Sunday, October 25, 2009

Lessons Learned From Rapid Acquisition of the MRAP

There has been some discussion recently on a case study of shortening the procurement cycle from the lessons learned of the Mine Resistant Ambush Protected (MRAP) vehicle. The MRAP is an armored all-terrain vehicle whose purchase and desire for rapid deployment was motivated by the continuing deaths of troops in Iraq and Afghanistan resulting from improvised explosive devices or IEDs. At the time of the purchase in 2007, the Department of Defense (DoD) goal was a rapid acquisition to get the MRAP vehicles into theatre as quickly as possible, but soon became a case study in improving strategies on how the DoD can make future rapid acquisitions for faster deployment. Although the Government Accountability Office report on the MRAP focuses on the specifics techniques for why the MRAP was successful, four tactics in particular were mentioned in Congressional testimony and the report that should be the foundation for other procurements:

Agree on a plan and stick to it. At the start of a rapid acquisition, officials must assess the immediate need and determine minimum requirements for the project, said Thomas Dee, director of the Joint Rapid Acquisition Cell at the Office of the Undersecretary of Defense for Acquisition, Technology and Logistics…

This may seem straightforward, but it can be an exercise in frustration by focusing on symptoms of the disease and not the disease itself. The evolution of the MRAP design was successful in part by recognizing that no idea should be invalidated during brainstorming; a key factor in requirements development for rapid acquisitions. Further, rapid acquisitions are most successful with the implementation of information sharing and collaboration; another prime candidate for Web 2.0 tools for an Acquisition 2.0 construct.

Stay with the familiar. At the outset of the MRAP program, DOD officials decided to use only proven technologies instead of testing new ones. They also kept requirements to a minimum with a strict policy of senior-level approval for any changes…

The only way that technology implementations can be successful in general, and certainly with rapid acquisitions, is to baseline requirements and use mature technologies. Baselined requirements form the basis for all work performed on the project for which it was developed, and identifies expected capabilities. It further allows the focus to be on those capabilities agreed upon in the requirements development process, moving the project forward towards the expected capability.

Here is where one of the fundamental breakdowns occurs in technology projects across government; the inability to define requirements combined with the desire to use immature technologies (i.e. Future Combat Systems). By leveraging Web 2.0 technologies and ensuring critical stakeholders are involved in the process, defined requirements can be identified and requirements creep can be eliminated.

Require bidders to show their work. DOD’s competition was full and open, but only road-ready contractors made the first cut. That is because DOD officials required vendors to bring in their vehicles and demonstrate their solutions, which weeded out the companies that had only plans, Brogan said…

Competitive prototyping is one of the most important tools for rapid acquisition, since it requires firms to show actual capability and not just plans or a roadmap on how they expect to get there in the future. This technique was mandated by former Under Secretary of Defense, Acquisition & Technology John Young in 2007. In his memo, Sec. Young points to the main culprit in how the DoD procures systems, which is to rely on proposals on paper that provide inadequate visibility into technical risk and a weak foundation for estimating development and production costs.

Relieve vendors of some of the work, if possible. Officials made the government responsible for adding the final pieces of equipment, such as radios, to the vehicles after they were bought rather than putting those tasks on the contractor’s to-do list. That shortcut helped get the vehicles to the battlefield more quickly, said Michael Sullivan, director of acquisition and sourcing management at the Government Accountability Office...

This goes to the 80 percent solution, in which case the baselined requirements provide the maximum capability possible for rapid acquisition and implementation. This way, the incremental capability can be improved from the baseline through feedback and full end-user input. In the case of MRAP procurement, this approach saved lives, and continues to protect troops as improvements are made to the vehicle through this process.

Lastly, the documentation process can also be a hindrance to rapid acquisition. Therefore, processes outside the DoD 5000 process were developed to help speed up reviews and approvals such as the Joint Rapid Acquisition Cell (JRACs) process. However, I think see the future of rapid acquisition through further streamlined processes such as the Business Capability Lifecycle (BCL) process, which is the preferred method of technology insertion and uses best practices in governance and risk management. Again it is the Web 2.0 collaboration tools that can help further streamline processes and reduce cycle time, which will lead to improved response time, lower costs, and more rapid fielding of critical technologies.

