Pentagon wants more leeway on Truth in Negotiations Act

Borrowing from an existing exemption for foreign military sales, DoD wants more flexibility to waive its requirement for vendors to supply cost and pricing data...

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Last week, Ellen Lord, the Defense Department’s new undersecretary for acquisition, technology and logistics, appeared before the Senate to give her first progress report on the department’s implementation of congressional acquisition reform. In passing, she made a new reform request of her own: a potentially-fundamental change to the way DoD handles sole-source procurements.

Since 1962, when Congress passed the Truth in Negotiations Act (TINA), the government has generally been required to demand that contractors provide it with their cost and pricing data when that company is the only bidder that can fulfill the military’s requirements. The rationale is that without a competition between vendors, the government needs some insight into its contractor’s actual costs to make sure it’s not getting gouged.

But Lord said Thursday that DoD wants “flexibility” to cut down the amount of data it requires companies to cough up, a step she said was necessary as part of her goal to reduce the department’s lead time for procurements by 50 percent. Contractors tend to view those data requirements as burdensome, particularly since they’re subject to government audits, and especially when DoD is buying items that are sold on the commercial marketplace..

Lord offered few details about the extent to which the department wants Congress to modify TINA, but suggested the changes should be modeled on a pilot program lawmakers authorized as part of the 2017 Defense authorization bill. That language was meant to speed up the department’s facilitation of foreign military sales with 10 test cases eliminating the need to gather certified cost and pricing data for arms sales to other countries, and instead, rely on the actual costs DoD had already paid for the same items to determine whether the prices were reasonable.

“Key to our success would be to have the same flexibility for our U.S. procurements,” she said. “If we were granted the statutory authority on sole-source procurements, it would allow us to use our judgment to reduce the cost and pricing data we would require when we have cost transparency with the companies with which we do business.”

In the meantime, Lord said she has used authority DoD already has to launch six other pilot programs, all with the goal of reducing acquisition timelines. In one such program, the department is reinterpreting its legal authorities to try to reduce procurement times for foreign sales of retrofit kits for C-130 aircraft to 180 days; in another, she said the department is “pre-positioning” its own production contracts so that they can be reused to “fill in the blank” when those items are sold to other countries.

As a general matter, Lord said her objective is to reduce acquisition timelines to an average of 12 months for major Defense programs, down from the current 2 ½ years. As one way to do that, she said her guidance to the acquisition workforce is to use the flexibilities DoD already has in order to find the least complicated path possible through he government’s maze of acquisition regulations.

“We are working on streamlined acquisition processes, where you basically have a flow chart and you use the simplest methodology possible to get things on contract so that we’re not held up in this do loop of, you want to do something but you can’t get it on contract,” she said. “That means you need to understand what you’re buying and how to tailor the process, and that’s what we have our contracting people doing right now, using real-life examples of how we’ve done this.”

Many of those examples come from DoD’s various non-traditional acquisition organizations, including the Defense Innovation Unit-Experimental, the Strategic Capabilities Office, and the Army’s Rapid Capabilities Office.

“We’re trying to learn from [the offices] who have taken the authorities that Congress has provided and applied them appropriately to speed things up, be more cost effective, thereby allowing smaller companies that couldn’t afford to go through this multi-year process to participate,” Lord said. “What we’re trying to do is scale all of those activities, but we’ve got to educate our acquisition workforce to be able to do that, and that is a huge issue. So I’m taking a fundamental relook at how the Defense Acquisition University operates, and we’re looking at more one or two day sessions where we teach people skillsets that they use the next day. But we’ve got to give people the tools, and then we have to train them. I am very optimistic that we can do that.”

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