2015 Fall Training Conference Acquisition Reform – Assessing the Impact on Business Opportunities #CGPFall15 #CGPFall15
Member Update & Commercial Market Initiative • Roger Waldron – President, The Coalition for Government Procurement 2 #CGPFall15
Commercial Market Initiative #CGPFall15 #CGPFall15
“While the MAS program has expanded and adjusted over the years; modernizing MAS to enhance this incredibly successful, $38 billion a year program will ensure that it continues to offer the efficiency and value it was created to provide .” ̶ Tom Sharpe, FAS Commissioner, GSA Modernizing GSA’s Schedules Program for Today’s Marketplace, GSA Blog, June 12, 2014 #CGPFall15 #CGPFall15
2015 Multiple Award Schedules Environment Standard Processes Complex time-consuming contract negotiation and evaluation processes based on outdated acquisition policies + GSA MAS Transformation Initiatives Competitive Pricing Initiative Transactional Data Reduce price variability for identical Make pricing and other data available to Schedule contract products and services Federal agencies to facilitate better through horizontal pricing comparisons purchasing decisions 5 #CGPFall15
Transactional Data Proposed Rule • Published March 4, 2015 • Contractors to report transactional data from orders and prices paid by ordering activities • FSS contract and GSA non-FSS contract orders (not VA) • Report transactional data at the order and BPA level to GSA monthly Transactional Data Contract or BPA Number Unit Measure (each, hour, case, lot) Order Number/Procurement Instrument Quantity of Item Sold Identifier (PIID) Non Federal Entity, if applicable Universal Product Code (UPC), if applicable Description of Deliverable Price Paid per Unit Manufacturer Name Total Price Manufacturer Part Number 6 #CGPFall15
Proposed rule and the PRC • Retains Price Reduction Clause (PRC) in GSA Schedule contracts • Deletes requirement to monitor basis of award (BOA) customer if report transactional data • Remaining pricing compliance requirements in effect – Commercial Sales Practices (CSP) information – Updates throughout life of the contract – Price reductions may be requested at any time 7 #CGPFall15
Transactional data burden and cost • GSA estimated a reduction in annual reporting burden for contractors – Annual burden reduction approx. 750,000 hours – Annual savings $51 million • Member Survey revealed: • Based on survey total implementation cost is $814,700,534 — 30 times GSA estimate of $24 million 8 #CGPFall15
“GSA can more effectively achieve its goals using methods that are less costly for industry and the Federal government.” Public comments from The Coalition for Government Procurement GSAR Case 2013-G504, Transactional Data Reporting May 4, 2015 #CGPFall15 #CGPFall15
Commercial Market Initiative #CGPFall15 #CGPFall15
Why an Alternative? • Transactional data as described in the proposed rule creates higher MAS program costs for government and industry – Inconsistent with FAS initiatives to lower contract pricing/costs • Dynamic market-based model an alternative – Put commercial back in commercial item contracting – Increase efficiency – Reduce market barriers for businesses of all sizes – Increase access to innovation 11 #CGPFall15
The Alternative – Straw-Man • Online Federal catalogue – Posts products and services at real-time competitive prices for products and services (labor or service rates) – Simplified terms and conditions accepted at purchase • Creates Basic Ordering Agreement (BOA) – Open to all eligible ordering activities – Offers Best Competitive Pricing – Supports customer requirements to follow FAR 8.4 ordering procedures – Opportunity to notify vendor of intent to purchase at high volume and request a quote 12 #CGPFall15
Alternative within GSA Authority • Within already existing authority for Schedules program • Federal Property and Administrative Services Act of 1949 • 41 U.S.C. 259(b)(3) – Program participation must be open to all responsible sources – Orders and contracts result in lowest overall cost alternative to meet Government’s needs 13 #CGPFall15
Benefits • Dynamic competitive market for commercial items – Market driven pricing – Greater access to commercial innovation across industries – Reduced lead times for new entrants and items – Increased competition • Terms and conditions aligned with commercial practices, as much as possible, to maximize best value 14 #CGPFall15
