The Defense Department said it’s seeing some early signs of success in a fledgling data transparency effort designed to drive better business deals for its sole-source contracts. For the first time, negotiators on DoD’s side of the table can study all of the Pentagon’s past business agreements with a given vendor for a given product as they try to nail down the government’s bargaining position.
The Contractor Business Analysis Repository (CBAR) began as a pilot program three years ago and has since been expanded across the military. While the department feels strongly that competition is the best way to make sure the government is paying a fair and reasonable price, it needs other mechanisms to divine what’s “reasonable” in scenarios where, for one reason or another, the military has decided only one vendor can do the job.
The repository is designed to house granular data on the business arrangements the department has reached with contractors for any sole-source procurement of more than $25 million over the past seven years, including what the vendor proposed for a given product at different points in time and the recommendations the Defense Contract Management Agency and Defense Contract Audit Agency made for each of those procurements.
“So if I’m at Eglin Air Force Base and I’m negotiating a missile deal with Raytheon, I can now find out what my brothers and sisters at the Naval Air Systems Command did, I can find out what the Army did at Redstone Arsenal,” said Shay Assad, the Pentagon’s director of Defense pricing. “All of that information is available to our contracting officers now. They all get it.”
CBAR got off to a somewhat slow start. In order for the system to work as intended, contracting officers first have to record their data into it when they reach a sole-source arrangement; their successors who are trying to establish a new agreement also need to consult the system to help guide their decisions.
“There was an initial reluctance for contracting officers to put their business clearances into this system, because they realized, ‘Wait a minute. My professional work is now going to be subject to review by all of my peers, and if I do a lousy job, they’re going to know I did a lousy job,'” Assad told a conference organized by the Coalition for Government Procurement Thursday in Washington. “But what it has done is brought the department together around a collective awareness that we’ve never had before. When I worked in industry, if I was negotiating a deal with the Naval Sea Systems Command for a certain product, I could walk down the street to the Naval Air Systems Command and the one thing I could count on was that those two commands weren’t talking to each other. That’s the way it was, but it’s not like that anymore.”
DoD fully deployed CBAR across the department 18 months ago. Six months after that, there still were only 200 to 300 contracting officers routinely using it, and they only added information about roughly 150 past agreements with vendors.
“People either didn’t understand what we were trying to do or we did a very poor job of telling them that we wanted to input their data into their system and use it,” Assad said. “So I sent a love note to all of my peers in our buying organizations to let them know we were serious, and now we have thousands of business clearances going into that system. It gives us the kind of analysis that used to take four or five months. Now our contracting officers get it instantaneously.”
But Assad emphasized that DoD’s implementation of CBAR should not be interpreted as a mandate for its contracting officers to insist on the lowest price they can find in the historical database. Rather, he said, it should be thought of as one tool at their disposal as they try to arrive at a negotiating position that contracting professionals think is fair and reasonable given the circumstances at the time.
“It’s very difficult to look at two different programs and compare the risks between them,” he said. “So we are very clearly telling our contracting officers that we are not interested in establishing arbitrary positions or setting goals for price improvement that no one knows how to get to. We are not saying that just because NAVAIR got one price for a product, the Air Force should be able to accomplish exactly the same thing. They might be different circumstances. What we want to do is create an awareness so that our contracting officers begin to think about what they’re expecting a company to do, how the company has reacted in similar circumstances and how it’s reacted in different ways in other circumstances.”
Bring their A game
At the same time, Assad said the expansion of the historical data available to government contracting officers will put pressure on companies to make sure they bring their A game to the negotiating table.
He said DoD wants its procurers to be receptive to arguments that can show a new contract involves a very different state of affairs than past ones did, and that rates should reflect that. But companies need to be prepared to make those arguments.
“It is really going to be the challenge of the company to present the data in a way that says, ‘Yes, I understand what you’re comparing, but you need to take the following things into account,'” he said. “What we’re telling our contracting folks is that when we establish a position, we want it to be established objectively, we want it to be fact-based and we want it to be data-driven. If the government changes its position, it ought to be because the company was able to demonstrate that either our interpretation of those facts was inadequate or there were facts we should have been aware of, but we weren’t. This is about awareness.”
DoD has implemented a training program specifically for CBAR, and Assad said one key message is that contracting officers should not confuse the Pentagon’s enthusiasm for the system as a signal that leaders want its front line acquisition officials to insist on the lowest prices they can find in the database.
“We’re spending a lot of time telling our folks, ‘Look, all of this Better Buying Power stuff is really a guide to help you think,'” he said.
The training is happening in waves. DoD said about 1,000 people who mainly work on major weapons systems have attended so far. The next groups will involve acquisition professionals who work on sustainment and engineering services contracts.