In early June the full Senate considered S. 2943, the FY 2917 National Defense Authorization Act. Included in the bill are a number of provisions of interest to ISOA members. Of particular note is Senator McCain’s effort to reform Department of Defense acquisition and contracting. While most of these proposals are aimed at major defense systems, there are provisions that will directly affect service providers. Of particular note are sections limiting the use of LPTA criteria and language regarding bid protest; as well as, Small Business contract requirements and the Committee initiative to consolidate all security cooperation authority into a single new authority under the Security Cooperation Enhancement Fund.
ISOA will continue to track the progress of this legislation as it moves off the Senate floor and into conference with the House.
ACQUISITION AND CONTRACTING
The bill would require DOD to implement modular open systems architecture in acquisition programs in certain mission areas, including close air support, air defense and intelligence, surveillance, and reconnaissance. Open systems make it easier to use commercial off-the-shelf software, upgrade a system and increase competition for upgrades.
The measure would streamline regulations for buying commercial items. Commercial items within certain cost thresholds can be bought using simplified acquisition procedures. The bill would automatically treat goods and services from nontraditional contractors as commercial items.
The bill would require the department to create a list of federal acquisition regulations and statutes unique to defense needs that shouldn’t apply to contracts for commercial and commercial off-the-shelf items.
Commercial off-the-shelf items bought by DOD under certain executive orders would be exempted. The department would have waiver authority for other purchases.
DOD would issue guidance to prohibit contracts that exceed the threshold for simplified acquisition procedures for purchasing facilities-related, knowledge-based, equipment-related, construction, medical, logistics management, or transportation services. The ban wouldn’t apply if the head of the military service or defense agency makes a written determination that no commercial services are appropriate.
The bill would require DOD and the military service branches to pay a penalty for the use of cost-type contracts from fiscal 2018 through 2021. Cost-type, also known as cost-plus, contracts take various forms but generally reimburse the contractor for the cost of the work plus fees. The penalty would equal 2 percent of the funds obligated for procurement contracts or 1 percent of funds provided for RDT&E contracts.
The bill would also direct DOD to use fixed-price contracts, including fixed-price incentive fee contracts.
The bill would require incumbent contractors that file protests with the Government Accountability Office after losing a contract through re-competition to use profits from bridge contracts to cover the cost of the GAO review process.
Non-incumbent protest losers with revenue of more than $100 million would pay the administrative costs of resolving bid protests.
Lowest Price Technically Appropriate
The bill would require DOD to revise federal acquisition regulations to limit the use of lowest price technically appropriate (LPTA) criteria.
The LPTA criteria would be allowed if the department could:
Comprehensively and clearly describe the minimum performance requirements that will be used to evaluate offers.
Realize minimal value from a contract proposal exceeding the minimum price.
Require minimal subjective judgment by the selection authority as to the “desirability” of one proposal versus another.
Justify the use of a lowest price evaluation methodology in the contract file.
The bill would exempt DOD contractors from wage and safety requirements established by Executive Order 13673 -- also known as “Fair Pay and Safe Workplaces” -- unless they have been suspended or debarred as a result of violations of federal labor laws.
The department would have to establish a program to improve contractors use of “business systems,” such as accounting and property management systems. According to the committee report, the provision is designed to encourage companies to use the same systems for defense work that would be used in the commercial marketplace.
The measure would allow first- and second-tier subcontracts on major procurements to count toward small business participation goals.
The bill would also make the federal Small Business Innovation Research and the DOD Small Business Technology Transfer programs permanent.
The measure would direct DOD to review the possibility of allowing small businesses to temporarily maintain eligibility for set-asides if they exceed the size threshold because of diversification into commercial markets.
The bill would authorize $312 million for the Defense Security Cooperation Agency, $1.1 billion less than requested.
The bill would make the following transfers to a new Security Cooperation Enhancement Fund:
$820 million from Coalition Support Funds to combat the Islamic State terrorist group.
$650 million from the Counterterrorism Partnerships Fund.
$414.8 million from the Defense Security Cooperation Agency for items including global train and equip programs, the Wales Initiative Fund and the Combatting Terrorism Fellowship Program.