Photograph by Marc Piscotty/Getty Images

A Sikorsky S-64 Aircrane firefighting helicopter drops water on a hotspot burning close to homes near Horsetooth Reservoir June 11, 2012 near Laporte, Colorado.

Neptune Aviation Services has withdrawn its protest of a U.S. Forest Service contract, allowing the agency to purchase seven air tankers, according to Mike Saccone, spokesman for Sen. Mark Udall. The contract is valued at about $60 million over five years.

Udall, a Colorado Democrat, in May pleaded for the U.S. Forest Service to override the automatic delay caused by the protest of a contract to help put out wildfires. The seven air tankers will be used to drop flame retardant.

“Additional unnecessary appeals and other delays may be simple calculations of dollars and cents for contractors, but slowing the acquisition of a robust air tanker fleet could risk the lives and homes of Coloradans living in wildfire-prone areas,” Udall said in May, according to a statement.

The Missoula, Montana-based company had originally been passed over for the tanker contracts. They were awarded to five closely held companies.

Original post is Neptune Withdraws Contract Protest for Firefighting Air Tankers by Political Capital.

Photograph by George Frey/Bloomberg

A construction worker makes final adjustments to a large autoclave at Alliant Techsystems Inc.’s ATK Aerospace Structures – ACCW Facility. Alliant is the largest supplier of rifle rounds to the U.S. military.

Government contractors are experiencing more decreases in revenue than increases for the first time in at least 18 years.

Thirty-eight percent of federal contractors saw a decrease in revenue in 2012 from the previous year, according to a Grant Thornton LLP survey published today. Revenue grew for 36 percent of respondents, while 26 percent did not see significant change.

The survey, which reflected findings from more than 100 companies, also said that 60 percent of participants reported experiencing profits lower or equal to 5 percent. Only 37 percent of  participants last year experienced profits at 5 percent or lower.

“Demand for firm fixed price contracts, new regulations and increased government audits are certainly reflected in the declining revenues,” said retired Vice Admiral Lewis W. Crenshaw Jr., Grant Thornton’s national Aerospace and Defense practice leader.

Grant Thornton is starting to see defense contractors diversifying their portfolios and moving toward the commercial sector, Crenshaw added.

Original post is Revenue Decreases for 40% of U.S. Contractors, Survey Says by Political Capital.

Photograph by Christopher Powers/Bloomberg

Mike Petters, president and CEO of Huntington Ingalls Industries Inc.

The chief executive officer of Huntington Ingalls Industries Inc. says he doesn’t think it would serve the company’s purposes to issue mass-dismissal warnings to workers even if U.S. spending cuts occur later this year.

“We are much more of a long-term business,” said Mike Petters, CEO of  Newport News, Virginia-based Huntington, the U.S. Navy’s sole builder of  aircraft carriers.

The exception might be if the U.S. government makes changes to existing  contracts, Petters said today at a roundtable discussion with reporters in  Washington.

Defense contractors face automatic Pentagon cuts totaling about $45 billion this year unless the White House and lawmakers agree by March 1 to an alternate deficit reduction plan.

The U.S. Worker Adjustment and Retraining Notification Act, known as the WARN Act, requires most employers with 100 or more workers to give 60 days’ notice of plant closings or “mass layoffs.”

Huntington, spun off from Falls Church, Virginia-based Northrop Grumman Corp. in 2011, is winding down naval operations at its Avondale shipyard in Louisiana, Petters said. He suggested the facility may be redeployed for commercial use.

He mentioned construction work related to refineries and gas plants as a  possible alternative to shipbuilding at the facility.

“There’s a lot of opportunity for those plants to be modularly-constructed,”  he said. “We have a pretty good sense of how to do that, both from an  engineering standpoint and from a construction standpoint.”

Petters said he couldn’t provide a timeline or say what kind of investment would be necessary to shift gears. He said he was “under no illusions” about the challenges.

“I am very aware that shipyards have struggled when they’ve gotten away from
shipbuilding,” he said.

Original post is Huntington CEO Doesn’t See Need for You-May-Be-Fired Notices by Political Capital.

Photograph by Kari Goodnough/Bloomberg

Oil from the BP spill floats in the Gulf of Mexico near Orange Beach, Alabama.

Washington is buzzing about BP Plc’s recent suspension from winning new U.S. government contracts. A few figures to provide some perspective on the oil company, which agreed to plead guilty to criminal charges after the worst oil spill in U.S. history:

• BP had Pentagon fuel awards valued at about $1.35 billion in the fiscal year that ended Sept. 30, 20b1, according to data compiled by Bloomberg.

• The company on Nov. 15 agreed to pay $4.5 billion to end all criminal charges and resolve securities claims relating to the Gulf of Mexico disaster in 2010 that killed 11 people.

• BP’s revenue in 2011: $376 billion. That’s more than the gross domestic product of Denmark. It would be the equivalent of buying more than 2 billion UGG Boots or about 571 million iPad Minis.

• The British oil company had about eight times the annual revenue of No. 1 federal contractor Lockheed Martin Corp., which had about $46.5 billion in sales in 2011.

Nevertheless, the suspension will “take a toll” on BP, said Charles Tiefer, a University of Baltimore law professor and former member of the Commission on Wartime Contracting.

Government acquisition officers weigh contractors’ past performances as they evaluate bids.  That track record is becoming more important as contractors face more competition for a shrinking pool of contracts, he said.

Original post is BP’s Revenue Dwarfs Contracts and Criminal Settlement by Political Capital.

