Contractors sat up and listened to an astonishing speech from a military acquisition leader

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A high ranking military official recently cited acquisition and the Defense supply chain in predicting mathematical certainty of the US losing out to China. That made contractors sit up and listen. The Federal Drive with Tom Temin got the latest from federal sales and marketing consultant, Larry Allen.

Tom Temin  This was an Air Force Major General correct, Larry?

Larry Allen  That’s right, Tom. This is Air Force Major General Cameron Holt. He’s the deputy assistant secretary of acquisition for the Air Force. He had some very choice remarks to make in a public forum recently, talking about the ability of our acquisition system, particularly the DoD acquisition system to move at the speed of need and the extra steps we put on our acquisition system that make it more difficult to acquire things and that harms our national security, particularly against potential adversaries, like China.

Tom Temin  He said, “Yes, we are going to lose if we can’t figure out how to drop the cost and increase the speed in our defense supply chain.” He said, “It’s a mathematical certainty.” So speed, I guess, from requirement to buying something, the implication is that the faster you can get through all of this, the less expensive it’ll be for the military.

Larry Allen  Less expensive it is for the military, it also reduces industry overhead. Tom, right now we have an acquisition system, which we’re trying to achieve a lot of socio-economic goods with. And that’s not necessarily a terrible thing and it’s also not really new. We have a history in the U.S. with trying to solve or at least address, post associated economic ills through government acquisition. I think the General’s comments here can really best be summed up by saying, look, it’s all well and good to have some of these extra aims, but if you lose sight of your main mission- that is acquiring needed goods and services in a timely manner- then you really jeopardize everything else. You jeopardize your mission. You jeopardize national security, and you jeopardize your ability to perform the socio-economic good that you would otherwise want to achieve.

Tom Temin  And it’s easy to cite the Defense Federal Acquisition Regulation (DFARS) and the Federal Acquisition Regulation (FAR) and what can change in Federal Acquisition Regulation, or what should change. What’s your sense of what industry could do to speed things up on it’s part?

Larry Allen  Tom, I think one of the things that industry could do is be proactive. You hear a lot from people, particularly in the DoD, customer side of things that industry, even large, established contractors are reactive. They wait for the request for quotation (RFQ) to come out. They wait for the request for proposal (RFP) to come out. And industry often sees a different perspective Tom. They know what they’re working on. They know what their cutting edge technologies are. Many of the people in industry used to be in government, so they know the problems they’re trying to achieve or solve. So I think that one thing industry could do would be to go out and be more proactive and recommend solutions. Now, you’re always going to run into people inside DoD, and elsewhere to be fair, that said, “Well, we didn’t invent that here so we’re not going to consider it.” But there’s nothing wrong with trying to go out and meet your customer and try to have them move forward with something that otherwise might take months. If you’ve got a bright idea, don’t put it under a bushel.

Tom Temin  Yeah, Holt estimated, and you’re writing this to your clients, that every dollar China spends on national security, the United States spends 20. I think he means dollar per dollar, not necessarily the fact that we have a bigger overall defense budget than China, but simply that ours is way less efficient.

Larry Allen  Well, it is way less efficient. We’re really bogging down our acquisition process with the wish list of perceived ancillary benefits. And also, to be fair, a lot of regulations. Tom, this is a time when we’ve seen new regulations on secure supply chain, on cybersecurity, on a whole host of companies that you can and can’t do business with. Talking to my colleagues who are working on the Russia supply issue that changes every day about companies that are or are not or may not be doing business somewhere in Russia. And those are all tough things for contractors to keep track of. And if they don’t keep track of them correctly, then they know they risk the wrath of an inspector general or an other oversight report. That just slows them down and it adds to the collective cost. Those things are put into place, Tom for legitimate reasons, but I think what General really is saying is we need to take a step back and analyze what is it that we really need in our acquisition system to protect us and to make sure that people are treated fairly. But we still need to keep our eye on the mission. Other things are getting ahead of the mission right now, Tom. And when other things start to interfere with the mission, you end up with problems. And if you’re talking about defense acquisition, those could be very big problems indeed.

Tom Temin  We are speaking with Larry Allen, president of Allen Federal Business Partners. And you’re also referring this week to the return of contractor blacklisting for alleged offenses of labor or environmental law, not connected to a particular federal contract. What’s going on there?

Larry Allen  Tom, contractor blacklisting goes back to the last days of the Clinton administration, when they attempted to put a rule in place, and actually did have been in place for a little while, that would have prohibited the government from doing business with companies that hadn’t been convicted, but in that case, had merely been accused of a whole host of alleged wrongdoings with labor, environmental and other types of law, none of which had anything to do with performance on the government contract. And even though that’s gone away, and the original rule is withdrawn, and canceled, Tom, we still see contractor blacklisting issues come back. Most recently, we’ve seen that with the Department of Agriculture, trying to implement a rule that talks about that department not doing business with companies that violated labor laws, really no distinction in the original draft about what type of labor laws whether they were big violation, small violations, whether they’d since been addressed, it was very vague. And then just in the last week or so we’ve seen a couple of blacklisting provisions make their way into the House version of the 2023, Defense Authorization Bill, one that would actually promote companies who had done a good job in promoting labor fairness. And again, that’s not really well defined either. So we see that contractors have to wake up and pay attention to what’s going on around them in terms of these types of rules and regulations, because they could be things that further handcuff their ability to do business in the market and also add time to the acquisition cycle. And we just got finished talking about why particularly in DoD, we don’t need to add any more time to the acquisition cycle.

Tom Temin  And these possible violations that could result in blacklisting, not related to the contract itself, also increase a company’s exposure to whistleblowers.

Larry Allen  Oh, I think that’s primarily the way that these types of provisions would be enforced Tom is via whistleblowers. They have a role in government, they absolutely do. But you know, sometimes they’re motivated by more than their desire to see things go, well. Sometimes they’re motivated by the fees they know they can collect if the government gets a cash award. So, you know, the government is not going to beef up its oversight community to track all of these new violations. They’re probably there’s an almost endless supply of whistleblowers out there who would be happy to point out that company A violated labor law five years ago, and even though they may have made a remedial change since then, that could be enough to get a contracting officer to convince them that they weren’t eligible for award. That’s another concern. We’re asking contracting officers, people trained in government acquisition, to suddenly show the wisdom of Solomon, when they’re trying to discern whether or not a company violated a labor law. And if so, just what the extent of that violation is on their ability to be a government contractor.

Tom Temin  Larry Allen is president of Allen Federal Business Partners. As always, thanks so much.

Larry Allen  Tom thank you very much, and I wish your listeners happy selling.

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