Old Newsletters - 2021

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July 23, 2021                                                                                  Issue 63

Yesterday, the Senate Armed Services Committee advanced its version of the National Defense Authorization Act, which increases the topline DOD budget by $25 billion, in line with calls for a 3-5% increase from FY 2021. We’ve pulled some key acquisition highlights from the Executive Summary, with the most exciting one showing support for reforming the Planning, Programming, Budgeting, and Execution process. The bill is far from finalized, and we can all look forward to the marathon markup that will resolve differences between the HASC and SASC versions. Speaking of budget reform, there’s an event this morning on the topic hosted by The Heritage Foundation, with ARP researcher Eric Lofgren and NPS professor/ARP researcher Phil Candreva.

We are thrilled at the choice to nominate Andrew Hunter, a long-time friend of and researcher with ARP, for head of Air Force acquisition. In addition to his previous experience at the Pentagon, Hunter has produced and supported smart research during his tenure at the Center for Strategic & International Studies. We highlight two of his research projects in this newsletter – his 2019 symposium presentation on adapting acquisition processes for software-defined hardware-based adaptable systems, and his latest CSIS research on biosecurity and the bioeconomy.

The top acquisition leadership position for DOD remains unfilled. Last week we shared that Mike Brown withdrew his name from consideration. Days later, it was announced that Stacy Cummings will be leaving A&S for NATO. The Politico article puts this vacancy in the context of the other Senate-confirmed positions at the Pentagon: 20 nominees are waiting for votes in the Senate, and 27 positions have no nominee.

In NPS news, faculty member Scot Miller makes the case for Model-Based Systems Engineering with an article that intersects with a trend in this week’s news and research on the need for (and challenge of) creating interoperable software throughout DoD systems.

 

This Week’s Top Story

SASC Completes Markup of Fiscal Year 2022 National Defense Authorization Act
Press Release

U.S. Senators Jack Reed (D-RI) and Jim Inhofe (R-OK), Chairman and Ranking Member of the Senate Armed Services Committee, announced Thursday that the Committee voted 23-3 to advance the National Defense Authorization Act (NDAA) for Fiscal Year 2022. During the subcommittee and full committee markups of the legislation, the Committee considered 321 amendments and adopted 143 bipartisan amendments. The bill now heads to the Senate floor for consideration.

The 61st annual NDAA supports a total of $777.9 billion in fiscal year 2022 funding for national defense. Within this topline, the legislation authorizes $740.3 billion for the Department of Defense (DOD) and $27.7 billion for national security programs within the Department of Energy. This legislation, like the President’s budget request, does not include a separate Overseas Contingency Operations (OCO) request – any war-related costs are included in the base budget.

Notable components of this bill, taken from the Executive Summary:

  • Establishes a Commission on Planning, Programming, Budgeting, and Execution (PPBE) Reform to provide an independent review and assessment of the PPBE process of DOD.
  • Establishes a pilot program to develop and implement unique contracting mechanisms for emerging technology that can increase the speed, flexibility, and competition of DOD acquisition process.
  • Repeals the preference for fixed-price contracts.
  • Requires DOD to develop and implement management innovation activities to support more effective business operations, including enhancing research on management challenges and partnerships with management and business schools.
  • Directs DOD transition of F-35 program sustainment from the Joint Program Office to the Air Force and Navy.
  • Requires the Secretary of Defense to submit a report on the plans for the Cyber Maturity Model Certification Program.
  • Directs the establishment of a working group to review and propose updates to DOD and component acquisition policy and guidance on cybersecurity requirements for systems and weapon acquisitions and report on specific proposals for updating policy and guidance.
  • Requires the Navy to develop a 15-year acquisition, modernization, and sustainment plan for the entire carrier air wing, building off the FY21 NDAA requirement to produce a fighter force structure acquisition strategy.
  • Provides the Secretary of the Air Force the authority to delegate the duties and authorities of the Senior Procurement Executive that relate to space systems and programs.
  • Amends section 9021(c) of title 10, USC, to modify the role of the Assistant Secretary of the Air Force for Space Acquisition and Integration to include broader responsibilities for acquisition integration of space architectures across the DOD.
  • Authorizes funding for the Acquisition Innovation Research Center to develop new and innovative acquisition policies and practices.
  • Directs the Acquisition Innovation Research Center to develop a capability to model and test proposed policy changes to better assess proposed changes to law, regulation, or acquisition practices.

 

ARP and NPS News

Spring Graduation at NPS and the ARP Impact
ARP Blog

Get to know the latest cohort of NPS graduates & the research ARP supported. A total of 364 U.S. and international military officers and DOD civilians completed their studies at Naval Postgraduate School this June. Sixteen of these students, in 8 teams, graduated with support from ARP, and four of these students received awards for their research.

The Navy Needs a New Way to Write Software
Captains Scot Miller and Charles Deleot, U.S. Navy (Retired), and Manfred Koethe | USNI Proceedings

New analysis from NPS faculty member and ARP researcher Scot Miller: According to the Consortium for Information and Software Quality (CISQ), in 2020 the United States wasted $2.08 trillion on bad software and its effects—nearly 10 percent of U.S. gross domestic product!  The Navy’s response to this crisis has been to embrace and implement Development Secure Operations (DevSecOps). But DevSecOps does not—cannot—fix fundamentally bad software. The “SecOps” stages will only succeed as well as the initial development process is executed. In MBSE, the software engineer creates a conceptual design model that is formally provable—that is, the logic of the software is impeccable. The follow-on evaluation of the conceptual design model is as simple as connecting it to a virtual operating environment that includes cyber threats.

ARP Principal Investigator Dr. Robert Mortlock recognized for teaching excellence

On July 7, Robert Mortlock received a letter of commendation from NPS Provost Scott Gartner for being in the top 5% of the faculty considered for the RADM John J. Schieffelin Award for Excellence in Teaching. He is recognized across campus for his “personal commitment to excellence in teaching and the positive effect it has on the education of our students.” Bob directs dozens of student theses each year, publishes regularly, and provides invaluable wisdom to the operational and financial management of ARP. Congrats, Bob!

 

Acquisition and Innovation

Biden to nominate defense industry expert Andrew Hunter as Air Force acquisition boss
Rachel Cohen, Air Force Times

Acquisition of Software-Defined Hardware-Based Adaptable Systems
Andrew Hunter, ARP Symposium Presentation (2019)

DoD must look for ways to harness technological innovation and incorporate smarter solutions for defense through acquisition and modification of systems that are multifunctional and designed for continuous modification.

When Biosecurity Is the Mission, the Bioeconomy Must Become Government’s Strategic Partner
Andrew Hunter, Gregory Sanders, and Sevan Araz, Center for Strategic & International Studies

House task force pushes Pentagon to wean itself off Chinese sources
Justin Doubleday, Federal News Network

Top Pentagon weapons office faces vacancies as the military rushes to focus on China
Paul McLeary and Connor O’Brien, Politico

TTS awards 4 contracts for governmentwide agile services
Dave Nyczepir, Fedscoop

Acquisition Rules Block the Building of War-Winning Networks
John A. Tirpak, Air Force Magazine

Proposed Rule Requiring Federal Contractors to Pay a $15 Minimum Wage Is Released
Courtney Bublé, Government Executive

NITAAC Contract Guide
Federal News Network

Commentary: Is competition in federal contracting dead?
Dave Drabkin, Federal News Network

Resource: Periodic Table of Acquisition Innovations
Federal Acquisition Institute

 

Research

Report of the Defense Critical Supply Chain Task Force
House Armed Services Committee

Speed is Life: Accelerating the Air Force’s Ability to Adapt and Win
Lt Gen David A. Deptula, USAF (Ret.) and Heather Penney, Mitchell Institute for Aerospace Studies

 

Defense and Federal Government

Biden order on competition sparks lobbying spree
Kate Ackley, Roll Call

VA delays further rollout of new multi-billion dollar record system until 2022
Leo Shane III, Military Times

Path for DARPA tech to become part of military’s JADC2 enterprise still unclear
Valerie Insinna, C4ISRNET

Lockheed’s CEO Wants His Company to Connect All the Pentagon’s Weapons
Marcus Weisgerber, Defense One

Commentary: Export Control Policy Rears Its Ugly Head Once Again
William Alan Reinsch, Center for Strategic & International Studies

 

Events

How Congress Can Help America Get More Out of Our Defense Dollars
The Heritage Foundation
July 23, 2021  |  11:00-11:45 ET

Defense News Conference
September 8, 2021

 

Higher Education

Air Force Career Development Academy transforms CDC content, delivery to Airmen
Dan Hawkins, Air Education and Training Command

 

Policy

Executive Order on Promoting Competition in the American Economy
The White House

 

Congress

Defense Critical Supply Chain Task Force Releases Final Report
HASC Press Release

Lawmakers Say Latest Shipbuilding Plan Doesn’t do Enough to Counter China
John Grady, USNI News

 

Acquisition Tips and Tools, with Larry Asch

Now More Than Ever, We Need Unity of Effort in Acquisition

In reading a recent posting on LinkedIn, I thought the author nailed it!

“If I had to point to the biggest reason that Acquisition organizations have problems, regardless of whether DoD or civilian, it’s a lack of collaboration.” “BUT more specifically, I’m talking about internal collaboration.” “No kidding—it’s the same root problem over and over and over.”

You would think internal collaboration would be simple based on our important mission, but that has not been the case in the acquisition world. For years we’ve had difficulty with multi-functional participants having different priorities and other factors leading to pointing fingers at each other when products or services were behind schedule or over budget.

