Lesson 01—Acquisition Environment

Overview

Audio on page: You are a consumer who purchases goods and services all the time. Many of you
probably made a purchase this morning. Did you stop and get a cup of coffee on your way to work? When
you make many of these little purchases, you generally don’t give the transaction much thought. When
you are spending larger sums of money, you may spend more time thinking about the purchase. This
involves deciding if you really want to make the purchase; checking on where you can get the best price;
and determining whether you have the money to pay cash or if you need to charge. In general, you call
the shots when you want to buy things for yourself. As you learn about the federal acquisition process,
you will note there are similarities and differences.

Acquisition Environment
Audio on page: The contracting officer makes purchases for the government. However, since she or he
is spending taxpayer dollars, the contracting officer is responsible and accountable for each government
purchase she or he makes. In this lesson, you will learn about the environment in which you will operate.
You will identify the similarities and differences between how commercial companies and the government
operate in regards to the acquisition process. You will look at the acquisition, technology, and logistics
(AT&L) workforce to see how the members work together to provide the necessary warfighter support,
while identifying outside influences that affect the acquisition environment. You will also trace the
evolution of procurement policy from a historical perspective, resulting in the government moving from an
informal to a more structured process, and from an adversarial position with contractors to a more
collaborative relationship.

Objectives
Welcome to the Acquisition Environment lesson.

Terminal Learning Objective: Given acquisition scenarios, identify both the past and present acquisition
environment to be able to understand the evolution of contracting so that smart business decisions can
be made by an informed workforce.

Enabling Learning Objectives:

• Identify the similarities and differences between the private and public sector acquisitions.
Identify the differences and relationships of the acquisition, technology, and logistics missions.
• Identify influences and historical perspectives that shaped how the government conducts
business with the private sector and how those characteristics have evolved over time.

References:
• Office of the Under Secretary of Defense for Acquisition, Technology and
• Logistics, <http://www.acq.osd.mil/>
• The American Heritage Dictionary
• Department of Defense Directive 5000 Series, Program Management
• Federal Acquisition Regulation (FAR), <http://acquisition.gov/far/index.html>
• Defense Federal Acquisition Regulation Supplement (DFARS),
<http://www.acq.osd.mil/dpap/dars/dfarspgi/current/index.html>

Topics Covered
This lesson contains the following topics:
• Overview
• Similarities and Differences Between the Private and Public Sector
• Acquisition, Technology, and Logistics (AT&L) Missions
• Influences and Historical Perspective of the Acquisition Environment
 • Lesson Summary

Similarities and Differences between the Private and Public Sector

Acquisition: Acquisition is defined as “the act of acquiring.” In DoD, acquisition covers the development,
production, fielding, operating and maintaining, and finally, disposal of a system.

Procurement: Procurement is synonymous to acquisition, but is a term used in the U.S. Code (USC).
Acquisition is a term generally used in the Federal Acquisition Regulation (FAR) system, and procurement
is used outside of the FAR.

Purchasing: Purchases, rents, or leases of services and equipment through either simplified acquisition
procedures or placement of orders against re-established contractual instruments to support operational
requirements.

Contracting: Contracting is the process of acquiring goods and services; actually procuring what is
needed. It is only one function within the acquisition process and can be used at various points. While the
acquisition cycle includes identifying the need to purchase a supply/service, the contracting/procurement
function is responsible for purchasing supplies and services. Whenever possible, you need to contract
with commercial contractors. While there is a distinction between these terms, you will find the terms are
sometimes used interchangeably. So you need to understand the context in which these terms are used
to understand their intended meaning.

Grants: A grant is a legal instrument for transferring money, property, or services to the recipient in order
to accomplish a public purpose of support or stimulation, where there will be no substantial involvement
between the federal agency and the recipient during the process. Procurement contracts, grants, and
cooperative agreements are distinguished in 31 USC 6304. Grants are not governed by the FAR and are
introduced here for informational purposes.
While there is a distinction between these terms, you will find the terms are sometimes used
interchangeably. So you need to understand the context in which these terms are used to understand
their intended meaning.

Audio on page: Before delving into the acquisition environment, let’s take a look at the definition of
acquisition, as well as key terms with which you will need to familiarize yourself. The government realm of
acquisition includes not only the act of acquiring but also any development effort necessary to design an
item, the actual production process, getting the item to the troops in the field, and ensuring that the items
can be operated and maintained in the field. This is often referred to as the life cycle process.

Acquisition begins at the point when the agency’s needs are established and includes the description of
requirements to satisfy the agency’s needs, solicitation and selection of sources, award of contracts,
contract financing, contract performance, contract administration, and technical and management
functions directly related to the process of fulfilling agency needs by contract.

Private and Public Sector—Similarities

Private and public sectors both:
• Buy goods and services to carry out their businesses or missions.
• Want to acquire goods and services at reasonable prices.
• Use many similar buying processes and make purchases from most of the same marketplaces.

