Georgia Tech Procurement Assistance Center

Lockheed: Pentagon negotiators are becoming more unpredictable

By

Pentagon negotiators have in recent months become more unpredictable and willing to ignore precedent, Lockheed Martin’s CFO said last week.  The seemingly new approach has slowed down talks on the latest batch of F-35 fighter jets and even on other weapons and gear that the U.S. Defense Department has been buying for decades, Bruce Tanner said.

“It’s not like negotiations were always easy, but I’ll say they were more predictable than they are today,” Tanner said in an interview Monday. “There’s just more things that are being changed or things that you thought were sort of foundational elements of negotiation that maybe weren’t up for negotiation that now seem to be up for negotiation.”

For example, he said, the government now wants companies to eat various costs they once would have been reimbursed for.

“Everyone should be interested in cost reduction, not simply not reimbursing elements of cost that you historically reimbursed,” Tanner said. “That’s a strange way to get cost reduction and, I would argue, a very short-sighted, not helpful, not healthy for the industry and ultimately not healthy for the folks in the Pentagon buying under that strategy to use that approach.”

Keep reading this article at: http://www.govexec.com/contracting/2018/03/lockheed-pentagon-negotiators-are-becoming-more-unpredictable/146432

GSA says small businesses benefitting from reverse auctions

By

Taxpayers and small businesses are benefitting from the ReverseAuctions program, the General Services Administration said.

In fiscal 2014, 85 percent of auctions awarded through the initiative went to small businesses even though 60 percent was set aside for them, and overall, reverse auctions generated 23 percent savings off standard contract price, an Oct. 21 blog post says.

Those small-business procurements totaled more than $19 million.

Additionally, more than 21 government agencies created 900 auctions and saved more than $6 million, according to the blog.

“Competition fuels savings. GSA ReverseAuction’s fiscal year 2014 performance is a testament to this principle,” wrote Charles Wingate, chief of a branch of the agency’s Federal Acquisitions Services’ Information Technology Commodities Division, on the blog.

ReverseAuctions is an online tool for agencies to use at no additional cost to buy simple commodities and services.

Keep reading this article at: http://www.fiercegovernment.com/story/gsa-small-businesses-benefitting-reverse-auctions/2014-10-22

Air Force wants contractors to rein in supply chain costs

By

The Air Force thinks it’s paying more for its goods and services than it should and wants to put pressure on its contractors to reduce costs in their supply chain.

Previously, when the Air Force negotiated contracts, much of it went to prime contractors, but now 60 to 70 percent of that is subcontracted, said the Air Force’s Deputy Assistant Secretary for Contracting Wendy Masiello.

“So we’re spending a lot more time understanding those supplier partnerships,” said Masiello at an April 16 Air Force Association breakfast. “It’s an area of expertise that you would hope the primes are starting to develop in order to manage those costs, but there’s often less motivation to be as stringent in those relationships. It’s often more about maintaining those suppliers as long-term partners.”

Keep reading this article at: http://www.fiercegovernment.com/story/air-force-wants-contractors-rein-supply-chain-costs/2014-04-20 

DoD to cut hundreds of staff and contractors for $1 billion savings

By

The Office of the Secretary of Defense will get smaller over the next five years as Chuck Hagel plans to cut 200 positions from his office, saving the Pentagon about $1 billion.

In July, Hagel ordered a 20 percent reduction in the front office budget to comply with sequestration reductions. The Joint Chiefs of Staff, service chiefs, combatant commanders and 3-star headquarters will reduce their staffs, as well.

“Some of these savings will be achieved through significant reductions civilian personnel; much of these savings will be achieved through contractor reductions. We are still finalizing the details, which will be available when the budget is submitted next year. But we will save at least $1 billion over the next five years,” Hagel said during a press briefing at the Pentagon on Wednesday.

In addition to eliminating 200 positions, several departments will reorganize to “reshape and strengthen” their staff. The Office of the Undersecretary of Defense for Policy will “re-balance” some of its workload to assistant secretaries of defense. The Office of the Assistant to the Secretary of Defense for Intelligence Oversight and the Defense Privacy and Civil Liberties Offices will be combined into a single office, as well.

Keep reading this article at: http://www.defenseone.com/management/2013/12/hagel-cut-hundreds-staff-contractors-and-reorganize-1-billion-savings/74912 

DLA to make major changes in contractor shipping requirements

By

The Defense Logistics Agency (DLA) plans to make big changes in its contractor shipping requirements.  The changes will take place in October 2013, so if your business sells products to DLA, now is the time to get ready. 