There are many factors why multi-functional acquisition participants (e.g., Engineering, Financial, Contracting, Program Management Office, and Requiring Activity/Customer) do not collaborate as a mission-focused team:

  • No forcing function to drive unity of effort for a given mission
  • Mixed messages and priorities from different functional areas
  • Differing lexicon/taxonomy/language
  • No focus on mission completion
  • Unclear who is in charge – no ownership
  • Competing priorities
  • No teambuilding training on how to work together

All the groups above tend to work independently in stovepipes, and then toss the action “over the fence” to the next group so they can execute their part of the process. That “fence tossing” and subsequent finger pointing leads to a process that is ineffective and inefficient.

The first step to overcoming these factors is to understand the challenges posed by integrating individuals from disparate organizations into a cohesive team to achieve unity of effort. To improve collaboration within organizations, leadership needs to set the conditions for increased Unity of Effort to accomplish mission.

Unity of Effort means multiple multi-functional organizations are working together in distinct but complementary ways toward the same objective. It is a cooperative concept which refers to coordination and communication toward the same common goals for success. To achieve unity of effort, it is not necessary for all to be controlled under the same functional structure, but it is necessary for each agency’s efforts to be in harmony with the short- and long-term goals of the mission.

Unity of Effort lessons learned in both the military and civilian settings are universal: successful teams are comprised of individuals that are properly integrated, well prepared through education and training, and carefully selected for team membership through a deliberate process. In this manner, the team is postured for success and can reap all the benefits that are inherent in achieving Unity of Effort.

To deliver complex capabilities takes a lot of different players, all focused on the same mission. As the LinkedIn post said on internal collaboration: “We have met the enemy and they are us.”

Leadership at all levels, we need you to step up! Rather than working in stovepipes, we must pull together as one internal team.

July 16, 2021                                                                                  Issue 62

You probably already heard last week’s big news: DoD finally cancelled the JEDI contract, which has been under protest for three years. A new pre-solicitation is already posted for JEDI’s successor, the Joint Warfighting Cloud Capability (JWCC), which will be a multi-award IDIQ, with both Amazon Web Services and Microsoft identified as capable offerors. This week, the Defense News Top 100 list of defense contractors is out, with accompanying analysis pointing out, for starters, that revenue was up in a year that saw economic contraction for many other sectors. How much did support from the Defense Production Act factor in to the success of these companies? Also this week, the defense appropriation bill is out of committee, with some expected modifications. And Mike Brown has taken himself out of consideration for the top defense acquisition position, saying he will return to DIU.

In NPS news, HASC chair Adam Smith visited campus for a tour and to deliver the first in-person Secretary of the Navy guest lecture since the covid shutdown. He hit a few key notes: NPS is crucial to developing the creative problem-solving talent DOD needs, and the Pentagon's love of bureaucratic processes is getting in the way of innovation in acquisition, technology & great power competition. We highlight some research from NPS faculty and students supported by ARP, covering acquisition workforce retention (with a model that predicts a post-covid exodus) and new contracts for cloud computing services. Our top story reports on congressional disappointment that the Space Force has not realized the potential to create a streamlined acquisition system, despite some promising initial efforts. Innovating the acquisition process remains difficult, even when there seems to be clear consensus on what needs to change.

 

This Week’s Top Story

House lawmakers call out lack of progress with Space Force acquisition reforms
Nathan Strout, C4ISRNET

In a new report, members of the House Appropriations Committee raised concerns that the U.S. Space Force has failed to take substantial action on reforming space acquisitions.

“The Committee remains concerned that the Air Force has not taken more aggressive action in addressing longstanding space acquisition issues and has made little progress in defining what the Space Force will be doing that is fundamentally different than when it was a component of the Air Force,” said lawmakers in a report on the annual defense appropriations bill.

The Space Force was established as a separate military branch in 2019, but it remains under the Department of the Air Force. One factor driving the establishment of a space force was the expectation that it would help unify space activities and acquisitions, which were then spread among dozens of organizations across the various services.

Read more.

 

ARP and NPS News

NPS Researchers Use Predictive Analytics to Improve Military Retention
Rebecca Hoag, Naval Postgraduate School

Two Naval Postgraduate School (NPS) researchers, Dr. Amilcar Menichini and Dr. Thomas Sae Young Ahn, who teach in the university’s management programs and support the Acquisition Research Program (ARP), think predictive analytics can help maintain a stable workforce. The pair is now in the middle of creating the Dynamic Retention Model (DRM), a predictive analytics model designed to create a hypothetical office full of individuals with different motivations, skills, experience, etc., that is then introduced to different scenarios, such as a pandemic or high turnover. Not only would a Navy command be able to look at the workforce quality as a whole, but they could also narrow down to look at how each employee might respond to different scenarios.

Student Thesis: Acquisitions Above the Stratus: Procuring Consumption-Based Solutions for a Modern DoD
Katherine Bukowski and William Parkin

This Capstone Applied Project evaluates the impact of procuring modern DoD capabilities as consumption-based solutions by applying relevant policy analysis, cost effectiveness analysis, and case study analysis. The authors recommend that cloud computing be placed into a new category within the DOD Taxonomy for the Acquisition of Services and Supplies & Equipment to enable greater flexibility in implementing a newly proposed contract type, consumption-based variable pricing, which must be supported by the revision of language contained in FITARA and 31 U.S.C. §1341 and an extension of FAR Clause 52.241-8.

HASC Chairman Talks Defense Innovation, Technological Leadership During Visit and Lecture at NPS
MC2 Tom Tonthat, Naval Postgraduate School

Congressman Adam Smith, 17th Chairman of the House Armed Services Committee (HASC), visited the Naval Postgraduate School (NPS), July 13, to participate in the university’s Secretary of the Navy Guest Lecture (SGL) program. Smith discussed the critical role of creativity, innovation and emerging technology in U.S. national security during his presentation, “Advancing Our Defense Technological Leadership,” offered live to students, faculty and staff in NPS’ King Auditorium and broadcast online.

 

Acquisition and Innovation

Mike Brown Withdraws As Acquisition Nominee
Aaron Mehta, Breaking Defense

Pentagon cancels JEDI Cloud contract after years of contentious litigation
Jared Serbu, Federal News Network

Biden nominates deputy director of the National Reconnaissance Office to lead new Space Systems Command
Nathan Strout, C4ISRNET

Joint Warfighting Cloud Capability (JWCC) Pre-Solicitation
Sam.gov

CMMC assessment requirements could be changing, potentially raising costs for some
Jackson Barnett, Fedscoop

 

Research

The next frontier in evidence-based policymaking: The science of scaling (recorded webinar)
Brookings Institution

Hypersonic Weapons: Background and Issues for Congress
Congressional Research Service

 

Defense and Federal Government

Multidomain cloud ready for operational use, drone swarm nearly there, says British air chief
Andrew Chuter, C4ISRNET

Navy secretary nominee supports expanding fleet, but says more money is needed
Leo Shane III, Military Times

Riding the wave: Defense revenues rise despite a dark 2020
Joe Gould, Defense News

Top 100 for 2021
Defense News

New ‘chaos engineering’ tool shared between DOD software factories
Jackson Barnett, Fedscoop

 

Higher Education

Commentary: How to Stop Political Division from Eroding Military-Academic Relations
Rikki H. Sargent, Shannon Houck, and Lucian Gideon Conway  |  Defense One

 

Congress

House appropriators advance $706 billion defense spending bill
Joe Gould, Defense News

A dozen of Biden’s national security nominees are on hold in the Senate
Joe Gould and Rachel S. Cohen, Defense News

Warren Lifts Kendall, Shyu Holds; Pushes Four-Year Revolving Door Rule
Theresa Hitchens, Breaking Defense

House Appropriators Carve Out $1.5B For DDG Navy Failed To Fund
Justin Katz, Breaking Defense

 

Acquisition Tips and Tools, with Larry Asch

CLINs for Travel in Commercial Contracts

Recently there was a great thread on LinkedIn about Defense Pricing and Contracting (DPC) Procurement Management Reviews (PMRs) on use of Cost CLINs for Travel. As we start to travel again, now is a good time to review how to structure travel expenses on commercial contracts.

The FY21 PMR cited recommendation reads: Ensure COST CLINs for travel are not included in commercial contracts (FAR 16.301-3(b)). The use of cost-reimbursement contracts is prohibited for the acquisition of commercial items.”

Here is an example of a best-business practice for the use of travel CLINs in commercial contracts:

Preferred method:  If travel is known, the preferred method is to have potential offeror’s quote travel within their proposal and include it into the contract on a firm fixed price (FFP) basis.  For example: “The customer has identified four (4) two-day meetings that require contractor presence (x 2 personnel) at (location) during the period of performance.”

In this method, the respective offerors would be required to provide a FFP quote for two contractor personnel, to include transportation, lodging, meals and incidentals, for two days at the respective location (multiplied by four to account for each scheduled meeting).     

Alternate method: If travel cannot be pre-determined and quoted on a FFP basis, include the following:

Direct Reimbursable Contract Line Item:

CLIN XXXX Travel - includes transportation, lodging, meals and incidental expenses incurred by the contractor; these travel expenses will be allowed under this CLIN and are subject to the limitations contained in the Joint Travel Regulations (JTR).  They should not be included in the offeror’s quote and will be permitted only after approval by the contracting officer or contracting officer’s representative and shall be limited by the JTR and the CLIN not-to-exceed (NTE) total.

The CLIN should be structured as follows:

               

CLIN

Description

Qty

Unit Price

Total Amount

XXXX

Contractor Travel; This is a not-to-exceed (NTE) CLIN and is a direct reimbursable CLIN subject to the limitations contained in the Joint Travel Regulation (JTR).  All travel under this CLIN must be approved in advance and shall at no time exceed the total NTE amount. 

