Pentagon works with Congress to limit new acquisition compliance burdens

John Tenaglia, the director defense contracting and pricing at the Defense Department, said House and Senate armed services committee lawmakers asked for feedba...

As lawmakers wrote the 2024 version of the Defense authorization act, congressional staff leaned into the experts at the Defense Department, particularly around acquisition reforms.

Congressional staff members sent more than three dozen requests to DoD for feedback on potential acquisition related provisions they were considering.

John Tenaglia, the director defense contracting and pricing at the Defense Department, said the department’s relationship with congressional staff is solid and they often ask for feedback on different ideas or potential provisions.

John Tenaglia is the director defense contracting and pricing at the Defense Department. (U.S. Army photo by William Pratt)

“We have about 40 or so requests for information. I really appreciate the fact that the staff members do ask us the questions, and we have a good dialogue with them,” Tenaglia said during a June panel at the Centre Law and Consulting summit, an excerpt of which played on Ask the CIO. “Some of those requests that we’ve made have been along the lines of aid to Ukraine, and we got some flexibilities last year that help us go a little bit faster in an environment where days actually matter. This has been a good reminder for us all that speed does matter in terms of being able to not just awarding contracts but delivering ultimate capability that flows from those contracts. We’re looking for a little bit more along those lines this year in short term. I’ll call them procurement flexibilities and then also the essentially using multi-year procurements to really address production on a larger scale than what we currently can do.”

He said the goal of the back and forth is to ensure lawmakers know the practical implications of new requirements that DoD would receive.

“We have a system where we have a lot of compliance burden already. A lot of that is well intended and some of it is in reaction to concerns whether it’s supply chain risk or part of the President’s equity agenda climate agenda or domestic sourcing,” Tenaglia said. “A lot of those really are resulting in rules that that you see that will find them their way into contracts and clauses that will be the department’s requirements. We’re in that season that we’re providing that feedback, and we are implementing the ones from last year.”

The House and Senate passed their respective versions of the fiscal 2024 defense authorization bill earlier this summer and are expected to go to conference committee to iron out their differences later this fall. Congress has passed a National Defense Authorization Act (NDAA) for each of the last 62 years.

Backlog of FAR cases

Whatever Congress does decide in the final NDAA, Tenaglia and his team at DoD will have to implement it. And over the last decade, lawmakers have given DoD plenty of new areas to implement acquisition regulations around. Tenaglia said there is a backlog of FAR rules that need to be written and implemented.

“We have about seven people who each have about 25 cases that they’re shepherding. We’re making good progress,” he said. If you follow our issuances, you see that we have publications on a weekly basis or so for both proposed and final rules. It’s just a lot of work, but it’s probably a good thing because any new policy should be very deliberate by its nature. If we have a lot of changes that are more frequent, it’s probably creates a lot more churn than we would want.”

As of Sept. 22, DoD listed more than 60 open FAR cases ranging from a 2014 NDAA provision to give prime contractors credit for lower-tier subcontracting to a 2022 provision that would require the military services and defense agencies to give unsuccessful bidders of task and delivery order contracts worth between $250,000 and $5.5 million a written explanation of why they didn’t win.

Earlier this summer, DoD pushed a rule regarding Other Transaction Authority (OTA) across the finish line. This final rule implemented a provision in the 2023 NDAA, letting DoD award a follow-on production contract without the use of competitive procedures, even if explicit notification was not listed within the request for proposal for the prototype project transaction.

Tenaglia said OTAs became more valuable over the last few years, but it still makes up a relatively minor portion of their annual acquisition spend.

New OTA guidance

He said DoD is reassuring Congress that they are using OTAs in a responsible and fair way.

“The balance we’re trying to strike here, though, is I would say nobody wants us to impose a FAR-like regime on the use of other transaction authority, and let’s keep it relatively free from a lot of the burden that it’s associated with FAR-based contracts. But there are some baseline requirements. Transparency is a key part of that, and it starts with just understanding the transactions that are occurring so we can get our arms around that,” Tenaglia said. “Contrary to what I said about policy, I can’t use the FAR and the DFAR to address our workforce with OTAs because the FAR doesn’t apply to it. So we had to find another way. We have guidance document that I actually co-authored in 2016, and there was 2018 version.”

DoD released an updated OTA guidance document in July with new case studies, a myths and facts section and an assortment of execution details.

“The statute, though commands the use maximum use of competitive procedures and so we do that. There was a recent Court of Federal Claims case that asserted that they have jurisdiction over bid protests of OTA awards. In my discussions with my general counsel colleagues, they reminded me that it’s probably not something to be too concerned about or alarmed about just because the companies have a forum in federal district courts that they could have already brought some of those grievances to anyway, so just another forum to bring that,” he said. “It’s not a bad thing that we’re held to account for making reasonable sourcing decisions competitive decision.”

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