Congress and Acquisition Congress and Acquisition ReformReform

Charting a course in uncertain watersCharting a course in uncertain waters

April 30, 2008 April 30, 2008

Jon EthertonJon EthertonEtherton and Associates, Etherton and Associates,

Inc. Inc.

re·formre·form 1. n., the improvement or amendment of what is 1. n., the improvement or amendment of what is wrong, corrupt, unsatisfactory, etc.: social reform; wrong, corrupt, unsatisfactory, etc.: social reform; 2. an instance of this. 2. an instance of this.

3. the amendment of conduct,3. the amendment of conduct, belief, etc. belief, etc. 4. v. (used with object), to change to a better state, 4. v. (used with object), to change to a better state, form, etc.; improve by alteration, substitution, form, etc.; improve by alteration, substitution, abolition, etc. abolition, etc. 5. to cause (a person) to abandon wrong or evil ways 5. to cause (a person) to abandon wrong or evil ways of life or conduct. 6. to put an end to (abuses, of life or conduct. 6. to put an end to (abuses, disorders, etc.). disorders, etc.).

What is acquisition reform?

The Evolving Vision of The Evolving Vision of Acquisition ReformAcquisition Reform

1983-19851983-1985 Full and open competition is the rule, not the exception.Full and open competition is the rule, not the exception. Pricing controls for spare parts, repair parts and support equipment Pricing controls for spare parts, repair parts and support equipment

not subject to full and open competition .not subject to full and open competition . Increased oversight of costs on cost-type contracts.Increased oversight of costs on cost-type contracts.

19861986 Organizing for improved outcomes on major weapon programs. Organizing for improved outcomes on major weapon programs. Packard Commission.Packard Commission. Goldwater Nichols.Goldwater Nichols. Defense Enterprise Programs. Defense Enterprise Programs. Revolving Door limitations. Revolving Door limitations.

The Evolving Vision of The Evolving Vision of Acquisition ReformAcquisition Reform

1987 – 19891987 – 1989 Piecemeal, case-specific legislation. Piecemeal, case-specific legislation. Rationalizing acquisition law.Rationalizing acquisition law. Cold war and defense industry winding down.Cold war and defense industry winding down.

1989-19941989-1994 Section 800 Panel.Section 800 Panel. Commercial-Military industrial integration.Commercial-Military industrial integration. Commercial products and practices. Commercial products and practices. Entrepreneurial government .Entrepreneurial government . FASA.FASA. FACNET and reducing the acquisition workforce.FACNET and reducing the acquisition workforce.

1995 1995 Preference for commercial products and services.Preference for commercial products and services. Efficient and streamlined acquisition.Efficient and streamlined acquisition. Decentralized IT acquisition. Decentralized IT acquisition. Clinger-Cohen .Clinger-Cohen .

Acquisition Provisions in Defense Authorization Acquisition Provisions in Defense Authorization BillsBills

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10

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30

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60

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FY96 FY97 FY98 FY99FY2000FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08

HouseSenate

2003-20082003-2008Concerns without a Concerns without a vision vision

Contractors are performing too critical many critical Contractors are performing too critical many critical governmentgovernment

functions.functions. Federal acquisition management capabilities are eroding.Federal acquisition management capabilities are eroding.

Contractors have too much influence and control.Contractors have too much influence and control. Requirements development is a major concern.Requirements development is a major concern. The government is losing its most experienced personnel.The government is losing its most experienced personnel. The government is losing its ability to manage large, complex The government is losing its ability to manage large, complex

programsprograms and large service contracts. and large service contracts.

Major program cost growth is out of control.Major program cost growth is out of control. There is not enough competition, especially with IDIQ There is not enough competition, especially with IDIQ

contracts.contracts. Agencies are using too many cost-type (“cost-plus”) Agencies are using too many cost-type (“cost-plus”)

contracts.contracts. Not enough transparency. Not enough transparency. Commercial practices and commercial item procurements do Commercial practices and commercial item procurements do

not protect taxpayer’s interest.not protect taxpayer’s interest. Agencies are abusing interagency contract vehicles.Agencies are abusing interagency contract vehicles.

- Major Systems Major Systems AcquisitionAcquisition- Contract Services- Contract Services- General acquisition - General acquisition policypolicy- Transparency- Transparency

Main Areas in National Defense Authorization

Act for FY2008

Major Defense Acquisition Major Defense Acquisition Programs (MDAPs)Programs (MDAPs) Section 815 – Procurement of Section 815 – Procurement of Commercial ItemsCommercial Items

– Amends 10 U.S.C. 2379 regarding Amends 10 U.S.C. 2379 regarding acquisition of commercial items as major acquisition of commercial items as major systems.systems.

