Secretary of Defense William Perry announced today a new policy designed toimplement a single process initiative leading to the use of common processesand performance specifications on existing Department of Defense contracts.Using a "block change" modification approach, it will involve the consolidationor elimination of multiple processes, specifications and standards in allcontracts on a facility-wide basis, rather than on a contract-by-contractbasis.
"Our principal acquisition reform initiatives in this area thus far werefocused on new contracts.
This single process initiative is significant inthat it impacts existing contracts," Perry said.
Currently in many contractor facilities several different processes orspecifications may be used for similar manufacturing or management operationsdue to differing requirements in various contracts.
This approach isinefficient, leading to increased cost and administrative workload for both thecontractor and the government.
Over the last year, several initiatives movedtowards changing this situation.
Participating in these efforts were theNon-Government Standards Integrated Process Team (NGS IPT) sponsored by theJoint Logistics Commanders and the Common Process Facility Working Group,co-chaired by OSD's director, Test, Systems Engineering and Evaluation and thecommander, Defense Contract Management Command (DCMC).
In August of this year,members of these agencies and the OSD staff began working together to draft thepolicy.
Their efforts resulted in the policy being announced today.
The policy on the single process initiative recognizes the following facts:
· Since DoD will not realize the full benefits of it's specifications andstandards policy until all contracts in a facility have been converted, theprocess to make the changes to those contracts must occur as quickly aspossible.
A streamlined approach is vital, avoiding unnecessary paperwork andcostly contractor proposal preparation.
However, adequate safeguards must bein place to ensure the receipt of consideration from the contractor, whenappropriate.
· Since the focus of the change is plant-wide, rather than being isolatedto one program or product, the DCMC in-plant personnel, particularly theadministrative contracting officer, will play a key role in facilitating theprocess.
However, since the changes will impact all the programs and productsthat facility produces, the "customer" community of program managers and buyingcommands must be consulted.
A management council approach, similar to thecurrent DCMC Reinvention Lab initiative, will be used.
Since the savings related to this effort can not be realized until thecontracts are changed, time is of the essence.
The Department recognizes thatimplementing this policy will cause contractors to incur some transition coststhat will offset short term savings.
Since this period of offset savings mayexceed the life of most of the existing contracts, net savings can only bereasonably expected on longer term, fixed price contracts.
Therefore, DCMCwill conduct an analysis to determine the extent of the change and theremaining life of existing contracts in order to identify those contracts wherethere will be significant savings and where consideration may be due to thegovernment.
All other contracts may be modified based upon the initialanalysis without the requirement for contractors to prepare detailed costproposals, an expensive and time consuming process.
The benefits of this action are many.
The acceleration of bringing commonprocesses to contractor facilities will result in more efficient, consistentand stable processes, with greater ease of contract administration for bothcontractor and government, and savings for the taxpayer.