Pilot Program to Accelerate Contracting and Pricing Processes

Section 890 of the 2019 NDAA (National Defense Authorization Act) authorized the Defense Department to conduct a pilot program with contracts in excess of $50 million (excluding those that are part of a major defense acquisition program) by

• Basing price reasonableness determinations on actual cost and pricing data for purchases of the same or similar products for the DoD and
• Reducing the cost and pricing data to be submitted.

The Defense Department sees this as an opportunity in a pilot setting to assess the impact of the efficiencies achieved under this pilot program including reducing contractor proposal costs and the time required to award contracts greater than $50 million.

As a condition of participating in this pilot program, the Contractor shall submit verifiable data documenting any savings (time and money) achieved as a result of the pilot program within three months after award.

The Defense Department is not waiting around for its FAR supplement (DFARS) to be amended through the regulatory process. It has issued a class deviation making the authorization effective immediately. Participation into the program must be approved by the Principal Director, Defense Pricing and Contracting.

Contracting officers using this authority to negotiate contracts are still required to determine that the costs are fair and reasonable for the Government. Now they can find means other than requiring cost or pricing data, to assist in making that determination.

This waiver applies, of course, to negotiated contracts and has no bearing on competitive awards or commercial item procurement. No word on how long the pilot program is to last.

NDAA 2019 - Commercial Products and Commercial Services

The President signed the 2019 NDAA (National Defense Authorization Act) named for Senator John McCain on Monday this week. We've covered a couple of the provisions in the legislation that are of interest to Government contractors, especially small businesses. Monday we discussed the prohibition against contracting officers arbitrarily withholding consent to subcontract just because they didn't like the price or the estimated cost and yesterday we took a look at a provision designed to enhance the effectiveness of PTACs (Procurement Technical Assistance Centers). Yesterday we discussed a new requirement  that allows the Defense Department to pay small businesses in 15 days rather than the traditional 30 days. Today we will look at the new definition of "commercial items". There are two definitions now, one for commercial products and the other for commercial services. These will become important distinctions as the Government's stated preference is to buy commercial first and if commercial items are not available, then to utilize some other procurement mechanism.

Commercial product. Commercial product means a product, other than real property, that is of a type customarily used by the general public or by non-governmental entities for purposes other than governmental purposes and has been sold, leased, or licensed, or offered for sale, lease, or license, to the general public. It also means a product that evolved from a commercial product through advances in technology or performance and is not yet available in the commercial marketplace but will be available in the commercial marketplace in time to satisfy the delivery requirements under a Federal Government solicitation. Thirdly, it also includes a product that satisfies the above criteria were it not for modifications of a type customarily available in the commercial marketplace or minor modifications made to meet Federal Government requirements.

Commercial services. Commercial services means any of the following:

1. Installation services, maintenance services, repair services, training services, and other services if those services are procured for support of a commercial product, regardless of whether the services are provided by the same source or at the same time as the commercial product and the source of the services provides similar services contemporaneously to the general public under terms and conditions similar to those offered to the Federal Government.
2. Services of a type offered and sold competitively, in substantial quantities, in the commercial marketplace based on established catalog or market prices for specific tasks performed or specific outcomes to be achieved and under standard commercial terms and conditions.
3. A service described above even though the service is transferred between or among separate divisions, subsidiaries, or affiliates of a contractor.

 Note that for commercial services, if they are not procured to support a commercial product, must have been sold in substantial quantities in the commercial marketplace.

2019 NDAA - Accelerated Payments to Small Businesses

The President signed the 2019 NDAA (National Defense Authorization Act) named for Senator John McCain on Monday this week. We've covered a couple of the provisions in the legislation that are of interest to Government contractors, especially small businesses. Monday we discussed the prohibition against contracting officers arbitrarily withholding consent to subcontract just because they didn't like the price or the estimated cost and yesterday we took a look at a provision designed to enhance the effectiveness of PTACs (Procurement Technical Assistance Centers). Today we want to look at another provision that should benefit small businesses - prompt payments.

