Defense officials: Austerity could streamline intelligence acquisition

Austerity is not necessarily a bad thing for the federal intelligence community. It’s simply a challenge. And maybe, even an opportunity.

That was the message from a panel discussion Friday featuring five federal officials who manage defense intelligence acquisition. The luncheon, “Intel Acquisition in Today’s Austere Budget Environment,” was organized by the Armed Forces Communications & Electronics Association.

Budget cuts are just budget challenges, the officials said, forcing agencies to address lingering issues they might have previously had the luxury to ignore: unsustainable contracts with the private sector, redundant contracts across departments, and a workforce not trained to work with fast-changing technology. Once addressed, officials foresaw a more agile federal intelligence sector, one that wouldn’t have to sacrifice capability to reduce its budget.

“This has been a cultural change for our workforce,” said Debra Scheider, director for the Office of Contracts at the National Reconnaissance Organization.


Officials from agencies such as the National Security Agency and Defense Intelligence Agency stressed the need to move from cost-plus contracts to fixed-price and performance-based contracts. Currently, intelligence agencies have mostly cost-plus contracts, where private contractors are paid for all expenses plus an additional payment to allow for profit.

But a fixed-price contract, where contractors simply receive a flat rate for their services, creates a clearer picture of exactly what the contractor will deliver. A performance-based contract gives even more incentive to deliver the product to exact specifications.

“We cannot necessarily afford all the extra options we have on contract today, so we have had to go back in and renegotiate the options,” Scheider said, speaking to a room filled with hundreds from private sector companies such as Lockheed Martin, Oracle and Google. Several of the government agencies represented — Scheider’s NRO and the National Geospatial-Intelligence Agency — said they had held industry days to boost relationships with the private sector.

“The way we’ve tried to approach that is not so much mandating a solution to you, but working with you and outlining the challenges so that together, we can come up with a solution that’s better for both of us,” she added.

Redundant contracts, created by a lack of resource sharing across departments, have also plagued intelligence acquisition. Multiple agencies have been signing separate contracts for similar services. Recognizing these redundancies can help offset budget reductions.


“While we may have less contracts, we’ll have more interagency programs,” said Karyn Hayes-Ryan, director of NSG IT oversight and NGA’s deputy component acquisition executive. And industry partners can also become more cost-effective by recognizing the redundancies, she said.

“Because you folks come in and say, ‘Hey, we’re doing this for [Defense Intelligence Information Enterprise], would that work at NGA?’” Hayes-Ryan added. “Those kinds of opportunities where you know we have a need and you know you’re delivering it for someone else, it serves you and it serves us to make it a more cost-effective approach.”

Judith Oxman, deputy acquisition executive for DIA, said the agency was teaming with NGA on vision acquisition contracts.

She described the panacea: “The idea is to eventually have a single capability across the entire [intelligence community] that will be spread out, instead of multiple systems that now we have to figure out how they’re going to work with one another.”

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