10,000

$1.00

NTE $10,000.00

               

The Contractor may be required to travel in performance of this contract. Allowable travel, including transportation, lodging, meals and incidental expenses, are reimbursable only when travel has been approved in advance by the contracting officer or contracting officer’s representative; reimbursement of allowable travel is subject to the limitations of the Joint Travel Regulation (JTR).  At no time shall the contractor exceed the established not-to-exceed (NTE) total amount as provided in CLIN XXXX.

In my research this is a common question about the best way to include a travel CLIN, as discussed on GSA Interact:

Question: “I have frequently seen in our office the practice of including an ODC Travel CLIN on a cost-reimbursable basis; that is, the CLIN in the FFP contract is delineated as a cost-type CLIN, thus making it a hybrid FFP/Cost contract.” 

Answer: Travel on GSA Schedules is not done as a cost-reimbursable basis. Travel costs are handled instead as a "direct reimbursable." They are handled this way specifically to avoid the hybrid contract scenario described in this question….”

If you want to see some lengthy intellectual discussions on this subject, read this 2009 WIFCON thread.

Many organizations have used a cost-reimbursable CLIN and rightfully called it a Hybrid contract. I like the approach of a not-to-exceed (NTE) CLIN as a “direct reimbursable CLIN.”

Guidance coming out of the DPC PMRs on this subject would be greatly appreciated. Also, I want to thank the openness of folks to share best practices and lessons learned such as above Direct Reimbursable CLIN methods.

July 2, 2021                                                                                    Issue 61

Next year’s budget continues to move through hearings and debates. This week the House Committee on Appropriations released its draft of the FY2022 defense funding bill, linked below. It is largely in line with the President’s Budget Request, with a few modifications, but we’re seeing plenty of leaders pushing back on everything from specific platforms to the top line. Our top story shares commentary on the budget process from our old friend on the Hill, Mac Thornberry, who continues to advocate for reform—this time with an eye on how the government acquires emerging technologies like artificial intelligence. In other acquisition news, Oracle has taken its appeal on the JEDI contract to the Supreme Court, continuing the slow death march of that version of DOD’s enterprise cloud solution.

This week a number of articles discuss how military education is adapting for the information age, with changes coming to Marine Corps education and a new NPS course on cyberspace strategy. We’re already seeing many requests for that course to grow beyond the NPS community into something like a MOOC.

Our highlighted ARP-supported research comes from recent Spring graduate Jan-Paul Amposta, who analyzed the latest technological innovations in commercial warehouse logistics and applied them to Navy supply corps needs. Among other findings, his thesis explains why the counterintuitively efficient inventory management technique used by Zappos was worth nearly $1 billion to Amazon. Read his conclusions to learn how robots might be part of the solution for the Navy.

No Tips and Tools this week, and no newsletter next Friday. Have a great Independence Day weekend, and don’t forget to reflect on the core beliefs that have made Americans more alike than different over the past 245 years. See you July 16.

 

This Week’s Top Story

How Congress must reform its budget process to compete against China in AI
Former Rep. William “Mac” Thornberry, The Hill

The Biden administration’s 2022 budget proposal includes a record $112 billion for defense research and development. The increase is appropriate, but more money alone will not keep us competitive with China and other adversaries. Today’s rapid innovation and technological change renders our industrial age approach to funding obsolete. Along with spending more in crucial areas, we need significant reform in how those funds are allocated and spent.

The National Security Commission on Artificial Intelligence (NSCAI) was created to help guide Congress and the nation in one of the foundational new technologies for national security, and it documented in detail many of the problems created by the current budget process. Its Final Report provided recommendations that Congress and the executive branch should act on immediately.

Over the last several years, Congress has given DOD several new authorities for acquisition and DOD has made some use of ‘work-around’ organizations like the Strategic Capabilities Office and the Defense Innovation Unit. But DOD still does not have the budgeting and funding flexibility to rapidly develop and field promising technology wherever it is developed. Although it may seem like a wonky, in-the-weeds issue, transforming how we fund the life cycle of emerging technologies, such as AI, is a strategic imperative for our nation.

Read more.

 

ARP and NPS News

Applying Commercial Procedures and Technology to the United States Navy's Material Inventory Validity
LCDR Jan-Paul Amposta

The Department of the Navy (DON) needs to improve inventory accuracy to increase readiness in multiple theaters. This recent ARP-supported student thesis examines the logistics model of high-profile, successful organizations to identify processes and technologies that would enable real-time audit for the DON. Further, the study conducts a cost-benefit analysis to determine the best value technological tools for acquisition by the DON. Amposta’s findings suggest that purchasing Automated Mobile Robot (AMR) technology by Fetch Robotics is the most beneficial alternative for real-time inventory accountability.

NPS Launches “Cyberspace and Military Operations” Course Open to all Students
MC2 Tom Tonthat

Understanding the role of cyberspace in military operations is not limited to just the cyber experts and practitioners, especially in this modern era of Great Power Competition. With this in mind, the Naval Postgraduate School (NPS) is launching the all-new CY4000 “Cyberspace and Military Operations” course, a new one-credit online class for the upcoming Summer Quarter, starting July 6, and it is open to all students.

NPS Students’ Acquisition Research Steals the Spotlight at Annual Symposium
MC2 Tom Tonthat, Naval Postgraduate School

During the 18th annual Acquisition Research Symposium (ARP) in May, Naval Postgraduate School (NPS) students presented theses and research projects to the Department of Defense (DOD) acquisition community during a virtual Graduate Student Research Poster Show. The students’ research covered various aspects of acquisitions such as price analysis factors and developing international wireless solutions. They spent a lot of time on their research to find improved ways to bring relevant technology from developers and experts to the warfighter, bridging the gap known as the Valley of Death that separates the two.

 

Acquisition and Innovation

Oracle petitions Supreme Court over $10B JEDI protest
John Hewitt Jones, Fedscoop

Bidders are scratching their heads over developments in a major NIH acquisition program
Tom Temin, Federal News Network

Lawmakers push back on VA’s plan to use ‘opaque’ fund for IT modernization
Jackson Barnett, Fedscoop

Industry presses for more time on cyber EO’s software transparency initiative
Justin Doubleday, Federal News Network

 

Research

Artificial Intelligence: An Accountability Framework for Federal Agencies and Other Entities
U. S. Government Accountability Office

 

Defense and Federal Government

Pentagon’s top IT official: More coordination needed on weapon systems and critical infrastructure cybersecurity
Andrew Eversden, C4ISRNET

OMB Offers New Guidance For Implementing First Part of Evidence Act
Aaron Boyd, NextGov

CNO Gilday: Tight Budgets Require Balance Between Readiness, Modernization
Mallory Shelbourne,  USNI News

 

Higher Education

Space Force Adds University of Colorado to Upcoming Partnership Program
Amanda Miller, Air Force Magazine

Here’s how the Marine Corps is looking to revamp its schoolhouses
Philip Athey, Marine Times

Commentary: The Challenge of Educating the Military on Cyber Strategy
Erica Borghard, Mark Montgomery, and Brandon Valeriano  |  War on the Rocks

 

Congress

Democratic appropriators want to spend more on weapons procurement than Biden
Joe Gould, Defense News

Kendall Nomination Held Without Explanation by Three Senators
Abraham Mahshie, Air Force Magazine

Bill to create federal rotational program for cyber experts passes to House floor
Dave Nyczepir, Fedscoop

Smith slams F-35 lifecycle costs: ‘We can do a hell of a lot better’
Joe Gould, Defense News

Appropriations Committee Releases Fiscal Year 2022 Defense Funding Bill
Press Release and Bill Summary, House Committee on Appropriations

June 25, 2021                                                                                            Issue 60

Today’s theme: the challenge of implementing cybersecurity standards for federal contractors. Our lead story summarizes a recent industry survey showing that the burden of implementing CMMC may be too much for some small electronics manufacturers. In related news, DoD is reviewing the CMMC process and considering strategies to support small businesses, including offering financial assistance. Kathleen Hicks shared this week that the future of the ill-fated JEDI contract may become public within a month. She also announced a new data and AI initiative working with the combatant commands.  Several articles on IT acquisition point to the ongoing tension between saving costs with GWACs and awarding fewer contracts to small businesses as a result.

This week sees some leadership positions confirmed (GSA and OPM) or nominated (assistant secretary of defense for international security affairs). In ARP news, we share some additional highlights from last month’s symposium panel on AI and cybersecurity, previewed a few weeks ago. And NPS Professor Dan Finkenstadt continues to shape the conversation about supply chain management, using the challenges of COVID vaccine distribution as a jumping off point for thinking through general challenges in managing visibility and risk in complex, global chains.

 

This Week’s Top Story

Electronics manufacturers send warning shot across CMMC’s bow
Jason Miller, Federal News Network

A new survey from the IPC, an industry association representing electronic manufacturers, found nearly a quarter of all respondents said the cost and burden of CMMC may force them out of the defense industrial base (DIB).

About half of IPC’s 3,000 members are located in the U.S. and many are serving the DoD market.

“This is important because we’ve already seen a considerable contraction and reduction in the number of electronics manufacturers here in the United States. To give you a sense of the kind of trajectory that we’ve been on as a country, over the last 20 years or so we have dropped from more than 2,000 printed circuit board manufacturers in the United States to fewer than 200. And that number is expected to decline further,” Mitchell said. “We were hearing from so many of our members that they were having anxiety about CMMC. It’s important to understand that electronics manufacturing generally is a thin margined business, so even small incremental cost increases can really effect a company’s competitiveness. As companies are beginning to undertake the assessments and do the other stuff necessary for certification, we were hearing from many of them that the costs were much larger than they had anticipated, and that there was continuing to be a lack of clarity about the requirements and what the timeline were.”

