The Acquisition Corner

Contract Management 101: A FFP contract is not T&M

2012-02-03T18:25:00.001-08:00

One thing that I have seen a lot of is the misapplication of performance-based contracting tenets, especially when it comes to requirements. Basically, some requirement offices slap “Performance Work Statement” as the title, delete “Statement of Work,” and maybe add some metrics and measures. Voila, a “performance-based contract” is born.

However, the contract line item numbers (CLINs) is really where I see performance-based acquisition (PBA) fall off the tracks. This text is straight out of a recent solicitation for a services contract on Federal Business Opportunities, commonly referred to as “fedbizopps” or FBO:

The Offeror shall provide their proposed firm-fixed price for this project by completing the CLIN Listing, in its entirety, as provided in the RFP. Additionally, the Offeror shall also provide a basis for the price, identifying all prospective labor categories, showing labor rates for all labor categories and discounts offered. (The Offerors shall also show profit, and any overhead costs if not included in the labor rate). Lack of detail may result in a rating of a higher risk by the Selection Authority in the selection process.

Significant discounts are considered highly desirable. Discounts offered must be explicit. (There is no page limit for this factor, however Offerors are encouraged to only provide that cost and pricing data mandatory to a comprehensive review and that data which would allow the evaluation team to determine price reasonableness.)

Certainly great material to include in my classes when I teach PBA, Contracting Officer Representative (COR), or FAC P/PM courses on how not to structure CLINS under a PBA, or for a Firm Fixed Price (FFP) contract.

For starters, why do you care about this information? You shouldn’t. As a project manager (PM) or COR, you care about performance. Period. The other contract management efforts that will be expended on managing labor rates, labor categories, expenditures, etc. is inappropriate for this contract type, it adds extra administration and complexity into the contract management function, and takes the focus away on what you really care about; performance.

Further, the main objective of a FFP contract is to transfer risk to industry, with the assumption on a FFP contract type that the requirements are clearly defined and baselined. This model wants to eliminate that risk premium, and further drive prices down by threatening to add risk if these factors, which you shouldn’t care about, are not deemed “reasonable?” Protest anyone?

This model is creating a culture of “buying in,” deemed an improper business practice per FAR Subpart 3.5, but now a necessity as a result of budget cuts and the pressure to cut contracts.

PBA is about performance, and incentivizing industry to exceed requirements through a strategic partnership of trust and communication for both parties to excel. Let’s focus on that, and leave the administrative burdens where they belong.

Can Communications Prevent Protests?

2012-01-22T18:12:00.000-08:00

I was interested in hearing from both the vendor and 1102 community on the "triggers" of a protest, and if any best practices could be conducted to avoid a protest or avoid a protest from being upheld.

The post on GovLoop and LinkedIn elicited some great feedback, although it was interesting to see the source of the comments (e.g. industry or government). Although the comments from industry focused on debriefs, government commentors focused on process. Nonetheless, a few best practices that government should exercise were understood by all:

Keep the evaluation as simple as possible;
Tell the offerors exactly what you are going to evaluate;
Evaluate exactly what you told the offerors you were going to evaluate; and when the source selection is over,
Tell the offerors exactly what you did evaluate (and ensure it's what you said you were going to do---no more, no less).

If the playing field is kept level for all players and the government has a reasonable rationale for source selection decisions, a protest may not be avoided, but the government will "win" by having the protest denied.

Nonetheless, in today's budget constrained environment, more companies are vying for fewer available government dollars, resulting in more protests. In the past, companies may have been hesitant to file a protest because there was another opportunity coming up or concerned about the relationship with the agency, but now the mentality is "throw something against the wall and see if it sticks."

Here is the where the divergence exists, in regards to debriefs. Industry continues to complain about the seemingly lack of transparent and quality debriefs, or being told no debriefs because they are not required.

Questions:

Would you say your agency conducts transparent debriefs that encourage relationships and communications?
Are your agency's debriefs described as hostile and difficult by industry?
Are protests at your agency going up, and if so, why do you think that is?
If protests are going down or have been steady at your agency, what can you attribute to this decline or rate?

Contract Management not Sexy, but Necessary

2012-01-08T14:48:00.000-08:00

A recent Defense Department inspector general report found that contracting officers and their representatives (COR) at the U.S. Army Medical Research Acquisition Activity need to step up their game when it comes to improving contract performance and acquisition outcomes.

The report shins a light on a reality hitting many procurement offices, where the intense workload, combined with a lack of enough skilled and trained 1102s, is creating an environment where quality is being sacrificed at the expense of performance.

Just taking a look at the topic headers is an eye-opening example of a procurement organization that is in need of serious improvements:

Sole-Source Awards Not Adequately Justified
Price Reasonableness Not Adequately Determined
Quality Assurance Surveillance Plans Not Prepared
Inadequate Quality Assurance Surveillance Plans
Contracting Officer’s Representative Acceptance of Deliverables Not Documented
Language in Contracting Officer’s Representative Letters Too General
Invoice Review Needs Improvement

The recommendations are also somewhat disturbing, in that they basically outline what needs to happen to realize improvements and work to improve this organization. Mainly, the recommendations state that contracting officers and CORs need to do their jobs, since some of the responses the IGs received where common in this environment: lack of time, resources, and a focus on production.

Simple tools, such as checklists, can be created to ensure that ALL the requirements of a contract action are achieved. This may seem simplistic, but following the checklists, and having them executed through automated contract systems and solutions, will ensure that the proper steps have been conducted. Basically, contract actions can not bee executed until these issues have been eliminated by ensuring the proper steps an actions by procurement personnel have been followed and verified. This is ultimately creating an environment of accountability, and hopefully improved quality.

