The Insider

Pentagon Procurement and Acquisition Policy Director Shay Assad this week is seeking to amplify guidance he sent out last November on improving competition in defense purchases.

As Inside the Pentagon reported in December:

The Nov. 24 memo from Shay Assad, the Pentagon's director of defense procurement and acquisition policy, provides additional instructions for competitive situations in which only one offer is received. Assad's memo to the services, defense agencies, U.S. Special Operations Command and U.S. Transportation Command expands on Pentagon acquisition chief Ashton Carter's Sept. 14 guidance on boosting the department's buying power.

"The intent of this guidance is to ensure more effective competition that will result in more effective use of the department's resources and savings for the taxpayer," Assad writes.

To maximize the savings that are obtained through competition, contracting officers will no longer use the standard on obtaining certified cost or pricing data in Federal Acquisition Regulations to determine that the offered price is based on adequate competition when only one offer is received, according to the memo.

In a memo released yesterday, though, Assad writes:

The focus of my memorandum was on maximizing competition in situations where only one offer is received in a procurement utilizing competitive procedures. The purpose of this memorandum is to amplify that guidance in response to questions that have been raised.

The policy guidance set out in the November 24, 2010, memorandum is applicable to all competitive procurements 0f supplies and services above the Simplified Acquisition Threshold (SAT), including commercial items and construction. Further, it covers procurements accomplished under the procedures in Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Supplement (DFARS) parts/subparts 8.4, 12, 13.5, 14, 15, and 16.5. Exceptions to this policy are procurements in support of emergency acquisitions for contingency operations, humanitarian assistance, disaster relief, peacekeeping operations, or recovery from nuclear, biological, chemical or radiological attacks against the United States. However, the use of these exceptions does not mitigate the need for competition nor the requirement for a determination that the price is fair and reasonable.

Unless an exception applies or a waiver is granted, the following procedures apply:

* If the solicitation was advertised for fewer than 30 days and only one offer is received, then the contracting officer shall cancel and resolicit for an additional period of at least 30 days; or

* If a solicitiation allowed at least 30 days for receipt of offers and only one offer was received, then the contracting officer shall not depend on the standard at FAR 15.403-1(c)(ii) in determining the price to be fair and reasonable. Rather, the contracting officer shall use price or cost analysis in accordance with FAR 15.404-1 to make that determination. If the contracting officer believes that it is necessary to enter into negotiations with an offeror, the basis for these negotiations shall be either certified cost or pricing data or data other than certified cost or pricing data, as appropriate, in accordance with FAR 15.403-1(c). DFARS 215-403-1(c) and FAR 15.403-3(b). The negotiated price should not exceed the offered price.

Waivers to the policy requirement to resolicit or the requirement to conduct negotiations are permitted. The waiver authority is the Head of the Contracting Activity (HCA). However, the HCA may delegate this authority to not lower than one level above the contracting officer.

I realize that implementation of this policy may have the unintended consequence of increasing the contracting community's workload, but given today's scarcity of resources we need to ensure effective competition to the maximum extent possible. Every dollar saved through effective competition benefits the warfighter and the taxpayers.

As Defense Department leaders begin tackling the kinds of existential questions posed by President Obama in his April 13 speech, Army Under Secretary Joseph Westphal sees different expectations about the timing of the review rising to the surface.

"For the services, it's important that it be done in a quick manner, but also in a comprehensive manner. I know the two things don't align very well," Westphal said in a speech this morning at the Center for Strategic and International Studies in Washington.

"I think the [defense] secretary is definitely looking for a longer-term, more expansive piece of work. The pressure that will probably come from the White House and probably come from the Congress will be, 'Hey, tell us now what that strategy is -- how you see the world in the future.'"

Westphal expects the deliberations to get "a lot of play" in the next two months, given what's at stake for service force structures.

Retired Congressman and former House Armed Services Committee Chairman Ike Skelton (D-MO) has joined EADS North America's board of directors, the company announced in a statement released this afternoon:

The EADS North America Board of Directors has confirmed the board appointment of Ike Skelton, who most recently served for 34 years as a U.S. Representative from Missouri. Skelton's Congressional career culminated in the role of chairman of the House Armed Services Committee, in which capacity he served from 2007 to 2011.

"Ike Skelton has a distinguished record of service to our nation, especially in support of the men and women of our military," said Ralph Crosby, Chairman of EADS North America. "His patriotism and leadership will be tremendous assets for EADS North America as we continue seeking to bring innovative, best-value solutions to the U.S. military in support of its missions."

Prior to his seventeen terms in the U.S. House of Representatives, Skelton served for six years as a Missouri state senator, beginning in 1971. Having begun his career in the field of law, he served in private practice and as a prosecuting attorney in Lafayette County, Mo., followed by three years in the role of Special Assistant to the Missouri Attorney General.

A lifelong native of Lexington, Mo., Skelton earned an Associate of Arts degree from Wentworth Military Academy and College in 1951 and went on to earn a Bachelor of Arts and a Bachelor of Laws degree from the University of Missouri in 1953 and 1956, respectively. He is the recipient of 14 honorary master’s and doctorate degrees and more than 60 awards and tributes.

