Harnessing Contracting Innovations for a Stronger Military

Working to slough off the culture of archaic contracting processes, certain offices within the Defense Department are implementing innovative procurement processes, especially for information technology (IT) products and services. The Defense Information Systems Agency (DISA), which is responsible for building, operating and securing the DOD Information Network (DODIN) for U.S. forces, has taken some proactive measures to introduce improvements into its contracting processes, according to Rear Adm. Nancy Norton, USN, vice director, DISA.

One example is the Systems Engineering, Technology and Innovation (SETI) contract program, which is a vehicle for small businesses, Adm. Norton said. DISA issued the request for proposals (RFPs) in February for procurement of engineering support/services. The new contract approach is designed to deliver multiple engineering service contracts in a timely, agile manner, enabling DISA to move toward an efficient approach in procurement. The contracts aim to provide innovation throughout the engineering lifecycle in support of the continuous and recurring short and long-term needs of DISA and its mission partners.
 
“SETI’s focus is on fostering, developing and encouraging innovation with the goal to reduce costs, timelines and provide innovative solutions to deliver emerging capabilities as well as reliable and consistent services to our warfighters,” according to DISA.

Overall, DISA is focusing on the innovative procurement of IT in four broad areas: emerging technology initiatives; strategic sourcing; process streamlining; and specialized training. “DISA will continue to leverage strategic sourcing and better buying power through deliberate and proactive portfolio management and contract consolidation,” she said.

The admiral presented her experiences during a panel presentation at the MILCOM 2017 conference in Baltimore on October 24. The panel, moderated by Thomas Michelli, acting principal deputy, DOD chief information officer, also included Thomas Greenfield, deputy director, Communication and Networks Directorate and Victor Gavin, deputy assistant secretary of the Navy for Command, Control, Communications, Computers, Intelligence, Information Operations and Space.

Adm. Norton observed that Secretary of Defense Jim Mattis’ lines of efforts are to restore military readiness while building a more lethal force; strengthen alliances and attract new partners; and bring business reforms to the DOD. DISA’s mission as a combat support agency aligns well with these efforts, she said, and its contracting processes need to be effective. “In order to contract effectively for IT products and services, there must be a paradigm shift in acquisition to introduce and implement innovation contracting methodologies,” she stated.

In many cases, traditional DOD contracting is slow, archaic and rigid, while IT is fast moving, state of the art and agile. Contracting regulations are vast and unduly burdensome. In addition, legacy systems are hamstringing their ability to upgrade along with budget constraints and technology. She is fighting to get rid of legacy systems faster, and acknowledged that DISA is spending more time talking with industry before they put out contracts. “We need to partner with you, the industry, more than ever,” Adm. Norton said. “And we can’t get to reform, innovation or even process and requirements changes without your input.”

Michelli shared how the DOD is moving toward a new contracting culture and that Secretary Mattis is encouraging “better, faster, cheaper ways of contracting” to bring industry capabilities to the warfighter. Mattis has said that the department needs industry to retain a technical and tactical advantage. Under the secretary’s charge, DOD is “moving very, very aggressively to reform our entire acquisition enterprise.”

Greenfield pointed out the U.S. is a networked force that depends on network overmatch going into a fight. In addition, communication is one way the U.S. strengthens alliances, such as with the Link 16 network used by more than 40 allied partners. Because of the pace of change in IT, “business reform is almost a must do,” for contracting, he said. Ellen Lord, the new undersecretary of defense for acquisition, technology and logistics, has established a goal to cut contract delivery times by 50 percent and is a big supporter of OTAs. She also thinks that DOD is too risk adverse in its culture, and is encouraging the mindset to “fail early” instead of not taking any risk.

Greenfield recommended contracting for technology in smaller increments or as iterative programs or technology updates. IT lends itself to that kind of contracting, and it lowers risk for the military, he said. Greenfield echoed Gen. Crawford’s call for the industry to develop technologies that hide the detectability of electronic systems. “As far as our network, the adversary has studied the way we fight and no longer will give the U.S. military the easy wins.”

In working with industry, Greenfield wondered if there were successful business models under which companies could share their technology with partners, such as through a licensing model. “Or do you actually have to hold all technologies close to the chest?” he asked.

Gavin, who is responsible for a contracting portfolio of all the networks inside the Department of the Navy, explained how traditional contracting vehicles like the fixed cost contracts can be very inefficient. For example, in contracting for computer memory, the cost has decreased over time, and as a buyer under that type of contract, users are paying more for storage under the fixed cost stipulations. The same thing is true for cloud services, he said. The price has decreased, but fixed price contracts would be paying above market prices.

Contracting has changed from a product-based focus to a service-based focus, Gavin observed. “You are hearing infrastructure as a service, platform as a service, software as a service and cloud services.” However, military contractors need additional education on how to contract for IT needs. “Our current processes do not account for that,” he said. “There is still a lot left to be done in our contracting processes and procedures to better match industry capabilities. And we need to be faster.”

Although DISA is beginning to employ OTA contracts, the Navy has few such contracts, Gavin said. He does see them as an opportunity that would allow technology programs to quickly to go from pilot stage to production in 300 days. He cautioned that under OTA vehicles, organizations need to understand the technology they are buying. “We need massive education before we are effective in using those type of contracts,” he indicated.

He also noted that in contracting for the traditional military base, industry partners would wait for the DOD to act. But in the IT sector, the department is not the driver. “We are followers of that technology,” Gavin stated. “We don’t control it and it’s a huge challenge” compared to contracting for the traditional industrial base. In addition, Gavin pointed out that the IT space is an international space, and the companies involved are not U.S. companies, so the contracting relationships “are very different."