Saturday, November 14, 2009

Increasing Competition Means Raising the Bar on Value

As part of the Obama Administration's call for reform of the federal acquisition process, the Office of Management and Budget (OMB) recently issued a second set of memos with guidance on increasing competition for better outcomes. These memos are a continuation of original OMB guidance released in July, which outlined ways to improve acquisition processes, make better use of information related to contractors' past performance, and balance the blended contractor and federal workforce. These initiatives are designed for agencies to achieve a 7 percent cost savings of their baseline contract spending by fiscal 2011, with overall expected savings of $40 billion annually.

In an effort to achieve these goals, OMB guidance states that improved acquisition outcomes through increased competition can be achieved by focusing on requirements and outreach to potential vendors. While this guidance can certainly go a long way to improve acquisition outcomes, OMB has fallen short in providing the specificity agencies need to execute these initiatives. Moreover, OMB also fails to mention one of the fundamental weaknesses in the current state of competition, which is to improve the quality of the vendors competing on federal contracts. OMB falls into the trap of focusing on quantity, which only exacerbates the competition problem by continuing the fixation of focusing on symptoms and not the disease. It does not help the government be a more strategic buyer nor promote innovation.

Many firms that offer innovative solutions are often brushed aside by the archaic decisions by agencies that award contract vehicles acting as gate keepers for who can compete on federal contracts. These processes are designed to treat all firms the same, but therein lies the problem. By restructuring these processes, improvements in competition quality can be realized, as the government can review the experience of firms and what they bring to the government in their totality. If higher quality businesses could qualify for such contracting vehicles and opportunities to compete, value could increase and costs could decrease.

The guidance also fails to provide clear instruction on collaboration, where real opportunities exist to leverage tools and technologies to exchange information with industry and improve knowledge transfer. The ability to leverage Acquisition 2.0 methods, as piloted in the Better Buy Project, demonstrates the potential of these initiatives that can and should be rolled out government-wide in an effort to standardize and improve how the government buys. These collaboration tools can help execute on the OMB guidance, which is to better understand the market, improve requirements development, and create opportunities for increased competition. This will ultimately set the stage for creating a performance-based acquisition construct and allow for a focused approach on oversight and accountability. Acquisition leaders who view these tools and techniques as unrealistic or time-wasters are not only missing out on real opportunities, but also possibly preventing the transformation of the acquisition process into a world-class, 21st century buying organization that these tools could help realize.

Only through the improved caliber of the supplier base can increased competition and quality be achieved, and it is the responsibility of government leaders to not only provide guidance, but the tools and techniques agencies need to accomplish the President's goals for improving acquisition outcomes.

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