Tag Archives: Government Procurement

Deceptive Pentagon Math In $89.2 Million F-35 Fighter Price

(Photo: DoD / Staff Sgt. Devin Doskey, U.S. Air Force)


This figure is the unit recurring flyaway cost—the price tag for just the aircraft and engine, which by themselves do not make a fully functioning weapon system.

That $89.2 million does not include procurement funds spent on initial spare parts, flight training simulators, the expensive – and poorly performing – ALIS support system, and more, all unique to the F-35.


“Pentagon leaders are likely reveling in the news that they have negotiated an agreement with Lockheed Martin that they claim drives down the unit cost of the F-35 joint strike fighter to below $80 million in the next few years. While any reduction in costs for the most expensive weapons program in history is an improvement, all is not as it appears in the industry trade press. A quick perusal of publicly available Pentagon budget documents shows the real cost of the F-35 to be above $100 million per copy for the fiscal year 2020 buy. Given the work that remains, and the way the Pentagon has surrendered many key responsibilities to the manufacturer, the price is likely to be at least that amount or higher for the foreseeable future.

The most commonly mentioned figure is for the F-35A, the Air Force’s conventional takeoff variant and the least expensive model. The current estimate for the lot of aircraft currently in production is $89.2 million apiece. This figure is the unit recurring flyaway cost—the price tag for just the aircraft and engine, which by themselves do not make a fully functioning weapon system.

When we also consider the future modifications necessary to correct both the known and potential design flaws and the aircraft’s $44,000 per-flight-hour cost, it is easy to see why the F-35 program is the most expensive in history.

A handy tool for anyone interested in knowing more about actual costs of military programs and weapons is readily available online. The Pentagon posts budget materials for each fiscal year on the comptroller’s webpage. Included are budget estimates and the justification documents containing more charts and figures than any reasonable person would care to view.

The Air Force’s fiscal year 2020 budget pays for the 48 F-35As in Lot 11. The current $89.2 million dollar price the Pentagon uses is calculated by separating out just the costs for the airframe and the engine from the larger total procurement cost that includes ALIS, simulators, initial spare parts, and more to get to the artificially low $89.2 million. That is far from the whole story.

The Pentagon’s own budget documents list the FY 2020 procurement cost for those 48 aircraft as more than $101 million, nearly $12 million more than the figure rolled out for press reports. Using the Navy’s charts and the same math shows that the real costs for each F-35C is more than $123 million, while each F-35B costs in excess of $166 million. But even that figure doesn’t tell the whole story.

None of this factors in the research and development costs of the program. Ellen Lord, the Pentagon’s acquisition chief, announced on October 29 that the program needs more money to complete the developmental and testing phase of the program. The latest publicly available figures show that taxpayers will have spent approximately $55.5 billion for F-35 research and development. If the Pentagon purchases all 2,470 F-35s in the current plan, the true cost of each aircraft goes up by nearly $22.5 million. Program officials had expected to complete development and operational testing by December 2019. But designers and engineers have struggled to complete the Joint Simulation Environment, a highly accurate simulator necessary to complete operational testing. The troubles stem from programming flight data and aircraft performance data gathered during real-world flights into the simulation software. The Joint Strike Fighter program will run out of development money before the simulator and the subsequent operational testing can be completed. The Pentagon expects to announce before the end of 2019 just how much more money beyond the program’s current $406.4 billion budget will be needed to complete this phase of the program.

No matter how the production costs are calculated, that money alone will not buy you a fully functional F-35. Engineers were not able to complete all of the combat capabilities that were supposed to be included as part of the original development phase of the program. This incomplete work, which taxpayers have already paid for, will now be completed in a new development phase and called “follow-on modernization.” Only time will tell how much will ultimately be spent in this effort, but taxpayers are already on the hook for $10.5 billion.

There is also the matter of the cost of maintenance and ownership. Lockheed Martin stands to make most of its money from the F-35 program in annual non-competitive sustainment contracts. As POGO has reported before, the services can’t independently perform many of the most basic maintenance functions on the F-35 and must instead rely on civilian contractors. Lockheed Martin currently receives $2 billion a year to keep the fleet of approximately 400 aircraft flying, meaning the annual operating cost for each F-35 is $5 million.

Pentagon officials had expected to make the long-anticipated full-rate production decision for the F-35 program before the end of this year. Also known as a Milestone C decision, the program must complete all the steps, including operational testing, as required by federal law. No one appears to be letting such trifling details stand in their way, however. The recent cost estimates emerged as part of the announcement of a $34 billion deal for three years’ worth of F-35 production—478 aircraft for the U.S. services and international customers—beginning in 2020. Officials continue to call this “low-rate initial production,” but this is essentially full-rate production in everything but name. The announced 169 F-35s for Lot 14 is the full-rate production figure for the program.

The public shouldn’t fall for the gimmicks the Defense Department constantly uses on aircraft unit cost, but the press, amazingly, seems to fall for it every time. Congress shouldn’t buy these phony cost projections and compound the program’s problems, based on a phony buy-in price by buying more F-35s before testing is complete.”


