DOD explores alternatives to traditional acquisition beyond fixed price

DOD is taking a multi-faceted approach to overhauling the way it buys goods and services in the face of dwindling funds.

As the Defense Department works to improve efficiencies – especially in the ways it buys goods and services – officials are working with the General Services Administration and looking at alternative opportunities to break out of the confines of traditional contract options.

“How do we more effectively use the GSA schedules? There is a concern within the department that when we use the schedules, we should be using them more effectively,” said Shay Assad, director of defense pricing at the Defense Department. “Right now there’s a presumption of competition; we need to ensure that we’ve created an environment where people…can actually compete fairly on a level playing field and have opportunities to do business.”

Assad, who spoke April 27 at the Coalition for Government Procurement’s spring conference in Falls Church, Va., said one of his efforts to improve contracting practices is a pilot program to try out different kinds of contracts for different kinds of procurements, rather than the conventional approaches to acquisition. his comments reflected the sentiments other DOD officials expressed at a panel discussion April 17.

“One of the issues with DOD in terms of increasing use of GSA schedules to procure things is the fact that if we’re not going on a fixed-price contract basis, it’s really not an area that’s open to us,” he said. “We’re working with GSA to figure out how we can establish a set of schedules where, if a contracting officer determined he wanted to buy services using a cost-reimbursement basis rather than a fixed-price basis, he in fact could use a GSA schedule to do that.”

Assad said the lack of flexibility can be a barrier to DOD customers, and he wants to expand the available contract options to offer more opportunities.

Another challenge Assad is seeing: misinterpretation of lowest-price technically acceptable contracts, which have gained momentum amid budget cuts and widespread efficiency efforts.

“There’s a mantra out there that if you’re worried about what you pay for things, you can’t possibly be worried about best value. That’s just not the case,” he said.

Assad was adamant that there is room for different types of contracts at DOD’s table, and that lowest price doesn’t mean poor quality.

“What we’re telling our contractors is, if you have a requirement where you absolutely want the highest-value technical performance you can, then best-value procurement is the way to go,” he said. “But if you’ve established a requirement where you’ve told the contractor, ‘This is the level of performance I want; that’s all I need, and there are a number of you who can supply it,’ then why would you pay more than you have to pay to get that service provided to you?”

To help bridge the gap between the department and contractors and foster better collaboration, Assad outlined some new information-sharing efforts he’s pursuing that he hopes will improve contracting practices across the board.

One effort is the establishment of a contractor business analysis repository, which is a data bank of historical information on a company – such as grade structure, pricing agreements and business clearances – that contracting officers can use a common access card to get background and data that improve decision-making.

“This [provides] information that would have taken months to bring together. It’s being beta tested now. It’s a very powerful tool and will be expanded, as we go forward, to include pricing and cross-analysis on products and services companies are providing so that contracting officer can get that information almost real-time,” Assad said.

He added that other efforts are targeting the strategic alignment of corporate and division administrative contracting officers, better pricing capabilities within contract managing officers, and integrated contractor analysis tools, all of which are geared for better information-sharing and decision-making.

“As a government and industrial team, we have to get at this. We just don’t have the budget anymore. And we’re still spending a lot of money,” Assad said of achieving the efficiency goals at the heart of the contract reform. “There’s a lot of opportunity for the companies that are in this business. The question is, how do we focus that?”