Acquisition lessons from the pandemic that could stick around

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The pandemic, specifically the spending and acquisition lessons from it, should not disappear once there’s a vaccine. In fact the lessons learned should spur permanent and better defense acquisition. That’s the thinking of Jerry McGinn, who’s followed defense acquisition for a long time. He’s the executive director of the center for government contracting at George Mason University and joined Federal Drive with Tom Temin to discuss.

Interview transcript:

Tom Temin: Jerry, good to have you back.

Jerry McGinn: Great to speak with you Tom.

Tom Temin: Tell us you’re thinking about what are the lessons learned, what has been good about defense procurement as a result of the pandemic?

Jerry McGinn: One of the interesting things is that if you look at the immediate response and the longer term response, government contracting has actually performed very well. It’s been chaotic in the beginning, and that’s not surprising, but the system has done a lot of good things, and Congress and the administration have both contributed to that. So what I looked at was, we’ve done a number of reports at the Center for Government Contracting on the COVID response, and initially it was sort of an all of the above or kitchen sink approach. Let’s do quick term and RFPs, let’s do whatever we can to get money to providers to deliver capabilities to respond the crisis. And Congress gave the administration great tools to do that, they increased the other transactions authority limits/thresholds, they allowed for undefinitized contract actions, or UCAs, to help speed things, they reduced restrictions on Defense Production Act and appropriated a billion dollars for the fund. And these things have been used very, very strong. And now so the question is, what sticks? I argue that a lot of it should stick.

Tom Temin: Well, I just want to divert for a minute, you mentioned undefinitized contract actions, UCAs. I think everybody knows about other transaction authority, that’s been in the news now for quite a number of months. Just tell us more about UCAs and what they’re designed to do and what they can help with.

Jerry McGinn: Yeah, so what UCAs can do is they can get you to start work quickly, immediately. So essentially it allows you to get a program or an action started an on contract before you negotiate all the terms and conditions of the full contract. And that’s been done a couple of times here in the pandemic response, for instance, there was $160 million UCA that was done for HHS, but through DPA authority. DoD appropriated $163 million for a vaccine delivery company to help deliver one use vaccines so when the vaccines are ready, we have a means to distribute them. So that was under UCA and other responses for that pandemic has done that as well. And so that allowed those companies to start work in the spring and then finish the contract. UCAs have gone away a little bit because it can be then tough to then get the final contract done. But the fact that they did this, and it’s actually then led to these strong actions, I think its a good thing.

Tom Temin: And OTAs, other transaction authorities are outside of the Federal Acquisition Regulation, or the DFARS. What about UCAs? Are they also something separate? Are they allowed in the DFARS?

Jerry McGinn: They are on the DFARs, yeah. It’s just another tool that is used to help get things at least started. It requires that you do follow up with a full proposal and get the contracts terms and aonditions signed, but it’s part of the system, which I think is a good thing. OTAs as you talked about sort of go around the system a bit. What we need to do is really strengthen how the system works, so it can be more responsive and adaptive.

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Tom Temin: Also writing in national interest, you have talked about the adaptive acquisition framework, the AAF, that the DoD has put together. Is that something new also, what is it and how can that apply?

Jerry McGinn: Yeah, no, that’s something that Department of Defense has been working on for a number of months. Essentially they argue that there are different pathways for acquisition. The regular DFARs system using OTAs. There’s a separate appropriation on trying to do a different kind of money for software contracting to make it more responsive. So this framework is trying to find the right tool for the right acquisition problem. So they sort of were rolling this out before the pandemic and now they’ve tried to do it. My argument is that this is a perfect time to really educate principally the contracting officers and all up and down the acquisition professional chain, about those pathways, about the different options so we choose the right kind of path for the right acquisition problem. The pandemic has given us lots of great examples on things that work and things that maybe don’t work as well. And so rolling out this acquisition, AAF, is a really good thing. I just want to see it promoted more and more across the acquisition community.

Tom Temin: And when these things happen rapidly or there’s UCA or an OTA — I mean, in the case of pandemic spending, Congress also built in something that has not been been fully exercised yet, and that’s kind of a post facto audit of what happened and whether it was all correct. And so doesn’t that also need to be part of these rapid and quick and effective types of techniques? Yeah, you can get things started and bought fast, but at some point, there’s a reckoning.

Jerry McGinn: I agree. I mean, you definitely want to ensure accountability so that all tax dollars are spent in the right way and transparently, and so on. And there’s time for that. So you need to have that, and you’ve seen some of that examination of different contracting actions they’ve done in the early stages to see whether or not it was appropriate. I think you absolutely that, but my argument is you don’t want the tail to wag the dog — you need compliance, you need full accountability — but these advances that we’ve made in government contracting, let’s not kind of backslide into a way that just returns to the system as usual.

Tom Temin: Sure. And a related issue I wanted to ask you about from your prolific pen. And that is the idea of the need for more manufacturing capacity to return to the United States. And this was also shown up in the pandemic, I’m looking at one of the collection of facemasks I have, this one happens to be made in Mexico, at least it’s in the right hemisphere. But a lot of it is from Asia. And you’re saying, though, that let’s not overdo it, because we need trade and we need, a solid economic system.

Jerry McGinn: Yeah, my argument is that I think we need to, clearly with with regard to public safety, that is PPE, and things that are pharmaceutical production, as well as defense, we need to get out of the China business. We need more domestic capacity so we’re not kind of at risk of being in difficult situations with adversarial countries. But that doesn’t mean buy America only. As you mentioned, we’ve already got close partners. I mean, we have the USMCA deal, Canada and Mexico that are geographically contiguous to us. And you have partners, strong allies in Australia, Japan, the United Kingdom that produce capabilities, such as rare earth production, rare earth magnet production, it’s a natural partnership for us to build domestic capacity with a little bit of help from our friends. So I just would caution about some of the forces in Congress particularly they want tighten buy America restrictions to both domestic capacity. And I just think that we don’t need that, because we already have very strong domestic production in the defense industry. And it’s a net export kind of industry as well. And we have lots of allies and partner countries that have companies that do business here and have subsidiaries here. So I don’t think the right tool was developed to build domestic capacity through Title Three, Defense Production Act and other kinds of tools, but partner with allies as we do that.

Tom Temin: I think what’s the nation needs is a good American made torque wrench that’s less than 500 bucks.

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Jerry McGinn: Yeah that is for sure. That is for sure. I was using a torque wrench on my zero turn radius mower trying to get some mulch blades on there, and I’m confident that wasn’t 500 bucks, and I’m sure the Department of Defense can get theirs for less than that as well.

Tom Temin: Alright. Jerry McGinn is executive director of the Center for Government Contracting at George Mason University. Thanks so much.

Jerry McGinn: Great to talk with you.

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