Did Elon Just Create a Secret IT Contracting Vehicle at OPM?

Why is no one talking about this?

On January 23rd, the Office of Personnel Management (OPM) awarded a five-year, $23M contract for Business Applications User Support (funded by OPM IT) to a company called Bering Straits under section 8(a) of the Small Business Act. This was a no-bid (sole source) contract - meaning there weren’t any other businesses competing for it. What is an 8(a) contract? The Small Business Association describes it like this:

Federal contracting and training program for experienced small business owners who are socially and economically disadvantaged. Businesses that participate in the program receive training and technical assistance designed to strengthen their ability to compete effectively in the American economy. Also eligible to participate in the 8(a) program are small businesses owned by Alaska Native corporations, Community Development Corporations, Indian tribes, and Native Hawaiian organizations. Small business development is accomplished by providing various forms of management, technical, financial, and procurement assistance.

Aside from being a glaring violation of Trump’s anti-diversity, anti-equity, anti-inclusion and anti-accessibility executive order, there’s something else interesting about this contract. (It is true that Trump’s executive order specifies to cancel programs “to the maximum extent allowed by law,” and 8(a) was passed by Congress in 1978. That would mean something if Trump weren’t trying to dismantle federal agencies established by federal law like USAID, FEMA, and the Department of Education. Or if Trump didn’t violate the Civil Service Reform Act (also passed in 1978) by putting federal workers on administrative leave for participating in diversity, equity, inclusion, and accessibility activity. But I digress.)

What’s interesting about this contract is that at $23M, it comes in just under the wire for a sole source contract because any contract exceeding $25M must be opened up to competition. Additionally, if you award a Sole Source contract above $25M, you have to justify that in writing to Congress under Title 13 CFR § 124.506.

That means the type and scope of work done under this contract over the next five years doesn’t have to be justified to Congress, nor did it have to be publicly described for the purpose of obtaining competitive bids from other companies.

Another feature of 8(a) Sole Source contracts is that they can be spun up extremely quickly, whittling the acquisition process down to a matter of weeks as opposed to the typical year(s) long process.

This contract is also interesting in light of OPM’s recent award of its $164 million ECIOSS (Enterprise Cyber, Infrastructure, and Network Operations Support Services) contract with the same company, which covers a wide range of cyber and IT support, begging the question - why the sudden need for an additional contract with a scope of work that is not available for public review? Plus, the $164M contract was awarded December 31st after only a six-month review. Because that contract was over $25M, there were multiple bidders. 13, in fact. The 8(a) company got the contract, allowing them to be utilized for future 8(a) contracts.

That’s weird for a few reasons as well, including the fact that the government rarely does anything on December 31st, and that the award would launch a 30 day transition period that would last most of January and into the early days of February. Contract transition is a task-heavy and hectic period, and since everyone is busy completing checklists, our systems are more vulnerable during that time the same way our national security is more vulnerable during a presidential transition.

Additionally, trump just cut the percentage of prime government contracts awarded to 8(a) businesses from 15% to 5%, so Bering Straits is getting a bigger piece of a smaller pie.

Keep in mind, if something nefarious is going on, it’s likely that the specific company here is an innocent bystander - nothing more than an 8(a) vehicle to get a quick secret contract on the books for funding that allows IT work to be done without oversight. But I don’t know. What I do know is that I don’t trust Elon Musk to ever do the right thing.

It will be interesting to see how many more of these quick and quiet contracts pop up.

~AG