Interagency Acquisition:Interagency Acquisition:Proper Use of Non-DoD ContractsProper Use of Non-DoD Contracts

DAU - CON353DAU - CON353October 25, 2005October 25, 2005

Michael CanalesDefense Procurement and Acquisition Policy

Pentagon 5E621703-695-8571

Michael.Canales@osd.mil

ObjectivesObjectives BackgroundBackground Policy Policy The Business DecisionThe Business Decision Roles-Responsibilities-ExpectationsRoles-Responsibilities-Expectations Lessons LearnedLessons Learned ChronologyChronology RedundancyRedundancy Training Opportunities Training Opportunities Sharing of Ideas Sharing of Ideas

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BACKGROUNDBACKGROUND

DoD spends billions of dollars annually utilizing DoD spends billions of dollars annually utilizing non-DoD contracts. This includes:non-DoD contracts. This includes:

Orders issued by a DoD contracting officer Orders issued by a DoD contracting officer ((Direct AcquisitionsDirect Acquisitions))

Orders issued by a non-DoD contracting officer Orders issued by a non-DoD contracting officer on behalf of DoD’s with DoD funds (on behalf of DoD’s with DoD funds (Assisted Assisted AcquisitionsAcquisitions))

**It is DoD Policy to use non-DoD contracts when it It is DoD Policy to use non-DoD contracts when it is in the is in the best interestbest interest of the Department of the Department**

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Examples of Non-DoD ContractsExamples of Non-DoD Contracts GSA SchedulesGSA Schedules Government-wide Acquisition Contracts Government-wide Acquisition Contracts

(GWACS) (Finite list) (GWACS) (Finite list) ““GovWorks”, “FedSource”, and Other GovWorks”, “FedSource”, and Other

“Franchise Funds” “Franchise Funds”

Recent Inspector General reviews have Recent Inspector General reviews have found that non-DoD contract vehicles are found that non-DoD contract vehicles are not always properly used.not always properly used.

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““Proper Use of Non-DoD Contracts”Proper Use of Non-DoD Contracts” Joint DoD Policy Memo on “Proper Use of Non-DoD Joint DoD Policy Memo on “Proper Use of Non-DoD

Contracts” Issued October 29, 2004 (January 1, 2005) Contracts” Issued October 29, 2004 (January 1, 2005) Agencies and departments must establish a pre-Agencies and departments must establish a pre-

award review process/procedures to ensure that award review process/procedures to ensure that using non-DoD vehicles are in the best interest of using non-DoD vehicles are in the best interest of the Department of Defensethe Department of Defense

Applicable to acquisition of both services and Applicable to acquisition of both services and suppliessupplies

Applies above the simplified acquisition threshold Applies above the simplified acquisition threshold ($100,000)($100,000)

Provide DoD unique terms and conditions to Provide DoD unique terms and conditions to assisting agenciesassisting agencies

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The Business DecisionThe Business Decision Using a non-DoD contract to meet DoD requirements is a business Using a non-DoD contract to meet DoD requirements is a business

decision.decision. Consider the following:Consider the following:

Does this meet the customer’s needs?Does this meet the customer’s needs? QualityQuality DeliveryDelivery PricePrice

Is the requirement within scope of the contract to be utilized? Is the requirement within scope of the contract to be utilized?

Is it cost effective (including fees and discounts)?Is it cost effective (including fees and discounts)? Are we compliant with competition requirements?Are we compliant with competition requirements? Who will perform contract administration-oversight-Who will perform contract administration-oversight-

surveillance?surveillance? Document the decisionDocument the decision

DoD Expectations of DoD Expectations of Requiring Activities Requiring Activities

“Bona fide” need Funds utilized must be consistent with

appropriation limitations Compliance with OSD Policy memo “Proper Use

of Interagency Agreements for Non-Department of Defense Contracts Under Authorities Other Than the Economy Act” (March 24, 2005)

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DoD Contracting Officers RoleDoD Contracting Officers Role

“It Depends”“It Depends” Business advisor responsibility:

Does this meet the customer’s needs—quality, delivery, price Are requirements within scope of the intended vehicle? Is it cost effective (including fees and discounts)? Does it meet schedule needs? Who is performing contract administration?

Oversight-Surveillance PaymentWhat happens if there are performance issues?

Other ConsiderationsPerformance BasedSB ParticipationBundling

DoD Contracting Officers Role (cont.) DoD Contracting Officers Role (cont.)

Review contract terms and conditions of assisting agencies’ vehicles prior to placing orders (Direct)

Provide to the assisting agency any unique requirements/terms and conditions associated with the acquisition (Assisted)

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If a requirements package is incomplete, contact the Requirements If a requirements package is incomplete, contact the Requirements POC Immediately!POC Immediately!

