Defense Acquisitions
Managing Risk to Achieve Better Outcomes Gao ID: GAO-10-374T January 20, 2010In fiscal year 2009, the Department of Defense (DOD) spent nearly $384 billion on contracts. This investment, representing over 70 percent of total government contract spending, highlights the great need to better manage risk in acquisitions. But DOD has not always managed risks effectively: major systems continue to take longer to develop, cost more, and deliver fewer quantities and capabilities than originally planned. In addition, poorly managed growth in services spending has contributed to disappointing program outcomes. DOD weapon system acquisition and contract management have been on GAO's high-risk list for nearly 20 years. This testimony focuses on (1) planning of DOD's acquisitions; (2) contract types and the award process, including bid protests; (3) outcomes of major acquisition programs; and (4) acquisition and contractor workforce management. It also highlights relevant reforms in each area. This statement is based on GAO's body of work on DOD acquisitions and contracting and on GAO's statutory role in issuing bid protest decisions. GAO has made numerous recommendations in prior work but is not making any new recommendations in this testimony.
The first and perhaps best opportunity to reduce risk in an acquisition program is in the early planning phase when critical decisions with significant implications for the program's overall success are made. Early and effective planning helps minimize risks in both weapon system and services acquisitions. GAO has reported on the importance of prioritizing needs, adequately defining requirements, and using a solid, executable business case before committing resources to a program. DOD must demonstrate that the warfighter's needs are valid and can best be met with the chosen concept and that the chosen concept can be developed and produced with existing resources. DOD can also protect the government's interest by selecting contracting instruments that provide the proper allocation of risk between the government and contractor and by ensuring competition. Promoting competition can save money, improve contractor performance, and promote accountability. GAO's bid protest process also serves valuable public interests by providing transparency in the procurement system and guidance to the procurement community without undue disruption to the acquisition process. Risks that are not effectively managed in the earlier phases may result in poor program outcomes as programs move into the execution phase of the acquisition process. Problems are much more costly to fix in later stages than early in the acquisition. Last year we reported that the cumulative cost growth in DOD's portfolio of 96 major defense acquisition programs was $296 billion, and the average delay in delivering capabilities was 22 months. These outcomes mean that other critical defense and national priorities may go unfunded and that warfighters may go without the capabilities they need. Central to better managing risks is a capable acquisition workforce. However, DOD lacks key information about the current number and skill sets of its acquisition workforce and what it needs. To supplement its in-house acquisition workforce, DOD relies heavily on contractor personnel. Such reliance is symptomatic of DOD's overall reliance on contractors to provide additional capacity and expertise. Yet, precision on the size of the total contractor workforce and what roles they are fulfilling is elusive, hindering DOD's ability to make key workforce decisions and increasing the risk of transferring government responsibilities to contractors. The current reform environment provides an opportunity to leverage the lessons of the past and manage risks differently. This environment is shaped by significant acquisition reform legislation, constructive changes in DOD's acquisition policy, and initiatives by the administration, including making difficult decisions to terminate or trim numerous weapon systems. To sustain momentum and make the most of this opportunity, it will be essential that decisions to approve and fund acquisitions be consistent with the reforms and policies aimed at getting better outcomes.
GAO-10-374T, Defense Acquisitions: Managing Risk to Achieve Better Outcomes
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Testimony:
Before the Subcommittee on Defense, Committee on Appropriations, House
of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 1:30 p.m. EST:
Wednesday, January 20, 2010:
Defense Acquisitions:
Managing Risk to Achieve Better Outcomes:
Statement of:
Paul Francis, Managing Director:
Acquisition and Sourcing Management:
Michael Golden, Managing Associate General Counsel:
William Woods, Director:
Acquisition and Sourcing Management:
GAO-10-374T:
GAO Highlights:
Highlights of GAO-10-374T, a testimony before the Subcommittee on
Defense, Committee on Appropriations, House of Representatives.
Why GAO Did This Study:
In fiscal year 2009, the Department of Defense (DOD) spent nearly $384
billion on contracts. This investment, representing over 70 percent of
total government contract spending, highlights the great need to
better manage risk in acquisitions. But DOD has not always managed
risks effectively: major systems continue to take longer to develop,
cost more, and deliver fewer quantities and capabilities than
originally planned. In addition, poorly managed growth in services
spending has contributed to disappointing program outcomes. DOD weapon
system acquisition and contract management have been on GAO‘s high-
risk list for nearly 20 years.
This testimony focuses on (1) planning of DOD‘s acquisitions; (2)
contract types and the award process, including bid protests; (3)
outcomes of major acquisition programs; and (4) acquisition and
contractor workforce management. It also highlights relevant reforms
in each area.
This statement is based on GAO‘s body of work on DOD acquisitions and
contracting and on GAO‘s statutory role in issuing bid protest
decisions. GAO has made numerous recommendations in prior work but is
not making any new recommendations in this testimony.
What GAO Found:
The first and perhaps best opportunity to reduce risk in an
acquisition program is in the early planning phase when critical
decisions with significant implications for the program‘s overall
success are made. Early and effective planning helps minimize risks in
both weapon system and services acquisitions. GAO has reported on the
importance of prioritizing needs, adequately defining requirements,
and using a solid, executable business case before committing
resources to a program. DOD must demonstrate that the warfighter‘s
needs are valid and can best be met with the chosen concept and that
the chosen concept can be developed and produced with existing
resources.
DOD can also protect the government‘s interest by selecting
contracting instruments that provide the proper allocation of risk
between the government and contractor and by ensuring competition.
Promoting competition can save money, improve contractor performance,
and promote accountability. GAO‘s bid protest process also serves
valuable public interests by providing transparency in the procurement
system and guidance to the procurement community without undue
disruption to the acquisition process.
Risks that are not effectively managed in the earlier phases may
result in poor program outcomes as programs move into the execution
phase of the acquisition process. Problems are much more costly to fix
in later stages than early in the acquisition. Last year we reported
that the cumulative cost growth in DOD‘s portfolio of 96 major defense
acquisition programs was $296 billion, and the average delay in
delivering capabilities was 22 months. These outcomes mean that other
critical defense and national priorities may go unfunded and that
warfighters may go without the capabilities they need.
Central to better managing risks is a capable acquisition workforce.
