Cost Reduction Promotes Better Relations

Frustrated by its inability to reduce costs and introduce more flexibility into its procurement process, the Air Force launched a new program called Bending the Cost Curve (BCC) in 2015. This intends to upend the traditional relationship the DOD has had with its suppliers. And NETCENTS-2 is one of the contracts at the tip of the spear on that charge.

In introducing BCC, then Secretary of the Air Force Deborah Lee James stated it was designed to encourage innovation and to drive down the cost of systems. It also intended to help the Air Force partner more closely with industry. A better dialog with industry would mean the Air Force “can better understand how processes, procedures and some of the choices we make can inadvertently contribute to rising costs, the stifling of innovation and slow processes,” she says.

A big part of that would be to build a business analytics capability, so in future the Air Force would be working with a data-driven approach. Procurement decisions would be based much more on empirical data and metrics. The private sector, she says, have reported savings of 25 percent or more on their investment decisions with similar efforts.

Before BCC, the Defense Department’s approach to cost reduction was to consider its providers as the main problem. This led to a palpable lack of trust between the DOD and its suppliers. Attempts at trying to forcibly squeeze costs out of the process, such as requiring contract awards to be based on lowest price, technically acceptable (LPTA) only exacerbated the problems. Both vendors and users openly worried that LPTA would affect the quality and delivery of some products.

If innovation is taken out of the equation, LPTA could result in better prices for NETCENTS-2 users since the technical requirements for products and systems are pre-set by the Air Force. However, NETCENTS-2 doesn’t require LPTA for task orders, leaving the purchasing strategy up to the individual contract user.

As far as the dialog of BCC, the NETCENTS-2 program office significantly expanded its outreach to users and vendors through social media, electronic media, and improved Web-based services. It also went through more traditional means such as presentations at industry events, and direct contact by video and audio conferencing. One example of that is a monthly vendor roundtable hosted by the NETCENTS-2 program office. Vendors on the contract can call in to talk with program executives and get feedback.

 As far as better statistics on NETCENTS-2 are concerned, the NETCENTS-2 program office requires regular reports from both vendors and contract users. Mandatory use of the contract by Air Force IT buyers also guarantees it receives the broadest data as possible to provide detailed insight into the Air Force’s spending on net-centric IT. This should lead to better policies for “strategically agile” acquisition and spending, another major goal of the BCC initiative.

The program office has also improved and expanded how it uses AFWay—the online IT purchasing portal. Launched in 2002 as an automated Web tool to make it easier and more manageable for Air Force units to buy commercial-of-the-shelf (COTS) products, its scope expanded over time. Now it allows for even better insight into such things as small business sales and how much of certain IT products are being bought.

Current features include such component as new release publications, business-to-business transfers, and management dashboards for tracking contractor performance. These are all intended to help the NETCENTS-2 program office keep up with the expanding volume of business on the contract.