big tax package coming out of the — sometimes you do see some sort of legislative deal come out of a — well, not often with a shutdown. Normally nobody wins in a shutdown. But when you’re reaching appropriations deals that don’t end in shutdown, sometimes you’ll see tax legislation attached to those kinds of deals. And, you know, we didn’t have that … There were not regular hearings and regular markups happening in the tax writing committees while we were in shutdown. And so there was probably a slowdown in some bills that are maybe under consideration because they weren’t being considered during the shutdown. And so I do think that probably it definitely had a direct effect on taxpayers who may have had an impact on customer service, but there’s also that effect of maybe slowing down policymaking as well.

Terry Gerton I’m speaking with Anna Taylor. She’s managing principal of the Tax Policy Group at Deloitte. Well, let’s talk about the specific impact on taxpayers. I mean, filing season is going to open in just a few weeks. Is there a reasonable expectation that the IRS and all of the companies that support tax filing will have written in the rules for the One Big Beautiful Bill Act provisions and anything else that might come up before the year end? Are tax filers going to have the systems ready to go?

Anna Taylor Well, I think that the Treasury and IRS have done a — they’ve made a real effort to try to get to the things from that bill first that were going to need to be implemented for taxpayers at the beginning of 2026. So I think in most cases, you have … already seen guidance come out on those things that are affecting individual taxpayers, like … the tipped income deduction and overtime pay, things like that. So they have already put out quite a bit of guidance in those spaces that will have a direct effect on individual taxpayers. There’s still a lot to go though. And, you know, you have business taxpayers who maybe aren’t filing on the same timeline as individuals. Some of that important guidance is still yet to come. But I do think that because of the thinking about the kind of end year for individuals, the administration has tried to prioritize those things that are going to need to be known on day one of the new year.

Terry Gerton That’s good to hear. You also mentioned the congressional tax writing committees and certainly as Congress has come back, the committees have quite a backlog. Can you give us any insight as to what they may be talking about in those committees?

Anna Taylor Well, they do have a full agenda. I mean, I think the first thing that you’re hearing a lot about if you turn on any news outlet right now is of course the thing that landed them in the shutdown to begin with, finding some sort of path forward on those Affordable Care Act premium tax credit — the enhancements for those credits. They didn’t reach any deal before they came out of the shutdown, but they did agree to keep working on it. So there was an agreement as part of coming out of that shutdown where Majority Leader Thune in the Senate said he will hold another round of votes on those credit extensions by the middle of December. So I do think that there’s conversations happening, both bipartisan and partisan, to see if there’s a path forward on figuring out a way to deal with health care costs and insurance premium costs. So that’s taking up a lot of time right now. In addition to that, there is interest from the committees to try to move some things that they’ve been working on for a while on a bipartisan basis. These are things that have been in works for years, honestly, and have pretty broad consensus support. Things like, you know, there’s a tax treaty with Taiwan that has moved through regular order in both the House and the Senate that I think people would like to see get over the finish line. There is, the chairman and ranking member of the Senate Finance Committee have worked on — they haven’t actually processed legislation, but they’ve put out a joint white paper on tax administration. So just some changes to make the system work better for taxpayers. I think that’s something they’re interested in trying to see if there’s opportunities to move together. And then there are a few expiring tax provisions on the business side of the ledger that haven’t been dealt with this year. You know, a lot of the expiring provisions on the individual side were included in that one big beautiful bill act back in the summer. But there are a couple of provisions like the Work Opportunity Tax Credit. That’s an important one that does have an effect on people’s ability to get a job and on business’s ability to hire. And so that’s one that is set to expire at the end of this year that I do think there’s probably bipartisan interest in extending. So those are all things I think on the near-term agenda, if they’re in an environment to be able to move some bipartisan legislation. And we all know right now that’s a big no.

Terry Gerton Well, speaking of that environment, 2026 is an election year for many members of Congress. Do you think in that environment they really will be able to move some of these big pieces of tax legislation or will they maybe just nibble around the edges?