I don't have time is not a legitimate excuse, not under any circumstance. However, leadership needs to understand the needs of the organization, provide the proper level of oversight, resources, and training to the procurement staff, and ensure that things are being done properly.

Best practices are plentiful, and they need to be acted on.

How Does a Small Business Get on an IDIQ?

2011-12-27T09:55:00.000-08:00

Some of the trends that have been written about in 2012, and beyond, is the government relying more and more on issuing task orders via IDIQ vehicles, as opposed to full and open competition and the normal acquisition process.

Although many courses and consultants discuss winning these task orders, little information is available on actually winning the IDIQ, and as a result, winning the ability to even compete for a task order.

What is the best way to research these IDIQ opportunities?

How does a small business get on these IDIQs?

What is the best strategy to position yourself to win the IDIQ?

Contractors Are Mission Critical, Not a Necessary Evil

2011-12-12T16:50:00.001-08:00

Former head of the Coalition for Government Procurement Larry Allen, now President of Allen Federal Business Partners, wrote a spot on article recently calling out the absurdity of the current environment of anti-contractor sentiment running rampant throughout the federal government.

Recent examples of these activities, among many, includes the Office of Management and Budget’s recent directive to ramp suspension and debarment operations, and the Air Force’s actual debarment of Iron Bow Technologies. Although this debarment was later overturned, it seems that this action was a direct result of the “get tough” policies.

Of note was the actual reversal, as a direct result of the Air Force and Iron Bow working together to address the issues leading up the debarment, and mitigation strategies to prevent any future occurrences. In other words, actions that should have occurred without the need of the seemingly knee-jerk debarment by the Air Force.

Further exacerbating the “greedy contractor” paradigm, and as noted by Allen, is Shay Assad, the director of pricing for the Department of Defense, announcing a more stringent pricing policy with contractors, in addition to the directions to cut service contracts by another 20 percent. Now with the Senate passing a Defense Authorization Bill that caps executive pay for contractors at $400,000, it seems that senior federal officials feel the need to squeeze the vice even further.

With the government continuing to freeze pay and hiring in critical areas, in addition to offering early buyouts, the expected outcome can only be further erosion of performance. With fewer government personnel, in addition fewer qualified and trained personnel since training is also getting cut, waste, fraud, and abuse will keep the Government Accountability Office (GAO) and Inspector Generals gainfully employed. On second thought, GAO is also cutting staff. Perhaps the Commission of Wartime Contracting will reopen its doors in the near future to report on billions in waste, and just drop the Wartime from its title.

Contractors perform vital functions, and more pressure will be put on industry to perform more with less. However, it is being done in an environment where profit margins are being cut to the bone, lowest cost is now the only variable, and many small businesses are in danger of extinction with cuts to contracts, and subcontracts.

The fact is this: Contractors perform messy services that no one else wants to do. They fix things that break in the middle of the night. They are absolutely essential to the efficient running of the enterprise. They should be treated with the respect commensurate with the role they play.Mistakes happen, and bad actors exist. But it’s past time to give credit where it is due.

We would be better served working together, and stopping this animosity.

GAO and Success: Acquisition Workforce the Common Factor

2011-11-23T06:51:00.001-08:00

With the collapse of the Congressional “supercommittee’s” budget deal on deficit reduction, federal managers, and their industry counterparts, are being told to prepare for the worst , as possible mandatory cuts are on the horizon for 2013.

In the mean time, federal managers will need to continue to find ways to save money and do more with less. To help programs succeed, the Government Accountability Office (GAO) recently came out with a report that highlights best practices for IT acquisition and execution. Combined with the Office of Management and Budget's 25 point IT reform plan, these two products create a powerful blueprint for what programs should be doing to improve outcomes, and be considered successful by meeting cost, schedule, and performance goals.

The one common denominator for program success is a steady, skilled acquisition workforce to execute these other principals. This should not come as a surprise. However, what was surprising is that the Defense Information Systems Agency's Global Combat Support System-Joint program did not list this fact as a critical success factor (similar to 6 out of 7 dentists recommend flossing for healthy teeth? Who actually goes to that one dentist?)

Putting aside the other factors, having a skilled, trained and stable acquisition workforce is critical to success in any program, and more than now than ever. The acquisition workforce, especially in contracting, must be able to act as business advisors and really lead the way in helping shape sound business practices. This includes pre-acquisition through contract execution. The program manager, in addition to the use of Integrated Program Teams, also are critical to ensuring that everyone is building requirements properly, proper contracts and metrics are in place, and then of course executing using the sound business practices categorized in the GAO report.

Regretfully, these budgets cuts and contract reductions can only be a detriment to implementing these best practices. With hiring freezes, reducing training budgets, and mandates to cut services contracts (such as acquisition support contracts), fewer opportunities will exist to improve performance. Coupled with the "low price at all cost" contract selection methodology, a thousand cuts are on the way to an environment of even further reduced performance, in addition to more fraud, waste, and abuse.

GAO and Inspector Generals will be quite busy in the next 24 months, but reports of program success will more than likely be a distant memory in this future timeframe.

Are One-on-Ones Necessary for Market Research?

2011-11-19T14:48:00.001-08:00

As the government looks for way to save money and improve performance, the topic of adopting best practices for IT acquisitions continues to be at the forefront of the conversation. However, implementing those best practices continue to be challenging, especially in the thought process when comes to one-on-one sessions.

When it comes to market research, the government continues to struggle to open the door to industry, thus robbing itself of improvements on the overall acquisition process. Specifically, requirements continue to be developed in a vacuum, exacerbated by poorly defined stakeholders analysis and moving forward without understanding needs.

