Tuesday, March 31, 2009

DOD Needs to Look Inward to Support Acquisition

A recent report by the GAO on the defense acquisition workforce starts to give a clearer picture as to the main reasons DOD continues to struggle in completing its acquisition mission. The report discusses skill gaps, lack of personnel, and overdependence on contractors. As I have posted in the past, contractors are not the enemy. Treating industry as the problem will not solve the issue, and further exacerbate the real human capital management issues the report addresses.

According to the report:

…. GAO found that program office decisions to use contractor personnel are often driven by factors such as quicker hiring time frames and civilian staffing limits, rather than by the skills needed or the nature or criticality of the work. Second, DOD’s lack of key pieces of information limits its ability to determine gaps in the acquisition workforce it needs to meet current and future missions…

… Omitting data on contractor personnel and needed skills from DOD’s workforce assessments not only skews analyses of workforce gaps, but also limits DOD’s ability to make informed workforce allocation decisions and determine whether the total acquisition workforce— in-house and contractor personnel—is sufficient to accomplish its mission..

The total acquisition workforce concept has not been adequately embraced at DOD, and certainly not understood or acknowledged by Congress. The report is correct in that DOD is establishing practices for overseeing additional hiring, recruiting, and retention activities. What seems to be missing is a focused approach to developing the core skills needed by current personnel overseeing in-house contractor acquisition support, mainly training personnel in oversight responsibilities, and program management skills to manage the contractors. Thus the situation is incomplete data with insufficient information on how the acquisition mission gets accomplished, and by whom. The resultant analysis is a conclusion that contractors supporting the acquisition mission are running amok and need to be reined in.

What I find interesting in the report is that the GAO met with representatives of leading companies to understand workforce management practices. However, the GAO did not meet with leading companies that are currently providing DOD with acquisition support. I am not sure why this omission occurred, as GAO could get a better understanding of the needs of government by finding out how and why they are being filled by industry. I think this is telling in the apparent assumption that contractors are inherently causing harm, and that DOD will need to stop “depending” on contractors if the acquisition mission is to be reformed.

The GAO is correct in that much work needs to be done to have an effective human capital management strategy at DOD, and across government, to better ensure that agencies have the right staff, doing the right jobs, in the right place, at the right time, and by making flexible use of its internal workforce and appropriate use of contractors to fill skill and capability gaps. DOD is not truly managing from a “total force” concept as they claim, as they do not collect data on contractors performing critical missions in the acquisition community.

According to the report

… 25 program office cited staffing limits, the speed of hiring, or both as main factors in their decisions to use contractor personnel. Additionally, 22 program offices cited a lack of in-house expertise as a reason for using contractor personnel, and 17 of those indicated that the particular expertise sought is generally not hired by the government…

In other words, DOD is hiring contractors to help perform a critical mission because they not only lack the resources, but lack the skills to perform the mission. What I find somewhat disingenuous is that the information in the GAO report highlights the strategic case made by industry on a limited use by contractors. Industry will not hire outside contractors to perform critical functions because of the proprietary nature of the data. Furthermore, these companies are managing profit-loss tightly, with proprietary information staying in house as the viability of the business depends on it. Industry models for strategic human capital management certainly can be researched for best practices, but I disagree with the approach the GAO took in their analysis as they fail to point out very different business models and missions.

As reported in FCW:

Many government officials and experts already say DOD relies too much on contractors, particularly for services contracts, and it needs to find a way to end that dependence. However, they also acknowledge that it can’t be done quickly or completely.

As result, one member of Congress is taking a simple route. Rep. Joe Sestak (D-Pa.) introduced a bill March 18, which would require the defense secretary to train members of the Armed Services before they are deployed on how to manage contracts and contractors.

I have already commented on the route taken by Rep. Sestak (here), and the inherent problems with this approach. The focus is misplaced by the GAO report and members of Congress in that contractors are not a critical issue having a negative effect on DOD acquisitions. I think it is best served to understand that program offices acknowledge that contractors are helping complete a vital mission, and it is imperative of DOD to look inward on how to best meet the needs of the mission, and focus on a true workforce concept which includes support contractors as necessary.

Sunday, March 29, 2009

What Real Acquisition Reform Means

Stan Soloway, President and CEO of the Professional Services Council, wrote a great piece regarding the somewhat dishonest approach to the entire wave of acquisition reform and the focus on the contracting community. I have posted several times on the need for a total workforce concept, and the need to understand that contractors are performing a great service to our nation, filling key capability gaps, providing flexibility to help achieve the government’s mission, and also giving up their lives in defense of our country (here and here).

As Mr. Soloway points out, the memo by President Obama to the Office of Management and Budget reflects his philosophy on and commitment to performance, efficiency and accountability. Regretfully, the conversation has turned into a focus on symptoms of what many are calling a broken system, instead of making the president’s commitments the real focal point of any substantive discussions on procurement issues.

