Industry Struggles with Ever Changing Acquisition Rules.

• Author: Chierichella, John
• Position: Viewpoint

Recent studies show that the percentage of overall research and development spending sponsored by the government has dropped sharply over the last 50 years.

Whereas government funding accounted for 67 percent of R&D in 1964, it accounted for 23 percent in 2015, a 44 percent reduction. For the government, this is not a salutary development. Increasingly, the "state of the art" is being defined by the commercial marketplace, without government participation and often without its access to the resulting technological advances.

One need only recall the intense media furor over the government's inability, for months, to obtain access to the shooters' encrypted cell phone data following the December 2015 San Bernardino terrorist attack to appreciate the consequences when the developers of advanced commercial technology eschew the federal marketplace.

The government has attempted for years to reverse this trend. In fact, the Federal Acquisition and Streamlining Act of 1994, popularly known as "FASA," had, as one of its primary purposes, the attraction of commercial entities into the federal marketplace. The trend, however, continues.

One of the principal reasons for this, and one that receives little attention, is that while policymakers "talk a good game" in terms of easing the regulatory burdens on non-traditional government contractors, they often fall woefully short on delivery. Succinctly stated, commercial contractors find it difficult to trust promises of legislative and regulatory reform when these promises can be undermined, as they have so often been in the past, by subsequent legislative and/or regulatory developments, or by implementation at the field level that ignores the purpose of the statute or regulation.

Perhaps the most obvious example of the government's willingness to impair a statutory mandate designed to benefit non-traditional government contractors can be found in the nullification of FASA's exemption for commercial item contracts from the requirement to provide cost or pricing data. For years, companies that had developed and priced their commercial items using a commercial market model were reluctant to provide cost or pricing data as a condition of contracting with the government.

The reasons for this reluctance are no1 difficult to divine. First, if the product is being successfully sold in the commercial marketplace, then the price, by definition, is reasonable because it reflects what a prudent buyer is willing to...