As discussed in previous posts, the Section 809 Panel recently released its long-awaited Volume III Report to Congress, which includes recommendations for streamlining the Department of Defense’s (DoD) acquisition system. The Volume III Report is the culmination of more than two-years of effort, and it is notable that, cumulatively, the Section 809 Panel’s Volume I Report, issued in January 2018, Volume II Report, issued in June 2018, and Volume III Report provide 93 acquisition reform recommendations that are dissected across more than 2,000 pages of analysis.
The Coalition for Government Procurement was an active participant before the Section 809 Panel, and it shares a longstanding commitment to streamlining procurement processes. Examples of this commitment include, but are not limited to, the Coalition’s study on contract duplication, recommendations for streamlining the Schedules program, and line-in/line out changes for the Section 809 Panel. The Section 809 Panel’s approach to the concept of a “Dynamic Marketplace Framework,” however, gives us pause. Unintended consequences of this approach may reduce access to the Federal market, as well as diminish transparency and accountability.
Under the proposed Dynamic Marketplace Framework, existing preferences for commercial buying would be replaced by a new “readily available” approach. Specifically, this framework would divide the products and services that are procured by DoD into three categories:
- Defense-Unique Development. Solutions that are financed by DoD to provide a defense unique capability.
- Readily Available. Any product or service that, without customization, can be ordered directly by customers.
- Readily Available with Customization. Products and services that are customized in a manner that is consistent with existing private-sector practices.
To acquire solutions that are readily available, or readily available with customization, the report proposes new “readily available procedures” that, effectively, would elevate DoD’s Micro-Purchase Threshold to $15 million. Specifically, under these new procedures, the procurement of these solutions would not be subject to full and open competition. Further, these procurements would be exempt from a host of government-unique/statutory requirements, such as the mandatory small business set-aside requirements, the Buy American Act, the Berry Amendment, and, presumably, the Trade Agreements Act. Considering the potential unintended consequences associated with this approach, the report’s recommendations to remove current public solicitation requirements that facilitate competition and to limit the ability of companies to file protests only with agencies and under limited circumstances, are particularly confusing. Indeed, it is not clear how substantially limiting transparency for commercial firms into the acquisition process is in the best interest of the government, industry stakeholders, and, ultimately, the American warfighter. This approach is puzzling given recent DoD interest in attracting new entrants and non-traditionals, which may lack the experience or understanding necessary to successfully navigate the Federal market.
As the Coalition noted in a prior blog, from a policy perspective, the Dynamic Marketplace Framework is an elaborate approach to revising commercial item contracting that, ultimately, appears to be a solution in search of a problem. The current Federal commercial item market is a vibrant channel for accessing commercial products, services, and solutions, constituting $133.9 billion in annual spend, of which $102.9 billion, or 76.8 percent, was for procurements valued at less than $15 million.
Rather than completely overhauling the way DoD procures commercial items, one way that the Department could achieve comparable improvements is by expanding its utilization of the Multiple Award Schedules (MAS) program. Indeed, the MAS program already provides Federal customers with a cost effective, readily available, and streamlined process that mirrors the commercial market through its thousands of contracts that provide tens-of-millions of items. Plus, as we have noted in prior blogs, it does so in a manner that mitigates supply chain risk. Put simply, the MAS Program provides Federal customers with a transparent channel for efficiently and effectively accessing best value solutions that meet their mission needs.
Transparency, via public notice and other means, creates openings for market entry, and it is fundamental to establishing confidence in the Federal market. For potential suppliers, transparency provides an assurance that they have a fair opportunity to compete for the Federal government’s business. By diminishing transparency and accountability, however, the unintended consequence of the Dynamic Marketplace Framework may, in fact, reduce access to the Federal market, and, in turn, the value provided to Federal customers by full and open competition.