However, DOD lacks key information about the current number and skill
sets of its acquisition workforce and what it needs. To supplement its
in-house acquisition workforce, DOD relies heavily on contractor
personnel. Such reliance is symptomatic of DOD‘s overall reliance on
contractors to provide additional capacity and expertise. Yet,
precision on the size of the total contractor workforce and what roles
they are fulfilling is elusive, hindering DOD‘s ability to make key
workforce decisions and increasing the risk of transferring government
responsibilities to contractors.
The current reform environment provides an opportunity to leverage the
lessons of the past and manage risks differently. This environment is
shaped by significant acquisition reform legislation, constructive
changes in DOD‘s acquisition policy, and initiatives by the
administration, including making difficult decisions to terminate or
trim numerous weapon systems. To sustain momentum and make the most of
this opportunity, it will be essential that decisions to approve and
fund acquisitions be consistent with the reforms and policies aimed at
getting better outcomes.
View [hyperlink, http://www.gao.gov/products/GAO-10-374T] or key
components. For more information, contact Paul Francis at (202) 512-
4841 or francisp@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
We are pleased to be here today to discuss the risks and outcomes
associated with the defense acquisition process. In fiscal year 2009,
the Department of Defense (DOD) spent nearly $384 billion on contracts
for goods and services. The significance of this investment,
representing over 70 percent of total government contract spending,
makes it imperative for DOD to manage risk in all of its acquisitions
to ensure that the government's best interests are being met. The
significance is further heightened by the critical role that
contractors play in supporting DOD's mission--as starkly illustrated
by the fact that in Iraq and Afghanistan the number of contractor
personnel exceeds the number of military personnel. Risk is inherent
in any major acquisition, whether a weapon system or complex service
acquisition. But it is only through the thoughtful management of risks
throughout all phases of the acquisition process that successful
outcomes can be achieved. Clearly, however, DOD has not adequately
managed such risks. For example, its major weapon systems continue to
take longer to develop, cost more, and deliver fewer quantities and
capabilities than originally planned. Last year we reported that the
cumulative cost growth in DOD's portfolio of 96 major defense
acquisition programs was $296 billion and the average delay in
delivering promised capabilities to the warfighter was 22 months. In
addition, since 2001, DOD spending on contracts for services has more
than doubled. We have reported that this growth has not been well
managed--resulting from thousands of individual decisions that tended
to be reactive, rather than from strategic, comprehensive planning--
contributing to schedule delays, cost overruns, and unmet expectations.
Despite decades of reform efforts, these outcomes and their underlying
causes have proven resistant to change and, in fact, both DOD weapon
system acquisition and DOD contract management have been on our high-
risk list for nearly 20 years. As recently as 2009, both Congress and
DOD have taken action to infuse the weapon acquisition process with
more knowledge and discipline, with laws and policy changes designed
to allow DOD to balance requirements with resources before programs
begin and produce more accurate cost estimates from the outset. In
addition, Congress and the President have initiated other reforms
aimed at improving government acquisition. While this most recent
round of reforms is very promising, it is too early to tell if they
will finally break the cycle of poor acquisition outcomes within DOD.
Further, no reform will be successful without having the right people
with the right skills to carry out and manage an acquisition program
throughout the entire acquisition process. Unwarranted risks can
undermine an acquisition in a number of ways. A poorly conceived
acquisition is doomed from the outset, while a poor contract selection
or an inadequate workforce can weaken the government's ability to
manage and oversee the acquisition. Therein lies the challenge: it
takes many things for an acquisition to succeed, while only one source
of unmanaged risk can cause a poor outcome.
Today, we will discuss (1) planning of DOD's acquisitions; (2)
contract types and the contract award process, including bid protests;
(3) outcomes of major acquisitions programs; and (4) the acquisition
and contractor workforce. We also will discuss relevant reforms in
each area. For purposes of this discussion, we have broken the
acquisition process down in to three broad phases: planning, contract
award, and execution. This statement draws from our extensive body of
work on DOD's acquisition of weapon systems and government contracting
and on our experience in deciding bid protests. Our audit work was
conducted in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
The Acquisition Process: Planning Phase:
The first, and perhaps best, opportunity to reduce risk in any DOD
acquisition is in the acquisition planning phase, when critical
decisions are made that have significant implications for the overall
success of an acquisition. Achieving the right knowledge at the right
time enables leadership to make informed decisions about when and how
best to move into succeeding acquisition phases. The appropriate
amount of early planning helps to minimize risks in both weapon system
and services acquisitions.
With regard to weapon systems, immature technology, unrealistic
requirements, a lack of early system engineering, acceptance of
unreliable resource estimates based on overly optimistic assumptions,
and the failure to commit full funding all contribute to poor
outcomes. We have frequently reported on the importance of using a
solid, executable business case before committing resources to a new
product development. Our body of work on best practices has shown that
an executable business case is one that provides demonstrated evidence
that (1) the warfighter's needs are valid and can best be met with the
chosen concept; and (2) the chosen concept can be developed and
produced within existing resources--that is, proven technologies,
design knowledge, adequate funding, people (including an adequate
technical, management, and acquisition workforce), and sufficient time
to deliver the product. This business case should match requirements
with resources and lock in those requirements. At the heart of a
business case is a knowledge-based approach to product development
that demonstrates high levels of knowledge before significant
commitments are made. High levels of uncertainty set up programs for
poor outcomes.
Our work on DOD's requirements process has shown that DOD does not
adequately prioritize needs from a joint, departmentwide perspective
and lacks the agility to meet changing warfighter demands. DOD often
does not perform the proper up-front requirements analysis on
individual programs to determine whether a weapon system will meet
warfighter needs. Significant contract cost increases can and do occur
as the scope of the requirements change or become better understood by
the government and contractor. In addition, it is a best practice to
achieve a high level of technology maturity--meaning that the
technologies needed to meet essential product requirements have been
demonstrated to work in their intended environment--prior to making
significant commitments to the weapons program. Technology maturity is
an important indicator of whether sufficient early acquisition
planning and analysis has been conducted. Since 2003, there has been
an increase in the technology maturity of DOD programs at the start of
system development; however, few programs have met the best practices
standard. In our 2009 assessment, on average, programs that reported
fully mature technologies by development start have experienced 30
percent less growth in research and development costs over their first
estimates than programs starting development with immature
technologies.[Footnote 1] When technology risks are not managed early,
an acquisition program can run into difficulties in later phases.