– For major systems, requires a contractor to For major systems, requires a contractor to provide sufficient information for price provide sufficient information for price analysis and authorizes contractor officer to analysis and authorizes contractor officer to request cost data if information is insufficient request cost data if information is insufficient to establish price reasonableness. to establish price reasonableness.

– Adds a similar requirement for commercial Adds a similar requirement for commercial subsystems, components or spare parts of subsystems, components or spare parts of major systems that are purchased by DoD major systems that are purchased by DoD under a prime contract and that are not off-under a prime contract and that are not off-the-shelf commercial items. the-shelf commercial items.

Services ContractsServices Contracts Section 805 – Procurement of Commercial Section 805 – Procurement of Commercial ServicesServices

– “ “Of a type” commercial services may be treated as Of a type” commercial services may be treated as commercial for purposes of TINA only if the contractor commercial for purposes of TINA only if the contractor officer has determined in writing that the offeror has officer has determined in writing that the offeror has submitted sufficient information to determine price submitted sufficient information to determine price reasonableness through price analysis. Contracting reasonableness through price analysis. Contracting officer may request submission of cost data if other officer may request submission of cost data if other information is insufficient information is insufficient

– Commercial (FAR part 12) time and materials Commercial (FAR part 12) time and materials contract s may only be used to acquire:contract s may only be used to acquire:

services in support of a commercial item,services in support of a commercial item, emergency repair services, and emergency repair services, and other commercial services only to the extent that the other commercial services only to the extent that the head of the agency approves a written determination by head of the agency approves a written determination by the contracting officer that the services to be acquired the contracting officer that the services to be acquired are commonly sold under T&M contracts to the general are commonly sold under T&M contracts to the general public and the use of a T&M contract is in the best public and the use of a T&M contract is in the best interest of the government. interest of the government.

Services ContractsServices Contracts Section 806 – Specification of Amounts Requested for Section 806 – Specification of Amounts Requested for Procurement of Contract ServicesProcurement of Contract Services

– Starting with FY10 budget submission, DoD required to specify by Starting with FY10 budget submission, DoD required to specify by account (other than RDT&E and MilCon) the amounts for contract account (other than RDT&E and MilCon) the amounts for contract services by component, activity or installation. services by component, activity or installation.

Section 807 – Inventories and Reviews of Contracts for ServicesSection 807 – Inventories and Reviews of Contracts for Services– Starting in FY08, SecDef required to submit an annual inventory of Starting in FY08, SecDef required to submit an annual inventory of activities performed during the prior fiscal year under services activities performed during the prior fiscal year under services contracts including:contracts including:

the functions performedthe functions performed the contracting organization in DoD the contracting organization in DoD the number of contractor FTE’sthe number of contractor FTE’s a determination whether the contract is a personal services contracta determination whether the contract is a personal services contract

– Service Secretary or head of agency is required to review his or her Service Secretary or head of agency is required to review his or her respective portion to ensure:respective portion to ensure:

Personal services contracts are being performed in accordance with Personal services contracts are being performed in accordance with applicable requirementsapplicable requirements Activities do not include inherently governmental functions (FAR Activities do not include inherently governmental functions (FAR 7.503(c))7.503(c)) Activities do not include functions closely associated with inherently Activities do not include functions closely associated with inherently governmental functions (FAR 7.503(d)) to the maximum extent governmental functions (FAR 7.503(d)) to the maximum extent practicable. practicable.

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Services ContractsServices Contracts Section 843 – Enhanced Competition for Task or Delivery Section 843 – Enhanced Competition for Task or Delivery Order ContractsOrder Contracts

– Government-wide provision Government-wide provision – Prohibition on single source task or delivery order contracts Prohibition on single source task or delivery order contracts above $100 million unless head of agency determines in above $100 million unless head of agency determines in writing that certain detailed conditions are met. writing that certain detailed conditions are met.

– Extends competition requirements for individual task or Extends competition requirements for individual task or delivery order awards in section 803 of the FY2002 NDAA to delivery order awards in section 803 of the FY2002 NDAA to all agencies.all agencies.

– Requires detailed solicitation requirements for individual Requires detailed solicitation requirements for individual task or delivery order awards above $5 million and an task or delivery order awards above $5 million and an opportunity for post-award debriefing.opportunity for post-award debriefing.

– Authorizes a GAO protest of the award of an individual task Authorizes a GAO protest of the award of an individual task or delivery order award above $10 million that is made 120 or delivery order award above $10 million that is made 120 days after January 28, 2008 and for three years thereafter. days after January 28, 2008 and for three years thereafter.