Audio on page: Conducting business in support of operations or missions is common to both the public
and private sectors. All organizations buy goods and services to carry out their business objectives. The
public sector contracting professional’s function is very similar to that of purchasing managers in the
private sector. They both want to acquire goods and services at reasonable prices. They may use many
similar buying processes, and they are members of most of the same marketplaces.
Cost of Doing Business
The private sector needs to have the flexibility and agility to adjust to changes and current technology in
order to stay competitive.
• Management needs to effectively implement change
• Business organization
• Hire best and brightest
• Eliminate burdensome administrative procedures
• Scrutinize policies and procedures

Audio on page: The private sector needs to have the flexibility and agility to adjust to changes and
obtain current technology in order to stay competitive. Management needs to have the resources and
flexibility to effectively implement changes. A business must be organized so its personnel and resources
can be effectively implemented. The company needs to hire the best and brightest in technical fields to
stay abreast of technological innovations. Burdensome administrative procedures are eliminated to
reduce unnecessary costs. Policies and procedures need to be scrutinized to maximize business with its
customers. This ongoing process is necessary for company survival.

Private and Public Sector—Differences

Private Sector Public Sector

Best interest of stockholders Best interest of taxpayers
Profit motive Service motive
Competition motivating factor Mission accomplishment

Audio on page: The overriding goal of a corporation or private sector firm is to maximize the value of the
firm to the shareholders. For a corporation, that is the value of their outstanding stock. The senior
managers have an obligation to make decisions that are in the best interests of the owners of the firm—
that is, the stockholders. Management may best serve these interests by maximizing the value of the
stock owned by these stockholders. This generally means maximizing profits while minimizing
expenses—the profit motive. If a company cannot make a profit, it ceases to exist.

Competition is a motivating factor that drives the private sector to please the customer, promote efficient
operations, and gain maximum market share.

While the federal government must purchase goods and services to operate, just like private sector
companies, it is governed by an obligation to serve the public and accomplish its mission. This obligation
to serve the public is evidenced in the responsibility to spend taxpayer dollars wisely. However, the
federal procurement process is also governed by various public policy objectives.

Public policy objectives are those additional objectives required of government acquisition personnel by
the president and the Congress. Some public policy objectives are making purchases using competitive
procedures, awarding contracts to small businesses, and a preference for buying from commercial
sources.

Summary
This concludes the Similarities and Differences Between the Private and Public Sector topic. In this topic,
you identified the definition of acquisition and key terms that you will encounter in the acquisition
environment. You also identified the similarities and differences between the private and public sectors in
acquisitions, and the effect of unique government requirements.

Acquisition, Technology, and Logistics (AT&L) Missions

Audio on page: The acquisition, technology, and logistics (AT&L) community must strive to maintain
flexibility and agility for the military, i.e., their customer. The community must adjust to changes and
current technology and spend taxpayers’ dollars wisely in accordance with public policy, while partnering
with contractors who are working to minimize costs, thus generating additional profits. Within the
government, we actively pursue new technological developments as part of our effort to retain our
leading-edge status among the countries of the world. Within DoD, we want a technologically superior
military. The acquisition process takes these new technological possibilities and finds real-world
applications. When you start working on an acquisition, it is important that you work with other members
of the AT&L community to ensure that what you buy meets the user’s needs, and that the DoD can
maintain and support the acquisition.

Phases of AT&L

Audio on page: The four major phases of AT&L are research and development, production, operation
and maintenance, and disposal. Contracting is a function that is spread across the entire acquisition
process, which represents the “A” in AT&L. As time progresses with the acquisition life cycle of a
requirement, the phases progress and mature with an appropriate contracting effort. The first phase is
research and development (R&D). The “T” in AT&L focuses on technology. There is generally an R&D
contract for design, exploration, prototype development, and testing and evaluation in this phase. In the
production phase, the focus shifts to the actual manufacturing or fielding of the requirement. This could be
an entirely different contract or the same contract, depending on numerous factors. Phase three and four
focuses on operations, maintenance and support, and disposal—these are logistics factors, or the “L” in
AT&L. All of the phases could be combined into one contract or separate contracts, depending on the
complexity of the program.

AT&L Mission
Within DoD, the AT&L mission is to:
• Provide the products and services necessary to meet the needs of operational users.
• Provide improvements in mission capabilities.
• Acquire products in a timely manner at a fair and reasonable cost.

Seven goals to support DoD’s acquisition mission:

High-Performing, Agile, and Ethical Workforce

• Shape and recapitalize future AT&L workforce to enable smart workforce decisions.
• Develop a performance construct and deploy enabling leadership initiatives.
• Develop a knowledge-enabled AT&L workforce to support the DoD AT&L mission.
• Provide ethics awareness training and performance standards fully integrated within the
workforce.

