By Jared Serbu
Defense Reporter
Federal News Radio

When it comes to designing Defense procurement programs that are clear to vendors, the recent, hard-fought contest to build a new aerial refueling tanker for the Air Force may show the way ahead, the Pentagon’s procurement policy chief said Thursday.

Shay Assad, director of Defense Procurement and Acquisition Policy in the Office of the Secretary of Defense, told industry executives at a Coalition for Government Procurement conference in Arlington, Va. Thursday the most recent KC-X tanker competition was much clearer and well-defined than previous Pentagon acquisition efforts.

“We knew what we wanted, and we clearly identified and set forth the requirements that needed to be met,” he said. “And then we identified a set of requirements that could be of value, but then let the offerors know, this is what this is worth, as far as we’re concerned. We’re going to try to make it much clearer to you what is the best value trade here and what are things really worth, so that you understand and focus your efforts on what we think is really important.”

Assad said wherever possible, DoD would try to make it clear to contractors exactly what its minimum technical needs are, how much the extra bells and whistles on an acquisition program are worth and exactly where price fits into the picture.

“The big challenges that I used to wrestle with when I was on your side of the street was how good is good?” he asked. “How much more money should I invest in what you’re telling me is important to you?”

But he said before DoD can communicate its priorities for a program to prospective vendors, it first needs to make sure its own program managers clearly understand what they’re asking for. He said that point was driven home when his office began asking individual DoD procurement professionals to list the three or four most important requirements of the program they were managing.

“Most of our program managers are very good at articulating that kind of thing,” Assad said. “But then we look at the award criteria, and the four or five things they talked about aren’t in there. There’s a disconnect between what you think is important and how we’re going to actually evaluate the contract.”

Peer Review

In addition to a new set of departmentwide source selection procedures, another step DoD is taking to produce a clearer, more consistent procurement process is a system of peer review. DoD acquisition experts from outside a program evaluate it at four separate stages of its life.

“The purpose of a peer review is not to change the decision process,” Assad said. “It is to ensure we do what we said we were going to do.” In the case of the tanker competition, even the losing bidder, EADS North America, agreed that DoD did just that.

“In this competition, the rules were the rules,” said EADS chairman Ralph Crosby in a March 4 press conference announcing his company would not challenge the contract award to rival Boeing. “It’s clear that there is no foundation for protest. We believe that the Air Force has been absolutely scrupulous about applying the rules.”

Avoiding Protests

And Assad said having those clear rules from the start to the finish of a competitive source selection are key to DoD having its awards overturned by the Government Accountability Office.

“When you talk to folks from GAO, it’s pretty fundamental why we lose protests when we do lose them,” he said. “We said we were going to evaluate someone in accordance with a set of criteria, and either we don’t evaluate them in accordance with that criteria or we haven’t properly documented it, such that there’s ambiguity and confusion. We want to prevent that, and we want to ensure our industrial community that we’re taking steps to make sure that we get this right.”

Nonetheless, Assad said DoD already was doing a relatively good job at avoiding successful protests. He said while the department processed 3.6 million contract actions in 2010, GAO overturned only 20 procurements. The growing number of protests, he said, is a concern.

According to GAO figures provided to Congress, the office received 2,299 protests in 2010 — an increase of 16 percent over 2009, and twice as many as were filed a decade earlier. The report does not provide separate protest tallies for Defense or other individual departments.

“Are we concerned about protests? Yeah,” he said. “Would we prefer that we don’t get what we call nuisance protests? Yeah. But one of the fundamental underpinnings of our system is that our contractors have a right to complain if they think something’s wrong. That’s a healthy thing.”

Acquisition Force Changes

Assad said the department also had made progress in its attempt to rebuild its in-house acquisition workforce, but was stepping back from the part of that effort that involved insourcing acquisition professionals who had been previously outsourced to the private sector as a cost saving measure.

DoD’s initial goal for bringing in acquisition experts involved directly hiring 10,000 new full-time civilian staff, and insourcing another 10,000. Assad said they had achieved approximately 6,000 new hires so far and that they would continue to hire more at the same pace. On the insourcing track, he said about 3,000 formerly private positions had been moved-in house thus far, but that the department was now reassessing whether it would press ahead further.

“We want to make sure that when we make that decision that in fact it’s an inherently governmental function that we’re asking people to do, that secondly it’s critical and needed, and third that it makes sense financially,” he said.

Any further insourcing of acquisition personnel would require approval from high in the DoD chain of command, he said, possibly up to the level of Deputy Defense Secretary Bill Lynn.

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