When submitting requests for progress payments (fixed price contracts) and claims for reimbursements (cost-type contracts), the Government is required by statute to pay within 30 days of receiving an adequate invoice or, if it does not pay within 30 days, it must add interest to the unpaid balance. The system works pretty good. We know of a few cases where the Government's payment office added interest to invoices that were paid beyond the 30 day deadline. Usually however, payments are made well before 30 days.

The 2019 NDAA shortens the payment cycle for Defense contracts (and subcontracts) to 15 days for small businesses. Specifically, the Defense Department shall, to the fullest extent permitted by law, establish an accelerated payment date with a goal of 15 days after receipt of a proper invoice for the amount due if a specific payment date is not established by contract. Additionally, non-small business prime contractors with small business subcontractors can benefit from the 15 day accelerated payment schedule it it agrees to make payments to the subcontractor in accordance with the accelerated payment date.

This new provision applies only to the Defense Department and specifically excludes non-Defense agencies. Also, there is no change to the interest on late payment rules, interest begins accruing after 30 days, not 15 days.

2019 NDAA - Funding for PTACs

The President signed the 2019 NDAA (National Defense Authorization Act) named for Senator John McCain yesterday. So this week we will be covering just a few of the provisions included in the legislation - those that might be of interest to Government contractors (and prospective Government contractors). Yesterday we discussed the prohibition against contracting officers arbitrarily withholding consent to subcontract just because they didn't like the price or the estimated cost. Today we want to take a look at a provision that has potential benefit for small businesses - enhanced PTAC (Procurement Technical Assistance Centers).

The House version of the 2019 NDAA contained a provision that would authorize PTACs to form an association to pursue "matters of common concern" (whatever that entails) and would direct DoD to recognize a PTAC association with a membership of the majority of PTACs and to fund the program. The Senate version had no such provision. In compromise committee, the House version prevailed.

The idea of PTACs is to offer no-cost procurement advise to small businesses looking to enter the Government market. The 94 PTACs across the US operate mostly autonomously and the heavy handed administration by DLA (Defense Logistics Agency) as to how PTACs can spend their Government funds has discouraged the Centers from coming together to share best practices and to otherwise improve their operations.

That's about to change. Section 859 of the 2019 NDAA authorizes DoD to pay costs relating to meetings of PTACs to discuss best practices for the improvement of the operations and for membership dues for any association of such centers, training fees and associated travel for training.

How much will these PTACs be funded for such purposes? We don't know yet. The legislation authorizes an amount determined appropriate by the Director so we'll have to wait and see.

If you are a small business and haven't taken advantage of the services available through your local PTAC, find them here and make an appointment.

2019 NDAA - Consent to Subcontract

The President signed the 2019 NDAA (National Defense Authorization Act) named for Senator John McCain today. So beginning today, we will be covering just a few of the provisions included in the legislation - those that might be of interest to Government contractors (and prospective Government contractors).

Section 824 of the NDAA deals with an inconsistency that has vexed many contractors. Contractors work very hard to maintain "approved" purchasing systems. We've discussed on this blog the process of becoming "approved". The Government conducts a CPSR (Contractor Purchasing System Review) every three years examining purchasing and subcontracting policies and procedures, deciding whether they are adequate (they usually are), and testing compliance with those policies and procedures (one can always find an infraction). At the end of this little dance, which usually takes several months, the Government will approve or disapprove the purchasing system. Most of the time, the systems are approved.

What has happened all to frequently however is that even with an approved system, contracting officers sometimes withhold their consent to subcontract solely on disagreement with the proposed subcontract price. Well, if a contractor has an approved system, the Government has already satisfied itself that the policies for selecting and determining fair and reasonable subcontract prices are sound and satisfactory for Government contracting. So, in cases where approval has been withheld, was there something new to the contractor's process that hadn't been evaluated previously or did the contractor deviate from its approved practices. Sadly, no. A contracting officer is just being officious and wielding power.

