Frank Kendall has just released his Memorandum for Defense Acquisition Workforce on the subject "Better Buying Power 2.0: Continuing the Pursuit for Greater Efficiency and Productivity in Defense Spending." We applaud this excellent direction to the government workforce and hope is gets the close attention it deserves. It covers 36 Department of Defense (DOD) initiatives organized into seven focus areas. The basic goal remains the same: to "deliver better value to the taxpayer and Warfighter by improving the way the Department does business." Achieving that goal "will require the professionalism and dedication I know I can expect from everyone in the workforce," he says.
This is a preliminary memo to be followed by a more detailed one with more specific goals. We'd like to focus on one of the areas: Incentivize Productivity and Innovation in Industry and Government.
The memo emphasizes the need to employ appropriate contract types. The original Better Buying Power (BBP) memo pressed for more use of fixed price incentive (FPI) contracts. Now, DOD refines its guidance to emphasize the use of the appropriate contract vehicle for the product or services being acquired. One type does not fit all applications. This initiative will focus "on improving the training of management and contracting personnel in the appropriate use of all contract types." We particularly applaud this effort. We have commented for years about the need to spend more time and effort on the selection of the right type of contract for the work to be performed.
The memo also seeks to better define value in best value buys. DOD notes that industry tends to default to a threshold level of performance to control costs and because the government gives unpredictable credit for performance above the minimum. DOD needs to improve its ability to define value above the minimum level so industry can bid more intelligently. "This will spur innovation by providing a predicable basis by which companies can bid enhanced performance with the knowledge that any increased costs are within an acceptable range." Praiseworthy, indeed.
Finally, and perhaps most importantly, the memo admonishes the workforce that when lowest price, technically acceptable (LPTA) selection criteria are used, the government should define technically acceptable to ensure needed quality. "Industry has expressed concerns about the use of Lowest Price, Technically Acceptable (LPTA) selection criteria that essentially default to the lowest price bidder, independent of quality." Indeed. This has to be one of industry's major complaints. We've written often about LPTA abuses. At least DOD has listened to the criticism. We think budget issues drive buyers to LPTA so we don't hold out much hope for improvement on this initiative. We'll see.
The good news is that DOD is listening to industry on the subjects of best value and LPTA source selection criteria. And we think the preliminary version of BBP 2.0 does an excellent job of setting the goals. We look forward to the more detailed memo that will outline the specific goals and requirements which is due out in two months.