Pentagon acquisition chief Frank Kendall said Tuesday he is planning to adopt a Navy pilot program for ranking contractor performance across the Department of Defense, but according to one industry representative, it is unclear whether the program will apply to contracting source selection in the future.
Alan Chvotkin, the executive vice president and counsel of the government professional and technical services trade group Professional Services Council (PSC), told Defense Daily following Kendall’s remarks the Navy, rightly, did not to use the Superior Supplier Incentive Program (SSIP) rankings in source selection because the service didn’t have enough experience with the rankings and criteria. Chvotkin said the Navy supplier program’s initial focus was on products as opposed to services because the criteria used in the rankings, from the Cost Performance Assessment Reporting System (CPARS), is more reliable. CPARS was used as the basis for the Navy’s SSIP.
“That (was) a smart judgment on (the Navy’s part) until they get some more experience with (the superior supplier ratings) because that’s real business,” Chvotkin said.
A Pentagon spokeswoman did not respond by press time to address some of the question raised by Chvotkin.
DoD next year will expand on a “by-service” basis the Navy’s SSIP, which ranked contractors on how well the sea service believed they carried out acquisition contracts, despite being an imperfect system, as Kendall acknowledged Tuesday at an AFCEA forum in downtown Washington. SSIP took data from CPARS and ranked the Navy’s major suppliers into three bins on how it viewed their performance.
Kendall and Navy acquisition chief Sean Stackley in June rolled out the results, which Kendall said Tuesday were designed to incentivize contractors to perform better. Kendall said he had a CEO from a company not ranked at the top say he had to explain to his board why his company was in the bottom tier. He did not identify the company.
“I said ‘Yes, that’s what I want,’” Kendall said. “I want you to understand why you’re in the bottom group and I want you to do something about it.”
Kendall said Tuesday he was “very receptive” to criticism that the CPARS data set is “somewhat limited” and that DoD would try to improve it. He also said DoD would use the CPARS data set more so contractors would get the feedback they need to understand how they are performing compared to competitors.
“I think that’s valuable information,” Kendall said. “I’d what to know that if I were a business.”
The Navy identified nine business units of large defense firms after a three-year evaluation process. Stackley said in June the Navy started off with 30 firms, which accounted for about 80 percent of its suppliers, and broke them down into their business units to create a field of 80. Each entity was evaluated by acquisition commands to determine the best performers. Stackley did say in June that being on the list would not be a determinant in how, or who, the Navy selects in awarding contracts.
Chvotkin said, make no mistake: even though the SSIP rankings are not used in source selection, past contract performance, which is part of the SSIP criteria, is used in contract awards. He said DoD is looking at changing possibly reporting, oversight or terms and conditions of the supplier program.
One challenge with bringing SSIP Pentagon-wide, Chvotkin said, is that many companies do business across multiple services and that companies can’t change their systems just for the Navy, for example, if they’re also doing business with the Army or Air Force. Chvotkin said it would be an advantage for companies to have uniformity with DoD’s supplier ranking program because it would be “very hard” and “very expensive” to have to conform to multiples.
“The value for the company is going to be not developing unique responses to each of the three military departments, but to have commonality across DoD,” Chvotkin said. “That takes an element of coordination at the OSD (Office of the Secretary of Defense) level, not simply saying ‘Army adopt a program, Air Force, you adopt a program.’”
Chvotkin said that is important because creating products for each of the individual services takes different criteria to measure how contractors are performing.
“When you’re into something like ship repair and overhaul on the product side, that’s very different than doing tracked vehicles or aircraft,” Chvotkin said. “So the ratings are going to be different (and) the measurements are going to be different.”
Though DoD said SSPI is not being used for source selection, Chvotkin warned contractors to not be surprised if it does impact their ability to win new work because it draws from the same past performance database that a contracting officer could rely upon as an evaluation factor.
As PSC represents contractors performing professional services like information technology or engineering, Chvotkin said PSC supported the Navy keeping SSPI products-only because he said there are too many types of service vendors and too few Navy-based CPARS ratings to do a fair comparison.