Anna Taylor It’s a really good question. And … when I look in my crystal ball, it’s cloudy, you know. I think that, even in the most political of times, you can sometimes get smaller packages of bipartisan consensus product through. So, you know, I’m still hopeful that they can — they’re going to have to do something on appropriations again when they get to the end of January. That’s when that next government funding deadline will be reached. And so there is potentially a bipartisan vehicle that will be heading our way come late January, assuming we’re not headed towards another shutdown at that point. And so I really do think there’s a possibility that if they reach some sort of funding deal, you know, as they’re working through it in December and into January, that there’s the potential that you could see some tax legislation move along with it, possibly. The later — and I think this goes without saying — the later you get into an election year, the harder it is to do bipartisan things. So when we get into, you know, maybe late summer, early fall, I’ll stop being as optimistic. But until then, I think that there’s still a chance they could move some of the smaller consensus items.

The post What can individuals and businesses expect when the tax filing window opens in just a few weeks? first appeared on Federal News Network.

Interview transcript

Terry Gerton You’ve got an interesting story about a protest this morning from a company who actually won the bid. Tell us about that.

Zach Prince Sure. So this involved a Department of Homeland Security procurement from ICE for detention services for folks detained for immigration law violations. So the protester here is a company, Active Deployment Systems. They’re a Texas-based company that markets itself as specializing in rapidly deploying and operating temporary facilities — so, exactly what ICE is looking for for this procurement. So ICE said that they were going to be issuing five or more IDIQ contracts, and then task orders would be competed for particular tasks. Each of the offerers would bid on only those types of tasks that they want to be considered for going forward. ADS, Active Deployment Systems — they received an award, but they were one of 42 offerers that received the award. And you get the sense reading the protest that they don’t like the fact they’re competing now with fewer, slightly fewer than they were competing with for the IDIQ award, but not many. So it’s still gonna be big, big competitions going forward. Maybe they’re trying to level or eliminate some of those competitors.

Terry Gerton So this was an IDIQ contract, right? Does this what does this tell us about the structure of these? Was ADS’s expectation reasonable in terms of the number of winners that they would have?

Zach Prince No, and in fact this is happening pretty commonly where agencies have these very large IDIQ awards that they might issue 50, 100+ individual IDIQs that, it does narrow the playing field a little bit going forward, but what it really does for the agency is speed along the competition for that next stage when they actually have the identifiable requirements that they’re going to have bids on.

Terry Gerton And you can kind of understand ADS’s perspective. I guess the fewer the competitors on — or the fewer the awardees — on the actual contract, the more likelihood they have of winning those orders and the higher their revenue might be. So their projections might have been off a little.

Zach Prince Yeah, that’s right. And you know, I think the better arguments that they had here, and maybe their real concern was about the price structure of this IDIQ. But the problem was that they raised these challenges while also submitting a bid for a contract they received, right. So to tell you a little bit more about that, for each of the objectives that you could bid on for this IDIQ, there was a set pricing volume that contained the government’s independent government estimate for what prices should be to be fair and reasonable. Among those estimates was a hard cap, essentially a hard cap on prices per bed per detainee. ADS argue that this harms them if they’re stuck with this because it might put them in a losing position going forward for the actual task orders.

Terry Gerton So the court kind of said that, well, the time to challenge that is not after you’ve won, but before you’ve won, right?

Zach Prince Yeah, that’s right. And they did try, to give ADS credit. They challenged this at the agency level and an agency level protest. But agency level protests don’t actually stop anything. They just tell the agency, hey, we think this is unworkable. You’re hoping the agency looks at it and says, Oh, yeah, you’re right. But here they didn’t. So, you know, ADS took a contract based on this price structure that they think isn’t proper. And as the court noted, they don’t have to bid on any task orders. So if they really think that this is a losing proposition for them, first of all, they shouldn’t have bid on the contract. And the same thing is true for the 50 something other offerors. But now they don’t have to take losing contracts. They can do the analysis on a task order basis and say, we don’t want to be part of this. Whether it’s good business for the agency, well, maybe not, but I think the agency was moving quickly and just wants to get this thing done for urgent needs to be fulfilled.

Terry Gerton I’m speaking with Zach Prince. He’s a partner at Haynes Boone. So we talked a little bit about ICE’s strategy and you’re seeing this more often in these IDIQs, where agencies will bring on a lot of winners and then use this as a means to simplify later competition.