Under the 2019 NDAA, a contracting office can no longer unilaterally withhold consent to subcontract merely because he or she disagrees with the proposed price.They can still withhold consent but now they must obtain written approval from the program manager prior to withholding consent. That should reduce the incidences of withholding consent - at least until contracting officers can conger up other reasons, other than disagreement with price, to withhold consent.

2019 NDAA - Past Performance Evaluations for Subcontractors and Joint Venture Partners

Last Tuesday, the Senate passed its version of the Fiscal Year 2019 NDAA (National Defense Authorization Act). Its called the John S. McCain National Defense Authorization Act for Fiscal Year 2019. Now its on to negotiations with members of the House of Representatives to create a compromise bill to send to the President.

Title VIII is the section we are most interested in as it covers "Acquisition Policy, Acquisition Management, and Related Matters. Over the past couple of months, we've discussed various Title VIII provisions included in both the House and Senate versions of the 2019 NDAA. There's no certainty that the two bodies will reach consensus on any of these provisions but there is a strong likelihood that most of them will be preserved - perhaps watered down a bit - but preserved. Many times some of the more controversial provisions end up as a requirement to do more study and write a report. That's the situation with contract disputes. The House wants to limit bid protests while the Senate wants to study whether that is necessary.

Section 816 of the Senate NDAA tries to beef up the availability of past performance evaluations of contractors and subcontractors. It requires FAR changes to ensure that the best information regarding past performance is available when awarding DoD contracts. Specifically it will require performance evaluations, as part of a government-wide evaluation reporting tool, for first-tier subcontractors performing a portion of the contract valued at not less than 20 percent of the value of the prime contract. It will also require past performance evaluations of individual joint venture partners.

The Senate is concerned that some less than satisfactory companies are getting Government work as subcontractors or as members of a joint venture by hiding in the shadows of never having their past performance evaluated or passed up to the people awarding Government contracts.

2019 NDAA - Multiple Bid Protest Appeals of the Same Issue

The Defense Department recently floated a proposal to reduce frivolous protests or what some call "forum shopping" by limiting the ability of contractors who's protests were denied by GAO (General Accountability Office) to then continue their protest at the Court of Federal Claims. DoD wants to limit the so-called "second bit at the apple" to within 10 days of knowing they had a basis to protest.

The Professional Services Council (PSC) and others including a couple of Senators, have called the plan "premature" and warned that it would deny fair access to companies seeking relief from potentially unjustified awards.

In order to forestall DoD's push, the Senate included a provision in its version of the 2019 NDAA (National Defense Authorization Act) that, if passed, will require further study of the matter. Specifically, the provision (Section 811) would require DoD to carry out a study of the frequency and effects of bid protests involving the same DoD contract award or proposed award that have been filed at both the GAO and the Court of Federal Claims and to establish a data collection system to better track and analyze bid protest trends in the future.

The report must include

1. the number of protests that have been filed with both tribunals and the results
2. the number of such protests where the tribunals differed in denying or sustaining the action
3. the length of time, in average time and median time for the intitial filing at the GAO to decision in the US Court o Claims
4. if performance was stayed or enjoined, whether the requirement was obtained in the interim through another vehicle or in-house, or whether during the period of the stay or enjoining the requirement went unfulfilled
5. separately for each tribunal, the number of protests where performance was stayed or enjoined and monetary damages were awarded which shall include for how long performance was stayed or enjoined and the amount of monetary damages
6. whether the protestor was a large or small business
7. whether the protestor was the incumbent in a prior contract for the same or similar product or service.

DoD will have six months to complete the study.

