August 19 OUSD Conference Call Notes

OSD A&S:

Recent activity by the department in partnership with HHS—DPA activity over the past two weeks--signed two agreements; Aug 10th with Bio Fire Defense for testing and Aug 17th $750,000 for plasma products; DoD started with a $1B objective under DPA Title 3 and now down to less than $50M to commit all in support of the national stockpile initiative. Scott Baum with OSD MIBP is headed back to Texas -- this is his last week.

DLA:

Gown solicitation—three solicitations that went out for stockpile effort on behalf of HHS received a large number of proposals; hoped to award contracts by end of August, but due to volume of responses awards will not be until mid to late September; Sec 889 DLA has modified over 22,000 open contracts and open solicitations which means they are about 85% complete in this effort; ODNI waiver did provide relief for about 70% of their contracts, but DLA decided to move out fully compliant and not utilize the ODNI waiver. Hill staffers asking why DLA is not pushing out more solicitations now to aid the Defense Industrial Base?—DLA response is that they are a working capital fund which functions as a revolving fund so DLA needs cash and obligation authority to purchase and that cash as a revolving fund is generated by sales. Unfortunately, DLA obligations thru month of July as compared to last July are down by about -$1B. Supply demand is down in hardware and spares especially in aviation, maritime and troop support supply. DLA ground support supply and medical supply was up about +5% as compared to last year. The Hill issue is the recent cancelations by DLA of open solicitations due to slowing fund/obligation activity from diminished demand. DLA found itself in a high stock position and that future demand would not materialize soon enough to offset projected buying by DLA forcing them to issue a largescale cancelation of solicitations. Some new solicitations have been issued, but at lower counts and some will not be reissued anytime soon. This is the same answer given to Hill staff last week. DLA did receive about +$500M in cash infusion via the CARES Act but specific to PPE and pharma. OSD has requested a additional +$300M to implement accelerated payments to suppliers in their pending $22B supplemental request. There is no official DoD request for additional funds for DLA to begin buying at higher levels.

DCMA:

DIB closures—industry is adapting well to the new normal and therefore OSD has noted that there are now no DIB closures as of 18 August; progress payments for week of August 10 -- 248 processed within 10 days on average; performance payments at 42 for the week at 14.5 days processing time on average.

DPC:

Sec 3610: Did publish the three checklists and class deviation for Sec 3610 and OSD will push that out today and its posted to their website; checklist can be used for subcontractor amounts and flexible dollar value thresholds; global settlement checklist; etc., all in response to contactor input back to DPC have been incorporated into these latest issuances by OSD DPC. Also updated FAQs product for reference which is posted as well. Also, memo notes that Sec 3610 reimbursements can be made against other contracting authorities. OSD continues pushing for supplement to fully execute Sec 3610 which is pending—OSD remain hopeful the funding will materialize. Senate support remains and OSD worked this issue with HACD staff yesterday with some positive movement in favor of the additional funding.

Sec 889: A lot of media reports are inaccurate with respect to ODNI waiver. Not deferred until December; no blanket waiver; not a broad waiver; waiver is specific to a limited number of project service codes; covers green or low risk product service codes such as textiles, food, various services not in support of weapons systems, but the waiver does not cover IT systems, repair services on major systems, etc. ODNI green list doc is marked FOUO thus not released—best bet to work with your contracting officer. The waiver is temporary until such time that ODNI can complete a more thorough review and will decide by Sept 30th whether to extend the waiver or not. Still need industry to identify prohibited items and to remove them from the supply chain. Note: OSD needs to understand what product companies are using to replace the restricted items from the supply chain and if they have a sourcing challenge to do so.

About the authors

Keith Webster

Keith Webster, president of the U.S. Chamber of Commerce’s Defense and Aerospace Council, guides the focus of the council to strengthen the U.S. defense and aerospace industries by influencing domestic and international policy on behalf of its members.

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