Zach Prince Yeah, we are seeing quite a lot of this. And I think there are a couple reasons for it. One is perhaps strategically, from a protest perspective, that this — if you just issue contracts essentially to everyone who submitted a reasonably responsive offer, then you’re limiting the IDIQ level protests, which generally can be heard at various forums, Court of Federal Claims, GAO. Maybe then you could have protests of the task order competitions, but those are limited only to GAO and only when they’re above certain dollar values. So the protest possibility becomes much more limited. You also can only have protests for whoever bid on the initial IDIQ or from whoever bid on the initial IDIQ. So it might be a management of protest strategy. It might just be because if you can get a framework in place from the agency that has the pricing mechanisms and the ordering mechanisms, it makes it a lot faster to buy what you need later on.

Terry Gerton So do you take any lessons from this particular protest resolution on how the court views these kind of arguments?

Zach Prince Yeah, I think in general, even if you haven’t waived an argument because you didn’t bring it up before, which it usually is the case. That is, if you submit a proposal and you have arguments that the solicitation was ambiguous or otherwise flawed, you can’t then complain later. That’s not always the case if you’ve launched agency level protests like ADS did here or there’s some other exception. But you really can’t have your cake and eat it too in this regard. And contractors are in a tough position, because you don’t want to be kicked out of competition for choosing not to bid. You don’t want to annoy the customer by protesting, perhaps unnecessarily, in advance. But if you don’t have clarity on terms or you’re gonna have to accept terms you don’t like, the protest mechanism is what’s there for you.

Terry Gerton Then should contractors change the way they approach these large IDIQs? Is there a different competition strategy that they should be employing to be more competitive going forward?

Zach Prince I don’t think there really is, unfortunately. I think — I have this conversation with clients all the time where there is a very ambiguous RFP, RFQ. I don’t know what it means. The agency won’t respond to questions and it makes a significant difference for the business on how they put their proposal together. But if they don’t bid, then they’re totally out of the game. If they bid making assumptions that prove to be unwarranted because the agency thinks it means something else, they might take a loss. So they could protest and annoy the customer and potentially delay the procurement. They can’t always protest because the protest rights are not so sweeping. And it also costs a lot of money. Or they just proceed and hope for the best.

Terry Gerton Or as the court told ADS, don’t take an order.

Zach Prince Yeah, that’s right. And I think ADS is likely going to take orders. I mean that was what they told the court. They want to keep this contract.

Terry Gerton This is an interesting case, Zach. Thanks for sharing it with us today.

Zach Prince Sure. Thanks for having me, Terry.

The post A protest from a winner? A recent case shows why timing matters when challenging solicitation terms first appeared on Federal News Network.

Interview transcript

Terry Gerton CFPB recently issued a new rule regarding the Fair Credit Reporting Act and it’s pretty important. Can you walk us through the core of that rule and why you at the Consumer Data Industry Association think it’s important?

Dan Smith Sure, happy to. So the Fair Credit Reporting Act has been in existence since 1970. The leading privacy legislation in the country has specific requirements that lay out how credit reporting should take place, the protections for consumers, and a clear process. And one of the core functions of the Fair Credit Reporting Act is to have a national standard and clearly discusses preemption. Throughout the years, it’s been amended several times. But in the end, Congress is the one who makes decisions on the law. They write the law, and it’s up to judges to interpret the law. In 2022, the CFPB, under the previous administration, put out a document called the Interpretive Rule on Preemption, where they decided what the statute meant. So the first problem was that CFPB actually doesn’t have the authority to do that. They’re not the judge. They implement regulations. They don’t interpret law. That’s up to the courts to decide. They clearly decided to go against the congressional intent of the FCRA. And the current administration believes that that is not their role; that is up to Congress to decide the law. And they were attempting to state that fact, right? So they basically went back to what was common knowledge of the interpretation on preemption to what it was prior to 2022. And they acknowledge in their current interpretive rule that this is not binding, just like the 2022 rule was not binding. It was an interpretation, right? It didn’t go through the APA process, right? We couldn’t sue in 2022 because they didn’t write an actual rule. They just said, this is what we believe. So the current administration is saying you don’t have the right to say, this is what we believe. That is up to Congress. You probably remember the Loper Bright case, which basically said Congress writes the laws, right? If they’re ambiguous, the the regulators actually don’t have the flexibility to interpret it. It’s up to Congress. So I believe the current administration is trying to get the market back to where Congress intended years ago.

Terry Gerton What does this all mean for both consumers and lenders who have to use this kind of data?

