Officials: Budget cuts, pay freezes hurt DoD acquisition workforce

Myriad challenges face Defense Department acquisition and many of them have exacerbated budget cuts and pay freezes, DoD officials told a House panel July 10, 2014.

“The fiscal challenges, shifting operational requirements, the current budget instability deriving from sequestration, years of pay freezes, furloughs, military end-strength reductions and the requirement for commensurate reductions in our civilian workforce, more than a decade of conflict–inevitably all of these things have affected the acquisition workforce,” said Acting Assistant Secretary of Defense Stephanie Barna at the hearing.

DoD Under Secretary Frank Kendall echoed Barna’s concerns that budget cuts, pay freezes and furloughs have slowed progress on acquisition reform.

Keep reading this article at: http://www.fiercegovernment.com/story/official-budget-cuts-pay-freezes-hurt-dod-acquisition-workforce/2014-07-15

Disgraced Congressman Randy ‘Duke’ Cunningham is a free man again

A federal judge says it is time to forgive Randy “Duke” Cunningham, the most corrupt member of Congress ever if measured by the amount of bribes he admitted accepting.

U.S. District Judge Larry Alan Burns has granted Cunningham’s request to have his post-prison supervision ended early, writing a final legal chapter on the sordid tale of the flamboyant ace fighter pilot who went to Congress as a hero in 1991 and left in 2005 as a disgraced felon.

The California Republican spent more than seven years in prison after pleading guilty in November 2005 to charges of tax evasion and conspiracy to commit bribery, mail fraud, and wire fraud. Cunningham, who was 64 when he was sentenced in March 2006, had used his positions on the House Appropriations and Intelligence committees to steer lucrative contracts to those who would help him finance an extravagant lifestyle featuring 19th-century French antiques, yachts, Persian rugs, hunting trips, a Rolls Royce, and a $2.55 million home in an exclusive community in San Diego County.

It all unraveled in 2005 when The San Diego Union-Tribune wrote about the corruption, triggering a federal probe that found, among many other things, that Cunningham had drawn up a “bribe menu” on congressional notepaper, outlining what bribes he would need to deliver a contract or earmark.

Keep reading this article at: http://www.govexec.com/oversight/2014/07/disgraced-congressman-randy-duke-cunningham-free-man-again/88513/

Not following interim DoD rule may be costing taxpayers billions

A new report from the U.S. Department of Defense found that Navy and Marine Corps contracting personnel may be subjecting billions of dollars to waste due to non-compliance with cost reimbursement regulations.

According to the department’s internal watchdog, of 170 contracts reviewed, valued at about $7.7 billion, 135 of them, valued at about $7.54 billion were in question because contracting personnel did not consistently implement the Federal Acquisition Regulation (FAR) revision, called the interim rule.

“As a result, contracting personnel continue to issue cost-reimbursement contracts that may increase DoD’s contracting risks because cost-reimbursement contracts provide less incentive for contractors to cut costs,” the Inspector General wrote in the report.

Keep reading this article at: http://www.washingtontimes.com/news/2014/jul/12/defense-dept-contracting-personnel-may-be-wasting-/ 

 

Both competition and small business participation are down in DoD contracts

The Department of Defense (DoD) has issued its annual report on the “Performance of the Defense Acquisition System,” and at least two elements of the report are sure to get attention:

  • There’s less competition in DoD contracting, and
  • Small business goals continue to be missed.

The Defense Department has been losing ground for the last six years in the percentage of contracted work being let competitively.  In 2008, 64 percent of DoD contract dollars were spent through competitive awards; by 2013, that rate had fallen to 57 percent.

DoD Competition Trend FY06 - FY13

This table showing declining competition in DoD contracts is from page 18 of DoD’s report entitled “Performance of the Defense Acquisition System, 2014.”

Of the units with in DoD, the Defense Logistics Agency (DLA) engaged in the highest rate of competitive contracting (82 percent) while the lowest rate of competitive contracts (41 percent) was demonstrated by the Air Force, Navy and Marine Corps.  Overall, DoD missed its competitive contracting target of 60 percent, coming in at 57 percent in FY13.   No unit within DoD met its competition goal.  Even at 82 percent, DLA missed its goal of 86 percent.

The decline in competition comes despite DoD’s formal acquisition policies to increase competition.  In 2010, DoD began setting strategic goals to increase the percentage it spends on competitively-awarded contracts. In September of that year, then-Under Secretary of Defense for Acquisition, Technology and Logistics Ashton Carter issued the memorandum “Better Buying Power: Guidance for Obtaining Greater Efficiency and Productivity in Defense Spending,” which, among other things, aimed to lower weapons costs by increasing competition.  Building on those goals, Frank Kendall, Carter’s successor, launched the Better Buying Power 2.0 initiative two years later. 

In a related contracting area, DoD’s rate of contract awards to small businesses  has been improving since FY11, but awards to small businesses in FY13 lag DoD’s achievements in several recent years, specifically FY03, FY04, FY05, FY06 and FY09.

Small business eligible dollars obligated to small businesses in FY13 totaled $47.2 billion across the Department: $15.9 billion for products (i.e., supplies and equipment) and $31.3 billion for services.  Overall, DoD missed its FY13 goal of 22.5 percent by 1.3 percentage points.

DoD Small Business Utilization Rates - FY01-FY13

This table from page 20 of “Performance of the Defense Acquisition System, 2014″ shows that participation by small businesses in DoD contracts lags achievements in FY09 and earlier years.

