May 19, 2020 | International, Aerospace, Naval, Land, C4ISR, Security
By: Joe Gould
WASHINGTON ― Four defense industry trade associations “strongly oppose" a handful of Pentagon-backed procurement reform proposals that they say would harm the defense industrial base, and they're asking Congress to reject them.
Two of the proposals aim at controversial pricing practices used by TransDigm by requiring contractors to submit cost information for commercial items and by requiring contracting officers to conduct a commercial item determination for every procurement. Others would set a preference for performance-based contract payments and authorize the Defense Department to release or disclose detailed manufacturing or process data.
The May 6 protest letter came from the Acquisition Reform Working Group — made up of the National Defense Industrial Association, American Council of Engineering Companies, the Computing Technology Industry Association and the Information Technology Industry Council — to the the House and Senate armed services committees. It comes as the panels were readying their drafts of the 2021 National Defense Authorization Act.
The Pentagon has worked to monitor its network of suppliers from the economic shocks associated with the coronavirus pandemic and to protect suppliers by using emergency funding from Congress to speed payments and improve cash flow along the supply chain.
The trade groups noted they represent “thousands of small, mid-sized, and large companies in addition to hundreds of thousands of employees that provide goods, services, and personnel to the Department of Defense,” and said the four proposals a “could have significant consequences for the defense industrial base.”
Congress focused ire at TransDigm last year after the Defense Department's Inspector General found for $26.2 million in parts the military bought from TransDigm, it earned $16.1 million in excess profit. Transdigm was the only manufacturer of the majority of the parts, which let it set the market prices even for competitively awarded parts.
Though DoD has argued its contractors need new latitude to make commercial item determinations and obtain cost or pricing information to prevent the excessive pricing TransDigm was accused of, the trade groups argue the TransDigm's actions weren't facilitated by an inappropriate reliance on improper commercial item determinations, or insufficient access to pricing data.
“As illustrated by the TransDigm Group, Inc's pricing practices, generally once a conversion to a commercial product or commercial service is made, it is common for prices to increase and subsequent contracting officers find it difficult to obtain data necessary to determine price reasonableness and negotiate fair and reasonable prices on behalf of the taxpayer,” the department said in its proposal.
Another proposal would require a contractor to submit uncertified cost information for commercial item proposals or contracts less than $2 million. The idea behind the reform is DoD wants to be able to get more insight into the costs of sole-source items and put itself in a more favorable position to negotiate with sole-source companies.
Congressional hearings on TransDigm's excessive pricing showed Defense leaders need the authority to obtain the data “to the extent necessary to determine price reasonableness is paramount in ensuring that such excessive pricing practices are curtailed.”
But the trade groups argue that levying the new regulations would “add a significant barrier to commercial item acquisition, reduce information sharing, further burden the system, and impede—rather than enable—the delivery of capabilities to the warfighter at the ‘speed of relevance'—all with little to no added protection for the government or the taxpayer."
The trade associations also opposed DoD's legislation to set a preference for performance-based contract payments. The groups said a DoD proposal to “recouple” total performance-based payments to total cost incurred would reverse Congress's previous work to emphasize performance over cost and contradict a spate of defense acquisitions rules.
DoD's argument is that it shouldn't be reimbursing a contractor more than its actual costs, or it “would result in negative levels of contractor investment,” and create a disincentive for contractors to deliver.
Another disputed proposal would let DoD release detailed manufacturing or process data, or DPMD, pertaining to privately funded commercial or noncommercial items outside of the government to third parties seeking to compete against the original equipment manufacturer. It's the latest episode in a running game of tug-of-war between industry and DoD over intellectual property.
While Congress has in recent years prodded DoD to set intellectual property strategies early in acquisition programs and negotiate for IP rights on a case-by-case basis, the trade groups argue the proposal would give DoD “an automatic default authority” and “eliminate the possibility of a negotiated solution.”
