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Government Contracts Advisor Industry Insights & Analysis

DoD Guidance Memorandum for “Limitation on Aggregate Annual Amount Available for Contracted Services” Revealed

Posted in Insourcing

Co-authored by Sandy Hoe.

In a blog post earlier this month, we first reported on Dr. Jo Ann Rooney’s (Principal Deputy Under Secretary of Defense for Personnel and Readiness) May 2012 letter responding to 157 members of congress who were advocating that the Department of Defense should insource more work to civilian employees, in lieu of government contractors.  In our discussion of Principal Deputy Under Secretary Rooney’s letter, we highlighted what measures DoD would take to comply with section 808 of the FY2012 NDAA.  We also noted that DoD had prepared related guidance to implement these measures. 

We have now obtained a copy of DoD’s guidance memorandum, entitled “Guidance for Limitation on Aggregate Annual Amount Available for Contracted Services”.  This memorandum provides general guidance about how DoD will limit its spending for contracted services, such as: (i) reducing the obligations for staff augmentation contracts and contracts for the performance of functions closely associated with inherently governmental functions by 10 percent as directed by Section 808(c)(4) of the FY12 NDAA, and (ii) requiring contracting officers to “establish negotiation objectives for direct labor and overhead rates that are less than or equal to direct labor and overhead rates paid to that contractor for the same or similar contracted services in FY 2010” for “all contracts or task orders with an estimated value of more than $10,000,000”

Please contact us for more information about this important topic.  Also, please feel free to read two recent and interesting articles discussing these issues that quote my colleague Sandy Hoe (Law360) and me (National Defense Magazine).