Guide to Technology Transition
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- Unsolicited Proposals
- Government Incentives
- Contractor Incentives
- Non-Cash Incentives
- Intellectual Property Rights
Solicitation MethodsRequests for Proposals, Broad Agency Announcements, and Research AnnouncementsRequests for proposals (RFPs) are a solicitation method described in FAR Part 15 and are applicable to procurement contracts. Using performance-based statements of work, the government describes, in the RFP, the results desired—or the “what”—and allows the contractor to propose the “how” they will achieve the desired results. Standard proposal formats are prescribed and the process for disputes or errors is discussed. Broad agency announcements (BAAs) are a competitive solicitation method for basic and applied research and the development goods or services not related to the development of a specific system or hardware procurement. BAAs are announced on the Federal Business Opportunities Web site38 and are general in nature, identifying areas of research interest (including criteria for selecting proposals) and soliciting the participation of all offerors capable of satisfying the government’s need. The selection of multiple proposals that offer unique and innovative ideas is expected if funds exist. Award instruments under BAAs include procurement contracts, grants, cooperative agreements, OTs for prototype projects, and/or TIAs. When it is determined that a procurement contract will not be used, the solution should take the form of a research announcement (RA). Unsolicited ProposalsSometimes industry can create its own contracting opportunities by submitting unsolicited proposals to perform R&D work or to introduce a new or improved item that may be of interest to the DoD. To be considered, a company’s unsolicited proposal must offer the government a unique and innovative concept. The proposal should contain an abstract of the proposed effort, the method of approach, and the extent of the effort. It also should include a proposed price or estimated cost. If the proposal includes any proprietary data, the company should protect against disclosure to third parties by clearly marking such data with a restrictive legend. For detailed guidance on the preparation of unsolicited proposals, see the publication “Selling to the Military,” available at http://www.acq.osd.mil/sadbu/publications/selling/. IncentivesGovernment IncentivesThe DoD relies on private industry to provide leading-edge technologies at an affordable cost throughout a system’s life cycle. Consequently, the DoD’s suppliers must be innovative, efficient, and effective and should be rewarded with properly constructed cash and non-cash incentives. In the past, the government–contractor relationship has been characterized as problematic and adversarial. There were disconnects between the contractual incentives to achieve the government’s desired performance and the motivational factors driving the contractor. Properly structured contractual incentives, as part of the overall business relationship, can maximize value for all parties. Contractual incentives should target the business relationship between the government and the contractor in such a way as to produce maximum value for taxpayers, for the contractor, for the warfighter, and for the organization in pursuit of its mission. The DoD not only must improve its ability to use existing contractual incentives, but also must develop a range of new and innovative contractual incentives. Currently, the DoD’s contract policies and methods contain certain disincentives to the development and insertion of beneficial technologies. These disincentives can be present in the S&T, development, production, and support phases of a system’s life cycle. Note that technology insertion for the purpose of enhancing a system’s performance or capabilities generally is encouraged by contract policies and methods. However, technology insertion for cost reduction, both during development and procurement and over the total life-cycle sustainment, often encounters financial disincentives. Milestone payments paid for the completion of an observable technical event are a method to provide incentives for the contracting parties to strive for better research results while avoiding many FAR-based requirements found in cost-type R&D contracts.
Enhanced communications also might serve to incentivize contractor participation. For example, the presolicitation information exchange process might include sharing government technology roadmaps for the DoD’s critical future requirements and comparing them with industry’s commercial technology development plans. Non-Cash IncentivesAward-Term IncentivesAward-term incentives are performance-based incentives designed to entice the contractor to execute an orderly transition of workload, provide superior support, and control prices through extensions or reductions of the term directly based on performance. When using award-term incentives, the government establishes objective performance parameters in the underlying contract and announces up front that it intends to shorten or lengthen the period of contract performance (minimum and maximum), based on the contractor’s performance against the parameters. The objective of this tactic is to establish long-term contractor relationships with proven producers of products or services. The award term structure is similar to that for an award fee, but the incentive is a performance period rather than cash. This is effective if performance metrics are objective and when a long-term business relationship is of value to the government and the contractor. Points are awarded during each year of the contract based on performance in each performance measurement category. Decisions on extending or shortening the contract are made on a year-by-year basis, based on a moving, multi-year average of the contractor’s overall point total. Extensions can be set, based on performance that exceeds requirements rather than just meeting them.
Cost-Based IncentivesShare-in-Savings ProvisionsShare-in-savings (SIS) provisions are cost-based incentives. A SIS contract encourages contractors to apply ingenuity and innovation to get the work done quickly and efficiently to share in the savings attributed to their planning and execution. SIS provisions are best used when the anticipated return on investment is large enough to make this a viable business proposition for the contractor. With this tactic, the risk shifts from the government to the contractor, with commensurate opportunity for contractor reward for successful performance. Because of the risks involved, a partnership approach between the government and the contractor is required. The idea is to allow the contractor to apply ingenuity and innovation to efficiently deliver the requirement instead of dictating the government’s preferred approach. At this time, the DoD is in the process of implementing DFARS coverage for contractors to share savings. Contractors are encouraged to reduce costs via an advance agreement. Contractor actions include reduced management costs, facilities consolidation, modernization of facilities, and outsourcing. Savings can be shared, under proposed rules, up to 50 percent of the realized cost reduction over no more than five years.
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