2019 NDAA - Consent to Subcontract Under Approved Purchasing Systems

What good is having an approved purchasing system if contracting officers keep second-guessing the results of the process? You know, like telling the contractor a subcontract price is too high based on nothing more than a desire to clout - to show who's boss.

The past month or so, we've spent a few of those days writing about provisions in the House's version of the 2019 NDAA (National Defense Authorization Act) involving acquisition related matters. Today we begin a series on the Senate's version of the NDAA. Ultimately these two versions get worked out in compromise committee so we can't know yet what the final NDAA will look like. Also, the White House has weighed in on the NDAA with provisions it disagrees with (or, in some cases, "strongly disagrees" with.

FAR (Federal Acquisition Regulations) Part 44 deals with subcontracting policies and procedures. Section 44.3 details CPSRs (Contractor's Purchasing System Reviews) and 44.305 discusses granting, withholding, and withdrawing approval of a contractor's purchasing system.

The ACO (Administrative Contracting Officer) is responsible for granting, withholding, or withdrawing approval of a contractor's purchasing system. Such approval can be given only after determining that the contractor's purchasing policies and practices are efficient and provide adequate protection of the Government's interest.

Once approved, the Government waives the contractual requirement for advance notification in fixed price contracts and waives the contractual requirement for consent to subcontracts in fixed-price contracts and for specified subcontracts in cost-reimbursement contracts if not called out for special surveillance.

Evidently, there have been more than a few cases where, notwithstanding an approved purchasing system, contracting officers have been withholding consent based solely on disagreement with a proposed subcontract price.

The Senate added Section 818 to its version of the 2019 NDAA to curtail such abuse. Under the new provision, if a contracting officer wants to withhold consent to subcontract where the contractor's purchasing system has been approved, the contracting officer must have a written approval from his or her program manager prior to withholding consent.

This seems to be a non-controversial provision and should probably remain in the final bill. Its really too bad though that the Government needs to come up with statutory language to force the Government to behave itself.

2019 NDAA - Mandatory Arbitration Agreements

Nine or so years ago, the 2010 NDAA (National Defense Authorization Act) added new restrictions on the awards of contracts over $1 million to contractors that require employees to resolve disputes through arbitration. The provision was implemented in the DFARS (DoD FAR Supplement)at Section 222.74. Specifically, the policy states:

Departments and agencies are prohibited from entering into contracts greater than $1 million unless the contractor agrees not to enter into any agreement with any of its employees or independent contractors that requires, as a condition of employment, that he/she agree through arbitration any claim under the Civil Rights Act or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention

The policy also applies to existing agreements. In other words, contractors must agree to not enforce the provisions of agreements entered into prior to the effective date of the policy.

Fast forward nine years and now Congress wants to see how the Defense Department is monitoring this prohibition.

A provision in the 2019 NDAA will require (if passed) the Defense Department to provide a briefing to the House Armed Services Committee on steps the Department has taken to ensure compliance with DFARS 222.74 concerning the restrictions on contractor use of mandatory arbitration agreements.

The briefing must include steps taken by DoD to ensure it does not fund contracts with contractors that require, as a condition of employment, that employees enter into agreements to resolve certain claims and torts through arbitration. The briefing must also include steps taken by DoD to ensure the restriction is flowed-down to subcontractors. There's a third requirement to the briefing - potential ways for DoD to determine the prevalence of mandatory arbitration by DoD contractors compared to contractors that do not do business with DoD.

We suspect that other than the normal Representations and Certifications delineated in SAM (System for Award Management), DoD is not doing much at all to determine compliance with this provision. Wonder what prompted the House to include this provision? Evidently there must be some indication out there that contractors continue to insist upon mandatory arbitration agreements to settle complaints. A whistleblower perhaps?

2019 NDAA - Finally, a Definition for the term 'Subcontract'

Section 832 of the House version of the 2019 NDAA (which passed with an overwhelming majority) includes, at long last, a formalized (and precise) definition of the term 'subcontract'.