The president’s memo does not recommend or create new policy and allows the potential for validating existing policy; an encouraging sign and a productive means to explore the real issues that exist. According to Mr. Soloway:

Using language that ignores an array of Government Accountability Office and other objective analyses, the president appears to lay virtually all the blame for cost over-runs on weapons systems at the feet of contractors. Fortunately, the memo recognizes the many factors that are often at the heart of the problem, including requirements scope and stability, funding, and others. What’s more, the president calls for an end to wasteful contracts — a goal with which no one could disagree — leaving it for the review process to determine whether such contracts involve work that simply doesn’t need to be done and should simply be terminated or whether they reflect poor performance and should be recompeted.

There is no question that debates and dialogue about acquisition reform in Congress have been troubling. Mr. Soloway rightfully points out that there has been very little discussion on accountability, efficiency and performance, but a rather a focus on contracting, and contractors in particular. There seems to be a philosophy in Congress that contractors have one sole purpose, and that is to treat the government as an ATM.

In regards to activities performed by contractors that apparently fly in the face of activities deemed inherently governmental (e.g. procurement support), this really gets to the heart of the matter. Although the government, especially DoD, have made tremendous strides in shoring up the acquisition workforce, much work needs to be done to create the numbers and skills to adequately perform the mission. Further, this initiative will require years of commitment and resources to be productive if they can ever be achieved, and also needs to involve targeted training on oversight and ensuring the commitment to accountability, efficiency and performance are at its center to ensure the walls of inherently governmental are not breached. Acquiring the skills, flexibility, and commitment of industry to help perform the acquisition mission should be treated as a strategic initiative, and managed as such. Breakdowns in the relationship have occurred on both sides of the equation, as lack of oversight and accountability by the government has also contributed to problems with contractors supporting procurement activity. To end with Mr. Soloway:

The president has set in motion a series of activities designed to enhance competition, government performance and accountability, all on behalf of the taxpayer, for whom the real question is whether and how well the government delivers; whether it’s by federal employee or contractor makes no difference. We owe the taxpayers the benefit of an intellectually honest, consistent and analytically sound process that can achieve the president’s goals. Then, let the chips fall where they may.

Thursday, March 26, 2009

The Importance of Following Source Selection Procedures

With protests becoming a more concentrated problem for federal contracts, and contracting activity to significantly increase with Stimulus spending, a recent Government Accountability Office (GAO) bid protest decision is very disturbing. The Obama Administration is putting pressure on agencies to increase competition and best value awards, but the GAO decision demonstrates the need for adequate documentation and justification for not only a best value decision, but making any decision at all.

The GAO decision pertained to a protest launched by Reston, Va.-based Access Systems Inc., challenging a $25.6 million task order for ongoing Marine Corps Systems Command technical and management support which was awarded to Avineon Inc. of Alexandria, Va. Access Systems was the incumbent contractor, and had submitted a lower bid than Avineon.

The Marine Corps' Request for Quote (RFQ) stated that the task order would be issued on a best value basis, where "overall technical merit [was considered] to be of significantly greater importance than evaluated price." But GAO decided the Marine Corps failed to provide necessary justification for the higher price, and thus sustained the protest.

The source selection team for the Marine Corps rated both companies' acceptable for the technical evaluation, with subsequent past performance as low risk. Access Systems and Avineon held comparable technical certifications and both had qualified personnel.

Best value contracts are supposed to be a tradeoff of proposed technical solutions, coupled with prices. However, best value decision often go to the lowest bidder because of the desire to lower costs and the increased pressure from industry of protests. One of the real issues is the inability of the government to understand what truly is in their best interest. This problem is a combination of unskilled personnel, under enormous pressures to move forward with contract actions, in addition to poor processes that are not adequately defined or followed.

The hope is that the pressure from the Obama Administration for greater visibility and transparency will drive agencies to be more diligent in documenting awards and following source selection procedures. Nonetheless, the GAO protest decision is not an isolated case.

Having disciplined, rigorous source selection procedures in place, coupled with adequate training for source selection personnel in how to follow those procedures, will be critical to ensure true best value awards. More importantly, this will also help ensure the government receives the best deal and the best solution. The evaluation criteria need not be overly complex, but must be thorough enough to ensure that critical factors are evaluated and the key determinates are incorporated to differentiate solutions and help with the tradeoff process.

It boils down to having sound evaluation criteria in the solicitation and ensuring offerors understand the criteria of how they will be rated. The government must then be thorough to evaluate proposals only on those criteria, and ensure adequate, precise documentation is the outcome of the process to substantiate an award, mitigate protest risk, and ensure the government does indeed acquire a best value solution.

Wednesday, March 25, 2009

Troubled Waters for Coast Guard Deepwater Program

New testimony from John P. Hutton, Director of Acquisition and Sourcing Management, (GAO-09-462T), before the House Subcommittee on Coast Guard and Maritime Transportation reveals the continued efforts of the Coast Guard to effectively manage their troubled Deepwater Program. Deepwater is the largest acquisition program ever attempted at the Coast Guard, involving the replacement or modernization of 15 major classes of Coast Guard assets, accounting for almost 60 percent of the Coast Guard’s fiscal year 2009 appropriation for acquisition, construction and improvements.

