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