DLA’s new shipping requirements are called First Destination Transportation (FDT), and the new rules apply to the movement of material from suppliers to the first military depot or direct to military customer.  In these instances, shipping will change from FOB destination to FOB origin.

  • FOB is an abbreviation for free on board.  This term is used with the designation of a physical point to determine the responsibility and basis for payment of freight charges and, unless otherwise agreed, the point at which Title for supplies passes to the buyer of consignee.  (The policies on designation of contracts as FOB Origin or FOB Destination are set forth in FAR 47.3.)
  • Irrespective of whether a contract is designated as FOB Origin or FOB Destination, the government bears the cost of shipping (either as part of the item price under FOB Destination or separately under FOB Origin).   An important consideration between the two designations, however, is who bears risk for damage or loss of the item during shipment.  Typically, under FOB Destination, the seller bears the risk of loss or damage to the item during shipment.  Under FOB Origin, the buyer typically bears the risk of loss or damage to the item during shipment.

Slated to begin with solicitations and awards in late October 2013, DLA’s new FDT rules will require the removal of transportation-related cost from contractor bids.  Shipping will be designated FOB Origin, thus contractors need only be concerned with quoting the associated costs of manufacturing their products.  Products affected by the October roll-out will be those labeled as Class IX consumables and some Class IV and VII materials to CONUS destinations. Supply Chains included in the FDT initiative are: Aviation, Land and Maritime, Construction and Equipment, and Industrial Hardware.

According to DLA, the new FDT rules mean that geography will no longer play a part in competitive bidding because distance-based shipping expenses will not have to be factored into bids.   The drawdown of troops from Afghanistan signals a reduction of necessary parts and supplies to U.S. troops.  Contractors who utilize this change in transportation terms, and find additional avenues for cutting costs, will find their reward in additional business opportunities.

In these uncertain budgetary times, DLA is challenged to decrease costs at the same time as being challenged with increased support to the troops in both the U.S. and abroad.  It is DLA’s goal to take control of its supply chain by improving in-transit visibility (ITV) and dock productivity as well as safety stock requirements.  ITV offers opportunities to consolidate.  Loading fewer, fuller trucks increases DLA’s effectiveness and reduces its carbon footprint.

Once the FDT rules become effective, vendors are advised that before  submitting a bid (minus the cost of transportation), they will need to Log In and subscribe to DLA’s Vendor Shipment Module (VSM).   VSM is the vehicle by which vendors will notify DLA’s transportation team that a shipment is ready for pick up.  No matter the size or weight, VSM will assess the information provide by vendors, assign the carrier best suited for the shipment, and notify the vendor of the carrier choice. At that time, VSM will allow each vendor to access its own contract information in order to print a commercial bill of lading, military shipping labels, packing slip, address labels and small parcel carrier labels.

For VSM registration and instruction, please click on the link below.   A Help Desk is available and can be reached by email at delivery@dla.mil or by phone Monday through Friday, between the hours of 6:00 am and 6:30 pm Eastern Time, at 800-456-5507.

Will you be ready for this change in October 2013?  Now is the time to register for VSM:  https://vsm.distribution.dla.mil/   Watch for solicitations that use the freight term FOB Origin, and don’t forget to sharpen your pencil!

For more information on FDT, visit: http://www.dla.mil/FDTPI/Pages/default.aspx#transportation.

Cutting through red tape in government procurement

By

Do government purchasing departments drown prospective vendors and contractors in paperwork and procedures?

“I certainly believe there is too much red tape in selling to the government, which is driving up procurement costs on lower ticket items, which is the core of our business,” Steven Bosio, president of Grand Rapids, Mich.-based MarketLab, told Industry Market Trends (IMT).  MarketLab is a direct-mail catalog supplier of specialty products and services for health care professionals.

Keep reading this article at: http://news.thomasnet.com/IMT/2012/07/10/cutting-through-red-tape-in-government-procurement/ 

Congress looking at forced reductions to address budget and debt ceiling issues

By

It’s the budgeting equivalent of the old adage about killing two birds with one stone. Congress returns from Easter recess next week facing two urgent fiscal questions: what to do about raising the federal government’s borrowing threshold and how to pass a budget for the next fiscal year that honors the fiscal austerity of the current political moment?

Increasingly, the odds favor addressing both issues with a single legislative agreement.

The Treasury Department has said the federal government will hit its $14.3 trillion debt limit around May 16, though bookeeping leeway could allow lawmakers to defer action until July. Republicans in both the House and Senate, backed by a few Democrats, have said they will oppose increasing the debt limit without a significant commitment to future spending cuts.