Having a feasible, stable preliminary design for a weapons program
early in the acquisition process is also important in lessening risk,
both by ensuring that there is a match between resources and
requirements and by demonstrating that a product's design can meet
customer requirements, as well as cost, schedule, and reliability
targets. We have found that programs have too often moved forward in
the development process without a stable design, although the level of
design knowledge attained at key milestones has been increasing over
time.
The Army's Future Combat System (FCS) was an example of a program for
which requirements were not adequately defined and solidified early
on, resulting in design churn and the potential for reduced
capabilities. The Army started the FCS program in May 2003 before
critical technologies were proven and key systems were defined; it did
not expect to complete defining requirements and establishing system
designs at least until 2009, 6 years after program initiation. As you
know, the FCS has recently had elements canceled and some of the
remaining elements restructured into other programs. In another
example, one of the defining technologies shaping the Navy's Ford-
class aircraft carrier (CVN 21) design is the Electromagnetic Aircraft
Launch System, a catapult system that uses an electrically generated,
moving magnetic field instead of steam to propel aircraft to launch
speed. Though the ship is under construction, the catapult technology
is still immature. As we have previously reported, technical
challenges have resulted in cost growth and delays that could disrupt
construction of the lead ship.[Footnote 2]
Service acquisitions also require early planning. Once DOD determines
what services contractors should provide, both the contractor and the
government need to have a clear sense of what the contractor is
required to do under the contract. Poorly defined or changing
requirements have contributed to increased costs, as well as services
that did not meet the department's needs. The absence of well-defined
requirements and clearly understood objectives complicates efforts to
ensure accountability for acquisition outcomes. For example, we
reported that a disagreement between a contractor and DOD on how to
bill for food services in Iraq resulted in at least $171 million in
questioned costs that DOD did not pay.[Footnote 3] A clearer statement
of work, coupled with better DOD oversight of the contract, could have
prevented the disagreement and mitigated the government's risk of
paying for more services than needed.
Relevant Reform: Congressional and Departmental Initiatives:
Recent reform actions have been taken by Congress and DOD to address
some early risk factors. The Weapon Systems Acquisition Reform Act of
2009, the National Defense Authorization Acts from fiscal years 2006
though 2009, and DOD's revisions to its acquisition policy in December
2008 all addressed issues essential to reducing risk in the early
acquisition planning phase, such as promoting early systems
engineering, assessing technology maturity, controlling costs, and
ensuring combatant commanders play a greater role in setting
requirements. These are positive steps, but inconsistent
implementation has hindered past DOD efforts to address problems with
weapons acquisition. To improve outcomes on the whole, DOD must ensure
that these and other policy changes are consistently put into practice
and reflected in decisions made on individual acquisitions.
Similarly, over the last decade Congress has enacted legislation to
improve DOD's management and oversight of services. In response to the
National Defense Authorization Act for Fiscal Year 2002, DOD
established a service acquisition management structure to ensure that
DOD's services acquisitions are based on clear, performance-based
requirements with measurable outcomes and that acquisitions are
planned and administered to achieve intended results. Recently, DOD
established a multiphased, peer-review process for services
acquisitions intended to ensure consistent and appropriate
implementation of policy and regulations, improve the quality of
contracting processes, and facilitate sharing best practices and
lessons learned. Going beyond the requirements of the legislation, DOD
expanded its guidance on this review process to include its
acquisition of weapon systems and products. We plan to report our
initial observations of DOD's peer review process by the end of this
month.
The Acquisition Process: Contract Award Phase:
Once early acquisition planning is complete, DOD must select
contracting instruments that match the needs of the acquisition and
protect the government's interests. The information obtained during
early acquisition planning can serve to inform the contract award
phase and further reduce risk. During the contract award phase, DOD
can choose among different contract types, pricing arrangements, and
contract vehicles to acquire products and services. Of primary concern
during this phase should be the proper allocation of risk between the
government and contractor and ultimately what is in the best interest
of the government. The way to do this is through selecting the
appropriate contract type--ranging from fixed price to cost
reimbursement--for the acquisition. Each contract type, described
generally in table 1, comes with a different level of cost or
performance risk for the government.
Table 1: Contract Types:
Fixed-price:
Government pays a fixed price and is guaranteed an end item or service
whether actual total cost of product or service falls short of or
exceeds the contract price. May also pay an award or incentive fee
related to performance;
Contractor provides an acceptable deliverable at the time, place, and
price specified in the contract;
Who assumes risk of cost overrun? Contractor.
Time-and-Materials:
Government pays fixed per-hour labor rates that include wages,
overhead, general and administrative costs, and profit; government may
reimburse contractor for other direct costs, such as travel and
materials costs. Government is not guaranteed a completed end item or
service within the ceiling price;
Contractor makes good faith effort to meet government's needs within
the ceiling price;
Who assumes risk of cost overrun? Government.
Cost-reimbursement: Government pays contractor's allowable costs,
which do not include profit. Also pays a fee, which may be related to
performance. Government is not guaranteed a completed end item or
service within the estimated cost;
Contractor makes good faith effort to meet government's needs within
the estimated cost;
Who assumes risk of cost overrun? Government.
Sources: Federal Acquisition Regulation, Defense Federal Acquisition
Regulation Supplement, DOD Contract Pricing Preference Guide (data);
GAO (presentation and analysis).
[End of table]
Fixed-price contracts are generally considered to be the lowest risk
to the government because the onus is on the contractor to provide the
deliverable at the time, place, and price specified in the contract.
In addition, the contractor is responsible for bearing any costs
associated with a delay or inadequate performance, assuming that the
government has not contributed to contractor performance issues
through late delivery of government-furnished equipment or changing
requirements.
Time-and-materials contracts constitute a higher risk to the
government.[Footnote 4] Under this contract type, the contractor
provides its best efforts to accomplish the objectives of the contract
up to the maximum number of hours authorized under the contract. Each
hour of work authorizes the contractor to charge the government a
fixed labor rate which includes profit. These contracts are considered
high risk for the government because the contractor's profit is tied
to the number of hours worked. The government is not guaranteed a
completed service. Thus, the government bears the cost risk of paying
for additional hours. To limit the risk from these types of contracts,
the Federal Acquisition Regulation (FAR) provides that appropriate
government monitoring of contractor performance is required to give
reasonable assurance that efficient methods and effective cost
controls are being used. Although these contracts may be appropriate
in certain circumstances, we have reported that contracting officers
used this contract type for ease and flexibility in the face of
unclear requirements or funding uncertainties and did not adequately
determine, as required, that no other contract type was suitable.