In the commercial sector, the closer firms get to signing a contract, the more collaboration occurs. However, the opposite is true in the federal sector. Incoming contractors should be given all the information that is not proprietary to the incumbent to be successful, including budgets and prices currently paid for incumbent services.

However, some government procurement officials disagree. According to these officials, it is up to industry to respond fully and openly with responses to an RFI and during an Industry Day. Further, it is simply a matter of time versus value, as industry will simply use the opportunity in a one-on-one to strengthen their position during capture management by trying to slant government requirements in their direction.

The more government communicates with industry, the more likely the government will get quality services at realistic prices. Although it has almost become standard practice for government buyers to hold an Industry Day, it is assumed that no further communications with industry are necessary. Further, many buying offices simply will not conduct one-on-one meetings with vendors because of incorrectly assuming that favoritism and ethical issues are land mines that should be avoided at all costs.

Questions for industry and government:

How do we work together to change these perceptions?
Are one-on-ones worth the time and effort, from both perspectives?
What other tools are available to increase collaboration?

Your Taxpayer Dollar$ at Work: Volume III – Muffin Edition (Update)

2011-10-29T11:11:00.001-07:00

So the $16 muffin is back in the news as the Department of Justice (DOJ) Inspector General made updates to its previous report by correcting the record, and bowing to the sensationalist media coverage that yes, the muffin itself did not cost $16.

Correcting the record is a good thing. However, what the sensationalist media forgets, and what seems to be ignored, is the fact that the DOJ, in addition to the federal government itself, is not doing enough due diligence to ensure that the these expenditures are in the best interest of the organization or that they are being good stewards of taxpayer funds. The report correction goes on further to say that all-inclusive lunches cost $76. Will this be the subject of the next series of reports?

Putting aside the full court press of public relations activity by the hospitality industry, how does government know they are getting the best value? Having done this myself over the years, I have always tried to negotiate better pricing for conference space, refreshments, meals, etc. by playing venues off one another to get the best deal for my needs. I do not doubt that the venues are being flexible to get my business, but how can the government buyers say with a straight face they too are getting the best prices? Further, what options are being explored to find more cost effective means of holding these conferences and training (i.e. videoconferencing, other federal spaces, etc.)?

It is this willful ignorance that explains why we can continue to expect the inability to create budgets, more focus on nonsense, and putting aside effective governance and accountability for the foreseeable future.

Performance Outcomes: Judgment Day is Coming

2011-10-02T12:59:00.001-07:00

So Fiscal Year (FY) 2011 is now in the books, and the new government FY 2012 begins. I don't think anyone can argue that this end of FY was one of the most challenging end of FYs in recent memory, with budgetary issues and Continuing Resolutions adding to a sense of doom in industry, if not outright confusion and desperation in most government procurement shops. Many of the acquisition divisions at federal agencies did not have a clear sense of what the budgets and fiscal environment for the rest of the year would be, thanks to a dysfunctional political system and a Congress willing to sellout stable government operations in the name of political sensationalism and outright partisanship at the expense of the nation.

From what I have seen over the last few months and winding up this FY, coupled with the bleak fiscal horizon in the next few years, government operations are in serious trouble. Frankly, if you think government operations are bad now, you ain't seen nothing yet. The Government Accountability Office, Office of Management and Budget, and other watchdog groups and organizations can expect their workload to increase to the point of trying to move a mountain with a shovel.

One only need taking a look at what is happening with alarming regularity, and will no doubt continue as the government continues to find ways to save money and reduce the amount of contractor support and contracted dollars; low price is the only price.

Granted low price, despite illusions of "best value" has always been around, things seem to be spiraling out of control. I have seen with alarming frequency contracts be awarded to low-priced bids, at prices that are ridiculously low compared to both other bidders and government estimates. Sometimes 20% or more below. So much for price not being the most important factor. Price reasonableness and realism? Looking at the bottom-line figure is not enough. Sometimes performance costs money, and should actually save money in the long-run. That is a concept seemingly lost on procurement officials right now.

Although "buying in" is a prohibited practice according to the Federal Acquisition Regulation, it has now become a sanctioned activity. Expect to see many more fixed priced contracts, despite the requirement, in addition to modification after modification. Performance will be an afterthought, as multipliers in industry (the final amount that a contractor bills the government for a dollar of labor, often referred to as “loaded” cost) get lower and lower. Anything less than 2.4 is considered inexpensive; with 2.4 – 2.7 the norm and anything greater than 2.7 considered expensive. I have heard of firms lowering their multipliers to 1.9 to be competitive. Competitive? How can you be profitable?

Size is the answer, as only very large firms can absorb that type of contract strategy. Make it up in volume, and the modification circus that poorly written and "cheap" contracts is also another outcome. This strategy simply decreases competition, especially for small businesses, and will result in even further poor contract performance. Just what we need. Forget about even developing proper requirements, as that is now a cost driver.

So how to you staff these contracts if you are "lucky" enough to win a contract? Answer: on the cheap. Hire know-nothing consultants straight out of college or inexperienced staff to support the requirement, pay them rock-bottom salaries with little if any benefits, and put them through the sausage grinder for a couple of years. Repeat the process. How will government get any decent performance?The current environment and abilities of the acquisition workforce are not conducive for governance and oversight as it is. Now you're going to expect them to provide even more?

Industry: How are you planning to succeed in this environment? What adjustments are you making? What experiences have you had in this "new" low-cost paradigm?

