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Small Business & Industry Day Transcript - Morning
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 Opening Remarks - Mr. Sean Stackley, Assistant Secretary of the Navy (Research, Development & Acquisition)

The economy is broken. Budget is broken. [These are] things we’ve become numb to.

We need a bigger Navy. [We are] driving for greater affordability and innovation.  [There must be] more reliance on commercial and greater competition.

We must drive affordability, performance and quality.  [We] must create opportunities, be fair up and down chain of command.

How are we doing?  [I] coined the term “Greenometer” [which shows] less money and better [performance]. Metrics are packaged to describe how (different organizations) are doing. Greenometer shows doing better [for less money], and [it seems to get] "better" or "greener" as it goes up the chain - but in reality we're not doing ok. (Greenometer makes it seem that way but not always the case.)

I have an open door policy for small business issues.  Need to hear clearly and directly how about the issues.

It's easy for big business to get a seat at the table but we need more small businesses.

By the time issues make it to Hill – the issues are already entrenched, and it’s difficult to get to ground truth. [By time process is done], you end up with a wrench instead of needle nose pliers.  What needs to be measured? There needs to be an opportunity to compete [for] performance and quality, [and this] is not measured.

What is measured are dollars spent compared to benchmarks.  Metrics package used is the “Greenometer.”

We’re not doing okay…. the word on the street much different from word on the Hill.  I’ve been holding Roundtables at multiple locations. Feedback has been DEAFENING, [consistently].   Not across board but consistent; therefore, Greenometer [must not be] measuring correctly.

[Major themes ASN RDA hears]:

1-Communications - improvement is needed

2-Need to improve access for Small Businesses to the Programs/SYSCOMS requiring products

3-[Companies would like] more feedback (RFIs, RFP, etc) - Tripwires

4-LPTA always an issue. Valid method of contract, but may not [always be using] the best practices.  We go out with best value [bid] but we get LPTA, not because of policy but practice

5 –  Risk averse. [Perception that they’re] going against Head of Contracts,  EDs, or SYSCOM Commanders. But we need to get job done, figure out the requirements and go after it doggedly

6 – Too long to award a contract!  More difficult for SB without resources to remain in limbo on contract awarding. Process is too burdensome. Questions on Seaport process, subcontracting policy. Work and funding not flowing down to Small Businesses and sub primes. Prime/Sub relations broken; referred to data rates abuse as theft. IDIQs are being awarded but not being exercised. Not performing market analysis and one-bid contract, and short contract periods. CFAR is being ignored. Start with policy (for example 3 year contract  re-compete policy going out to 5 years).  SBIR phase III, if we are not going to exercise phase III contract, and will instead re-compete it---why? Because we don’t need to re-compete if going from Phase II to Phase III.

Additional Takeaways

Small business advocates are available for issues. For SYSCOMS, it is the executive directors. If issues are still unresolved, Mr. Stackley has open door policy. Message gets out if program managers unresponsive to SB issues.

Contracts taking too long; therefore, we started having offsites with heads of agencies.

    Step 1: Define the problem     
    Step 2: How do we fix the problem 
    Step 3. Prepare a plan to execute. Plan is for 2016-17 with new contract actions. Identify the manpower available and create schedule for accountability.

Need to get message out about what needs improvement…loud and relentlessly.

 Q & A Session - Open Forum

Q1: Open door policy and encouraging Small Businesses to go to heads [of contracting] if issues with awarding or not hitting competition.  Where is this contact information, who should we contact?  Online sites do not provide the individual’s information only a general email.

A1: If a product directly aligns with a program, first POC should be program manager or a Director in a SYSCOM. If no response, contact Mr. Bill Deligne. Third POC is Sean.j.stackley@navy.mil.

Streamlining is important - we don't have a lot of time to be bothering with (delays).

Q2: SeaPort Issues…locked out of business due to zone issues. Is there any way to relax the regions requirements for SB? Could be missing out on innovation by locking out SB.

A2:  SeaPort ~15 years old, and originally a good idea. 44 companies originally, 2800 now. Elliot Branch working with Cindy Shaver to review SeaPort for better alignment, modifications and best practices.  Review ends in 2019. SeaPort should be reviewed more often than every 10 years.

Q3:  Hub zone program, what can industry do to assist the Navy with the success of it and viable socioeconomic program?
A3:  Cindy Shaver:  Even on greenometer, it is not a great success in the Hub Zone, and overall lack of understanding. We struggle looking for opportunities in hub zone and how to apply it, and what the rules are.

Secretary Stackley recommended setting up a hub Zone meeting.

Q4:  Can you discuss the issues that were addressed when coming up with the schedule? Manning? Policies?
A4:  Sec Stackley: It started with trying to figure out how long it took to get things under contract. Started workflow analysis, flow charts….We were going to be analytical, precise, and it just wasn't going to get done because trying to be overly precise.

It's people part I.  Workload part II. It’s the Process (what isn't needed and taking up time). What are the Priorities?  We need to realize we're not going to get more people.  Took care of workforce issues and working on training. The real question now is what is the work?  We need to “Get it out on the table” so that contracts can plan their work, schedule, and prioritize… and hold ourselves accountable. This is not about people not performing it's about the system not performing. It’s about the program office not being on time and not sticking to the schedule.  It's time to get serious about schedule.   "If we were a business we'd be out of business."  We need to get serious about schedule performance and contracting. If we’re not awarding contracts, we’re not doing our job.  Right now we're using a blunt instrument. We need the right tool for the job.