Although the MRAP program was greatly helped through its DX designation (and thus declare its acquisition DOD’s highest priority to allow access to more critical materials than was otherwise available), it is the four critical points of the program that can be transferred to other acquisitions. Namely keeping the requirements simple, clear, and flexible, in addition to using mature technologies, are the critical success factors that should be implemented with all procurements to see better results and positive outcomes.

Sunday, October 4, 2009

Ideas to Improve Federal Acquisition and the Better Buy Project

This week saw the launch of the Better Buy Project, a joint project of the National Academy of Public Administration and the American Council for Technology-Industry Advisory Council in conjunction with the General Services Administration. According to the website: …The acquisition process represents one of the most important areas of collaboration between government and the private sector.

Unfortunately, it is also among the most complex and least transparent. The Better Buy Project is an experiment dedicated to the belief that there's a lot of room for improvement in the way government buys products and services. We're testing this hypothesis by asking for your ideas on how to make acquisition process more open, transparent and collaborative.

The best part of this project is that the U.S. General Services Administration (GSA) GSA would really like to adopt some of your best ideas. Promising ideas will be selected by GSA to be piloted on an upcoming acquisition, where lessons learned will be captured for future implementation. But that really depends on us, and the ideas we're able to produce…

To that end, I certainly will be actively involved in adding my opinions and ideas to improving the process. To improve my ideas, one of the best leaders in common-sense approaches to the federal acquisition process, Steve Kelman, wrote a blog post that discusses some of the issues I have had and will refine, in addition to some others that are worth considering. Here are five of his suggestions that deserve more attention than they are getting, with my comments and ideas for further improvement.

1. Make past-performance evaluations more meaningful.

I have stated on several occasions (here and here) that past performance needs be one of the most important, if not the most important factor in evaluations during source selection. However, improved contract management strategies are needed through training and leadership to ensure contractors are evaluated and rated in a fair and timely manner. One of the issues with documenting past performance is undue influence by contractors, who have a lengthy and cumbersome process to challenge reviews they do not like or agree with. I absolutely agree with Dr. Kelman that the Federal Acquisition Regulation (FAR) language should be eliminated that allows a contractor that doesn’t like the evaluation to appeal to a higher level. Government officials should have the flexibility and the authority to evaluate performance, and just let contractors critique the review in the file. The onus should be on the contractor to refute the bad review, and not be allowed endless appeals in an effort to ensure a review is in line with industry demands.

2. Reward vendors for suggesting cost-saving ideas.

This is one the fundamental principles of using Web 2.0 technologies to exchange information between the Government and industry. Although the FAR encourages the exchange of information with industry during pre-contract award phases, contract personnel often view this activity as undue influence or not to be encouraged. Instead, the Government continues to push unrealistic and poorly planned solicitations without thorough vetting of requirements. The ideal environment for the Government is one where collaboration tools are leveraged to effectively share knowledge about requirements during the pre-solicitation phase, where these participatory exchanges can be used to evaluate who will provide the best savings to the Government. Further, these exchanges and collaborative environment can also help transition into a performance-based contracting atmosphere where the Government can get out of the requirements development business all together and focus on needs, objectives, and mission.

3. Revive share-in-saving (SIS) contracting.

This technique works by paying the contractor, all or in part, based on the savings it generates through the contract. According to Dr. Kelman, he was not fond of what he called a “vicious defamation campaign by the Project on Government Oversight — whose officials would rather have a contract fail than see a vendor make a profit — and benign neglect (at best) from the Bush administration.” Although Dr. Kelman does not elaborate, I was not encouraged with the few attempts at SIS across Government.

In theory, this contracting method is not new or particularly innovative, but certainly a best practice of world-class procurement. My issue with this technique is what is needed to be successful; clearly specified outcomes (e.g. generating savings by eliminating inefficient business practices, conservation measures, identifying new revenue centers, etc.), clearly defined incentives and performance measures, and commitment from top management and leadership. These precursors have been an Achilles heel of Government and the acquisition community for various reasons (i.e. workforce numbers and quality, training, etc.). I believe step one is shoring up the acquisition workforce, train them, ensure the capabilities are present to execute these initiatives, and then move forward on process improvement and instituting best practice techniques in parallel to see real changes and improvements.

