We don’t often use the Notebook to highlight contract announcements, but this one bears mentioning in that it’s very large, it appears to be another significant move toward strategic sourcing, and it gives some insight into a large slice of DoD spending that’s not often publicly disclosed.

Last week, the Army’s Intelligence and National Security Command made awards to 21 firms under an indefinite-delivery contract called Global Intelligence Support Services. The cost-reimbursement contract – drawn up as a comprehensive solution for most of the command’s service contracting requirements – is worth $7.2 billion over five years.

Assuming the award survives the window for bid protests intact, 30 percent of the total value will be set aside for small business awardees.

While $7.2 billion is a ceiling and the actual number of dollars INSCOM will obligate over the next five years are by no means assured, the new IDIQ’s dollar figure gives a snapshot into the level of resources DoD’s intelligence agencies are willing to commit to contractor support even during a period of diminishing resources. Army officials created the new contracting vehicle in order to bring under one umbrella a broad array of support services the Army had been buying via several other intelligence community acquisition vehicles.

The Army will use the IDIQ for not only INSCOM’s own needs, but also those of the rest of the intelligence community for missions in which INSCOM is partnering with another element of the IC. The vehicle covers four broad categories of services:

• Intelligence and security operations
• Information operations
• Mission support for facilities management, logistics, training and intelligence systems
• Sustainment services, including program management, strategic planning, and administrative and requirements analysis.

“A single acquisition will lead to multiple contracts that will provide for the competitive placement of task orders to meet current and future Army Intelligence, Security, and Information Operations requirements,” officials wrote in the original solicitation. “This contract will support complex, classified, compartmented, and/or unique ground-based and airborne reconnaissance and electronic intelligence collection and production systems.”

Careful observers of last week’s rollout of Better Buying Power 3.0 – the “technological superiority” edition of the Pentagon’s ongoing acquisition improvement program – will have noticed that there was no mention this time around of Lowest Price Technically Acceptable (LPTA) contracts. That’s one of the defense industry’s most persistent critiques of the way DoD has been using the acquisition system in the last few years.

While one of the tenets of Better Buying Power 3.0 is that DoD needs to let industry know precisely what it’s willing to pay for better performance and to buy more products and services on the basis of “best value,” industry critics point out that many source selections in recent years never even reached those questions. That was because the evaluation criteria were defined up-front to make clear that the government would award the contract to whichever firm can meet the barebones requirements at the lowest cost.

But Frank Kendall, the undersecretary of Defense for acquisition, technology and logistics, said he remains aware of the LPTA complaints, and said the department will continue to examine the issue over the next few months while it moves 3.0 from draft form toward formal instructions to DoD acquisition officials.

“I’m collecting data on how much we’re actually using LPTA, because frankly, I think there are a few cases that have gotten a lot of attention, so I want to understand what we’re really doing there,” Kendall told reporters. “But our policy is clear: don’t use LPTA unless you can really define the performance that you want, and that is all you want.”

Still, Kendall acknowledged that many of the Pentagon’s weapons programs had “defaulted” to LPTA because officials had not identified precisely how much more they were willing to pay for added innovation.

He said most of the complaints he has heard about LPTA have come from the world of service contracting.

“And it’s often incumbents who have built up a level of expertise and a more experienced, more expensive workforce who are competing against someone else who’s coming in with lower rates and a lower base of knowledge. They would like that level of knowledge to be valued in a best-value competition,” Kendall said. “Where that sort of expertise matters, we should not use LPTA. But there are service contracts like base maintenance, for example, where we can define quite precisely what we want, and that is all we want. We’re not going to pay for any more than that.”

This week’s Q&A between reporters and Halvorsen — the first in what he promised will be quarterly chats with the press — also included a fair amount of discussion about his overall management approach in the CIO position.

While he didn’t shed any light on how much longer he’ll continue to serve in an acting capacity, he did give some insight on how he’d like to shape the Pentagon’s implementation of the Joint Information Environment.

In general, the policies that demand the department evolve toward a more enterprise-centric, shared approach to IT won’t change, Halvorsen said. But he thinks DoD needs to make JIE a bit less ethereal and focus more on measurable, deliverable capabilities during what he said would be a never-ending evolution toward more joint IT.