[Footnote 5]
Cost-reimbursement contracts also pose high risk to the government.
Federal agencies obligate more than $100 billion annually using this
type of contract. Cost-reimbursement contracts are considered high
risk for the government because of the potential for cost escalation
and because the government pays a contractor's allowable incurred
costs to the extent provided in the contract regardless of whether the
work is completed. As such, cost-reimbursement contracts are generally
suitable only when uncertainties involved in contract performance do
not permit costs to be estimated with sufficient accuracy to use a
fixed-price contract. The two major reasons for the inability to
accurately estimate costs are (1) the lack of knowledge of the work
needed to meet the requirements of the contract, for example, under
research contracts, which necessarily involve substantial
uncertainties, and (2) the lack of cost experience in performing work,
such as the development of a weapon system where manufacturing
techniques and specifications are not stable enough to warrant
contracting on a fixed-price basis. When these conditions exist, the
use of a cost-reimbursement contract may be appropriate. Conversely,
when uncertainties have been reduced to a manageable level, a fixed-
price contract generally is used. We reported in 2009, however, that
key controls to ensure the appropriate use of cost-reimbursement
contracts were not always used by agencies when selecting this
contract type.[Footnote 6]
As we look across DOD's many weapons programs, we typically see a
migration from cost-type to fixed-price contracts as programs move
from development to production. We become concerned, however, when we
see programs like the Joint Strike Fighter move into the production
phase for significant quantities under a cost-reimbursement contract,
which suggests that the program still faces significant uncertainties
and cost risks. The choice of contract type in this case may be
consistent with the level of risk the program faces, but that level of
risk may indicate a program not yet ready for production.
A variety of other contract types or agreements are also available,
such as indefinite delivery/indefinite quantity contracts,[Footnote 7]
blanket purchase agreements,[Footnote 8] and undefinitized contract
actions.[Footnote 9] While these contracts and agreements offer the
government the ability to adapt its business arrangements to the
situation at hand, when they are not used properly the government
could be exposed to undue risk. For example, we reported that agencies
are not maximizing opportunities for competition or savings under
blanket purchase agreements. Similarly, with the use of undefinitized
contract actions, we have reported that the contractor has little
incentive to control costs, creating a potential for wasted taxpayer
dollars.
Regardless of the contract type selected, competition is the
cornerstone of the acquisition process, and the benefits of
competition in acquiring goods and services from the private sector
are well established. Promoting competition--as opposed to sole-source
contracts, where the government negotiates with only one source--can
help save the taxpayer money, improve contractor performance, and
promote accountability for results. Agencies are required to perform
acquisition planning and conduct market research for all acquisitions
in order to promote and provide for, among other things, full and open
competition. There are certain circumstances when sole source
contracts may be appropriate, such as urgent needs or when there is
truly only one source to provide the good or service, and Congress has
allowed for such flexibility.[Footnote 10] However, our work has
identified situations where the government has not taken advantage of
opportunities to compete work. For example, we found that the Army had
issued contracts for security guards at U.S. military installations on
a sole-source basis. Based on our recommendations, the contracts
subsequently were competed, which resulted in cost savings.
Bid Protests: Promoting Transparency and Integrity:
One of the principal tools for ensuring the integrity of the
competition system is the bid protest process. GAO has been deciding
bid protests since the 1920s. The Competition in Contracting Act of
1984 (CICA) codified GAO's role as a quasi-judicial forum to provide
an objective, independent, and impartial process for the resolution of
disputes concerning the award of federal contracts. We handle protests
following the procedures set out in the Bid Protest Regulations in
Part 21 of Title 4 of the Code of Federal Regulations. The existing
process provides a balanced approach to adjudicate and resolve bid
protest challenges to federal procurements. In fiscal year 2009, we
received 1,764 protests, which is an increase of approximately 20
percent from 2008. See appendix I. This increase is driven in part by
statutory expansions of GAO's bid protest jurisdiction. However, when
viewed historically, and viewed in terms of the significant increases
in procurement spending, the number of protests challenging contract
awards in the last 5 years is relatively low. A more detailed analysis
of our bid protest statistics pertaining to DOD specifically is
included in appendix II.
The bid protest process involves a legal, adjudicative function; both
the process and the resulting product differ from those associated
with the reports that GAO issues in connection with its program audits
and reviews. Protests are handled solely by GAO's Office of General
Counsel (OGC), not by its audit teams. In developing the record, OGC
provides all protest parties--the protester, the awardee, and the
contracting agency--an opportunity to present their positions. In some
cases, we conduct a hearing to further develop the record. Under CICA,
as amended, we have 100 calendar days to decide a protest.
The product of a protest before GAO--our legal decision--does not
address broad programmatic issues, such as whether or not a weapons
program is being managed effectively or consistent with best
practices. Our decision also reaches no conclusion about which of the
offered goods or services will best meet the agency's needs. Instead,
a bid protest decision addresses specific allegations raised by an
unsuccessful offeror challenging particular procurement actions as
contrary to procurement laws, regulations, or the evaluation scheme
set forth in the solicitation.
We sustain a protest when we find that the contracting agency has not
complied with procurement laws, regulations, or the solicitation's
evaluation scheme, and that this error prejudiced the protester's
chances of winning the competition for the contract. Evaluating
offerors in a manner consistent with the solicitation's stated ground
rules is a requirement for conducting an impartial and objective
procurement. While the focus of this hearing is on our experience with
DOD protests, we do not want to leave you with the impression that
only DOD procurements experience problems, or the impression that DOD
procurements experience problems more often than those of other
federal agencies. That said, we have seen several cases involving DOD
procurements in which the agency has not followed, or has misapplied,
the ground rules for the competition as stated in the solicitation.
* In Sikorsky Aircraft Company; Lockheed Martin Systems Integration--
Owego, B-299145 et al., Feb. 26, 2007, 2007 CPD ¶ 45, we sustained a
protest involving an Air Force procurement of combat search and rescue
replacement vehicles (CSAR-X). There, the agency evaluated offerors'
operating and support costs in a manner that was inconsistent with the
stated evaluation criteria for cost/price. We recommended that the
agency amend the solicitation to clarify its intent with respect to
the evaluation of operating and support costs, seek revised proposals,
and make a new source selection decision. The agency thereafter
materially revised its solicitation, but did not permit proposal
revisions, which led to another sustained protest. See Sikorsky
Aircraft Company; Lockheed Martin Systems Integration--Owego, B-
299145.5, B-299145.6, Aug. 30, 2007, 2007 CPD ¶ 155.