Just a few weeks after reaching a last-minute deal to fund the government through the end of this fiscal year ending on September 30, the Republican-controlled House and Democratic-controlled Senate must also address the bigger challenge of reaching a deal on a budget resolution setting spending targets for fiscal 2012, which starts on October 1. The budget resolution offered by House Budget Committee Chairman Paul Ryan, R-Wis., has no chance of Senate passage and Senate Budget Chairman Kent Conrad, D-N.D., has not yet offered a budget resolution, but his plan would face long odds in the House as well as in the Senate if it could not generate some GOP support.

Congressional aides in both chambers said that the hope is to address the debt limit and the fiscal 2012 budget by approving a bill that would require Congress to meet ratio-based deficit-reduction targets over perhaps the next decade.

Under the plan, failure by congressional committees to hit the targets would trigger automatic reductions.

Democrats said such a proposal can be voted on in one package with a debt-limit increase, and could provide the significant commitment to deficit reduction that picks up enough GOP votes to allow the debt-ceiling increase. The bill could also serve as a vehicle to set fiscal 2012 spending levels.

Such a plan would not include entitlement reform, though a general statement signaling intent to address entitlements is possible.

While such a measure would serve a similar function in both chambers, aides said they expect the House and Senate to take different approaches, which would complicating efforts. Democratic staffers said they hope Senate passage of what will be seen as a bipartisan plan would put pressure on House GOP leaders to move the same measure.

The details of what many are referring to as a “fail-safe” or triggered mechanism on spending reductions would be crucial, and are far from determined. But various groups of lawmakers and policy organizations are pushing plans that follow the general outline of forcing future cuts that could be linked to the debt-ceiling vote. Sens. Bob Corker, R-Tenn., and Claire McCaskill, D-Mo., have offered a proposal to set binding caps to reduce spending to about 21 percent of the nation’s gross domestic product, though the plan has little Democratic support.

A group of former policymakers, including former Senate Budget Committee Chairman Pete Domenici, R-N.M., outlined a package last week to force Congress to identify deficit-reduction targets that stabilize the debt over 10 years. President Obama signaled general support for a plan that caps spending.

The most closely watched fail-safe proposal, however, may come from the bipartisan “Gang of Six” senators. The group, comprised of Conrad and Sens. Mark Warner, D-Va., Dick Durbin, D-Ill., Saxby Chambliss, R-Ga., Mike Crapo, R-Idaho, and Tom Coburn, R-Okla., hopes to release a sweeping plan to cut the deficit as soon as next week. Their proposal, based on a plan offered last year by the heads of Obama’s bipartisan fiscal commission, would seek to cut spending by $3 trillion and increase tax revenue by $1 billion over a decade.

Two Senate sources briefed on Gang of Six talks said they expect the senators to propose multiple “pieces,” that could receive votes at separate points this year.

The sources said that in addition to a long-term deficit-cutting plan, the senators are preparing to recommend a relatively simple process under which Congress commits to meet deficit-reduction targets, to both mandatory and discretionary spending over perhaps a decade. The plan would also set targets for revenue increases. It would impose “draconian” cuts if the targets are not met, one senior aide said. That proposal could then be linked to the debt-ceiling vote.

A key to the proposal would be the exclusion of specific cuts. That will allow Congress to defer fights it cannot complete in the next month or two while committing to future reductions.

It remains to be seen how strict the plan would be – Congress has previously created exemptions to limit the effect of similar approaches, like Paygo. But the plan would at least serve the political and legislative means for passage of the debt-limit increase.

Conrad has said he is holding off on offering a budget resolution to see if the gang reaches a deal soon. If it does, a senior Democratic aide said Conrad could then include a fiscal 2012 budget plan in the fail-safe mechanism that would be voted on in conjunction with the debt limit.

The aides said they expected the gang to unveil their both long- and short-term deficit-cutting plans as soon as the middle of next week.

Spokesmen for Coburn, Durbin, Warner, Conrad, and Chambliss said the senators have not reached an agreement, noting that no proposal is agreed on until a complete deal is reached by gang members. The aides said the group may not offer a plan next week. All declined to comment on the specifics of the potential proposal.

In public appearances in recent days, gang members have made it clear that their long-term deficit-cutting plan would include a trade in which Democrats agree to a long-term effort to trim spending on Social Security benefits while GOP members back efforts to increase tax revenue by ending tax deductions or loopholes. The package will not include any increases in tax rates, according to senators and multiple aides.