Read more.

 

ARP and NPS News

Smart Tech Acquisition Starts with Asking Tough Questions
ARP Blog Post

How can the Navy and the Department of Defense best use and acquire capabilities made possible by emerging technologies like artificial intelligence? That question, and the many answers to it, ran throughout the recent symposium panel, “Enhancing Acquisition with Artificial Intelligence and Cybersecurity.” Rear Admiral Lorin Selby, Chief of Naval Research, chaired the panel and kicked off conversation with some thoughts on how Naval acquisition and larger structures throughout DoD need to change to address today’s technologies and threats.

“The acquisition model we have is tuned for about 1985,” Shelby said. “It’s tuned for an adversary that is technologically inferior and economically inferior to us. That is not the case today with a nation like China. Some of the topics we have today in this panel are critical to that discussion. How do you go after the things our acquisition system is not tuned to do?”

Tuning value chains for better signals in the post-COVID era: vaccine supply chain concerns
Daniel J. Finkenstadt (NPS) and Robert B. Handfield (NCSU), International Journal of Operations & Production Management

NPS Professor Dan Finkenstadt continues his collaborative research on how to monitor supply chains, arguing that some best practices can transcend the particular challenge of COVID vaccine distribution.

 

Acquisition and Innovation

Pentagon to reveal JEDI cloud-computing contract’s future in coming weeks
Joe Gould, C4ISRNET

Pentagon CMMC review aims to address small biz cost concerns, ‘restore trust’ in assessment processes
Justin Doubleday, Federal News Network

Energy Department Revising Cybersecurity Requirements for Nuclear Administration Contractors
Mariam Baksh, Nextgov

GSA creates $2.1B contract for NOAA’s IT
Dave Nyczepir, Fedscoop

Industry group warns onerous criteria for GWACs may benefit large contractors
John Hewitt Jones, Fedscoop

Connolly floats legislative fix for IT working capital funds
Dave Nyczepir, Fedscoop

NATO hopes to launch new defense tech accelerator by 2023
Vivienne Machi, C4ISRNET

 

Research

Building End-to-End Sustainment Plans for Weapon Systems
Vincent “Bram Lillard and Han Yi, Institute for Defense Analyses

Software Development: DOD Faces Risks and Challenges in Implementing Modern Approaches and Addressing Cybersecurity Practices
U.S. Government Accountability Office

 

Events

Periodic Table Of Acquisition Innovation And Frictionless Acquisitions
ACT-IAC
June 29, 2021  |  10:00am-12:00pm EDT

 

Defense and Federal Government

Hicks Announces New Artificial Intelligence Initiative
Terri Moon Cronk, DOD News

Robin Carnahan confirmed to lead GSA
Jackson Barnett, Fedscoop

Senate confirms Ahuja as first permanent OPM director in more than a year
Nicole Ogrysko, Federal News Network

Biden picks Russia pro for key Pentagon post
Joe Gould, Defense News

Commentary: Do U.S. Navy Surface Warfare Officers Need A New Career Path?
James Homes, 19FortyFive

Commentary: The New Pentagon Slush Fund (Pacific Deterrence Initiative)
Andrew Lautz and Mandy Smithberger, Defense One

 

Congress

Senators Hammer $1 Billion Loss, Industrial Instability with Navy’s Planned 2022 Shipbuilding
Richard R. Burgess, Seapower Magazine

Pentagon chiefs insist flat defense budget is enough
Joe Gould, Defense News

 

Acquisition Tips and Tools, with Larry Asch

What is an Antideficiency Act (ADA) Violation?

As we get ready for the 4th Quarter Spending Spree Season, here’s a reminder of what to watch for to prevent an ADA Violation. The ADA underpins the federal spending processes, and violation puts managers at risk and bring great embarrassment and scrutiny on an agency.

The ADA has its origins dating back to 1884 and was updated twice: in 1950 and again in 1982.

The 1982 version of the ADA is located in Title 31 of the U.S. Code. It prevents agencies from:

  1. Spending more funds than Congress has given them, or spending that money before received,
  2. Accepting “voluntary services,” and
  3. Spending more than Congress apportioned or allotted.

The ADA is the only appropriations statute that includes both criminal and civil penalties. Federal employees who “knowingly and willfully” violate ADA shall be fined not more than $5,000, imprisoned for not more than 2 years, or both. My research uncovered that no federal employee has ever been prosecuted or convicted under this statute. The mere potential for criminal and felony prosecution does make the ADA the appropriation law that almost all federal employees have heard of and enhances compliance with the act.

Antideficiency Act: What NOT to Do!

Below are some excerpts from a recent GAO compilation of ADA reports for FY 2020.

“Agencies that violate the Antideficiency Act must report the violation to the President and Congress and transmit a copy of the report to the Comptroller General at the same time. 31 U.S.C. §§ 1351, 1517(b). The report must contain all relevant facts and a statement of actions taken.”

Some examples:

  • Appropriations from O&M accounts to fund multiple contracts for development of an IT system. These contracts should have been funded using appropriations from RDT&E.
  • Incurred obligations without a valid apportionment in place. Attorney in its Office of General Counsel advised that a written apportionment was not necessary following the enactment of the second continuing resolution (CR) because the Office of Management and Budget (OMB) Bulletin 17-02 automatically apportioned funds provided by the CR. However, OMB Bulletin 17-02 did not automatically apportion funds and Agency incurred obligations without a valid apportionment in place.
  • An obligation in excess of its apportionment. Program officials did not check funds availability at the time of the approval.
  • Obligations to pay for an outside employee training program that focused on personal growth rather than professional development.
  • Improperly received and accepted voluntary services.

Another source for what activities would constitute a violation is DoD 7000.14-R Financial Management Regulation Volume 14, Chapter 2 “ANTIDEFICIENCY ACT VIOLATIONS.” In addition to explaining potential violation scenarios, this guidance provides a list of actual violations that occurred within DoD.

Violation Examples:

  • Obligated O&M funds for site preparation construction costs on a relocatable building project. This unauthorized obligation of O&M funds instead of military construction funds.
  • Obligated O&M funds in advance of the appropriation when a 14-month severable services contract was awarded that exceeded the 12 month limit.
  • Obligated O&M funds for two- and four-year severable equipment leases.
  • Obligated O&M funds in excess of the Continuing Resolution Authority allocation.
  • Obligated O&M funds for information technology equipment in excess of the investment threshold.
  • Obligated O&M funds, rather than Other Procurement funds, to purchase a data processing local area network (LAN). Even though the hardware components and LAN operating system software were purchased separately, the components and the software together constituted a system with an aggregate cost in excess of the expense/investment threshold.

These examples are meant to help you understand some of the issues that have caused ADA Violations and how serious a matter it is. When I was a new Contracting Officer, I found people I could trust and read all the guidance closely. Your best friends are the Program Manager Business Office Chief and Fiscal attorney. Ask to see the guidance, funding line, etc. And remember: if they know it, they can show it. 

One more tool is GAO’s Principles of Federal Appropriations Law, also known as the Red Book.

June 18, 2021                                                                                            Issue 59

As DoD pivots to focus on China, the role of Naval forces is taking center stage in conversations about budget, the national defense strategy, policy, and upcoming confirmation hearings for Carlos Del Toro, nominated to be the next Secretary of the Navy. This week’s NATO summit has yielded new agreements that the organization will respond to attacks in space and cybersecurity. It also declared China a global security challenge.

In Congress, markup of the FY 2022 NDAA will begin July 28, with a break for August recess. The amended NDAA may include the recent House-approved proposal to repeal the 2002 Authorization of the Use of Military Force. Budget hearings continue next week, with appearances from Austin and Milley. This week also brings new policy documents announcing the unified regulatory agenda and continuing efforts to shore up domestic supply chains.

In acquisition, federal purchasing of consumption-based solutions is getting closer to having a standard process. Federal contracting boomed in 2020, but small businesses are starting to get edged out by best-in-class contracts meant to save money through category management. This week’s ARP research reveals flaws in systems meant to hold contractors accountable for past performance. Watch the video and read her thesis for full findings and recommendations.

Finally, we’ve got a bonus article for those who want to understand why they just got today off for Juneteenth. Happy Freedom Day!

 

This Week’s Top Story

GSA set to alter cloud buying landscape with new policy
Jason Miller, Federal News Network

After almost two-and-a-half years of work, the General Services Administration is about ready to unleash a new way to buy cloud services.

GSA released its second draft policy to industry in May that would let agencies buy cloud services “by the drink” through the schedule contract.

A second draft policy created by Jeff Koses, GSA’s senior procurement executive, outlines how this buying approach would work under the schedule contract, including not requiring the Price Reduction Clause, which mandates vendors give the government their lowest price at all times, and what type of contract and how the funding would work.

“GSA anticipates purchasing cloud computing on a consumption basis will increase competition, as the move towards commercial practices will encourage new entrants to the FSS program,” Koses wrote in the draft policy, which Federal news Network obtained. “With a contract structure more closely tied to real time demand, this approach also provides greater flexibility to take advantage of technology improvements and better support cyber security. Tying cloud computing procurements to commercial market prices will also provide cost transparency without burdening contractors with additional transactional price reporting requirements. Plus, this approach promotes cost efficiency as it reduces the need to lock into long term contracts in markets where falling prices are reasonably anticipated.”

Read more.

 

ARP and NPS News

Student Research Video: Impact Analysis of DFARS 252.242.7005 on Contractor Business System Approval

NPS student Symantha Loflin explored the impact to the government, contractor, and warfighter of the implementation of Better Buying Power Initiative 3.0 and more stringent government oversight of contractors. This research details significant deficiencies of the process.

