We are starting to see the Department of Government Efficiency (DOGE) Cost Efficiency Initiative take shape in the federal government—the Department of Defense (DoD) recently released a memo that limits services contracts, especially IT, management, and advisory professional services. The memo, “Implementation of Executive Order 14222 – Department of Government Efficiency Cost Efficiency Initiative” outlines four new policies that are aimed at reducing external support and relying on in-house expertise for these services. If you are a contractor within the Defense Industrial Base (DIB), this update could affect you—here’s what we know so far.
Why Did the DoD Restrict Consulting and Management Services?
The DoD is working on prioritizing warfighting capabilities while increasing efficiency. In other words, they are moving toward relying more on their in-house expertise to source critical services including IT and management services. While they’ll still continue to rely on contractor support for cutting-edge technology to fulfill their needs, they are looking inwards to source certain professional services. This aligns with the Executive Order 14222, which implements DOGE’s Cost Efficiency Initiative.
DoD Memo Restricts IT Consulting and Management Services
The first policy in the DoD memo prohibits new contracts and task orders for IT consulting or management services that involve “integrators” or “consultants” unless there is a proper justification. “Integrators” and “consultants” are defined as entities providing system IT integration, implementation, or advisory services (including system design and deployment, strategic or technical expertise, and IT system management).
If DoD components want to look externally for IT consulting or management services, they’ll need to justify their reasoning with a cost-benefit analysis, an evaluation of alternatives, and a demonstration that these services can’t be done in house.
Exceptions for this include:
- Contracts in direct support to defense weapon system programs and directly associated program sustainment activities.
- Contracts or task orders with a total value (including options) under $10 million.
It’s important to note that this order also affects current task orders—if any new or existing task order is found to be non-compliant, it’s subject to termination.
Limitations on Advisory and Assistance Services Contracts
The memo also limits the category of consulting and advisory contracts—DoD components cannot execute new contracts or task orders for consulting, advising, assisting, or any professional services performing similar functions without prior authorization. These contracts include, but are not limited to:
- Services providing expert advice, recommendations, studies, analyses or support for management
- Strategic planning
- Policy development
- Organizational assessments
- Technical expertise
- Operational decision making
If a DoD component wants to acquire an external contract related to the above, they’ll need to submit a description of the contract’s purpose, deliverables, and a justification demonstrating in-house resources are insufficient or less cost-effective.
Exceptions to this memo are:
- Contracts for systems engineering and technical assistance in support of major defense acquisition programs.
- Any contract or task order with a total value (including options) under $1 million.
Optimizing Civilian and Contractor Employees
The third policy in this memo encourages DoD components to take advantage of the DoD’s civilian workforce for broad functional roles, including human resources, administrative support, analytical research, training, compliance and reporting.
The memo says contractor support of these roles is permitted only when:
- The role is not inherently governmental
- No existing DoD employees have the capacity or skills to fulfill the requirement
- Internal hiring, training, or resourcing cannot address the gap
- Consolidating contracts, including GSA contract vehicles, does not yield better pricing
Maximizing the Use of GSA Multiple Award Schedules (MAS) and Other GSA Vehicles
The last policy in this memo is really important for GSA Schedule contractors. This policy directs the DoD to use GSA procurement vehicles to support DoD requirements for common goods and services. This is in response to the EO “Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement.” While we may see a reduction in DoD customers looking for IT consulting and management contracts, we can still expect them to turn to the MAS program for their other needs.
Who Does the DoD Memo Impact and What Does it Mean for Contractors?
We mentioned this at the beginning of the article, but this only affects you if you are (1) a contractor within the Defense Industrial Base (DIB), and (2) if you offer IT consulting, management services, or advisory/assistance services.
If you are a contractor on the GSA Schedules program offering these professional services, this does NOT mean you need to remove these services from your GSA contract. This is strictly a DoD memo, not a GSA-wide memo. Other agencies are still looking to procure these types of services through the MAS program.
Staying on Top of Future GovCon Updates
If you’ve been tuned in to the federal govcon world recently, you’ll notice there’s a lot of change. This doesn’t necessarily mean you are going to lose business or your contract. What’s important is that you are staying on top of these changes and know how to adapt. Especially now that the federal government’s Q4 is starting on July 1, it’s essential you’re prepared for the spree as agencies rush to spend the remainder of their budgets.
If you want to stay in the know on future government contracting news and insights, check out our blog and newsletter. If you need help managing your GSA Schedule during this transitional time, or want to learn more about acquiring a GSA contract, we would be happy to help you.