Government: What are you doing to ensure performance with such a low-price? What price reasonableness and realism checks are being done? What technical acceptability checks are being done?

Your Taxpayer Dollar$ at Work: Volume III – Muffin Edition

2011-09-23T10:48:00.001-07:00

This week's news of the absurdity of waste, fraud, and abuse across government comes from the Department of Justice (DOJ) Office of the Inspector General (OIG) Audit Division. Their report, titled Audit of Department of Justice Conference Planning and Food and Beverage Costs is a follow-up to a previous September 2007 which examined expenditures for 10 major DOJ conferences held between October 2004 and September 2006. That audit found that DOJ had few internal controls to limit the expense of conference planning and food and beverage costs at DOJ conferences. This report highlights the same story, and little to no corrective actions by DOJ to mitigate this waste. Makes you think fondly of the $50 hammers and $500 toilet seats of Defense back in the 80s, doesn't it?

Of course politicians and the media jumped on the story for easy press, zeroing in on the $16 muffins and nearly $10 cookies served to attendees at one event. Emily Ingram of the Washington Post created a good competitive landscape of the muffin offerings in Washington, and only at government conferences will those prices apply.What is even worse is that DOJ officials basically stated they thought they were addressing the issue:

...Justice officials did not dispute most of the findings. The department did not offer an official to speak by name, but a spokeswoman who was not authorized to comment publicly said the agency “agrees that excessive spending of the types identified in the report should not occur” and has taken steps to prevent it. She said conference costs have been cut this year as part of an effort to curtail nonessential spending, though she could not specify an amount.

Justice Department officials gave auditors a variety of explanations for the expenses, saying consultants they hired to help plan events had valuable knowledge and that the department had done its best to control costs. Officials from one Justice office said they thought they were saving money by serving muffins and other snacks instead of full meals...

You're not saving money DOJ, you're wasting it needlessly.

The OIG recommendations are pretty straight forward: itemize costs and ensure you have adequate price analysis to ensure "best value." These controls need to go much further by commoditizing these expenditures, of course itemizing all costs (both direct and indirect), and ensure no surprises and real best-value. There are many other quality, yet reasonable, venues that can accommodate these functions other than the Ritz Carlton.

Adequate market research must be conducted, lessons learned applied, and opportunities for strategic sourcing and leveraging the buying power of the government must be utilized. Further, perhaps this is an opportunity to consolidate BPAs across government and further leverage buying power, in addition to possible using reverse auctions to drive down prices. Cost savings of these types of expenditures are really low-hanging fruit, akin to eliminating free coffee or soda in the break room, which makes this report even more shocking at the level of waste rampant in government.

We obviously have a long way to go in reducing spending, although a thorough spend analysis of these commodity-type of expenditures could probably find millions, if not billions, in needless waste and efficiencies. The opportunities to save money are everywhere. Just look in the snack basket apparently.

How Do You Stop A Contracting Disaster?

2011-09-10T21:41:00.001-07:00

In light of the new inherently governmental rules that have been published by the Office of Federal Procurement Policy, decision making by the government in regard to acquisition strategy comes to mind. When it comes to hiring contractors to assist in performing acquisition functions, it is very much a caveat emptor situation.

Contracting is a difficult subject, that requires expertise. There are many IT and Program Management firms that continue to receive contracts to provide acquisition support, although they do not have the competency or the skill set to provide it. They just happen to be there providing other support services, are an 8(a) so you can sole-source a contract, or see these opportunities because of the desperate need by government. So why not assist with procurements? It is just paper-pushing anyway, with little value-added service, right? Hardly.

What is happening is that IT Program Managers with a few DAU classes under their belts are making incompetent recommendations related to contract type, acquisition strategy, and requirements. Because the federal IT clients do not understand contracting, and the acquisition shops are overloaded and not providing sound business advice, the government relies on poor advice in its decision making.

Contracts worth millions, sometimes hundreds of millions, are being made in this dysfunctional environment. The government continues to bleed, and incompetent contractors continue to be paid. The inherently governmental rules allow contractors to provide guidance and advice, but little vetting of competency and skill set seems to be happening due to pressures of desperately needing support, and the need to increase contract throughput. These services, when done right, can be very critical to supporting this crucial government management mission. I am not advocating they go away, but in looking at inherently governmental functions, the government really needs to be careful what it is getting and why.

How can we honestly discuss acquisition reform when this environment exists?

Contingency Contracting Failures: It's About the People

2011-09-06T07:32:00.001-07:00

The big story before the Labor Day holiday was the release of the final report by the Commission on Wartime Contracting in Iraq and Afghanistan (CWC). According to the Project on Government Oversight (POGO), the enormous dollar volume of waste and the assumption of the over-reliance on contractors for contingency operations was the focus of the report. I very much respect POGO's work, but I respectfully disagree.

The major issue is the quality of the acquisition workforce. In agreement was Sen. Claire McCaskill (D-MO), who stated that two areas in the report that jumped out to her was the Defense Department culture and the lack of qualified and too few contracting professionals as main reasons for the waste. Although I normally focus on quality, it was the quantity on this issue that was also a major failure.

..."I think the dirty little secret that has now been exposed-in fact this goes governmentwide and not just in wartime contracting-is that if you don't have the personnel that work for the federal government, rather than increase the personnel and the costs associated with that, go out and contract," she said. "This has occurred to a large extent in the Department of Homeland Security, it's occurred in a number of places and we have been doing that while we have hollowed out our acquisition personnel. We need to make investment in government employees that know how to police this and we frankly have dropped the ball in that regard."...

