Portal for Procurement

PORTAL FOR PROCUREMENT



A Web-based procurement system that is transforming how the Navy
acquires professional services is attracting interest from other military
agencies as a model of the benefits of electronic commerce.

By Harrison Donnelly
 

A Web-based procurement system that is transforming how the Navy acquires professional services is attracting interest from other military agencies as a model and example of the benefits of electronic commerce.

The Navy SeaPort Enhanced (SeaPort-e) program, which got its start seven years ago as an internal contracting system within Naval Sea Systems Command (NAVSEA), now covers roughly half of the annual "spend" awarded by naval systems commands for engineering, financial, program management and 19 other categories of services.

With an emphasis on small business participation and competitive bidding for all task orders, the multiple award contract (MAC) program currently includes 1,283 prime contractors eligible to compete for awards offered by a total of 118 commands and field activities around the country. Participation in the program is offered on a rolling admissions basis, with an annual application process culminating in the selection of additional companies each year. Each successful vendor is awarded a MAC, allowing the opportunity to subsequently compete for individual task orders.

SeaPort-e's combination of efficient ordering technology and an enterprisewide approach to contracting for professional services has already produced significant benefits, with cost savings in the "double-digit percentages," according to NAVSEA program manager Jerome Punderson, who vows to continue the progress as the program approaches a second round of five-year contracts.

"In the first year, we saved much more than what we invested in the system," Punderson said. "But that was the easy part, going from some fairly inefficient vehicles, and now we're coming up to the second round. We need to take advantage of lessons learned so far, so that we tighten up our criteria when we recompete and are able to achieve a second round of savings, or spend the same amount of money and get improved performance. We want to make sure we are getting what our customer needs."

As of December 2007, SeaPort-e had awarded a total of 1,289 task orders, with a total potential value of $16.1 billion.

The success of the program has drawn interest from other quarters, with one outside office, the Defense Threat Reduction Agency (DTRA), planning to use the system to place orders for services. Marine Corps ordering activities are also allowed to use the program. In addition, Department of Defense officials are looking at SeaPort-e's ordering technology as a basis for other efforts to improve professional-services procurement, although probably not by incorporating Army and Air Force buying activities directly into the Navy system.

Indeed, one of the reasons for the appeal of the program is that it maintains a balance between creating a standardized, automated ordering system across the Navy and preserving traditional local autonomy and flexibility in making contract decisions.

"We developed the process, and everyone uses it, but they award their own task orders. A field activity doesn't want headquarters to do their contracting for them, so they do their own contracting with the vendors around them or anyone who wants to compete for that business. But it's not a centralized thing saying, we're going to do your contracting for you. They still have control over their local spending and making sure they are meeting local needs, but we came up with a process they are all going to use," Punderson explained.

"By having that Web-based process, it enables us to manage behavior and make sure people are following the same set of rules and are consistent. If an issue comes up, we can look at what's going on. It allows you to manage a process across the Navy," he added.

Competitive Goal

A major goal of SeaPort-e is to foster competition in the awarding of task orders. The program currently averages about three offers per solicitation, which Punderson acknowledges sounds low in comparison with the more than 1,200 companies in the program.

"But when you have an incumbent at a warfare center or field activity that's doing a good job, industry isn't going to waste money putting a proposal together trying to take that business away. Other times it's worth it. We would like to increase the number of offers we get. Sometimes we get only one offer for a solicitation, for good or bad reasons. We want to eliminate the bad reasons," he said.

Every task order is competed. Although federal acquisition regulations allow exceptions to competition, SeaPort-e has a rule that everything has to be competed, and it is. As Punderson observed, "When you start to make exceptions, the exception becomes the rule.

"We looked at a lot of previous MAC contracts, and we found that they would use it to place an order to meet the minimum need, and then do a 'logical follow-on,' which is one of the exceptions, for a much bigger task. As a result, a lot of the work never went up for competition. From the beginning, we said we'll compete everything," he continued.

Truly competing everything required keeping a close eye on strategies taken by some local offices, Punderson recalled. "Early on, we had people doing things like releasing a solicitation on Thursday evening with proposals due on a Tuesday, with a Monday holiday in between, and saying that was competition. That is not competition, but means that you already know who you want. So we try to make sure there is enough time for competition. There are times when you're in a hurry, and you tell people it really is urgent. But everything is not that urgent. We try to have guidelines, and then you can have exceptions when you need them."