“I think the thing that needed more concentration was to get more discrete about the specific events in JIE, and to really get things in a set of priority order that you could individually cost,” he said. “I think the security pieces of this were understood, what it did for mission was understood, but I don’t think we understood how to cost it.”

Among the concrete deliverables Halvorsen pointed to was DoD’s move to Joint Regional Security Stacks (JRSS), a shared security architecture that will give network defenders much more cybersecurity insight into what’s happening on the military’s scattered networks. To be clear, the Army, the Air Force and DISA launched JRSS before Halvorsen took over as CIO. But he said the Navy and Marine Corps are now looking for ways to merge their own enterprise-level security systems into what will eventually become a shared security architecture, even if it won’t necessarily use one single set of hardware and software.

Halvorsen also pointed to improvements in mobility as a near-term deliverable.

He said DoD is focused on giving its combatant commanders an affordable, modern smartphone that can handle secret-level data and will work anywhere in the world. Without offering details, he said DoD hopes to roll out a solution some time in November.

DoD is also working on a new mobility idea for the vast majority of its users who spend most of their time on unclassified networks. Halvorsen said the Defense Information Systems Agency is working with industry on what will be the department’s first devices that can support dual-personas.

While those devices would be government-owned — a “bring-your-own-device” strategy is still a long way off for DoD — the handhelds would have the ability to securely segregate government data from the user’s own personal data and switch back and forth between those two roles.

“We have begun to put those out. It’s based on the BlackBerry Z30, and DISA has done a great job on that,” Halvorsen said. “I’m very happy with all the progress we’ve made, but to be very candid, I am not very happy with the price. We have a lot more work to do to drive the cost down.”

IT officials in DoD and within the military services have made no secret of the fact that they have many examples of overlapping systems with duplicate data, and identifying an authoritative data source is often quite difficult.

Now, the department is making a concerted effort to identify and consolidate that duplicate data — an effort DoD thinks might wind up eliminating between $10 billion and $20 billion in wasted IT spending over the next five years.

Terry Halvorsen, the department’s acting chief information officer, told reporters last week that the Business Process and Systems Review is being led jointly by his office and Dave Tillotson, the department’s acting deputy chief management officer.

“Our tasking from the deputy secretary of Defense is to go through every agency and principal staff agent in the DoD and look for both process and systems improvements,” he said. “On both the process and systems side, you really should lead by example, so we started with the DCMO and the CIO. Within our own organizations, we have already found some places where we have some duplicate data, where we are not using the most authoritative data. That’s going to follow through in almost every place we review.”

In the end, the department wants to settle on a smaller universe of remaining databases that hold high-value and accurate data, whose operating expenses are reasonable and that have good data integrity. In some instances, that might mean acquiring new systems rather than just decommissioning older ones.

“In some cases, we’re going to look at what we have in our legacy systems, decide that they’re not the answer, and decide it is more effective and efficient to kill those legacy databases and start new,” Halvorsen said.

The Defense Department is set to propose tighter rules that it says would close several loopholes in current regulations that are designed to protect service members from predatory lenders.

Congress passed the Military Lending Act (MLA) in 2006, placing caps on the interest rates that creditors could charge active duty troops and their families, but lawmakers left it to DoD to determine which lenders the new law would apply to. In a proposed rule set for publication in Monday’s Federal Register, Pentagon officials said they’ve concluded that they drew the initial definitions much too narrowly.

For instance, while the rules were intended to cap interest on payday loans for military members at 36 percent, it turned out that those types of lenders — who routinely charge triple digit rates on an APR basis — could easily get around the cap. They could do so by declaring that the term of the loan was open-ended, making the total loan amount for more than $2,000, or longer than 91 days.

The new rules, which DoD will open for public comment this week, would expand the 36 percent cap to cover all payday loans and a much broader category of financial products, including credit cards and loans secured by a car title. In general, the MLA’s provisions would apply to any loan that’s also covered by the Truth in Lending Act.

Lenders would also have to give service members new disclosures pointing them to financial counseling services and suggesting that they look into lower- interest borrowing options. They would also be barred from agreements that force borrowers to handle disputes in arbitration or to waive their rights under the Servicemember’s Civil Relief Act.

