It Is Not All Bad News in the Defense Acquisition World

By Don Geiss and Tony Melita

There are many reasons why defense acquisition has received a bad rap and why lawmakers and Pentagon leaders have been trying to reform the acquisition process for more than 30 years.

The problems are well known. It takes too long to develop and field new technology within the constraints of federal acquisition regulations.

There are cases, however, when defense acquisitions can work effectively.

Examples of successful defense acquisitions can be found in the Defense Department’s Ordnance Technology Consortium, known as DOTC. It was chartered in 2002 by the undersecretary of defense for acquisition, technology and logistics as a procurement reform initiative that is designed to preserve and advance the U.S. ordnance technology base. 

DOTC facilitates collaboration, technology development and prototyping among U.S. industry, academia and the Defense Department’s ordnance community. This arrangement is legally supported by Section 845 prototype “other transaction agreement.” OTA is administered by the Army at Picatinny Arsenal, N.J., through a government-staffed DOTC program office.  

Representatives from industry and academia participate through the National Warheads and Energetics Consortium, which currently has more than 220 members who individually, or in teaming arrangements, collaborate with government and then compete for technology development and prototyping awards through the OTA. 

The OTA requires that all awards include a one-third cost share by industry or a significant contribution by a non-traditional defense contractor. This requirement motivates traditional defense contractors to seek innovative ideas from non-traditional firms, which are defined as those having less than $500,000 in federal acquisition contracts in the past 12 months. Non-traditional contractors are most often small businesses. Their involvement provides a new pool of innovation. 

Approximately 22 percent of NWEC members are non-traditional defense contractors. The OTA is available for use by all service laboratories, agencies and Defense Department program offices. Current customers are primarily service ordnance laboratories, program executive offices, U.S. Special Operations Command, the Defense Threat Reduction Agency and the Defense Advanced Research Projects Agency. 

DOTC categorizes the ordnance technologies into nine focus areas: warheads, explosives, propellants, pyrotechnics, fuzes/sensors, protection and survivability, enabling technologies, joint insensitive munitions and demilitarization.

The consortium is a non-profit, self-sustaining business enterprise. The program office operates with a staff of five full-time employees as well as support from one contracting officer and one specialist from the Army Acquisition Center. As of the end of May, the DOTC program office was executing 183 initiatives — including technology development and prototyping projects — with a value of $450 million.

The OTA is executed with the National Warheads and Energetics Consortium using a consortium management firm which provides a single point of entry for the government in its relationship with the 220 NWEC members. A 5 percent fee is charged to all DOTC customers. This fee covers operating expenses. The consortium has an 18-member government and industry executive committee that functions like a board of directors. The executive committee meets semi-annually to track, oversee and advise the program office on business operations and processes, not the individual initiatives and technology projects. Additionally, the executive committee has monthly conference calls with the program office to review the status of operations.

So what makes DOTC different? A key characteristic is that it fosters collaboration up front in the technology planning process. Government and industry representatives collect and discuss munitions technology challenges and requirements in advance of funding and need. This helps inform corporate research-and-development investments. 

Requirements are captured and published in an annual plan that serves as the basis for a request for ordnance technology initiatives, which is the DOTC equivalent of a Federal Acquisition Regulation-based request for proposals.

The annual plan and request for initiatives are combined in a single document and contract action as opposed to the hundreds of requirements and RFPs that would normally be advertised individually in FedBizOpps under the traditional FAR-based approach. 

Members of NWEC respond to individual requirements with three-page white papers which outline their technical approach. If clarity is needed, government technologists can seek further information. If their white papers are deemed technically acceptable, the authors are then welcome to submit proposals. The white papers serve as an initial screen that enables a better understanding of the requirements and the technical approach. This process minimizes the number of proposals, the time and cost for industry to prepare, and for the government to evaluate.

In fiscal year 2013, DOTC ordnance technology development initiatives are averaging 49 days from the point of finalizing the statement of work with funding received to award. If funding isn’t available, there is a provision to retain approved proposals in an “electronic basket” for three years. This allows for rapid awards in the event of emerging urgent needs, end-of-year sweep-up funds or subsequent year funding availability. The electronic basket eliminates the traditional start-from-scratch FAR-based approach to every new requirement or funding opportunity. In the past 12 months, 35 proposals totaling $83 million were pulled from the basket and awarded in an average of 45 days. 

It is worth noting that 81 percent of the fiscal year 2013 prototype project proposals were awarded to, or have significant participation by non-traditional defense contractors, with the remaining 19 percent comprising traditional defense contractor awards that offered one-third cost share. These statistics show how DOTC is able to engage U.S. suppliers that for many reasons avoid traditional FAR-based contracting opportunities.

Technical oversight and management of the individual initiatives are performed by the government office that provided the funds. Typically, initiatives have a three-year period of performance and are incrementally funded. Each initiative’s technical objectives are measured through fixed-price or cost-type payable milestones. Patent and data rights are flexible and negotiable.

Companies are made aware of technology development opportunities through the annual request for initiatives, which is openly advertised through federal business opportunities notices. Interested parties are advised that in order to compete for these technology development opportunities, they must be members of the NWEC. Members pay an annual fee of $500. This approach ensures that DOTC is continually casting a wide net for innovative solutions, while providing non-traditional defense contractors an opportunity to compete.

As an example, two non-traditional defense contractors, CLOGIC and Akela Laser Corp., have teamed up to support the active protection interceptor munition program. Akela Laser’s test bed laboratory and specialized laser sensor equipment measure reflectivity data of various threats, providing the ability to quickly modify advanced munitions design concepts after re-verification of results.

Formal protests against the government’s selections under the OTA are prohibited. This is a huge benefit for the Defense Department that significantly lowers the risk of program delays. Once the project reaches an appropriate technology readiness level, the FAR-based acquisition process takes over to support an engineering-and-manufacturing development program or low or full-rate production. 

The Army’s 120 mm accelerated precision mortar program is one example. At the request of the Army program manager for combat ammunition systems, DOTC responded to an operational needs statement for a prototype demonstration of a precision mortar. Upon completion of the effort, the program manager reported that this was the office’s first acquisition in which the process used was not the lagging factor for schedule execution. The total acquisition time was reduced from the typical 18 months to nine months. 

DOTC is an acquisition reform initiative that is working. Its processes embody many of the Defense Department’s “Better Buying Power” initiatives.

Don Geiss is program director of the Defense Department’s Ordnance Technology Consortium. Tony Melita is a senior adviser of the National Warheads and Energetics Consortium.

Topics: Defense Department, DOD Policy, Procurement, Acquisition Reform, Defense Department

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