Like many other major acquisition programs, the GAO has been kept busy over the last three years of reporting serious performance and management problems such as cost increases, schedule slips, and assets designed and delivered with significant defects. In other words, the same issues for many other major defense acquisition programs.

The Coast Guard contracted with Integrated Coast Guard Systems (ICGS), a partnership of Northrop Grumman and Lockheed Martin as a systems integrator in June 2002 to carry out the Deepwater acquisition. In April 2007, Coast Guard Commandant Admiral Thad W. Allen acknowledged that the Coast Guard had relied too heavily on contractors to do the work of government and announced that the Coast Guard was taking over the lead role in systems integration from ICGS.

The new report by GAO outlines the results of this decision, and details the resultant issues and problems surrounding the program.

According to Mr. Hutton, one of the key decisions was to consolidate acquisitions under one Directorate, including Deepwater, as outlined in the Coast Guard’s Blueprint for Acquisition Reform, which sets forth a number of objectives and specific tasks with the intent of improving acquisition processes and results. Previously, Deepwater was managed independently of other Coast Guard acquisitions, with the resultant insulated structure and fractured decision making for the Coast Guard’s most visible and comprehensive acquisition. The Coast Guard has also vested its government project managers with management and oversight responsibilities formerly held by ICGS.

The Coast Guard has also begun to follow a disciplined project management process using the framework set forth in its Major Systems Acquisition Manual and Blueprint for Acquisition Reform. This process requires documentation and approval of program activities at key points in a program’s life cycle.

…The process begins with identification of deficiencies in Coast Guard capabilities and then proceeds through a series of structured phases and decision points to identify requirements for performance, develop and select candidate systems that meet those requirements, demonstrate the feasibility of selected systems, and produce a functional capability…

In other words, follow an events driven approach to the acquisition, using key milestones for decision points. What were they doing before? Apparently ICGS was following a system-of-systems approach based on a schedule-driven methodology. This was one of the issues identified in the eventual takeover, as the ICGS approach was not very practical, or feasible really, for an asset-based acquisition program of that magnitude.

Mr. Hutton further stated that leadership at DHS is now formally involved in reviewing and approving key acquisition decisions for Deepwater. GAO reported in June 2008 that DHS approval of Deepwater acquisition decisions was not required, as most decisions were deferred to the Coast Guard in 2003. I am not sure how that subrogation of responsibility lasted as long as it did. Billions of dollars on investment were made before DHS got involved in the decision making process. How could their budgets have been realistic?

Not surprisingly, Mr. Hutton stated that DHS had not effectively implemented or adhered to their own investment review process, and has not provided the oversight needed to identify and address cost, schedule, and performance problems in its major investments.

The most important and problematic area of concern was the testimony regarding the decisions, or lack thereof, that are coming back to haunt the Coast Guard. The example he sates was the acceptance of the design, specifications, and ultimate blessing to proceed with the long-range interceptor, without so much as doing any business case, capability analysis, or needs assessment. ICGS basically determined this need for the Coast Guard, with little or no analysis, and the Coast Guard approved it. Also provided was the example of the Fast Response Cutter-A (FRC-A), which a third-party validated the Coast Guards fears that the design was faulty, and would not even come close to its expected service life (30 years). The FRC-A has been since scrapped.

Further detailed was the lack fundamental issue of all government agencies in regards to acquiring and managing acquisitions, and that is the weakness in numbers and skills of its acquisition workforce.

… The Coast Guard’s 2008 acquisition human capital strategic plan sets forth a number of workforce challenges that pose the greatest threats to acquisition success, including a shortage of civilian acquisition staff , its military personnel rotation policy, and the lack of an acquisition career path for its military personnel…

One item in the testimony of particular interest was the use of contracting personnel by Mr. Hutton:

…In the meantime, the lack of a sufficient government acquisition workforce means that the Coast Guard is relying on contractors to supplement government staff, often in key positions such as cost estimators, contract specialists, and program management support. While support contractors can provide a variety of essential services, when they are performing certain activities that closely support inherently governmental functions their use must be carefully overseen to ensure that they do not perform inherently governmental roles. Conflicts of interest, improper use of personal services contracts, and increased costs are also potential concerns of reliance on contractors…

Government oversight, as I have mentioned in this blog, is one of the principle areas of attention that the government needs to address, in conjunction with an overall, holistic approach to the acquisition workforce crisis. Although the current economic climate has mitigated some of the pending retirements by senior acquisition personnel, it has not been resolved. Contractors are providing a vital role in executing the acquisition mission across government, and need to be included in human capital strategies as part of a strategic, mission-oriented approach to human capital management. That has to be coupled with effective training and hiring to ensure the correct mix of skills and personnel are brought to bear on providing oversight to the workforce.

Although contractors often bear the brunt of ire in the oversight department, lack of enforcement of acquisition rules and poor leadership also cause significant delays and problems in regards to government acquisition personnel and the outcomes of procurements. We need to communicate better with our government counterparts, and help demonstrate industry’s continued support and need in supporting the acquisition mission. The bottom line is that many of the resources currently needed to keep acquisitions going exist outside of government, and that fact needs to be understood by government leaders to find better ways to work with industry.