Ms. Shaver: I’d like to add that we're looking at this from multiple perspectives. We are working on the processes and figure out where we’re doing it to ourselves, and not prioritizing, touch time based on resources available. Recently put out long range acquisition plan, posted on the NAVSEA website.  It includes the procurements planned for the next 3 years that have been identified.  [We are] trying to identify the work, so that you can see the opportunities as a Small Businesses. 

Sec Stackley:  I want to know everyone that touches a procurement request for a contract award, why they are touching it, and how long they are touching it for?  Because most of these actions are sitting idle; therefore if we can reduce the number of people who need to touch it.  We are not getting more people.  The junior people we have will become better experienced.  Workload will decrease and be more predictable.  Need to hold people accountable.  Need to put a schedule out there where we can measure and hold ourselves accountable.   I want you to scream bloody murder so we can hear you.

I keep a book in my office called “The Signal and the Noise.”  The Greenometer—a lot of noise in that and it does not get the signal out.   You are drowned out by that noise. All it just takes one General Dynamics  person to speak and the system tends hears them and not you.  You have to speak up.  Beat the drum, but no whining we don't have time for that.

Q5: Have you looked into using GSA Oasis in particular, Pool III Engineering Services to augment and doing thing?  USAF and Army are using it. 

A5:  Ms. Shaver: Part of looking at the next generation Seaport is looking at Analysis of Alternatives to look at where we are now compared to where we are then.  And looking at Oasis is one of the alternatives we are looking at. I know that Mr. Branch has had some meetings with the GSA.  I have some concerns that I need to understand more about Oasis to make sure they have a rolling admissions process which allows us to leach some Small Business Industry Days across the Navy Enterprise. SYSCOMs contracts have the same concerns.  I do not have a specific answer but it is on our radar. As part of this journey, we do need the voice of small business and figuring out the best way ahead.   We will be coming out with an industry survey, and doing road shows for feedback. Especially in the small business support services section.

 Q & A Session - Panel Discussion

Mr. Deligne
Affordability is other side of SBP - one of our pillars. 

Sec. Stackley talked about affordability (another part of our strategic business plan) and performance.
We cannot continue to replace existing warfighter capabilities with systems that are exponentially more expensive.   It is catching up to us in the shipbuilding industry. It’s going to require innovation and a different way of thinking.  

We are looking at affordability through commonality. We have driven a tremendous amount of variation into the plate in the different system causing tremendous burden to our platforms. On the procurement end, with so many variations, probably not getting the best deal.  Hugely dependent on you to bring the innovation to the table in cyber and affordability areas. We need to get on the huge barrier in the cyber area.  It will be detrimental to our ability to take on the cyber domain.

There will be a lot of resources in the Cyber domain over next decade, and cannot exclude 80% of the Small Business participation. We would be shooting ourselves in the foot.


Ms. Shaver

Along with Mr. Tatigan, I'm thrilled we're doing this at HQ. Our field activities do a great job at the local areas, and this is something that has been long overdue at HQ. 

From a contracts directive perspective, it is our job that to make sure that each procurement is reviewed for small business opportunities.  At the end of day I sign the contracts, but I don't own the requirement or checkbook.   Even though I sign on the bottom line, it is the PEOs and PMs, so getting Small Business engagement at an early level with the customers that I serve is [of] key [importance].  My job is to ensure we are doing everything we can to make sure procurement comes to fruition when it is identified as Small Business or procurements are identified as Small Business set aside.  It starts with communications.

Greenometer is about metrics, but this is so much more than about the metrics.  And honestly, metrics is a rear view mirror look, and what we need is the forward look. It needs to be deliberate communications and planning that feed into what are the new procurements that will be set aside for Small Business.

We're predominantly a production command, so where does a small business fit into that picture - everywhere.

Set asides. [We are] looking at increasing goals for primes.

We've been extremely successful in SBIR.

Disruption and competition are great. We're seeing good examples of this with subs, and software.

Contractually, this a good deal for taxpayer.

Looking beyond services sector as well where there are opportunities across all portfolios.


Seaport is the big question on everyone's mind. We are going to be coming out with a survey. We do want to talk to small business.  We do want to understand experiences that can inform what the program does going forward for the Navy with regard to Seaport and support services. 


Mr. Bray:

On behalf of all the PEOs, our greenometers are all green (laughter)

When you look at metrics you have to understand where the bar is set. SBIR is one area with quite a bit of cost across the board. And we think we’re doing pretty good.  The key metric for me is the SBIRS phase II to III transition.  But what is the correct number? Is 100% transition the goal? Is it 50%?  We can always do better to make those transitions.   That’s what I challenge my PEO and the other PEOs.  There are a lot of things we all could do to make those transitions better for SB.


We looked across the board at a lot of different areas.  In IWS, SUBS and others [we] looked at service contracts and Omnibus and how do we set aside certain pieces. [We looked at] competitive actions within the Small Business community, and we have been successful. 

 In IWS we looked at one for Business Financial Management that has been positively received across the PEO, and we will continue to look across the PEOs and Directorates.


On the technology side, [and this] ties a little bit to SBIR, but [it is] broader than that.  The open system architecture we’ve done in the past with various program -- the modularity, the componentization and the software -- have enabled us to do a lot more for big systems.  The one example I like to use is CEC.  This has been a journey for the last 10 years in IWS.  They’ve taken a very large complex system, and they’ve reduced the weight, the size and increased its capability.  They’ve built in modularity to the point where we can take a big piece of that and put it out there for Small Business award.