Ensure it’s the right vehicle for the right requirement (scope)Ensure it’s the right vehicle for the right requirement (scope) If not, sIf not, suggest alternatives Ask for and incorporate any unique terms and conditions

applicable to the order or contract as supplied by DoD Comply with DoD competition requirements, specifically when Comply with DoD competition requirements, specifically when

acquiring “acquiring “services” by ensuring compliance with Section 803 of the 2002 NDAA (receive at least 3 proposals)

Properly code and capture data in FPDS-NG Properly code and capture data in FPDS-NG Provide reports/data to customers for analysis (fees)Provide reports/data to customers for analysis (fees) Make terms and conditions easily available (i.e. contracts online)Make terms and conditions easily available (i.e. contracts online) Set realistic customer expectationsSet realistic customer expectations Charge reasonable fees

DoD Expectations of DoD Expectations of Assisting AgenciesAssisting Agencies

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DoD Expectations of ContractorsDoD Expectations of Contractors

“With revenue comes responsibility” If you are concerned that a task or item ordered is

outside the scope of the contract, ask! Proper marketing of vehicles and capabilities Educate your workforce

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DoD Process ExpectationsDoD Process Expectations

Compliance with statute, regulation and policyCompliance with statute, regulation and policy Better packagesBetter packages

Right requirement (complete, well defined,$1.7B) Right requirement (complete, well defined,$1.7B) Right money (ADA)Right money (ADA) Right contract (scope) Right contract (scope) Right product or service deliveredRight product or service delivered Right oversight (by whom, at what level) Right oversight (by whom, at what level) Right feedback and right evaluationRight feedback and right evaluation

Right assisting agency Right assisting agency

Lessons Learned: Lessons Learned: DoD Purchases Made Through GSADoD Purchases Made Through GSA

Potential ADA Violations (“NCE”) Potential ADA Violations (“NCE”) Bona Fide Need Rule – (majority)Bona Fide Need Rule – (majority) Wrong Color of Money – (next most common)Wrong Color of Money – (next most common)

Other Cautions Cautions

Competition requirementsCompetition requirements Proper use of fundsProper use of funds Security Security Ethics and Integrity (SECDEF memo Sept. 7, 2005) Ethics and Integrity (SECDEF memo Sept. 7, 2005)

RECENT AND RELEVANTRECENT AND RELEVANT DPAP Policy Memo on “Use of Federal Supply Schedules and Market DPAP Policy Memo on “Use of Federal Supply Schedules and Market

Research” (January 2005)Research” (January 2005) Interagency Acquisition added to GAO “High-Risk” List (February 2005) Interagency Acquisition added to GAO “High-Risk” List (February 2005) ““Roadshow” training of top Non-DoD contract users (June 2005) Roadshow” training of top Non-DoD contract users (June 2005) Community of Practice (COP) established by DAU (DPAP link) Community of Practice (COP) established by DAU (DPAP link) Site Visits to Assisting Agencies commenced March 2005Site Visits to Assisting Agencies commenced March 2005

Interior, Treasury, GSA, NASA Interior, Treasury, GSA, NASA DoD IG Report on “Interagency Contracting: Problems with DoD’s and DoD IG Report on “Interagency Contracting: Problems with DoD’s and

Interior’s Orders to Support Military Operations” (March 2005) Interior’s Orders to Support Military Operations” (March 2005) DoD IG report on “DoD Purchases Made Through GSA” (July 29, 2005)DoD IG report on “DoD Purchases Made Through GSA” (July 29, 2005) DPAP Clarification memo “Proper Use of Non-DoD Contracts” (June 17, DPAP Clarification memo “Proper Use of Non-DoD Contracts” (June 17,

2005) 2005) USD AT&L Memo to MILDEPS, ODAs, and Field Activities (July 20, USD AT&L Memo to MILDEPS, ODAs, and Field Activities (July 20,

2005) 2005) SECDEF memo on “Ethics and Integrity” (September 7, 2005) SECDEF memo on “Ethics and Integrity” (September 7, 2005) DPAP Policy memo on “Interagency Acquisition: A Shared DPAP Policy memo on “Interagency Acquisition: A Shared

Responsibility” (September 20, 2005)Responsibility” (September 20, 2005)

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Redundant-Redundant Use of Non-DoD Contracts is “encouraged” when used

properly. Define Requirements accurately and completely Acquisition Planning Market Research Rules follow the money

Competition Friday-Monday Ensure that the supplies or services acquired are consistent

with the appropriated funding being used Ensure that the transaction complies with internal review

procedures established “locally” by Military Departments and Defense Agencies (Army, Navy, AF, etc.) .

Section 854 2005 NDAA (MILDEPS report of fees paid) POC: Mike Canales, DPAP/Policy, 703-695-8571 POC: Mike Canales, DPAP/Policy, 703-695-8571 michael.canales@osd.milmichael.canales@osd.mil

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HOT LINKSHOT LINKSTraining and PolicyTraining and Policy

Defense Acquisition Universityhttp://www.dau.mil/-Left hand side to continuous learning -Register for a Continuous Learning classCourse # TBD# of Continuous Learning Points-TBD Defense Procurement Acquisition Policyhttp://www.acq.osd.mil/dpap/

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Back-Up SlideBona FideBona Fide Need Rule Need Rule

What constitutes a What constitutes a bona fidebona fide need of a need of a particular fiscal year depends on the particular fiscal year depends on the facts and circumstances of the case.facts and circumstances of the case.

Generally, you can’t use this years Generally, you can’t use this years funding to fund next years funding to fund next years requirements. requirements.

DoDIG report on DoD Purchases DoDIG report on DoD Purchases Made Through the General Services Made Through the General Services Administration (May 2005) Administration (May 2005)

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Back-Up Slide:Back-Up Slide:Audit ReportsAudit Reports

Internal GSA IG ReviewsInternal GSA IG Reviews DoDIG Review of Interior DoDIG Review of Interior DoDIG Review of Franchise FundsDoDIG Review of Franchise Funds DoD IG Review of DoD Purchases Made DoD IG Review of DoD Purchases Made

Through GSAThrough GSA DoD IG Commenced review of DoD DoD IG Commenced review of DoD

Purchases Through Treasury, NASA and Purchases Through Treasury, NASA and Interior Interior