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October 5, 2018 | International, Aerospace, Naval, Land, C4ISR, Security
NAVY Asturian-Consigli JV LLC,* Virginia Beach, Virginia (N40085-18-D-1124); Edifice LLC, doing business as Edifice Solutions,* Beltsville, Maryland (N4008-18-D-1125); ED DesignBuild LLC,* Germantown, Maryland (N40085-18-D-1126); HCG-JCG JV,* Escondido, California (N40085-18-D-1127); and Military and Federal Construction Co. Inc.,* Jacksonville, North Carolina (N40085-18-D-1128), were each awarded a firm-fixed-price, indefinite-delivery/indefinite-quantity multiple award contract for general construction projects in the Hampton Roads area of Virginia. The maximum dollar value for all five contracts combined is $249,000,000. The work to be performed provides for, but is not limited to, new construction, renovation, alteration, and repairs for general construction projects. Types of facilities include, but are not limited to warehouses, training facilities, personnel support and service facilities, housing facilities, etc. Asturian-Consigli JV LLC is awarded initial task order at $2,947,636 for the foundation and crawl space repairs at the advanced electronic guidance and instrumentation system facility (V-10) on Wallops Island, Accomack County, Virginia. Work for this task order is expected to be completed by December 2019. All work on this contract will be performed in the Naval Facilities Engineering Command, Mid-Atlantic Hampton Roads area, Virginia. The term of the contract is not to exceed 60 months, with an expected completion date of September 2023. Fiscal 2018 operations and maintenance, (Navy) contract funds in the amount of $2,967,636 are obligated on this award and expired at the end of fiscal 2018. Future task orders will be primarily funded by operation and maintenance, (Navy) and military construction. This contract was competitively procured via the Navy Electronic Commerce Online website, with 19 proposals received. These five contractors may compete for task orders under the terms and conditions of the awarded contract. The Naval Facilities Engineering Command, Mid-Atlantic, Norfolk, Virginia, is the contracting activity. (Awarded Sept. 29, 2018) MacDonald-Bedford | MBP JV,* Alameda, California, was awarded a maximum amount $98,000,000 indefinite-delivery/indefinite-quantity contract to provide construction management services in support of the Guam Defense Policy Review Initiative (DPRI) Program. The work to be performed will support the existing Naval Facilities Engineering Command (NAVFAC) workforce capabilities and provide increased capability to support construction projects and associated efforts undertaken by NAVFAC Pacific. The outcome to be achieved is the hiring of temporary supplemental construction management and engineering technician services. No task orders are being issued at this time. Work will be performed primarily in the Marianas region of operation (to include the following islands but not limited to: Guam, Tinian, Pagan, Palau, Chuuk, Saipan, and Northern Mariana Islands) (80 percent); Australia (10 percent); and Hawaii (10 percent), and is expected to be completed by September 2023. Fiscal 2018 operations and maintenance (Navy) contract funds in the amount of $10,000 are obligated on this award and expired at the end of fiscal 2018. Future task orders will be primarily funded by operation and maintenance (Navy). This contract was competitively procured via the Navy Electronic Commerce Online website, with six proposals received. The Naval Facilities Engineering Command, Pacific, Pearl Harbor, Hawaii, is the contracting activity (N62742-18-D-1171). (Awarded Sept. 29, 2018) Davcon Inc.,* Virginia Beach, Virginia (N40085-18-D-1149); Delaware Corp.,* Topping, Virginia (N4008-18-D-1150); Doyon Project Services,* Federal Way, Washington (N40085-18-D-1151); Rand Enterprises,* Newport News, Virginia (N40085-18-D-1152); and Within Interior Design Inc., doing business as Tazewell Contracting,* Norfolk, Virginia (N40085-18-D-1153), were each awarded a firm-fixed-price, indefinite-delivery/indefinite-quantity multiple award contract for heating, ventilating and air conditioning construction projects in the Hampton Roads area of Virginia. The maximum dollar value for all five contracts combined is $95,000,000. The work to be performed will primarily consist of new construction, demolition, repair, alteration, and renovation of heating, ventilating and air conditioning equipment, systems and infrastructure to include system components such as fans, motors, ductwork, controls, pumps, piping, supports, and insulation. Types of facilities on which work will be performed include administrative/industrial buildings, maintenance shops, warehouses, hangars, communications facilities, personnel support/instructional buildings, recreational facilities, lodging/dormitory facilities, medical clinics, training areas, indoor ranges, etc. Davcon Inc. is being awarded initial task order at $148,400 for the replacement of a chiller at Building 3889 at Joint Expeditionary Base Little Creek-Fort Story, Virginia Beach, Virginia. Work for this task order is expected to be completed by February 2019. All work on this contract will be performed in the Naval Facilities Engineering Command, Mid-Atlantic Hampton Roads area, Virginia. The term of the contract is not to exceed 60 months, with an expected completion date of September 2023. Fiscal 2018 operations and maintenance (Navy) contract funds in the amount of $168,400 are obligated on this award and expired at the end of the fiscal 2018. Future task orders will be primarily funded by operations and maintenance (Navy). This contract was competitively procured via the Navy