The DoD must start contracting for excellence

To encourage modern technology development, contracts should account for development that begins with a vision and proceeds with sprints. These contracts should have quantifiable outcomes and reward speed to fielding in order to inherently favor companies that invest significantly in IRAD allowing them to bring full our partial solutions to the table at the start of work. One possible method to create this model is through the use of indefinite delivery-indefinite quantity (IDIQ) contracts. IDIQs can enable flexibility to achieve a stated “vision” by including agreed upon building blocks used to mix and match for any given sprint. These types of contracts spell out in the Statement of Work (SOW) the goals and performance objectives but not exactly how to accomplish these goals using these building blocks. This frees industry to be innovative in fulfilling the goals outlined.

That was from Matt Steckman in a Medium post. Read the whole thing, including views on profit policies. See more from Matt in my conversation with him, Leaping the Valley of Death.

I think IDIQs are starting to become an increasingly important avenue of contracting, where smaller firm-fixed price task orders can be quickly added. Other Transactions with payable milestones and Commercial Solutions Openings are other potential vehicles. But the point is that contract mechanisms should mirror the technology development process. If the DoD wants to move toward an iterative agile approach, then using the same old multi-year waterfall contract process will create too many contradictions, leaving the DoD with waterfall development in reality.

This has been a major talking point of mine — that contracts must get broken down into technically separable tasks. This provides the government options. It doesn’t require the same multi-year lead time to fix requirements because the government can continually check on progress and simply forego future task orders if the company isn’t performing. It is best paired with competition, so that real alternatives can be compared and the best survive in a process akin to natural selection (better stated: a comparative filtering process).

IDIQs are great. But the way the government implements them is often misguided. Check out the process flow chart on an IDIQ provided by the National Institutes of Health below. Moving much faster with options to cancel and divert resources to alternatives is a much fairer and more effective method of accomplishing a mission.