The Future of Defense Contracting – From the Defense Perspective

Yesterday, I had the opportunity to attend McKenna Long & Aldridge LLP’s 2012 Government Contracts Briefing in Denver, CO.  The firm hosted an excellent day of speakers, topics and breakout sessions.  The Keynote Speaker was Shay D. Assad, Director, Defense Procurement and Acquisition Policy and Strategic Sourcing.   His keynote address on “Better Buying Power Implementation” was definitely noteworthy, in that a) I took a lot of notes and b) it seemed to be contrary to what government contractors are seeing happening in practice.  I thought I would share some of the highlights of Mr. Assad’s address with our industry to gather thoughts.

Here are my notes – in bullet format. DoD’s perspective and future plans….

  • Profitability is an incentive to get contractors to reduce costs. DoD does not want to reduce contractor profit.
  • There is no FFP mantra. There is a better way to buy services and that may be using Cost Type contracts.
  • The DoD is reviewing how they buy services to ensure they get low-cost and contractors still profit.
  • Business systems will be crucial.  There will be two camps of contractors; those that have adequate business systems in place (and will be liked by the government) and those that don’t (and will be disliked).
  • New government contractors will have to be much more prepared for what they’re getting into.
  • There will be more of a “should cost” focus.
  • DCMA will become the central provider of cost/price analysis for COs.
  • A new repository, the Contractor Business Analysis Repository (CBAR), will be populated so that all DoD agencies can see the rate history for contractors.
  • To avoid conflicting opinions, if DCAA has audited a contractor’s rates, DCMA will adopt that position. DCMA will have final authority on rate approvals.

There was discussion regarding the acquisition workforce’s competency.  Surprisingly to me, it was acknowledged by Mr. Assad that there is room for improvement and that they are working on it.  From our perspective, a competent workforce is the only way to reach the goals the DoD is pushing from the top. Without it, we’ll continue down the frustrating path that we’ve been seeing recently with inappropriate contract types, mishandled solicitations, and barely-worth-it margins.

You see that the DoD’s high level executives are envisioning a win-win world and some streamlining, but, as I gathered from the remainder of the event and from colleagues, there is a long way to go before reality catches up to the vision. Which of course at that point the vision would have totally changed I’m sure.

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About Stephanie Amend

Stephanie is the Principal and CEO of Arrowhead Solutions, LLC, a solutions firm specializing in assisting established small businesses be successful government contractors.

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