“It’s still true today as it was then that every dollar not wasted is a dollar that can be invested in new capability to achieve the goal of greater buying power,” said Ashton Carter, the deputy defense secretary, in a briefing with reporters last week.
The original initiative, a set of practices meant to cut costs and improve productivity, pushed contracting officials to increase competition and award more contracts to small business. Additionally, the Pentagon sought to incentivize contractors, promising, for instance, a preferred supplier program that would reward its high-performing vendors.
While Defense Department officials said the first initiative has achieved some significant results, they said the latest version is revised to respond to its shortcomings.
Perhaps most obvious is a new focus on the acquisition workforce. Frank Kendall, the Pentagon’s top acquisition official, said the department has invested in increasing the number of contracting officials, but now needs to improve their quality.
“We can do better, and we can have a deeper bench,” he told reporters.
He acknowledged last week that not every effort has gone as planned. For instance, the Defense Department sought to make its buying process more incentive-based, providing higher profits for better performance, but has not made enough progress.
“It’s not as easy as it sounds,” Kendall said. “We’ve got a fair amount of work to do there.”
The Pentagon has purposely increased its use of fixed-price contracts, which set a total price that can’t be exceeded, but Kendall said there has been an “overreaction” by agencies. In contracts that require companies to develop new technology, for example, it is difficult to predict the price.
“People thought that [fixed-price] had become the right kind of contract to use for almost everything, and that wasn’t what we wanted,” Kendall said.
The military has also somewhat missed the mark on its effort to run what it calls “lowest price, technically acceptable” competitions, which allow the government to select the cheapest proposal, as long as it meets the program’s minimum standards.
That type of competition is different than a “best value” program, in which an agency might pay more — if officials feel the extra capabilities are worth the extra cost.
“We need to make sure we’re not simply going for lowest price, period, but that we’re actually getting the quality that we need for whatever it is we’re contracting for,” Kendall said.
And he acknowledged that the superior supplier program hasn’t yet been implemented, but said it is still in the works and that the Navy will lead a pilot effort.
Stan Soloway, president and chief executive of the Professional Services Council, an industry group, said it’s “common sense” for the Pentagon to make mid-course corrections to its strategy.
In particular, he said contractors are glad to see the Pentagon questioning lowest price, technically acceptable contracting.
“Low price has become something of a default,” he said. Now, “they really want to talk more about defining value.”