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DoD issues guidance to improve acquisition competition

Thursday, September 11th, 2014

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Moving to reverse what he calls a “declining competition rate,” the Department of Defense (DoD) acquisition chief issued strong guidance last month to the Military Services and DoD components to improve the defense acquisition competitive environment.

In a memo to the DoD acquisition community, Under Secretary of Defense (Acq) Frank Kendall said that DoD has not met its competition goals in the last four years. Calling competition “the most valuable means we have to motivate industry to deliver effective and efficient solutions for the Department of Defense,” Kendal stressed that a competitive environment spurs innovation, improves quality and performance, and lowers costs.

He emphasized that with the limitation on resources, DoD has to maximize the use of competition. “Every dollar saved through competition benefits the Warfighter and the taxpayers,” he said. Kendall’s memo described actions DoD must take to provide a more competitive environment.

The Business Senior Integration Group (chaired by Kendall to oversee the Better Buying Power Initiative) will assess the progress on efforts to expand and improve competition at its quarterly meetings. The group will determine what actions have been successful and will also deploy “business intelligence tools” to identify competition opportunities.

Contracting officers will ask for feedback from companies that expressed interest in a competitive solicitation, but did not submit an offer. This will provide acquisition leaders with important information to enable them to identify possible barriers to competition.

Contracting officers will also be required to expand the use of Requests for Information (RFI) or Sources Sought (SS) notices before issuing non-competitive acquisition solicitations. This will assist managers to better maximize the use of competitive procedures.

Kendall announced the issuing of “Guidelines for Creating and Maintaining a Competitive Environment for Supplies and Services in the Department of Defense.” These guideline will complement the principles of the Better Buying Power Initiative: 1) think rather than default to the “school solution,” 2) attract and train acquisition professionals; stress acquisition fundamentals; and streamline decisionmaking. Kendal said the techniques and examples in the guidelines should be considered in designing acquisition strategies that create and maintain a competitive environment throughout the product or service lifecycle.

DoD will also publish a “DoD Competition Handbook, A Practical Guide for Program Managers” that updates the Defense Systems Management College handbook (Establishing Competitive Production Sources), which is 30 years old. This updated handbook will include new chapters on technology maturation and risk reduction, engineering, manufacturing, and development, and operations and support.

In addition to these actions, Kendall said DoD will also amend procedures for preparing non-competitive Justification and Approval (J&A) documents. Current policy does not effectively track the use of possible plans to remove or overcome barriers to competition in follow-on acquisitions of a product or service, according to Kendall’s memo. To capture these missed competition opportunities, the previous J&A document for a product or service will be required to be part of the approval package for any subsequent acquisition.  

U.S. military operations in in Iraq costing $7.5 million a day

Wednesday, September 3rd, 2014

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The cost of running U.S. military operations in Iraq has been averaging $7.5 million per day since mid-June, according to the Department of Defense (DoD).

Pentagon spokesperson Rear Admiral John Kirby told reporters last week that the costs of DoD’s humanitarian and military operations in Iraq have fluctuated daily since beginning on June 16th. Daily costs did not start out at $7.5 million per day, he stressed. “As our OPTEMO and as our activities have intensified, so too has the cost,” he said.

But, the latest figures DoD has compiled show that through those costs have averaged $7.5 million per day through August 26. That would mean that DoD has already spent over $500 million in Iraq.

Kirby said these costs are being funded from current Overseas Contingency Operations (OCO) funding. Congress provided $85.2 billion for OCO in FY2014. Kirby said OCO spending in FY2014 is “well within the limits that we need for 2014.”

Kirby cautioned that the situation in Iraq is still fluid and DoD and the State Department are continuing to plan and review options Costs will change as the level of operations, especially air strikes change. There have been 110 air strikes in Iraq since they began, Kirby said.

President recommends 1% pay raise in 2015 for federal civilian personnel

Tuesday, September 2nd, 2014

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President Obama last week notified Congress that he has determined that federal civilian employees should receive a 1 percent across-the-board pay raise in 2015. In March, the president included a 1 percent civilian pay raise in his FY2015 budget request.

The president also kept locality pay at the 2014 level.