Strategic and Tactical Acquisition Excellence

• Acquisition agenda aligned with DoD’s core values, policy objectives, joint capability needs, and
available resources to attain best-value solutions.
• Risk, outcomes, schedule, and cost balanced when planning and adjusting portfolios, programs,
and procurements.
• Acquisition execution improved across the total life cycle through the use of sound business and
technical practices.
• Customer demands and warfighter Joint Urgent Operational Needs (JUON) promptly and
efficiently fulfilled.
• Capability fielded to meet warfighter needs.

Focused Technology to Meet Warfighting Needs

• Aligned and prioritized research development test and evaluation investments that support the
 strategic direction of DoD.
• Effective, timely and affordable technology solutions.
• Interoperable technology defined and delivered.
• Joint investments in science and technology.
• Robust, highly capable national technical capability.
• Revitalized Director, Defense Research and Engineering strategic role.

Cost-Effective Joint Logistics Support for the Warfighter

• Integrated, effective end-to-end supply chain operations.
• Optimized equipment/systems design and sustainment reliability.
• Achieve DoD/Office of Management and Budget (OMB)/Government Accountability (GAO) supply
chain management improvement program targets.
• Cost-effective logistics and materiel readiness policies and programs.

Reliable and Cost-Effective Industrial Capabilities Sufficient to Meet Strategic Objectives

• Effects of DoD policy and program decisions on the industrial base, and the extent to which
industry decisions limit or expand DoD options are understood.
• DoD research and development, acquisition, and logistics decisions expand and sustain the
industrial base to encourage competition and innovation for essential industrial and technological
capabilities.
• Statutory processes and decisions leveraged to enable a capable, competitive, and reliable
industrial base.
• Contract finance and profit policies drive desired results.

Improved Governance and Decision Processes

• AT&L leads or participates in major corporate governance forums, ensuring that AT&L interests
and equities are adequately represented.
• Strategic goals supported by leveraging best practices (e.g., managing the force and fixing the
GAO high-risk areas).
• A net-centric data environment with enterprise data/facts for decision making, through business
transformation.
• Continuous process improvement, using techniques such as Lean Six Sigma.
• Move from transaction-based activity to enterprise-wide life cycle performance-driven-outcomes-
based strategy by building on lessons learned from continuous process improvement and
performance-based logistics initiatives.

Capable, Efficient, and Cost-Effective Installations

• Locate, size, and configure installations to meet needed capabilities.
• Deliver effective, safe, and environmentally sound living and working spaces.
• Protect personnel, property, and mission capabilities through informed risk-based decisions.
• Optimize life cycle asset investment by balancing resources and risk.
• Continuous improvement in planning and operations through best business practices and
management techniques.

Audio on page: Within DoD, the AT&L mission is to provide the products and services necessary to meet
the needs of operational users, provide improvements in mission capabilities, and acquire products in a
timely manner at a fair and reasonable cost.
The Under Secretary of Defense for Acquisition, Technology and Logistics from 2007 to 2009, Mr. John J.
Young, Jr., has identified seven goals to support DoD’s acquisition mission:
• High-Performing, Agile, and Ethical Workforce;
• Strategic and Tactical Acquisition Excellence;
• Focused Technology to Meet Warfighting Needs;
• Cost-Effective Joint Logistics Support for the Warfighter;
• Reliable and Cost-effective Industrial Capabilities Sufficient to Meet Strategic Objectives; and
• Improved Governance and Decision Processes, Capable, Efficient, and Cost-effective
Installations.
The “A” in AT&L
Acquisition: The acquisition career field is responsible for fulfilling a customer’s need, which might entail
developing something state-of-the-art to answer a military requirement for the very first time. This
requirement, most likely, would use the latest technology and would need to be highly reliable in extreme
environments. These factors add risk to the process, which can be lessened by teaming with the
appropriate AT&L members. An acquisition strategy will be created and will provide a summary
description of the customer’s requirement, which the acquisition is intended to satisfy. One aspect of the
requirement for consideration would be concerns regarding interoperability.

Considerations
Interoperability: Interoperability is defined as the ability of systems, units, or forces to provide data,
information, materiel, and services to and accept the same from other systems, units, or forces; and to
use the data, information, materiel, and services so exchanged to enable them to operate effectively
together. Interoperability within and among U.S. forces and coalition partners is a key goal that must be
addressed satisfactorily for all defense systems so that DoD has the ability to conduct joint and combined
operations successfully. The use of standardized data shall be considered to facilitate interoperability and
information sharing.