We look across the PEOs to see where we can get affordability and technological advancements to warfighter soon – in performance of the various systems, the way we do business in the shipyards, cabling, connectors, lighting, and cyber.   It’s these areas where a Small Business can be very innovative.

But how do we insert that into program office?  How do we get it in there and out to the warfighter as soon as possible?


Q1:  Secretary Stackley hit on a very sensitive issue. Small Businesses are helping large businesses win contracts and meet their Small Business goals but at the end of day, the work is not flowing down to the Small Businesses.   So we can’t perform and we can’t contribute.  What are you doing with regard to execution accountability?


A1: Ms. Shaver: One of the things we have started to do is providing an incentive structure around subcontracting and Small Business.  Therefore, if in your proposal you say you’re going to subcontract a certain percent out we are going to reward you if you meet or exceed that. You have to provide demonstrative performance. It is somewhat of a challenge in the system because there are no automated systems that show from an execution perspective if you are meeting your goal.  Therefore we are trying to put incentive structures in the contract. There is after action reporting, but it becomes a rear view mirror exercise.  We are looking for methods to actually demonstrate during execution that the money is actually going to Small Business.   Because that is part of the terms and conditions that you agreed to.  We are not where we need to be yet. But I think we recognize it is a problem.


Funding stream is a challenge too.  For example, we expected to obligate $1M by the end of the year, but only obligate $700K.  The Prime makes decisions as to where those $700K have to go and often says I’m going to hold that money inside.  I’m going to put my own people to work instead of giving it to subcontractors.


We want to know if they have to make those decisions and tradeoffs, are they doing them with the businesses in mind? So it isn’t always the Small Business that are suffering.  It is a legitimate concern and we have a ways to go.  We're putting an optic to and voice to this, and with the incentive structure we hope we can help a little bit. 


VADM Hilarides:  In the last few years, how many feel you've been on short end of stick of a big business bid and you didn’t get what you helped them achieve?

(Many hands went up)


Mr. Deligne: I don’t think we have visibility into what is going on there, and we need to figure out how to get data on this.  We need [more] visibility so the program offices and PEOs can have those conversations on why that is not happening.


Mr. Bray:  Data is harder to get when it’s second and third tier supplier. 

On missile side, with missile systems, [we have] semiannual reviews [in which] we look at subcontractor suppliers.  We're looking at all levels and how money's flowing.  Trying to understand if the competition is happening at all levels and how the supplier activity is happening.

We work with a consortium of Program Offices.  It is an area we are looking at, and the money flow is the area that concerns me the most.  If money is not reaching the sub-primes, they don’t have the flow to keep going.  We are working on this.  The data is not as evident to get there.  Working with DCAA too with audits.


Ms. Shaver:  Another area we’re looking at is making sure that when we are making the payments, the payments are flowing down.  [We receive phone calls], and we hear [some Small Businesses] are not being paid.  I open up the contract and see it is fully funded and work is being executed, why are vendors not being paid?  I can tell you we have written letters to large companies/ primes, and have had large primes in our offices explain to me why.  Because this is a term of performance.  If you are not paying your subcontractors, performance will suffer, and you have an obligation to do that.  And we are going to start evaluating you on it and start looking at it from a CPARS perspective. 


Q2: Follow on question--Last several years small business set aside was 20-30% instead of having a AB goal inside the larger contract. Are we going to continue doing that, because it shuts out Small Business who do not fit into that niche? 


A2: Ms. Shaver: We've been pushing for more AB breakouts and Small Businesses set aside, especially in the support services sector.  And one of the things we do is look back at the services provided historically, and which pieces of the work are being done at the subcontractor level by SB and being done successfully.  That type of work is what driving us to pull work out and set it aside and to write a set aside as much as possible.  Doesn't mean we don't have just as large goals for unrestricted large business small business set aside goals.  It is becoming a challenge for some of the large primes because the SB they have used as subs for previous procurements are now off working as primes. And the good news is they now have to find new SB to rejuvenate their industry.  We are working on more set asides, but we are still holding those large businesses accountable to have as high or higher subcontractors. 


VADM Hilarides: Caveat on the services area there is tremendous downward pressure across the entire government for us to reduce contractor support services.  I hear it everywhere I go.  We need to control that expenditure.  And there’s a sense that we are not managing as well.  It is an area that is difficult to audit.


Q3:  (Person asking question said he had experience with MDA, NAVSEA, NAVAIR, Hughes, and Raytheon.)

At NRO we had same discussion last year. All the little companies sat in a little room and said “how come I am not getting any business from the primes?”  We (as Small Businesses) need to wake up.  Because if you’re a big prime, and you’re buying hardware in bits and pieces, they will beat your door down because they are manufacturing and that is their bread and butter.  But when there is downsizing, rightsizing, sequestration…whatever you want to call it [that’s a different situation].  Big businesses are run by the unions, not program development guys.  If [an] engineer [is] working at a company, when the rubber meets the road, [he or she will think] I've got to hire Union first before you (by law). 

[So] get the right arrangement and go bid the work.


A3 :VADM Hilarides: That's not a question but sounds like very good advice. (Laughter)


Q4:  Has there been an update on transferring responsibility for SeaPort services procurement from NAVSEA 02 to the NSWC? 