Dan Smith The credit reporting ecosystem is critical to every consumer in this country. It provides access to credit. It provides the lender with the ability to mitigate their risks, to analyze the consumer and their ability to repay the loan. It helps facilitate the buying of a car. You could walk into an auto dealer and walk out with a $50,000 car today. And a good reason is because of the credit reporting system. It allows the lender to evaluate the consumer with data. They’re not making judgments. They’re not looking at the person. They are making a decision based on data that talks about their ability to repay the loan. So every day consumers benefit from a robust, complete, accurate credit report. The good, the bad and the not so good. And if you have a system that doesn’t intake the completeness of a consumer’s credit, then you’re going to have decisions that are not accurate. And a lender has two basic choices at that point. They can cut back on their lending, lend to less, or they can charge people more because they’re taking on more risk. Those are their two levers. So the more complete and more accurate a credit report is, the better the lender’s going to be able to manage their risk and lend to more people.

Terry Gerton I’m speaking with Dan Smith. He’s the CEO of the Consumer Data Industry Association. So in the interim between the previous administration’s interpretive rule and this one, some states tried to create their own standards on credit reporting. Were there any particular state actions that raised a red flag for you at CDIA?

Dan Smith Yes. The reason CDIA is so current concerned about the state action is that Congress is the decider of what can and can’t be on a credit report. And it is critical that we have a national standard, that the same data, same types of data appear across the country, so that there is a system that a lender can rely upon if they’re lending in California or they’re lending in Nevada or they’re lending in New Jersey. The credit score that’s based off that information is consistent across the country. If you had data in California that’s different than data in New Jersey, that means the score would act differently. A 750 in California that doesn’t have medical debt would perform different than a 750 in New Jersey that does have medical debt. And I don’t know how a lender can manage a network of 50 different credit reports, 50 different credit scores — and there aren’t just two credit scores, FICO and Vantage score. There’s 50 or 60 different forms of credit scores based on the lender. It’s a complex weave and it’s important to have a national standard so a lender can evaluate the consumer on a level playing field. And if you allow someone other than Congress to determine what can or can’t be on a credit report, you’re bringing politics into the decision making, not sound underwriting decisions. So today’s medical debt, tomorrow’s student loans. Next week is homes damaged by a natural disaster. And before you know it, that credit report is less valuable to the lender and they stop buying the credit report and using it as a tool to lend more.

Terry Gerton You mentioned medical debt along with some of the others. There was a recent decision in the Eastern District of Texas having to do with medical debt that vacated a C F P B rule. Was that in line with the new rule or was that related to the old rule?

Dan Smith So we actually filed that case, CDIA along with Cornerstone Credit Union League out of the Texas area. So you had you have two things. You have the current interpretive rule, which they talked about preemption and what a state can and can’t do. That’s what happened last week. Back in January of 25, the previous administration, as they were leaving, finalized the prohibition on medical debt from being included in credit reports, right? We and others sued saying you don’t have the legal authority to determine that, only Congress does. So back in … 1996, Congress actually prohibited medical debt from being on credit reports, right? People don’t realize, in ’96, they said no medical debt. We don’t think that’s correct. In 2003, they came back and said, oops, that was a mistake. When somebody has $50,000 in any kind of debt, a lender needs to know that so they can make the right choice and not put that consumer in a position that they’ll fail. You don’t want to give people more credit than they can actually afford. So Congress in 2003 passed a law saying both medical debt can be included as long as you can de-identify the medical institution. So if you are a patient at Sloan Kettering, this was an actual example by Congress. You’re a patient at Sloan Kettering and your credit report says. Medical debt, $5,000 Sloan Kettering, the assumption can be made very easily that you have a medical cancer. They don’t think that was fair. And they made the decision that you could put the medical debt, but you have to quote code it or block the identity of that company, the Sloan Kettering. But it says you can definitely put the information on there. So they completely reversed their opinion and said it’s important. So what happened was in ’25 in January, the administration and the CFPB said, we don’t agree with Congress. We’re going to take it off. And they used some data and some analysis and a lot of hyperbole and said, this isn’t fair to the consumer, so we’re gonna take it off. Well, they don’t have the authority to actually do that. So the lawsuit in Texas was to say the authority the Bureau has is to implement regulations, not make law. And the court agreed with us completely.

