There is broad agreement that in the event of sequestration-driven reductions beyond those which are already being planned for the Defense Department, the impacts on each of the services industry segments—from technology development to workforce access—could be potentially cataclysmic, particularly with regard to contingency support and surge capacity, and research and development investments for next generation technology capabilities.
While the Obama administration’s Jan. 5 Defense Strategic Guidance makes the case for mission-driven budget decisions to avoid such calamities, PSC, as part of a multi-association industry taskforce, made its own recommendations for how the department can mitigate a sequestration scenario that could leave the department and industry unable to compete for critical talents.
- Communication between defense program managers and other stakeholders must be made a core value of the department’s business practices (as endorsed by former Deputy Secretary of Defense William Lynn in June 2010). If the department is intent on achieving optimal efficiencies in its operations while also realizing the maximum value from each dollar spent, communication must be improved and must include direct instruction from the department’s senior leaders to its workforce. Working in a collaborative environment produces substantial cost savings without sacrificing either quality or capability.
- The department should undertake a rapid, open process of reviewing burdensome administrative processes, such as overly complex contract structures and compliance requirements, delays in making award decisions on contracts and task orders, and slow contract administration actions, including payments, each of which contributes to the unnecessary and deleterious impacts on the industrial base and further reduces resources that could be applied to the department’s needs.
- Guidance should be issued reiterating the department’s twin objectives of ensuring that contractor margins be reasonable and tied to the complexity of the work and risk assumed by the contractor, and precluding the use of margins as arbitrary sources of cost savings.
- Guidance should be issued reiterating the importance of using cost-technical tradeoffs in procurements involving complex, mid-to-high-end services. This guidance should remind the workforce that while excess requirements or capabilities are never advisable, least of all during a time of constrained resources, it is nonetheless vital that the department access the best, most innovative and high performing capabilities available. True innovation and technological advancement is only possible when the department’s procurements reward and give credit for such capabilities.
- The department should immediately enhance its management of service contracts. The department needs to obtain the greatest possible value from each dollar spent and doing so requires a trained, empowered workforce prepared to exercise critical thinking skills. There is broad consensus that procurements today are not only based on the lowest price, but lack real business character or judgment; this problem is driven principally by a workforce that has little to no business training. The Defense Acquisition University still does not have a curriculum tied to the acquisition of services and does not require contracting personnel to study and understand business risk identification and management.