The House Armed Services Committee noted that there are multiple definitions of subcontract within the Federal Acquisition Regulations. The Section 809 Committee has made similar observations. Establishing a single definition of the term 'subcontract' will provide clarification, simplicity, and consistency for defense procurement actions.

Its long overdue.

Here is the proposed definition in two parts, what it means and what it does not include:

The term 'subcontract' means a contract entered into by a prime contractor or subcontractor for the purpose of obtaining supplies, materials, equipment, or services of any kind under a prime contract. The term includes a transfer of commercial product or commercial service between divisions, subsidiaries, or affiliates of a contractor or subcontractor.

The term 'subcontract' does not include

1. a contract the costs of which are applied to general and administrative expenses or indirect costs, or
2. an agreement entered into by a contractor or subcontractor for the supply of a commodity, a commercial product, or a commercial service that is intended for use in the performance of multiple contracts.

2019 NDAA - Expedited Hiring Authority for Procurement Positions

Over the past couple of weeks, we've provided updates on a few provisions in the House version of the 2019 National Defense Authorization Act (NDAA) which was approved by an overwhelming majority of Congressional members. Today we bring you another provision that, while not directly related to procurement regulations, will certainly have long-term impact on the efficacy in the Government procurement functions and responsibilities.

Section 875 of the 2019 NDAA would authorize direct-hire authority for acquisition professionals. Direct-hire authority (DHA) is a hiring authority that the OPM (Office of Personnel Management) can grant to Federal agencies for filing vacancies in specific occupations, grade levels, and locations when it can be proven that there is a critical hiring need or a severe shortage of candidates. DHA expedites the hiring process by eliminating veterans' preferences, ranking and rating, as well as other time-consuming and onerous selection procedures.

Currently, DHA is granted to IT positions (including cyber-security), veterinary medical officers, medical occupations, Iraqi reconstruction, and certain Federal acquisition positions. Sadly, there is no direct hire authority for contract auditors at this time.

The Government depends upon skilled acquisition and program personnel to

• understand complex market dynamics, 
• develop clear requirements, 
• negotiate in the best interest of the taxpayers, and 
• hold contractors to high performance standards.

The expediency that direct-hire authority allows can be helpful to an agency both in meeting critical initiatives that may require particular expertise, such as to support information technology modernization, cyber-security efforts, and real property acquisition and disposal, as well as supporting the Federal Government as it plans and executes on its agency and regulatory reform activities (e.g. Sectional 809 Panel).

DHA offers a distinct advantage to agencies in that they are able to recruit to fill vacant positions at universities.

2019 NDAA - More Funding for PTACs

The House yesterday passed its version of the 2019 National Defense Authorization Act (NDAA). The Senate is working on its version which is expected to easily pass. Then the bills are off to a joint committee to reconcile or resolve the differences.

Over the past few days, we have been writing about some of the procurement related provisions in the House version. We'll continue that today and for a few more days until we've covered the major procurement provisions. Today we will discuss funding of the Procurement Technical Assistance Centers (PTACs).

The Procurement Technical Assistance program was established to expand the number of businesses capable of participating in Government contracts. It is administered by DLA (Defense Logistics Agency) Office of Small Business in cooperation with states, local governments and nonprofit organizations.

Under the program, Procurement Technical Assistance Centeres (PTACs) help businesses pursue and perform under contracts with the Department of Defense, other federal agencies, state and local governments and with government prime contracts. The services provided by PTACs are free and include registration in SAM (System for Award Management), identification of contract opportunities, help in understanding requirements and in preparing and submitting bids.

Section 859 of the House version of the fiscal year 2019 NDAA would provide PTACs additional resources necessary to conduct greater outreach and provide expanded support to small businesses. It would increase the topline budget for the PTAC program to $50 million. It would increase the funding caps for PTACs operating on a statewide, less than statewide, and eligible tribal locations to $1 million, $750,000, and $450,000 thousand respectively, substantial increases in all categories.

