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woops85

The DoD 23 Point Memo

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My initial thought is it's impossible to achieve. I'm not sure even what I read. It's the longest memo on new practices I think I've ever seen at 17 pages.

One of the last sentences saying "This letter is not the end of a process, but the beginning of vigorous implementation and further refinement" makes me wonder if he really understands DoD and the government. 23 different actions is too much for any organization to take on at once.

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Guest Vern Edwards

There is not one thing in that memo that has not been tried already, except for the goofy taxonomy of services. There is not one new idea.

There will be a flurry of activity: new training and new reports, but that's it. The memo was shows signs of haste was poorly written. It is shameful for such a memo to have come from a USD AT&L. Moreover, the memo strategy is silly. It effectively says, "We've got to do this, and I will issue more detailed guidance in the future." He might as well have said, Take no initiative. Don't do anything until you receive further instructions.

Finally, all this is coming from a relatively new presidential appointee two years into an administration that can expect no help from Congress and that is in serious political trouble. The main sponsor for all this, the SecDef, has already announced that he is leaving next year, before the end of the president's term.

This is one of the dumbest things I have ever seen from DOD.

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Sending out a memo with lots of lofty ideals like "set shorter program timelines" at the same time issuing mandatory additional bureaucracy steps is like Mr. Carter saying "You will build a ship faster, but you also have to wear lead boots to do it!". In other words, his 23 points do not match his own actions, so they are so much smoke and mirrors.

Example: DoD has instituted mandatory "peer review" processes, that are 10% peer review and 90% additional management bureaucracy and red tape. It now takes no less than 2 additional WEEKS in the acquisition milestone schedule just to SCHEDULE the peer review board and get all the parties in the same room at the same time.

Example: There are now 2 different, fully staffed, cost and pricing teams reviewing every acquisition over $10m in my office. 1 C/P team focuses on the IGE and reviewing proposal pricing, the other just has "oversight" over the whole process and gets to add their 0.02 to the solicitation process. Time added to the acquisition milestone schedule for the second team is probably about 1-2 weeks to accomodate their "oversight", meaning meetings and an additional set of changes required at various milestones in order to move on to the next.

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This reminds me of the Air Force's Program Budget Decision (PBD) 720, where it anticipated savings in advance, built budgets that assumed those savings would materialize, and they never did. How else can you plan to spend more without larger budgets? The last thing a bureaucrat (or a politician) wants to do is actually have to make tough choices.

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Guest Vern Edwards

The biggest problem with the memo is that it does not take into account the political, economic, institutional, and cultural sources of the problems we have experienced for so long: inter-service rivalry, excessive technical optimism, short-term program management assignments among military personnel, the uncertainty arising from the appropriations process, requirements creep, and on and on, all of which have been well documented since the late 1950s. The memo reflects the apparent belief that we can circumvent those sources of difficulty by adopting certain processes, like should cost analysis. We can't. We have tried before, and we cannot do it.

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I'm a bit surprised that nobody has commented on the following points --

1. Eliminates the current preference for use of Performance-Based Payments, in favor of a return to use of customary progress payments.

2. Emphasizes use of unilateral Forward Pricing Rate Recommendations instead of bilateral Forward Pricing Rate Agreements. Where DCAA has expressed an opinion on the contractor's future indirect rates, that opinion must be adopted by the DCMA contracting officer without exception.

There's plenty of criticism to be aimed at the Memo, but those two points stood out to me as being egregiously bad decisions, that will lead to no good outcome.

This doesn't help anybody, except DCAA. They get to audit contract financing payments again, and they get to override the ACOs. :lol:

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Guest Vern Edwards

You're right about FPRAs and FPRRs. That's bad news for contractors. But I don't read the memo as expressing a clear preference for progress payments based on costs over performance-based payments. That may be what it intends, but I'd need to see a clearer expression of that intention before I would reach that conclusion.

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Requiring DCMA to issue FPRRs using DCAA recommended rates makes more sense than establishing FPRAs just for the sake of agreement when as the memo points out, the FPRA rates are NOT fair and reasonable.

I guess I am puzzled. Why is a FPRR fair and reasonable but a FPRA is not? Just because a memo says it is not?

A FPRR is a unilaterally imposed pricing structure that the contractor may or may not agree with. The Contractor should have the change to negotiate and take exception to DCAA recommendations. The last time I looked, DCAA auditors were pretty green and some incompetent. Why should a Contractor agree to this?

Also, if the rates are negotiated, why are they not fair and reasonable since they are based on actual numbers?

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Loul,

I imagine that many negotiated FPRAs do represent fair and reaonable rates so I should have made myself clearer; my point is that IF an FPRA does not represent fair and reasonable rates then a FPRR based on DCAA recommended rates is better than agreement with a contractor's proposed rates just for the sake of agreement which I believe is the message from the memo.

A negotiation in which one party concedes for the sake of agreement due to incompetence does not make the negotiation fair and reasonable. Based on my experience, there are a lot more incompetent ACOs then incompetent auditors.

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A negotiation in which one party concedes for the sake of agreement due to incompetence does not make the negotiation fair and reasonable. Based on my experience, there are a lot more incompetent ACOs then incompetent auditors.

From my point of view, the competence/incompetence argument is a red herring. In point of fact, the FAR confers FPRA and FPRR authority to the DCMA and not to DCAA. (Ref. 42.1701) In fact the FAR says that FPRRs should be used only "when an FPRA has not been established or has been invalidated". The FAR establishes a process for submission and negotiation of FPRAs, and the Memo seems to be a tacit admission that the process, as implemented by both DCAA and DCMA, is not working. Rather than fix the process, DOD leadership has chosen to scuttle it.

As far as finger-pointing goes, having DCAA take six months to issue its audit report seems like a good start. That's pretty pathetic, and comes from the multiple management reviews the agency imposes. Let's also add multiple DCMA Review Boards (to approve both PNMs and post-negotiation draft FPRAs) to the list of process kinks. In other words, there's plenty of blame to go around.

H2H

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