Inside the 2014 Defense Authorization report

The congressional report for the 2014 Defense Authorization Act lays bare congressional thinking on topics such as lowest price, technically acceptable contracting, NetCents 2, allowable costs and other topics that are near and dear to government contractors.

For each bill and law passed by Congress, there is a report, and these reports are often seen as the most important pieces of legislative history because they reveal the thinking of lawmakers, particularly at the committee level, as they debate and write legislation.

The 2014 Defense Authorization Act Report from the House Armed Services Committee is no different, and should be required reading because it is a huge document.

Here are some highlights:

LPTA

The committee voiced concern that LPTA might be well-intentioned, but is being used instead of best value, and that LPTA should not be the default position on awarding contracts.

The committee wants the Comptroller General to review the use of LPTA, and to look at guidance and directives related to LPTA, training of acquisition officers, implementation of efficiency initiatives such as Better Buying Power, and risks associated with LPTA.

The report is due June 30, 2014.

NetCents

There is no mention of the problems getting the NetCents 2 Products contract awarded. Instead, the report is concerned that the Air Force might be using the NetCents contract inappropriately for sole source and brand-name procurements.

Reverse Auctions

This procurement strategy, which is ideal for commodity purchases, gets a nice shout out in the report, with the committee encouraging the services to increase the use of this process. There is only one word of caution to provide more guidance on when it is appropriate to use the process.

Allowable Costs

I won’t pretend to understand all the stuff in this section (Section 813), but the committee feels the allowable cost for contractor compensation is too high, and the authorization bill changes the formula to how it is calculated.

The formula will be tied to the Bureau of Labor Statistics Employment Cost Index. The administrator of the Office of Federal Procurement Policy also is being asked to review commercially available executive compensation surveys, and to work with the Defense Contract Audit Agency.

The main object from the committee is that the allowable cost is rising too fast. At the current rate of increase, the compensation cap would be $1.6 million by 2020.

Small Business

The committee wants the Defense Department to release 75 percent of Small Business Innovative Research funds when continuing resolutions stretch beyond three months.

The committee also wants the Under Secretary of Defense for Acquisitions to publish an annual list of the capabilities needed to help small businesses compete for full-and-open contracts.

Energy

Not sure what to make of this, but as I did keyword searches, the word "energy" got lots of hits, from “Directed Energy Weapon” to “Energy Usage.” That’s a pretty broad topic, but interesting nonetheless, given how often I hear executives talk about energy as a growth market.

The document is 600 pages or so, and these are just some highlights I hit. I’m curious what nuggets people are looking for.