Electronic Commerce Online website, with 11 proposals received. These five contractors may compete for task orders under the terms and conditions of the awarded contract. The Naval Facilities Engineering Command, Mid-Atlantic, Norfolk, Virginia, is the contracting activity. (Awarded Sept. 29, 2018) A&H-Ambica JV LLC,* Livonia, Michigan (N40085-18-D-8733); Building Associates Inc.,* Bloomington, Indiana (N4008-18-D-8734); Federal Construction Group Inc.,* San Diego, California (N40085-18-D-8735); Krempp Construction Inc., Jasper, Indiana (N40085-18-D-8736); Midnight Sun Global Services LLC,* South Bend, Indiana (N40085-18-D-8737); and SEI Group Inc., Huntsville, Alabama (N40085-18-D-8738), were each awarded a firm-fixed-price, indefinite-delivery/indefinite-quantity multiple award contract for general construction projects in Crane, Indiana. The maximum dollar value for all six contracts combined is $95,000,000. The work to be performed provides for, but is not limited to, new construction, demolition, repair, alteration, and renovation of buildings, systems and infrastructure and may include civil, structural, mechanical, electrical, fire protection, and communication systems. Types of facilities include administrative, industrial, maintenance, warehouses, communications, personnel support, recreation, lodging, medical, training, ranges, roads, etc., in support of the Naval Facilities Engineering Command, Public Works Department Crane, Indiana. A&H-Ambica JV LLC is awarded initial task order at $1,876,276 for the renovation of Building 2724 Break Room Renovation at Public Works Department Crane, Indiana. Work for this task order is expected to be completed by October 2019. All work on this contract will be performed in the Naval Facilities Engineering Command, Mid-Atlantic Public Works Department Crane, Indiana area of responsibility. The term of the contract is not to exceed 60 months, with an expected completion date of September 2023. Fiscal 2018 Navy working capital contract funds in the amount of $1,901,276 are obligated on this award and expired at the end of fiscal 2018. Future task orders will be primarily funded by operations and maintenance (Navy); and military construction. This contract was competitively procured via the Navy Electronic Commerce Online website, with 19 proposals received. These six contractors may compete for task orders under the terms and conditions of the awarded contract. The Naval Facilities Engineering Command, Mid-Atlantic, Norfolk, Virginia, is the contracting activity. (Awarded Sept. 29, 2018) DEFENSE LOGISTICS AGENCY BP Products North America Inc., Chicago, Illinois, has been awarded a maximum $47,075,766 fixed-price with economic price adjustment contract for aviation fuel. This was a competitive acquisition with 19 offers received. This is a one-year base contract with no option periods. Location of performance is Singapore, with a Dec. 31, 2019, performance completion date. Using military services are Army, Navy, and Air Force. Type of appropriation is fiscal 2019 defense working capital funds. The contracting agency is Defense Logistics Agency Energy, Fort Belvoir, Virginia (SPE602-19-D-0452). Olgoonik Technical Services LLC, Anchorage, Alaska, has been awarded a maximum $11,579,403 modification (P00027) exercising the third one-year option period of a one-year base contract (SP3300-16-C-5001) with four one-year option periods for warehousing and distribution support services. This is a fixed-price-incentive firm contract with cost-reimbursement line items. The modification brings the total cumulative face value of the contract to $40,706,113 from $29,126,709. Locations of performance are Alaska and California, with an Oct. 15, 2019, performance completion date. Using customer is Defense Logistics Agency. Type of appropriation is fiscal 2019 defense working capital funds. The contracting activity is the Defense Logistics Agency Distribution, New Cumberland, Pennsylvania. AIR FORCE Onvoi LLC, De Funiak Springs, Florida, has been awarded a $39,951,581 contract for base operating services at March Air Reserve Base, California. This contract provides for all personnel, supervision, equipment, tools, materials, supplies, test equipment, and other items and services necessary to accomplish supply, vehicle operations and maintenance, traffic management, real property maintenance, fuels management, and airfield management. Work will be performed at March ARB, California, and is expected to be completed by Oct. 31, 2023. This award is the result of a competitive acquisition and 10 offers were received. Fiscal 2019 operations and maintenance funds in the amount of $8,106,974 are being obligated at the time of award. Air Force Reserve Command Robins Air Force Base, Georgia, is the contracting activity (FA4664-19-C-0001). CORRECTION: The Sept. 28, 2018, announcement of a $1,051,818,540 cost-plus-fixed-fee contract award to The Aerospace Corp., El Segundo, California (FA8802-19-C-0001), for Federally Funded Research and Development Center support, was not for a contract modification. All other information in the announcement is correct. ARMY Oshkosh Defense LLC, Oshkosh, Wisconsin, was awarded a $16,038,473 modification (P00151) to contract W56HZV-15-C-0095 for spares acquisition integrated with production. Work will be performed in Oshkosh, Wisconsin, with an estimated completion date of Dec. 31, 2018. Fiscal 2018 procurement Marine Corps; and other procurement, Army funds in the amount of $16,038,473 were obligated at the time of the award. U.S. Army Contracting Command, Warren, Michigan, is the contracting activity. *Small Business https://dod.defense.gov/News/Contracts/Contract-View/Article/1654951/source/GovDelivery/