DoD needs more commercially available goods to speed acquisition

With shortages from production down through the supply chain, the Pentagon’s acquisition leadership wants to close the gap by purchasing more commercially available products. To make that work, contracting officers must overcome not just buying issues but budget and planning issues.

Military acquisition professionals speaking at the Acquisition Research Symposium in Monterey, California said Thursday they need better ways to get commercial products, particularly those involving advanced technology, into the hands of service members. Some initiatives are helping move Defense acquisition toward commercial products, but more needs to be done.

“What you’re seeing now are organizations springing up in order to try to fill that gap. Whether that’s AFWERX in the Air Force, or the unmanned task force that the Navy has played with, or the Office of Strategic Capital now trying to make some effort with money seeding,” said Navy Vice Adm. Francis Morley, military deputy to the assistant secretary of the Navy for research, development and acquisition.

While those initiatives expanded DoD’s ability to buy commercially produced products, the department needs new ways to ensure future expansion, officials said, including more long-term planning both for the actual purchases and for the budget to buy them.

DoD’s Defense Innovation Unit recognized the need to fill the production gap in January when it identified six areas where the department should be buying more commercial technology. Those areas include artificial intelligence/machine learning, autonomy, cyber, energy, human systems and space.

“The majority of the driving technologies that we need to advance our operational capabilities and solve our operational problems are being led in the commercial sphere and not the government labs anymore. That requires a different approach, a different ability to bring that capability in,” Morley said.

Building a plan for commercial purchases into the program objective memorandum (POM) allows contracting officers flexibility to buy commercially available items as the need arises. The POM shows requests for the next five years in DoD’s programming phase of the budget process.

Army Lt. Gen. David Bassett, the director of the Defense Contract Management Agency, said planning the POM with emerging technology in mind proves challenging for all the services. The Army’s solution included putting commercial technology in the POM as it planned its capability set models. The capability sets combine commercial solutions with Defense-specific innovation.

“It amounts to a wedge for commercial technology. We wouldn’t decide what we were going to get until we had finalized the design of that capability set. It allowed for on-ramps for some commercial radios and other things without knowing two years earlier exactly what it was going to be,” said Bassett, who previously served as the Army’s program executive officer for command, control and communications-tactical (PEO-C3T).

If Congress allowed for more flexible spending in the POM, Bassett said it would make it easier to plan for commercial purchases. However, contracting officers need to find ways to verify they are paying a fair price.

“I do see some companies try to use commerciality, particularly on something that they know I have to buy from them, as a way of expanding margins rather than speeding the award of contracts,” Bassett said. “We’re happy to pay commercial prices for genuine commercial items. But we want to be confident that the level of modifications and the cost of those things still represents good value to the government.”

The problem, Bassett said, is industry and the Pentagon don’t always agree on what defines a commercial product, and then what constitutes fair prices. He said restrictions on the government’s ability to ask for pricing information made the process opaque. In order to get Congress to agree to flexible spending for commercial items, contracting officers have to justify pricing.

“I think that’s a fallacy that’s out there. If it’s similar to something that’s being sold commercially, it can be commercial, but we still have to get fair and reasonable pricing. That does involve sharing a certain amount of non-certified cost and pricing data with the government so we can be confident that we’re paying a fair and reasonable price,” Bassett said in an interview with Federal News Network.

He said training the acquisition workforce to better understand commercial production models and how pricing works would help both sides work together.

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