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Terry Gerton Timely payments, rescinding stop work orders, and monitoring long-term impacts are top priorities as agencies restart operations. We’ll also look at key takeaways from PSC’s Vision Conference with CEO Jim Carroll. Jim, thanks for joining me.

Jim Carroll Terry, thank you so much for having me on.

Terry Gerton You are coming off two days of the PSC Vision Conference. Let’s start there. What were the biggest insights that you heard over those two days of discussions?

Jim Carroll Well, I’ll say three insights. One was it was a brutal way to start the Monday after Thanksgiving holiday … But, we had to accommodate the really great speakers on — including really some wonderful keynote speakers. Next year it will not be the Monday after Thanksgiving. So for all of our members, you know, for this event, we’re thankfully able to get a better date. But more importantly, as I mentioned, really was hearing from some of the leadership in the administration about, what is their projections for 2026 and how the money, as being appropriated by Congress, as the budget request and where they expect it to go. And so, one was just the amount of money, which is something worth talking about. The other thing and is really the use of AI and how the embrace of AI by the federal government is rapid, but it’s also a bit unknown. We’re moving forward in this space of the government using AI without everyone necessarily understanding all the implications. So I think so far those are the two big takeaways that we’ve been able to summarize. And, it’s a great event for our members and a few guests.

Terry Gerton What did you hear about this administration’s take on industry partnerships?

Jim Carroll You know, I think we have to sort of look back at DoD. I think DoD with Secretary Hegseth is a good example of that. As you recall, in November, Secretary of War Pete Hegseth met with our members and the folks that do defense contracting and said that they really do want to do a radical revolutionary overhaul of the FAR, and especially, in the sense of producing deliverables and measuring outcomes based on performance and getting this done right and how the military, how the branches within DoD have been tasked with coming up with orders … by mid-January, 60 days, in terms of how they think we can best streamline the process. And our hope is that this proposal really has legs. And we think it does. There’s support in Capitol Hill. There’s support in the administration. And of course, we — the leading trade association for companies that do business with the federal government — we’re completely supportive of most of these changes. There are things that we’ve been asking for for years that would really expedite the awards. Hopefully, with the grace of God, cut down on the number of appeals following an award, which seems to be a bit of an epidemic of companies now just expect there to be an appeal. And so we’re really very hopeful that this will stick and we’re optimistic that it will. And so that’s one of the major things, and then of course, as I mentioned, the amount of money in government services. And there was discussion about that … this week from the assistant secretary of war, that you know, there really is going to be an extraordinary amount of money, $850 billion at DOD with at least $180 billion toward services. And that’s what our very, and I’m proud to say, patriotic, companies that want to do the right thing for the war fighter and the taxpayer are eager to jump on board.

Terry Gerton Speaking with Jim Carroll, CEO of the Professional Services Council. Jim, tell us more about what you heard about the deployment of AI from the government agencies and within the contractor community.

Jim Carroll Yeah, so within the government we had speakers from across the government. As I said, Assistant Secretary of War, Michael Cadenazzi, who handles the industrial base policy, talked about an initial $180 billion, $200 billion in services, and how the use of AI and services can change and how there needs to be flexibility because of AI, that when some of these contracts call for a hundred seats to be filled, that there is enough flexibility that contractors can come back to the government and say, hey, we’re gonna use some, you know, AI, some other advanced technology. We can reduce the number of personnel from a hundred to eighty people. And in the past there’s been some resistance. Both the Department of War and some of the other departments, you know, really stressed that they want flexibility because of AI. I’ll say one thing that was interesting, and we’ve seen and heard this from members, is that there are a fair number of new companies who have never put in bids for government work that are using AI to not only write their proposals, but as I mentioned, also the use of AI to appeal. I mean, it just seems like it’s a press of the AI button, if you will, and an appeal is generated. And we need to get away from that, you know, for valid, justifiable awards, let’s move forward and deliver good results. And so we’re very optimistic. The recognition that AI has some limitations to it, but that it can deliver fast results is something that will be very interesting to see in 2026.

Terry Gerton Jim, one of the things that you and I have talked about, we’ve talked about it with a lot of contracting folks on the show is the uncertainty about the federal government workload for contractors. I’m wondering what you heard from your members over the course of this conference, especially as we’re sitting right now just post-shutdown and possibly pre-shutdown in January. What what are you hearing and what is PSC’s advice?