President Obama acknowledged the sacrifices already made by federal civilian employees, such as a three-year pay freeze through January 2014. However, he cited the need to keep the country on a “sustainable fiscal course” as the reason for limiting the pay raise to 1 percent and freezing locality pay.

Each year the president is required under Title 5, section 5304a, U.S.C. to present an alternative pay plan for across-the-board pay and locality pay adjustments. Unless Congress acts the president’s alternative proposal will automatically go into effect.

To date, Congress has expressed general support for a 1% civilian pay raise.  The House-passed FY2015 Financial Services and General Government Appropriations bill was silent on the pay raise. This indicates passive support for the president’s 1% pay raise proposal in that it does not reject it. The Senate Appropriations Committee, in its approval of the FY2015 DoD Appropriations bill, also includes funds for a 1 percent civilian pay raise. No other appropriations committees’ action to date would prohibit a 1% civilian pay raise.

The military pay raise for 2015 will be at least 1 percent, as the president proposed in the FY2015 budget request. The House-passed FY2015 Defense Authorization bill provides a 1.8 percent military pay raise, while the Senate Armed Services Committee’s (SASC) approved bill includes a 1 percent military pay raise

Marine Corps changes special duty assignment pay rates

Friday, August 29th, 2014

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The Marine Corps has revised special duty assignment pay rates for FY2015. Starting on October 1, 2014 most Marines on special duty will receive lower rates than have been paid previously.

The new rates will apply to billets such as recruiters, drill instructors, combat instructors, and embassy security guards. However, special pays for Marines who began serving in special duty assignments before October 1 will not be affected.

The change, which will save the Marine Corps $35 million over five years, was made in response to ongoing budget limitations.

The Marine Corps (as well as the other services) have had to take a hard look at all programs, including some pay items, to meet budgetary constraints. “We spent a significant amount of time evaluating all relevant factors before making a final decision on the changes,” Marine Corps compensation chief 1st Lt. John Krahling said in a news release.

He pointed out that most of Military Pay cannot be changed because it is mandated by law. Only four percent of the Military Personnel Pay account, such as bonuses and special pays, can be adjusted to achieve cost savings.

Krahling emphasized that the Marine Corps is trying to maintain the integrity of the special pay program. “Every billet and assignment that receives special duty will continue to do so,” he said.

CBO projects deficit to decline to $506 billion in FY2014

Wednesday, August 27th, 2014

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The baseline federal budget deficit for FY2014 is expected to be $506 billion, according to the Congressional Budget Office’s (CBO) latest report on the budget and economic outlook. CBO baseline estimates assume a continuation of current law for both expenditures and revenue.

This estimate is $14 billion more than CBO’s April estimate ($492 billion), but if realized would mark an improvement of over $170 billion from the 2013 deficit ($680 billion).

The slight increase in the projected FY2014 deficit reflects lower estimated revenue (-$24 billion), driven by a decline in estimated corporate income taxes, which will more than offset a projected $11 billion decline in expenditures.

For the period FY2015 to 2024, CBO expects the baseline deficit to be $422 billion lower than projected in April.  The deficit will drop to $469 billion in FY2015 before beginning to increase again due to rising mandatory spending and growing interest payments on the debt, according to the CBO report.  By FY2022, CBO projects the deficit will exceed $900 billion, unless changes are made to current law. 

CBO expects the deficit as a percentage of Gross Domestic Product (GDP) to drop to 2.9 percent, significantly lower than the 4.1 percent recorded in 2013. The deficit share of GDP will remain at or below 3 percent until 2019 according to CBO. For the period 2020-2020, the measure will approach 4 percent because deficits will begin to grow at a much faster rate than GDP, CBO reports.

But, while the deficit as a share of GDP will stay under 4 percent through 2024, CBO expresses concern about the growing size of the total federal debt. CBO estimates that federal debt held by the public will be 74 percent of GDP by the end of FY2014 and could grow to 77 percent by 2024. This is over twice that recorded in 2007 and “higher than in any year since 1950.”

CBO worries that a growing national debt will have “negative consequences” on federal spending (increased interest payments) and economic growth, and would restrain the flexibility policymakers need to be able to deal with future challenges and crises.

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