Multinational Interoperability: To the extent possible, systems and software shall be designed
consistent with U.S. export control laws and regulations, to permit use in a multi-national environment
with provisions made for current and future information disclosure guidance and constraints. DoD must
have a framework for assessing the interrelationships among and interactions between U.S., allied, and
coalition systems. Mission area-focused, integrated architectures shall be used to characterize those
interrelationships. This end-to-end approach focuses on mission outcomes and provides further
understanding of the full range of interoperability issues attendant to decisions regarding a single program
or system. In order to foster interoperability with U.S. allies and coalition partners, consideration shall be
given to procurement or modification of allied systems or equipment, or cooperative development
opportunities with one or more allied nations to meet the user’s needs.

DoD Interoperability: The defense acquisition system shall emphasize acquisition judgment based on
consideration of a relevant family-of-systems, including those that cross component organizational
boundaries. To that end, the requirements community shall specify key performance parameters, and the
acquisition and test and evaluation communities shall adopt a family-of-systems management approach
to ensure that their reviews of individual systems include a thorough understanding of critical system
interfaces related to the system under review and the flow of consistent and reliable data, information,
and services among systems in the battlefield. The objective is an environment characterized by mutual
understanding of key systems in a given mission area; shared decision making and close cooperation
between the requirements, test and evaluation, and acquisition communities; and disciplined control over
the development and introduction of acceptable interoperable systems.

The “T” in AT&L

Technology: Pursuit of new developments to maintain a technologically superior military force.
Evolutional development is a preferred strategy to ensure the warfighter has the most updated
technology.

Evolutionary Acquisition Strategy: An acquisition strategy that defines, develops, produces or

acquires, and fields an initial hardware or software increment (or block) of operational capability. It is
based on technologies demonstrated in relevant environments, time-phased requirements, and
demonstrated manufacturing or software deployment capabilities. Those capabilities can be provided in a
shorter period of time, followed by subsequent increments of capability over time that accommodate
improved technology and allow for full and adaptable systems over time.

Audio on page: Technology takes the customer’s requirements and/or technology breakthroughs and
translates those needs or opportunities into products that can assist the warfighter to better fight,
communicate, or train. While technology is the second part of AT&L, it normally precedes the acquisition
cycle. However, it can be found later when block upgrades are implemented. Evolutional development is
a preferred strategy to ensure the warfighter has the most updated technology.

There are two basic approaches to evolutionary acquisition. In the first approach—spiral development—
the ultimate functionality cannot be defined at the beginning of the program, nor matched with the
evolving needs of the user. In the second approach—incremental development—the ultimate functionality
can be defined at the beginning of the program, with the content of each deployable increment
determined by the maturation of key technologies.

The “T” in AT&L—Continued

Evolutionary Acquisition Strategy: There are two basic approaches to evolutionary acquisition:
• Spiral Development: Spiral development is an iterative process for developing a defined set of
capabilities within one increment. This process provides the opportunity for interaction between
the user, tester, and developer. In this process, the requirements are refined through
experimentation and risk management, there is continuous feedback, and the user is provided the
best possible capability implements evolutionary acquisition. Spiral approaches can be helpful for
synchronizing hardware and software processes, and for determining when to apply an
evolutionary, incremental, or single-step acquisition strategy.

• Increment or Block: Increment or block is a militarily useful and supportable operational

capability that can be effectively developed, produced or acquired, deployed, and sustained.
Each increment of capability will have its own set of thresholds and objectives set by the user.

Audio on page: There are two basic approaches to evolutionary acquisition. In the first approach, spiral
development, the ultimate functionality cannot be defined at the beginning of the program, nor matched
with the evolving needs of the user. In the second approach, incremental development, the ultimate
functionality can be defined at the beginning of the program, with the content of each deployable
increment determined by the maturation of key technologies.

The “L” in AT&L

Logistics: The science of planning, obtaining, maintaining, and transporting materials, personnel, and
facilities. More specifically, logistics refers to those aspects of military operations that deal with design
and development, acquisition, storage, movement, distribution, maintenance, operation, hospitalization,
evacuation, and disposition of materials, personnel, facilities, and services, accordingly.

Total Ownership Cost

Total ownership cost (TOC) impacts life cycle management and is defined as the sum of all financial
resources necessary to organize, equip, train, sustain, and operate military forces sufficient to meet
national goals in compliance with all laws, all policies applicable to DoD, all standards in effect for
readiness, safety, and quality of life, and all other official measures of performance for DoD and its
components.

TOC is composed of costs to research, develop, acquire, own, operate, and dispose of weapons and
support systems, other equipment, and real property. TOC also includes the costs to recruit, train, retain,
separate, and otherwise support military and civilian personnel, and other costs of business operations in
DoD.

Total Cost Ownership Example

These types of questions will help identify the logistics costs associated with car ownership, which should
be included in deciding the most cost-effective approach (new/used car and model) to meet your needs.
The next steps will be the act of acquiring the car and all necessary items of support.
How much will the car cost you in maintenance, repairs, fuel, insurance, parking, depreciation and finance
charges for the total time you plan on owning the car? Remember, you will spend more money to own
your car than you will to buy it. This type of comparison should be used in determining if it is more cost
effective to buy a new or used car and which model.

