Future of Service Acquisition Contracting

Published: June 26, 2019


“With tightening budgets, and increased risk, there must be a greater focus on improving contracted services outcomes.” – Ken Brennan, Deputy Director, Services Acquisition

In June 2017, Ken Brennan, Deputy Director, Service Acquisition, presented “Improving the Department of Defense Services Acquisition Tradecraft” to industry. During this presentation, he stated that service-based requirements play a significant role in supporting the warfighter and improving the tradecraft in acquisition of services. These efforts continue to be a focal point of Under Secretary of Defense for Acquisition, Technology, and Logistics (USD(AT&L)) Better Buying Power (BBP) initiatives.

Areas of focus during 2017 included:

  • Improving oversight capabilities
  • Improving / updating portfolio management
  • Developing SA training and oversight, such as peer reviews and requirements validations.
  • Developing forecasting capabilities
  • Developing / Implementing Federal CM while protecting DoD equities.

A key area though was revising DoD Instruction (DoDI) 5000.74. It was a directed standalone DoD instruction on the acquisition of services issued in January 2016. It complements DoDI 5000.02, “Operation of the Defense Acquisition System,” which establishes policy for the management of all Defense acquisition programs.

Revisions to DOD Instruction 5000.74 makes a number of changes.

  • Establishes policies and procedures for defining, assessing, reviewing, and validating requirements for acquiring services.
  • Establishes a simplified and flexible management framework for translating services requirements into stable, efficient, and effective acquisitions.
  • Makes Military Services Decision Authorities (DA) consistent with current requirements for acquiring services and tailoring procedures to best achieve cost, schedule, and performance objectives.
  • Incorporates and cancels Enclosure 9 of DoDI 5000.02.

These instructions apply to all DoD Components, including OSD, Military Departments, the Office of the Chairman of the Joint Chiefs of Staff and the Joint Staff, Combatant Commands, the Office of the Inspector General of the Department of Defense, Defense agencies, DoD field activities, and other DoD entities.

Highlights of Established Procedures

Each DoD Component is required to establish procedures that align with DoDI 5000.74. These procedures will differ between agencies, but there are overarching policy changes.

  • Acquisition of contracted services is a Command responsibility. Unit, organization, and installation commanders are responsible for the efficient and effective acquisition of contracted services.
  • Contracted services, along with military and civilian manpower, are an element of the DoD’s Total Force. These services are procured by means that are in the best interests of the DoD.
  • The DoD Functional Domain Experts (FDEs) for services acquisition management of each service category will be appointed by the USD(AT&L) to provide strategic oversight of service acquisitions. Component Level Leads (CLLs) will be appointed by the Component heads to assist the FDE in overseeing the lifecycle process of these acquisitions.
  • The DoD will use competitive procedures and incentive- and performance-based contracting to the maximum extent practical to procure the services.
  • Each requirement for contracted services will be reviewed and validated by the requiring activity authority.
  • Service acquisitions will be managed to allow DoD to leverage small business capabilities and maximize competition.
  • Existing federal government contracts available for use within the DoD, including interagency and federal strategic sourcing initiatives, should be used as much as possible before awarding new contracts.

Read a full list of the policy changes.

Service Supplements

Each Defense agency is required to adhere to the DFARS’ policies, but each agency handles contracts and implements the policies differently.

Department of the Navy

The Navy Marine Corps Acquisition Regulation Supplement (NMCARS), implementing 5000.74 instructions, revised Subpart 5237.1 and 5237.102 policies. Under the changes, Navy agencies are required to consider using the Seaport vehicle to satisfy service-based contracts. Personal medical service contracts are exempt. If SeaPort is not used to satisfy competitive requirements, and a J&A has not been approved, a Determination and Findings (D&Fs) must be submitted for approval to DASN(AP) with an endorsement by the Head of Contracting Agency (HCA). Activities can expect disposition of the D&F within five business days.

Department of the Army

The Department of the Army issued a revised Army Federal Acquisition Regulation Supplement in May 2019. The review and approval of acquisition strategies for special interest, service-based contracts falls onto the ASA(ALT) or Senior Services Manager without power to further delegate. 

Service-based contracts that are considered Category II, which have an estimated total value between $250 million and $1 billion, will be reviewed by DASA(P) or a Senior Services Manager. Category III contracts, which include acquisitions with an estimated total value between $100 million and $250 million, will be reviewed by the HCA to no lower than SCO. Category IV contracts, which have a total estimated value between $10 million and $100 million, will be reviewed by the HCA to no lower than COCO. Lastly, Category V contracts, which have a total estimated value between the Simplified Acquisition Threshold and $10 million, will be reviewed by the HCA to no lower than one level above Contracting Officer.

Department of the Air Force

The Department of the Air Force issued Air Force Instruction (AFI) 63-138 in May 2017.

The AFI establishes policy guidance and implements a management structure for the acquisition of services. It defines the roles, assigns responsibilities, and establishes review and approval expectations of participants who are responsible for acquiring services. It also:

  • Provides direction for acquiring services (IAW §10 USC 2330.
  • Defines and establishes processes to implement the AF Support Services Requirements Review (SSRR).
  • Identifies acquisition planning considerations for services acquisition.

Under 5337.104, the HCA responsibilities are to approve proposed personal services contracts if the services are to be provided by individuals outside the U.S. and directly support defense intelligence components or special operations command. These services must be urgent, cannot be obtained by other means, and support DoD activities or programs outside the U.S. They must be delegated to SCOs, SCCOs, or Delegable to SCCOs, but not Delegable below SCO or SCCOs. In addition, services, which are being acquired through a contract with the local government and are in the DoD’s best interest, must be delegated to SCOs, SCCOs, or Delegable to SCCOs, but no lower than COCO.

Overall, DoDI 5000.74 provides direction for the acquisition of services by laying out policies and responsibilities, while also giving guidance on portfolio management, data collection, and other requirements development.

These policies assure that contracted services are delivered to the warfighter efficiently and in a timely manner. Through different policy changes, DoD agencies are continuing to work to implement the changes set forth by the Services Acquisition in the office of Defense Procurement and Acquisition Policy.