What the report simply fails to address is the political realities made with these decisions. Hearts and minds needed to be won, and thus materialized the pictures in Iraq of U.S. personnel sitting a top pallets of U.S. currency, handing it out like candy to win favor in line with local cultural norms. In Afghanistan, bounties were paid to find "terrorists,"so locals sold their neighbors up the river to win favor with the U.S., make more money than they ever have before, and take over land and settle old scores. Warlords also were paid off, although sympathies to al Qaeda and Taliban forces continue to be difficult to determine. How much waste went to the enemy? Perhaps that is the $30 Billion that the report mentions in possible unaccounted for waste. Any oversight with these issues?

The realities for personnel are that contingency contracting may be one of the most difficult areas of contract management, as local customs and norms may interfere with transparency and oversight, making the glaring lack of adequate training even more difficult to comprehend. Further, how many people across Defense, State, and USAID have any formal training? Obviously not enough. It got so bad that Defense was actually considering giving every lowly grunt going into theatre some form of contract training!

Coordination and collaboration across these agencies means creating a Contingency Contracting Corps, shared among the agencies, that can perform the contingency contracting mission across the globe. They would be the "special forces" of contracting; the tip of the spear to ensure accountability to the taxpayer. This of course requires a massive overhaul in the training curriculum available to the acquisition workforce, which of course needs to include revamping services contracting and commercial item acquisition. A much broader skill set would also need to be considered, one that needs to be factored in for hiring or designation to this mission.

After 10 years of war, and the 15 strategic recommendations made by the Commission, I hope that Congress understands the issues at stake. We need to invest in the acquisition workforce, and fully fund these initiatives that can have vast returns with upfront investments. I would like to think that government management of this scale would easily be an election year issue, but perhaps it will not make effective sound bites.

Policy Reviews Will Not Improve Government Procurement

2011-08-23T20:46:00.000-07:00

As part of the continuing push by the Administration to reduce the amount of redundancy and to cut red tape through a review of existing federal regulations, agencies recently announced their final plans that describe what they will begin to consider as possible reforms to current regulations to execute on the President’s Executive Order.

The plans look at variety of issues, including increasing competition, payments to small businesses, and vendor communications with government. In addition, the final plan for regulatory reviews also includes conflicts of interest, how to properly review a company’s past performances, and working with the Small Business Administration to update rules for using set-aside contracts and small business subcontracting plans.

Although the regulatory review plans are long overdue, and definitely needed, I am not sure the fundamental issues at the heart of the problems are regulatory in nature.

In July, the Department of Defense (DOD) proposed changes to the Defense Federal Acquisition Regulation Supplement’s rules on how DOD gets a fair or reasonable price from a company when only one-bid is received. Under the proposed new rules, Contracting Officers would have to re-compete the solicitation for at least another 30 days, and would have to determine prices to be reasonable through price or cost analysis or they can enter negotiations with the company that made the bid. However, the proposed regulatory change does not even discuss a comprehensive review of requirements or acquisition strategy, which more than likely led to the one-bid in the first place.

Regulatory reviews also plan to look at FAR 15, and regulatory obstacles to vendor communications. In fact, the regulations are clear on best practices and what is permissible prior to RFP release, even though it is not getting done. Dan Gordon, administrator of the Office of Federal Procurement Policy (OFPP), plans to discuss the rules about communications, and provide more guidance via a proposed memo by the end of 2011.

This memo would be a continuation of the OFPP's Myth Busters Campaign that discusses the misconceptions about government and industry communications. The Better Government IT initiative was created to help in this effort, but it is through this crowdsourcing that best practices can be reviewed, not through a review of regulations.

Mandating the use of current policy and regulations does not seem to be a viable option for ensuring government executes on these issues. It is through concerted leadership to execute existing policy and actively solicit best practices that we can expect to see effective change.

Eliminating burdesome policies and regualtions that create barriers to entry and create costs to government and industry would be welcome, but I am not sure this policy review will be as productive as might expected by its proponents.

MythBusters Call For Participation

2011-08-14T19:55:00.000-07:00

Continuing the ongoing campaign to improve government and industry relations through the "Mythbusters" initiatives, the American Council for Technology (ACT) - Industry Advisory Council (IAC) has put up an initial list for comment and expansion to deliver on finding the "Top Ten."

Please visit the BetterGovernmentIT.org site to offer your comments and suggestions, and to vote on the top ten vendor-friendly strategies. The site will be active until 9/9! Help us help Government – visit bettergovernmentit.org and provide your input!

Your Taxpayer Dollar$ at Work: Volume II

2011-08-10T06:55:00.000-07:00

Last year I started a series to highlight outrageous cases of waste, fraud, and abuse by the federal government. In the current environment of complete political theatre and legislative dysfunction leading to budget crises, debt ceilings, and continuous resolutions, I can probably write a book with so much material. However, I wanted to focus on a truly outrageous case of fraud and waste that is shocking, even when we succumb to the worst stereotypical fears of our government.

According to a recent inspector general report at the Department of Veterans Affairs (VA), $540 million dollars annually worth of business is being awarded to companies that fail to meet eligibility requirements for veteran owned small businesses or service-disabled veteran owned small businesses. The report stated these results were extrapolated from audit results, which assumes $540 million, and could add up to $2.5 billion over the next 5 years. The report further estimates that factoring out ineligible businesses, the VA only awarded 12 percent of its procurement dollars to actual veteran owned small businesses (VOSBs) and 10 percent to service disabled veteran owned businesses (SDVOSBs), as opposed to the 23 and 20 percent it said it did during fiscal 2010. Half a billion in estimated fraud? Give me a break.