Early Glitches In GSA FedBizOpps Conversion To BETA SAM

Image: https://ndptac.org/_files/docs/news_release/fbo_transitioning_to_beta.pdf


The new Beta.Sam.Gov website absorbed FBO.gov and many other government databases on Nov. 8 with more to be consolidated. [ https://beta.sam.gov/ ]

Analysts at The Pulse GovCon provided us with a list of problems with the transition”


“Change is hard for everyone, and when something you rely nearly every day changes overnight. That’s really hard.

I heard the reports about slowness and glitches. So I waited a few days. And I gave it a test drive today. I’m not real happy and I’m not alone.

For me, I used FBO.gov to search for new requests for information and sources sought as well as solicitations and awards. I went there to search for specific contracts. For me, the advanced search feature was easy to use and almost intuitive.

Was it perfect? No. I wish it went back more than a year. I wish there were more connections between procurements.

I know all of us have unique information needs. Most of you probably aren’t looking for the same thing I am. I want to look at the last two or three days of postings dealing with IT, professional services and research-and-development. I also want to filter notices based on sources sought, awards, solicitations and justifications.

FBO.gov would generally provide what I was looking for. I’d find some nice news tidbits and I could track developing procurements.

Beta.Sam.Gov seems to have more features, but I can’t figure out why it has so many date choices to filter searches on. There is something called “Inactive Date”, followed by “Published Date” (I think I know what that is.) Then there is “Updated Date” and “Response/Date Offers Due.”

Narrowing my search parameters is difficult. I can’t seem to save my searches. The help function just isn’t, well, very helpful.

I’m not alone in my challenges.

One contractor complained that Beta.Sam.gov changed “Solicitation Number” to “Notification Number.” And what does that mean?

There are no push notifications yet for new opportunities or updates. This contractor called notifications “arguably the most critical feature” of FBO.gov.

That person voiced concern that we’ll see fewer procurements going through Beta.Sam.gov and moving to other means that don’t require public notification because if industry is struggling with it, then government contracting shops are as well.

Market research firm The Pulse GovCon has multiple concerns with the transition. Like Deltek and Bloomberg Government, The Pulse relies on the data from Beta.Sam.gov to track new procurements and contract actions.

Analysts at The Pulse GovCon provided us with a list of problems with the transition:

  • Lack of communication from the General Services Administration during the transition. “It is unclear who the owner of this is,” they said.
  • The API, which pulls data from the backend, is limited and doesn’t match information that you see on the front-end page.
  • Agencies are still being migrated, which makes identifying opportunities disjointed.
  • Advanced searches and saving searches are a struggle.
  • Frequent time outs.

I hope GSA is working to improve Beta.Sam.gov. Frankly, it makes me nervous that FBO.gov is gone and is replaced with something called Beta. You don’t replace a tried and true tool with something called Beta.

I’d like to hear what you are experiencing. If you have any tips or tricks, please share.”



Nick Wakeman

Nick Wakeman is the editor-in-chief of Washington Technology. Follow him on Twitter: @nick_wakeman.

GAO Report: “Contract Awards To Mid-Sized Businesses And Options For Increasing Their Opportunities”



Some federal contracts are set aside for small businesses (categorized by their number of employees or their revenue). But what happens when these businesses grow to become mid-size?

We found that, between 2008 and 2017, very few small businesses (about 2.5%) grew to mid-size and continued to receive some type of federal contract.


“Why GAO Did This Study

Small businesses that receive federal contracts set aside for them may outgrow the size standards the Small Business Administration (SBA) uses to define small businesses. (Size standards vary by industry and generally are based on employees or revenue.) Questions have been raised about the extent to which mid-sized businesses can compete with large businesses for federal contracts. GAO was asked to provide information on federal contracting opportunities for mid-sized businesses. This report analyzes, among other objectives, (1) the extent to which small businesses grew to mid-sized and continued to receive federal contracts and (2) options for increasing contracting opportunities for mid-sized businesses. GAO analyzed federal contracting data for fiscal years 2008–2017 (most recent and complete). In the absence of legal definitions of “mid-sized” and “large,” GAO multiplied relevant size standards for small businesses to arrive at parameters for mid-sized and large businesses for its analysis. GAO reviewed literature to identify options for increasing contracting opportunities and interviewed SBA officials and a nongeneralizable selection of 11 stakeholders—trade association representatives, researchers, and small business directors at three agencies with large obligations for small business contracts in fiscal year 2017—to obtain views on the options. SBA provided comments, which we addressed as appropriate.

What GAO Found

From fiscal year 2008 through 2017, very few small businesses that were awarded limited competition (set-aside) contracts grew to be mid-sized and continued to receive contracts. (GAO defined mid-sized businesses as having revenue or employees up to five times above the small business size standard.)

• Of the 5,339 small businesses awarded set-aside contracts in fiscal year 2008 and awarded any sort of federal contract (including set-aside or competed) in 2013, 104 became mid-sized by fiscal year 2013.

• While a set-aside category for mid-sized businesses would increase opportunities for mid-sized businesses, stakeholders generally believed it could decrease opportunities for small businesses and increase agency burden (time and costs to implement the set-aside).

• Requiring agencies to consider businesses’ past performance as subcontractors or as part of a team would help both mid-sized and growing small businesses by making them more competitive for contracts.