DoD also wants to give lenders access to an online database that would let them verify whether a borrower is an active-duty member or a dependent, and creditors would get a safe harbor from MLA penalties as long as they used it.

“I commend Secretary Hagel for taking this important step to make the Military Lending Act more effective,” Holly Petraeus, the Consumer Financial Protection Bureau’s assistant director for service member affairs, said in a statement. “High-interest loans to the military have been a problem for many years. This problem reached a crisis as payday and other lenders began thronging outside the gates of military installations in ever-increasing numbers. Secretary Hagel and the department’s actions today make it clear that they have serious concerns about these high rates charged to service members, no matter what the loan is called or how it is defined.”

In an April report to Congress in which DoD signaled its intention to impose tighter regulations, the department reported survey results that showed 11 percent of service members were carrying loans with interest rates of more than 36 percent. It also pointed to “significant average declines in overall job performance and retention, and significant increases in severely poor readiness” among those who used payday loans.

The retention question is of particular concern to the department. If a member has to be separated because of debt problems, recruiting and training his or her replacement costs the military an average of $57,333.

“Inside the DoD Reporter’s Notebook” is a biweekly feature focused on news about the Defense Department and defense community, as gathered by Federal News Radio DoD Reporter Jared Serbu.

Submit your ideas, suggestions and news tips to Jared via email.

DoD, VA still not moving medical records in a timely fashion

While most of the negative media attention the Department of Veterans Affairs has gotten over the last few months has focused on its healthcare operations, VA has ongoing challenges on the benefits side of the house as well. As of this week, it still has a backlog of 264,000 disability claims — though, notably, that’s down from 451,000 at this time last year.

One major reason VA officials have long pointed to as a contributor to the delays in awarding compensation benefits has been the lag time between when VA requests a veteran’s medical records from the military and when they hit a claims adjudicator’s desk. A new electronic system DoD and VA implemented this year was supposed to go a long way toward solving that, but a new audit finds it’s had some stumbles out of the gate.

HAIMS, the Health Artifact and Image Management Solution, was designed to give VA essentially instant access to the complete, certified military medical records of anyone who left service after Jan. 1 of this year. In theory, DoD is supposed to scan the complete records of anyone separating from the military into HAIMS, and from there, they’re electronically transferred into VA’s new electronic claims processing system, VBMS. Moving the records quickly is important, because in many cases they’re a key part of the evidentiary process VA officials use to determine whether and how much disability compensation a veteran is entitled to.

But in reality, the new electronic process isn’t much speedier than the old paper one — at least so far — according to a new report VA’s inspector general released on Thursday. The audit blames both DoD and VA for sluggishness in transferring patient treatment records.

Between Jan. 1 and June 3, VA asked DoD for 7,300 electronic service treatment records. DoD had only completed 29 percent of those requests at the time of the audit — 71 percent were still pending. And out of the 2,100 requests DoD did complete, only 18 percent were turned around within the 45-day legal deadline. Some 4,200 electronic records requests were still overdue.

And those are just the delays on the DoD side of the information chain. The auditors pointed out that since the two departments are only using the electronic process for newly-separated veterans, the vast majority of VA’s new claims still rely on paper treatment records, so HAIMS is unlikely to help matters much even if the electronic process were working perfectly.

For example, the IG’s data shows that the biggest single category of brand new claims it received last year came not from Iraq and Afghanistan war veterans, but from vets who served during the Vietnam era. And while all of VA’s regional offices are now using the paperless VBMS system to process claims, the service treatment records for any veteran who left the military before this year are still on paper, in giant warehouses in St. Louis, Missouri. Those records eventually make their way into VBMS, but VA is only scanning the paper records into the system after a veteran submits a new claim. There are no plans to proactively convert the entire stockpile of paper records at the National Personnel Records Center and VA’s Records Management Center into an electronic form so they’re available on demand.

As a result, it takes, on average, 48 days between the time VA claims staff request a record and the time it’s available in VBMS. That’s on top of the average 63-day span between when a claim is first in the system and VA actually requests a treatment record.

All in all, the average timeline between when a veteran submits a new claim and his or her military treatment record is available to a claims adjudicator is 131 days, auditors found. That process alone is enough to make a claim qualify as backlogged: VA’s definition is 125 days.