How Long Does It Take to Award a Government Contract? Understanding PALT Time Frames with Big Data Analytics
David I. Gill and Timothy G. Hawkins

From research presented at this year’s symposium. The purpose of this research is threefold: (1) to understand the drivers of procurement administrative lead time (PALT), (2) to identify opportunities to reduce PALT, and (3) to predict when specific requirements are likely to be awarded. These analyses will be performed using newly available, government-wide data for over 5 million federal contracts.

Note that Larry’s “Tips and Tools” also discusses PALT.

Today NPS holds its spring quarter graduation ceremony at 1000 PT. Watch online.

A total of 364 U.S. and international military officers, and DOD civilians, completed their studies this quarter. The Spring Quarter class includes 152 U.S. Navy graduates; 77 U.S. Marine Corps graduates; 39 U.S. Army graduates; 17 U.S. Air Force graduates; 53 DOD civilian graduates; 1 U.S. Space Force, 1 U.S. Navy Reservist; 1 U.S. Army Reservist; and 23 international graduates representing 15 countries.

 

Acquisition and Innovation

Contraction of small business contractors: What’s prompting the drop?
Jonathan Tercasio, Federal News Network

Government’s Contract Spending Reached Record High in Fiscal 2020
Frank Konkel, Nextgov

Air Force, Navy developing agreement to share coding platforms
Jackson Barnett, Fedscoop

White House Releases a Regulatory Agenda to Advance Its Priorities
Courtney Bublé, Government Executive

Commentary: Small Business GWACs: A History of Success in Promoting Governmentwide Opportunities for Small Businesses
The Coalition for Government Procurement

Resource: De-Risking Guide for Government Technology Projects
18F

 

Bonus

So You Want to Learn About Juneteenth?
Derrick Bryson Taylor, The New York Times

On June 19, 1865, enslaved African-Americans in Galveston, Texas, were told they were free. A century and a half later, people in cities and towns across the U.S. continue to celebrate the occasion.

 

Policy

Increasing Opportunities for Domestic Sourcing and Reducing the Need for Waivers from Made in America Laws
Office of Management and Budget

Spring 2021 Unified Agenda of Regulatory and Deregulatory Actions
Office of Information and Regulatory Affairs

Building Resilient Supply Chains, Revitalizing American Manufacturing, And Fostering Broad-Based Growth: 100-Day Reviews under Executive Order 14017
The White House

 

Defense and Federal Government

Pentagon considering permanent naval task force to counter China in the Pacific
Lara Seligman, Politico

Next National Defense Strategy Should Return to Two-War Force Construct
John A. Tirpak, Air Force Magazine

Navy Needs 'Champion' In Secretary Nominee Del Toro, Analysts Say
Caitlin M. Kenney, Defense One

NATO expanding defense clause to attacks in space
Mychael Schnell, The Hill

NATO members agree to new cyber defense policy
Maggie Miller, The Hill

DHS poised to remake federal hiring in September to confront cybersecurity gap
Natalie Alms and Justin Katz, FCW

OPM Finalizes Rule Easing Rehiring of Ex-Feds
Erich Wagner, Government Executive

 

Congress

Lawmakers are worried about the US Navy’s spending plan and a near-term China threat
Megan Eckstein, Defense News

House 2002 war authorization repeal, with Senate action next
Joe Gould, Defense News

Space Command asks Congress for $67 million to achieve full operational capability
Nathan Strout, C4ISRNET

Chairman Smith and Ranking Member Rogers Announce Markup Schedule for Fiscal Year 2022 National Defense Authorization Act
HASC Press Release

Full Committee Hearing: “The Fiscal Year 2022 National Defense Authorization Budget Request from the Department of Defense” – June 23, 2001
HASC Press Release

 

Acquisition Tips and Tools, with Larry Asch

Will Measuring PALT Fix Procurement?

What is PALT, and what does it measure? Depending on the source, you’ll get different answers.

Do you know which of these is the real PALT?

  1. Procurement Action Lead Time
  2. Procurement Acquisition Lead Time
  3. Procurement Administrative Lead Time

All three of these names are commonly used, but the correct answer is C.

The measurement of PALT has been around for years, but when does it start? In some organizations it begins when the procurement office receives a completed Acquisition Requirements Package (ARP). An ARP or equivalent nomenclature is a complete package including all acquisition documents (and there can be a lot!), approvals, and justifications. Others start measuring when they receive a "funded" requisition. Still others say it begins when the program office had a need and started the first steps (we used to call this Acquisition Lead Time, or ALT).

Over the past three years, we’ve been moving closer to a shared definition of PALT.

The FY2018 National Defense Authorization Act (NDAA) Section 886 first mandated that it be defined for all of DoD as “the amount of time from the date on which a solicitation is issued to the date of an initial award of a contract or task order of the Department of Defense.”

The following year, the FY2019 NDAA Section 878 required the Office of Federal Procurement Policy (OFPP) to develop a definition of PALT to be applied Government-wide and to develop “a plan for measuring and publicly reporting data on PALT for Federal Government contracts and task orders in amounts greater than the simplified acquisition threshold.” This proposed regulatory change was posted in the Federal Register a year later (01/21/2020).

Finally, OFPP issued a memorandum, “Reducing procurement administrative lead time using modern business practices,” on January 14, 2021, putting this definition in place. This memo defines PALT consistent with the FY2018 NDAA language. To provide the data needed to measure PALT, FPDS-NG now has a field for solicitation date, “a mandatory reporting requirement for all contracts or orders valued above the SAT.” The memo includes a table with 17 examples of recent contracting actions taken by agencies that have reduced PALT.

This is a great start, but has anyone seen this memo and taken action?

Here are my recommendations for timely acquisition customer support:

  1. First and foremost, the acquisition team needs to sit down and find out when the customer needs it and why. This may be a novel idea, but it works.
  2. In my experience, the long pole in the tent is getting out of the gate and forming a good Integrated Project Team (IPT) to develop the Market Research Report and Acquisition Strategy. By the time you get to solicitation, you have a good handle on the acquisition and next steps. This measurement of PALT seems to tell only half the story.
  3. Improving PALT time is not just about the contracting folks. Acquisition is a team sport, and we need to look at the whole process; the development of the acquisition requirements package is a key measurement of time. The Section 809 Panel report reflected that from start of requirement to acquisition strategy for one large acquisition took 559 days.
  4. We need improved fundamental training and improvements in all functional areas.
  5. The best tracking of PALT times are the Judy’s, Chris’s, and Jessica’s and others doing their leadership jobs. We used to have a monthly “intensive review” on every acquisition with our Branch Chief Judy. Judy knew Contracting, and she would help expedite and mentor us. But if you had not done your job—watch out.
  6. Some agencies actually have policy groups that help mentor acquisitions and are more than frozen middle checklist reviewers. Early involvement of knowledgeable people helps.
  7. Memos like the OFPP PALT and best practices: what happens to them? How many people read them, how many organizations teach them? How do we institutionalize the DHS Procurement Innovation (PIL) mindset?
  8. What about surveys on how well contracting is supporting the PM’s performance? And yes, let’s hear from Industry too. I know what you’re thinking—no, I don’t think this will affect their functional independence. If it does we warranted the wrong Contracting Officer.
  9. Job Performance ratings directly related to customer support and continuous improvement in customer support and quality

June 4, 2021                                                                                                   Issue 57

The latest issue of Contract Management magazine shows the impact of ARP and NPS on the acquisition community, highlighting the work and accomplishments of former ARP-supported students and collaborating professor Daniel Finkenstadt. The JEDI protest continues to stall out the DOD’s acquisition of cloud capabilities. Biden is looking to increase the percentage of federal contracts going to small disadvantaged businesses as part of the larger movement toward racial equity in American government and society. And we include a few of the many articles analyzing the budget request delivered last week, highlighting the list of unfunded Navy priorities (big procurement projects) and the cut to higher education funding.

 

This Week’s Top Story

After uncertainty around its future, Pentagon will continue defending the JEDI cloud
Andrew Eversden, C4ISRNET

The U.S. Department of Defense will continue to defend its contentious Joint Enterprise Defense Infrastructure cloud contract in court after signaling earlier this year that the program’s future was uncertain, according to court documents filed Friday.

The Pentagon’s decision to continue defending the JEDI contract is unexpected after the department stated in January it would reassess the program if the court decided to hear Amazon Web Services’ allegations of political interference by President Donald Trump. In late April the U.S. Court of Federal Claims declined to toss out those allegations.

Documents filed Friday afternoon indicate that at least several more months of litigation are expected in the lawsuit, which AWS filed after it lost the contract to Microsoft in October 2019. Under one scenario posed by the department, the case would continue into at least October, two years after it originally awarded Microsoft the contract.

In a statement, a Pentagon spokesperson Russ Goemaere said the filing, called a Joint Status Report, was a “standard filing in any litigation.”

Read more.

 

ARP and NPS News

Student Research Video: Husbanding Service Provider Price Analysis Factors

Do short-notice port visits increase cost, decrease competition, or slow down solicitation time? NPS graduating student & US Navy LCDR Austin Gage answers these questions with findings from his team's thesis research, originally presented as part of the student poster show at the 18th Annual Acquisition Research Symposium.

The ARP Community Features Prominently in the Latest Issue of Contract Management Magazine

Alone, We Can Go Fast, But Together We Can Go Far
Contract Management Magazine

Interview with ARP alum Brigadier General Alice W. “Ali” Trevino, Commander of the Air Force Installation Contracting Center (AFICC), talks about category management, “out-innovating” on industry days, change management, and more.