What maintenance tasks are you going to
accomplish, if any (e.g., wash it, change the
oil, tune ups, etc., and which ones are you
going to contract to your local garage?). For
the maintenance tasks you plan on
accomplishing yourself, what tools,
equipment, supplies, manuals, and training
will you need?
This is your maintenance concept, and it will
influence the logistics elements such as
support equipment, supplies, training, tech
data (manuals), and facility requirements if
you accomplish the maintenance tasks
yourself

Where will you store these items?

How much will all these items cost?

Audio on page: To apply the total cost ownership concept to your personal life, consider the life cycle
costs of an automobile. The price to buy the car is not the only cost. You will also pay for registration, title,
car tags, taxes, insurance, gasoline, oil, other fluids, repairs, maintenance, garage, and any costs to sell
the automobile. Additional total cost ownership for the automobile would be the time spent doing market
research in preparation of buying the automobile, waiting on an oil change, or receiving training on how to
drive the automobile. Let’s look at some considerations when purchasing a car.

Focus of Logistics
On-the-job acquisition logistics focuses on designing a system that can be adequately supported. It
includes:
• Identifying the needed product support;
• Advocating the best product design alternative;
• Influencing the detailed product design;
• Acquiring any necessary product support;
• Providing product support to the end user; and
• Improving the product support provided.

Audio on page: On-the-job acquisition logistics focuses on designing a system that can be adequately
supported after it has been purchased and sent to the troops, and planning the support structure for the
system. It includes identifying the needed product support, advocating the best product design alternative,
influencing the detailed product design, acquiring any necessary product support, providing product
support to the end user, and improving the product support provided.

Bumps in the Road

Some of the bumps in the road the M-1 experienced were:

Loaded on Aircraft: The tanks were built and then delivered to an Army location in the United States.
However, many were scheduled to be shipped overseas. When the tanks were to be loaded on an
aircraft, the tanks were too wide. Therefore, the Air Force had to provide larger planes to transport the
tanks, and then, only two tanks would fit in the Air Force’s largest transport plane.

Loaded on Railcars: Once the tanks got to Europe, they were to be loaded on railcars to be shipped to
the individual bases. However, the tanks again were wider than the normal railcars in use. Special railcars
had to be built to transport the tanks.
Maintenance/Repair: Once the tanks reached the bases, they were to be maintained/repaired inside the
maintenance building. However, the tanks were larger than the doors in the building. The buildings had to
be retrofitted with larger doors or new buildings had to be built. After the tanks arrived, and facilities were
built or retrofitted, there was the question of who would do the actual maintenance. There were very few
mechanics that had the required training on how to maintain the M-1. Not all the mechanics had been
trained at all the fielding locations by the new equipment training teams that were deployed worldwide to
train all the maintainers. There were not enough training teams to cover all the locations before the tanks
arrived.

There were many lessons learned from the mistakes made with failing to integrate logistics into the
beginning of the M-1 program. In the end, the tank was and continues to be a very effective weapon
system, and the lessons learned from the tank have been applied to subsequent programs with
increasing success.

Audio on page: Rarely do things go the way you plan, and DoD acquisition is no exception. The M-1
tank had its share of bumps in the road. In this example, asking more logistical questions up front may
have reduced the number of difficulties this program experienced.
Such problems experienced by the M-1 can be avoided when logistics personnel play an integral part in
the acquisition process. While these issues should be resolved before the requirement is sent to
contracting, you should never hesitate to ask logistics questions. Remember, as a good business advisor,
your job is to identify the pros and cons of a specific product as well as any alternative products.

Summary
This concludes the Acquisition, Technology, and Logistics (AT&L) Missions topic area. In this topic, you
identified the functions and mission of AT&L, relating how they work together to provide the warfighters
with the tools they need to do their jobs.

Influences and Historical Perspective of the Acquisition Environment

Influences on the Acquisition Environment
Audio on page: Over time, outside influences and historical perspectives have shaped how the
government conducts business with the private sector.

World Events: The potential for war throughout the world influences our acquisition, as DoD must
provide the means to conduct those wars. Our mission is to acquiring the equipment, personnel, and
supplies the warfighter needs to conduct operations.

For example: The wars in Afghanistan and Iraq are just some recent/current wars where Americans
responded with equipment purchased by contracting personnel.

National Events: Recent national events, such as the Oklahoma City bombing, the Sept. 11, 2001
terrorist attacks, and Hurricane Katrina have changed the mission and roles of DoD and necessitated
changes to what we buy and how we buy it.

For example: Have you seen uniformed military personnel at airports lately? Will security personnel at
major airports soon be government personnel? What is a result of the relief efforts for Katrina regarding
federal contracting?