As is true throughout the defense procurement process, the Navy program must contend with a growing number of protests against award decisions. The fiscal 2008 defense authorization contains a provision that allows protests to the Government Accountability Office against task orders in excess of $10 million.

"That's something we wouldn't necessarily have asked for," Punderson said. "But unless it's abused, it will make sure you are following the rules and are fair to everyone. We go out of our way to make sure we're treating everyone fairly, with a process to adjudicate complaints. But Congress, primarily because of abuses of MACs, decided to change the law to allow protests to occur.

"In the service business sector, even in the past when we worked under FAR part 15, contracts were almost always protested," he noted. "So the goal is to make sure the processes are right, and the protests will not be sustained. Eventually, it will settle out that only contracts that ought to be protested are, because someone didn't do something right."

Small Business Boosts

Small business participation is an important element of SeaPort-e, and the program contains several provisions designed to ensure that smaller firms have the ability to compete for business.

Early in the program, when 14 of the original 21 SeaPort prime contractors were large businesses, officials found that small businesses were having difficulty, winning only 12 percent of the business. In response, the SeaPort-e program office instituted the capability of setting procurements aside for small businesses. Specialists now review every task order requirement to determine whether it represents a suitable opportunity for a small business set-aside, or for small business subcontracting by large prime contractors. In addition, the annual rolling admissions process is designed to give new firms, often small businesses, a chance to enroll in the program

Since those changes, small businesses have done well, winning 582 of the 1,289 task orders awarded, or 45 percent of the total awards. The program is currently meeting its small business goals, providing 33 percent of total dollar obligations to small businesses at the prime contractor level, and 20 percent of dollars awarded to large business primes via small business subcontracting. Prime contractors are required to bi-annually report via the portal on their actual levels of small business subcontracting, which has enabled the program to determine that these goals are being achieved.

Another key element in the diversity of the program is the regional structure. Task orders are competed within seven geographic zones, thus enabling locally based companies without national resources to contend for business at nearby Navy facilities, particularly in the key regions of Norfolk, Va., San Diego, Calif., and Washington, D.C.

Preserving that infrastructure of local support is vital to the Navy, Punderson observed. "Our small business community is very important to the technological base located around the warfare centers. The people who do ordnance engineering at Indian Head, Md., for example, need to have people who are specialized in ordnance. But those are not necessarily the largest companies, but might be small businesses.

"We wanted to preserve that capability, so you can do set-asides within this process. So I can set up a requirement that only small businesses that are in SeaPort-e can compete for a particular task, or perhaps only service-disabled veteran-owned small businesses can compete. It allows us to manage to meet our socioeconomic goals for small business, as well as preserving the technology that they bring for us," he said.

Model Expansion

While the inclusion of DTRA represents the first step for SeaPort-e outside the Navy, officials don't expect that many defense agencies will join the program directly. But they do see others adopting similar approaches.

"DTRA contacted us, and since they manage contracts primarily out of one office, they are able to say they will manage their own people to make sure they follow their own rules," Punderson said. "But when we talk to the Air Force or Army, it's about how you would set up something like this, not that we're all going to do this together. Even ignoring the cultural differences, it's not practical for two large, dispersed organizations to manage a single process.

"We don't want to expand SeaPort-e greatly, in the sense of including a lot of ordering activities outside Navy. But what we have talked to others about, including [Director of Defense Procurement, Acquisition Policy and Strategic Sourcing] Shay Assad, is using this as a model for how to do this. There are philosophical differences about MAC contracts, and some people prefer to award a small number of contracts for very specialized services, while we take an almost opposite model, which is to have vendors covering all capabilities in the marketplace. There are problems and good things about both approaches.

"When we talked to the Air Force, they liked a limited number, rather than the wide-open approach," Punderson continued. "They really liked the capability developed for the system that allows easy placement of competitive orders. So they don't want to have our contracting approach, but they like the business approach of using the portal for placement of orders. We've talked to the Army about a similar approach. We have talked about sharing system and hosting costs, but each would continue to take care of their own contracting problems."

Punderson summed up SeaPort-e's broad appeal this way: "The technology could be applied almost anywhere in the government where they want to use multiple award contracts. Not everyone agrees with our contracting approach, but they like the way we are able to manage the process." ♦