Defense Department file photo

Contractors See Some Goodies in Big Defense Bill

Industry cheers curbs on lowest-price awards, small business reforms.

The grab-bag $610 billion defense policy bill now at the halfway point in its journey through Congress has the contracting community upbeat about some procurement and small business reforms while wary of debate about the extent to which defense contractors will be subject to President Obama’s Fair Pay Safe Workplaces executive order.

version of the fiscal 2017 National Defense Authorization Act passed the House May 19 by a 277-147 vote, while a slightly different version cleared the Senate Armed Services Committee the same day 23-3.

“Building on last year’s initial set of improvements to the acquisition system, the FY17 NDAA makes foundational reforms intended to help get better technology into the hands of the warfighter faster and more efficiently,” said a summary by House Chairman Mac Thornberry, R-Texas. “It does so by requiring weapon systems to be designed with open architectures that can easily be upgraded as technology and threats evolve. It also provides flexible funding to experiment with new technology, while simplifying the process and expanding the avenues of competition for suppliers of all sizes.”

The House bill would give the Defense secretary more tools to manage and approve cost, schedule, and technological risk for major acquisition programs, he added, and it would also set up-front conditions for cost and schedule and then hold the military services accountable for meeting them, in part by giving Congress time during the procurement schedule to assure that appropriate transparency and enforcement mechanisms are in place.

The bill also establishes an “Acquisition Scorecard” that pulls exclusively from existing reports and documents and does not impose new work on Defense officials while focusing on intellectual rights of small and large companies.

 “Thornberry has been extremely open in the process for developing the acquisition agility section, and we welcome that,” said Roger Jordan, vice president for government relations at the Professional Services Council. “The requirement of moving toward a modular open system was pretty rigid in the original draft but is now much more flexible to the department.”

Also pleasing to large contractors, Jordan added, is language in both the House and Senate bills that encourages Defense to avoid, to the maximum extent practicable, relying on “lowest price, technically acceptable” source selection criteria for certain types of services contracts, including information technology services, systems engineering and technical assistance services. Lowest price, technically acceptable criteria would be used “only in situations where [DoD] can clearly define performance requirements and determine that technical proposals of offerors other than the lowest bidder would result in no, or minimal, benefit to the department,” PSC said in a statement praising lawmakers.

“The legislative language aligns with recent DOD internal guidance which, if followed, will avoid an overreliance on [lowest price, technically acceptable criteria] that hinders DOD’s ability to maintain a best-in-class competitive edge; inhibits DOD’s flexibility in making valuable tradeoffs among cost, innovation, and capabilities; and risks higher long-term costs due to mission failures and contract rework actions,” said PSC President and CEO David Berteau.

More contentious is language in both versions that would relieve Defense contractors from applying acquisition regulations promulgated pursuant to President Obama’s 2014 Fair Pay and Safe Workplaces Executive Order (13673), or any successor executive order. Congress would confine compliance only to contractors who have been suspended or disbarred because of past federal labor law violations. Without this language, Jordan said, the executive order “puts a pretty significant burden on DOD and industry for companies already abiding by labor laws, and the reporting requirements to capture alleged violations are pretty broad.”

The White House, in its May 16 statement of administration policy threatening to veto the bill, objected to that language exempting DOD from the order. “These safeguards give federal contracting officers the information they need to assess a contractor's record of integrity and assist contractors with significant labor violations in improving their labor law compliance,” the White House said. “In doing so, these protections help ensure that law-abiding contractors do not have to compete with those who offer lower bids based on savings from skirting the law.”

Good Jobs Nation, an advocacy group for low-income workers, noted that the same day the House and Senate panel approved their language on Fair Pay Safe Workplaces, the National Labor Relations Board issued a complaint against one defense contractor for not following the order.

“The President’s Fair Pay and Safe Workplaces executive order ensures that companies that receive taxpayer dollars are held to the highest legal and ethical standards,” said Joseph Geevarghese, an attorney and director of Good Jobs Nation. “America’s taxpayers will not tolerate giving our tax-dollars to corporations that trample the rights of low-wage workers,” he added.

The small-business contractor provisions in the House version include language to modernize the Small Business Act for consistency, strengthen small business advocates within DoD and the Small Business Administration, boost opportunities for subcontracting, improve coordination between SBA and Defense Department mentor-protégé programs, and promote integrity and accountability in veterans contracting programs.

“The contracting reforms included in this year’s NDAA will provide new and improved opportunities for America’s 28 million small businesses to compete for defense contracts so that we can get the best possible products in the hands of our warfighters and make sure the taxpayers get the most bang for their buck,” said House Small Business Committee Chairman Steve Chabot, R-Ohio.

The bill also includes bipartisan-backed language long-sought by conservatives to “Audit the Pentagon,” or permit lawmakers a closer look at the Defense Department’s struggle to achieve financial clean books by 2017. “After 25 years of non-compliance with the law, I am glad the DOD is finally making progress,” said sponsor Rep. Michael Burgess, R-Texas. “However, we must continue to put pressure on the Pentagon to comply with federal law in working towards a full audit… The Pentagon must be held to the same level of accountability that other public sector agencies are held to when it comes to the spending of taxpayer dollars.”