• Stakeholders said raising size standards based on revenue would allow a limited number of mid-sized businesses to be eligible for set-asides again, but not help the vast majority of mid-sized businesses.”

Click to access 700999.pdf

The Government’s Historic Spending Spree Continues



“Driven largely by the Defense Department, the federal government’s discretionary spending spiked to a seven-year high in fiscal 2018, with agencies obligating more than $554 billion for products and services, up $100 billion from 2015.”


“According to official spending data from the Government Accountability Office, the Defense Department accounted for $358 billion in contract obligations while civilian agencies, like the Veterans Affairs and Homeland Security departments, obligated $195 billion.

Source: GAO analysis of Federal Procurement Data System – Next Generation

The government closed the 2018 fiscal year on a massive spending spree—due in part to funding increases after a delayed budget agreement—and early fiscal 2019 spending data indicates the government isn’t slowing down its contract spending.

Spending data tabulated by the Professional Services Council illustrates the spending uptick.

During the largest fourth-quarter spending in recent memory, Defense and civilian agencies raced to spend almost $190 billion. Early receipts show the high-paced spending continued into fiscal 2019, especially at the Defense Department. Defense agencies obligated $111 billion in October, November and December—a 32% increase from the first quarter of fiscal 2018.

Source: Bloomberg Government

That’s a historic level of early spending for the Defense Department, according to David Berteau, president of the Professional Services Council. Over the previous five years, the Defense Department has spent in the $60 to $70 billion range over those same Q1 months, cautiously allocating money during sometimes tense budget negotiations in Congress. Fully appropriated this year with large acquisitions like ships and aircraft on the books, Berteau said the Defense Department hasn’t had to be as cautious.  

“The Defense Department obligated almost as many contract dollars in the first quarter of fiscal 2019 as in the fourth quarter of fiscal 2018,” Berteau told Nextgov. “Never in 40 years of following this—I’ve never seen a first quarter in Defense spending that looked like a fourth quarter.”

Civilian spending is up—though to a lesser degree—despite a 35-day government shutdownbeginning the year. Through the first two quarters of fiscal 2019, civilian agencies have allocated about $78 billion, up from $67 billion at the same time last year.

Source: Bloomberg Government

It is unclear whether the government’s current spending trends will continue through fiscal 2019, as the government’s reported spend data lags behind by three to six months. In June, White House officials said they had “every intention” of avoiding a shutdown similar to the one that shuttered several agencies in December, floating a one-year stopgap measure to keep agencies next year at fiscal 2019 levels. However, Berteau said 2018’s uptick in contract spending “is fully expected” given the stable more stable fiscal conditions with which the fiscal year began. Berteau added that contract spending is not increasing at the same pace as overall government spending, so contractors aren’t getting “more than their fair share, but actually less.” 

“The reality is the growth we’re seeing in contracts in fiscal 2018 is fully expected, exactly in line with what Congress appropriated and President Trump signed,” Berteau said. 

Where did the money go?

According to the analysts at The Pulse of GovCon, the civilian agencies with the largest contract spend last year were the departments of Energy ($32 billion), Veterans Affairs ($31 billion), Health and Human Services ($25 billion), Homeland Security ($18 billion) and NASA ($18 billion).

Agencies across government spent approximately $225 billion on products—including pens, paper and hand grenades—and $340 billion on services, including research and development. 

The government’s top contractor, Lockheed Martin, captured $40 billion in revenue over fiscal 2018. Collectively, the government’s top ten contractors—Lockheed Martin, Boeing, Raytheon, General Dynamics, Northrop Grumman, McKesson Corporation, Huntington Ingalls Industries, BAE Systems, Leidos and United Technologies Corporation—captured almost 30% of Defense obligations and 17% of civilian obligations. 

Small businesses, according to The Pulse of GovCon, received about 22.5% of the government’s total contract dollars.”


2019 Top 100 Federal Government Contractors

Image: http:// https://medium.com/@Smalltofeds/how-reach-the-washington-technology-top-100-government-contractors-6fafc8bb8237


Nick Wakeman

Companies made major moves that have affected their rankings and more changes are coming as the market has reached an inflection point fueled by strong budgets and significant mergers and acquisition activity.


“It’s easy to look right at the very top of the Top 100 and talk about change, but there is much more going on than the return of Leidos to the No. 1 ranking.

The 2019 Washington Technology Top 100 is based on an analysis of data from the Federal Procurement Data System. We analyzed the data using over 350 product and services codes that pull from agency contract obligations in the IT, systems integration, professional services and telecommunications area. The rankings are based on unclassified fiscal year 2018 prime contracts.

Leidos’ return to No. 1 is driven by the growth they’ve seen in the market, plus an assist from a pair of divestitures by last year’s No. 1 General Dynamics.

GD’s divestiture of nearly $800 million in public-facing contact center business to Maximus was a major boost to the latter company, which vaulted the No. 72 ranking in 2018 to No. 25 this year with $1.2 billion in prime contracts.

GD’s second divestiture was smaller: the sale of its Navy engineering and ship design work to CACI International. That gave a nice boost to CACI’s overall prime contract number of $2.8 billion, up from $2.3 billion last year, but it didn’t change the ranking and they remain at No. 10 again this year.

