Navy plans preferred contractor program

The Navy plans to offer favorable terms and conditions to companies in a new program in exchange for exemplary work, according to the service.

The Navy plans to reward contractors that show good performance, according to a news report.

In a May 5 speech, Navy Secretary Ray Mabus said he plans to set up a preferred provider program, and he urged companies to get better at their work so they would qualify for the program, according to a May 10 news report from the Navy Department. Mabus said the Navy would release a notice about the program in the Federal Register this month.

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Mabus was speaking at the Navy League Sea Air Space Expo in Washington

In the program, the Navy would reward contractors with favorable contract terms, conditions and payment schedules “in return for consistent and exemplary contract performance,” he said. In addition, Mabus mentioned the program’s entry criteria would include energy-efficient products and manufacturing capabilities.

Mabus also said he was forming an industrial base council intended to let Navy and Marine Corps officials hear from private-sector representatives about their concerns. The council would be made up of companies in the fields that the department works closely with.

Similarly, last month, the House overwhelmingly passed a Defense Department acquisition improvement bill, which would also require DOD officials to set up a council of companies in the defense industrial base. The Senate hasn’t considered the bill.

Mabus said the Navy would live by several other time-tested imperatives that lead to successful acquisitions as it tries to make every dollar count, according to the department.

The Navy’s programs will go through a rigorous test that analyzes their requirements. The requirements must be clearly defined long before the contract is awarded. He said all contract spending will go through this analysis. The Navy would turn to fixed-price contracts and set aside contracts that include incentives and award fees for special high-risk circumstances, the report states. The Obama administration has pushed departments to avoid cost-reimbursement contracts because they are too risky.

In addition, Mabus plans to raise the bar on performance, as he keeps a closer eye on Navy contractors and the service's own internal acquisition teams, and he has urged acquisition officials to increase their outreach to increase the workforce, he said.

Defense Secretary Robert Gates made similar remarks about acquisition reforms in a speech on May 5. Because of procurement problems, he said the military is paying more for airplanes and ships while getting fewer of them.

Gates said DOD needs to do “a better job of negotiating contracts, doing a better job of capping requirements and doing a better job of executing the program, and then [it is] industry’s responsibility to do this for the price they say they’ll do it.”