2. Procurement Rules and Practices

Enable payment for consumption of IT services in arrears.

A significant challenge in procuring cloud-enabled IT services involves structuring an appropriate method of payment. For something simple, like Infrastructure as a Service, agencies should be able to contract directly with a cloud service provider without having to fund upfront (in effect, pre-paying) for a projected level of service consumption.


These types of procurement arrangements are typically fixed price. This necessitates precision with the estimated level of consumption; while vendors may be willing to return excess funds, they are under no obligation to do so in a fixed price environment and furthermore, deobligated funds are returned to the general treasury and not the procuring agency.


In effect, I am suggesting a revision to the FAR (specifically, either a new subpart to Part 16, or an additional type of fixed price contract under Subpart 16.2) to include a contract type that enables payment for consumption AFTER it occurs. This would also necessitate a review of GAO's Red Book to consider the impact on Anti-Deficiency and bona-fide needs rules. [If any CFO's out there - please input!]


Ideally, for simple, commercially-available IT services like public website hosting, it should be as easy for the government to buy this as it would be for your mother or brother to buy something off eBay or Amazon.



14 votes
Idea No. 18