For all of you Defense Department contractors out there, I read a very interesting article recently in NationalDefenseMagazine.org, on the pressure the Pentagon faces trying to attract innovative commercial suppliers vs. the need to ensure suppliers are charging fair commercial prices for their products.Read More
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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.
The Defense Contract Audit Agency was created in 1965 to help the Government assure that they are making the best use of taxpayer dollars on the contracts they enter into. As a result, they have been auditing contractors ever since for the Department of Defense (DoD) and even some other Government Agencies. Their audit services have grown to include all kinds of business system audits from Floorcheck Audits (timekeeping function) to full financial system audits. Last year the results of the DCAA were staggering, according to director Pat Fitzgerald:
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 Directorate of Defense Procurement and Acquisition Policy (DPAP) has requested input on the statutes and regulations that govern the purchasing process. Originally the DPAP requested all comments 30 days from the announcement on February 12th. Many industry organizations, including the National Defense Industry Association (NDIA), pushed back and the DPAP office has granted another month to solicit opinions. The new deadline for comments to the DPAP office is April 23rd. The DPAP office is looking primarily for:
Late last year the Federal Government changed the Federal Acquisition Regulations (FAR) to make mandatory accelerated payments to small business, especially from certain agencies. This began with policy directives by the Office of Management and Budget (OMB) Memoranda M-12-16, dated July 11, 2012, and M-13-15, dated July 11, 2013. These policies were incorporated into the FAR on November 25th, 2013. The new rule requires prime contractors to make accelerated payments to subcontractors and is found in the following FAR clauses:
I attended a briefing this week by the Director of Small Business with the Air Force Space Command. It was very enlightening to see the status of small business contracting within this section of the Air Force. Yes, the budget cuts and sequestration has reduced the amount of money being spent in this sector. But the good news is that the small business goals are being met in a lot of areas despite the reduction in dollars (on a percentage basis). The Air Force is using some creative tactics to insure that small business has an opportunity and that the small business goals can be met. I think that the Air Force realizes that small business is the best hope for job growth as well as the best chance for new innovations.