General policyGeneral policy Section 852 – Acquisition Workforce Development FundSection 852 – Acquisition Workforce Development Fund

– Establishes a DoD Acquisition workforce development fund Establishes a DoD Acquisition workforce development fund for recruiting, training, and retention of DoD personnel from for recruiting, training, and retention of DoD personnel from a percentage of the funds for contract services in each a percentage of the funds for contract services in each budget account. budget account. – The percentages are:The percentages are:

0.5% - FY080.5% - FY08 1.0% - FY091.0% - FY09 1.5% - FY101.5% - FY10 2.0% - FY11 and thereafter 2.0% - FY11 and thereafter

– SecDef has authority to credit less, but minimum amounts SecDef has authority to credit less, but minimum amounts are specified.are specified.

TransparencyTransparency Section 844 – Public Disclosure of Justification and Approval Section 844 – Public Disclosure of Justification and Approval Documents Documents

– Government-wide provision Government-wide provision

– Requires Federal agencies to make publicly available on the agency Requires Federal agencies to make publicly available on the agency website and through a government-wide website within 14 days website and through a government-wide website within 14 days after contract award J&A’s for the use of other than competitive after contract award J&A’s for the use of other than competitive procedures.procedures.

Section 845 – Disclosure of Government Audit Findings Section 845 – Disclosure of Government Audit Findings – Government-wide provisionGovernment-wide provision

– Requires each agency inspector general to submit to Congress as Requires each agency inspector general to submit to Congress as part of its semiannual audit report an annex on final, completed part of its semiannual audit report an annex on final, completed contract audit reports issued to the contracting activity containing contract audit reports issued to the contracting activity containing unsupported, questioned or disallowed costs in excess of $10 million unsupported, questioned or disallowed costs in excess of $10 million or other findings the agency IG determines to be significant. or other findings the agency IG determines to be significant.

– Requires each agency head to provide within 14 days a full and Requires each agency head to provide within 14 days a full and unredacted copy of any audit described in the report to various unredacted copy of any audit described in the report to various congressional committees upon written request. The agency would congressional committees upon written request. The agency would be required to identify any information in the audit exempt from be required to identify any information in the audit exempt from public disclosure under 5 U.S.C. 552(b). public disclosure under 5 U.S.C. 552(b).

Current Acquisition Policy Issues Current Acquisition Policy Issues

– S. 680/HR 1362 Conference S. 680/HR 1362 Conference Acquisition workforce revitalization (title I)Acquisition workforce revitalization (title I) Undefinitized contract actions (sec. 301)Undefinitized contract actions (sec. 301)

– Transparency and Contractor responsibilityTransparency and Contractor responsibility DatabaseDatabase Tax delinquencyTax delinquency Fraud reportingFraud reporting

– HAC-D – Acquisition Policy/ContractingHAC-D – Acquisition Policy/Contracting OutsourcingOutsourcing Implementation of the section 804 reportImplementation of the section 804 report

– HASC – Two thrustsHASC – Two thrusts Clarification of inherently governmental positionsClarification of inherently governmental positions Buy American Buy American

– SASC – Implementation of last year’s bill provisionsSASC – Implementation of last year’s bill provisions

– DoD Legislative Packages DoD Legislative Packages

Obstacles to a Congressional reform vision Obstacles to a Congressional reform vision

– Many cooks Many cooks House and Senate Armed Services CommitteesHouse and Senate Armed Services Committees Senate and House Government ReformSenate and House Government Reform CommitteesCommittees House and Senate JudiciaryHouse and Senate Judiciary CommitteesCommittees House Appropriations CommitteeHouse Appropriations Committee

– Congress versus Executive BranchCongress versus Executive Branch Different messages from different agencies on Different messages from different agencies on reformreform

– Problems driven by issues larger than the Federal Problems driven by issues larger than the Federal acquisition policy reachacquisition policy reach

Funding process and constraints Funding process and constraints National demographics National demographics Industry and technology trends Industry and technology trends

– No blueprint in sight No blueprint in sight

Concluding thoughts Concluding thoughts

– Congress will remain very active in legislatingCongress will remain very active in legislating

elements of process reform.elements of process reform.

– A coherent vision of reform with reinforcing parts is A coherent vision of reform with reinforcing parts is unlikelyunlikely to emerge until well into next year if ever. to emerge until well into next year if ever.

– Some type of blueprint is needed that encompasses Some type of blueprint is needed that encompasses anan understanding of the limiting conditions on any understanding of the limiting conditions on any reformreform agenda. agenda.

– Rationalization of the legislation will be critical at Rationalization of the legislation will be critical at somesome point.point.