That CACI’s prime contract dollars would increase and not impact their ranking is a testament to the overall growth in the market. Thanks to a stable budget with increases in both civilian and defense spending, companies in the market are experiencing a period of growth.

The total prime contracts captured on the 2019 Top 100 stands at $115.4 billion, an increase of $10.1 billion compared to 2018’s $105.3 billion in total prime contracts.

That rising tide lifted all boats — not just the companies at the top. Last year’s No. 100 company in Akima had $177.6 million in prime contracts. This year’s No. 100 in American Systems — received $197.9 million in obligations.

We expect fiscal 2019 spending, which will dictate the 2020 Top 100, to remain strong but there are questions over whether market has reached its peak. The deciding factor will be whether the president and Congress can reach a deal on the budget. Without a budget resolution, the Budget Control Act and its automatic spending caps driven by sequestration will return.

Contractors can make contingency plans, but for the most part so much of it is out of their control.

But regardless of the budget, massive changes are in the works for the Top 100 thanks in large part to a few mega merger and acquisitions that are pending.

Just as we were completing the Top 100, Raytheon (No.6 with $5.7 billion in prime contracts) announced its plans to merge with the aerospace and defense businesses of United Technology Corp. (No. 27 with $974 million). That deal will likely not close until sometime in the first half of 2020, pending regulatory reviews. The combined company could hit the top three next year.

It is interesting to note that United Technologies moved strongly up the list this year from No. 57 in 2018 to No. 27 thanks to its acquisition of Rockwell Collins.

In the coming months, the merger of L3 Technologies (No. 18 with $2 billion in prime contracts) and Harris Corp. (No. 13 with $2.3 billion), also could move the combined company into the top 10.

I add that “could” qualifier in both transactions for two reasons. While the companies in both of those megadeals talk about how complementary their businesses are and how little overlap there is, there are always divestitures. Perhaps not right away but they will come.

A second reason is that we don’t know what other companies in the Top 10 will do. CACI generally makes at least deal a year and in recent years their acquisitions have gotten larger: including this year’s purchase of LGS Innovations for $750 million.

No. 9 Science Applications International Corp. will likely not make another big deal as it integrates the acquisition of Engility, but could make smaller ones. The same is true of No. 9 Perspecta, who is at least looking around.

Leidos is stepping up its M&A game after a two-year hiatus to integrate the massive Lockheed Martin Information Systems and Global Solutions business. We can expect them to make a deal over the next year.

Another large deal pending on the Top 100 comes in Serco Inc. (No. 39 with $691.3 million) acquiring the Navy business unit from Alion Science & Technology (No. 31 with $872.9 million.)

There is one other major move on the Top 100 that is worth pointing out. Newcomers to the Top 100 generally crack the list in the lower quarter. But this year, Cerner made its debut at No. 48 with $490.2 million in prime contract obligations.

Cerner is the prime contractor on the massive Veterans Affairs Department project to create a new electronic health record system.

They also are the major subcontractor to Leidos on the parallel project at the Defense Department. Cerner’s work for DOD doesn’t impact the Top 100, but further helps show how they have become a major market player.

We invite you to explore the 2019 Top 100 and our stories and analysis as we publish them in the coming days.

We also encourage you to attend our June 21 WT Power Breakfast on “The Secrets of the Top 100.” Executives from Leidos, Unisys, Serco and others will their strategic vision and how it meets the challenges of today’s market.

And on June 26, we’ll have our annual Top 100 webcast where we dive into the numbers behind the Top 100 and the trends driving the biggest contractors in the market.”

Government Plans To Improve Contractor Past Performance Rating System



The forces are coming together to say vendor past performance is a valuable tool. But it’s not working as it should because it’s too burdensome and not as accurate as it should be. No one wants to throw it out. We just want to fix it.

Experts say the current system, the Contractor Performance Assessment Reporting System (CPARS), takes too much time to fill out, lacks important details and isn’t as accurate as it needs to be.


“When the General Services Administration released the $65 billion Alliant 2 governmentwide acquisition contract for IT services back in June 2016, it was one of the first major procurement efforts to put a premium on past performance.

As part of the self-scoring approach to Alliant 2, GSA determined that 40 percent of the evaluation points would be on how vendors have performed on previous and similar work with the government.

At the time, industry analysts praised GSA for building on this self-scoring approach.

Now three years later, the self-scoring approach where past performance is a significant evaluation factor has grown in popularity.

At the same time, vendors and federal procurement officials alike heed a common call that the current approach to obtaining past performance is problematic and needs to be rethought.

“As the government moves to buying more services and solutions, things are getting more subjective and you want to be able to do a better job of motivating contractors to do more,” said Jim Williams, a former federal executive with GSA, the IRS and the Homeland Security Department, and now a principal with Williams Consulting, LLC and an advisor for GovConRx.

Experts say the current system, the Contractor Performance Assessment Reporting System (CPARS), takes too much time to fill out, lacks important details and isn’t as accurate as it needs to be.

“The time and effort to draft CPARS evaluations is too much, and with most agency contracting staffs pressed to do more with less, that gets pushed out further, especially if there is a need to justify ratings over satisfactory,” said Mike Smith, a former DHS director of strategic sourcing and now executive vice president at GovConRx. “There needs to be some way to justify anything over satisfactory that is not so hard to track down all the information so it becomes less cumbersome. Contractors also are not actively engaged in the documentation and support of the ratings. That has to change too, especially as agencies are paying a lot more attention to ratings. We have to figure out how to make sure past performance ratings are not done in haste.”

