By Debbie Gregory.

During a March 6th House Armed Services Committee hearing, lawmakers interrogated Marine Corps officials regarding a $150 million deal with Heckler & Koch to provide the service branch with some 50,000 HK416 rifles. This works out to approximately $3,000 each, almost five times the cost of the current M4, which cost $642 per rifle in 2013.

Called into question, besides the cost, was the Corp’s sidestepping of the normal acquisition process: the contract was sourced to foreign manufacturer Heckler & Koch without allowing American firearms companies to compete for the contract.

Although the longer rifle barrel and gas piston operating system gives the Heckler & Koch rifle an edge over the M4, it doesn’t seem like that justifies the higher price tag.

To be fair, when the Marine Corps purchased the M4’s, FN Herstal aggressively underbid both Remington and Colt, resulting in the deeply discounted price per weapon.

In questioning Lt. Gen. Brian D. Beaudreault, deputy commandant of Plans, Policies, and Operations, HASC Chairman Rep. Joe Wilson asked, “Do you believe that it is the best option to not compete a contract that could be as many as 50,814 rifles?”

When FN Herstal lodged a protest with the Government Accountability Office (GAO) over the issue of the Marine Corps not allowing competition to yield the best product for the lowest price, the GAO rejected that protest, claiming an exception in which “the supplies or services required by an agency are available from only one responsible source, and no other type of supplies or services will satisfy agency requirements.”

Here’s where the waters get a little murky. Those requirements would be determined by Marine Corps Systems Command’s Program Manager for Infantry Weapons Systems, and would likely involve Marine Systems Command (MARSYSCOM) supervisory lead engineer Sal Fanelli. Interestingly, before joining MARSYSCOM, Fanelli previously worked for Heckler & Koch.

By Debbie Gregory.

Deputy Defense Secretary Patrick Shanahan believes that increased communication with defense contractors is a step in the right direction in order to optimize the Pentagon’s relationships with industry. The Defense Department’s No. 2 civilian, Shanahan manages the Pentagon and oversees the acquisition and budget efforts.

In a March 2 memorandum entitled “Engaging With Industry” Shanahan wrote: “Conducting effective, responsible and efficient procurement of supplies and services while properly managing the resultant contracts requires department personnel to engage in early, frequent and clear communications with suppliers.”

As the Trump administration sought to deepen relations between private industry and government, last April Defense Secretary Jim Mattis encouraged expanded Pentagon-industry relations.

The push for more Pentagon-industry communications comes after other top leaders have ordered restrictions on talking with the public and the press. Most recently, on March 1, U.S. Air Force leaders suspended all interviews, embeds, and base visits for media organizations “until further notice.”

Prior to that, in March 2017, the Chief of Naval Operations cautioned his people to be more careful in what they say in public, saying that he did not want to give adversaries useful information.

“Industry is often the best source of information concerning market conditions and technological capabilities,” Shanahan wrote. “This information is crucial to determining whether and how the industry can support the Department’s mission and goals.”

Shanahan believes that complying with ethical and legal limits “should not” cause defense and service officials to be reluctant to engage industry.

“The department’s policy continues to be that representatives at all levels of the department have frequent, fair, even and with industry on matters of mutual interest, as appropriate, in a manner that protects sensitive information, operations, sources, methods and technologies,” Shanahan wrote.

By Debbie Gregory.

Faced with criticism over how it awarded a contract to move computer systems to the Internet cloud, the Pentagon has slashed a nearly $1 billion contract down to no more than $65 million, while also scaling back the scope of the work. The revision will limit its use to only U.S. Transportation Command rather than the entire Defense Department.

The contract awarded to Herndon, Virginia-based REAN Cloud—an Amazon Web Services partner, has come under scrutiny by those who feel that the procurement wasn’t handled properly, charges that Pentagon officials strongly denied.

Pentagon spokesman Col. Robert Manning said that after reviewing the contract, the Defense Department decided that “the agreement should be more narrowly tailored” so that Rean would build a prototype service for a single agency, the U.S. Transportation Command, instead of many agencies within the military.

Oracle filed a bid protest with the Government Accountability Office last month that called the procurement “an egregious abuse” of the procurement process for a contract that it charged was “shrouded in secrecy.”

Additionally, the Pentagon was criticized because the original contract was awarded by the Defense Innovation Unit Experimental (DIUx ) which was created to procure the technology of Silicon Valley-type companies that mostly shy away from Pentagon work. DIUx is fast-moving to provide non-dilutive capital to companies to solve national defense problems, usually in under 90 days.

The procurement, a follow-on to a smaller competed contract, was awarded under an “other transaction authority,” a way for the Pentagon to procure goods and services quickly without being subject to the bureaucratic federal acquisitions process.

Critics of the “other transaction authority” process say such arrangements are not competitive and insufficiently transparent.

By Debbie Gregory.

We previously wrote about the deal for two new Air Force One airplanes that President Trump was trying to negotiate with Boeing CEO Dennis Muilenburg. After talks stalled, the president stepped in to push through a fixed-price deal that would require Boeing to buy the planes at an agreed price. Boeing would then be responsible to absorb any cost overruns.

The list price for one of Boeing’s 747-8s is $351.4 million, but the stock jumbo jets require significant and timely modifications before they will be ready to transport a president.

The president asked for the new planes to be done by 2021, the beginning of what would be a second term, which is three years sooner than the original plan of 2024. The two 747s are in California now, and although Boeing will be done upgrading the planes by then, but the Air Force testing requirements could take an additional three years.

And upon closer investigation, it now looks like that “informal” $3.9 billion deal for the two planes may not be such a deal.

It appears that a “fixed-price contract” is not the same thing as a “firm, fixed-price” contract. And that could be a problem.

Boeing officials have always been and remain adamantly opposed to a firm, fixed-price deal. Given that Boeing has had to absorb more than $2 billion in cost overruns while developing the Air Force’s new refueling tanker, it is no wonder that the company is trying to avoid the same situation with refitting the two commercial 747s for presidential use.

The current Air Force One planes began service in 1990 under former President George H.W. Bush and they are reaching near the end of their planned life.