Why Market Intelligence?
Daniel Finkenstadt, Maj. (USAF) and Anne Laurent

NPS professor and ARP collaborator Major Finkenstadt partners with Laurent to provide in-depth looks at how market intelligence differs from standard market research and how it is accomplished by expert practitioners.

Category Management as a Special Forces Mission Enabler

(Available to NCMA members only) Coverage of a recent ARP-supported thesis by NPS graduates Charlie Dacanay, Moises Guzman, and Kelly Wright.

Assessing Russia’s role and responsibility in the Colonial Pipeline attack
Scott Jasper, Atlantic Council

From NPS professor Scott Jasper: “as a scholar of Russian cyber operations, I know Russia benefits politically from the chaos of this attack and Russia has the power and duty to do something about such attacks, even if the weapon is in someone else’s hands.”

 

Acquisition and Innovation

Biden Seeks to Use Procurement ‘Power’ to Close Racial Wealth Gap
Courtney Bublé, Government Executive

BREAKING: Katie Arrington Out At DOD
OQRI, Oxebridge

Navy projects $133 million in business system reforms savings for 2022
Lauren C. Williams, FCW

How the Navy Drives Culture Change and Scales Innovation
Dr. Maria Theodotou, Inc.

Booz Allen wins $674M contract to support DOD data analytics platform
John Hewitt Jones, Fedscoop

Commentary: FSS BPAs: Back to the future or ‘Déjà vu all over again!’
Roger Waldron, Federal News Network

UPDATED: Department of Defense Contracting Officer’s Representatives Guidebook (May 2021)

 

Events

The 2021 CNAS National Security Conference
June 8-17, 2021

TEDxDAU 2021: Platforms of the Future
Defense Acquisition University
June 9, 2021

 

Defense and Federal Government

Navy aims to reduce end strength, cut higher education funding in new budget request
Diana Stancy Correll, Navy Times

Destroyer, Navy Tactical Grid Systems Top $5.5B FY 22 Navy Unfunded List
Sam LaGrone, USNI News

Biden Expands Blacklist of Chinese Companies Banned From U.S. Investment
Carlos Barria, The Wall Street Journal

Memo Outlines DOD Plans for Responsible Artificial Intelligence
DoD News

The Missile Defense Agency’s $8.9B budget request focuses on next-gen defense
Jen Judson, Defense News

Pacific Germany
Dominik Wullers, War on the Rocks

 

Congress

Lawmakers champion China deterrence fund, but not Biden’s version
Joe Gould, Defense News

Before US-Russia summit, measure demands any new missile treaties include China
Joe Gould, Defense News

 

Acquisition Tips and Tools, with Larry Asch

GAO Protest Jurisdiction for DoD Task and Delivery Orders is $25 million – That Depends

When developing your Acquisition Strategy and analysis of contract alternatives for Indefinite Delivery Ordering Vehicles—e.g., OMB Best In Class (BIC), Government Wide Acquisition Contracts (GWACs) such as GSA’s Alliant 2, and STARS II, and NITAAC’s CIO-SP3—you need to take into consideration the impact to DoD Orders and GAO’s Protest threshold. Whether the GAO’s jurisdictional threshold for protesting a task or delivery order is $25 million or $10 million depends upon the identity of the agency that awarded the underlying Indefinite Delivery contract, not the identity of the agency issuing or funding the order.

History:

In 1994, Congress enacted the Federal Acquisition Streamlining Act (FASA), which states that “the Comptroller General shall have exclusive jurisdiction” of a protest “in connection with the issuance or proposed issuance of a task or delivery order.” Other than protests that an order “increases the scope, period, or maximum value of the contract under which the order is issued,” only the GAO, not the Court of Federal Claims, can consider bid protests of orders. Increases in scope protests may be filed at either GAO or the Court of Federal Claims without regard to the value of the order. The following discussion focuses on challenge of Issuance of task or delivery orders and GAO’s jurisdiction, not scope increases.

In 2018, two new rules went into effect that impacted GAO’s jurisdiction to hear protests of task orders and delivery orders issued pursuant to Indefinite Delivery contracts.

First, GAO could no longer hear protests of task or delivery orders of less than $25 million issued under an Indefinite Delivery contract by the Department of Defense, the Coast Guard, or NASA. The change represented a $15 million increase in the threshold task order or delivery order value for a GAO protest, which previously was set at $10 million.

Second, GAO’s jurisdiction for hearing protests valued at $10 million or more and issued by civilian agencies was extended permanently.

Key Consideration: Whether the GAO’s jurisdictional threshold for protesting a task order or delivery order is $25 million or $10 million depends upon the identity of the agency that awarded the underlying Indefinite Delivery contract, not the identity of the agency issuing or funding the task or delivery order. GAO will retain jurisdiction to hear protests of task or delivery orders valued between $10 million and $25 million that are either issued or funded by DoD, Coast Guard or NASA when a civilian agency awarded the underlying Indefinite Delivery contract. Example from recent GAO Protest threshold: even though a DoD Contracting officer issued the Task Order, “The authority under which we exercise our task order jurisdiction is determined by the agency that awarded the underlying IDIQ task order contract, here GSA, rather than the agency that issues or funds the task order.”

With the protest system so broken, this $25 million threshold could create an incentive for DoD to use a current DoD-issued Indefinite Delivery contract or create its own new contracts.

Recommendations:

  • Provide guidance to Contracting Officers and Program Managers so all are fully aware that if you issue an order against a Civilian contract (e.g., Alliant 2) your Order Protest threshold with GAO is $10M, not $25M.
  • OMB’s Memorandum (March 20, 2019) directed agencies to increase use of contract solutions designated as BICs as a preferred governmentwide solutions. The problem is many of the BICs are GSA and NITAAC vehicles. So, the second-order effect of using a Civilian agency BIC is that it will reduce the protest threshold from $25 million to $10 million. OMB should develop NDAA 2022 Language that treats Civilian agency BICs as preferred contracts, so that if DoD issues orders against it, the $25 million threshold applies.

When making your determinations, be careful which contract vehicle you use. I for one like having a $25 million threshold for Task or Delivery Orders in a culture of protest, protest, and more protests.

June 11, 2021                                                                                                 Issue 58

This week we bring news of how NPS research is improving the acquisition of artificial intelligence and other IT, with a profile of Professor Johnathan Mun and a short video excerpt from the recent symposium panel, “Enhancing Acquisition with Artificial Intelligence and Cybersecurity.”  China continues to shape defense strategy: Secretary Austin gave testimony this week defending the FY2022 budget to lawmakers, announced new initiatives resulting from the China Task Force, and directed a new China-focused approach to professional military education.

In acquisition, the top story announces the first CMMC assessor has been certified. The Air Force has a new digital transformation office designed as an “enabler” for best digital buying practices. Determining cost and pricing for spare parts continues to be a challenge. In research, a pair of GAO reports out this week remind us that weapon system acquisition remains on the High Risk List and that ship repair capacity is limited. And don’t miss Larry’s assessment of the Contracting Officer Representative Guidebook released last week.

 

This Week’s Top Story

First CMMC assessment organization approved
Lauren C. Williams, FCW

The accrediting body overseeing the Defense Department's Cybersecurity Maturity Model Certification program announced June 9 that RedSpin has met requirements for Certified Third-Party Assessment Organizations and passed the CMMC Level 3 assessment administered by the Defense Industrial Base Cybersecurity Assessment Center.

With the first authorized C3PAO organization and more expected this summer, the CMMC-AB's plans to have an operational training ecosystem are taking shape. There are currently 156 organizations awaiting approval, according to the CMMC-AB's marketplace website.

Matthew Travis, the accrediting body's CEO, said the standing up of the first C3PAO, which will be able to conduct CMMC assessments across the defense industry base, was a "significant milestone" amid recent cyber events.

Read more.

 

ARP and NPS News

Watch: Scaling technological innovation across DoD's acquisition ecosystem

During the Q&A portion of this year's symposium panel on AI and cybersecurity, chair RADM Lorin Selby asked panelists how DOD can scale up the acquisition of technological innovation. Conversation turned to getting requirements right, education that integrates technical and strategic thinking, and understanding the core problem.

Evaluating Artificial Intelligence: NPS Researchers Seek to Improve Acquisition of AI Systems
MC3 James Norket, Naval Postgraduate School

A challenge in defense acquisition can be the ability to keep up with the speed of innovation in emerging technology, but specifically, the acquisition of Artificial Intelligence (AI) systems can pose a unique challenge, especially if the technology comes from relatively new start-up companies.

Problems Solved Here: Central Coast Tech Bridge, Innovation Accelerator Foundation to collaborate on technology solutions
Office of University Communications, Naval Postgraduate School

The NavalX Central Coast (C2) Tech Bridge is partnering with Innovation Accelerator Foundation (IAF) to expand collaboration between the Naval Postgraduate School (NPS) and public sector innovation organizations to include small to medium-sized American enterprises and universities. The C2 Tech Bridge serves as an innovation hub connecting private, government and defense innovation centers to accelerate development of capabilities related to defense.