* In The Boeing Company, B-311344 et al., June 18, 2008, 2008 CPD ¶
114, we sustained a protest involving the Air Force's procurement of
aerial refueling tanker aircraft. We found that the agency had
deviated from stated evaluation criteria in a number of ways,
including that the agency did not apply identified relative weightings
in assessing the merits of the firms' proposals, and the agency
considered exceeding "key performance parameter objectives" as a key
discriminator between proposals when such consideration was prohibited
by the solicitation. We also found a number of other areas where the
evaluation was unreasonable in light of the solicitation requirements.
* In Navistar Defense, LLC; BAE Systems, Tactical Vehicle Systems LP,
B-401865 et al, Dec. 14, 2009, 2009 CPD ¶ 258, we sustained a protest
involving the Army's procurement of medium tactical vehicles. Although
the solicitation provided that offerors whose key tooling and
equipment did not exist would be viewed as presenting more risk than
offerors who had such items on hand, the agency did not evaluate
offerors' risk consistent with this solicitation requirement.
* In Health Net Federal Services, LLC, B-401652.3 et al., Nov. 4,
2009, 2009 CPD ¶ 220, and Humana Military Healthcare Services, B-
401652.2 et al., Oct. 28, 2009, 2009, CPD ¶ 219, we sustained two
protests involving DOD contracts for TRICARE managed health care
support. Both protests involved instances where the agency deviated
from the stated criteria during the evaluation of proposals. In both
cases, we found that the agency did not adequately account for network
provider discounts in the evaluation, as was required by the
solicitation.
Although the examples above highlight instances where the agency did
not adhere to stated evaluation criteria, there are other reasons why
GAO might sustain a protest. For example, an agency's evaluation may
not be adequately documented, or the evaluation conclusions may not be
supported by the record. An agency also may have conducted inadequate
or misleading discussions, or evaluated offerors' proposals in a
disparate manner. Some of the cases above also include one or more of
these additional reasons as a basis for sustaining the protest.
Despite several significant decisions sustaining protests, GAO's bid
protest process reduces potential disruptions to DOD procurements as a
result of three factors: (1) GAO consistently closes more than 50
percent of all protests involving DOD procurements within 30 days of
filing; (2) remaining DOD protests must be, and are, resolved within
100 days of filing; and (3) CICA permits agencies to proceed with
contract performance even before a protest is resolved when the goods
or services are urgently needed, or when proceeding is in the best
interests of the United States. In short, while there are challenges
associated with balancing competing interests inherent in the protest
system, public bid protest decisions serve a number of valuable public
interests--providing transparency in the procurement system and
guidance to the procurement community, without undue disruption to the
acquisition process.
Relevant Reform: Congressional and Administration Initiatives:
Congress has always had a strong interest in ensuring that the
procurement system works as intended and recently has demonstrated an
even more pronounced level of concern. This is evidenced by the
creation of oversight bodies in both the House and Senate focused on
contracting issues, as well as by hearings such as this one. On the
legislative front, Congress has enacted measures designed to improve
accountability, transparency, and effectiveness throughout the system.
Most recently, for example, the National Defense Authorization Act for
Fiscal Year 2010 provides for new controls over certain sole-source
contracts and undefinitized contract actions.
The President's March 4, 2009, memorandum also addresses the need for
improvement in the procurement system. In that memorandum and
subsequent Office of Management and Budget guidance, the
administration has tasked agencies with making measurable improvements
in four key areas: (1) increasing competition, (2) reducing the use of
high-risk contracting approaches, (3) improving the acquisition
workforce, and (4) determining the appropriate use of contractors
versus federal employees in doing the work of the government. We plan
to track the progress made in each of the areas over time.
The Acquisition Process: Program Execution and Outcomes:
After a DOD program moves into the final phase of the acquisition
process, any risks that were not effectively managed in the earlier
phases may contribute to or be compounded by new risks. For example, a
program with immature technologies or unstable requirements will have
a difficult time ensuring the design is mature before production
begins. Problems are much more costly to fix in late development or
production than before starting the acquisition. Weapon systems that
cost more, take longer, and deliver fewer quantities and capabilities
than originally planned are outcomes that are typically accepted and
accommodated in the acquisition and budgeting processes. Recently,
however, more dramatic actions have taken place in the form of
cancellations of programs such as the VH-71 Presidential Helicopter,
the Armed Reconnaissance Helicopter, the Transformational Satellite,
and portions of the Future Combat System.
As we mentioned previously, in 2008, the cumulative cost growth in the
DOD's portfolio of 96 major defense acquisition programs was $296
billion and the average delay in delivering promised capabilities to
the warfighter was 22 months. These outcomes mean that other critical
defense and national priorities may go unfunded and that warfighters
may go without the equipment they need to counter the changing threats
that they face. Of these same programs, 75 percent reported increases
in research and development costs since their first estimate, and 69
percent reported increases in total acquisition costs. It should be
noted that DOD's performance in some of these areas is driven by
older, underperforming programs as newer programs, on average, have
not yet shown the same degree of cost and schedule growth. Table 2
depicts recent cost and schedule growth in major programs.
Table 2: Analysis of DOD Major Defense Acquisition Program Portfolios
(Fiscal year 2009 dollars):
Portfolio size: Number of programs;
Fiscal year: 2003: 77;
Fiscal year: 2007: 95;
Fiscal year: 2008: 96.
Portfolio size: Total planned commitments;
Fiscal year: 2003: $1.2 trillion;
Fiscal year: 2007: $1.6 trillion;
Fiscal year: 2008: $1.6 trillion.
Portfolio size: Commitments outstanding;
Fiscal year: 2003: $724.2 billion;
Fiscal year: 2007: $875.2 billion;
Fiscal year: 2008: $786.3 billion.
Portfolio indicators: Change to total RDT&E[B] costs from first
estimate;
Fiscal year: 2003: 37 percent;
Fiscal year: 2007: 40 percent;
Fiscal year: 2008: 42 percent.