Smith said on average, depending on the type of procurement, it could take a contracting officer a few minutes to a few hours to write an in-depth CPARS review.

New data compiled by GovConRx shows the value of CPARS is dropping dramatically.

Between 2014 and 2018 across the four areas of CPARS—quality, management, schedule and cost control—the number of satisfactory ratings have consistently increased while the number of exceptional ratings bottomed out and the number of very good ratings also are a downward trajectory.

Source: GovConRx analysis of CPARS.gov.

“We’ve seen some changes and a bigger emphasis in using CPARs for source selection decisions, but we don’t think the government is getting the same value for what the evaluations were designed for in the first place,” said Ken Susskind, founder and CEO of GovConRx. “We talked to quite a few agencies and chief procurement officers and we are hearing there is not enough detail or accuracy in CPARS for them to rely on to make educated and informed decisions during the source selection process. And then we hear from a lot of contractors that they believe they are performing at an exceptional and very good level, but they are getting satisfactory ratings in CPARS.”

And getting satisfactory ratings in CPARS combined with the increased importance of past performance makes a bad recipe for both agencies and vendors. especially because  the real value of the data is in the comments written by contracting officers. Experts say contracting officers don’t believe they have the time to justify ratings above or below satisfactory so it’s easier just to give everyone an average rating.

Lesley Field, the deputy administrator in the Office of Federal Procurement Policy, said the chief acquisition officer’s community is recognizing the value of CPARS is diminishing.

“I do think it’s time to reimagine what that systems could do and how it could support our acquisition workforce,” Field said in an interview with Federal News Network. “There is a lot of data in the system, but it may be a little difficult for folks to pull out what they need. We want to make sure the data is accessible and relevant. So we are thinking about ways to start a modernization effort for CPARS so the system can produce information that is more actionable and usable for our contracting officers.”

Field said the data needs to be more specific and better reflect how vendors are performing.

OFPP is beginning a new “in-reach” effort to talk to the frontline workers to ensure they have the tools and training to do their jobs better.

Soraya Correa, the chief procurement officer at DHS, said her office is part of a group of agencies starting to work with OFPP on reinventing CPARS.

DHS chief procurement officer Soraya Correa.

She said it’s clear CPARS has become tedious and there can be too much back and forth with vendors over the ratings and comments. Correa added past performance needs to be simplified and automated to some extent.

“If we use something like artificial intelligence or automation tools to simplify data and sort the data so we can present it in a more streamlined fashion, CPARS would be more valuable for contracting officers,” Correa said in an interview. “I would love to see a more commercial past performance approach, almost like a Yelp approach. Vendors can add comments to the government’s ratings, but there wouldn’t be a back and forth. The contracting officers could have a tool so they can search for projects similar in size, scope and complexity. That is one of the things we look for. They can run a report and it tells them what ratings came back at and key comments from vendors and the government.”

Field said agencies need to keep up with the times so a “Yelp for government” isn’t necessarily a bad idea and is a model to explore and possibly pilot changes to CPARS to make it more in-line with commercial practices.

“What we would like to play with is if there are AI tools out there or emerging technologies that could look across the evaluations, maybe help us come up with more insight,” she said. “Would it be possible to look at the Federal Data Procurement System data and figure out what other awards are out there and if anything interesting pops up? It’s really a holistic reimagining of what that past performance system could do. Obviously, the contracting officers are the ones who will have to make that assessment, take all that information and evaluate it and use their judgement.”

Field said it’s still early in the process to reimagine CPARS, especially as GSA transitions it to a new platform, beta.sam.gov, in the coming months. Field said OFPP is working with a few agencies to figure out what the future of vendor past performance could look like.

Correa said DHS is one of those agencies working with OFPP on modernizing CPARS. She said emerging technologies, like AI, will promote both the use of past performance data and the need to make sure CPARS information is a higher quality.

One common complaint is CPARS doesn’t necessarily include or have room for private sector past performance data.

Both Correa and Field agreed that obtaining that information would be helpful, especially as agencies strive to find non-traditional contractors.

“I do think CPARS is a good tool. We’ve come a long way with that tool. I remember when we first implemented it and it was much more difficult to use. They continue to make improvements on CPARS, the system itself,” Correa said. “I just want to take advantage of automation and the technologies that are available to help us cull the data, simplify it and bring it back in a fashion to the contracting officers that is simple, straightforward and easy to use. If along the way, we can tailor the data requirements, how we get data into the system, how the CORs, program managers and contracting officers interact with the system to get their data in the system and pull it back, then we will have an ideal tool.”

Public Sector Procurement Getting Smarter

Image: citynmb.com


“The U.S. government in fiscal 2018 spent more than $1 trillion.  On average, anywhere from 30-to-40% of this goes toward purchasing something.

There is no question that various public procurement entities are evaluating the technology they use to streamline processes, get visibility into their data, collaborate with their suppliers, manage categories and contracts and much more.” 


