DOD components could lose funding over service contract inventories

The House Armed Services Committee is emphasizing the importance of service contract inventories with a threat to withhold money.

“The committee continues to be disappointed that the defense agencies, the Navy, and the Air Force have not fully implemented the Inventory of Contracts for Services,” according to a report on the fiscal 2013 National Defense Authorization Act (H.R. 4310).

The Army has successfully undertaken an extensive manpower and cost inventory of all its service contractors since 2002. The Army’s inventory has been designated as the model for the other departments and agencies, according to the report, but much of the rest of DOD is flailing.

As a penalty, Congress would withhold 20 percent of authorized funding from the Office of the Secretary of Defense, the Navy, the Air Force, the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics, the Office of the Assistant Secretary of the Navy for Research, Development, and Acquisition, and the Office of the Assistant Secretary of the Air Force for Acquisition.

To get the funding restored, the defense secretary would have to certify to House and Senate defense committees that the inventories are making progress. Defense agencies would have to be on their way to meeting the requirements laid out in the law. Congress instituted a department-wide contract inventory in the fiscal 2008 defense authorization bill.

The provision is contained in the "chairman's mark," a marked-up version of the bill with the committee's proposed changes.

Committee members wrote they are convinced that the inventory is important for transparency in government contracting and benefits decision-makers in planning and budgeting.

The Government Accountability Office reported in April that officials have made progress in tracking their service contracts. However, DOD isn’t in the clear yet in gathering accurate data. DOD officials turned in a plan to Congress on how they might build such a department-wide system, but officials said they likely would not collect manpower data through it until 2016.

The authorization bill is in its infancy stage at this point, with the first committee mark-up scheduled for May 9.

In addition to the inventory provision, Rep. Howard “Buck” McKeon (R-Calif.), chairman of the Armed Services Committee, said the bill includes ways to develop DOD’s relationship with industry while enhancing competition.

DOD would have to report to Congress on areas of risk within the defense industrial base, such as points of failure and if there's an over-reliance on foreign companies. DOD would have to develop a national security strategy for industry. The strategy would have to clarify that the base must be able to supply and support DOD’s force structure.

The bill also would establish new goals for procurement contracts awarded to small businesses and boost the importance of advocates for small business contracts. The bill would strengthen their authority in advising officials throughout the acquisition process.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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