While defense leaders have been giving the impression that a review of military missions, as mandated by President Obama, is just getting under way, the Joint Staff had begun work on such a thing shortly before the president's April 13 speech, we're told by several officials.

A classified tasker from the Chairman of the Joint Chiefs of Staff, handed down about a week before the POTUS address, asked military leaders to look for "options" in the face of the strategic and "domestic" -- read fiscal -- environment, one source said.

Of course, Adm. Mike Mullen has noted for some time that the nation's debt is a key threat to national security.

After the Obama speech, the Mullen tasker seems to have become something of a nucleus for the kind of review that the president mandated. A follow-on phase, with more detailed guidance on world regions and DOD capabilities, just got started, we're told.

The Joint Staff's J-8 directorate and the Cost Assessment and Program Evaluation office on the one side, and the J-5 and the Pentagon's policy shop on the other, are key players in the effort, with one team looking at resources and the other examining strategic options, according to sources.

The Defense Department has officially killed the Joint Strike Fighter F136 alternate engine program, according to a DOD statement issued today:

The Department of Defense today notified the General Electric/Rolls Royce Fighter Engine Team (FET) and the Congress that the F136 Joint Strike Fighter (JSF) engine contract has been terminated.

On March 24, 2011, Under Secretary of Defense for Acquisition, Technology and Logistics Ashton Carter directed the F-35 JSF contracting officer to issue an order to the FET to stop work on the F136 development contract.  The stop work order ended the expenditure of $1 million per day on an extra engine that the DoD has assessed as unneeded and wasteful.  The stop work order was put in place pending final resolution of the extra engine’s future in Congressional action on the fiscal 2011 budget.

Subsequently, H.R. 1473, the Department of Defense and Full-Year Continuing Appropriations Act for 2011 was passed by both houses of Congress and signed by the President on April 15, 2011.  H.R. 1473 contains no funding for the F136 engine.

Following this action, Carter directed the JSF Joint Program Office to cease all activity on the F136 development, and the JSF contracting officer determined to terminate the F136 contract.

The FET has been instructed to preserve and deliver government property. The Defense Contract Management Agency will assume responsibility for termination settlement.

As InsideDefense.com blogged this morning, however, GE isn't going down without a fight. And according to a company statement released in the wake of the DOD announcement:

While we are deeply disappointed by the DoD's "Notice of Termination," GE and Rolls-Royce remain committed to the F136 and the significant benefits it brings to the American taxpayer and our fighting men and women.

For 14 years, the F136 team has developed F136 technologies and engine prototypes at a cost of $3 billion to taxpayers.  They contain some of the world’s most advanced propulsion technologies. The intellectual property includes numerous patented technologies from both companies.

Over the coming weeks we will work with the US Government to comply with the Notice.  Throughout that process, GE and Rolls-Royce will take all necessary steps to ensure that the F136 assets and intellectual property are protected.

More than $200 million in F136 hardware is located in 17 facilities, including nine engines under various stages of assembly.

GE and Rolls-Royce will work closely with our Congressional supporters during the 2012 budget process in pursuit of incorporating the engine into the program, and preserving competition. We continue to be encouraged by the bi-partisan support for the engine on the merits of its performance and value. There is a significant willingness in Congress to revisit the F136 funding debate as the consequences of terminating the engine are being fully understood.

From a company personnel standpoint, the F136 termination notice has limited impact because of actions already underway at GE and Rolls-Royce.

Since the DoD “stop work” order in March, GE and Rolls-Royce has been in the process of realigning the GE Rolls-Royce Fighter Engine Team into a core technical team (about 100 people). The team is being sized in a manner consistent with overall JSF schedule slips.

The technical team seeks to protect, enhance, and advance the vital F136 propulsion technologies for JSF and future combat aircraft.

The F136 program has been called a “near model program” by the U.S. Senate.  The F136 engine has met or exceeded performance expectations and demonstrated significant advantages over the Pratt & Whitney engine.  The engine development has been under development since 1996 and is 80% complete with six development engines tested.

In addition to strong performance, the GE/RR F136 development program has been on or ahead of schedule.

Raytheon has delivered the first Standard Missile-6 production round to the Navy, the company announced this morning. According to a statement:

"Five years ago, Raytheon promised the U.S. Navy that SM-6 would be delivered in March 2011, and we delivered on that promise," said Frank Wyatt, vice president of Raytheon's Air and Missile Defense Systems product line. "Raytheon delivered the SM-6 to our customer and met cost expectations for system development and demonstration. Now the U.S. Navy has a missile that provides an umbrella of protection against the full spectrum of air threats."

SM-6 leverages the legacy Standard Missile airframe and propulsion elements while incorporating the advanced signal processing and guidance control capabilities of Raytheon's Advanced Medium-Range Air-to-Air Missile.

