Managing purchase actions with FAR 13.5 streamlined protocols and processes to conduct the construct, solicitation, and award of the purchase results in dramatically less “touch time” and an associated reduction in transaction costs.
According to CAPT Steve Shapro, NAVSUP Code 02, the reduction in actual touch time required to process a SAP buy versus buys using traditional large contract methods is significant. CAPT Shapro indicates that a recent review of protocols revealed over a 90% reduction in processing touch time when SAP protocol was used. Specifically, contract actions using SAP protocol have approximately 9 hours total touch time, while those just using large-contracting procedures have approximately 200 hours of touch time.
By extrapolating this time savings into monetary savings, the researcher discovered that for each transaction that utilizes the FAR 13.5 provisions instead of traditional “large” protocol, there’s an average cost reduction of over $9,500 per transaction! And, approximately 90% of [Fleet and Industrial Supply Center] FISC’s 65,000 annual contract action transactions are below the FAR 13.5 Test Procedure’s $5.5 million threshold! The potential impact of full utilization of the FAR 13.5 protocol is obvious, given the virtual universal applicability to actions less than $5.5 million.
That was a nice 2006 paper from CDR Cody Yoder, “Getting the Most from Acquisition Reforms: FAR 13.5 Test Provisions for Simplified Acquisition Procedures, Commercial-item Acquisition.”
The Navy’s Fleet and Industrial Supply Center had 58,500 contract transactions below simplified acquisition thresholds, and if that saves $9,500 on each, then that’s well over $500 million each year (even in 2006 dollars). Expand that out to defense and government as a whole, then you’d be talking many billions. In fact, it would be so many billions that I’m a bit skeptical of the claim.
USA Spending shows a total of about 5.8 million federal transactions in FY 2019. If half of the transactions could qualify as simplified acquisition but don’t use the approach (well below the 90 percent estimated for FISC), that translates to about $60 billion in additional transaction costs in FY 2019 alone. That’s presumably government costs only. Add in additional contractor effort and we’re talking over $100 billion easily.
Thinking about it again, the numbers are perhaps believable. Of over $587 billion obligated in FY 2019, transaction costs to the government of 10 percent from simplified acquisition sounds reasonable. Those government costs, of course, are not counted in the $587 billion obligated. However, the contractor costs, which may be another 10 percent or more, would eventually be reimbursed from the dollars obligated.
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