Photograph by U.S. Coast Guard via Getty Images

Fire boat response crews battle the blazing remnants of the off shore oil rig Deepwater Horizon in the Gulf of Mexico near New Orleans, Louisiana.

The Environmental Protection Agency has slapped BP Plc with a temporary ban on new government contracts, telling the world the company showed a “lack of business integrity” after the nation’s largest oil spill, in the Gulf of Mexico.

Now, BP wants to show it’s accountable and dependable so the EPA will lift the ban.

It has dropped more than 100 pages on the agency to demonstrate its “present responsibility.”

The phrasing comes directly from the jargon-laden federal acquisition regulations, the rules that govern contracting. Agencies are supposed to award orders only to responsible firms or individuals.

An agency procurement official can suspend a contractor based on evidence of the “commission of any other offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility” of the vendor.

The British oil company on Nov. 15 reached a settlement with the Justice Department, agreeing to pay $4.5 billion to end all criminal charges and resolve securities claims relating to the 2010 Gulf well blowout, which killed 11 people.

Scott Amey, general counsel for the Washington-based Project on Government Oversight, said he’s concerned that the government considers BP irresponsible so long after the Deepwater Horizon disaster.

The company “has had years to put its house in order,” Amey said.

EPA said the temporary ban will remain in place until BP can provide sufficient evidence demonstrating that it meets federal business standards. The company has said it expects a draft agreement from the agency soon, which would lift the suspension.

“I’m not surprised that BP is doing its due diligence to convince the government that it is a responsible company,” Amey said. “However, the EPA should be watchful of promises, especially this late in the game. A company’s culture can’t change overnight or over the course of a few days.”

Original post is BP’s Case for `Responsibility’ at EPA by Political Capital.

Loaves of Wonder Bread at the Hostess Brand Inc. bakery in Sacramento, California. Photograph by Ken James/Bloomberg

The Pentagon may need to find another vendor to satisfy its sweet tooth.

Hostess Brands Inc., the bankrupt maker of Wonder Bread and Twinkies that has said it will fire more than 18,000 workers and liquidate after a strike crippled operations, has won about $169 million in U.S. government contracts since fiscal year 2000.

Almost 90 percent of that business was with the Pentagon.

In 2011, Hostess won about $15.4 million in federal awards, mainly with the Defense Commissary Agency, according to data compiled by Bloomberg. The amount marked a 34 percent decline from a peak of $23.2 million in 2006.

Chief Executive Officer Gregory F. Rayburn says Hostess will dismiss most of its 18,500 employees and focus on selling assets. Shipments of bread, snack cakes and other products will continue until supplies run out, he says.

The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike Nov. 9 after a bankruptcy judge in White Plains, New York, imposed contract concessions that 92 percent of the union’s workers rejected.

Original post is Pentagon Twinkies Supply Route Cut by Political Capital.

President of Taxpayers for Common Sense, Ryan Alexander, testifies during a hearing on Capitol Hill in 2011. Photograph by Alex Wong/Getty Images

“Punt and go home.” That’s the message that Taxpayers for Common Sense wants to send to lawmakers.

Ryan Alexander, president of the Washington-based non-partisan budget watchdog organization, said in a Nov. 14 open letter to Congress that lawmakers should do the bare minimum necessary to stave off the fiscal cliff and then hand the baton to the elected 113th Congress.

Automatic U.S. budget cuts of $1.2 trillion may be triggered in January if President Barack Obama and Congress don’t agree on a deficit-reduction plan. The cuts, known as sequestration, may combine with tax cuts scheduled to expire at the end of the year, setting up a so-called fiscal cliff that lawmakers from both parties say they want to avoid.

Alexander said lawmakers should enact “legislation that makes a down payment on sequestration to cover at least six months, negotiate a fiscally responsible deal on extending the 2001 and 2003 tax cuts, patch the Alternative Minimum Tax, and use agriculture related offsets such as direct payments to extend the expired farm bill for one year.”

She added, “That’s it.”

Original post is Budget Watchdog to Congress: Do Bare Minimum, Then Get Out by Political Capital.

Government contractor Oshkosh Corp.'s M-ATV vehicle. Photograph by Oshkosh Corp. via Bloomberg

Contractors may see more canceled deals with the U.S. government as the federal budget shrinks, according to Robert Burton, a former top procurement official under President George W. Bush.

“Terminations for convenience” on federal awards will “absolutely” trend upwards, said Burton, a former acting administrator of the Office of Federal Procurement Policy and now partner at Venable LLP in Washington. He said he is already seeing contracts “on hold” in the face of budget cuts in his capacity as an attorney.

Burton said the upward tick in cancellations wasn’t dependent on sequestration, the automatic budget cuts that will be triggered if President Barack Obama and Congress don’t agree to delay or alter them.

“What they’re really planning for are huge budget cuts” that are “going to happen next year” regardless of whether sequestration is avoided, Burton said.

The federal government terminated 13,579 contracts in the fiscal year ended Sept. 30, more than double the 5,692 it ended in fiscal 2006, according to procurement data compiled by Bloomberg. The value of canceled deals was $2.15 billion last year, compared with $416 million five years earlier.

These terminations, which included a $144 million deal with Oshkosh Corp. for battlefield ambulances last year, reflect the discontinuation of war funding that fueled a boom in contract spending in the past decade.

Juliann Francis and Nick Taborek contributed to this report from Bloomberg Government. 

Original post is U.S. Contract Terminations Coming by Political Capital.