DOD throws light on how it buys services

The Navy's Seaport Enhanced multiple-award contract might be just the test case for how the Defense Department plans to change the way it buys services.The four-year support services contract, which is worth potentially $20 billion, provides transparency about the task orders and money being spent'both internally to the military services and agencies, and externally to more than 600 vendors.'The Navy has been able to effect significant change by looking at all different elements to improve procurement,' said Peter Fogelsanger, director for Aquilent Inc. of Laurel, Md.'They are not just looking at technology or policy, but the intersection of people and how ... they get their end customer and vendors to embrace processes,' he said. 'Policies have to be consistent across the Navy, and technology is a huge enabler to make other things work well.'Aquilent provides the Navy with an online procurement system for Seaport-e, which lets vendors interact with government more easily.The Navy's accidental pilot follows closely the larger plan Shay Assad, director of Defense Procurement and Acquisition Policy, has in mind.Assad, speaking at a recent conference sponsored by the Contract Services Association of America of Arlington, Va., said he is focusing on getting information systems to the warfighter and managing the procurement processes more efficiently.Assad's office is identifying what services the military branches buy and will put them into portfolios. Defense officials will then decide on best practices to use for buying them, he said.'All cards are on the table, and we will try to take the best approach,' Assad said. 'We spend more on services than major weapon systems, so it is important for us to manage how we buy services and make sure we create competition.'The amount DOD spends on services has steadily increased over the past decade. In fiscal 2006, the department spent $146 billion on services, including between $3 billion and $4 billion with the General Services Administration's Federal Technology Service and $13 billion to $15 billion on GSA's Federal Supply Service schedules, Assad said. DOD's total procurement budget for 2005 was $268 billion, and for 2006 it will likely have only increased.This isn't the first time DOD has tried to improve the way it buys services. In fact, it has been an ongoing process since the mid-1990s.Stan Soloway, a former DOD procurement official and now president of the Professional Services Council, an industry trade association in Arlington, Va., said this latest attempt by Assad is part of DOD's evolving recognition that buying services is more complex and varied than previously thought.'Services are not monolithic,' Soloway said. 'How you buy and manage different services, what oversight is needed, the types of contracting vehicles and the acquisition strategy you will need all will vary depending on what you are buying. What Shay is doing is defining services DOD buys and the requirements associated with each service.'Assad has asked PSC to work with his office to identify the services DOD buys and how best to buy them. PSC will present findings to Assad sometime in January, Soloway said.DOD does not have a consistent methodology for developing the different parts of an acquisition, such as the performance statement of work, Assad said.This exercise will address those inconsistencies, which is good news for vendors, Fogelsanger said.'If you become more efficient and consistent, it benefits the government because there is more predictability in notices to and responses from vendors,' he said.Fogelsanger also said DOD's move to improve service buying is similar to what agencies are doing with strategic sourcing of products, which is designed to improve efficiency and lower costs, better manage contracts, and change consumption of the services by knowing what you are buying and when.In fact, Assad said, strategic sourcing is his top issue in terms of identifying best practices and moving forward.The review also could help reduce the time it takes to award contracts.Assad said that under SeaPort-e, it takes 115 days to develop and award a task order, of which 58 are used to develop requirements and the statement of work.'We want to reduce bid and proposal costs,' he said.He added that the major services are trying to figure out how to reduce the procurement lead time to less than 60 days.Soloway said reducing lead time on contracts is important, but DOD can't look at it only one way. He said delays could also be caused by the inefficiency of the system, or by the complexity of the procurement.Assad said he is meeting monthly with the DOD services and agencies to update them on his office's progress.