Jim Carroll Terry, don’t jinx us. No more government shutdowns. No, we’re tracking January 30th very closely. We had very senior meetings in the White House in the West Wing with a couple different meetings because of the shutdown to talk about the impact that it is having on results and the impact it is having on protecting the homeland. And so, what we told them in addition to the impacts is when the government gets up and running, because shutdowns end. This was a record-breaking one, but shutdowns do end. And as soon as they end, you know, it’s to tell the individuals in the departments, immediately start processing these invoices, get these payments out the door. You know, there are a fair number of companies, especially in the small to mid-size, that really did not have stable cash flow. They really were hurting. We saw some layoffs or at least, you know, sidelining of key employees, and it really presented a huge financial strain on the companies, which flows down to the employees, which flows down to the communities. And so that’s what we asked for. We asked, in addition, that the momentum on getting contracts, new contracts out the door, be, you know, jump-started as fast as possible. Historically, it takes quite a while after a shutdown for things to resume sort of a normalcy. And, we don’t have time for that. In addition to the financial impact, truly the impact on national security. The world is facing new and dangerous threats that seem to be magnifying every day. And our contractors are able to deliver world-class results and protection. And unless they get up and running immediately, you know, those threats are very real.

Terry Gerton Are you seeing that kind of activity coming out of the government agencies now a couple of weeks on from shutdown?

Jim Carroll You know, we’re actually pleasantly surprised. And I hate to say that word surprised, but in the past, it does seem to be a bit of a lag. Our message seems to be delivered. We’re getting payments out quickly. Maybe not all and not every department, but it seems to be beating historic records in in terms of getting payments out. Obviously, some companies are still hurting, you know, waiting to get paid for work that they performed. But we’re happy so far. But Terry, I can’t believe you brought up January 30th of next year. You know, is this a lull between shutdowns? I hope not. I hope that they’re able to resolve, you know, some of the significant issues, healthcare, things like that. But as we’ve talked about, there’s not a lot of workdays up on Capitol Hill, and we just cannot have another shutdown.

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Interview transcript

Terry Gerton The Securities Industry and Financial Markets Association has recently written to the SEC asking to modernize its communication and record keeping rules. Help us understand what the big issue is here.

Robert Cruz Well, I think the fundamental issue that SIFMA is calling out is a mismatch between the technology that firms use today and the rules, which were written a long time ago — and in some cases, you know, the Securities and Exchange Act from 1940. So essentially we’re all struggling trying to find a way to fit the way that we interact today into rules that are very old, written when we were doing things with typewriters and, you know, over written communication. So it’s trying to minimize the gap between those two things, between the technology and what the rule requires firms to do.

Terry Gerton So instead of all of those hard copy letters that we get from investment firms and those sorts of things, we also get emails, text messages. That’s where the disconnect is happening?

Robert Cruz Yes. It’s the fact that individuals can collaborate and communicate with their customers over a variety of mechanisms. And some of these may be casual. They may be not related to business. And that’s the fundamental problem is that SIFMA is looking for the rules to be clarified so it pertains only to the things that matter to the firm, that create value or risk to their business or to the investor.

Terry Gerton And what would those kinds of communications look like?

Robert Cruz I think what they’ll look like is external communication. So, right now the rule doesn’t distinguish between internal — you and I as colleagues talking versus things that pertain to, you know, communications with the public or with a potential investor. So it’s trying to carve out those things that really do relate to the business’s products or services and exclude some of the things that may be more just conversational, as you and I might pass each other in the hallway, we can chat on a chat board someplace. It’s trying to remove those kind of just transitory communications from the record keeping obligations.

Terry Gerton Right. The letter even mentions things like emojis and messages like “I’m running late.”

Robert Cruz Exactly. And you know, it’s a fundamental problem that firms have is the fact that if you say you’re going to be able to use a tool, even if it’s as simple as email, that means that our firm has an obligation to capture it. And when it captures it, it captures everything, everything that is delivered through that communication channel. So that creates some of that problem of like, somebody left their lunch in the refrigerator. We need to clean it up. it’s trying to remove all of that noise from the things that really do matter to the business.

Terry Gerton Not only does that kind of record keeping impose a cost on the organization, the reporting organization, but it also would create quite a burden on the regulators trying to sort out the meaningful communication in that electronic file cabinet, so to speak.

