Terry Gerton There has been a lot of focus over the last couple of weeks on the Pentagon’s pause of the CMMC process and a lot thought about what they might do next, but you have a different perspective out there working with the contractors. Folks are still having to make decisions today. So what are you hearing from PSC members about how they’re responding while this is all sort of up in the air?
Stephanie Kostro You know, that is a great question and something that we’ve been talking with a lot of our member companies about since the suspension began. And just to keep to level set and keep in mind, PSC has 400 member companies. Roughly 40% of them do work under contract with the Department of War/Department of Defense, right? And so a lot of them are tracking this issue very closely. A lot of them are in the middle of the CMMC program process to get certified by a certified third party assessment organization. And so one of the top issues was, well, what happens if I’m midway through that certification process? Do I suspend that? And it might come as a surprise to some of your listeners. It came as a somewhat of a surprise to me is that, to a company, all of the ones that I’ve talked to who are in the middle of getting their certification by a third party organization, are continuing with that process. And when I asked them why, why are you continuing through this process? They made a couple of points. One, they’ve begun the process, they’ve invested some money and they wanna see it through. And more importantly is the second point, which is there needs to be a cybersecurity regime for compliance among government contractors. There is going to be a cybersecurity regime in place for government contractors, and they need to be cybersecure. They are all in on making sure that their company has the right cyber hygiene. And that they are taking the right steps in the cybersecurity realm to be cyber secure, particularly when it comes to government information. And so they look at it as a good governance perspective and they are continuing down that path. Now, that might not be the decision for all companies, maybe just the ones I talked to, but I did find their argument compelling.
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Terry Gerton That makes a lot of sense since DoD has been clear that they’re not actually changing the cybersecurity standards. At this point they’re only questioning whether self attestation remains sufficient or you need to have a third party.
Stephanie Kostro That’s right. And I, you know, again, no one’s arguing that they need to be less cyber secure, right? If anything, the cybersecurity standards need to be as they are, always looked at and revised because the threat evolves and therefore the flexibilities in any sort of compliance regime also need to evolve. I would note part of this review process that the department is undergoing for the next 60 days, or it’s already begun, is a request for information from industry and the general public. Those responses are due on August 14th, which is before the assessment is done. And so my hope is that the department and its task force, which has already been seated and has already met and has started to do its work, will take that information on board as part of this assessment process and really listen to what contractors are saying: what works, what doesn’t work, what needs to be fixed and what is potentially superfluous to cybersecurity, but it’s there as a requirement and you don’t actually need it. So, it runs the gamut there, Terry.
Terry Gerton And Stephanie, these standards and this process has been in the works for almost a decade now. This sudden monkey wrench in the process, does that make contractors think, maybe I shouldn’t put my bets in a place where there could be more uncertainty? How are they doing business planning around this?
Stephanie Kostro That is a really great question. One point that I’ve made to some companies, as well as to some folks throughout our ecosystem here, is to say, CMMC really came about in the late teens, right? 2019 or so. PSC was present at the creation of CMMC back in the day. And we’ve seen it go through some review processes and some pauses and some iterations. And so it should not have come as a surprise. If you think about 2019, that was the first Trump administration. They created CMMC. The Biden administration made some tweaks. It is not unexpected that the Trump administration right now would want to make some tweaks again. So, to be honest, this suspension was telegraphed by the executive branch a few months ago. So back in April, May, we knew something was coming. We didn’t know what it was. It ends up that it is a suspension while they undergo this assessment. And we’ll see what emerges at the end of it. So that isn’t a surprise in and of itself. From a compliance perspective, the business planning perspective, I think the larger issue is the Department of Defense/War has a set of requirements. They’re in DFARS, right? The Defense supplement to the FAR. But there are companies that do work for the department and then other departments in the government. What is really desirable from a business planning prospective is that the entire U.S. government have a regime that covers all of the departments and agencies so that you don’t have to set up one compliance regime for the Department of War and another for everyone else. That is problematic.
Terry Gerton Stephanie Kostro is president of the Professional Services Council. Stephanie, let’s switch to another area where there have been lots of changes. PSC just launched an International Affairs Council. So what’s happening in the foreign affairs, foreign assistance market that made right now seem like a good time to create that new organization?
Stephanie Kostro So I’ll go back, about a year ago, we welcomed our new chief executive officer, Jim Carroll, to PSC, and I was given the role of president. And when Jim and I sat down, we looked at all of the agencies, missions, et cetera, that were covered by someone here at PSC. And we noticed that there was a bit of a gap. We had an International Development Council, but we didn’t have any particular body within PSC that could address things like the rest of what State Department did, the international narcotics control and law enforcement, or the rule of law and justice programs. We didn’t have anyone who was really tackling the humanitarian assistance piece. And so we took this as an opportunity to refocus what had been our International Development Council, widen the aperture a bit so that we could talk from soup to nuts about what the State Department does, what the Department of Commerce and the USDA, the Department of Agriculture do in concert with what the State department oversees, with the Foreign Commercial Service and the Foreign Agricultural Service. What the Department of Defense does with foreign military sales, direct commercial sales, et cetera. And so we’ve launched this International Affairs Council. I’m very excited about it because we’ve talked to folks on the Hill, on the Senate Foreign Relations Committee. We’ll be talking to the House Foreign Affairs Committee. We’ve talked with folks at the State Department and the Millennium Challenge Corporation, etc., about what it is that we bring to the table now because we’re covering a wider swath of issues. And we’re very, very excited about the future of foreign assistance.
Terry Gerton When you look at this space, and you’ve covered several agencies that all have a finger in the international affairs pie, how do you make sense of that? What are the issues you’re bringing forward on behalf of your members? What are your big concerns?
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Stephanie Kostro I would say the top issue, as it has been for the last 16 months, is to ensure that our member companies can get reimbursed for work they performed under contract, whether it was under the Biden administration or the early months of the Trump administration, before USAID was, I’ll say, dismantled or otherwise placed under the auspices of the Office of Management and Budget. So reimbursement of outstanding invoices is top of mind, getting them paid. And part of that is also some of the termination settlement proposals. So when contracts are terminated, you go through a process where the government customer and the contractor go through and agree upon what costs can be paid to the contractor to make them whole at the end of this termination process. That is the top issue for us right now, is to make sure that appropriate payments are being made to our member companies. In addition, we wanna be at the table as the executive branch goes through what the future of foreign assistance looks like. We’ve heard both Secretary Rubio, Secretary of State Rubio and others talk about humanitarian assistance, security cooperation, etc., really also support to the United Nations and other international organizations on behalf of the American people to make sure that the American taxpayer is getting a return on investment. I think the contracting workforce has a lot of value to add to this discussion and I look forward to engaging with the State Department and others through our International Affairs Council towards that end, to make it a good value for the American taxpayer and to advance U.S. interests overseas.
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