“………  there is a tremendous opportunity for improved spend management, more efficient processes and overall better visibility into supplier relationships in order to maximize return on every taxpayer dollar.

It’s difficult not to think about paper filled offices and uninterested employees. According to a Governing Institute survey, the tech-fueled procurement revolution has been slow to catch on in most governments. Only 35% of respondents, for example, said they have up-to-date spending information and market metrics in their databases even though nearly two-thirds cited such areas as critical to success.

That said, 2019 is most certainly going to see lots of change in the world of public procurement. In fact, it would be interesting to see the results from the Governing Institute survey which is coming up again in 2019. It is my opinion that public procurement across federal, state and local spheres is coming out of the shadows and shaking the stereotype, making 2019 pivotal.

Public sector procurement getting smarter

There is no question that various public procurement entities are evaluating the technology they use to streamline processes, get visibility into their data, collaborate with their suppliers, manage categories and contracts and much more. Procurement leaders in government are more aware and informed now than ever before and as such, they want the best as opposed to “what’s worked before.” Increasingly they are learning from the digital procurement transformation in the private sector and paying more attention to technology trends. There is more research on public sector procurement now with efforts such as Governing Institutes State Procurement Survey and Public Spend Forum. Government is getting smarter and looking for cloud-based platforms that can cover all their source-to-pay needs as well as be configured to meet the needs of individual agencies.  They understand that solutions need to be modern and user-friendly for all users including end-users, procurement and suppliers in order to have an impact.

A model that is talked about often in the private sector will become more commonplace in public sector. Customer centricity requires that procurement thinks of itself as a service provider, which means providing expertise and insight, understanding the goals, objectives and requirements of stakeholders, managing projects and change, etc.

On the flip side, this model is also about positioning the organization as “the customer of choice” for suppliers. The idea is to make it easier for suppliers of all sizes to work with the government but also in order to capture the latest innovation.

Rethinking quality and performance

Quality control and performance monitoring are going to become more important for public entities as they draw evermore scrutiny but also in the effort to deliver better services to citizens. Effective quality control requires a streamlined supply chain and better visibility into supplier performance.

Getting a handle on supplier performance and risk will require broad collaboration across agencies or across different entities of a state and must be part of the broader transformation strategy in order to truly be effective. The bottom line is that public sector procurement leaders must have in mind a strategy to monitor and improve supplier performance across multiple metrics.

Is there one place where suppliers register? Do you maintain supplier key performance indicators? Do you have the ability to survey suppliers or users? Can you keep track of contractual commitments? These are some of the questions that need to be addressed.

Data will make the difference

As with all things technology related, data is key. This is even truer as we enter the era of digital technologies such as artificial intelligence, blockchain and internet of things. Without having a handle on good, clean data, transformation and digitization efforts can be quickly stymied.

Having a strategy to improve the quality of supplier master data, for example, is a key one for procurement and will be important in order to reap more benefits from any procurement transformation. Good data is also the only way to develop strong strategic plans and initiatives that will help better manage spend and suppliers.

Fostering more digital talent

Following the previous point, getting a good handle on data is difficult without the right talent. As with all industries, public sector procurement organizations must equip themselves with the right talent around data, analytics and all things digital. I think we will see this happening more in 2019.

Overall, 2019 looks to be an exciting year for transformation and digitization of public sector procurement. Although, transformation is journey, for public sector it is one that has been long overdue for an overhaul.”

Change In Cloud Forecast: Multiple-Award Vs. Single-Award


Image: “Vmvirtualmachine”


“The CIA’s decision to adapt a multiple-award strategy for its new cloud computing vehicle affords the intelligence community an excellent opportunity to increase its access to innovative solutions, to maximize competition and to reduce performance and national security risks.”


“Last week, it was reported that the Central Intelligence Agency (CIA) is planning a new procurement vehicle that would significantly expand its cloud infrastructure. Known as the Commercial Cloud Enterprise, or C2E, the new vehicle will leverage a multi-vendor strategy to provide tens of billions of dollars in enterprise-wide support to the intelligence community. A request for information (RFI) for the new vehicle is expected to be released by May 2019, with awards anticipated by no later than July 2021.

The approach brings increased contract flexibility that will help the CIA meet its mission requirements with best-value solutions.

Interestingly, the CIA’s decision stands in sharp contrast to the Department of Defense’s (DoD) decision to pursue a single-award strategy for its $10 billion Joint Enterprise Defense Initiative (JEDI) cloud vehicle. As many may recall, the JEDI procurement has been the subject of significant controversy. Indeed, last year, the Coalition, among others, raised many significant concerns with DoD’s approach to cloud as described under the JEDI vehicle, including, but not limited to:

  • The lack of guidance provided by DoD as part of its evaluation criteria related to how it will assess and value technical capabilities;
  • The long-term, negative impact associated with a single-award strategy as it relates to agency access to competition and innovation from the commercial market place; and
  • The creation of barriers to entry for new, emerging technologies and/or capabilities.

In addition, since that time, litigation and investigation have dogged the JEDI procurement, both of which have included concerns about the use of single award and allegations of possible conflicts of interest that may have improperly influenced DoD’s overall approach to the procurement. Putting aside the allegations of conflict of interest, the Coalition believes the reported approach of the CIA justifies reconsideration of the policy concerns articulated around a single-award cloud solution. Indeed, one might argue that such reconsideration is mandated by the fact that the CIA is considering this approach after having lived with a single cloud environment.

