Monday, September 28, 2009

Capturing Past Performance Data is Not Enough

As acquisition reform continues to gain steam, the Office of Management and Budget and the Office of Federal Procurement Policy are continuing to craft guidance and procedures to improve the acquisition process in hopes of saving money on contract costs and reduce the use of “high-risk” contract types. These improvements will no doubt create positive impacts on long-term acquisition outcomes, but it is the short-term and current processes that can and must be improved. Specifically, it is past performance data on procurement actions that can have a deep and lasting impact today on how the government does business and awards contracts today.

To this end, a new past performance database is being developed to capture and use the data on how contractors performed to award contracts. This new system, the Federal Awardee Performance and Integrity Information System (FAPIIS), will integrate a handful of other databases (Excluded Parties List System and Past Performance Information Retrieval System or PPIRS, and the Contractor Performance Assessment Reporting System).

Further mandates to use past performance data were mandated earlier this year in a final rule published in the Federal Register. According to the rule, contracting officers are required to use PPIRS to document the past performance of firms winning awards off the General Services Administration's Multiple Award Schedule and for task or delivery orders placed against government-wide acquisition contracts.

Although the use of past performance is regarded by many in and out of Government to be one of the most important factors that should be used to award contracts, its use is sporadic at best and often not consistent across either agencies or organizations inside agencies. The Government Accountability Office (GAO) reported that the PPIRS system only had a "minimal" number of performance reports for orders placed against the GSA schedules. Further, other GAO reports found that Agencies are often reluctant to rely on PPIRS data because of perceived skepticism about the reliability of the information and difficulty assessing the relevance of such data to a specific contract. As I have also commented (here), technical and cost data should not be at the heart of source selections, but often is the only relevant data used to make award decisions. I believe this is the wrong approach to awarding contracts, and should be addressed immediately without the need for legislation.

For the FAPIIS initiative too be successful, several things have to happen; integration, data standardization, and holding all contracting officers and programs accountable for ensuring past performance data is entered into the new system correctly, accurately, an timely. Past performance data needs to be standardized across government, and all federal agencies should be using one system. One of the main issues with the poor data quality is that many agencies, and departments and organizations within an agency, are using different forms and systems, thus creating an unreliable maze of stove-piped systems and that are not trusted and add little value for their use. Acquisition leaders should also make using a standardized system a high priority, and hold those accountable for its implementation and the quality of the data.

Another issue with the shoddy data, or lack of reporting, is the pressure applied by industry on the reports and the lack of proper oversight and contract management skills in the acquisition community. With standardization in how past performance data is collected and reported, coupled with having the subsequent skills by government to report on performance, fair and effective past performance data could now be realized and disseminated across Government. Industry would still have the opportunity to challenge adverse reviews, but at least the review would be fair and defendable. I think that is not the case currently, and the contracting community feels they do not have the time and inclination to challenge industry, or possibly bring to light poor management by the Government. It is easier to just not update PPIRS, since accountability is currently not enforced or even an issue.

I think my view was brought to light in the current account of continued issues with the Defense Contract Audit Agency, during a billing system review of one of the largest contractors in Iraq. According to the GAO investigators, an auditor stated he did not perform detailed tests (paralleling why past performance data was not updated), "because the contractor would not appreciate it." Since when are government operations dictated by offending contractors?

Like many issues involving poor acquisition outcomes, leadership is crucial to turning the corner on poor performance. I hope that the push to integrate past performance data will be a positive step to hold contractors and programs accountable for execution and adhering to cost, schedule, and performance objectives.

Thursday, September 24, 2009

Hitting a Home Run; Baseball and the Acquisition Process

An interesting post by Bill Gormley of Washington Management Group described parallels on two of my passions, baseball and improving the acquisition process. It is an interesting read and a fun way of discussing what can be a somewhat difficult process and subject. Some specifics points he makes and my take:

…Normally, an organization’s name change doesn’t affect employees. But because Congress changed the committee’s name and is seemingly focusing its efforts on oversight instead of reform, it has cast a cloud of doubt over the entire league.

