Government Contracts Intelligence Briefing

Earlier this week, the Department of Defense (War) announced plans to significantly remake how it will purchase goods and services from government contractors in its Acquisition Transformation Strategy (the Strategy). Central to these reforms will be the use of portfolio management to break down the walls within the Pentagon.

Priorities in the Strategy include empowering the acquisition workforce, reducing regulations and processes, developing high performance systems through technical excellence, and improving lifecycle management. The Strategy does not mean that regulatory compliance is going away but highlights the Department’s efforts to streamline regulations (in the Defense Federal Acquisition Regulation Supplement) consistent with the FAR Overhaul.

That does not mean that the Department is dispensing with regulatory requirements and due diligence altogether. In fact, the Strategy indicates there will be increased scrutiny on what the Department is buying as it aims to “[s]crub every government investment deal to confirm it is the best deal for the warfighter to protect our national security.” This may be accomplished by utilizing DFARS 252.204-7024, which requires Department contracting officers to review every contract for price risk, item risk, and supplier risk. Further, the Strategy emphasizes the importance of cybersecurity. “The Department must ensure IT capabilities are focused on strategic outcomes, maximize the use of commercial technology, and require high cybersecurity standards.”

The Strategy also emphasized the need to rebuild the number of large contractors it can choose from. In its estimation, at the end of World War II, there were 51 large contractors that could handle large complex procurements. That number, today, is five. Part of the Strategy is creating stronger demand signals by offering longer and larger contracts to contractors willing to dedicate to providing solutions to the Department. Also, Portfolio Management Executives will oversee a larger portfolio with discretion to shift money, adjust program features, and direct outcomes.

Also central to the Strategy will be the use of commercial products and services. This is consistent with the larger strategy pushed by the Trump administration through executive orders and reformation to the Federal Acquisition Regulations.

All of this will not be possible without adequate training to the contracting workforce and the strategy proposes to remake the Defense Acquisition University to do that.

The Strategy is an ambitious remake of how the Department will spend hundreds of billions in the coming years and contractors should continue to monitor so they can meet the changing opportunities at the Department.