Defense acquisition chief Frank Kendall announced five new measures to boost competition in defense contracting, though industry representatives said it is a tough problem that will take additional measures to fix.
The Aug. 21 memo, posted online by the National Defense Industrial Association, notes that “when we create and maintain a competitive environment, we are able to spur innovation, improve quality and performance, and lower costs for the supplies and services we acquire. Over the past four years, the Department has not met its competition goals. In fact, we have experienced a declining competition rate, and we must take action to reverse this trend.”
On Aug. 24 Kendall posted “Guidelines for Creating and Maintaining a Competitive Environment for Supplies and Services in the Department of Defense” online, and in September he will publish the “DoD Competition Handbook, A Practical Guide for Program Managers,” which the memo says should help program managers craft a competitive acquisition program. On a Defense Department-wide scale, the memo says DoD should use business intelligence tools to quantitatively measure areas of improvement and areas of progress for creating competition.
In cases where multiple companies expressed interest in the market research phase of a solicitation but few or only one offer was ultimately submitted, “the contracting officer will seek feedback from those companies who originally expressed interest to understand why they did not submit an offer. We will use this feedback to consider how we might overcome barriers to competition for future requirements,” according to the memo.
Fourth, contracting officers will now have to issue a sources sought notice or a request for information (RFI) before issuing sole-source (SS) contracts where the “only one responsible source” clause is invoked, and the responses to the RFI or SS notice will be included in the sole-source contract’s justification and approval (J&A) document. “This technique is already used in many instances, but expanded use will inform our ability to maximize use of competitive procedures.”
And fifth, the information contained in J&A documents will be better tracked. They currently must describe actions an agency could take to overcome barriers to competition, but those recommendations are not tracked or incorporated into larger plans. Kendall’s memo directs that subsequent acquisition of the same product or service must include the previous J&A in its approval package. A higher level in the acquisition chain of command must sign off on the sole source justification after having read the previous suggestions to improve competition and the current reasons why none still exists.
Overall, the attempt to boost competition was well received. Aerospace Industries Association Vice President for National Security and Acquisition Policy Betsy Schmid said that “AIA and our member companies strongly support competition and efforts to encourage and promote it, and we are reviewing the memo from Under Secretary Kendall to understand how the guidance will be implemented.”
She noted, however, that “we will continue to remain vigilant and in dialogue with DoD to reduce red tape and cost that often unintentionally accompany policies that are written with the greatest intent to support our warfighters and lessen the burden on taxpayers.”
Kendall’s memo, for example, does not indicate how much additional time or money it might take to comply with the final two policies regarding J&A documents–which in some cases could lead to more competition, but in some cases could just be another box to check.
Schmid noted that in some cases–many of the Air Force’s aircraft modernization projects, for example–there may reasonably only be one contractor who can do the work. Those contracts add up, and the Air Force’s current research and development budget has about 60 percent of its money going to sole-source contracts. “How do you introduce competition where the Air Force is spending a lot of money modernizing? It’s very hard to do,” she said, and suggested it would take a bigger effort with an emphasis on innovation to get at that problem.
For contractors that provide services, the memo seems less likely to help. Stan Soloway, president and chief executive officer of the Professional Services Council, said with many services contracts there isn’t a lack of competition, but there may be a lack of companies willing to compete for particular contracts “given the nature and the quality of the solicitation.”
“One of the biggest issues in our sector right now is the overuse of lowest price technically acceptable,” he said. Whereas there may be a need to open up more competition in products acquisition, Soloway said with service contracts the government needs to “open the aperture” and try to “recognize innovation and value.” For a company that can offer the best value but not necessarily the lowest price, the current environment can be a disincentive to participate.