Congress and Acquisition Reform Charting a course in uncertain waters April 30, 2008 Jon Etherton Etherton and Associates, Inc.

What is acquisition reform? re·form 1. n., the improvement or amendment of what is wrong, corrupt, unsatisfactory, etc.: social reform; 2. an instance of this. 3. the amendment of conduct, belief, etc. 4. v. (used with object), to change to a better state, form, etc.; improve by alteration, substitution, abolition, etc. 5. to cause (a person) to abandon wrong or evil ways of life or conduct. 6. to put an end to (abuses, disorders, etc.).

The Evolving Vision of Acquisition Reform 1983-1985 Full and open competition is the rule, not the exception. Pricing controls for spare parts, repair parts and support equipment not subject to full and open competition . Increased oversight of costs on cost-type contracts. 1986 Organizing for improved outcomes on major weapon programs. Packard Commission. Goldwater Nichols. Defense Enterprise Programs. Revolving Door limitations.

The Evolving Vision of Acquisition Reform 1987 – 1989 Piecemeal, case-specific legislation. Rationalizing acquisition law. Cold war and defense industry winding down. 1989-1994 Section 800 Panel. Commercial-Military industrial integration. Commercial products and practices. Entrepreneurial government . FASA. FACNET and reducing the acquisition workforce. 1995 Preference for commercial products and services. Efficient and streamlined acquisition. Decentralized IT acquisition. Clinger-Cohen .

Acquisition Provisions in Defense Authorization Bills

2003-2008 Concerns without a vision Contractors are performing too critical many critical government functions. Federal acquisition management capabilities are eroding. Contractors have too much influence and control. Requirements development is a major concern. The government is losing its most experienced personnel. The government is losing its ability to manage large, complex programs and large service contracts. Major program cost growth is out of control. There is not enough competition, especially with IDIQ contracts. Agencies are using too many cost-type (“cost-plus”) contracts. Not enough transparency. Commercial practices and commercial item procurements do not protect taxpayer’s interest. Agencies are abusing interagency contract vehicles.

Main Areas in National Defense Authorization Act for FY2008 Major Systems Acquisition - Contract Services - General acquisition policy - Transparency

Major Defense Acquisition Programs (MDAPs) Section 815 – Procurement of Commercial Items Amends 10 U.S.C. 2379 regarding acquisition of commercial items as major systems. For major systems, requires a contractor to provide sufficient information for price analysis and authorizes contractor officer to request cost data if information is insufficient to establish price reasonableness. Adds a similar requirement for commercial subsystems, components or spare parts of major systems that are purchased by DoD under a prime contract and that are not off-the-shelf commercial items.

Services Contracts Section 805 – Procurement of Commercial Services “Of a type” commercial services may be treated as commercial for purposes of TINA only if the contractor officer has determined in writing that the offeror has submitted sufficient information to determine price reasonableness through price analysis. Contracting officer may request submission of cost data if other information is insufficient Commercial (FAR part 12) time and materials contract s may only be used to acquire: services in support of a commercial item, emergency repair services, and other commercial services only to the extent that the head of the agency approves a written determination by the contracting officer that the services to be acquired are commonly sold under T&M contracts to the general public and the use of a T&M contract is in the best interest of the government.

Services Contracts Section 806 – Specification of Amounts Requested for Procurement of Contract Services Starting with FY10 budget submission, DoD required to specify by account (other than RDT&E and MilCon) the amounts for contract services by component, activity or installation. Section 807 – Inventories and Reviews of Contracts for Services Starting in FY08, SecDef required to submit an annual inventory of activities performed during the prior fiscal year under services contracts including: the functions performed the contracting organization in DoD the number of contractor FTE’s a determination whether the contract is a personal services contract Service Secretary or head of agency is required to review his or her respective portion to ensure: Personal services contracts are being performed in accordance with applicable requirements Activities do not include inherently governmental functions (FAR 7.503(c)) Activities do not include functions closely associated with inherently governmental functions (FAR 7.503(d)) to the maximum extent practicable.

Services Contracts Section 843 – Enhanced Competition for Task or Delivery Order Contracts Government-wide provision Prohibition on single source task or delivery order contracts above $100 million unless head of agency determines in writing that certain detailed conditions are met. Extends competition requirements for individual task or delivery order awards in section 803 of the FY2002 NDAA to all agencies. Requires detailed solicitation requirements for individual task or delivery order awards above $5 million and an opportunity for post-award debriefing. Authorizes a GAO protest of the award of an individual task or delivery order award above $10 million that is made 120 days after January 28, 2008 and for three years thereafter.

General policy Section 852 – Acquisition Workforce Development Fund Establishes a DoD Acquisition workforce development fund for recruiting, training, and retention of DoD personnel from a percentage of the funds for contract services in each budget account. The percentages are: 0.5% - FY08 1.0% - FY09 1.5% - FY10 2.0% - FY11 and thereafter SecDef has authority to credit less, but minimum amounts are specified.

Transparency Section 844 – Public Disclosure of Justification and Approval Documents Government-wide provision Requires Federal agencies to make publicly available on the agency website and through a government-wide website within 14 days after contract award J&A’s for the use of other than competitive procedures. Section 845 – Disclosure of Government Audit Findings Requires each agency inspector general to submit to Congress as part of its semiannual audit report an annex on final, completed contract audit reports issued to the contracting activity containing unsupported, questioned or disallowed costs in excess of $10 million or other findings the agency IG determines to be significant. Requires each agency head to provide within 14 days a full and unredacted copy of any audit described in the report to various congressional committees upon written request. The agency would be required to identify any information in the audit exempt from public disclosure under 5 U.S.C. 552(b).

Current Acquisition Policy Issues S. 680/HR 1362 Conference Acquisition workforce revitalization (title I) Undefinitized contract actions (sec. 301) Transparency and Contractor responsibility Database Tax delinquency Fraud reporting HAC-D – Acquisition Policy/Contracting Outsourcing Implementation of the section 804 report HASC – Two thrusts Clarification of inherently governmental positions Buy American SASC – Implementation of last year’s bill provisions DoD Legislative Packages

Obstacles to a Congressional reform vision Many cooks House and Senate Armed Services Committees Senate and House Government Reform Committees House and Senate Judiciary Committees House Appropriations Committee Congress versus Executive Branch Different messages from different agencies on reform Problems driven by issues larger than the Federal acquisition policy reach Funding process and constraints National demographics Industry and technology trends No blueprint in sight

Congress will remain very active in legislating Concluding thoughts Congress will remain very active in legislating elements of process reform. A coherent vision of reform with reinforcing parts is unlikely to emerge until well into next year if ever. Some type of blueprint is needed that encompasses an understanding of the limiting conditions on any reform agenda. Rationalization of the legislation will be critical at some point.