Robert Cruz Absolutely. Well, the firm clearly has the obligation to sift through all of this data to find the things that matter. If you have a regulatory inquiry, you’ve got to find everything that relates to it. Even if it’s, you know, I talked to an investor and there was an emoji in that conversation. I still need to account for that. So the burden is both on the firm as well as on the regulator to try to parse through these very large sets of data that are very, you know, heterogeneous with a lot of different activities that are captured in today’s tools.

Terry Gerton Relative to the question about the tools, you’ve said that SEC rules should be agnostic to technology. Unpack that for me. What exactly does that mean?

Robert Cruz Sure. This kind of goes back a few years where there was a revision to the rule 17A-4 from the SEC, which is the fundamental record keeping obligation. It says you need to have complete and accurate records. What they tried to do at that time was remove references to old technologies and spinning disks and things we used to do long ago. And so the objective was to be more independent of technology. Your obligation is your obligation. If it matters to the business, that’s the principle that should govern, not the particular tool that you use. So technology being agnostic — or rules being agnostic; technology means it doesn’t matter whether it’s delivered via email, via text, via emojis, carrier pigeons or anything else. If it matters to the business, it matters to the business.

Terry Gerton How do today’s variety of technologies complicate a business’ compliance requirements?

Robert Cruz The challenge is very complex, period. It’s always going to be with us because there’s always going to be a new way that your your client wants to engage. There may be a new tool that you’re not familiar with that they want to interact on. Or you may get pull from your employees internally because they’re familiar with tools from their personal lives. So that encroachment of new tools, it doesn’t go away. It’s always been with us. And so it’s things that we have to anticipate. Again, be agnostic because there’s going to be something that comes right along behind it that potentially makes you know an explicit regulation irrelevant from the outset.

Terry Gerton I’m speaking with Robert Cruz. He’s the Vice President for Regulatory and Information Governance at SMARSH. All right, let’s follow along with that because you’ve got a proposal that includes a compliance safe harbor. So along with these compliance questions, what would that change for firms and how does it address the challenges of enforcement?

Robert Cruz Well, it’s an interesting concept because the rules today are meant to be principles-based. They’re not prescriptive. In other words, they don’t tell you, you must do the following. And that’s one of the challenges the industry has is that, what is good enough? What is the SEC specifically looking for? So this is like trying to give people a safe spot to which then you can say, well, SEC, if you really care about, you know, particular areas of these communications, they can tune their programs to do that. So it feels like it’s just giving some latitude so that we can define best practices. We can get a clearer sense of what the regulators are looking for. It’ll guide our governance processes by just having a clearer picture of where enforcement’s going to be focused.

Terry Gerton The regulatory process that would apply here is notoriously slow and complicated. What’s at stake for firms and investors if we don’t get this modernized?

Robert Cruz Well, I think you’re going to continue to see just a lot of individual practices that will vary. Some firms will interpret things differently and we’ll need to wait for enforcement to determine which is the best way. So, case in point, generative AI — if you’re using these technologies inside of the tools that you currently support, are these going to be considered issues for the SEC or not? We we have to wait until we get some interpretation from the regulators to say, yes, we need to have stronger controls around this, or yes, we need to block these tools. You know, you need to make that adjustment based upon the way that the SEC responds to it.

Terry Gerton And what is your sense of how the SEC might respond to this?

Robert Cruz My gut tells me that just given where we are right now, you know, the SEC has a reduction in headcount it’s dealing with. It’s stating its mission very clearly and its focus is on crypto, is on capital formation, is on reducing regulatory burden. I just don’t know if this makes the list. So it clearly is being abdicated strongly from SIFMA, but, whether this makes page one of the SEC priorities list with the 20% reduction in headcount, it really seems like an outside chance that it gets onto their agenda.

Terry Gerton Could it inform some of the other regulation issues that they’re addressing, such as crypto and and capital formation?

Robert Cruz Absolutely. And that’s a great comment — the notion of using an unapproved communication tool, it didn’t go away. We may not see the big fines anymore, but I think the regulators are going to be saying if there’s an issue related to crypto, related to investor harm or what have you, if you’re using a tool that is not approved for use, you don’t have the artifact, you don’t have the historical record. They’re not going to view that you know favorably if you’re not able to defend your business. And so it’ll come up in context of other examinations that they’re carrying out. So maybe not a means to an end as it’s been for the last two years, but it will impact their ability to do their jobs ultimately.

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