Procurement: December 28, 1999


Raytheon has told Teledyne Continental Motors to stop working on an engine for the Tactical Tomahawk because their engine did not meet performance goals. Instead, Raytheon will negotiate with Williams International, a Michigan-based company.--Stephen V Cole

Responding to complaints from American industry and foreign customers, the Pentagon has launched a one-year study of its Foreign Military Sales program, trying to find out if the many complaints are valid. US industry complains that the arcane rules of the Pentagon's accounting are stopping them from fully developing the export market. Foreign customers (who are charged a 2.5% handling fee by the Pentagon to buy weapons from US industry) complain that the overly complex accounting makes it impossible to determine what they are really paying for the goods they receive. Some of the ideas being considered include a sliding scale of charges rather than a fixed percentage, or some other means of directly attributing the actual costs to each sale.--Stephen V Cole

The Air Force is revamping its depot services and supplies contracting system, and the changes have small business both excited and angry. The Air Force wants to replace hundreds of smaller contracts with five huge ones, which would shut out the smaller contractors from bidding. The Air Force insists, however, that the contracts include goals requiring the winning bidder to subcontract out much of the work, and in effect the government is just transferring the cost of administering the contracts to the companies. The other change is so-called IDIQ contracts, which stands for Indefinite-delivery, indefinite quantity. If there is an item which many bases use and several vendors offer, the old system required each base to go out for bids every time it wanted a new batch. Under the new deal, a single contract is signed by many to provide a given item made to given specifications. Whenever one of the bases or agencies wants that item, it simply asks everyone who signed the contract for a quotation on price and deliverability, then picks the one that offers the best price. This takes only 3 weeks (rather than six months) and eliminates the need to renegotiate and approve the same contract dozens of times. --Stephen V Cole


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