Section 859 would also adjust the percentage of Federal funding for PTACs to 75 percent from 65 percent, and would adjust the community contribution to 25 percent from 35 percent.

For firms unfamiliar with the PTAC program, click here to find your local PTAC. Every state is covered.

2019 NDAA Provisions - Accelerated Payments for Small Businesses

Small businesses will certainly welcome this item tucked away into the current version of the proposed 2019 NDAA (National Defense Authorization Act) - accelerated payments.

Section 852, Prompt Payments of Small Business Contractors benefits both small business prime contractors and small business subcontractors. It provides the following:

1. For a prime contractor that is a small business concern, the head of an agency shall (not "may"), to the fullest extent permitted by law, establish an accelerated payment date with a goal of 15 days after receipt of a proper invoice for the amount due if a specific payment date is not established by contract.
2. For a prime contractor that subcontracts with a small business concern, the head of an agency shall, to the fullest extent permitted by law, establish an accelerated payment date with a goal of 15 days after receipt of a proper invoice for the amount due if
• a specific payment date is not established by contract and
• the prime contractor agrees to make payments to the subcontractor in accordance with the accelerated payment date to the maximum extent practicable without any further consideration from or fees charged to the subcontractor.

This is not exactly new. DoD has been working, with varying success to expedite payments to small business for several years now. By giving expedited payments a statutory foothold and using the word "shall" instead of "may" should give the program some permanence and a better chance that small businesses will truly see expedited payments.

2019 National Defense Authorization Act

Details of the fiscal year 2019 National Defense Authorization Act (NDAA) are beginning to emerge but are no where near complete as representatives introduce amendments to the proposed legislation  almost daily. If past years are an indication, we won't see the 2019 NDAA signed into law until late fall.

From time to time, we will be bringing you updates on details within the proposed NDAA, including proposed amendments - especially provisions that pertain to Government acquisition. These provisions are usually found in NDAA's Section 800.  Today we want to begin with a provision that attempts to bring clarity to the definition of "commercial items".

The statutory definition of commercial item is located in 41 USC 103 and the regulatory definition is found in FAR 2.101. Both read the same. Briefly, a commercial item is an item, other than real property, that is of a type customarily used by the general public or by nongovernmental entities for purposes other than governmental purposes and has been sold, leased, or licensed, or offered for sale, lease, or license, to the general public. The definition also includes items that evolved from an item (defined above) through advances in technology or performance and is not yet available in the commercial marketplace but will be available in time to satisfy the delivery requirements under a Federal Government solicitation. The current definition also discusses installation services, maintenance services, repair services, training services and other services that meet the same basic requirements as "items".

Under the proposed 2019 NDAA, Congress giving commercial "services" its own specific definition and renaming "items" into "products". The result is separate definitions for Commercial Products (41 USC 103) and Commercial Services (41 USC 103a).

The definition of commercial products is the same as it was for commercial items except for sections (5) and (6) which dealt with services which have been dropped out of the new definition and are now part of the definition for commercial services.

The new definition for commercial services includes:

1. Installation services, maintenance services, repair services, training services and other services if those services are procured for support of a commercial product, regardless of whether the services are provided by the same source or at the same time as the commercial product and the source of the services provides similar services contemporaneously to the general public under terms and conditions similar to those offered to the federal Government. 
2. Services of a type offered and sold competitively, in substantial quantities in the commercial marketplace based on established catalog or market prices for specific tasks performed or specific outcomes to be achieved and under standard commercial terms and conditions.
3. A service described above even though the service is transferred between or among separate divisions, subsidiaries, or affiliates of a contract.

These proposed changes do not seem to be significant but do add clarity to a definition that is sometimes confusing and often times applied inconsistently.