"SM-6 is a remarkable missile because it combines the reliability of time-tested systems with all the latest advancements in missile technology," said Wyatt. "This missile can use both active and semiactive modes, giving the warfighter an enhanced ability to reach remote targets."

According to a Raytheon executive, the company is under a three-year, low-rate initial production contract to provide the first lot  of 29 missiles using fiscal year 2009 funds, 11 in FY-10 and 59 in FY-11. Full-rate production will begin in FY-12, the executive added.

Producing the SM-6 has not gone without its share of hitches however, as InsideDefense.com reported in January:

The Navy has resumed at-sea testing of the Standard Missile 6 (SM-6) system in Hawaii, hoping to verify engineering changes made following failures last summer, according to Navy officials and Pentagon documents.

Success in the at-sea testing is seen as essential to avoid a delay in plans to field the first operational systems in fiscal year 2011.

“Testing is currently under way at Pacific Missile Range Facility,” Chris Johnson, a spokesman for Naval Sea Systems Command, told InsideDefense.com.

Operational and developmental testing of the Raytheon-built SM-6 Extended Range Active Missile -- a $6.6 billion program that began low-rate production in August of 2009 -- was suspended last year following a series of mishaps, according to the Pentagon's top weapons tester. The testing being conducted includes missions at the range in Kauai, HI, that were put on hold after a series of firing attempts last summer were deemed deficient.

“The suspension of developmental/operational testing exhausted the schedule margins that existed in the SM-6 schedule,” Michael Gilmore, Pentagon director of operational test and evaluation, wrote in his office's recent assessment of the SM-6 program.

Members of the Missile Technology Control Regime (MTCR) held the pact's 25th Plenary Meeting in Buenos Aires this month "to review and evaluate its activities and to further intensify its efforts to prevent missile programmes and their proliferation," according to a State Department release issued this morning.

The 34-member MTCR includes the United States, Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Ireland, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Poland, Portugal, the Republic of Korea, the Russian Federation, South Africa, Spain, Sweden, Switzerland, Turkey, Ukraine and the United Kingdom.

Representatives met from April 11 to 15, according to the statement. Further:

MTCR partners discussed proliferation of weapons of mass destruction as well as their means of delivery that constitute a threat to international peace and security and reaffirmed the importance of addressing these challenges and the role the MTCR serves in this regard. MTCR guidelines and controls list constitute an international export control standard which is increasingly adhered to by non-members of the MTCR. Therefore, Partners agreed to redouble their efforts to encourage and assist, upon request, non-partners countries that are supportive of the objectives and purposes of the MTCR Regime, to contribute to the efforts of missile non proliferation.

Partners conducted extensive discussions on missile proliferation-related activities worldwide, to include developments in missile programs and their proliferation; procurement activities and techniques in support of such programs; rapid technological change; the role of intangible technology, brokering, and transshipment in facilitating proliferation; and key technology trends in proliferation missile programs. These discussions showed that additional export control efforts by MTCR countries could have an even greater impact. They also underlined the importance of addressing transit and transshipment issues and, in this context, the proliferation risk posed by countries with weak export controls.

Partners exchanged information on concerns about the ongoing missile programs in Middle East, Northeast Asia and South Asia, including Iran and North Korea, which could contribute to regional instability and supply missile proliferation activities elsewhere.

Partners noted the direct relevance of UN Security Council Resolutions, inter alia, 1874 and 1929, to MTCR export controls and expressed their determination to implement these resolutions and to exercise vigilance and prevent the transfer of any items, materials, goods and technology that could contribute to WMD missile programmes of proliferation concern, in accordance with their national legislation and consistent with international law.

Partners agreed to continue exchanging views on missile program developments.

Partners reaffirmed the critical importance of the MTCR’s ongoing technical work. They noted the rapid evolution of relevant technologies and the related need to take forward looking action to address these developments. They expressed their appreciation for the work of the Licensing and Enforcement Expert Meeting (LEEM), the Information Exchange Meeting (IEM) and the Technical Expert Meeting (TEM) in particular the decision adopted on amendments to the Equipment, Software and Technology Annex.

Over the past year, the outgoing MTCR Chair (Brazil) conducted outreach with Belarus, China, India, Kazakhstan, and Thailand. The incoming MTCR Chair (Argentina) intends to conduct further outreach, including with additional countries, in order to increase transparency about the Regime and promote its objectives. Partners expressed their willingness to continue extensive outreach by individual MTCR Partners to a wide range of countries. Non Partners activities in support of the objectives and purposes of the MTCR would also be welcome.

Partners agreed to continue their individual and collective efforts to assist interested countries in implementing the missile-related export controls mandated under UN Security Council Resolution 1540, and to work with the 1540 Committee.

Partners also reviewed a number of key aspects of the internal functioning of the Regime, including issues related to future membership. Partners exchanged views on their overall approaches, interalia, membership evaluation. Individual applications for membership also were thoroughly discussed, with no consensus being reached on the admission of new members at this time. The membership issue will continue to be discussed.