VA officials did tell auditors they’ve implemented processes that should considerably shrink that 131-day window. Changes the department made to VBMS beginning in June will automatically request a veteran’s military treatment record as soon as a new claim is entered into the system instead of relying on regional office staff to manually request it. The same automatic requests will happen for the new electronic records in HAIMS.

VA says the new process should be fully in place by March of next year.

VA begins recruiting drive

The Veterans Affairs Department is getting a running start at beginning to spend the extra $5 billion Congress and President Barack Obama authorized earlier this month to hire more doctors, nurses and clinicians.

During an address Friday at Duke University, VA Secretary Robert McDonald said the department was kicking off a new recruiting initiative, saying that while VA is using another $10 billion in emergency appropriations to pay for private-sector care for veterans, the long term solution is to beef up the Veterans Health Administration’s own medical staff.

“We need the best doctors and nurses serving Veterans, and that is why I will be out recruiting, leveraging the existing relationships and affiliations VA has with many academic institutions, and talking directly to medical professionals about joining us to fulfill our exceptional mission of caring for those who ‘shall have borne the battle,'” McDonald said.

Speaking at an American Legion conference earlier in the week, McDonald suggested a shortage of medical staff was one factor behind the recent waiting list scandals in Phoenix and elsewhere. But rather than asking for more resources to get veterans timely care, managers created secret waiting lists to conceal the true length of their wait times, he said.

But not everyone is convinced a lack of resources is at the root of VA’s access problems.

“We will look over the next nine or 10 months at whether physicians at VA are seeing an adequate number of patients,” Rep. Jeff Miller (R-Fla.), the chairman of the House Committee on Veterans Affairs told the Legion conference on Wednesday. “There are those who will tell you we don’t have enough doctors. I’m here to tell you the doctors that we have aren’t seeing enough patients. They will tell you we don’t have enough infrastructure. I will tell you that the infrastructure we have is closed during the hours you would want to use it the most. We have to bring the way VA delivers health care into the 21st century.”

DISA planning successor to $12 billion Encore II IT contract

Encore II, the Defense Department’s huge multiple award contract for buying IT products and services still has a few years of life left in it. But given the vehicle’s length and complexity, DoD is getting to work on planning its successor.

The Defense Information Systems Agency, which manages the contract, issued a sources sought notice on Thursday as part of the preliminary effort to build an acquisition strategy for the forthcoming Encore III. The responses, officials say, will help DISA make decisions such as how much of the contract can be set aside for small businesses.

The scope of the indefinite delivery, indefinite quantity contract — IT products and services — won’t change much under Encore III, DISA officials told vendors at the agency’s annual forecast to industry earlier this month. But some of the changes they’d like to make include better on and off ramps for firms to enter and exit the contract. That’s one of the lessons DISA learned during Encore II: 10 years is a long period of performance, and a lot can happen during that time, like contract holders who were small businesses at the outset graduating to larger size standards.

“There has been a reduction in the number of small businesses we can access on that vehicle,” Dr. Jennifer Carter, DISA’s acquisition executive said. “So one of the things we’re looking at is making sure there are opportunities for small businesses and the ability to access large businesses where that’s appropriate. We also need to make sure we’re optimizing competition for the life of the contract, and if the life is long, we need to keep pace as small businesses evolve into large ones and as new small businesses come on the scene. If we don’t make sure there’s an opportunity for an on-ramp, we’re essentially locking ourselves out of some capabilities and getting behind the market. The approach on Encore II hasn’t been everything we’d intended for providing those opportunities.”

Encore II, a $12 billion contract DISA originally awarded to 26 vendors in 2008, is good through the end of May 2018. The agency wants to award Encore III before then, but hasn’t yet targeted a precise award date. The current schedule calls for a draft RFP in the second quarter of 2015 and a final RFP in the third quarter of 2015.

But the current contract had a base period of five years followed by five one-year option periods, so DISA very well could end Encore II early if its successor is ready in time.

“We’re starting very early in the process because this is very hard and very complex, but if this contract is ready to award prior to 2018 given the small business structures I look at, Encore III may implement early,” said Douglas Packard, DISA’s acting procurement director “Every option under Encore II is not a guarantee, so we may not exercise every option year.”

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