Home PSC Review of DHS Small Business Program

September 17, 2009
Enhanced Services Industrial Base Focus Could Reduce Costs for Services, PSC Tells Congress

Washington, D.C.— At a hearing today of the Defense Acquisition Reform Panel of the House Armed Service Committee, Professional Services Council President and CEO Stan Soloway testified that the Department of Defense must enhance its understanding of the structure and dynamics of its services industrial base and the impact on this industrial base of its business practices and policies.

“Even as the department seeks to improve its oversight of services contracts, we believe it also needs to increase its insight into and understanding of the supplier base performing on those contracts. In 2008, the department spent over $180 billion on services, more than 40 percent of the department’s total contract spending,” Soloway said.

During the hearing, titled “The Department of Defense and Industry: Does DoD Effectively Manage its Industrial Base and Match its Acquisition Strategies to the Marketplace?”,  Mr. Soloway outlined PSC’s assessment of the state of the DoD services industrial base and the effect of the department’s actions—notably including insourcing initiatives, organizational conflict of interest (OCI) rules, small business utilization policy, and workforce development plans—on the many and diverse companies that provide it with crucial solutions and capabilities. PSC has long been an advocate for recognizing the contributions of the services industrial base and the affect of DoD business policies and relationships with its services supplier base.

Soloway warned that although the department has made progress assessing the services industrial base, aspects of DoD’s current approach and policies “strike at the heart of the government’s relationship with its services providers, increases costs and risks for the contractor, and could actually incentivize the wrong types of behavior by both the government and its contractors…Such actions dramatically increase risk and uncertainty for the industrial base, inhibit the ability of companies to offer the kind of solutions the government seeks, raise costs, and more.”

Full text of Soloway’s testimony is attached and available online at: http://www.pscouncil.org/AM/Template.cfm?Section=Services_Industrial_Base_and_Competitiveness1&CONTENTID=3753&TEMPLATE=/CM/ContentDisplay.cfm

PSC is the national trade association of the government professional and technical services industry. PSC’s more than 330 member companies represent small, medium, and large businesses that provide federal agencies with services of all kinds, including information technology, engineering, logistics, facilities management, operations and maintenance, consulting, international development, scientific, social, environmental services, and more. Together, the association’s members employ hundreds of thousands of Americans in all 50 states.