A4:  Ms. Shaver: We have discussed where we should conduct the HQ SeaPort E. We've looked at this but [there’s] no decision yet, and my focus is the future of SeaPort E as a whole and the Analysis of Alternatives.


VADM Hilarides: 90 percent of our contracting is from field.


Q5: Regarding the SeaPort SB set aside, are you aware you are awarding contracts to companies that exceeded that Small Business criteria by more than 5 years?   Companies whose gross revenue exceed $300M.  Employees who exceed 500.   


A5: Ms. Shaver: We go by the rules from the FAR.  At the time that you submit your proposal is when your small business status is determined.  And we go to the SBA to ensure the SB status is accurate at the time of proposal submission. 


Q6: What SeaPort does, is it recertifies SB every 5 years.  It takes the average of the last 3 years of certification.  So when you solicit proposals with a 1-2 week turnaround, the larger revenue firms have bigger proposal teams and large pool of resumes to pull from to undercut a SB. It is an unfair process for the Small Businesses.    Ironically, a Small Business as subprime to large business has to certify annually.


A6:  Ms. Shaver will take action to look at this and look at the timelines and requirements for certification.


Q7: With regard to incentive fee on payment terms… is there anything you can do to flow that to the master contract level?  In terms of net 30, net 60, at the MAC level vice just Omnibus?


A7: Ms. Shaver will take a look at it.  Will look if there is anything to preclude us from doing that at the MAC level.  But some of those payments are what we do to encourage that subcontracting flow is working.


Q8: Sec Stackley hit on a couple of key topics that are ongoing issues: delay in contract awards, and the appropriate use of LPTA vs best value in the evaluation process.   Taking those two issues and looking at the head of contracts office, it sounds like there’s going to be an emphasis on the turnaround time.  Will there also be discussion with regards to best value evaluation process?


A8: Ms. Shaver: I’ve sat in on the Feb and Apr meeting with Sec Stackley, and there have been lots of discussions with regard to timelines.  We are working on this from two perspectives.  One is the planning and predictability, which we heard feedback from Small Businesses. It is very important to Small Businesses to know timelines and evaluate other opportunities.  Will I have the workforce to cover X, Y, and Z, while I’m waiting on award for X, or do I want to bid on Y? For Small Businesses it is much more serious constraint.   Predictability and timelines are important to business opportunities.


There has to be a realization that there are certain bureaucratic processes in place we are not going to be able to move.  We need to look at the touch times and re-work to figure out how much we can lean.

And then the focus can be on predictability.  I would love it to take 6 months, but know it will take a year.  But if I say it’s going to take a year then I stick to a year. And a year doesn’t become 18-24 months. [This has been and is] part of what we’re suffering from...  We need to make it faster, but we really need to make it more predictable.


The other piece that you asked about was LPTA… we have had extensive discussions regarding LPTA and data mining. We have found that we're not advertising that much but when you peel back the onion on source selection it looked like they defaulted to LPTA.  Best value in not LPTA.  Sometimes the high technical is also the lowest priced, and that can look on the surface like LPTA.  My job is to ensure there is good order and discipline in the best value trade analysis, [and that it] shows that tradeoff is actually occurring.  That is the discussion with Sec. Stackley and the message we continue within our organization.  Need to ensure everyone understands the difference.
Small Business & Industry Day Transcript - Afternoon
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 Opening Remarks - Mr. Bill Deligne, NAVSEA Executive Director; Ms. Allison Stiller, Deputy Assistant Secretary of the Navy (Research, Development & Acquisition)

Mr. Deligne:  We had a very good turnout for the morning session.  As executive director, I get involved with a lot of the business processes and small business programs.  Chair SBIR.  [This] keeps me engaged in Small Business matters, although I am still learning about the SBIR program.

I want to encourage you to be here for the discussions after the panel when we run through each of the PEOs and end with talking about SBIR.  It is very tactical [information] for you [regarding] how to be involved in the near term in our SBIR program.  We will hear from each of the PEOs and their product lines.  If you’re already familiar with NAVSEA and are ready to jump in, we have our DPMs in the booths out in the atrium. You can go and engage in more detailed conversations.

This is the first event of this kind at HQ, and we encourage you to provide feedback to make the follow on events better.  We will have follow-on events to get through our entire portfolio (engineering, service support, etc).


Ms. Stiller: I would like to give you some perspective/thought.  Let me set the stage.  The problem, as you know, is the budget.  We are facing sequestration, we’re facing budget controls, CRs…we need a bigger navy.  We are at an all-time high optempo and high state of readiness with our fleet and aircraft.  We are also in a phase called innovation.  We are facing a technological edge erosion and we are seeing our adversaries come into play here.  Affordability is the key with every program.  We are actively engaged in better buying power and acquisition reform.  When you add all of this up, innovation, competition, affordability, cost effectiveness, speed, agility, it all equals Small Business.  Our policy is to deliver affordable platforms, affordable weapon systems, be innovative, and perform to meet the needs.  We have created and will continue to create opportunities for Small Businesses to compete.  We will be fair, attentive and timely.  We will abide by the law and leverage the authorities that we have.  We also want to listen and receive feedback. 

