DOD to change way it buys services

Two Defense pilots are aimed at getting better discounts from vendors and improving coordination among the military services' buys, says DOD's Dominic Cipicchio.

Henrik G. de Gyor

Over the last 15 years, Defense Department spending on services has increased from 20 percent of DOD's procurement budget to 60 percent of it. The dramatic shift has prompted procurement officials to revisit how Defense buys services.

Over the next year, department managers will draft and test procurement strategies to coordinate and consolidate some services buys.

The pilots are part of a two-pronged approach laid out in February to get better discounts from vendors on volume purchases and improve coordination among the military services' buys, said Dominic Cipicchio, deputy director for Defense procurement.

'We need a more disciplined way of buying services,' he said. 'We need to look at industry best practices and make sure we take small businesses into account when we put together our strategies.'

Defense will test new strategies along business lines, such as IT support, administrative help and management services, Cipicchio said.

In the initial phase of the effort, Defense brass asked agencies to analyze how they spend money on services acquisitions, he said.

'We are very decentralized in our approach, and we needed a more strategic look at this,' said Cipicchio, who spoke at a recent Coalition for Government Procurement conference in Arlington, Va. 'We looked at what services we were buying, who bought them and for how much, and tried to analyze the data to find areas that could be coordinated better.'

DOD officials will spend the next year developing plans based on those studies and hope to begin the pilots late next year.

The emphasis on changing the way contracting officers and program managers buy services is part of a broader procurement improvement effort, Cipicchio said.

In an August memo, DOD procurement officials required the military branches to start using performance-based contracting as much as possible. The memo asked them to report how frequently they use performance-based techniques and how much training program managers receive about using such contracts.

'This initiative is geared toward training the requirements side,' Cipicchio said. 'They have not heard the need for performance-based services contracting.'

The memo also set training goals. By September, 50 percent of all procurement workers must be trained in performance-based contracting. A year later, all such employees must be trained.

DOD is developing an online learning module on performance-based contracting. It also is emphasizing it in Defense Acquisition University courses, Cipicchio said.

The module also will include training on Section 803 of the National Defense Authorization Act, which requires procurement officers to solicit at least three bids for all purchases worth more than $100,000 through Multiple-Award Schedule contracts, he said.

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