4. Use contests as a procurement technique.

This item is similar to competitive prototyping at Defense, and another best-in-class technique to help defray the expensive costs of large procurements, properly manage and transfer risks, and improve technological maturity for better investment decisions. The Government cannot continue to dump millions, and in some cases billions, into unproven technologies without defined requirements without clear, accurate, and realistic cost, schedule, and performance outcomes (e.g. Future Combat Systems).

5. Make successful contract management experience a promotion criterion for program officials.

Accountability needs to be the name of the game for successful outcomes. This has to come down from leadership, and to make contracting a strategic imperative for successful Government operations. Contracting touches most of operations, and needs to have the attention and investment in resources needed to fix the process, save money, and bring the acquisition workforce back to the center stage of being important players in the process of Government management. Because accountability seems to be a foreign concept, in addition to simply not having enough bodies, personnel who are not qualified are promoted and continue to experience problems managing contracts. I have often written about the need to focus on skills and capabilities in rebuilding the workforce upfront, but accountability needs to be front and center at the backend as well.

I look forward to further input by senior leaders’ such as Dr. Kelman into helping shape the direction into improving the acquisition process, in addition to the evolution of the Better Buy Project and implementation of the suggestion and ideas from this initiative. These programs will go a long way towards improving how the Government buys and manage its resources.

Thursday, October 1, 2009

With New Fiscal Year Comes New OMB Guidance

As Fiscal Year (FY) 2010 is now underway, The Office of Management and Budget (OMB) will be ramping up its guidance on improving acquisition outcomes, which includes a broad section of areas to include competition, contract types, workforce, outsourcing, and acquisition practices. I will be covering theses issues in more depth as they are rolled out, but wanted to set the table for the upcoming guidance by reviewing past recommendations and improvement actions. The first of two steps of pointed guidance for contracting cost savings came from the OMB memo late summer, outlining existing contracts and acquisition practices. I will therefore review these two subjects, as the guidance from OMB in their memo left many in industry flat for the lack of details, and many in Government with the lack of direction that they desperately need and were hoping to obtain from leadership. My take is that the memo created a scenario of asking for short-term objectives with long-term guidance, creating somewhat of a mixed message structure and raising more questions than were answered.

In the July memo, OMB has asked agencies for a 7% contract spending reduction in FY 2010 and 2011, with the overall goal of $40 billion a year in net savings through better acquisition management and contract practices. Immediately, in my mind anyway, the questions raised and not addressed are how did the Administration come up with the figures? What analysis was done? Where is the transparency? Also, what investments in resources are needed to realize these savings? The logical solution is to make agencies accountable for reshaping their acquisition processes and refining their strategic plans to meet these objectives. However, many organizations find themselves in the unenviable position of either not having a plan, having poorly written plans, or more importantly, not having the resources and commitments from leadership to perform this important function. Most acquisition offices that I know and have spoken with would love nothing more to perform these important strategic activities, but the reality is that they are severely stretched thin, in both personnel and resources, with procurement velocity the only activity that can and must occur. Acquisition has to first become a strategic imperative at an organization; to be folded into the performance goals that are also being rolled out by OMB. First thing is first, and I think this dichotomy will cause more problems than it solves.

Since procurement as a strategic activity is a difficult if not foreign concept in the current acquisition process, many of the recommendations made by OMB will fall on deaf ears unless strong, active leadership executes on these initiatives. Let’s take a look at the recommendations as they were made by OMB one-by-one:

(1) Ending contracts that do not meet program needs or projects that are no longer needed

Does this also mean that Congress will stop funding pet-projects in their home districts; the ignominious and omnipresent earmarks or “pork barrel” projects? Doubtful, since Congress is under enormous pressure from an army of government contractor lobbyists and re-election always on the horizon. Further, my hope is that agencies do not take the “termination” guidance as a mandate, since the victims of those activities will more than likely be easy targets with little inclination and resources to fight back; small businesses. A thorough analysis of contract activities, return on investment, termination costs, and other similar variables will need to be analyzed through a prism of contract, budgeting, and program management; critical skills that are in short supply across Government.

