DoD’s service contracts overhaul might serve another 12 years

The Defense Department’s revamp of the way it handles services contracts could take 12 more years before the effort is completed.

“I really look at this as a 15-year effort that we are about three years into,” said Ken Brennan, DoD’s deputy director of services acquisition during an April 25 Professional Services Council event in Arlington, Virginia. “My goal is that services [contracts] become less of a standalone and just more of the general culture and policy.”

Brennan said despite the long timeline, DoD is making progress on implementing the instruction it released in January and sees the potential for new guidance regarding small business in the administrative services realm.

DoD is trying to improve the way it acquires services, which make up more than half of its procurement budget.

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The January instruction made services acquisition more portfolio-focused and gave military acquisition chiefs more power over services contracts. Brennan said so far the Air Force has made the most improvement.

“They’ve done some phenomenal things with organizational health assessment, they do a fine job of coordinating with their [Major Command] decision makers and those types of oversight,” Brennan said.

Brennan said the Army and Navy have moved a little bit slower, but are coming up strong. The services are creating the Services Requirement Review Boards required in the instruction.

“I hope it doesn’t take 15 years to memorialize this [instruction],” said Alan Chvotikin, executive vice president at PSC. “The nature of services changes a lot. … Services offerings that the market place is putting on the table, the pace of change in the commercial marketplace coming into government really needs to move much more quickly to provide a process for that. I’m just concerned it will take way too long.”

Brennan said one area for collaboration between DoD and small business is in administrative services.

“We know based on our spend analysis that we do a lot of smaller transactions, we know based on our market research that the large businesses in this arena historically do not do business with the Department of Defense and we also recognize that the market and the requirement are aligned very geographically and have a very large small business footprint,” Brennan said. “When you put those three things together, I’m actually contemplating and working through he potential development … of a policy memo that says, ‘Hey if you’re going for [administrative services] you really ought to be going only small business, it ought to be local and it ought to be likely a set aside or within the small business rules.’”

Brennan said he would obtain small business partners input and possibly publish a Federal Register announcement.

“It could be as vanilla as, ‘Hey, we are doing really great with guns as far as small business in this subcategory, please consider this,’ all the way up the entire spectrum to say, ‘Hey, if you are getting this kind of skill set, it needs to be contracted through small business,” Brennan said.

The Government Accountability Office put DoD service contracting on its high-risk list for its challenges with acquisition workforce, contracting techniques and contract support. The January instruction was a reaction to problems within services procurement.

The instruction creates “expert” positions that preside over each of the services sectors.

“You can’t have the idea that everyone is an expert on everything. So, how do you look at and gain that knowledge and share that and create communities of practice” Claire Grady, DoD’s director of defense procurement and acquisition strategy, said in December. “A functional domain expert [will] have that cross-cutting look across the community field into how we are buying services. [It] is a critical part of how we are tackling this.”

DoD dubbed the new service sector leaders functional domain experts. FDEs will provide strategic management to improve planning, execution and reduce costs over areas like transportation services, medical services, and electronics and communications services.

FDEs also will put processes in place to monitor post-award performance, identify best practices, develop metric cost and performance and make policy recommendations.

Grady said DoD would be keeping a close eye on the metrics the FDEs develop because they are the experts that will know what metrics matter most.