Comprehensive Pentagon Bureaucracy Reform and Reduction Act

Last week we wrote about a proposal by Congressman Thornberry, the Chairman of the House Armed services Committee, to cut $25 billion from DoD support agencies (agencies he refers to as the "fourth estate" (see Proposal to Cut $25 Billion from DoD Support Agencies). This proposal will in all likelihood become part of the 2019 NDAA (National Defense Authorization Act).

Another aspect of the proposed legislation that we didn't include in our prior discussion is the impact on the Defense Contract Audit Agency (DCAA) and the Defense Contract Management Agency (DCMA). These "fourth estate" Agencies are not on Thornberry's target for elimination but are specifically called out for consolidation.

Specifically, the proposal calls for DoD to conduct a review of the functions of the Defense Contract Audit Agency and the Defense Contract Management Agency (DCMA) to determine whether there are functions being performed by either Agency that could more appropriately be performed by the other Agency.

The review shall include

1. a determination of whether there are functions performed by either Agency that could more appropriately be performed by any other organization or element of the Department of Defense including the military departments or commercial providers.
2. an assessment of the potential benefits and challenges associated with combining the Agencies into one agency with oversight for defense contracting.

That doesn't sound too drastic, does it? A little tweaking here and there to satisfy the intent of the legislation should it become law. But consider Part 2 of the proposal.

By March 1, 2020, the Secretary of Defense shall submit to the congressional defense committees a report that includes

• the results of the review

• a plan to combine the functions of DCAA and DCMA into one agency by not later than January 1, 2021.

There's no qualification on that second bullet. It requires a plan to combine DCAA and DCMA. It does not say depending on the results of the review, consider whether it is beneficial to combine DCAA and DCMA. It requires a plan to combine the two Agencies as if the efficacy of such combination has already been established.

Proposal to Cut $25 Billion from DoD Support Agencies

The Chairman of the House Armed Services Committee, Mac Thornberry, announced a proposal yesterday to cut 25 percent (more than $25 billion) out of the Defense Department's support agencies by eliminating some and cutting back on others. If adopted, thousands of civilian jobs would be cut and it would certainly result in significant changes to Defense contractors.

The proposal specifically calls for the elimination of the following seven Agencies.

• Defense Information Systems Agency (DISA) whose mission would be folded into the U.S. Cyber Command
• Defense Technical Information Center (DTIC) which acquires, stores and disseminates scientific and technical information to aid R&D.
• Office of Economic Adjustment which aids communities hurt by defense program changes, including base closures.
• Defense Technology Security Administration which guides policy on arms transfers overseas
• Test Resource Management Center, which coordinates among DoD test and evaluation facilities
• Defense Human Resources Activity which guides and implements human resource initiatives, budgets, policies and programs
• Washington Headquarters Services which provides operational and administrative services

In announcing his proposal, which will likely be included in the 2019 NDAA (National Defense Authorization Act), Thornberry made the following statement.

Over the years, Congress has focused most of its attention on the military services and on weapons and equipment, personnel, and policy issues. We have paid relatively little attention to the rest of DoD that make up the 'Fourth Estate.' In fact, one expert has said, 'the Fourth Estate is untouched by human hands.' Yet, this portion of the Department of Defense spends about 20 percent of the budget, includes about 25 percent of the civilian workforce, and hires about 600,000 contractors.

We are working to get more value for the taxpayer dollar, to get more resources into the hands of the warfighter faster, and to make the Department more agile and innovative in facing the wide array of security challenges before us, we cannot neglect to examine this large portion of DOD

Besides specifically calling for the elimination of these seven agencies, there was no mention of the other agencies comprising Thornberry's 'fourth estate'. Presumably, agencies such as DCAA (Defense Contract Audit Agency) and DCMA (Defense Contract Management Agency) would be included in these cuts. Agencies having a national security mission (e.g. NSA) would be exempt.

Oh, and by the way, the American Federation of Government Employees (AFGE) condemned the proposal as "foolish and shortsighted".