This week, the FAR & Beyond blog features guest bloggers on a topic of interest to our members. The comments herein do not necessarily reflect the views of The Coalition for Government Procurement.
Moshe Schwartz, President of Etherton and Associates
Stephanie Halcrow, former House Armed Services Committee staffer and currently a Senior Fellow with the Center for Government Contracting within the School of Business at George Mason University
Other Transaction authority, or OTs, have been a hot topic in acquisition in recent years, with multiple reports and articles debating the pros and cons of the authorities, how they can be used, and the growth in obligation dollars being applied to such transactions. Unfortunately, there has been little discussion of the consortia that are often the catalyst for DoD’s use of OTs—until now.
Last month, George Mason University Center for Government Contracting released our report, The Power of Many: Leveraging Consortia to Promote Innovation, Expand the Defense Industrial Base, and Accelerate Acquisition. The report traces the origins of consortia, describes the consortia model, analyzes the value proposition of the consortia model to the government and to industry, and offers several recommendations for a way forward to further enable DoD to leverage the power of consortia. Most importantly, based on our research, the interviews we held, and the data we analyzed from 12 consortia doing business with the government, we found that when done right, consortia expand the industrial base, promote collaboration, and often more efficiently deliver the innovative technologies our armed forces require to maintain their edge. In cases where there is an immediate, unanticipated critical need, consortia can provide critical surge capacity in support of government acquisition, offering a ready, pre-established network of potential suppliers who have expertise in specific areas, and helping government program offices that do not have the requisite skill and experience in executing OTs. We believe General Perna, Chief Operating Officer of Operation Warp Speed, said it best when he told us “Warp Speed would not have gone at Warp Speed if it was not for the Consortium.”
The foundation of the consortia model is built on collaboration between government and industry. The government benefits by gaining feedback and awareness of industry and academia’s capabilities and this in turn shapes the requirements. Industry benefits by being able to better understand the requirements and tailor their proposals. Consortia members also benefit from the collaboration with other industry and academic entities which provides partnering and supplier relationship opportunities.
Most consortia use Other Transaction authority as a contract vehicle and this authority relies on participation of nontraditional defense contractors. Skeptics are often suspicious of the actual participation of nontraditional contractors. Of the 12 consortia we examined, 78% of the consortia members are nontraditional defense contractors and 67% of the awards are made to nontraditional defense contractors as lead.
But. The consortia model is not a silver bullet for all acquisition; it is one tool among many that when used properly, can provide real benefits to the government. And consortia are not self-governing. It is incumbent upon the government acquisition workforce to know when and how to use, and how to best manage, consortia. As reliance on consortia grows, and more money is obligated on OT agreements, DoD needs to tap into and use the wealth of data that is available at the consortia level to gain insight into and more effectively manage consortia. DoD has not yet taken the necessary steps to fully benefit from this data.
Concomitant with the increasing use of OTs and consortia, oversight organizations are calling for more rules and regulations, mirroring a longstanding belief that rules and regulations are the answer to improving acquisition. Policy makers will be tempted to impose an ever more robust statutory, regulatory, and policy regime to guard against workforce errors, waste, or even fraud. In so doing, there is a real risk of undermining the flexibilities that provide the value proposition of the consortia model and OTs. It is important to find the right balance between effective management controls and providing flexibility and freedom to operate. The recipe for effective management and acquisition outcomes is not ever-more regulation, it is capable people given the authority to make good decisions.
Based on our experience writing this report, we would like to issue three challenges:
- DoD – Gather the right data (but not too much data) to inform policy, incorporate training on consortia at Defense Acquisition University, and manage consortia;
- Congress – Ensure that DoD uses OTs effectively, but don’t add too many regulations that will result in undermining the value of consortia; and
- Consortia – Help foster increased collaboration among members to promote harnessing the expertise and technologies of multiple bidders, who can pool resources and expertise to develop the next generation of capabilities.