Portfolio indicators: Change to total acquisition cost from first
estimate;
Fiscal year: 2003: 19 percent;
Fiscal year: 2007: 26 percent;
Fiscal year: 2008: 25 percent.
Portfolio indicators: Total acquisition cost growth;
Fiscal year: 2003: $183 billion;
Fiscal year: 2007: $301.3 billion[A];
Fiscal year: 2008: $296.4 billion.
Portfolio indicators: Share of programs with 25 percent increase in
program acquisition unit cost growth;
Fiscal year: 2003: 41 percent;
Fiscal year: 2007: 44 percent;
Fiscal year: 2008: 42 percent.
Portfolio indicators: Average schedule delay in delivering initial
capabilities;
Fiscal year: 2003: 18 months;
Fiscal year: 2007: 21 months;
Fiscal year: 2008: 22 months.
Source: GAO analysis of DOD data:
Notes: Data were obtained from DOD's Selected Acquisition Reports
(SAR) (dated December 2002, 2006, and 2007). In a few cases data were
obtained directly from program offices. The number of programs
reflects the programs with SARs; however, in our analysis we have
broken a few SAR programs into smaller elements or programs. Not all
programs had comparable cost and schedule data and these programs were
excluded from the analysis where appropriate. Portfolio performance
data do not include costs of developing Missile Defense Agency
elements or the Defense Integrated Military Human Resources System
(DIMHRS) program.
[A] The total acquisition cost growth for the 2007 portfolio was $295
billion in 2008 constant dollars.
[B] Research, Development, Test, and Evaluation.
[End of table]
The collective performance of the programs in DOD's portfolio is a key
indicator of how well the acquisition system generates the return on
investment that it promises to the warfighter, Congress, and
taxpayers. On the whole, cost growth continues to have an adverse
effect on the quantities programs are able to deliver to the
warfighter. Cost increases have an impact on DOD's buying power for
individual systems, as demonstrated by changes in program acquisition
unit costs. As program costs increase, DOD must request more funding
to cover overruns, make trade-offs with existing programs, delay the
start of new programs, take funds from other accounts, or reduce
procurement quantities. Late deliveries delay providing critical
capabilities to the warfighter and result in operating costly legacy
systems longer than expected, finding alternatives to fill capability
gaps, or going completely without the capability. Ultimately,
continued cost growth reduces DOD's overall buying power and results
in less funding being available for other DOD priorities and programs.
The Navy's fiscal year 2009 long-range ship construction plan is one
such example: the plan provides for fewer ships at a higher unit cost--
in both the near term and the long term--than the Navy outlined in its
fiscal year 2008 plan because cost growth has mounted in current
shipbuilding programs and the Navy has had to reallocate funds planned
for future ships to pay for ones currently under construction.
Relevant Reform: Congressional Initiatives:
In the last several years, Congress has enacted legislation that could
improve DOD's program outcomes. For example, in the National Defense
Authorization Acts for fiscal year 2006 and for fiscal year 2008,
Congress included a provision that requires decisionmakers to certify
that programs meet specific criteria at key decision points early in
the acquisition process. In addition, the Weapon Systems Acquisition
Reform Act of 2009 contains provisions aimed at addressing
requirements and improving the validity of cost estimates.
Specifically, it established the positions of Director of Cost
Assessment and Program Evaluation, Director of Developmental Test and
Evaluation, and Director of Systems Engineering, as well as
requirements for reports and guidance on systems engineering and
developmental testing. The act also includes provisions related to the
early consideration of trade-offs among cost, schedule, and
performance early in the program cycle; early design reviews; and
competitive prototyping.
Workforce: The Right People Doing the Right Work Is Essential to
Program Success:
Over the last several years, changes in the federal acquisition
environment have created significant challenges to building and
sustaining a capable acquisition workforce, which is responsible for
planning, executing, and supporting DOD acquisitions. There has been a
substantial increase in spending on acquisition programs and services,
while the number of civilian and military personnel in DOD's
acquisition workforce has remained relatively constant. Program
offices have reported that workforce shortfalls have resulted in
degradation in oversight, delays in certain management and contracting
activities, and increased workloads for existing staff. To supplement
its in-house acquisition workforce, DOD relies heavily on contractor
personnel. For example, we have found that in some program offices
contractor personnel outnumber DOD personnel.
Both GAO and DOD have noted that without an adequate workforce to
manage the department's acquisitions, there is an increased risk of
poor acquisition outcomes and vulnerability to fraud, waste, and
abuse. However, DOD's lack of key pieces of information hinders its
ability to determine gaps in the number and skill sets of acquisition
personnel needed to meet its current and future missions. At a
fundamental level, workforce gaps are determined by comparing the
number and skill sets of the personnel that an organization has with
what it needs. However, DOD lacks information on both what it has and
what it needs. Specifically, it lacks complete information on the
composition and skill sets of the current acquisition workforce--
including contractor personnel--and whether these skill sets are
sufficient to accomplish its missions. Not having this information
skews analyses of workforce gaps and limits DOD's ability to make
informed workforce allocation decisions.
In the broader context, DOD also has had difficulty identifying and
quantifying its overall contractor workforce. To this end, Congress
has enacted legislation in recent years to increase the availability
of information on services acquisitions to improve DOD's ability to
manage its use of contractors. For example, in 2008, Congress amended
a requirement in place for DOD to compile annual inventories of the
activities performed under contracts for services, to include
information on the number of contractors paid for performing the
services. The inventories are intended to help senior DOD officials
make more informed acquisition and workforce decisions related to the
use of contractors. We have found limitations with the inventories
that were submitted for fiscal year 2008, as well as similar
limitations in the department's ability to provide complete and
reliable data on the number of contractors in Iraq and Afghanistan.
Beyond the numbers of contractors, our recent work has shown that
reliance on contractors to support core missions can place the
government at risk of transferring government responsibilities, or
inherently governmental functions,[Footnote 11] to contractors. Of key
concern is the loss of government control over and accountability for
policy and program decisions. For example, we reported that DOD
officials generally did not consider whether contractors may be unduly
or inappropriately influencing government decision making, when making
decisions regarding the use of service contractors. Another area where
the appropriate role of the contractor has come into question is the
use of the lead system integrator.
