DoD’s long-awaited policy streamlines services contracting

The Defense Department is centralizing how it manages more than $150 billion a year in service contracting.

The Pentagon expects the long-awaited policy, released Jan. 5, to provide better oversight, authority and control over ever-growing services procurements.

DoD is creating new “expert” positions to preside over each of the services sectors. Undersecretary of Defense for Acquisition, Logistics and Technology Frank Kendall will appoint the positions.

The policy also moves acquisition authority approval from the Office of the Secretary of Defense to the military acquisition chiefs for services contracts worth more than $1 billion.

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The Government Accountability Office put DoD service contracting on its high-risk list for its challenges with acquisition workforce, contracting techniques and contract support.

Claire Grady, DoD’s director of defense procurement and acquisition strategy, said at a National Contract Management Association event in December, that the policy institutionalizes processes in a more cohesive way. Grady said the policy should not be a surprise to people because DoD has been trying to communicate its policy to industry.

The creation of new positions within the service contracting policy is aimed at combining service and component knowledge.

DoD dubbed the new service sector leaders functional domain experts (FDEs). FDEs will provide strategic management to improve planning, execution and reduce costs over areas like transportation services, medical services, and electronics and communications services.

“You can’t have the idea that everyone is an expert on everything. So, how do you look at and gain that knowledge and share that and create communities of practice” Grady said. “A functional domain expert [will] have that cross-cutting look across the community field into how we are buying services. [It] is a critical part of how we are tackling this.”

FDEs also will put processes in place to monitor post-award performance, identify best practices, develop metric cost and performance and make policy recommendations.

Grady said DoD would be keeping a close eye on the metrics the FDEs develop because they are the experts that will know what metrics matter most.

“Depending on your individual need for service it’s going to vary what success might look like and we avoided putting a one-size-fits-all metric out there to help drive that discussion and really understand from an industry perspective ‘What is the art of the possible?’ and then measuring that,” Grady said.

Under the FDEs, the department has created component level leads (CLLs), which will assist FDEs in overseeing the life cycle of the service contract.

Component heads will appoint CLLs, and will ensure the efficiency within service contracts, while also promoting the training and development of program managers.

As a means of oversight, the new policy establishes a Services Requirement Review Board (SRRB) to review and validate requirements for services contracts worth $10 million or more.

SRRBs will review mission need, workforce analysis, strategic alignment and prioritizations of services, the policy stated.

“This is looking across portfolios and saying ‘How do we really plan to spend our money on services and is that really the highest priorities for those organizations,’” Grady said. “In some cases what we are finding is some people, when they look at the requirements, think ‘maybe this isn’t quite as important as something another office really needs.’ There is some self-correcting behavior due to the visibility of some of those requirements and also it’s creating visibility for opportunities of where it makes sense to potentially combine some requirements.”

Finally, the policy creates data collection requirements and reporting requirements for service contracts. The data collection will comprise  the total contract price, the type of contract, what kind of business the contract was awarded to and the functions and missions performed by the contractor.

DoD has come under fire in the past for dragging its feet on creating a service contract reporting system. Congress charged DoD with creating an office that would take in reporting requirements.

In 2014, Sen. Claire McCaskill (D-Mo.) wrote to DoD stating that the department was using four different contract management systems which left $58 billion of the $187 billion in service contract obligations unreported in 2012.

The policy requires regular reporting and the use of an enterprisewide contractor reporting application.