The Department of Defense (DoD) should take definitive actions to streamline DoD’s acquisition process and remove barriers facing small business. According to the House Armed Services Committee (HASC) Panel on Business Challenges in the Defense Industry, implementing the recommendations cited in its report (Challenges to Doing Business with the Department of Defense) would “improve business to government relations and embrace emerging technologies.”
The panel spent six months examining the challenges businesses encounter when dealing with DoD: 1) regulatory challenges; 2) incentives and mandates used to support the defense industrial base; 3) structural challenges for sectors within the industrial base; 4) the effect of current fiscal environment on the industrial base and its contractors; and 5) opportunities to lower barriers to entry.
According to the panel’s report, “small and midsize businesses face particular challenges in contacting with DoD.” This has been especially true in recent years when DOD has not met its small business procurement goals, according to the report. Panel chairman Rep. Bill Shuster (R-PA) said throughout is study the panel heard a consistent theme: “navigating the defense acquisitions process is difficult for all businesses, but is particularly difficult for small businesses.”
As defense contracts have gotten larger, the Small Business Administration’s (SBA) $2 million per contract limit for surety bonds is insufficient to help small businesses, the report states. In addition, the panel asserts that DoD cannot track small business participation and the current culture does not promote involvement by small businesses in the acquisition process.
The panel contends that DoD’s acquisition workforce has a difficult time managing and executing programs while attempting to acquire and retain a “professionally certified and competent defense acquisition workforce.” Often, the report states, acquisition program managers promulgate a “risk averse” culture as they struggle to balance risks while managing cost, schedule, and performance.
DoD’s outsourcing of program management has left it short of critical skills and could “create a potential conflict of interest and blur the lines” between work that must be performed by federal employees and that which can be performed by private contractors, according to the report. The panel also contends that changing regulations, which add complexity, confusion, and poor execution, have produced difficult challenges for the acquisition workforce.
The panel cites challenges created by DoD’s lack of a “clearly articulated strategy that would provide a corporate vision of DoD’s future technology needs” and the diverse array of funding mechanisms for transitioning technology from the early stages of research and development across the “valley of death.”
The panel also identifies impediments to companies competing for defense contracts: too many regulations for defense contractors; bureaucratic rigidity; export control requirements; overworked and under resourced acquisition personnel and oversight agencies; and the audit backlog.
To address these challenges, the panel recommends a number of policy and process changes. The Secretary of Defense and the Service secretaries should develop a long-term strategy to maintain an effective industrial base and align future investment areas to DOD capability gaps. To encourage industry to allocate independent R&D resources and other longer-term investments, the panel would require the Secretary of Defense to improve communications between DOD and industry.
The Department should consider increasing small business procurement goals and ensure that small businesses actually perform work reserved for them. To improve the efficiency and effectiveness of the acquisition workforce, DoD should rebuild the workforce assess the current certification and training requirements, and improve the Defense Acquisition University curriculum, according to the report.
The report recommends that DOD simplify and streamline the acquisition process. Specifically, DoD should review current acquisition-related laws and regulations and identify those that should be repealed or changed, notify Congress if a DoD audit organization does not complete a peer review within a three-year period, and increase oversight of the Defense Contract Audit Agency (DCAA) and the Defense Contract Management Agency (DCMA) to reduce the audit backlog. The report also would direct DoD to asses the feasibility and advisability of reorganizing the Department of Defense to realign DCAA and DCMA to improve communications, audit performance, oversight, and management.”
The report’s recommendations are expected to be included in the HASC markup of the FY2013 Defense Authorization bill.