Relevant Reform: Congressional and Departmental Initiatives:
Congress has passed legislation designed to improve DOD's acquisition
workforce. For example, Congress has provided expedited hiring
authority for the defense acquisition workforce and has created a
Defense Acquisition Workforce Development Fund with a dedicated
funding stream to provide the necessary training and development
resources. The department also has a number of initiatives underway to
address deficiencies in its acquisition workforce, including
conducting a competency assessment to identify the skill sets of its
current in-house acquisition workforce and increasing the size of its
acquisition workforce. The department is planning to increase the size
of the acquisition workforce by up to 20,000 people by 2015, through a
combination of new hires and insourcing work currently performed by
contractors. In addition, DOD is currently working to develop a new
more consistent approach for compiling future inventories of service
contract employees to help provide better information for use by
decision makers.
Concluding Observations:
The current state of defense acquisitions has been decades in the
making. To a large extent, this reflects cumulative commitments to
provide unparalleled long-term capabilities, to expedite near-term
capabilities, and to accept the attendant risks. Over time, investment
budgets have grown substantially to accommodate the foregoing. Today,
DOD finds itself with a large portfolio of weapons and other
acquisitions that it may not be able to afford, a large and hard-to-
define contractor workforce, and a government workforce that may not
be sufficient to manage and oversee the acquisitions and the
contractors. The likelihood of smaller or level investment budgets,
painful lessons learned from recent acquisitions, and a strained
workforce, suggest that we need to manage risks differently. Right
now, we have a great opportunity to do just that. The acquisition
reforms that have been instituted by Congress, the administration, and
DOD provide a good framework for managing risk. The recent difficult
decisions to cancel or trim a number of major weapons programs suggest
a collective willingness to make decisions that are consistent with
reforms. In the past, good policies have been on the books, but
decisions on what programs to approve and to support with funding
often undermined those policies. Some fundamental lessons can help
guide the decisions ahead. More specifically, a program must be put on
a sound technical, cost, and schedule footing before it is approved--
contract vehicles can accommodate risks but cannot fix a troubled
program. At the same time, a flawed competition or contract award
process can delay or disrupt an otherwise sound acquisition. A sound
acquisition and contracting strategy is essential to executing the
acquisition within time and funding budgets. A capable workforce must
undergird all of the above.
Mr. Chairman, this concludes our prepared statement. We would be happy
to answer any questions you may have at this time.
[End of section]
Appendix I: 2005-2009 Statistics for All GAO Bid Protests:
Fiscal year: 2005;
Total cases: 1,262;
Dismissals: 956;
Merit results (sustain and deny): 306;
Protests sustained: 71.
Fiscal year: 2006;
Total cases: 1,223;
Dismissals: 974;
Merit results (sustain and deny): 249;
Protests sustained: 72.
Fiscal year: 2007;
Total cases: 1,277;
Dismissals: 942;
Merit results (sustain and deny): 335;
Protests sustained: 91.
Fiscal year: 2008;
Total cases: 1,458;
Dismissals: 1,167;
Merit results (sustain and deny): 291;
Protests sustained: 60.
Fiscal year: 2009;
Total cases: 1,764;
Dismissals: 1,449;
Merit results (sustain and deny): 315;
Protests sustained: 57.
Source: GAO:
Note: These figures represent the number of protests. Often there are
multiple protests filed for a single procurement action.
[End of table]
[End of section]
Appendix II: 2005-2009 Statistics for GAO Bid Protests Involving DOD
Components:
2005 DOD Component Statistics:
Component: Air Force;
Total cases: 127;
Dismissals: 93;
Merit results (sustain and deny): 34;
Protests sustained: 13.
Component: Army;
Total cases: 282;
Dismissals: 223;
Merit results (sustain and deny): 59;
Protests sustained: 7.
Component: Defense Logistics Agency;
Total cases: 121;
Dismissals: 108;
Merit results (sustain and deny): 13;
Protests sustained: 0.
Component: Marine Corps;
Total cases: 12;
Dismissals: 4;
Merit results (sustain and deny): 8;
Protests sustained: 1.
Component: Navy;
Total cases: 135;
Dismissals: 105;
Merit results (sustain and deny): 30;
Protests sustained: 5.
Component: DOD (Misc.);
Total cases: 29;
Dismissals: 19;
Merit results (sustain and deny): 10;
Protests sustained: 2.
Component: Defense Total;
Total cases: 706;
Dismissals: 552;
Merit results (sustain and deny): 154;
Protests sustained: 28.
Source: GAO.
Note: These figures represent the number of protests. Often there are
multiple protests filed for a single procurement action.
2006 DOD Component Statistics:
Component: Air Force;
Total cases: 148;
Dismissals: 105;
Merit results (sustain and deny): 43;
Protests sustained: 13.
Component: Army;
Total cases: 334;
Dismissals: 277;
Merit results (sustain and deny): 57;
Protests sustained: 12.
Component: Defense Logistics Agency;
Total cases: 70;
Dismissals: 62;
Merit results (sustain and deny): 8;
Protests sustained: 3.
Component: Marine Corps;
Total cases: 32;
Dismissals: 29;
Merit results (sustain and deny): 3;
Protests sustained: 1.
Component: Navy;
Total cases: 101;
Dismissals: 73;
Merit results (sustain and deny): 28;
Protests sustained: 4.
Component: DOD (Misc.);
Total cases: 54;
Dismissals: 42;
Merit results (sustain and deny): 12;
Protests sustained: 5.
Component: Defense Total;
Total cases: 739;
Dismissals: 588;
Merit results (sustain and deny): 151;
Protests sustained: 38.
Source: GAO.
Note: These figures represent the number of protests. Often there are
multiple protests filed for a single procurement action.
2007 DOD Component Statistics:
Component: Air Force;
Total cases: 136;
Dismissals: 103;
Merit results (sustain and deny): 33;
Protests sustained: 16.
Component: Army;
Total cases: 323;
Dismissals: 242;
Merit results (sustain and deny): 81;
Protests sustained: 22.
Component: Defense Logistics Agency;
Total cases: 97;
Dismissals: 80;
Merit results (sustain and deny): 17;
Protests sustained: 0.
Component: Marine Corps;
Total cases: 20;
Dismissals: 18;
Merit results (sustain and deny): 2;
Protests sustained: 0.
Component: Navy;
Total cases: 129;
Dismissals: 96;
Merit results (sustain and deny): 33;
Protests sustained: 8.
Component: DOD (Misc.);
Total cases: 70;
Dismissals: 36;
Merit results (sustain and deny): 34;
Protests sustained: 16.
