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Defense


NAVY CONTRACT SPENDING JUMPS 30% IN APRIL AMID CORONAVIRUS PANDEMIC

Jared Serbu@jserbuWFED
April 29, 2020 7:13 am
4 min read
      

The federal contracting community has gotten used to seeing major upticks in
contract outlays in the last couple months of the fiscal year. But for the
Department of the Navy, April’s numbers rivaled those figures: Contract
obligations this month are already up 30% compared to the same period a year
ago, and almost double the figures from April 2018.

To be sure, the coronavirus pandemic was a big factor in the increase in
dollars-on-contract. Like...

READ MORE



The federal contracting community has gotten used to seeing major upticks in
contract outlays in the last couple months of the fiscal year. But for the
Department of the Navy, April’s numbers rivaled those figures: Contract
obligations this month are already up 30% compared to the same period a year
ago, and almost double the figures from April 2018.

To be sure, the coronavirus pandemic was a big factor in the increase in
dollars-on-contract. Like most other parts of the government, the Navy and
Marine Corps are spending a lot to respond to the pandemic itself and to keep
vulnerable parts of their supply chains afloat.

But that’s not the whole story, said James Geurts, the assistant secretary of
the Navy for research, development and acquisition. The Navy Department’s
ability to get cash out the door more quickly is also the result of reform
efforts that have been underway for the last two-and-a-half years and emergency
planning that predated the COVID crisis.

“I’m seeing some remarkable efficiencies,” he told reporters on a conference
call Tuesday. “I think a lot of that is getting rid of layers of bureaucracy
that weren’t needed. Some of it is also creating better partnerships with
industry so that we can leverage cost and pricing data we already have, and we
don’t have to send out an RFP and get a proposal back just to confirm that data.
And some of it is just a continued sense of urgency and mission focus.”

As of Tuesday, the Department of the Navy had obligated $96.9 billion toward
contracts in April, compared to $74.7 billion in April of 2019, even though more
than 95% of its contracting workforce is working remotely. During the same
month, those acquisition professionals also increased their use of distance
learning for ongoing workforce development by more than 65%.

READ MORE: DEFENSE NEWS

Geurts said many of those “efficiencies” were born of necessity because of the
pandemic, but there’s no good reason the changes the DON has made shouldn’t
become part of the fabric of how its acquisition system operates.

“I think all of these are relatively sustainable activities,” he said. “I want
to come out of this in a place where what we’re doing is now the standard — not
crisis behavior or point-in-time behavior. “If we can make it the standard, we
can leverage that efficiency to give us more resilience and to allow us to then
recap that increased business tempo into products and services for the
warfighter.”



In some instances, the Navy had already been thinking through ways to accelerate
the contracting process and its cash outlays, but the pandemic provided a major
incentive to implement those policies right away.

For example, Naval Sea Systems Command decided to release nearly $600 million in
pending contractor payments it had been holding back. NAVSEA generally retains
10 percent of the dollar value of new ship construction or ship repair contracts
until it’s satisfied the job has been done adequately.

“We were already moving toward reducing that because we found it not to be a
terribly effective tool in the long run, and that we could use other tools to
ensure that the work was completed and we had warranties on the work,” Geurts
said. “We had already been moving down that path experimentally. But we thought
it was in everybody’s best interest to move to that quickly, particularly
because a lot of that retention had an overly-large impact on mid-sized and
small subcontractors. And we are only as strong as our industrial base.”



The DON is also speeding up its use of Small Business Innovation Research (SBIR)
and Small Business Technology Transfer (STTR) programs to keep funding flowing
to the smaller firms it needs for R&D work. The Office of Naval Research
announced this week that it will open up $30 million in rapid funding via a
broad agency announcement; ONR plans to spend $250 million through the same BAA
over the next 90 days.

READ MORE: CONTRACTING NEWS

But Geurts said he believes the Navy’s ability to reorient its contracting
apparatus quickly in response to the pandemic is largely attributable to a
reform initiative the Navy Department began in 2017. The adjustments are
comprised of what he calls the “Four Ds:” Decentralized execution,
differentiation of work, digitization of operations, and development of talent.



        Read more: Defense

“I tend to be lucky more than smart, but in hindsight, those strategies are what
allowed us to pivot very quickly to operating in this kind of unplanned
contingency,” he said. “We decentralized so that the workforce understood intent
in a culture of trust — we trusted them to make the right decision and we
de-layered. In a crisis, that’s just gold. Digitizing the work has been money,
because if we had not figured that out we would have never been able to operate
with efficiency in a massively distributed workforce. We’ve also developed that
workforce so that they have the confidence, and I have the confidence, to allow
them to run at speed.”

      
Jared Serbu

Jared Serbu is deputy editor of Federal News Network and reports on the Defense
Department’s contracting, legislative, workforce and IT issues.

Follow @jserbuWFED


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Related Topics
Acquisition Acquisition Policy All News Contracting Covid-19 Defense Defense
News Department of the Navy James Geurts Navy


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