DoD acquisition proposals reduce burden, heighten transparency concerns

The Defense Department is prompting Congress to take action on a handful of acquisition issues, mostly aimed at reducing regulations on the system, but some fear the proposals may harm government transparency as well.

DoD has been on a crusade to streamline and unburden the defense acquisition since 2010, when it released its first version of Better Buying Power.

Now that James Mattis has taken over as defense secretary, DoD is doubling down on bettering its business operations and making its processes leaner.

The newest legislative proposals to Congress reflect that philosophy.

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The group of nine recommendations range from expanding DoD’s micropurchasing threshold to raising the bar for contracts that can be protested by industry.

“I would call these things efficiency management initiatives, language that’s going to improve the efficiency and overall effectiveness of contracting,” Coalition for Government Procurement President Roger Waldron said.

One proposal is raising eyebrows of some transparency groups, however,

The proposition narrows the requirement for companies doing business with the government to report the compensation costs of their most highly paid employees.

Current law mandates contractors and subcontractors must reveal the names and total compensation for the five highest paid executives. That’s only if the company’s awards account for at least 80 percent of the company’s revenue, the awards account for at least $25 million and public information of the executives is not available through other channels.

“What this proposal does is it substantially throttles back the number of firms that would be required to report. It’s anti-transparency is what it is,” said Richard Loeb, senior policy counsel for the American Federation of Government Employees.

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The proposal changes it so that only companies under cost accounting standards need to report compensation information.

Cost accounting standards apply to larger companies that enter into contract awards of $50 million or more, basically doubling the previous threshold for reporting.

Loeb said companies doing 80 percent or more of their business are basically government workers. Federal workers disclose their salaries because they are beholden to the taxpayers. Companies who do that much government work also need to be responsible for the taxpayer money they are receiving, Loeb said.

Contractor compensation “has a lot to do with the prices that [taxpayers] pay and has to do with how the funds are utilized. It basically boils down to do we want the public to know how their federal tax dollars are spent,” Loeb said.

Waldron, on the other hand, is not as concerned by the proposal, stating it takes some of the burden off of industry.

DoD claims the current requirement equals 55,000 hours of paperwork in total a year. Almost 5,000 companies respond to the requirement and just over half are small businesses.

Other proposals

Less controversial proposals in the DoD legislative package include raising the micropurchasing threshold from $5,000 to $10,000.

The recommendation allows defense and civilian agencies to earn rebates, buy products faster and make purchases directly.

Another proposal standardizes the threshold for filing protests of task and delivery orders under multiple award contracts at $25 million. That’s an increase from $10 million.

Congress already bumped up that threshold for other DoD contracts.

The protest rules came from a feeling within the department that protests were becoming more of a rule than an exception from industry, causing delays in contract awards.

The recommendations also attempt to reduce reporting burdens on contracts and civilian agencies by raising the applicability bar to report the amount invoiced and direct labor hours on service contracts.

“Despite the good intention underlying this provision, the inventory process has produced limited value for the significant amount of effort required of contractors and related work required of agencies,” the proposal states.

DoD says it now how better ways of accounting for the information.

Congress

Whether any of these proposals will be taken to heart is uncertain. The House Armed Services Committee and the Senate Armed Services Committee have both finished the markups of their 2018 defense authorization bills.

In order for the proposals to make it into law in the next year they will have to be added as amendments to the defense authorization bill or introduced as separate bills.