How are we doing in the realm of Small Businesses?  Our greenometer is very green but we know we aren’t.  What are we doing to get to green?  RDA and SBO instituted Small Business round tables across the country.  [This is] a forum to ensure your voices are heard and not lost in the noise.  Sessions have been extremely productive.  Received consistent messages that there are things the navy needs to work on.  Some of these things are: improving communication, granting SB access to programs, providing feedback, minimizing use of LPTA, trip wires, eradicating navy culture from being risk averse, streamlining the time it takes to award contract, tailoring the contractual requirements, refreshing SeaPort, ensuring the primes comply with their bids to flow down work, ensuring data rights to proposals, not allowing IDIQ contracts to sit idle, not recompeting SBIR contracts unless forces, addressing 3 year contract policy, taking into account CPARS, gaining better understanding of hub zones.  We hear you when you say the government is making it impossible.

It’s been a couple years, what have we done?  We’ve converted your concerns to actions, analyzed data and generated new policies.  Updated policies and assigned actions. For example, we’ve addressed the 3-year contract policy to go back to 5 years. We’ve addressed the need and mandated competition.  We’ve addressed the SBIR Phase III re-compete.  We’ve assigned a team to review and refresh SeaPort.  We’ve updated our policy on the use of LPTA.  [We are] tailoring contractual requirements to make more sense.   We’ve assigned every DPM as a Small Business advocate.  The SYSCOM advocate is the Executive Director (ED).   If you feel they are not responding to you, then ASN RDA and I are your answer.

Another thing we’ve instituted in the last year is a summit with the SYSCOM commanders, EDs, and head of contracts to address the time it takes to award contracts.  First meeting happened in Feb and it defined the problem. The second meeting happened in May and it outlines what needs to be done.  We are meeting again in Oct to outline what each SYSCOM plans to do.  The contract actions they plan and the timelines they plan to complete.   It will be a roadmap of how we plan to do business over the next several years.

As you may have heard, Emily Harmon has been named as the new Director for Small Businesses.  When she comes aboard we plan to establish a monthly forum to meet with SB here in the DC area.  In conclusion, we want you to know we are listening and want to make the greenometer as accurate as possible.  We value what SB do as part of our team and we are listening. 

 Q & A Session - Open Forum

Q1:  You said you would review your policy on LPTA, can you be more specific?

A1:  It is very descriptive on when and how LPTA is used.  When it is very clear that it is effective and not going to be best value in a different guise. 


Q2: SB set aside?

A2: Recent guidance from SBA, and precedence is given to companies that are disadvantaged and women-owned. Need to have a certain number in SeaPort classified that way.


Mr. Deligne introduced Mr. Tatigan, longest serving DoD employee


Q3: Could you speak briefly to the new DoD 5000, for the acquisition of services, and more importantly, how you think that will enable or impact Small Businesses?  When we look at the amount of oversight required, they can lead to delays and barriers for Small Businesses when there is such a focus on reducing cost.  [It is] like a race to the bottom in the services sector.

A3:  If the DoD 5000 is out, it is news to me.   But it is going to allow us to do the right thing.  The comment about the race to the bottom is a concern.  When a program office needs support, they need to take the time to describe/specify the type of support they need (engineering, technical, etc).  [We] need more fidelity in who we truly need.  You’ll see in the new 5000 the ability to tailor and do what is right. 


Q4: Mentor-protégé programs?

A4: A mentor-protégé program is something we are looking at.  We set up contracts to encourage small business participation.  But we cannot track flow through the larger companies.  We know there are some small businesses who are very involved.


Q5: DoD 5000 has new language for milestone reviews in SBIR Phase III, as well as establishing goals and incentives. Can you discuss that?

A5: My plan is to streamline as much as we possibly can and apply lessons learned to other SBIR programs as applicable.  But [we] don’t want to get to the point where we are putting a huge administrative burden that is not getting us what we need.  There may be some growing pains, and we’ll need to hear from you.


Q6: Cyber security is a big issue these days, but as a Small Business we are too small to get accreditation.  Will there be a forum which can help with cyber security accreditation for small businesses?  Small Businesses have useful resources.


A6: Mr. Deligne:  There were two things that really surprised me this morning. The first has been discussed regarding flow down, and the second is the barrier for Small Businesses participating in Cyber.  Cyber security is one of our key focus areas, and we’ve got a lot of work to do. Our capacity, skill level, how we engage industry, how we protect our shipboard networks; you name it. We have work to do there.   There is going to be an uptick in resources, and we have to be in position to leverage the innovation of Small Businesses.  We hear you loud and clear, and it’s definitely on the list.  NAVSEA is going to hold a Cyber Industry Day somewhere in the end of October for large and small businesses.

Ms. Stiller: It is a great question. In fact I have a Cyber meeting tomorrow and will pass this concern on to the bigger group.


Q7: You spoke of acquisition reform, innovation, prototyping… Senator McCain is really big into acquisition reform… there are different ways of getting contracts, streamlined with very quick turn-around, but we are finding it very hard for contracting officers to think outside the box, is there any opening for contractors to be allowed to think outside the  box?

A7: One of the things is streamlining SeaPort and other opportunities that Cindy and Mr. Branch are working.   One issue they are working is how to continually get people into SeaPort….but it is definitely a part of the whole contract review we are doing.  We are looking at streamlining contracts and preventing contracting officers from being risk averse.  We recognize that if we don’t award contracts, we can’t do business. We need to ensure contracts are awarded to deliver the needed products and services. 


Q8: Quite often, Small Businesses are not evaluated in CPARS, so how do we address this issue of Small Business contracts?

