JFCOM Contractors Await Closure Details

    Leaders of the Joint Forces Command (JFCOM) in southern Virginia will meet with vendors Wednesday as they begin to lay out the process of ending service support contracts in preparation for the command’s eventual closure next March.

    The industry day will focus on the transition of remaining missions as well as the associated approach to ending or transitioning support contracts, according to a notice posted on the command’s website. Contractors will be hit especially hard when the command closes as part of Defense Secretary Robert Gates’ efficiency initiative. Although military and federal civilian jobs will mostly be protected – either transferred to a new, smaller command that will replace JFCOM or moved into other parts of DoD – the Pentagon plans to eliminate approximately 80 percent of the contracting workforce. Of the 2,300 jobs the department is eliminating as part of the closure, 2,000 are held by contractors, JFCOM commander Gen. Raymond Odierno said in early February.

    Up to this point, vendors have been frustrated because DoD has not given specifics about which jobs will be on the chopping block, said Butch Bondoc, a consultant who works with contractors in the Hampton Roads community around JFCOM. Contractors and members of Congress have complained that precious few details have emerged about the command’s closure since Gates first announced his intent to shut it down last August.

    The contractors know the numbers, they know the percentages, but every single one of them want to know, ‘which chair are you going to empty?’ Bondoc said. ‘Like any good company, you’d like to be able to say to your people that you’re going to follow up and give you a job after this one goes away. But you don’t know that when you don’t know which people you’re losing. If you employ 10,000 people and you don’t know if you’re affected, you don’t know what to promise. You don’t know what to plan for. Nobody can make a plan until the general announces who’s losing their job. It’s causing a lot of anxiety and a lot of frustration in the area.

    Bondoc said the firms that provide services at Joint Forces Command are both large and small companies, including some of the world’s largest, most recognizable corporate names as well as small, specialized companies with only a handful of contracts.

    The jobs are anywhere from top secret jobs for analysts, scientists, top secret and secret jobs for engineers, technicians, even down to administrative functions, he said. All these jobs are filled by contractors who thought they had a secure contract with Joint Forces.

    Other big questions swirl around the termination of contracts, both the timing and the terms.

    Terry Murphy, who leads the government contracts practice group at the Hampton Roads law firm Kaufman and Canoles said he’s already getting questions from clients who are worried they’ll be on the termination list.

    We’ve been getting calls saying ‘what do I do with this lease now? How do I get out of this lease?’ And at the same time some of our real estate clients are being presented with tenants that say, ‘yes I’ll lease the space, but I want an out, because if the funding for this JFCOM contract doesn’t come through I don’t want to be on the hook for a lease,’ he said. I’m hopeful that our contractors can adapt and find business in the remaining sections of JFCOM or in the other variety of DoD components that we’re fortunate enough to have here in Hampton Roads.

    Murphy said a great deal of effort will be expended in the coming months figuring out how the contracts will come to an end. JFCOM will have to wind down each of the contracts it is terminating, and negotiate terms with each vendor, he said.

    Unlike a private contractor, a government contractor has to sign up to the federal acquisition provisions that allow the federal government to terminate a contract at the government’s convenience, he said. That’s a termination without cause. The applicable regulations in the federal acquisition regulations provide that there will be a termination of convenience settlement negotiated between the government and the contractor so the contractor will be made whole for what he’s expended. But he’s not going to get paid for work that he doesn’t do. I anticipate we’ll see a lot of terminations for convenience coming down the line.

    But that line may get pushed farther back if Virginia lawmakers in the U.S. House have their way. Members successfully pushed through an amendment to the latest continuing resolution passed last week prohibiting any federal funds from being used to close down Joint Forces Command for the rest of the fiscal year.

    Rep. Scott Rigell (R-Va.), who represents part of the Hampton Roads area, said in a floor debate Friday that DoD still hasn’t demonstrated to Congress that the cost savings involved in closing JFCOM are worth the loss of some of its capabilities.

    The establishment of a combatant command requires a literal act of Congress, he said. It follows then that the closure of a combatant command should involve thoughtful analysis that is shared with this body for comment. The closure of Joint Forces Command fails on that important count. Either no such analysis has been conducted, or it is being withheld. The absence of data that supports the closure of a combatant command is simply unacceptable.

    Odierno told reporters earlier this month that slightly more than half of JFCOM’s current functions and jobs would be saved. Many of them will go into a new, smaller command, also based in Hampton Roads and reporting to a two-star general or admiral. Besides joint training and doctrine, DoD plans to hold onto the modeling and simulation functions that JFCOM has worked on for both the Pentagon and outside government agencies. Odierno said the new command might let the contractor base in Hampton Roads rebound within a couple of years.

    The way it’s going to work is if we’re successful building this organization, I believe there will be others who will want to invest in this organization, he said. So you might find if we’re successful two years from now that other areas of DoD are sending money here for us to work their concepts, which would then potentially grow the contract force again, based on demand. Today’s it’s kind of supply-based. In the future it’ll be demand based, where if people think it’s relevant they’ll provide the money.

    Until then, Murphy said, there will be a major impact to the contractor base in Hampton Roads. He said both large and small firms will take a big hit.

    Some of the larger contractors are affected because they’ve invested considerable funds in developing facilities to support JFCOM, he said. But there are smaller contractors that may have one, two or three contracts that they do very well, and they’re going to be affected dramatically by this.

    This article originally appeared in the February 22, 2011 issue of Federal News and is reprinted with permission. 

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