The Social Security component would aim to reduce spending on benefits over 75 years. Advocates of some Social Security reform, like Warner, hope to sell the plan by arguing that it will affect only Americans currently younger than 32 or 33 years old. But aides said the specifics of changes in benefits, and the age of those affected, are one of several remaining issues.

The gang is also widely expected to propose ways to cut spending on Medicare and Medicaid, likely including some means-testing to control Medicare costs. But the group has kept a tight lid on specifics.

— by Dan Friedman – National Journal at http://www.govexec.com/story_page_pf.cfm?articleid=47670&printerfriendlyvers=1 – April 26, 2011

Relying on continuing resolutions wasted billions, says Pentagon acquisition chief

By

The absence of a permanent budget for the first six months of the fiscal year likely cost the Defense Department billions in inefficiencies, according to the Pentagon’s top purchasing official.

In a speech on Wednesday at the conservative-leaning Heritage Foundation, Ashton B. Carter, undersecretary of defense for acquisition, technology and logistics, argued that the seven continuing resolutions passed by Congress from October 2010 through the second week of April were highly ineffective and resulted in a waste of taxpayer resources.

“It is uneconomical to proceed in this herky-jerky fashion,” Carter said. “It cost billions for us to operate in this way. It’s like a hidden tax.”

He said the lack of a permanent, fixed budget upset some carefully calibrated buying plans and caused the department to shelve other programs that had yet to commence.

Congress finally passed a fiscal 2011 budget for the last six months of the fiscal year last week.

Carter’s address focused on his initiative to milk greater savings and more efficiencies out of the roughly $400 billion the department spends to procure goods and services. The acquisition chief said the era of ever-increasing Defense budgets was gone and that the department needed to do “more without more.”

The leaner acquisition environment, he said, will feel very different to those in the Defense community who have “grown accustomed to a circumstance where they can always reach for more money.”

While much of Carter’s focus was on the $200 billion devoted to the services of acquisition, he also suggested that the department may not be done cancelling or scaling back several expensive major weapons programs.

Carter’s office has already abandoned several weapons programs, totaling $300 billion, which were either over-budget or inefficient, or which involved a product of which the department had simply acquired enough. They include the presidential helicopter, the Expeditionary Fighting Vehicle and aspects of the Future Combat System.

And while the Pentagon has plucked most of the low-hanging fruit, “there undoubtedly will be more cancellations of that kind,” he said.

The alternative to not addressing these problems, Carter said, is more broken programs, ineffective products provided to the warfighter and eroded taxpayer confidence in the department’s ability to wisely spend money.

Repeating themes from many previous speeches on this subject, Carter outlined his 23-point plan to drive more efficiencies and savings out of an essentially flat Defense acquisition budget. The plan includes introducing more competition, reducing bureaucracy and unnecessary paperwork, improving the tradecraft of service acquisition, building up the procurement workforce and incentivizing better productivity from industry.

Carter added that the department plans to roll out a new Superior Supply Incentive Program in the coming months that will reward the best performers in the Defense industry with advantages in source selection, performance payments and nonmaterial recognition. The program is modeled after a plan originally scheduled to be introduced by the Navy but which Carter is expanding departmentwide.

“We are trying to reduce cost and not profit,” Carter said. “We use profit as an incentive to reduce cost.”

Relying on continuing resolutions wasted billions, says Pentagon acquisition chief

— by Robert Brodsky – GovExec.com – Apr. 20, 2011

SBA chief signals 2012 budget will eliminate some programs

By

President Obama’s fiscal 2012 budget, scheduled to be released on Monday, will streamline, and in some cases, eliminate entirely, several small business programs, according to Small Business Administrator Karen Mills.

Last month, Sens. Mary Landrieu, D-La., chairwoman of the Small Business and Entrepreneurship Committee, and Olympia Snowe, R-Maine, the panel’s ranking member, sent a letter to Mills and SBA Inspector General Peg Gustafson seeking recommendations for programs that could be “eliminated, or substantially reduced without undermining the SBA’s ability to serve the needs of small business owners.”

On Friday, Mills responded in a one-page letter in which she declined to provide details of any program cuts before the fiscal 2012 budget is submitted to Congress.

But, in a sign of what might be on the horizon, Mills hinted that the agency, which already has experienced years of flat or declining spending, could face even leaner times.

“With respect to delineating specific programs that we believe are redundant or duplicative, on Feb. 14 the president will release his fiscal 2012 budget proposal, which will identify SBA programs that can be further streamlined, or in some instances eliminated altogether,” Mills wrote.

It is not clear which programs are on the chopping block. In the letter, Mills said she, or SBA senior program officials, would be available to discuss the cuts after the budget has been released.