The main culprit, not surprisingly, is the lack of accountability, according to testimony before the House Veterans Affairs' subcommittee on oversight and investigations by Belinda Finn, assistant inspector general for audits and evaluations at the VA OIG.

…Ineligible businesses received awards because VA's office of small and disadvantaged business utilization was not thoroughly reviewing business documentation and performing site visits to verify the veteran-owned status, said Finn. The OIG also found that contracting officers did not always check VA's enterprise veterans database, business size classification codes, or properly assess subcontracting and partnering agreements…

Once again the lack of resources and strain on the acquisition workforce was blamed, although this is a false argument. There is absolutely no excuse for not verifying eligibility of a firm for these types of set-aside programs, not to mention the subcontracting and partnering agreements. Where is the protection of the public’s trust?

Also of note is that only 30% of service disabled veteran contracts are with the VA, so this is a widespread issue. Obviously unethical firms and individuals are taking advantage of the lack of oversight, but there is no reason why VOSBs and SDVOSBs should be self-certifications. These programs should have formal certification processes similar to 8(a).

Although the VA has verification programs in place through its Center for Veteran Enterprise, it is woefully inadequate and cumbersome. You need your DD-214, adjudication letter from the VA (for SDVOSB), and corporate documentation showing 51% ownership and control. That is it. The current document requests are intrusive, and privacy is a risk. Explain to me how requiring 14 voided checks proves I am eligible?

Taxpayers are at risk in this program, and I hope the government, especially at the VA, understand the depths of this massive fraud being per perpetrated on taxpayers and veterans.

Industry and Government Relations Continue To Be A Challenge

2011-07-27T05:38:00.000-07:00

Recently at the National Contract Management Association’s World Congress in Denver, the clouds and storms that rolled into the mile-high city were harbingers of things to come for the week as the relationship between government and industry seems to continue a downward trend at a time when it needs to improve. However, it is the current adversarial atmosphere that was on full display at the conference and illustrated the difficulties that lay ahead in improving and creating an environment of productive communications.

The conference kicked off with an address by Linda Hudson, CEO for BAE Systems, who explained the difficulties that businesses currently face, and the troubles that are on the horizon. A panel session proceeded immediately following the speech, aptly entitled “Show Me the Money—Corporate Survival in Tough Economic Times.”

It is simply a matter a fact that budgets will shrink or remain flat for the foreseeable future, and businesses must adjust to this reality. However, another reality is the ever increasing pile of regulations, oversight, and scrutiny that contractors must continue to deal with. From new ethics regulations, numerous reporting requirements, and ever increasing mandates on security, contractors must comply with this new environment and the subsequent increases in costs of doing business. There simply is no choice, either comply or fold. It is this compliance with current, and what can only be more and more future regulations and increasing oversight, that creates the choices for industry in how they can try to remain competitive. These choices will result in increasing layoffs, scaling back of benefits, decreasing small business subcontracting opportunities, and a restructuring of the industrial base to remain viable and profitable.

Further exacerbating the issue is the continued focus on risk-transference to industry through more and more focus on fixed price contracts, regardless of requirements. Because requirements continue to be poorly or inadequately defined, the result is increased costs to both industry and government in time and money to adhere to a construct that should have never been developed in the first place. This leads to industry having to continue readjusting their pricing strategies to remain competitive through lower and lower priced bids, to the point where margins are razor thin and profitability suffers even more.

I was disappointed at remarks made by Dr. Steve Kelman on his FCW blog, as he seemed to ignore the fact that industry is facing the most difficult period in some time, and will continue to suffer. Barely mentioned is the vulnerability of small businesses, who will face fewer opportunities and even more risk through insourcing. This issue was barely addressed by both the panel and Dr. Kelman, a significant deficiency that I addressed to the panel via a question, but it did not get answered. It is comments like Dr. Kelman’s and the environment he describes that illustrates the work ahead.

The real factor to working in this environment productively is through increased and transparent communications between government and industry, and an understanding that both sides actually do have the same objective. That is, completing a mission on time, and within budget. However, that reality and the current environment for industry seem to be lost on government, and the tone at the NCMA conference exacerbated the “us versus them” attitude. Both sides need to understand the mission from each side’s perspective, and understand the impacts actions have on completing that mission. This is of vital interest to effective government management, and deteriorating relationships will make getting the job done that much more difficult for all parties in the challenging times that lay ahead.

Improving the IT Acquisition Process

2011-06-20T16:24:00.001-07:00

Federal Computer Week ran an interesting article recently on the many ideas and suggestions for improving the IT acquisition process. Their report was the result of the “Smarter Federal IT Initiatives: High Quality, Cost-Effective and On-Time” event sponsored by the Association of Management Consulting Firms in March. This event, featuring a panel of subject-matter experts, offered ideas for improving each aspect of the acquisition life cycle. Their ideas were certainly intriguing, from both a perspective of what was said, and what was not said.

Steve Cooper, director of IT and CIO at the Federal Aviation Administration’s Air Traffic Organization, discussed business value and how it is measured, or not measured, in federal technology programs.

…What often occurs with many projects delivering IT-enabled solutions is a lack of agreement at the beginning of the project on what business value will result from the project and how best to measure it. A worst case might be no discussion of business value occurs at all. With every project, we need to respond to the question, "Was this the best use of taxpayer dollars?" and then be able to prove it…

…The toughest challenge is agreeing on how to measure and prove the realization of that expected value. Discussion upfront can prevent the use of a metric that will require inordinate amounts of effort to collect…

How on Earth are projects getting approved with no business cases, or poorly defined business cases without a discussion of return on investment? I agree that a project does not always have financial returns, but those benefits need to be addressed, along with a plan on measuring during the execution phase. This in itself is one of the main concerns; the poor quality of data across government. Office of Federal Procurement Policy Administrator Dan Gordon recently issued a memo concerning this issue, along with guidelines on how to improve data quality, and more importantly, accountability for ensuring its viability. The government is drowning in data, and most of it is of such poor quality that good decision-making is stunted, or impossible.