 

Acquisition and Innovation

What’s a fair price for KC-46 spare parts? The Air Force isn’t sure
Valerie Insinna, Defense News

US Navy zeroes in on LCS flawed parts, maintenance slow-downs to improve operational days
Megan Eckstein, Defense News

Pentagon’s Accelerating ‘Connect-Everything’ Effort Hinges on Uncertain Cloud Program
Patrick Tucker, Defense One

Air Force launches new digital transformation office
Jackson Barnett, Fedscoop

The Curiosity To Explore, The Humility To Learn, The Boldness To Act (Profile on Hondo Geurts)
Anne Laurent, Contract Management Magazine

 

Research

How to train supply managers – necessary and sufficient purchasing skills leading to success
Klaas Stek and Holger Schiele, Journal of Purchasing and Supply Management

Weapon Systems Annual Assessment: Updated Program Oversight Approach Needed
U.S. Government Accountability Office

Navy Ships: Timely Actions Needed to Improve Planning and Develop Capabilities for Battle Damage Repair
U.S. Government Accountability Office

 

Defense and Federal Government

Hicks: DoD Budget Designed to Deter Chinese Aggression; Pentagon Issues New China Policy Directive
John Grady and Mallory Shelbourne, USNI News

Professional military education is getting a China-focused upgrade
Meghann Myers, Military Times

US Navy creates DDG(X) program office after years of delays for large combatant replacement
Megan Eckstein, Navy Times

Possible First Use of AI-Armed Drones Triggers Alarm Bells
Jamie Dettmer, Voice of America

Video: MQ-25A Unmanned Aerial Tanker Refuels Super Hornet in Successful First Test
Sam LaGrone, USNI News

DoD Seeks $2.3B To Bolster US Chip Making
Brad D. Williams, Breaking Defense

The Department of Defense Announces Establishment of Arctic Regional Center
DoD Press Release

NATO’s Stoltenberg: Sophisticated Cyber Attacks Could Trigger Collective Response
John Grady, USNI News

 

Congress

SASC advances Air Force secretary pick, six other nominees
Joe Gould, Defense News

Austin, Milley defend weapons cuts in Biden’s defense budget
Joe Gould, Defense News

 

Acquisition Tips and Tools, with Larry Asch

NEW: DoD Guidebook for Contracting Officer Representatives (CORs)

The Defense Pricing and Contracting (DPC) site recently posted this news: “On May 28, 2021 the updated DoD Guidebook for Contracting Officer Representatives (CORs) has been published. This replaces the 2012 DoD COR Handbook.” To keep up with these kinds of updates, I recommend checking the DPC site periodically.

The new COR Guidebook is posted here, and the DoD Contracting Officer’s Representatives Guidebook List of Major Changes (2021 versus 2012) can be found here.

The Good News is that I still get excited when new and useful DoD Guidance is published, since I think it can help us do our jobs better. The bad news is that this document, and its 166 pages, missed the mark as user-friendly useful guidance.

First and foremost, all DoD Guidebooks should follow the format started with Ben FitzGerald’s OTA Guide that is easy to navigate and provides advice, OT Facts & Myths, case studies, and lessons learned. Similar user-friendly formats have been used in the Adaptive Acquisition Framework and related resources such as the Contracting Cone.                            

The COR Guidebook states, “This guidebook is NOT to be used as a replacement for COR training.” This guidebook provides basic knowledge and the tools needed for CORs to effectively perform their duties and responsibilities. The information provided in this guidebook is only supplemental information and does not replace any information provided in the FAR, DFARS and agency regulations.”

We are drowning in information while starving for wisdom. Every Guidebook needs to be structured to provide tools that help our folks perform their mission better, and modern-day learners like myself are not going to read a 166-page document of basic information—especially when it’s repeated in other documents.

Recommendations:

  • Guidebooks need to include useful information to include facts and myths, case studies with POCs, useable templates in formats created with the end user in mind, like the OT Guide mentioned above.
  • We need more emphasis on selecting and managing CORs. To start, CORs should meet the minimum COR competencies described in the DoDI 500.72. Then, their experience and training should match the contracts they support, based on dollar value, requirement complexity, and performance risk:
    • Type A: Fixed-price contracts without incentives, and low performance risk.
    • Type B: Fixed-price contracts with incentives; fixed-price contracts with other than low performance risk, and other than fixed-price contracts. This includes everything other than Type A and C.
    • Type C: Unique contract requirements that necessitate the COR have a higher education, or specialized training beyond the Type B requirements.
  • Requirements for COR’s expertise changes over the lifecycle of a program. In a complex R&D or Transformation, the PM or Technical Lead is best suited with procurement analyst support. As the program moves in the lifecycle to production and sustainment, procurement analyst types are best suited as CORs. Bottom line: chose the right COR based on the Types above, and a Type C program needs the right person
  • Consolidate information and provide a roadmap to material and guidebooks to use when training and developing CORs.

May 28, 2021                                                                                                  Issue 56

The full defense budget should be going to Congress today—historically late—and our top story covers the conversation between top DOD officials and House appropriators at yesterday’s hearing. Expect to see a battle between legacy systems and emerging capabilities as DOD pivots for the future within a (relatively) constrained budget. HASC Chair Adam Smith has a commentary out this week making clear what he thinks of systems that have failed by going over budget, under delivering capabilities, or being canceled. In his words, “not getting what you paid for is unacceptable.”  In Tuesday’s confirmation hearing for Frank Kendall, Susanna Blume, and Heidi Shyu, all three shared their thoughts on acquisition challenges such as the F-35 and the balance between R&D and sustainment costs.

In other acquisition news, sam.gov has officially replaced the beta version, with only a few snags in the transition this week. The CMMC Board has a plan for getting the first assessors trained—key to certification being possible. In our Research section, we’re excited to share the latest on China’s Military-Civil Fusion from a team that has presented at this and previous symposia, Emily de la Bruyère and Nathan Picarsic. Their thorough research sheds light on why everyone is talking about China as the “pacing threat” and why it’s past time to examine the global supply chain. When you’re tired of reading, take four minutes to watch and listen as one of our ARP-supported students shares his team’s research on how the Navy educates supply corps officers. When talking about their research during the symposium earlier this month, these students noted that “we have a definite career path leaving NPS.” But their research shows that the Navy can be more intentional for other educational and professional paths.

Happy Memorial Day weekend, and here’s to those who gave their lives to keep so many others safe.

 

This Week’s Top Story

Pentagon budget will shake up ‘legacy’ systems. Lawmakers are shaking back.
Joe Gould, Defense News

A day before details of President Joe Biden’s first defense budget will be released, top Pentagon officials asked Congress to let them use the budget to shed unneeded weapons in order to invest in forward-looking technologies now ― but it was not an easy conversation.

In an appearance before House appropriators Thursday, Defense Secretary Lloyd Austin said the forthcoming budget will spend more on advanced technologies like hypersonics and artificial intelligence, and divest from “older ships, aircraft, and [intelligence, surveillance and reconnaissance] platforms that demand more maintenance, upkeep and risk than we can afford.”

“By making sure we are focused on acquiring the right kinds of capabilities that we need to be relevant in the future fight, I think this puts us in a good place,” Austin said. “That requires us to take a hard look with the services with capabilities that will not be relevant in a future fight and really begin to no longer invest in them.”

The chairman of the Joint Chiefs of Staff, Gen. Mark Milley, said when he became the Army chief of staff six years ago, military budgets were “mortgaging our future to pay for our present.” With an eye on China, the forthcoming budget “is biasing the future over the present, slightly.”

Read more.

 

ARP and NPS News

18th Acquisition Research Symposium Explores Synergy, Technology in Acquisition Strategies
MC2 Tom Tonthat, Naval Postgraduate School

“Defense acquisition is a critical enabler in getting capabilities across the finish line to the warfighter, and this Symposium is a key part of improving that process,” said retired Vice Adm. David Lewis, NPS’ Chair of Acquisition.

Student Research Video: Optimizing the Navy Supply Corps 810 Program--Analysis and Recommendations

Originally presented as part of the student poster show at the 18th Annual Acquisition Research Symposium. LCDR Shawn Grogan shares his team's research calculating the effectiveness of the Navy's program to send supply corps officers to a top-30 U.S. business school. These graduates are expected to serve in leadership assignments where their educational experience is needed to influence strategy, innovation, and significant DoD business decisions. This ARP-supported research analyzes data that shows challenges with the current system and provides recommendations to increase the Navy’s return on investment.

NPS Students Tackle Key Challenges of the Mobile CubeSat Network
MC2 Nathan K Serpico, Naval Postgraduate School

Four Naval Postgraduate School (NPS) students, representing the Navy and Army, have each conducted thesis research to advance and address unique aspects of the Mobile CubeSat Command and Control (MC3) Network, a Department of Defense (DOD)-led ground station network providing common-use infrastructure for small satellite research.

 

Acquisition and Innovation

Biden Nominees Want to Shake Up Pentagon Weapons Buying Process
Marcus Weisgerber, Defense One

NIST to consolidate existing supply chain guidance before issuing new recommendations
Dave Nyczepir, Fedscoop

Tech companies write to Biden administration pushing commercial tech preference
Dave Nyczepir and John Hewitt Jones, Fedscoop

CMMC accreditation chief says assessor training coming ‘mid-to-late’ summer
Jackson Barnett, Fedscoop

(No-longer-beta) SAM.gov gets a qualified B+
Tom Temin, Federal News Network

Commentary: Wasted dollars and unfulfilled requirements: The case for fixing Pentagon procurement
Rep. Adam Smith, Defense News

Commentary; How to fund security and modernize at the same time
Michael Garland and Gaurav “GP” Pal, FCW

 

Events

DoD Supply Chain Vulnerabilities – Perspectives from the House Armed Services Committee
GMU Center for Government Contracting
June 18, 2021  |  10:00 am ET

 

Defense and Federal Government

2 Key Defense Studies Focus on Science, Tech, and Diversity
Amy McCullough, Air Force Magazine

US Navy conducts first live-fire test of hypersonic missile motor
Megan Eckstein, Defense News

Commentary: The Pentagon needs a plan to get punched in the mouth
Christopher M. Dougherty, C4ISRNET

New Resource: Defense Futures Simulator
The American Enterprise Institute, the Center for Strategic and International Studies, and War on the Rocks partnered to address a shared concern: lack of understanding about how defense strategy is translated into concrete budget choices. To meet this challenge, the three organizations built the Defense Futures Simulator.