Given the intensified focus on oversight, agency leaders are now leery of voicing their support of a contracting officer’s decisions. That would be like team owners not supporting their managers’ decisions. That’s not good baseball, and it’s not good business…

Several legislative pieces do attempt to focus on reform, such as hiring authority, help the glacial hiring pace, and the Weapon Systems Acquisition Reform Act of 2009 at Defense. Further reform initiatives are undoubtedly on the horizon, with the Office of Management and Budget and Office of Federal Procurement Policy finding ways to trim acquisition costs and improve the procurement process. Nonetheless, finding ways to improve oversight and hold programs and contracting officials accountable is not a bad thing.

…This cloud of doubt goes even higher, to the “replay officials” — the inspectors general and Government Accountability Office. What will these entities do if an agency leader makes a decision they feel is questionable? The focus on oversight has led to more incidents of decision reviews — or instant replays.

The umps “call 'em as they see 'em,” but they can only see some of what has happened. It’s as if the video on an instant replay cut off just as a line drive was nearing the foul pole. Was the hit fair or foul? It’s tough to say when you can only see where the ball landed…

With report after report of waste, fraud, and abuse and no end in sight, the acquisition mission is finally coming into focus as a major issue that needs the attention it so desperately warrants. Acquisition outcomes must be improved, and it is the reasons and decisions that created the mess we are in that deserve carefully scrutiny to improve and create lessons learned for future successes.

…Let’s be clear here: No one is promoting bad acquisition planning. Those on the field try to make good calls — and usually do. Everyone wants a clean and well-played game. The point is that many of the acquisition-focused decision-makers do not have the support they need from their superiors. And Congress has slowed down the acquisition community at a time when the clear signal from the paid attendees — taxpayers — is for government to speed up the process…

The acquisition community needs a strong, focused, and strategic injection of resources to ramp up capability and skills to complete the mission and create a world-class procurement process that always seeks to improve and save money. However, slowing down the process may not be such a bad thing. Throwing good money after bad is not a responsible solution, but happens every day as an overwhelmed acquisition workforce is continually asked to do more and constantly increase procurement velocity (e.g. Recovery awards). Sometimes taking a step back to do things right is a viable option, similar to the analogy of measuring twice and cutting once.

Strategic and thorough acquisition planning is the key to success, and should be done for long-term outcomes. Mountains of data, physicals, and evaluations of long-term performance are done on baseball prospects before sinking millions into a contract. Many procurements, to the tunes of millions, are done through hastily planned sole-source contracts without any price evaluations or consideration of past performance. Although speed in baseball can make a huge impact on the outcome of a game and season (i.e. Game 4 of the 2004 ALCS; which still gives me heartburn thinking about it), in the acquisition process it can be a disaster.

Mr. Gormley’s conclusion, however, is right on point:

…Give the agencies the authority to elevate the acquisition community to professional status. Give them the tools to hire, train and keep training. Remove the oversight fear factor of making a bad decision. Yes, Congress, continue your overall responsibilities of oversight, just let the professionals carry out their assignments…

The acquisition workforce must be rebuilt and trained so it is a professional, business advisory community that includes the skills and capabilities of acquisition life-cycle management. More regulations are not the answer; it is allowing the community to do its job that is needed. Guidance on contract types and what contract activities will be frowned upon by well-meaning but ill-informed legislators, in addition to always being fearful of being second guessed, have created a risk-averse environment that is having difficulties attracting talent. Much like New York Yankees owner George Steinbrenner always second guessing Billy Martin created an environment known as the “Bronx Zoo” in the 1970’s, so too has a destructive environment been created that needs a healthy dose of resources to improve and see positive outcomes on how the Government buys, and also how those purchases are conducted.

