Commercial solutions openings as a path to continuous competition

A CSO-type general solicitation advances two core concepts: modular contracting and merit-based decision-making…

Modular contracting is a proven strategy. IT projects that follow the strategy can deliver valued outcomes more quickly, at less cost, and with lower risk of failure. It also makes sense that, when capabilities are procured as modules from many competing offerors, IT projects can be more responsive to changing needs and are better positioned to take advantage of innovative developments that unexpectedly appear in the commercial market.

… Instead of a program-centric acquisition approach, where often the winner takes all, programs are managed inside a portfolio of capabilities. To add and maintain complementary and potentially competing operational capabilities inside a portfolio framework is an approach that demands broad perspective…

With CSOs, the agility of modular contracting is made possible by an award process that is responsive enough to keep up with commercial innovation. Award decisions hinge on assessed intrinsic merit, which is wholly left to the federal organization to define. CSOs change how commercial items and late-stage R&D can be acquired by the federal government in two ways.

First, merit-based awards allow federal organizations to execute strategies without having to determine “best value,” which is an involved process that requires analyses, documentation, and time… Second, merit-based determinations lower the transaction cost associated with changing solutions or testing alternatives.

That was the excellent Victor Deal in NCMA Magazine: “What Commercial Solutions Openings Can Be… If We Dare.” You can find more on CSOs in my podcast with Victor, which was episode #1.

I think CSOs can be a crucial part of revolutionizing the defense industrial base to incorporate continuous competition and accelerated progress. Unlike Broad Agency Announcements which can only be used for S&T funds, CSOs can be used with any color of money so long as it is innovative. Might sound odd, but even R&D projects are considered commercial.

The two tenants of modular contracting and merit-based decisions allows the government to deal with industry on a truly commercial bases. For example, competitions in government tend to be non-competitive in reality. The government is tasked with strictly defining requirements which suppliers must bid on, and the lowest price wins. More than that, the process favors incumbents which can get in early on the requirements generation and have the money to last through the years it can often take.

CSOs are more of an open topic solicitation method, so firms can come in with their own bright ideas and pricing strategies, and allow the government to evaluate those based on merit — which is another way of saying the process allows for judgment. This is important because the government often doesn’t have the technical skill to precisely define requirements for innovation, and when it does it more likely than not screws it up.

CSOs allow for the creativity of industry to come to the fore, where pricing is tempered not by cost accounting data but by competition among relevant alternatives. The current FAR competition methods do *not* provide for adequate competition in reality — as evidenced by continuing consolidation of the industry even after 1984 Competition in Contracting Act. The government cannot demand competition. It must make itself an attractive buyer though methods like CSOs.