Recommended Pilot • Develop using existing commercial tools through 18F • Voluntary pilot for limited Schedules • Simplified terms and conditions • Measure pilot success based on: – Total Acquisition Cost • Cost of pilot participation vs current Schedules program (government and industry) • Compare administrative, bid & proposal and compliance costs, and pricing – Survey • Customer agencies • Contractors 15 #CGPFall15
Discussion • What suggestions do you have on the Commercial Market Initiative? • What is the appropriate role of transactional data? • What can be done to reduce Contract Duplication? • How can the processing time for modifications be reduced? • Any additional ideas for GSA to improve its government-wide contract vehicles (MAS program and GWACs)? 16 #CGPFall15
Thank you #CGPFall15 #CGPFall15
Keynote: The Need for Acquisition Reform • Jack Gansler – Former Undersecretary of Defense for Acquisition, Technology, and Logistics 18 #CGPFall15
DEFENSE ACQUISITION REFORM October 22, 2015 THE HONORABLE JACQUES GANSLER THE GANSLER GROUP Click to edit Master subtitle style 1 3 2 0 O l d C h a i n B r i d g e R o a d S u i t e 4 4 2 M c L e a n , Vi r g i n i a 2 2 1 0 1 7 0 3 - 4 4 2 - 5 2 0 0 SOLUTIONS FOR GOVERNMENT AND INDUSTRY 19
The Gansler Group The Current National Security Challenge • DoD budgets and force structure cuts (to help with US deficit) • Worsening worldwide security environment (including cyber security – yet increasing cyber dependence) • Decline in emphasis on research funding (but no longer the leader in many areas) • Weapons costing more and taking longer (but numbers matter for total force effectiveness) • Growing legislation and regulation on acquisitions (which raises costs and creates barriers to change) • Acquisition policies and practices based on buying goods (but over 60% of the dollars go to services)
The Gansler Group Shrinking and Uncertain Defense Budgets and Declining Force Structures [Source: Center for Strategic and International Studies (CSIS)].
The Gansler Group The State of Global Security* * Source: Exelis Analysis (2013)
The Gansler Group Cyber Security Vulnerability in “Information Age” • Financial Institutions • Health Care Institutions • Transportation Systems • Communication Systems • Power Grids • Weapon Systems (manned and unmanned) • Government Organizations • Individuals (computers and smart phones • Commercial Firms CONCERNS: Privacy, financial, criminal, competitive business, and security (national and personal)
The Gansler Group
The Gansler Group DoD Vulnerability Not Just in Equipment but Also in Services • Services now are over 60%of expenditures and mission – critical (e.g. logistics)* • Many DoD services are cyber-dependent * In the Sinai War Israel ran out of bullets
The Gansler Group DoD Logistics (the Highest-cost acquisition area) is not “World Class” • Not a single, integrated, secure IT System (current estimate is approximately 2000 individual systems) • Does not provide total asset visibility (as FedEx and UPS do) • 50% of maintenance is legislatively mandated as sole-source (depots) • Does not provide adequate inventory visibility* - Over 1/3 of the stored munitions at Letterkenny are obsolete -Army lost track of $5.8 billion of supplies, between 2003-2011 - ”DLA has about $14 billion of inventory, and probably half is excess to what we need” (V. Adm. Harnitcheck {2013}) • Air Force’s Expeditionary Combat Support System cost $1.03 billion, between 2005 and 20012; but then was cancelled** *Source: Scott Paltrow “Unaccountable,” Reuters (November 18, 2013) **The problems (according t an A.F. i nternal inquiry were “muddled governance, ineffective change management, and revolving door leadership,” Sean Reilly, Federal Times, December 2, 2013
The Gansler Group An Awakening Act (regarding cybersecurity) • In 2015, the Office of Personnel Management (OPM) was hacked • Records of 5.6 million people were taken (current and former government employees) • DATA INCLUDED: Fingerprints, social security numbers, information provided in obtaining security clearance, etc.
The Gansler Group Problems in DoD DoD’s Acquisitions Caused Increased Regulation and Oversight Increasing Costs and Driving Away Commercial Firms OMB and SBA estimated Regulatory Compliance costs of $1.752 trillion in 2008 (up from $1.1 trillion in 2005 and $843 billion in 2001)** Note 1: That the sum of corp. tax and individual taxes in 2011 was $1.402 trillion (far less than the estimated regulatory compliance costs). Note 2: The TASC/Coopers and Lybrand study of the 18% “regulatory cost impact on DoD purchases” was done in 1994. A 2014 Air Force report said the regulatory cost increase is now 25%.
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