The Air Force has seen a decline in the competitiveness of its service contracts despite the Defense Department pushing for more companies to vie for procurements.

The Air Force’s rate of effective competition for service contracts has dropped about 15 percent from 2008 to 2014, according to an Oct. 1 study by the Center for Strategic and International Studies.

The other services, meanwhile, have increased the competitiveness of their contracts over the same period of time. The Army has gone from awarding about 70 percent of its contracts competitively in 2008 to about 73 percent in 2014. The Navy grew from 60 percent to about 63 percent and overall DOD contracts held steady around 65 percent. The Air Force dropped from 56 percent to 41 percent.

“These results were somewhat surprising to CSIS, given the widespread view among DoD officials and industry experts that the Air Force was ahead of the other major DoD components in improving tradecraft in services acquisition,” the study said.

The drop in competitive contracts is traced to certain categories of service contracts. The Air Force’s equipment related services fell far behind the overall DoD. The contracts for the repair of electrical equipment were only competitive 2 percent of the time, while DoD as a whole did it 27 percent of the time. Similarly, the repair of aircraft components was 9 percent in 2014, while DoD awarded 26 percent of those contracts competitively.

Competition rates, acquisition reform

The study posits that a declining rate of competition is not necessarily bad.

“A declining rate of effective competition does not necessarily mean that the Air Force is paying more or getting lesser performance quality from its services contracts, but it is a possible warning sign that warrants further inquiry,” the study stated.

The study said it is possible that the Air Force may be discouraging competition for the sake of competition when it’s obvious one bidder will win the contract.

Another reason for the low rates may be because of the nature of the industrial base with which the Air Force works. Equipment related services are usually performed by the original manufacturer because it owns the technical data rights.

DoD regularly checks its competition rates and publishes the results. The department’s Better Buying Power acquisition plan promotes competitive contracts as a means to lower prices for services and goods.

The Air Force has been releasing a number of acquisition reforms in recent years. Its “should cost” initiative requires program managers to set aside historically-based independent cost estimates that are developed for all big programs and instead manage their programs according to what they ought to cost. The Air Force said it has saved $2 billion over the past five years with the strategy.

Just last month, Air Force Secretary Deborah Lee James announced a “should schedule” initiative, which would give priority to a company that can deliver faster results in the design and development phase for established programs.

“If an industry partner can propose a solution that credibly offers a way to accelerate successful [engineering and manufacturing development] then that company would have a competitive advantage for the award,” James said Sept. 14 during the program’s announcement.

Congress’ interest in acquisition

Congress also is interested in changing acquisition. The 2016 Defense authorization bill gives more power to the military service chiefs and secretaries over the acquisition process.

Under the bill, the service chiefs and secretaries will gain the authority, starting with any new programs in 2017, said a Senate Armed Services Committee staff member during a briefing with reporters Sept. 30.

The bill also follows the lead of the “should cost” program and further empowers program managers by giving them more control over their programs. The current process is often likened to a full bus where every passenger has a steering wheel and a brake, causing the bus to crash. The new process would give the steering wheel and brake only to the program manager.

President Barack Obama has threatened to veto the bill over the way it uses an emergency fund to pay for items that are usually in DoD’s base budget. Congress used the fund to increase the defense budget without going over sequestration caps. The House passed the DoD Authorization bill Oct. 1 by a vote of 270-156.

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