DLA Piper's Government Contracts practice recently hosted a panel discussion on developments and trends affecting the future of Department of Defense (DOD) contracting. The panel featured presentations and commentary from Lieutenant General Paul A. Ostrowski, Principal Military Deputy to the Assistant Secretary of the Army (Acquisition, Logistics and Technology) and Director of the Army Acquisition Corps, as well as Richard L. Dunn, the former General Counsel of the Defense Advanced Research Projects Agency. Sam Knowles and Dawn Stern of DLA Piper also served on the panel, which was moderated by Brad Jorgensen of DLA Piper.
Key insights from the panel are summarized below.
DOD is increasingly using its "Other Transaction" (OT) authority to contract with industry and academia for a broad range of research, prototyping, and, in limited cases, production work. Panelists emphasized that OT agreements cannot be used in all settings; but when available, they offer the following key advantages:
- An expedited contracting process and rapid deployment of solutions: "it can take days or weeks instead of months or years to reach an agreement"
- OTs are not subject to federal laws and regulations that apply to procurement contracts (eg, FAR/DFARS): "OTs are viewed by many as an increasingly acceptable 'end run' around clunky, FAR-based rules"
- Greater access to leading technology companies"OTs can eliminate the contractual barriers that keep some technology companies from wanting to do business with the government"
Panelists suggested that, despite the move toward OTs, obstacles remain that are limiting DOD's effective use of OT authority. These include a cultural paradigm within DOD that is too process-oriented and wedded to standardized contract terms, as well as a lack of training and understanding within the acquisition workforce regarding OTs.
Panelists emphasized that the starting point of an OTA-based procurement should be a "blank sheet of paper." The terms negotiated by the parties should include only those relevant to the identified problem, the proposed solution, and the speedy deployment of the solution to the warfighter. The panelists concurred that, in many cases, DOD's insistence on incorporating numerous FAR and DFARS clauses into OT agreements – "because it creates a comfort level" – is undermining the flexibility and potential of OT agreements.
Army Futures Command
Panelists discussed several aspects of the newly created Army Futures Command, which is headquartered in Austin, Texas. Panelists said the Command's creation constitutes the most significant reorganization of the Army's acquisition and contracting elements since 1973 – resulting in the realignment of a number of existing Army organizations, including the Army Research, Development and Engineering Command, the Army Capabilities Integration Center, and the Army Research Laboratories.
Panelists explained that the Command's mission is to help modernize the Army by accelerating development and improving the Army's procurement processes. The Command is intended to "de-layer" a historically slow, cumbersome, and overly bureaucratic acquisition system that often yields development projects that are significantly delayed and/or over budget. According to panelists, the Army can better ensure technical superiority over adversaries by: streamlining functions under one command, focusing on solutions rather than processes, deliberately breaking down the traditional cultural divide between the military and startup innovators, and proactively sponsoring new capabilities through prototyping.
With respect to commercial item contracting, panelists discussed the reforms recommended by the Section 809 Panel, including (i) the reclassification of commercial items as "readily available" items and "readily available items with customization," and (ii) significantly reducing the number of compliance obligations applicable to commercial-item contractors and subcontractors. These recommendations – which the 809 Panel aptly identified as "revolutionary" – are aimed at decreasing acquisition lead time and facilitating access to the DOD marketplace by commercial and non-traditional contractors.
It remains unclear how much traction these reforms will gain in Congress. But given the potential magnitude of the changes, it's a "must watch" situation for the acquisition community.
Panelists discussed the unfortunate disconnect between government and industry concerning the security standards and controls required by the Department of Defense. The lack of engagement has caused companies to implement costly and burdensome mechanisms without much input from their government counterparts – often without knowing whether the regulators view the company as compliant with NIST requirements.
Panelists indicated that the National Institute of Standards and Technology (NIST) is planning to release proposed revisions to NIST Publication 800-171, which applies to many DOD contractors. This draft publication will give companies an opportunity to recommend a more flexible approach to the security standards; however, it is not clear that the government will be receptive to such comments.
Although Congress and policymakers are increasingly sensitive to compliance burdens that create barriers to entry in the government marketplace, the need to protect government information against cyberattack is a critical policy goal. Panelists predicted that balancing the tension between these goals – perhaps by requiring cybersecurity to be addressed through the requirements-definition process rather than standardized contract terms – will be the work of months and years.