A8: I have had this discussion several times, and it is any subcontractor on a prime.  Ms. Stiller will take for action.


Q9: Legislation for changes in 50% subcontracts, which is a huge impact to Small Businesses who need to meet Small Business requirements but then need to do 50% of the work.  That has not gone into the FAR. Are you planning to take advantage of that?

A9:  I don’t see why we wouldn’t, and that is a great question.  I will follow up on that.


Q10: I have asked this question to Sec Stackley. Not too long ago we were competeing for a particular effort and one of the things we very quickly realized was that on SeaPort you can be a large business and you can still bid Small Business contracts.  Is there any effort whatsoever to look closely at how those contracts are being awarded? In SeaPort it says it’s a Small Business set aside. It gets awarded, and in the column where it asks if they are a B, it says no.  It’s discouraging to see these companies win Small Business contracts, if they (the contracts) are [for] Small Business set asides.  Small Businesses can stay Small Business in SeaPort for years after they are no longer a Small Business.  It’s not good, it’s not fair, and it sends a very bad message. 

A10: Mr. Deligne:  That is exactly right.  We had the exact same discussion this morning.  Ms. Shaver has taken this for action, and is reviewing the process for classifying companies in SeaPort.


Q10b: When can we expect to see changes? When would that occur?

A10b: I’m referring to a contract that took two years to award, and was then awarded to a company who had already graduated from Small Business status. 

Q10c: When you look at bidding these, the reality is there are contracts that are Small Business set asides, during changes, the contract grows larger, and incumbent becomes the one that can no longer bid anymore.  And then they get flipped.  How can you flip a Small Business contract to an unrestricted? Is there a process to ensure a Small Business set aside stays a Small Business set aside regardless of the size?

A10c: If a contract is too large for a Small Business, we will ensure a wedge is contracted to Small Business and the rest of it will be unrestricted. Often there is a requirement a percentage to be dedicated to a Small Business.  But basically, if a contract has been set aside, it continues to be set aside. 

Q10d:  I’ve seen it before, many times, where the scope was redefined, and no longer a Small Business set aside.

A10d: Ms. Stiller: I do have one plea/request, because we are listening and trying to change.  Mr. Stackley has made the DPM responsible and be the Small Business advocates.  And when you see stuff like that, please go to them.  They will get to it right away and run it to ground.  If it’s broader than one program, take it to the ED.  Then bring it to me.  Sec Stackley and I have open door policy. 


Q11:  You mentioned earlier a SeaPort refresh..

A11: We have been asked to look back at SeaPort and identify what is or isn’t working well.  We are also looking at other vehicles which may be valuable to have and use.  Cindy Shaver and Elliot are looking into this now and expect them to come back with recommendations soon. 


Q12: Feedback on SeaPort E…sole source contracting for SBIR phase 3. When looking at SeaPort E, make sure that the contract officers are comfortable with sole source SBIR and not setting up Small Business for unintended risk. 


Q13: You mentioned the DPMs are now the Small Business advocates, and we should talk to them on individual programs, and I think that’s great, but what I think you all need to do is take a look at the last 4 years of SeaPort E awards, and you will see the magnitude of what we are talking about.  Awarding Small Business set asides to large businesses.

A13: I will definitely take a look


Q14: We worked on recertification processes for Small Business on SeaPort E, the issued revolves around the voluntary recertification. That is the “loophole” that allows large businesses to stay as a prime after they’ve graduated. Size certifications are only required during rolling admission periods, and they are voluntary.

A14: Ms. Shaver: let me talk a little about the future of SeaPort.  There are concerns about recertification for Small Business, rolling admissions.  The program has changed and evolved over time.  Going forward, all of the SeaPort are set to expire in 2019. And we are trying to determine what the way ahead is for SeaPort. My goal is to have an acquisition strategy nailed down by 2016.  This is a discussion with all SYSCOMS not only NAVSEA.  It is a higher range analysis of alternatives.  We are seeking feedback from industry, especially Small Business because Small Business make up ~80% of vendors on SeaPort, to understand what does or doesn’t work. 


Mr. Deligne: mentioned large businesses carrying their Small Business status forward.  Cindy Shaver: this is definitely something we are going to address with the SBA.  While we are technically complying with the rules, it doesn’t necessarily mean it is best business policy.  It is definitely something we need to understand. 


We will take a look at sole sourcing SBIR contracts.  Phase 1 and 2 SBIR are mostly awarded outside of SeaPort.  If in Phase three the PM wants to sole source, they can write the justification and cite the legislation.  SeaPort E was not set up for research and dev and follow on…it was mostly for support services.  Contracts that do go through SeaPort are 100% competitive.  Therefore all the business rules are in place.  Set up as a checker on the government side to ensure the work is being done right…it wasn’t really done with SBIRs in mind.  I will take all this for consideration.

 Q & A Session - Panel Discussion

Vice Adm Hilarides:  My Small Business experience really started in 2005.  I had been in acquisitions all the way through my career.  Fortunately I had the very best mentor in the whole world, and over the course as PM and PEO SUBS, Matt turned himself into the billion dollar man.  I rode his coat tails to a very good place.  What Matt taught me is Innovation, a word that’s been tossed around a bit today, and the second one was access to my favorite appropriation—OPM.  Other People’s Money.