Thursday, September 17, 2009

When the Lack of Oversight on Government Contracts Has Dire Consequences

One of the most blatant examples of contractors running amok with little to no oversight has come to light recently as a result of an investigation and subsequent report by the Project on Government Oversight (POGO). This report was created based on information from current and former employees of ArmorGroup North America Inc., hired to protect the U.S. embassy in Afghanistan. The report and subsequent information provided by POGO is something that one would fine by cross pollinating a Stephen King novel with Lord of the Flies, where security contractors were forced to participate in a variety of lewd activities, hazing, and other lascivious acts or risk losing their jobs. Although the behavior by ArmorGroup personnel is inexcusable and leaves ones bereft for words, the real issue is how this happened, and how it could have been prevented.

According to the POGO report, concerns about the ArmorGroup contract have been addressed by the State Department, which administers the contract, for over two years. These concerns repeatedly addressed a pattern of security violations, a pervasive breakdown in the chain of command, and discipline and morale issues.

…In July 2007, State issued a "cure notice," advising the firm of 14 specific deficiencies that were endangering the performance of the contract, including failure to provide an adequate number of guards, relief personnel and armored vehicles. Officials sent another cure notice in April 2008. But two months later, State decided to extend the contract for an additional year...

…This environment has resulted in chronic turnover by U.S./ex-pat guards. According to the State Department, "nearly 90% of the incumbent US/Expats left within the first six months of contract performance…

...Problems with the contract, particularly concerning staffing, persisted and in September 2008 the department threatened to terminate it. But in July, State renewed the contract through 2010, with an option to extend it through 2012. The contract is worth $187 million annually…

The report further examines the utter breakdown in State oversight, with toothless warning and notifications that allowed Wackenhut Services, Inc., the parent company of ArmorGroup, to continue its abysmal performance with no real consequences. Over the last two years, this contract has seen possible misrepresentation by Wackenhut executives to Congress through sworn testimony refuted by POGO, security and communications breakdowns, and creating an environment that fuels resentment and volatility that has far reaching effects on our mission and foreign perception in a culturally sensitive part of the world.

Other questions brought to bear by the report is the inherently governmental function of providing security in a combat zone by contractors, which carries the risks of cost-cutting and profit motive, personnel issues, and rules of engagement and accountability by contractors. These types of questions still remain unanswered, although they should have been answered by State years ago through investigation and proper contract management of security contracts in Iraq (e.g. Blackwater).

Although it is expected that State will finally terminate the ArmorGroup contract, the issue remains on how these oversight gaps will be filled in the future. Although State continues to take the issue very seriously in light of the POGO report and will continue to improve its oversight of State security contract overseas, the bigger question is the inherently governmental nature of providing security in a combat zone. As POGO recommends, the language in the 2009 National Defense Authorization Act should be clarified and strengthened to prohibit reliance on private security contractors for inherently governmental functions, and to include protection of the diplomatic mission in a combat zone as being inherently governmental. I do not believe this function is something that should be outsourced, as the most professional and dedicated security force in the world should go back to performing this function; the U.S. Marines.

This also brings into question appropriate disciplinary action against Wackenhut and ArmorGroup, as the nature and severity of their actions warrant disbarment and possible criminal proceedings against those employees who violated the law in the “performance” of their duties against other employees and local nationals. Only when the Government takes performance and oversight seriously, and holds contractors responsible and accountable for their actions, will this type of activity no longer take place. I do believe that the vast majority of contractors act in accordance with ethics rules and uphold high standards of integrity, but am troubled by the small percent that do not and corrupt the government contracting process with little or no accountability. Past performance has to be made a much stronger evaluation factor for future work, and should be the central focus of award guidelines in light of a renewed push for tracking past performance data. Nonetheless, strong contract administration and oversight are ultimately the key to ensure performance on contracts. If it were not for whistleblowers risking is some cases their safety, would we have known about the abuses at Abu Ghraib prison in Iraq or ArmorGroup in Afghanistan?