(2) Building the skills of the acquisition workforce and recruiting new talent so as to negotiate more favorably priced contracts and manage contract costs more effectively

This is a long-term goal, and the most important one as the common denominator breakdown in the acquisition process; the lack of sufficiently, trained personnel. Government wide initiatives are already under way to shore up numbers, but I have yet to see coherent, strategic plans to build capability and skills, a much more important objective than numbers alone. I do know the Office of Federal Procurement Policy (OFPP) is working with agencies to develop these plans, but also believe the lack of an Administrator is hurting the efforts, with significant weaknesses in communicating these strategies and helping shape the policies and guidance that will help to alleviate workforce personnel issues. I hope that the nomination of Daniel Gordon, who has served as acting general counsel at the Government Accountability Office since 2006, gets expedited, as he is desperately needed. Nonetheless, I do not believe workforce issues will be a short-term activity to help realize the cost savings objectives, as the hiring process is too slow, and the training too substantial and lengthy for new acquisition personnel to have immediate impacts on the process. Changing that paradigm is another topic altogether, and does merit further discussion.

(3) Developing more strategic acquisition approaches to leverage buying power and achieve best value for the taxpayer

No question leveraging buying power is an important activity that needs to be properly planned and executed to see real savings. I believe this initiative is one the most value-added activities that needs to be a primary focus across Government to meet cost savings goals outlined by the OMB in the next 24 months. The issue here is a coherent strategic communication strategy, across multiple agencies and across multiple organizations so that the left hand knows what the right hand is buying, but also knows how they are buying, and why. The simple answer here is that working groups across Government need to continue working through these issues, conduct a thorough spend analyses, and eliminate redundancy to save on contract costs by increasing efficiency, cutting wasteful and redundant contract vehicles, and only purchasing from trusted vendors that offer the desired discounts and have a track record of meeting cost, schedule, and performance goals. Elimination of waste at buying centers saves on contract and administration costs, and could be done relativity quickly without the need of legislation. This is simply a good business practice, and is being conducted by commercial firms as a primary strategic imperative to save money and lower costs.

(4) Increasing the use of technology to improve contract management

I do not think there is an argument or question here about how technological innovations has drastically improved productivity and helped lower costs. However, the issue here is what technologies need investment as they pertain to reducing contract management costs. I believe the answer lies in the potential of Web 2.0 (or Gov 2.0). The power of Web 2.0 strategies is the improved exchange of information, which is critical and at the heart of improving transparency, quality, and accountability, all themes shared by the Obama Administration. Further the use of Web 2.0 technology can help improve communication and knowledge transfer between stakeholders, having a dual effect of increasing quality, and lowering costs. These tools can be very helpful during pre-contract award, where Government and industry can communicate on needs, build solid requirements, properly plan and budget, and create realistic cost, schedule, and performance objectives with corresponding metrics for successful administration and oversight. The impacts on long-term performance and lowering contract costs could be impressive and significant, but also timely.

(5) Reengineering ineffective business processes and practices to reduce cost to spend

Another important concept is improving the processes of acquisition, which I also see as long-term goal requiring short-term planning to see real change and reduce costs. One the best methodologies to accomplish this goal is Lean Six Sigma, where improvements are done in a structured, project format. This methodology follows a prescribed mandate and structure, which would be the reduction in contracting costs, and ensures that important issues are analyzed using a sound and consistent methodology. The beauty of Lean Six Sigma is that this methodology can avoid the pitfalls common to efforts that address symptoms of a bad process, rather than causes, of problems and enforce the use of data in decision making.

What is further important about this methodology is the consistency of how the processes are analyzed; which helps effectiveness of the process improvement project teams and allows for the sharing of project results across the organization. Using this methodology, along with Web 2.0 tools for knowledge sharing and information flow, also helps apply a disciplined approach to configuration management and feedback mechanisms to ensure that project team recommendations are implemented and tracked. Again this initiative is dead in the water without active commitment from leadership, which requires hands-on participation and creating a culture that actively supports process improvement. Further, leaders need to be change agents, and help and drive the message that change is good and can help complete the mission in a more effective, less costly manner.

The amount of work that needs to be done to create a world-class procurement process in Government is a long-term objective, but has been also put into a short-term bucket with cost savings targets that will be taken as a mandate by agencies. As we move into FY 2010, I look forward to continuing to see leadership in action, and change for the better.