Photographer: Vincent Mundy/Bloomberg

DOD, GSA, DHS Expand Fast-Track Commercial Tech Buying Procedure

July 18, 2018 Paul Murphy

The use of Commercial Solutions Opening (CSO) acquisition procedures to fast-track the acquisition of innovative technology is ramping up quickly across government.

Two years after launching a CSO pilot program as part of Other Transaction prototyping efforts by its Defense Innovative Unit Experimental (DIUx), the Pentagon has begun rolling the concept out across the entire agency, according to a June 26 memo from Defense Procurement Director Shay Assad.

According to the new guidelines, Defense Department contract officers can use CSO procedures to acquire “any technology, process or method, including research and development, that is new as of the date of submission of a proposal of a technology, process, or method.”

CSOs are potentially worth hundreds of millions of dollars. However, according to the memo, purchases valued at greater than $100 million require approval from senior DOD procurement executives and the submission of notifications to Congress.

The General Services Administration and the Department of Homeland Security have also initiated their own CSO programs. On May 22 GSA launched AAS Express to make GSA resources and contracts available to agencies conducting CSOs. And on June 15, DHS published CSO guidelines, setting the stage for its own CSO program.

While DOD’s CSO program can trace its roots to the fiscal 2016 National Defense Authorization Act, language authorizing CSO use by DOD, DHS and GSA appeared a year later in the fiscal 2017 NDAA.

More Than OTA

Assad’s CSO “class deviation” gives contract officers a new, streamlined way to acquire innovative commercial technology under the Federal Acquisition Regulations’ commercial buying procedures, which are outlined under FAR Part 12. In addition to Other Transaction Authority (OTA) prototype-related contracts, CSOs can now be used to buy any commercial technology deemed innovative and necessary by the Pentagon.

Using these CSOs, contract officers competitively select proposals received as a result of a general solicitation similar to a Broad Agency Announcement, bypassing the normal solicitation process and the creation of formal requests for proposals.

For the past two years, the Pentagon’s use of CSOs has been limited to buying activities with Other Transaction Authority (OTA). Assad’s memo expands the use of CSOs to all DOD buying activities. It also brings CSO buying procedures under the Federal Acquisition Regulation while bypassing an extended year-long rule-making process. The new CSO authority is good through the expiration of the pilot in 2022.

The speedier acquisition of innovative technology comes with a downside: while CSO notifications will be publicly posted, the lack of a multi-stage bid process with sources-sought notices, performance work statements and requests for proposal means the acquisition process will lose transparency. This conflicts with other governmentwide initiatives calling for greater up-front transparency, such as Category Management and Best-In-Class contracting.

According to the Assad memo, proposals received as a result of a CSO will be peer-reviewed by agency-determined experts. CSOs will not be evaluated against one another because they will not be generated from a common performance work statement.

This analysis was first available to Bloomberg Government subscribers.
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Where to Find

The memo requires contracting officers to issue notices of CSO availability through a governmentwide point of entry, which most frequently refers to the government’s online opportunity portal, FedBizOpps. These notices are ingested and published by BGOV on a daily basis.

CSOs may also be announced in leading scientific, engineering or technical journals, requiring vendors to maintain sophisticated market research capabilities. AAS Express CSOs will be announced through eBuy, according to GSA’s AAS Express web site.

CSOs will continue to be used to buy OTA prototypes, and DOD OTA purchases are expanding rapidly — obligations have increased by 50 percent from $1.4 billion in fiscal 2016 to $2.1 billion in fiscal 2017. With the CSO threshold now set at $100 million for purchases requiring approval, this makes larger awards easier.

And on June 29 the Defense Information Systems Agency announced its commitment to OTA, including plans to use the authority for next-generation command and control applications.

As soon as publicly announced CSOs appear and awards are made, Bloomberg Government will be tracking their status in the BGOV Opportunities module and in the Contracts Intelligence Tool.

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