Component: Defense Total;
Total cases: 775;
Dismissals: 575;
Merit results (sustain and deny): 200;
Protests sustained: 62.
Source: GAO.
Note: These figures represent the number of protests. Often there are
multiple protests filed for a single procurement action.
2008 DOD Component Statistics:
Component: Air Force;
Total cases: 154;
Dismissals: 132;
Merit results (sustain and deny): 22;
Protests sustained: 9.
Component: Army;
Total cases: 396;
Dismissals: 322;
Merit results (sustain and deny): 74;
Protests sustained: 9.
Component: Defense Logistics Agency;
Total cases: 87;
Dismissals: 74;
Merit results (sustain and deny): 13;
Protests sustained: 1.
Component: Marine Corps;
Total cases: 22;
Dismissals: 18;
Merit results (sustain and deny): 4;
Protests sustained: 2.
Component: Navy;
Total cases: 126;
Dismissals: 88;
Merit results (sustain and deny): 38;
Protests sustained: 9.
Component: DOD (Misc.);
Total cases: 53;
Dismissals: 51;
Merit results (sustain and deny): 2;
Protests sustained: 0.
Component: Defense Total;
Total cases: 838;
Dismissals: 685;
Merit results (sustain and deny): 153;
Protests sustained: 30.
Source: GAO.
Note: These figures represent the number of protests. Often there are
multiple protests filed for a single procurement action.
2009 DOD Component Statistics:
Component: Air Force;
Total cases: 189;
Dismissals: 168;
Merit results (sustain and deny): 21;
Protests sustained: 3.
Component: Army;
Total cases: 503;
Dismissals: 424;
Merit results (sustain and deny): 79;
Protests sustained: 7.
Component: Defense Logistics Agency;
Total cases: 127;
Dismissals: 109;
Merit results (sustain and deny): 18;
Protests sustained: 3.
Component: Marine Corps;
Total cases: 43;
Dismissals: 36;
Merit results (sustain and deny): 7;
Protests sustained: 2.
Component: Navy;
Total cases: 149;
Dismissals: 114;
Merit results (sustain and deny): 35;
Protests sustained: 3.
Component: DOD (Misc.);
Total cases: 39;
Dismissals: 32;
Merit results (sustain and deny): 7;
Protests sustained: 2.
Component: Defense Total;
Total cases: 1,050;
Dismissals: 883;
Merit results (sustain and deny): 167;
Protests sustained: 20.
Source: GAO.
Note: These figures represent the number of protests. Often there are
multiple protests filed for a single procurement action.
[End of table]
[End of section]
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Paul Francis, Managing Director, Acquisition and Sourcing Management,
(202) 512-4841 or francispj@gao.gov:
Michael Golden, Managing Associate General Counsel, on (202) 512-8233
or goldenm@gao.gov:
William Woods, Director Acquisition and Sourcing Management, on (202)
512-4841 or woodsw@gao.gov:
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this testimony.
Staff Acknowledgments:
In addition to the contacts above, Sharon L. Larkin (Deputy Assistant
General Counsel), Shelby S. Oakley (Assistant Director), Brenna
Guarneros, Christopher (James) Madar, Christopher Mulkins, and Alyssa
Weir all made key contributions to this testimony:
[End of section]
Footnotes:
[1] GAO, Defense Acquisitions: Assessments of Selected Weapon
Programs, [hyperlink, http://www.gao.gov/products/GAO-09-326SP]
(Washington, D.C.: Mar. 30, 2009).
[2] GAO, Best Practices: High Levels of Knowledge at Key Points
Differentiate Commercial Shipbuilding from Navy Shipbuilding,
[hyperlink, http://www.gao.gov/products/GAO-09-322] (Washington, D.C.:
May 13, 2009)
[3] Negotiations between the contractor and DOD resulted in a
settlement under which $36 million would not be paid to the contractor.
[4] The Federal Acquisition Regulation (FAR) provides that a time-and-
materials contract provides no positive profit incentive to the
contractor for cost control or labor efficiency. T&M contracts exhibit
some characteristics of fixed-price contracts in that T&M contracts
contain fixed hourly labor rates and a ceiling price which the
contractor exceeds at its own risk. FAR § 16.601.
[5] GAO, Defense Contracting: Improved Insight and Controls Needed
over DOD's Time-and-Materials Contracts, [hyperlink,
http://www.gao.gov/products/GAO-07-273] (Washington, D.C.: June 29,
2007).
[6] GAO, Contract Management: Extent of Federal Spending under Cost-
Reimbursement Contracts Unclear and Key Controls Not Always Used,
[hyperlink, http://www.gao.gov/products/GAO-09-921] (Washington, D.C.:
September 30, 2009).
[7] There are three types of indefinite delivery contracts: definite-
quantity contracts, requirements contracts, and indefinite quantity
contracts. Indefinite Delivery/Indefinite Quantity contracts provide
for an indefinite quantity, within stated limits, of products or
services during a fixed period. The government places orders for
individual requirements under these contracts.
[8] Blanket purchase agreements are a simplified method of filling
anticipated repetitive needs for products and services by allowing
agencies to establish "charge accounts" with qualified vendors. These
agreements may be established under a General Services Administration
schedule contract. Blanket purchase agreements are not contracts. See
GAO, Contract Management: Agencies Are Not Maximizing Opportunities
for Competition or Savings under Blanket Purchase Agreements despite
Significant Increase in Usage, [hyperlink,
http://www.gao.gov/products/GAO-09-792] (Washington, D.C.: September
9, 2009).
[9] To meet urgent needs, DOD can use undefinitized contract actions
to authorize contractors to begin work before reaching a final
agreement on contract terms. See GAO, Defense Contracting: Use of
Undefinitized Contract Actions Understated and Definitization Time
Frames Often Not Met, [hyperlink,
http://www.gao.gov/products/GAO-07-559] (Washington, D.C.: June 19,
2007).
[10] The Competition in Contracting Act of 1984 requires agencies to
provide for full and open competition through the use of competitive
procedures, unless one of seven specified exceptions applies. See 10
U.S.C. § 2304(c).
[11] Inherently governmental functions are those so intimately related
to the public interest that they should only be performed by
government personnel. These functions include those activities which
require either the exercise of discretion in applying government
authority or making value judgments in making decisions for the
government. See Federal Acquisition Regulation 2.101.
[End of section]
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