After industry pushback, Army pledges to revise software acquisition – up to a point

WASHINGTON — After industry pushback on the Army’s newest solicitation under its software directive policy, Army acquisition officials say they are revising their plan to incorporate suggestions specifically about the inclusion of various contract types.

However, officials want industry to come to grips with a reality: that the final proposal request is not going to satisfy everyone.

“We got a lot of feedback, most of it quite positive. I think a small, relatively small number who thought otherwise were a little louder about it,” Doug Bush, the Army’s acquisition head, told reporters Thursday during a media roundtable at the Pentagon.

“So like I said, of course, there’s always gonna be some people who have concerns, and that’s fine. I think we’ve listened to a lot of it. But you know, if some companies don’t want to bid on a contract, it’s a free country. Don’t bid. Others will,” he said. “My goal is simply get the capability for the Army, not to make everybody happy.”

The service’s new software directive, which has been in effect since March, revises the Army’s policy on requirements, testing, procurement, sustainment and personnel. The goal: attempt to become more adept at applying modern digital practices to bolster speed and agility. It will serve as a guide to buying all software for the service moving forward — and the contract language now in contention is serving as its first major test.

Specifically, Army acquisition officials held the roundtable to address industry qualms with a Request For Information (RFI), issued in May and updated in August, which solicited industry input on a multi-vendor contract for software procurement. It’s officially known as the MSD MA IDIQ: Multiple Award Indefinite Quantity Indefinite Delivery Contract for Modern Software Development.

Industry critics have previously expressed discontent with the RFI, saying that the proposed contract language would push industry to develop software specifically for the Army and under cumbersome cost-plus contracts, rather than existing, proven commercial software off-the-shelf at a firm fixed price, as most companies prefer.

Industry experts have argued that the cost-plus model is only workable for traditional, larger defense contractors, requires commercial companies to adopt burdensome Pentagon-specific cost-accounting processes, and thus discourages the most innovative software companies from even trying to sell to the Army. 

Related: Army attempts to reassure industry on software acquisition

In the cost-plus model, the government pays for the cost of building or developing the product and later on pays for the cost of labor plus an additional percentage that’s usually dependent on their performance. This type of contract is often used when work is subject to change within the contract duration. 

Even though a handful of industry experts were notably vocal about their opposition to the use of cost-plus contracts in the most recent solicitation, Bush said that the Army’s RFI yielded an overwhelming amount of positive feedback. He added that the Army was never going to use only cost-plus contracts for software acquisition, but instead always intended to use a hybrid approach when awarding contracts — a method he said will be tailored to each specific contract. 

“It’s not a simple world of cost-plus versus fixed price there. Those are ends of a spectrum. In between those things lie a vast array of hybrid approaches that are tailored to different things. So this is a very complicated thing that cannot be simplified into a binary cost or fixed price narrative,” Bush said. 

“I want to say one thing, there will be times when a cost type contract of some flavor is the appropriate thing to use to protect the government’s interest. I’m not going to apologize for that. This is the American people’s money. Our contracting approaches are gaged to both achieve the capability, but also make sure funding is not wasted,” Bush said. 

Furthermore, Jennifer Swanson, the chief systems engineer for the Army’s acquisition office told reporters at the roundtable Thursday that the Army is experimenting with a pilot program that will release a solicitation without stating the type of contract up front, and instead let the bidders decide which contract vehicle would be the most appropriate. 

“I’m not saying we’re definitely doing it, but we’re working through the legalities and the possibility of using this modern software development contract as the pilot to look at what we would do if we didn’t specify contract type up front in a task order requirement,” Swanson said. 

“I want to make sure it’s clear the reason we’re doing that is so that we are able to consider all solutions that are out there. There may be a commercial solution we’re not aware of, and so this would allow a company to bring that forward with a, say, firm fixed price contract type that would make sense for a commercial solution, as opposed to what we traditionally do, which is we say this is either commercial or it’s not commercial. So this would just allow us to get more competition and more insight on what’s out there,” she added. 

Among other industry qualms with the cost-plus model is that it uses a a strict government-made accounting system that’s overseen by a multitude of bureaucracies and requires contractors to track labor costs. This can be seen as tricky in the software industry as coders and developers tend to work irregular hours, so trying to track billable hours is a bit of a headache. 

Swanson said another RFI will come out early next month in an attempt to fix this often laborious and tedious process of tracking every single labor cost which comes with often old-school requirements like paying someone based on the degree they hold. 

“One of the things that we are going to be updating is how we differentiate labor category costs, “she said. “How do they [industry] pay more for a certain level of software person? The government tends to, we’ve always traditionally used degrees to differentiate, and that’s not really the way that industry does things anymore, nor should we.”

“So that’s going to be a big thing that I think changes in the updated draft, and we’re continuing to get and address feedback. We want to make sure that we get this right,” she added. 

Sydney Freedberg in Washington contributed to this report.