The conference, focusing on “Confronting the Challenges Facing Today’s Government Contracting Community,” included more than 200 senior officials, executives, and experts from industry, academia, and government.
Many government contractors rely on OTAs, or “Other Transaction Authority” contracts, as a faster alternative to government contracting that sidesteps federal acquisition regulations. These contracts, popular with the military and contractors alike, can help smaller, nontraditional contractors to secure government contracts significantly more quickly, and with less regulatory burdens. A number of conference speakers reflected that the pace of government can be incompatible with the pace of business, where venture capital investors and capital improvements demand a rapid revenue stream. In some cases, government contracts can take months or years to complete.
Several panelists noted that OTAs have the potential to be misused as procurement officials look for ways to go around the contracting system to get things on contract fast. This could come under scrutiny by Congress in time, however, government and industry officials also need to look for ways to streamline the overall contracting process and improve understanding between government and contractors.
Under Secretary of Defense for Acquisition and Sustainment Ellen Lord described an “adaptive acquisition framework” that provides clear choices in the contracting process for different types of contracts and contractors, particularly small businesses. “Contractors tell me ‘I can’t believe what it takes to get an RFP out,” and procurement officers say, “I can’t believe what it takes to get a proposal together.” Among the remedies the Department of Defense is working on is gathering business cases to examine contracting experiences to learn how to improve the process on both sides.
“We’re trying to speed up the acquisition process and make it cost effective,” Lord said of her top-level goal of “enabling acquisition innovation.”
Rep. Denver Riggleman (R-Va.), who now serves on the House Financial Services Committee, Subcommittee on National Security, International Development, and Monetary Policy, reflected on his own experience as a government contractor. “When I was a small company, I was always looking for ways to leverage OTAs,” said Riggleman. “The contractual environment we are in wants to push you to OTAs,” he said, noting that when he moved military service to a career as a government contractor, “It took me over a year to get my first contract.”
“For me, I think if you can figure out how to use OTAs correctly, it’s part of the natural process,” Riggleman told conference attendees, but encouraged the government contracting sector to watch his subcommittee for possible legislation addressing oversight of OTAs.
But continuing challenges in government contracting come at a particularly precarious time for the nation. The activities of adversaries like China, particularly with regard to money laundering, data breaches, intellectual property, and other data-driven security issues, are top priorities for Riggleman’s subcommittee. “Not only money laundering,” he said, “but also their ability to penetrate our networks, and that should scare the hell out of everybody.”
David Drabkin, director of government contracting at Dixon Hughes Goodman, noted that the 18 to 24 months it can take from issuance of RFP to starting on contract is a major barrier for government contractors. In some cases, said Drabkin, a former chairman of “809 Panel” charged with examining and making recommendation on government contracting, venture capitalists often don’t advise contracting with DOD because of the time it takes to go through the procurement process. Government, he noted, still doesn’t appreciate the pace of business. “One of the things they don’t value is time,” said Drabkin.
Another issue government contractors grapple with is government perceptions regarding intellectual property.
“China has a whole-nation approach to the United States,” said Chris Taylor, CEO of government contractor Govini. “The things we are doing now do not work.” Government doesn’t understand the nature of intellectual property rights, he said, and doesn’t have an incentive to pay intellectual property owners for that data. A common misunderstanding, for example, is that data provided by a contractor is not licensed in perpetuity. “When we talk about supply chain security,” said Taylor, “it is internal as well as external.”
Stephen Rodriguez of One Defense warned that China can outpace the United States in developing and implementing digital weapons. “They take our technology and produce it faster, at one-tenth the cost,” said Rodriguez, noting that the current DOD procurement model is “the anthesis of commercial innovation.”
Vicki Allums, an intellectual property lawyer with Defense Acquisition University, said a government understanding of intellectual property requires a cultural change, with all parties understanding terms and intellectual property rights and ownership. She recommended a thorough examination of methodologies in valuing intellectual property for government customers. “What is the value of that IP,” she said, “in what they are trying to accomplish overall.