Monday, May 24, 2010

Blended Workforce Done Strategically is Right Sizing

The insourcing debate seems to have heated up this month, as competing forces are all at play and all are trying to be satisfied. The Office of Management and Budget (OMB) continues to provide guidance on inherently governmental functions, public comments continue on the proposed rules, and groups to help small business seem to forming in an effort to organize resistance to “non-strategic” insourcing that will disproportionally affect their business and possibly their survival. 

Along those lines, recent testimony talked to the difficulties and challenges that result with strategically insourcing:

"In many cases, overreliance on contractors may be corrected by allocating additional resources to contract management," said Daniel Gordon, administrator of the Office of Management and Budget's Office of Federal Procurement Policy, in prepared testimony for the Senate Homeland Security and Governmental Affairs Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia. "In other words, rebalancing does not require an agency to insource ... provided the agency can hire, retrain or reassign sufficient federal employees with the requisite skills in managing contractors to maintain control of their activities."

Accordingly, Administration officials and Congress appear to understand that the effort to “rebalance” the workforce must be done deliberately.

…"Rebalancing the federal workforce will not simply be a job conversion process," said subcommittee Chairman Daniel Akaka, D-Hawaii. "This effort will take considerable workforce planning to determine what federal positions should be created and what contracting functions eliminated."…

…"We must ensure that the goals we are asking agencies to achieve with respect to insourcing can be achieved using current hiring tools," said Sen. George Voinovich, R-Ohio. "If not, the administration or Congress must supply agencies with sufficient flexibilities to get the job done."…

Although the debate has many aspects and stakeholders across the Government, it is the small businesses and firms affected that seem to be lost in this debate about insourcing the right way. Where is the strategic nature of these actions?

Although a provision in the fiscal 2011 Defense authorization bill, approved by the House Armed Services Committee, would prevent the Pentagon from establishing "any arbitrary goals or targets to implement DoD's insourcing initiative," it does not seem that DoD is taking this measure seriously.

Earlier this month, Professional Services Council President Stan Soloway, sent a letter to Defense Secretary Robert Gates to raise concerns that the Pentagon's plan to bring thousands of contracted positions back to the Pentagon has gone off track. I am not sure if there has been a response yet by the Secretary or DoD, but there seems to be lack of any concerted effort to show demonstrated savings or any cost analysis that warrant the actions or create the best deal for the taxpayer.

…"From a budgetary perspective, the [Defense] components are simply eliminating fully burdened contract costs with less than fully burdened personnel costs," Soloway wrote. "Moreover, market competition, which the president has repeatedly identified as the key to improving performing and reducing costs, is not even being considered in DoD's and the components' planning. Rather, for work that does not fall into the categories you identified as being critical to the department, DoD is substituting a sole-source model for a competition-based model of management."…

Rebuffing these claims of improper costs analysis has been Christine Fox, director of Defense's cost assessment and program evaluation. Ms. Fox issued guidance earlier this year for comparing the labor costs of civilian and contract support. Falling short of the guidance, however, are a number of costs that should be attributed to the government, which include training and development according to Mr. Soloway. The guidance also cites the expenses incurred by DoD for contract administration and oversight, but does not include similar information when the work is performed by federal employees. Why the disconnect? An oversight or trying to fit a position into an argument?

The insourcing pressure at DoD is intense, as Secretary Gates has called for DOD to reduce the number of support service contractors from its current level of 39 percent of the workforce to its pre-2001 level of 26 percent, with acquisition positions being the largest increase.

…"As a result of this lack of process discipline, we are witnessing thousands of contractor employees, many of them members of a union and/or employees of small businesses (some of which face the potential of literally going out of business), having their jobs terminated, in many cases leaving contractor employees without work," wrote R. Thomas Buffenbarger, president of the International Association of Machinists…

There are many competing forces at stake, but It is unfortunate that strategic analysis seems to have gone by they wayside to fulfill policy that benefits narrow interests and seems to be opposed to what is in the best interest of the taxpayer and the mission.

Sunday, May 9, 2010

Performance Based Contracting Needs a Continued Push through Acquisition 2.0

Why has it been so difficult to execute performance-based contracting? Certainly the complexities of modern-day service contracting play a part, but as Steve Kelman, former administrator of the Office of Federal Procurement Policy points out, it has been a frustrating and slow moving initiative making little headway in proper execution of these methods.

…There is one obvious reason for this: If you haven’t included performance metrics in your contract, it involves a lot of work to change it into a performance-based contract when you go to recompete it. And there are other reasons. Sometimes it is genuinely difficult to develop relevant performance metrics for contractors, just as it is for in-house activities — for example, what are relevant outcome-based metrics for State Department diplomacy? Finally, there is the sometimes vexing issue of changing and adding to performance metrics during the life of a long contract as technology and user requirements change…

The issue is beyond metrics, as it starts with understanding the outcomes and objectives of what performance-based contracting is all about. It requires a different mind-set, a different set of skills and capabilities, but most important, it involves understanding that culture is probably the biggest barrier of all.

The tools of the Acquisition 2.0 community can have a role in changing this culture, as one of the central tenets of this methodology is about collaboration, specifically between industry and the government. Using initiatives such as the Better Buy Project, outside parties, as well as those inside the government, can add value to the dialogue:

…Program managers need to recognize that some of the things that add to the time it takes to get a contract awarded are good investments that ensure faster and better execution of the contract in the long run. In that case, the evidence is overwhelming that using performance metrics — whether for in-house or contracted activities — can improve performance by motivating and focusing employees and facilitating feedback, which is a necessary tool for organizational learning. We need to bring those benefits to contracting…

Of course, determined leaders acting as change agents will always be needed to push for new ways of doing business. Deborah Broderick, the FBI’s new senior procurement executive, seems to understand these responsibilities and has taken a lead in changing the culture at FBI and its mixed track records of procurement outcomes. 

One of her approaches was to actively engage training where it counts, to help program managers, contracting officers, and the contracting officer's technical representatives in developing proper performance-based contracts with objectives at the time of actually writing the bid. This approach has allowed for innovation, and the ability to focus on outcomes. Further, the approach measures those outcomes through development of proper performance metrics and other contract provisions specific to the procurement in question and not generic metrics made for manufacturing or other boilerplate metrics that are used for the sake of speed and cutting corners. As Dr. Kelman points out, these methods will take time, and leaders must help offset the pressure for speed and sacrificing doing what is right. This pressure is often short-sighted, and may help contribute to the status quo; cost, schedule, and performance issues.

Acquisition 2.0 tools can help aggregate the ideas for performance metrics through crowd sourcing, as both industry and government know what has worked, but more importantly, what has not worked. We have to understand that performance-based contracting is not a silver bullet. However, when investments are made in these techniques, the return on that investment has the potential to be great, and go a long way in improving government management overall.