Technological Improvements: As technology changes, we change our processes and procedures. We

now publicize our requirements on the Internet (FedBizOps), and we conduct “reverse auctions” for some
supplies and services. We also use the Internet extensively for market research to find the goods and
services we need to perform the mission of DoD. Everyone has e-mail, don’t they?

Congressional Actions: Congressional action (i.e., passing laws) impacts the way in which we conduct
our business in the marketplace. Recently, Congress asked DoD to give a preference to veteran-owned
small businesses and disabled, veteran-owned small businesses when DoD buys goods and services.

American Public: The American public can and will influence our acquisition procedures by lobbying
their members of Congress to keep a base in their state (district) or buy goods and services from their
constituents. The “Washington Post test” is often referred to because the press affects public opinion as
well as Congressional actions. Further, the American public comments on proposed federal rules and
regulations and participates in the acquisition process as suppliers.

Evolution of Acquisition
Colonies and contracting—our founding fathers balancing liberty, protection, and representation.

Audio on page: The colonies were involved in contracting even before the Revolutionary War and the
formation of the Union. Early on, contracting was informal. Over the last 200 years, the informal
relationship between government and contractor has moved from informal, formal, adversarial, to the
collaborative environment that we have today.

Historical Perspective
1776 Constitution: The U.S. declared independence from England.

1781 Morris System: Before this time, as demonstrated during both the French and Indian War and the
Revolutionary War, individuals were acting in the dual capacity as both government official and merchant.
No limit existed on spending, and self-interest prevailed. Agents of the government often used public
funds for private ventures and pursued other activities within their own self-interests. In 1781, a system
was implemented, under the direction of Robert Morris, placing some control over profit and agent’s
commission incentives. This is the first process that recognized the necessity to separate government
and contractor interests.

1789 Ratification: The government of the United States of America as we know it today started in 1789
with the ratification of the Constitution of the United States. The Constitution provides the authority for
contracting. Under Article 1, Section 8, Congress was given the authority to raise and support armies.

1792 Establishment of the Department of Treasury: In 1792, President George Washington

established the Department of the Treasury. The department served as an executive agency of the
president and received full responsibility for conducting purchases and contracts for the American Army.

Audio on page: In 1776, the U.S. declared independence from England. The government of the United
States of America as we know it today started in 1789 with the ratification of the Constitution of the United
States. Before this time, as demonstrated during both the French and Indian War and the Revolutionary
War, individuals were acting in the dual capacity as both government official and merchant. In 1792,
President George Washington established the Department of the Treasury. The department served as an
executive agency of the president and received full responsibility for conducting purchases and contracts
for the American Army. To see how the acquisition environment has evolved over time, click on the icons
located on the timeline.

1808-1809 Officials Not to Benefit: In the early 1800s, more regulations were enacted that started to
shape the oversight process. A firm wedge was being established between the government agent and the
private contractor. In 1808, Congress created a new statue, entitled “Officials Not to Benefit,” which
prohibited government officials from gaining personal profit from government office and prohibited
conflicts of interest. That was the beginning of acquisition reform, which we are still struggling with today.
The concept of advertising for competitive bids can be traced to 1809, when Congress first called for
competition in government contracting.

1812 War of 1812: By the war of 1812, Congress had established the Quartermaster General’s Office,
firmly entrenching the military’s independent structure. In the period between 1815 and 1860, the
contracting process became more structured.

1842 Advertising and Sealed Bids: In 1842, Congress required advertising and sealed bids. Formalized
procedures and regulations were imposed to ensure accountability and reasonable prices.

1861 Civil Sundry: The Civil Sundry Appropriations Act of 1861 established a competitive open bid
system and provisions of formal advertising that are still used today.

1862 Antifraud Act: To further address instances of corruption and carelessness, the Antifraud Act of
1862 was passed, which required all contracts be written, signed and retained on file. The Pendleton Act
of 1883 established a civil service merit system and severely limited the contracting officer’s discretion.

1876 Little Big Horn: In 1876, General George Armstrong Custer was defeated at the battle of the Little
Big Horn not only by a superior force, but also by a force with superior weaponry. Both sides were armed
with commercially available rifles. However, the U.S. Cavalry was armed with single-shot Springfield rifles
while the Native Americans were armed with Winchester repeating rifles. In 1910, the General Supply
Committee was established along with a standard contract format.

Audio on page: In the early 1800s, more regulations were enacted, which started to shape the oversight
process. By the time the War of 1812 began, Congress had established the Quartermaster General’s
Office, firmly entrenching the military’s independent structure. In the period between 1815 and 1860, the
contracting process became more structured. In 1842, Congress required advertising and sealed bids.
Formalized procedures and regulations were imposed to ensure accountability and reasonable prices.