David Swatloski, a major defense acquisition program manager at the Department of Defense (DoD), seemed to be speaking from recent experience in the poor state of requirements development process at DoD:

…Market research allows the government to determine what potential solutions are available that might meet the government’s needs. This is not an insignificant problem to address properly. If the government need is communicated in terms of a problem statement with a desired outcome, business can respond with more potential solutions. In a great number of cases when this approach is used, more solutions and capabilities are disclosed…

Leveraging industry’s knowledge of technology is critical to the pre-acquisition phase, but it first starts with an acknowledgment from the DoD that they no longer have the institutional knowledge they once had. Only through an outcome-based approach to developing requirements can DoD have the opportunity for the innovation and the variance in solutions and competition it desires.

…The federal acquisition regulations do not preclude hands-on, face-to-face discussion and open communication to understand capabilities during market research. Face-to-face discussions, demonstrations and visits to see capability are the best ways to conduct market research. These methods improve communication and understanding…

The risk-averse nature of government, coupled with the lack of leadership and support for risk taking have created a calcified environment where treating industry fairly means not to deal with industry at all. This is a significant cultural issue that needs to be rectified to have the two-way knowledge transfer take place to improve requirements, and thus the likelihood of successful programs. Failed programs always fail at the beginning of their life-cycle; the pre- and acquisition phases. It has ultimately developed into a seemingly caveat emptor environment.

A.R. “Trey” Hodgkins III, senior vice president of national security and procurement policy at TechAmerica, discussed the importance of trust and how communications can go a long way to improving the entire arena of government contracting

…Building trust is about building relationships, and success can be found in good relationships. When government and industry enter into the kinds of large IT contracts that are the intended beneficiaries of the Office of Management and Budget’s 25-point plan for IT management and acquisition reform, they become partners that are mutually joined in the success or failure of the undertaking…

…The impact of better trust — and the communication and engagement that builds that trust — is a better outcome for the government acquirer, industry and the taxpayer. A perfect example would be a lessening of the use of bid protests. Industry frequently feels that the lack of communications in the lead-up to an RFP, in the competition phase or after an award leaves them little choice but to file a bid protest in order to get information about the government’s decision…

This is one focal point of the Better Government IT project that I co-chair with ACT-IAC. Communication is the cornerstone of any successful relationship, and government contracting is no different. Building a strategic partnership with the contractor is ultimately what should be established to ensure mutual success by the government. However, the government wrongly assumes ethics and integrity issues where they do not exist. How exactly can a program be successful if communication and information is not exchanged properly? Making the contractor submit yet another report is not the answer. Creating an environment where government and industry can discuss issues openly and honestly is part of the solution.

James Bryan, vice president of technology solutions at the Center for Organizational Excellence, discussed the use of pilot projects and the need for prototypes in large-scale technology efforts.

…Most agencies realize that the day of major technology implementations that produce a “big bang” outcome after a prolonged development cycle are coming to a close. But that doesn’t mean the need for agency-transforming technology disappears. In order to meet the need for change and increase the likelihood of successful IT implementations, agencies should consider pilot implementations, combined with agile development methodologies, whenever possible.

With pilot projects, agencies have an opportunity to test or prototype a solution on a small scale in order to validate the requirements and expected outcomes prior to making a large investment. Pilots are designed to be small but focused efforts to test the potential effectiveness of a solution. They also afford the agency an opportunity to gather lessons learned and later apply them to the large-scale implementation. In most pilot projects, the project owners and the project teams come to the realization that some of the requirements established at the outset need to be modified in order to produce an IT solution that will actually meet their needs…

A pilot is a great way to test capabilities on a smaller scale to ensure a properly defined scope, and to have better grasp on outcomes and metrics to achieve success. These capabilities can then be expanded for further expand requirements and continue success through lessons learned and continuous learning. However, it is imperative that pilots be treated as projects, which means they have clear objectives and end-points. Too many pilots or prototypes simply continue in perpetuity, which not only defeats the purpose but creates the “big-bang” and does not allow for any learning. Further, not all projects should be made into pilots. Just like requirements should not be forced into a certain contract type, not all projects are pilot candidates. Value must be carefully weighed against the chances of success, the ability to develop through agile means and lessons learned, and total value and risk.

Kathleen Turco, associate administrator of government-wide policy at the General Services Administration, discusses one of the most difficult issues facing government management; change management.

…We must begin with the end in mind: What do you want to change? The change management effort should focus on the employee requirements and not just the technology if we are to successfully transition our work processes, procedures and behaviors to adapt to new technology...

...The most significant obstacle is that our nature is to avoid change rather than embrace change. Senior managers must be aligned across the organization to ensure that all are in lockstep on change management and employee training. Otherwise, the transition is doomed from the beginning…

As Ms. Turco mentioned, training is a key component to change and requires that the organization fully understand and make resources available. Regretfully, training is one of the first things that get cut during fiscal belt-tightening, which is unfortunate as having empowered, knowledgeable, and trained employees can have major impacts on success through new technology or process implementation.

These issues are of even greater importance now that one of the chief architects of IT acquisition reform, Vivek Kundra, has resigned. Only through continuing the momentum that Kudra helped spearhead, along with a continued focus on government/industry collaboration, can improvements be achieved. The adversarial nature of the relationship needs to be rethought, as only through working together can taxpayers get better results.

