In light of industry feedback regarding the Army’s latest solicitation under its software directive policy, Army acquisition officials are revising their strategy to incorporate suggestions, particularly concerning the types of contracts involved. However, officials clarified that the final proposal request will not meet everyone’s expectations.
Doug Bush, the Army’s acquisition head, highlighted the mixed reactions during a media roundtable at the Pentagon. “We received a lot of feedback, most of it quite positive. A relatively small number of critics were louder in their concerns,” he stated. “While we appreciate all input, the goal is to obtain the necessary capabilities for the Army, not to please everyone. If some companies choose not to bid, that’s their prerogative; others will.”
The Army’s new software directive, effective since March, redefines policies regarding requirements, testing, procurement, sustainment, and personnel. The aim is to implement modern digital practices to enhance speed and flexibility in software acquisitions, with the contract language currently under scrutiny serving as its first major test.
Specifically, the roundtable addressed industry concerns about a Request for Information (RFI) issued in May and updated in August, which sought input on a multi-vendor contract for software procurement, officially referred to as the MSD MA IDIQ: Multiple Award Indefinite Quantity Indefinite Delivery Contract for Modern Software Development.
Industry representatives have voiced discontent over the RFI’s proposed contract language, arguing it would require firms to develop software specifically for the Army under cumbersome cost-plus contracts, rather than allowing them to deliver existing commercial software off-the-shelf at a fixed price, which is more favorable to many companies.
Critics contend that the cost-plus model is primarily suited for larger traditional defense contractors and compels commercial entities to adopt burdensome Pentagon-specific cost-accounting processes, deterring innovative smaller companies from participating. In a cost-plus contract, the government covers the development costs and pays an additional percentage based on performance, a model typically used when project requirements may evolve during the contract term.
Despite some vocal opposition to cost-plus contracts in recent solicitations, Bush emphasized that the Army received a substantial amount of positive feedback from the RFI. He reiterated that the Army never intended to rely solely on cost-plus contracts for software procurement, stating that a hybrid approach will be implemented, tailored to each specific contract.
“It’s not a simple dichotomy of cost-plus versus fixed price. These are two ends of a spectrum with numerous hybrid options in between that are suitable for various situations,” Bush explained. “There will be circumstances when a cost-type contract is appropriate to protect the government’s interests, and I will not apologize for that. We are accountable to the American people, and our contracting strategies must ensure both capability and responsible use of funding.”
Additionally, Jennifer Swanson, the chief systems engineer for the Army’s acquisition office, shared that the Army is piloting a new approach that would allow solicitation without specifying contract types upfront. Bidders would be free to choose the most appropriate contract vehicle for their proposal.
“We’re exploring the legalities and feasibility of using this modern software development contract as a pilot project to evaluate contracting without predefined specifications,” Swanson noted. “This approach aims to encourage a broader range of solutions and commercial options that we might not be aware of, ultimately enhancing competition.”
She acknowledged the complexities associated with the cost-plus model, specifically the strict accounting requirements it imposes, which can be problematic in the software industry where work hours fluctuate.
To address these challenges, Swanson announced that an additional RFI is expected to be released next month, intending to streamline the tedious tracking of labor costs associated with traditional requirements, such as degree-based pay differentiation in contracting.
“One significant update will involve how we classify labor category costs,” she said. “Our current practice of differentiating by degrees is outdated and doesn’t reflect industry standards today. We’re looking to modernize this approach based on current industry practices.”
“Our goal is to incorporate this feedback and ensure we develop a system that works both for the Army and the industry,” Swanson concluded.