Title 10 section 2304a of the United States Code authorizes the department to award single or multiple task or delivery contracts and provides that the implementing regulations must, “establish a preference for awarding, to the maximum extent practicable, multiple task or delivery order contracts…and establish criteria for determining when award of multiple task or delivery order contracts would not be in the best interest of the federal government.”

We believe that the balance struck by the statute is appropriate. By allowing a modicum of flexibility to make a single award, it recognizes that agency missions may dictate a single award approach, but it articulates a preference for multiple awards, consistent with commercial practices.

The Coalition continues to believe that a single award approach is asynchronous to normal commercial/organizational buying practice and, because it represents a single channel of attack, raises concerns about potential risks to national security. Further, given the nature of cloud technology innovation and its rapid evolution, a virtually monopolistic award could lock the government market for cloud services.

In this regard, we are reminded of DoD CIO Dana Deasy’s testimony last year that, “in a cloud world, there is no such thing as one solution that’s going to solve for all.” Moreover, rather than expediting access to innovative technology, reduced competition ultimately could impede the government’s access to that technology

The CIA’s reported approach is an interesting development, for that agency and for DoD. Under these circumstances, and in light of the atmospherics surrounding the JEDI procurement, the Coalition believes now might be the time for DoD to institute a pause on the current JEDI acquisition strategy, to reach out to stakeholders in government and industry, and to assess the viability of its current path to enterprise cloud. Further, the department should consider reviewing the CIA’s new C2E vehicle to identify strategies that embrace continuous competition, transparency, and innovation.

To this end, the Coalition and its members stand ready to work with DoD on this important and vital effort.”


DoD Inspector General Slams Government Property Management on F-35 Fighter Program


EDITORS NOTE: For the details of acquisition law on title to, control and management of government owned property please see: https://www.smalltofeds.com/2009/04/small-business-government-contract.html


“Over the lifespan of the program, the F-35 JPO has not followed the mandated procedures used to manage government-furnished property, or GFP, and instead depended on Lockheed and its subcontractors to keep track of such equipment, stated a DoD IG report released Friday.

Lockheed has self-reported losing $271 million in government property, but the Pentagon has no way to validate that figure, the report noted. “


“The F-35 Joint Program Office has not adequately tracked government property leant or leased to Lockheed Martin and its subcontractors, an oversight that a new investigation by the Defense Department’s inspector general said could impact readiness.

Building the F-35 Joint Strike Fighter requires the use of government property such as materiel, special tooling like molds used to form the jet’s structure and unique test equipment.

As a result, the DoD does not know the actual value of the F‑35 property and does not have an independent record to verify the contractor‑valued government property of $2.1 billion for the F‑35 program,” the report said. “Without accurate records, the F‑35 Program officials have no visibility over the property and have no metrics to hold the prime contractor accountable for how it manages government property.

“The lack of asset visibility restricts the DoD’s ability to conduct the necessary checks and balances that ensure the prime contractor is managing and spending F‑35 Program funds in the government’s best interest and could impact the DoD’s ability to meet its operational readiness goals for the F‑35 aircraft.”

The report claims the program office did not:

  • Maintain a record of GFP known as an “accountable property system of record,” or APSR.
  • Award contracts with complete GFP lists.
  • Coordinate with the Defense Contract Management Agency on the contracting actions necessary to transition property from being “contractor acquired” to “government furnished.”

In short, “DoD officials failed to implement procedures … to account for and manage government property for more than 16 years” and, during that time, did not hold specific officials responsible for the resulting mismanagement, the report said.

As a result, the IG asserts that the JPO hasn’t been able to provide the level of oversight needed to establish that contractors aren’t misusing government property. 

Meanwhile, Defense Contract Management Agency officials indicated that confusion over the inspection procedures necessary to shift equipment from the “contractor-acquired property” label to the GFP designation led to delays in the ability to use that equipment — which could have a detrimental effect on readiness.

In a statement, the F-35 JPO responded that it was not surprised by the report’s findings and that efforts are underway to address the IG’s recommendations.

“The F-35 Program will continue to inventory, track and contractually account for all GFP associated with the F-35 system, and will diligently strive for opportunities to improve as highlighted by the DoD IG report,” the statement said. “By incorporating both the lessons learned from the DoD IG findings and the JPO’s own internal assessments, we expect to measurably enhance our management of GFP.”

The IG recommended a course of action that it advised should be put in place before the move to full-rate production later this year.

It suggests that the JPO should ensure current lists of GFP are complete and accurate before awarding contracts. It calls for appointing a “component property lead” and “accountable property officer” to ensure that happens and that a formal APSR is created. The IG also directs the program to create procedures that ensure the APSR is updated with the latest data.

The F-35 JPO, in its response, said that a component property lead will be named and will be responsible for ensuring all government property is properly tracked and maintained — and that all relevant financial statements are accounted for.

