Past Performance Issues Stir Debate at Small Business Conference

By Joshua A. Kutner

The U.S. military services base many of their contracting decisions on the past performance of competing vendors. The bigger, more established companies that have fulfilled many contract obligations for the services most likely have an extensive track record that the Defense Department can rely upon. But what about those smaller companies that are just starting out, or those who are just starting to recognize the business opportunities available to them in the federal sector?

Many of these smaller entities have voiced concerns that, since they do not have a past performance record with the Pentagon, they are overlooked when it comes time to award a contract. But Army officials insist there are plenty of business opportunities for small, small disadvantaged, minority- and woman-owned businesses. To resolve such issues and explore prospective partnerships, Army and industry representative gathered at the 5th annual Army Small Business Conference, in McLean, Va. The conference is co-sponsored by NDIA and the Army Materiel Command (AMC).

Gen. John G. Coburn, AMC commanding general, called the past performance issue a “real-world problem.”

“If you think everything is right,” said Coburn, “it’s not necessarily so.” Coburn recognized those companies that do not have a past performance record. “Never had past performance? How do you get one?”

Some officials believe that a business’s performance in the commercial sector can be indicative of its track record. “Some say go work the commercial sector,” said Coburn, whose agency is the Army’s top purchasing agent with $19.2 billion in annual sales. That’s equivalent to $53 million each day.

One industry representative, at the conference, wondered why after receiving multiple contract awards, his company had to compete for specific task orders. This is because of changes to defense federal acquisition regulations, said an official. If a contract or multiple contracts are awarded to a business, sometimes the workload may be too burdensome for smaller companies. Task orders are then competed and awarded to a company that can get the work done, said the official. “Past performance will simplify the process in getting task orders,” he asserted.

Another issue in which small businesses struggle is competing against incumbent large companies for follow-on or next-phase contracts. This means that if the Defense Department has been satisfied with a current contractor’s work on a particular system, it is more difficult for another contractor to win future contracts for that system. Competitors “have to work extra hard to impress and prove [their] capability” against incumbent contractors, said Edward G. Elgart, acting deputy assistant secretary of the Army for procurement.

There will be plenty of new business opportunities at AMC as a result of upcoming work in the so-called “recapitalization” of old equipment, said Elgart.

Elgart told the conference that the Army “for the first time, [has] a clear definition of recapitalization,” which involves modernizing assets and legacy systems to sustain capabilities. This entails extending service life; reducing operating and support costs; improving system reliability, maintainability and efficiency; enhancing capability, and reducing footprint on the battlefield, said Elgart. The Army has 21 initial recapitalization systems. The top three, respectively, are the M1A1/A2 Abrams tank, the AH-64AD Apache helicopters and the UH-60 Blackhawk helicopters.

Topics: Contracting, Defense Department, Defense Contracting

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