To read DoD’s complete annual report on acquisition, visit: http://www.acq.osd.mil/docs/Performance-of-Defense-Acquisition-System-2014.pdf

Quality cost data is key to making better management decisions

Cost estimating may not be as exciting as the new baseball season or the competition on American Idol, but for anyone in management, it is absolutely vital, if somewhat less entertaining. Especially if you’re involved in program management, procurement or finance you rely on high quality cost estimates every day.  Why?  Because they provide the foundation for informed decision-making.

As such, it’s essential for managers to be able to distinguish between two important, but very different (and often confused) types of cost estimates: life cycle cost estimates (LCCEs) and independent government cost estimates (IGCEs).

This table compares and contrasts the two types of estimates, to help decision-makers determine which one they need to utilize.

This table compares and contrasts the two types of estimates, to help decision-makers determine which one they need to utilize.

Life cycle cost estimates take a comprehensive view of a program. They include all costs, whether incurred by the government or the contractor, including labor, materials, facilities, hardware, software and integration costs, and sometimes even imputed costs. Life cycle cost estimates can be for 30 years or more. For high dollar programs, LCCEs are required by many government agencies at various acquisition milestones. For example, on very large programs the Defense Department requires LCCEs at three milestones before projects can proceed. Given the scope and duration of LCCEs, they are treated as living documents that should be updated annually.

Keep reading this article at: http://www.govexec.com/contracting/2014/07/quality-cost-data-key-making-better-management-decisions/87946/

What you need to know about the top federal contractors

In his farewell address to the nation, President Eisenhower warned against the economic and political influence of the rising military industrial complex: the relationship between government entities and private government contractors.

Yet almost 60 years later, with the government contracting industry so large that many call it a fourth branch of government, Eisenhower’s warning appears unheeded.

Top Contractors by Dollars Obligated 2014

Proponents of the industry say that contractors keep the nation safe, doing work the government does not have the capability to do. Its critics, on the other hand, assert that contractors have an incentive to perpetuate war—the more weaponry contractors produce, the more profits they make.

Keep reading this article at: http://time.com/2917578/government-contractors-lockheed/

IG says USPS needs to better monitor spending on its employee travel cards

U.S. Postal Service travel card coordinators need to more efficiently monitor cash advances that they give to traveling employees because many of those advances potentially didn’t comply with travel policy, says a June 25 report by the inspector general.

The Postal Service provides individual government travel cards to some employees for use while on official travel.

As of Jan. 15, USPS had 44,104 government travel cardholders who made 247,419 purchases, totaling $44.9 million. They also took 8,793 cash advances, totaling $1.6 million, from April 1, 2012, through March 31, 2013, the report says.

Keep reading this article at: http://www.fiercegovernment.com/story/ig-usps-needs-better-monitor-spending-its-employee-travel-cards/2014-07-02

The future of contracting

As government agencies now rely primarily on contractors to meet their mission objectives, they must embrace the oversight and management of contractors as a core competency, not as an administrative function buried deep within the management and/or administration office. Mission delivery through external, private-sector, and profit-motivated businesses requires all federal executives and staff to accept their roles in ensuring that contractors properly support the agency’s “customers” as well as its own private business objectives. Immense advances in technology in recent years and the rising prominence of new corporations in our information age replacing those of the industrial age raises the question: How can government acquisition better leverage new methods of communication and technology; and if so, how can it be more effective?

While technology continuously improves our lives in many ways, such as providing new and improved tools to make data more available, functions to perform faster, and communication to be more accurate and responsive, the professional competencies required and goals of government contracting cannot and should not change. These are concepts of fairness, competition, the role of small business, fair and reasonable pricing, ethical standards of conduct, best value, intellectual property, acquisition planning, compliance, etc. There are also business competencies of leadership, economics, accounting, marketing, etc.  The terminology of competencies may change, but the competencies themselves will remain.

Keep reading this article at: http://www.federaltimes.com/article/20140624/BLG06/306240011/The-future-contracting

VA forming cadre of specially-trained acquisition workers

The Veterans Affairs Department is recognizing and rewarding the success of its acquisition workers.

VA is professionalizing the acquisition workforce in a way comparable only to the Defense Department.

“We are establishing a professional acquisition corps in order to provide the benefits to VA by having a very specified cadre of highly-trained contracting officers and program managers who have a demonstrated history of high performance, and are qualified to lead VA’s most critical and high visibility programs and procurements,” said Ford Heard, VA’s associate deputy assistant secretary for Procurement Policy, Systems and Oversight and deputy senior procurement executive, during an interview on Federal News Radio’s In- Depth with Francis Rose.

“From a VA perspective, we are basically a soup to nuts organization as far as what is being procured in VA.  Not only is it IT.  Not only is it high professional quality healthcare services, but all the facility management requirements that anyone of our healthcare facilities would utilize. So, what we are actually doing is building this acquisition corps to really benefit veterans in the service we offer, and the opportunities for our employees to advance and receive training that they would not normally get under past circumstances.”

Keep reading this article at: http://www.federalnewsradio.com/538/3654616/VA-forming-cadre-of-specially-trained-acquisition-workers 

Procurement troubles still dog Defense Department

Congress has held hearings over the past 30 years seeking ways to fix the Defense Department’s poor procurement system.

A June 24th hearing offered interesting ideas.

No headlines afterward about stopping F-35 costs from skyrocketing, keeping new production of nuclear aircraft carriers on schedule or halting the failure of billion-dollar computer programs — in fact, there was hardly any press coverage at all.

Two worthwhile ideas that came from the four experienced procurement specialists who appeared before the House Armed Services Committee provided no silver bullets, but they made sense.

  1. Give the main contracting officer for major weapons projects absolute cradle-to-grave authority and responsibility and accountability.
  2. Interservice rivalry and even intraservice competition have far from ended, and they harm the procurement system.