In Small Business in you have a good record of transactions and good projects, the Small Business money is available.  We tapped into that vein.  Now I find myself in the advocacy position and working to solve this problem with Sec Stackley.  As he gone out to talk to Small Business, they have a tremendous amount of frustration.  He turned to me and asked what I was doing to hear the voices of the Small Business.   He told me I needed a system to listen to them and communicate with them.  We are here to open that dialogue.  This is not our first Small Business  forum, it is the first at HQ.


The Large Businesses are a hard nut to crack.  Especially those large contracts where you may not see a connection to Small Business.  There’s a good case to be made that there is a Small Business in every large contract.  We are here to listen to you.


I walked in with Mr. Tatigan today…he had an extra spring in his step this morning.  I believe we all have Small Business opportunities. For example – Cyber security.   It’s a relatively new body of work.  It’s not your typical Cyber or IT.  They are treated different than information…they have to be treated different. We have to learn how to control the systems under our authority.  We will need a lot of help and innovation.


Mr. Deligne:  Before becoming ED, I spent 20 years in aircraft carrier programs so my direct work with Small Business was limited.  Most of our work was sole source to shipyards.  What I counted on was the large company interaction with the Small Business  community. Every day we saw the interaction and the benefit.  What we didn’t realize was how big of a deal the flow down was from the primes.  A question was brought up this morning.  Almost every hand in the room when up when asked if they’d been part of proposal as a sub, and they didn’t see the flow down of work or funds.  It makes me wonder how we are graded on the success of a small business program.  I’m pretty sure we are only graded on the prime contracts.  No one asks me for data on SM or subcontracting.  I don’t think we have a baseline that shows what that funding looks like.  I think we’ve stumbled onto something as a result of this forum.


We may put a group together to review the flow down of funds.  I also think you should be asking those questions.  Why aren’t SYSCOMS graded on Small Business contracts?


VADM: I’ll just say I’d rather the question not come from Senator McCain.


Ms. Shaver:  I am thrilled we are having this event at HQ.  I’ve attended others at the field activities and have witnessed the frustration the SB face.  We do get graded on the metrics, but this is so much more than the metrics.   And honestly, metrics is a rear view mirror look, and what we need is the forward look.  If we don’t look forward, things are not going to change.  Communication and dialogue are important, because metrics don’t tell you much of anything.


One of the biggest problems I face, and hear about, is that it takes too long.  In reality, in procurement, there are a lot of things that are put on us (legislation, rules, GSA) and we have a lot of work to do to see where we can implement change.  We have great leadership in DASN who continuously meets with us to enforce a change.  It doesn’t just hurt industry, it hurts the warfighter. 


We are also working on planning and predictability because it is much more of an issue for Small Business.  They need to decide what to bid on, the proposal, competitors, etc., and without a predictable process, it complicates more for the Small Businesses.  At DASN we are working on planning a lot better and predicting as much as possible, and prioritize to stick to a plan.  We have released our long range planning tool for the next 3 years.  It is not perfect, but we are looking for the dialogue and we know it will need refinement.  From an HQ perspective, we do buy large stuff, and most Small Businesses fit in at subcontracting levels.  We are looking to see where we can turn the dial elsewhere.  We do a very good job in the service sector. 


To quickly touch on SeaPort E….it is one of the largest vehicles we use.  It is coming up on a milestone and all the MACs are set to expire in 2019.  At the big Navy level we are reviewing for best practices and lessons learned.  We are doing analysis of alternatives, and we will be reaching out to industry, especially Small Businesses (who make up 80% of SeaPort program) for feedback.  Goal is to have new strategy completed by end of 2016.  We will be doing road shows and surveys.


Mr. Bray:  Representing PEOs… we are about acquiring budgets, contracts, products, services.

The goals of the PEOs are innovation, affordability and technological advancement.  We are in a very critical environment. Sec Stackley and Ms. Stiller both discussed metrics, and I think we’re doing pretty good on SBIR. The key metric for me is the SBIRS phase II to III transition.  But what is the correct number? Is 100% transition the goal? Is it 50%?  We can always do better to make those transitions.   And we can improve affordability and innovation to move the bar up on performance. 


The PEOs have done a lot of great things. That’s what I challenge my PEO and the other PEOs.  Within my portfolio in IWS, I look at the CEC program.  10 years ago it was a large, expensive bundled system. And we have taken that and used open system architecture to break it apart and make it logical.  In the services area, across the PEOs we looked at omnibus, rolling out service competitions and segmenting some of those off to Small Businesses.  On the acquisition side, I think Small Business can come in and give us what we need.


We look across the PEOs to see where we can get affordability and getting technological advancements to warfighter soon – in performance of the various systems, the way we do business in the shipyards, cabling, connectors, lighting, and Cyber.   It’s these areas where a Small Business can be very innovative.


Q1: We talked about innovation and streamlining acquisition.  There are some out-of-the-box vehicles out there where innovative ideas and technology could get out there without going through SeaPort.  Sen. McCain really likes it.  Already run by the army and air force, but too risky for contracting officers.  What can we do to make contracting officers less risk averse?

A1: Received similar question with respect to other transactional authority as it relates to R&D / prototypes.  There is a lack of education across the federal government of those tools. And part of that is because it’s a narrow authority and at HQ we don’t do as much R&D.  But it does make sense at our warfare centers to be able to use these types of vehicles.  It provides less flexibility for terms and conditions, but we may need to break some of those barriers.  On the government side, we are used to working with a set of rules and regulations, not just the contracting people, but program offices, attorneys, and you’re taking away that safety net and [it] causes problems.   Requires re-education of what’s out there and when to use them.  I was glad to see legislature [that] put some stipulation on the authority to prevent abuse, and stipulates a certain percent has to be to non-traditional contractor who hasn’t held a government contract in two years.  That has helped and starting to see more people using it.  We need to get the workforce re-oriented on how to use them properly and take advantage of it when it makes sense.


