The Department of Defense just released a document outlining the Guidelines For Creating and Maintaining a Competitive Environment for Supplies and Services in the Department of Defense. This document is in response partly to the fact that competitive bidding on DoD contracts has slipped to 57% for FY 2013. This means over 40% of the contracts issued by DoD are not competitive contracts. About 2/3 of these “non-competitive” contracts are service contracts. I think that is somewhat of a surprise as the DoD always thought that technology contracts might be sole sourced, depending on the technology and the confidentiality and security requirements. Service contracts, on the other hand, might not have the same restrictions and it is quite a surprise to officials in the Defense Department that competition is not used more. The Under Secretary of Defense for Acquisition, Technology and Logistics, Frank Kendall, wants to increase the amount of competition in purchases by the Defense Department. The guidelines cover not only services but products and commodities as well.
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The House and Senate Armed Services Committees are currently looking into suggestions on how to "fix" the Defense Department Procurement system. Industry groups, such as the National Defense Industry Association (NDIA), have been asked to submit suggestions to the committees by this month to be considered for the 2016 Defense Authorization Bill. There has been a lot of talk on how to make the system better over the years but most people think that the system has become more cumbersome and somewhat less effective over the years. Many argue that the taxpayer is not getting the best value for their money. That is hard to argue when you see so many defense programs over budget and late in delivery (The FA-22 & F-35 aircraft are two good examples that come to mind). So what will make this attempt to "fix" the system any different from past attempts? According to Rep. Mac Thornberry (R-Texas) the committee is interested in why current laws and regulations didn't work as intended, not in adding new regulations. Rep. Thornberry is currently overseeing the House Armed Services Committee looking into defense procurement reform.
With all the pressure on the Federal Budget the past couple of years, it is clear to see that the way of government spending is changing. The implications of how it changes is very different from what we have seen before. Or is it? One of the clear changes is that spending is being cut. Sequestration calls for cuts if congress cannot decide what to trim from the budget. There have been several band-aids put on the FY2014 budget but the general consensus is that the budget will be trimmed significantly in coming fiscal years. This may mean creative ways to trim expenses in certain departments, like the DoD, and will result in a more competitive environment for those bidding on the remaining work.
The Federal Government released their 2013 report on the Defense Acquisition System. This 126 page report looks at the performance of the purchasing system in the Government's largest arm and points out many of the reasons we have such budget problems that ultimately cause issues such as Sequestration. In a recent issue of National Defense magazine, NDIA president Lawrence Farrell Jr.'s article indicated that now may be a perfect opportunity for the DoD to clean up their purchasing habits. With all the pressure on the Federal budget, especially on the military component, this should be a perfect time to make changes that would result in better acquisition, saving billions of dollars in the process.