 

Research

Defusing Military-Civil Fusion: The Need to Identify and Respond to Chinese Military Companies
Emily de la Bruyère and Nathan Picarsic

Spare Parts Contracts: Collecting Additional Information Could Help DOD Address Delays in Obtaining Cost or Pricing Data
U.S. Government Accountability Office

 

Congress

SECAF nominee walks a tightrope on F-35 procurement plans
Valerie Insinna, Defense News

After rare reversal, Wormuth confirmed once again as first woman Army secretary
Davis Winkie, Army Times

Secretary of Defense Opening Remarks for Testimony Before the House Appropriations Committee – Defense (AS PREPARED)
DoD Newsroom

May 21, 2021                                                                                                  Issue 55

Next week should bring the full defense budget, along with some congressional hearings on service budget requests from the Navy and Army. Also planned is a confirmation hearing on three DoD officials including Secretary of the Air Force. In acquisition news, the JEDI contract is getting new scrutiny from Congress, and this week’s Nextgov story highlights how DOD has already moved on with other cloud contracts while waiting out the interminable JEDI protest. This week we’re using our top story to brag a little more about last week’s symposium, which was a resounding success.

 

This Week’s Top Story

18th Annual Acquisition Research Symposium Creates A Vibrant, Informed Community, Once Again

Our first-ever virtual symposium spanned three days and brought together nearly 1,000 attendees, creating a stronger and more diverse community of acquisition researchers and practitioners than ever before. Over 23 panels, presenters shared research on topics including supply chain, IT/AI acquisition, workforce issues, spending trends, and updates from a variety of senior leaders. Four student teams presented their recent thesis research with a crowd of attendees that asked so many good questions, the student poster show ran out of time before we got to them all.

The virtual nature of this year’s event means we have even more resources than normal to share with you:

  • Videos from each day’s keynote address and plenary panel are now posted on YouTube for you to watch.
  • Papers and presentations from panels are being uploaded to the Defense Acquisition Innovation Repository, organized in the collection that includes symposium proceedings and presentations from this and all previous symposia.
  • Currently the full proceedings and many of the papers and presentations can be found organized by panel on the symposium website.

Here’s a quick highlight of our three keynote speakers:

Stacy Cummings kicked off day 1, situating her comments in the context of priorities and goals of the President and the Secretary of Defense, which are calling for innovation, modernization, and enhanced teamwork. She covered recent changes to the DODI 5000 series and the Adaptive Acquisition Framework, including the software acquisition pathway and new DODI guidance on product support management and sustainment.

On Wednesday, Jay Stefany described the Navy’s current acquisition priorities—and they are largely focused on the often neglected sustainment end of acquisition, which accounts for 70% of program costs. Stefany identified several areas where researchers can help as the Navy (and DoD) move to more intentionally plan and manage sustainment. These include prioritizing SBIR projects that focus on sustainment, employing digital engineering across the lifecycle, crafting the right business model for IP rights, planning for cybersecurity upfront, and using more data-informed modeling across the board to support these and more efforts.

VADM Jon Hill opened the final day with a captivating discussion of how the Missile Defense Agency is using emerging technologies to counter ICBMs, hypersonics, and other threats. He also spoke about MDA’s unique acquisition authorities that allow MDA to operate quickly and flexibly, outside of acquisition processes determined by the DOD 5000 series.

The three plenary panels also gave informed, stimulating conversations about acquisition research, policy, and practice. Browse our YouTube channel to find those recordings, and stay tuned for more highlights in future ARP publications. We’ve gotten some useful feedback from many people who attended. If you have thoughts to share, it’s not too late to help us make next year’s symposium even better: https://event.nps.edu/conf/app/researchsymposium/home#!/feedback?c=37

 

Acquisition and Innovation

If the Pentagon Drops JEDI, Then What?
Mila Jasper, Nextgov

Republican lawmakers call for DOD to release full findings of JEDI investigation
Billy Mitchell, Fedscoop

Air Force working on an App Store for IT
Jackson Barnett, Fedscoop

DOD clears path for first assessor to enter CMMC market
Jackson Barnett, Fedscoop

SBA Announces New HUBZones to Expand Federal Contracting Opportunities for Small Businesses
SBA Press Release

Commentary: The bold new direction for missile defense is worthy of support
Maj. Gen. (Ret.) Howard “Dallas” Thompson, The Hill

Commentary: The F-35’s Painful Lessons Must Inform Future Programs
Dan Grazier, Defense One

 

Events

Re-Imagining the Future Force, with Rear Admiral Lorin C. Selby, U.S. Navy, Chief of Naval Research
NPS Secretary of the Navy Guest Lecture
May 25, 2021  |  Noon PT

Subcommittee on Seapower and Projection Forces Hearing: “Department of the Navy Fiscal Year 2022 Budget Request for Seapower and Projection Forces”
House Armed Services Committee
Thursday, May 27, 2021 |  11:00am ET

 

Defense and Federal Government

DoD Publishes DevSecOps 2.0 Docs For Accelerating Apps
Brad D. Williams, Breaking Defense

DOD Aims to Transform Itself Into a Data-Centric Organization
David Vergun, DoD News

Navy’s Plan to Cut an Aegis Destroyer Riles Maine’s Lawmakers
Anthony Capaccio, Bloomberg

 

Congress

Lawmakers press White House for space acquisition chief
Lauren C. Williams, FCW

Congress to vet nominees for Air Force secretary, two more key DoD positions next week
Rachel S. Cohen, Air Force Times

Senate rejects defense spending ‘parity’ amendment
Joe Gould, Defense News

Watch: Subcommittee on Cyber, Innovative Technologies, and Information Systems Hearing: “Reviewing Department of Defense Science and Technology Strategy, Policy, and Programs for Fiscal Year 2022: Fostering a Robust Ecosystem for Our Technological Edge”
May 20, 2021

 

Acquisition Tips and Tools, with Larry Asch

Can a Firm Fixed Price (FFP) contract contain Incentives?

In my opinion, incentives work—we get what we reward. The acquisition culture has not embraced incorporating incentives in our day-to-day processes and procedures.  Is it too hard? Require too much time to develop? Lack of proper training? Certainly, the DoD Guidance on Using Incentives and Other Contract Types (dated April 01, 2016) which replaced the 252-page DoD and NASA Incentive Contracting Guide from 1969 did not help. By comparison, the new Guidance is 41 pages and desperately lacking in the whole gamut of incentives available to an acquisition team.

Let me give you some tips and tools on how you can put performance and delivery incentives to use on a FFP contract. We will save for future articles other types of incentives.

FFP with contract incentives is not new. It has been done, even predating the FAR, DFARS, and ASPR. See below example for basic FFP contract with monetary incentives for exceeding specifications (and monetary disincentives for not fully meeting specifications). 

The flying machine should be designed to have a speed of at least forty miles per hour in still air, but bidders must submit quotations in their proposals for cost depending upon the speed attained during the trial flight, according to the following scale:

  • 40 miles per hour, 100 per cent.
  • 39 miles per hour, 90 per cent.
  • 38 miles per hour, 80 per cent.
  • 37 miles per hour. 70 per cent.
  • 36 miles per hour, 50 percent;
  • Less than 36 miles per hour rejected.
  • 41 miles per hour, 110 per cent.
  • 42 miles per hour. 120 percent.
  • 43 miles per hour, 130 per cent.
  • 44 miles per hour. 140 per cent.

The above specification was issued on 23 December 1907 by the Signal Corps of United States Army for a heavier-than-air flying machine. Yes, you guessed it—the award went to the Wright Brothers.

Today’s guidance in FAR Subsection 16.202-1:

"A firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractors cost experience in performing the contract... The contracting officer may use a firm-fixed-price contract in conjunction with an award-fee incentive (see 16.404) and performance or delivery incentives (see 16.402-2 and 16.402-3) when the award fee or incentive is based solely on factors other than cost. The contract type remains firm-fixed-price when used with these incentives."

What about Acquisition of Commercial items? FAR 12.207(d) says: "(d) The contract types authorized by this subpart may be used in conjunction with an award fee and performance or delivery incentives when the award fee or incentive is based solely on factors other than cost (see 16.202-1 and 16.203-1). "

Note: As stated above, FAR 16.202-1 is the description of "Firm-Fixed Price Contracts" and includes: "The contracting officer may use a firm-fixed-price contract in conjunction with an award-fee incentive (see 16.404) and performance or delivery incentives (see 16.402-2 and 16.402-3) when the award fee or incentive is based solely on factors other than cost. The contract type remains firm-fixed-price when used with these incentives." The adjustment here is the result of the Government paying for better/worse performance, not because of a change in the Contractor's cost basis.

Yes, a FFP contract with performance or delivery incentives is still FFP!

One effective tool to utilize incentives on service contracts is with the Performance Requirements Summary (PRS) see Step 5 of the Performance Based Seven Step Process example below:

“The Department of Defense takes the desired outcomes, performance objectives, performance standards, and acceptable quality levels that have been developed during the analytical process and document them in a Performance Requirements Summary (PRS). The PRS matrix has five columns: performance objective, performance standard, acceptable quality level, monitoring method, and incentive/disincentive.”

Incentives work, and with many of our contracts being FFP we should consider performance and delivery incentives as the norm for services with a PRS. I have reviewed many PRSs, and many do not use the incentive/disincentive column, or call out negative CPARS, or use a sample of the one they did last time.

Recommendation:

  • Leadership at all levels should support that incentives work
  • Mandate use of DoD PRS five columns and training on how to complete each column
  • Provide success stories and samples of using FFP with Performance and Delivery Incentives

If they did it in 1907, we certainly can do it today.