“Prior to the onset of full-rate production, the JPO has begun physical inventories at all F-35 sites housing GFP. This inventory is expected to run through the end of calendar year 2019,” it said. “Some corrective actions already determined are in process for Low Rate Initial Production (LRIP) Lot 12 and should be complete prior to [a full-rate production] decision. These actions will be worked in concert with the stand-up of the F-35 Program’s Accountable Property System of Record.”

The IG, in its report, said it was satisfied with the corrective actions proposed by the JPO, but that it would review their implementation at a later date.

Creating a record of government property will not be as simple as copying over Lockheed Martin’s record.

Lockheed estimates there are 3.45 million pieces of government property used for the F-35 program, and that equipment is worth an estimated $2.1 billion. However, its records are not written to the same standard that the Defense Department mandates.

For instance, federal regulations require that government records keep track of the contract number associated with a given piece of GFE, while Lockheed did not include that information. Other data recorded by the company — such as the name of a part or its quantity — were incomplete by Pentagon standards.”


Defense Innovation Board Has Ideas To Fix DOD’s Software Acquisition Woes



“Congress has given the Defense Innovation Board the gargantuan task of figuring out how to fix the ways in which DoD buys and develops software. The process is widely regarded as too slow, too expensive and reliant on long-outdated practices.

Nearly half of the draft metrics — the early workings of a report the board will deliver to Congress next April — have to do with speed.”


“But beyond those general presumptions, one of the first things the board has found as it’s set about the project is that DoD keeps very little data about its own software projects. And since that’s exactly the kind of information one would need to pinpoint where the problems lie, the board has made collecting it its first order of business.

“We don’t really have any good ways of measuring software within the Department of Defense, beyond numbers of lines of code,” said Dr. Richard Murray, a board member who is a professor at the California Institute of Technology. “And every time I see the chart that shows exponential number of lines of code, I go, ‘Why are you measuring that?’ It’s a great way to get lots of lines of code. And so, what should the metrics be? What should we be measuring?”

During a quarterly meeting on Tuesday, board members began deliberating over a dozen different potential ways to track software development. They were based in part on the belief that implementing those new measurements will incentivize different behaviors in the government and contractor workforces which write software for the military.

Nearly half of the draft metrics — the early workings of a report the board will deliver to Congress next April — have to do with speed.

They would, for instance, require DoD development programs to track the time it takes from the start of a project to when developers deliver “simplest useful functionality.” They would also require tracking the time to remedy newly-discovered security holes, and how long the military takes to actually deploy new software updates into an operational environment after they’ve been written and tested.

Those metrics would also include “target values” for the department. The board suggests commercial-off-the-shelf software should see at least some operational use within a month after the program is launched. But highly-customized software that also needs to run on customized hardware, including embedded systems, could shoot for targets of less than a year.

“And the key is those numbers have nothing to do with the current three-to-five years, which is typical for the Department of Defense,” said board member Michael McQuade, a former United Technologies executive. “Fundamentally, this is an environment where spending a long time getting the requirements right, then spending a long time getting someone to agree the requirements are right, then spending a long time getting someone to agree that contractually I can meet the requirements is simply the wrong metaphor for how we go about doing software.”

Other sets of metrics

Several other proposed metrics have to do with the quality of the software the military uses. How much automation are developers using to quickly verify their code is correctly-written? How many bugs are caught during the development process, rather than by end-users in the field? How often does DoD have access to the source code it’s paid contractors to develop so that it can inspect it, and roll back to earlier versions if necessary?

On the latter metric, the board said its review of DoD software programs has found that’s almost never the case.

“That’s because of the way we incent and contract with our vendors,” McQuade said. “And it’s our belief that you simply cannot own the delivery of code for a system – whether that’s a commercial system or whether that’s a customized or a real time embedded system – without the ability to go look at the code, to run metrics on the code itself.”

Another set of metrics are meant to improve DoD’s monitoring of the cost, schedule and performance of software programs, hopefully leading the department to make more accurate predictions of how long it will take to develop a particular capability once military officials decide it’s needed.

They would track questions such as the number of new software features developers are being asked to implement, what program management methodologies they’re using, how early and often they’re engaging with end-users, and how much of the program’s objective can be accomplished by re-using code that’s already written and owned by the government.

“One of the ideas would be to apply a machine learning model to these kids of statistics if we were collecting them,” Murray said. “That would give us predictions. If someone said ‘we want lots of features,’  that would  allow you to both estimate what a program would cost, in terms of number of programmers and other things, but also audit whether the program is on track or whether it’s headed south.”

A simpler way to track program management

Former Google CEO Eric Schmidt, the board’s chairman, proposed what he said would be a simpler way to track the effectiveness of program management within DoD.

He said the board should develop a list of the 100-or-so most common programming languages, software development environments and hardware platforms in use throughout the broader IT industry over the past five years. DoD components, he said, should be graded on how often they’re allowing their developers to use those tools rather than long-outdated ones.

“And that would suggest, for example, that anybody who’s using a VAX architecture would get a zero on that scale,” he said. “I think using a list of what’s been current in the last five years is easily audited. It’s easily inspected. If the last use of something outside the DoD was 20 years ago, these are factual things, so in a regulatory environment, you can survive challenges and you can tell people we’re going to grade you on that achievement. I can tell you that the majority of the teams that we’ve met with would not meet that criteria, but it’s a simple metric.”