Trying to get more mature (non-developmental) technology to the fleet.  Going out with competitive problem statements on programs.  Most recently did one on PEO LCS.  Put out problem statement, and assuming you have mature technology, we will award you a contract for study at a fixed amount (few $100K).  If study pans out, then we can exercise an option with you to test in a lab.  If that comes to fruition, we will put it on a ship, and if that works we can exercise option to purchase.  Would like entire cycle to be 2 years. Trying to model this after an early project for IEDs when you don’t have time for a 5 year acquisition cycle.


Q2: We have a program with mature technology, and they would like to engage with you on this 2 year pilot program, who should they contact?

A2: Bill Bray, PEO IWS


Q3: Is there a SBIR equivalent on services side?

A3: There are similar types of vehicles.


Q4:  We don’t work directly for NAVSEA, but we some R&D and you talk about innovation and getting the right people on task, it’s difficult when compensation and margins for the company are being driven south.  When do you think there will not be such a downward pressure in that area?  For planning purposes, can add resources on DoD side vice commercial.

A4:  VADM Budget environments that we’re in, and economy still sputtering along, I can’t imagine movement in that area. 


Ms. Shaver:  Getting a very hard look at services due to pressures from budget.  From perspective of DoD there is a strong look at product vs services.  Products are tangible….delivering product to the warfighter.  Products don’t work without services but when we look at budget pressures, the budget being scrutinized the most is being applied to services.  This is a concern for me looking at our metrics and looking where funds go, and it is a lot of my Small Business “spends.”  I don’t have an answer, but it is a big concern.


VADM:  Part of the downward pressure is due to rate trip wires, and when individuals go above certain rates, there’s a trip wire and set of approvals.  The PM has to make a conscious decision, and the intent is not to deny that PM the person they absolutely need.  It’s to make sure they’re not getting a person who’s expensive, because it’s a person they know.


Q5: had a chance to work with Mr. Deligne in carriers on Small Business.  Feedback is that the current contracting really hurts Small Businesses because if it takes to long there may be personnel substitute clauses and can’t afford to maintain staff if it takes too long.  With regard to Cyber and computing infrastructure, there are barriers to Small Business because we are too small or the cost is too great.  Is there any thought to cloud computing?  Is Navy or DoD looking into that or are we sticking with what the Navy has been doing so far?

A5:  VADM:  Part that I was referring to, in the control systems, there is very little cloud use…not shipboard.  I believe you are referring to a network, and can we put trusted information in it, accredited to do the work.  How do we extend our umbrella to that…that is a great question, and we’ll have to take it for action.  That’s a very good point and you need to be secure if my data is going to be your data.


Mr. Bray: Cloud services is an area we can look at for efficiencies and innovation because it’s our program, and it’s driving costs all over the place.  It needs to be done efficiently and effectively so we can demonstrate our systems.  It is definitely an issue we have to worry about.


Q6: As a small company, to stay competitive, we drive down our costs and are bottom feeders when we’re up against large companies.  So when I try to recruit someone good, I can’t afford them.  We can’t entice the right minds needed for the cyber work.  We use margin to keep good employees.

A6: Mr. Deligne: We are faced with the same dilemma when trying to attract that kind of talent.  We need to up our game on skill and talent levels.  Cyber is in demand, and we may have to redirect resources from other things to strengthen that domain.  You’ll have to do the same thing or your company could be in jeopardy.  Had an acquisition discussion about how we would strengthen cyber acquisition work to get up to where we need to be.  We can work together and learn from each other.  We are going to have a Cyber industry day at the end of October.


VADM: I thought you meant the trip wires on the rules prevented you from getting hired, and that is not what they’re intended to do.  If there are different interpretations, that is when you need to contact the Small Business advocates -- the DPM, then Bill, then Sec Stackley.


Q7: We all understand the situation with the budget.  How are you putting in price realism? When it doesn’t specify level of requirements you are looking for.  How are you making your pricing determination for the contracts?

A7: Ms. Shaver: Price realism is somewhat subjective and varies from procurement to procurement.  We are looking at do you have a good understanding of the work? Past performance?  It comes down to rates, but almost all of procurements, we put out our best value rate offer.  Just because I’m getting the lowest rate, doesn’t mean I’m getting the best value.  I’m looking at that criteria and making sure I’m getting best tradeoff.


If there aren’t specific requirements, then all you get is the “bottom feeders” undercutting the hours.  When you go with the lowest price, government really isn’t getting the services they are seeking, and we hope price realism is being applied realistically.


[We] spend [an] enormous amount of time doing a source selection doing best value trade off and then a few months after execution, they blow through those rates.  Best value now costs more than the person who was outstanding and bid higher.  Trying to do no additional scope, additional scope should be competed and putting processes in place to monitor where we are in execution.  And if we are seeing execution go higher we’ve been putting CPIF in place so that they’ll go down to a minimum fee.  [We are] trying to curve that exact behavior.  Because once I do the research, and select you as a contractor, I expect you to execute to your plan.  I also worry if the government is executing high.  [We] need to execute the best value tradeoff.