The Civil Sundry Appropriations Act of 1861 established a competitive open bid system and provisions of
formal advertising that are still used today. To further address instances of corruption and carelessness,
the Antifraud Act of 1862 was passed which required all contracts be written, signed and retained on file.
In 1876, General George Armstrong Custer was defeated at the battle of Little Big Horn, not only by a
superior force, but also by a force with superior weaponry. Both sides were armed with commercially
available rifles.

1917 Merchants of Death: During World War I, the government used independent advisors to prevent
contractor overcharging and to watch over government officials. Nevertheless, U.S. manufacturers were
blamed for profiteering from the war and were nicknamed the “Merchants of Death.” Distrust of private
manufacturers was at its height following the war because the contractors were blamed for American
involvement in the war based on the assumption that they engineered American involvement to make
excess profits.

1921 Economy Act: A new set of controls to prohibit competition between individual buyers was
embodied in the Economy Act of 1921. The act permitted the establishment of procedures by which one
government agency could obtain needed supplies or services from another agency. The supplies or
services could be conveniently or economically purchased or provided by contracting with a private
source. The servicing agency had capabilities or expertise to enter into a contract for supplies or services
not available within the requesting agency, and the servicing agency was specifically authorized by law.
An example of this would be DoD requesting U.S. Department of Agriculture to purchase livestock for
research.

1931 Davis-Bacon Act: The Davis-Bacon Act of 1931 relates to minimum wages for laborers and
mechanics in construction work. It was enacted at the onset of the Great Depression to maintain wage
levels and the economy by requiring the payment of prevailing area wage rates. The Miller Act of 1935,
which was also related to the Great Depression, provided for contractors who could not pay their
creditors. Special hardships confronted many of those creditors and companies, which had supplied
materials on credit.
1933 Buy American: The Buy American Act of 1933 also came about because of the devastation of
American industry during the Great Depression. In an effort to protect American companies, the act puts
requirements in place that give preference for domestically produced manufactured articles, materials,
and supplies. This is important in support of the industrial base. The Buy American Act applies to all
federal agencies.

Audio on page: During World War I, the government used independent advisors to prevent contractor
overcharging and to watch over government officials. A new set of controls to prohibit competition
between individual buyers was embodied in the Economy Act of 1921.
The Davis-Bacon Act of 1931 relates to minimum wages for laborers and mechanics in construction work.
The Buy American Act of 1933 also came about because of the devastation of American industry during
the Great Depression. In an effort to protect American companies, the act puts requirements in place that
give preference for domestically produced manufactured articles, materials, and supplies.

1941 Berry Amendment: The Berry Amendment provides additional restrictions to the Buy American
Act, ensuring that DoD purchases domestic end products. Initially, this was to guarantee that uniforms the
U.S. troops wore and the food they ate were American-made. Later codified in the 2002 National Defense
Authorization Act, such items as tents, tarps, and specialty metals were included.

1941 War Powers: World War II saw an easing of contract restrictions. In December 1941, the first War
Powers Act removed almost all the statutory requirements relating to contracting. It allowed heads of
government agencies to provide their contracting officers a great deal of discretion. Because of the war
effort, contractors became more powerful and resisted governmental requirements. This culture resulted
in an arm’s length relationship between the government and contractors.

1947 Armed Services Procurement: In 1947, Congress passed the Armed Services Procurement Act,
which established a comprehensive set of procurement regulations for military procurements know as the
Armed Services Procurement Regulation (ASPR). The act established authority for DoD to contract for
the acquisition of property and services needed for national defense. Although sealed bidding was still
favored, the act permitted award of contracts by negotiation providing that certain stated facts existed.
Throughout the decades of the 1950s and 1960s, there grew a great deal of mistrust in the procurement
system as a whole. Examples can be seen in misuse of contract types—cost contracts allowing overruns
and inefficiencies adding up to waste and “defense pork barrel.” Also, there was a strong feeling that
military professionals were unconcerned about costs and were “gold-plating” their weapon systems.

1953 Miller Act: The Miller Act set up the requirements for protection of the government by establishing
performance bonds and payment bonds for construction contracts exceeding $100,000, unless the
requirement was waived.

Audio on page: The Berry Amendment provides additional restrictions to the Buy American Act, ensuring
that the DoD purchases domestic end products. World War II saw an easing of contract restrictions. In
December 1941, the first War Powers Act removed almost all the statutory requirements relating to
contracting. In 1947, Congress passed the Armed Services Procurement Act, which established a
comprehensive set of procurement regulations for military procurements, known as the Armed Services
Procurement Regulation (ASPR). The Miller Act set up the requirements for protection of the government
by establishing performance bonds and payment bonds for construction contracts exceeding $100,000,
unless the requirement was waived.