“Over the past two years, the agency has made considerable progress in this area,” Mills wrote. “Plans are in place to continue to use technology and other cost-saving approaches to continue to streamline activities and make the best use of the taxpayers’ dollars.”

The IG’s office said it has not yet completed its response to the letter.

The Senate committee is planning to hold a hearing this month on proposed SBA program cuts.

— by Robert Brodsky – GovExec.com – February 9, 2011

Army suspends all ongoing insourcing plans

By

In an about-face, the Army has suspended all of its ongoing insourcing activities, potentially savings thousands of private sector positions.

In a Feb. 1 memorandum, Army Secretary John McHugh announced he was halting the service’s insourcing initiative immediately in favor of a scaled-back approach in which his office would have to directly approve projects.

“In an era of significantly constrained resources, the Army must approach the insourcing of functions currently performed by contract in a well-reasoned, analytically based and systemic manner, consistent with law and prevailing presidential and Department of Defense guidance,” McHugh wrote in the memo, released on Thursday by the Professional Services Council, an industry group that has opposed plans to bring contractor jobs back in-house.

The memo suspends all ongoing insourcing transitions, but does not reverse efforts that already have been completed.

Army spokeswoman Anne Edgecomb said the memo is not intended to stop insourcing altogether but to ensure that the process is conducted responsibly and deliberately. “We are trying to make sure we do everything we can to be fiscally responsible,” Edgecomb said. “We see the writing on the wall.”

Edgecomb did not have figures immediately available on the number of contractor positions the policy change would effect.

The Defense Department’s insourcing program leader said on Thursday that the Pentagon did not direct Army to change its policy.

“The department is committed to meeting its statutory obligations under Title 10 to annually review its contracted services, identifying those that are inappropriately being performed by the private sector and should be insourced to government performance,” said Thomas Hessel, a senior manpower analyst in the Office of the Undersecretary of Defense for Personnel and Readiness, in a statement to Government Executive. “This includes services that are inherently governmental or closely associated with inherently governmental in nature; provide unauthorized personal services; or may otherwise be exempted from private sector performance … While some contracted services may be identified for insourcing, some services determined to be no longer required or of low priority may be eliminated or reduced in scope while others will continue to be provided by the private sector.”

All future insourcing proposals, McHugh wrote, must include “at minimum, a manpower requirements determination, an analysis of all potential alternatives to the establishment of permanent civilian authorizations to perform the contracted work, certification of fund availability and a comprehensive legal review.”

Thomas Lamont, assistant secretary of the Army for manpower and reserve affairs, along with Mary Sally Matiella, assistant secretary of the Army for financial management and comptroller, will be responsible for developing criteria to evaluate the efficiencies generated from the policy change, McHugh said.

Contractor groups, which have long criticized the Defense Department’s insourcing plans as driven by quotas and lacking any verifiable cost savings, applauded the development.

“Secretary McHugh is taking the right approach to insourcing,” PSC President Stan Soloway said. “We have said all along that all sourcing decisions for clearly commercial work — whether insourcing or outsourcing — must be done strategically with the best interests of the government mission and American taxpayer in mind.”

John Palatiello, president of the Business Coalition for Fair Competition, a group formed to challenge the Obama administration’s insourcing plans, said the memo is proof the initiative has been poorly executed.

“BCFC renews its call for a governmentwide moratorium on insourcing until common-sense standards and metrics for assuring that any insourcing is in the taxpayers’ interests, does not increase unemployment, and is focused on statutorily defined inherently governmental activities, not commercial activities,” Palatiello said.

The memo comes only a few weeks after the Government Accountability Office reported the Army had identified more than 4,200 full-time jobs in which contractors are performing either inherently governmental or unauthorized personal services. In both the inherently governmental and the unauthorized personal services contracts, the Army typically would be required to bring those functions back in-house.

Defense Secretary Robert Gates announced in August 2010 that the Pentagon was implementing a fiscal 2011 billet freeze and halting its insourcing plans because of a lack of cost savings. But, the plan affected only civilian agencies and offices. The military services were exempt from the freeze, allowing them to continue with their insourcing plans.

Soloway called on the other military services to follow the Army’s approach. “Through such a process the Army, DoD and the taxpayer will gain vital insight into the total life-cycle costs associated with these decisions, the degree to which they address the Army’s workforce needs, and more,” he said. “We hope, as they say, the Army leads the way.”

— by Robert Brodsky – GovExec.com – February 3, 2011

Contracting News

Read More

Contracting Tips

Read More

GTPAC News

Read More

Georgia Tech News

Read More