The Defense Department is becoming more aggressive in managing its programs by wanting increased cost insight into long-term contracts to ensure it is spending taxpayer money appropriately, according to an Air Force leader.
Deputy Assistant Secretary of the Air Force for Contracting Maj. Gen. Wendy Masiello told Defense Daily that the government’s growing involvement in program management is also driven by a demand for additional data rights.
“If I’m paying for it, I want to own it and I want it delivered so I can facilitate competition down the road,” Masiello said following a presentation Wednesday at Aviation Week’s Defense Technology Affordability and Requirements conference in Arlington, Va.
Masiello said having additional government insight into longer-term contracts is important because after 10 or 15 years, DoD wants to know if it still has a good deal. Masiello said she’s had a generation of acquisition officials in the government turn over, meaning they might not know a program’s history.
Aircraft availability rates, Masiello said, are a prime example of a “good, appropriately-working program” performing up to expectations that doesn’t necessarily require additional government insight.
“But we’re at a point now where I need to better understand where my money is going and are they giving me more than I asked for,” Masiello said. “Sometimes the contractor is actually delivering beyond specifications, does that cost me something?”
If that’s the case, Masiello said, maybe DoD could make a capability-for-costs trade for a lower-priced vendor who provides an important part so it can bring its overall costs down. Masiello said she’s also not against long-term contracts as long as it’s an incentive-type arrangement where the government shares in the savings after a period of time.
“But at some point, I think the taxpayer would like a little bit of a cut of the smart savings they’ve been able to put in place,” Masiello said.
Masiello said the additional insight isn’t necessarily across-the-board, but rather is situationally-specific. Masiello said when the government starts going down in incentive structure so it has more insight, it may decide that an existing fixed-price deal, for example, is a good deal and worthy of continuing.
“But then I have other contractors who have had a fixed-price deal for a very long time and they don’t want to give me any insight. Then you start worrying a bit,” Masiello said. “I won’t mean to be suspicious, but the reality is I have to be. That’s my job to make sure I’m paying the right price for the product I’m getting and the warfighter is getting.”
Masiello said additional insight can benefit both industry and government.
“When we understand really where those costs are, sometimes (she’s fine) with that fixed price deal because I’m comfortable with knowing what the costs were going into the build, about where the profit rates are (and) where the contractor’s return has been,” Masiello said. “In the end, that’s a good deal for all of us.”
DoD recently has developed programs to help improve the acquisition process. One of them, known as Better Buying Power 2.0, is part of a DoD effort to develop various types of business deals. BBP 2.0 is an updated version of a program designed to make the defense acquisition system more efficient (Defense Daily, Sept. 20).