1953 Small Business Act: In the early 1940s, Congress recognized the importance of small businesses
as key players in the industry base. The ASPR of 1947 continued the policy of making sure that a fair
proportion of federal contracts were placed with small businesses in peacetime. In 1953, the Small
Business Act recast the Small Defense Plants Administration into the Small Business Administration
(SBA), ensuring that the government would aid, assist, and protect the interests of small business
concerns, and that small businesses would receive a fair proportion of total federal purchases.

1970 Commission on Government Procurement: By the late 1960s, the burden of regulations and
instructions had stripped the contracting officer’s discretion down to a minimal level. All of these factors
resulted in the establishment of a Commission on Government Procurement in 1970.

1984 FAR: The Commission on Government Procurement made numerous recommendations, which
eventually led to the development of the Federal Acquisition Regulation (FAR) in 1984.

1984 Competition in Contracting: The Commission on Government Procurement was the lead-in to the
Competition in Contracting Act (CICA) of 1984, making “full and open” competition the principal objective
in government procurement.

1986 Packard Commission: In 1986, the President’s Blue Ribbon Commission on Defense
Management (the Packard Commission) concluded that problems with procurement were deeply
entrenched, having developed from decades of an overregulated process.

Audio on page: In the early 1940s, Congress recognized the importance of small businesses as key
players in the industry base. By the late 1960s, the burden of regulations and instructions had stripped
the contracting officer’s discretion down to a minimal level. The Commission on Government Procurement
made numerous recommendations, which eventually led to the development of the Federal Acquisition
Regulation in 1984. The Commission also was the lead-in to the Competition in Contracting Act of 1984,
making “full and open” competition the principal objective in government procurement. By 1986, the
President’s Blue Ribbon Commission on Defense Management (the Packard Commission) concluded
that problems with procurement were deeply entrenched, having developed from decades of an
overregulated process.

1980-1990s Extensive Reform: Since World War II, there has been an almost constant stream of
commissions, studies, investigations, reports, initiatives, and legislation directed at reform. By the mid-
1980s and early 1990s, the contracting process reached a point in which extensive reform was required
to correct the existing deficiencies in the contracting process.

1993 National Performance Review: Acquisition reform accelerated in 1993 with the establishment of
the National Performance Review (NPR) and a new emphasis on reducing cost in government.

1994 FASA: In October 1994, Congress enacted Public Law 103-355, the "Federal Acquisition
Streamlining Act of 1994” (FASA). The act established policies for acquiring commercial items, authorized
procedures for task order contracting, established simplified acquisition procedures, and promoted
electronic commerce. The government was making acquisition procedures more efficient.

1996 FARA: In February 1996, Congress enacted Public Law 104-106, the “National Defense
Authorization Act for Fiscal Year 1996.” Division D of the Act was titled the “Federal Acquisition Reform
Act of 1996” (FARA). The act authorized contracting officers to limit proposals in the competitive range,
permitted excluded offerors to request pre-award debriefings and encouraged dispute resolution for any
protest based on such exclusion. FASA/FARA acts aimed to increase the efficiency of the procurement
system by using commercial practices and simplifying the procurement process.

Audio on page: Since World War II, there has been an almost constant stream of commissions, studies,
investigations, reports, initiatives, and legislation directed at reform. Acquisition reform accelerated in
1993 with the establishment of the National Performance Review (NPR) and a new emphasis on reducing
cost in government. In October 1994, Congress enacted Public Law 103-355, the "Federal Acquisition
Streamlining Act of 1994.” The act established policies for acquiring commercial items, authorized
procedures for task order contracting, established simplified acquisition procedures, and promoted
electronic commerce. In February 1996, Congress enacted Public Law 104-106, the “National Defense
Authorization Act for Fiscal Year 1996.” Division D of the Act was titled the “Federal Acquisition Reform
Act of 1996.”

Summary
This concludes the Influences and Historical Perspective of the Acquisition Environment topic. In this
topic, you identified world and national events, technological improvements, and congressional actions
that have influenced changes in the acquisition environment. You also identified historical perspectives
such as the Civil Sundry Act and the Antifraud Act that shaped how the government conducts business
with the private sector.

Lesson Summary
This lesson focused on the acquisition environment. You identified the similarities and differences
between the private and public sectors. All organizations—private and public—buy goods and services to
carry out their businesses or missions. Non-government organizations talk about “carrying out their
business” or "making a profit,” while in DoD, you talk about “carrying out our mission.”

You identified the functions of Acquisition, Technology, and Logistics (AT&L) and how they work together to
provide the warfighters with the tools they need to do their jobs. You also identified that, due to influences and
historical perspectives, the acquisition environment has evolved throughout history. Although the acquisition
environment has moved toward commercial business practices and has become more dependent on private
contractors to provide services, there are still many unique aspects to government contracting. The government
contracting professional must work within the framework outlined in the U.S. Constitution, statutes, and
regulations.