Procurement officials explain new normal to contractors

'Adult conversations' needed to make some see budget realities of the next few years.

illustration dollar sign in vise

Just as civilian agencies have been doing, the Defense Department is assuming the already tight purse strings for acquisition budgets are likely to be pulled even tighter, and procurement staff is digging in to adjust to the "new normal."

"It's not the best of times," Frank Kendall, undersecretary of defense for acquisition, technology and logistics, said at the Coalition for Government Procurement's fall conference in Fairfax, Va., on Oct. 30. "We don't know when this will end, lurching from budget crisis to budget crisis."

He said he was preparing for a long siege by cutting back on new research and development contracts, stretching out existing R&D contracts, and expecting a decrease in force readiness. The budget sequestration and the recent government shutdown, he said, had his department "in damage limitation mode."

Among the other cost-saving options DOD is employing are shared services agreements with fellow government agencies for everyday operations such as payroll, to squeeze the most out of their IT operations.

With Congress' inability to come to a spending agreement, Kendall said he was happy to have a previously dreaded continuing resolution funding his operations into fiscal 2014. Despite the pessimism, however, he remained "reasonably hopeful that the [government shutdown] convinced people it wasn't a good thing to do" and wouldn't be repeated come the next deadline in January.

Still, he predicted the budgetary woes will continue through fiscal 2016, producing three more years of uncertainty.

Kathleen Turco, chief financial officer at the Veterans Affairs Department, said operating with no official budget is the "new normal" for civilian agencies, and suggested everybody needs to move on "You shouldn't stop planning to be ready," she said. "You have to impress on your acquisition staff that this is the way it is now."

Maj. Gen. Wendy Masiello, director of contracting for the Air Force, noted that the "way it is now" has cost her 30 contracting officers in the last two years. The personnel have left in the wake of furloughs, the shutdown and uncertain budgets. Their leaving, she said, was the equivalent of losing 700 years of collective contracting experience that can't be immediately replaced.

Masiello said she has had to explain the rules of the road to new acquisition officers.

Less experienced contractors, especially those away from the Washington, haven't grasped what "no" means, according to Masiello. She said those officers might not fully get that the open spigots they had become accustomed to have become a trickle. "We had to have adult conversations to explain our situation," she said.

Both Masiello and Kendall said they were working to implement new ways to buy goods and services. Masiello said the Air Force has implemented a program to bring selected field contracting officers into the Washington area to have them see how the budgeting and acquisition process works first-hand.

The Air Force is also working to virtualize its contracting environment and unveiled on Oct. 1 a new contracting agency -- the Air Force Installation Contracting Agency, based at Wright Patterson Air Force Base in Ohio. It redesignated its Enterprise Sourcing Group and most major command Contracting Directorates and Divisions as AFICA -- a new headquarters-level field operating agency, which reports to the Office of the Assistant Secretary of the Air Force for Acquisition.

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