DOD to improve monitoring of contract performance

The Defense Department is developing and implementing new policies to address contractor performance awards. The new rules will address longstanding congressional concerns about awards being paid despite poor performance, creating excessive waste.

In February, DOD delivered to Congress its report titled “Defense Acquisition Transformation.” Section 804 of the 2007 National Defense Authorization Act requires DOD to give Congress biannual updates on the implementation of acquisition reform.

Regarding contract performance awards, DOD will soon issue operating instructions to support new policies added late last year to the Defense Federal Acquisition Regulation. According to the policies, DOD will raise the level of officials who determine new contract award fees, set percentage limits for different performance levels and prevent awards from being paid for work that is deemed unsatisfactory.

The Government Accountability Office reported recently that DOD has paid about $8 billion in award fees without regard to contractor performance and failed to appoint performance monitors in more than a third of the cases GAO reviewed.

Awards and incentives will be linked to different outcomes, such as cost, schedule or performance, depending on the program, said Ken Krieg, undersecretary of Defense for acquisitions, technology and logistics, at a Pentagon press conference March 14.

Also, DOD is examining the idea of a fixed-award fee pool that various contracts would compete for and developing an automated process for collecting award fee data, coming sometime this spring, according to the report.

DOD's acquisition workforce is aging and replacements are needed, Krieg said. Civilians comprise 85 percent of DOD 134,000 acquisition professionals and have an average age of 49. DOD needs a strategy to drive new hiring, which occurs primarily at the component level, he said.

Krieg expressed reservations about creating the position of a chief management officer for DOD, as GAO often calls for. Added bureaucracy is a chief concern. "We've got lots of undersecretaries," he said.

Defense Secretary Robert Gates must report his view on creating such a position to Congress in the coming months.

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