How to Improve Government/Industry Communications in Acquisition?

2011-05-15T08:53:00.000-07:00

I was on Federal News Radio and In Depth with Francis Rose to discuss the Better Government IT initiative and the work the group is doing to improve the acquistion process and create best practices for government/industry communications. Some thoughts for consideration:

What are some ways we can improve the process?
What are some areas you see that are difficult, either from industry's side, or from government's?
What feedback can we give to both buyers and sellers to improve communications during the acquisition process?
What are some areas the Better Government IT initiative should focus on?
What communications best practices would you propose?
What communications practices should be adopted during contract management?
What Web 2.0 tools can be implemented in this process?
What program management tools would help increase communications?

Please join the discussion!

Call For Volunteers for Better Government IT Working Group - Due April 22

2011-04-09T11:00:00.001-07:00

On December 9, 2010 the U.S. Chief Information Officer Vivek Kundra released a "25 Point Implementation Plan to Reform Federal Information Technology Management." Many of the points in this plan are consistent with recommendations previously made by ACT-IAC. One of these recommendations, and a major priority in the Administration’s plan, is to improve communications between government and industry throughout the IT acquisition process.

Item 24 of the OMB plan directs the OMB Office of Federal Procurement Policy to launch a "myth-busters" education campaign to identify common misconceptions or myths about vendor engagement and improve overall communication between government and industry. Item 25 of the OMB plan directs GSA to launch an interactive platform for pre-RFP agency and industry collaboration.

ACT-IAC is working closely with OMB and GSA on both of these items to provide advice regarding a strategy for improving government-industry communication and collaboration. To date, we have hosted a national dialogue on Item 24 and sponsored industry focus groups on implementation of Item 25.

Overview of the Project

The Better Government IT project is expected to be an ongoing activity to improve government-industry communication and collaboration in the IT acquisition process. The working group will initially focus on working with the Administration to implement items 24 and 25 of the OMB plan. Other issues will be addressed where appropriate. The initial product to be produced by the working group will be a center of excellence on the ACT-IAC web site regarding government-industry communication. It is expected that this center will include:

The myths identified by OMB (and truths) plus additional myths as added.
Guidance for agencies and industry on what is allowed and not allowed regarding communication during different phases of the acquisition process.
Best practices and examples of good communication techniques.
Relevant policy documents and guidance from OMB and the agencies
An FAQ section that provides answers to the most often asked questions.
(Optional) A collaborative capability so that members of the government IT community can exchange ideas and information on this important topic.

Working Group

The working group will have an industry chair and a government chair. Jaime Gracia, President and CEO of Seville Government Consulting, will be the industry chair. A government chair is also being sought. The working group will have both government and industry members. The initial term of the working group shall be six months. At that time an assessment will be made regarding next steps.

Nominations are now being accepted for the Working Group. Individuals interested in participating in the working group should submit their name, email address, a bio of no more than 75 words as well as a brief explanation of why they are interested in joining the working group. This information should be sent to bettergovernmentIT@actgov.org no later than COB April 22, 2011. For the complete nomination information, please click here.

Providing the Blueprints for Improved Government and Industry Communications in the Acquisition Process

2011-03-27T11:17:00.001-07:00

As part of Federal Chief Information Officer (CIO) Vivek Kundra’s 25 point plan to improve the management of Federal IT resources, a vital component in need of attention is the poor state of communications between government and industry.

Although this fact was highlighted in Office of Federal Procurement Policy (OFFP) Administrator Dan Gordon’s Mythbusters memo of February 2, 2011, this process is one of changing culture. This culture has two facets; an extremely risk-averse federal culture where the fear of liability is almost debilitating and prevents any meaningful industry input, and a culture from industry where enormous investments in status quo have created competitive advantage, coupled with the fear of disclosure and transparency.

Nonetheless, both sides agree that middle ground can be achieved to improve the ways each side communicates with one another, with ultimate outcomes that vital feedback from industry is given to the government on resource management, requirements development, and knowledge transfer on technology that clearly lies, and belongs, with industry. In conjunction with the Office of Management and Budget (OMB), the industry group American Council for Technology and Industry Advisory Council (ACT-IAC) hosted an online, moderated exchange of ideas to engage the government IT community to gather feedback and improve communications between government and industry. To host this dialogue, ACT-IAC created a dedicated website at www.bettergovernmentit.org with links from both the CIO Council and the ACT-IAC websites, respectively.

Ben Coit, chair of the Acquisition Management Shared Interest Group at ACT-IAC, and Tom Suder, the ACT-IAC lead for the Mythbusters dialogue effort, discussed the initiative on the DorobekINSIDER show earlier this month.

"The overall goal is to develop actual recommendations so the government can be more effective in their mission by improving the quality of proposals that come in through effective communications," Coit said. "The government's mission is going to be better served by industry."

To that end, feedback was received until February 28th, and asked users to focus on four different categories to post a myth:

1. Please identify "myths" that government acquisition professionals may hold that inhibit their ability to communicate with industry during the IT acquisition process.

2. Identify "myths" that industry may hold that inhibit their ability to communicate with the government during the IT acquisition process.

3. What are major impediments to improving government and industry's ability to communicate with each other? If you identify rules or regulations, please be as specific as possible.

4. Provide examples of Federal IT acquisitions that included good communication practices - by either government or industry - that resulted in better outcomes and better decisions. Explain what the practice or process was and why it was valuable.

This past week, ACT-IAC submitted a white paper to OMB, which summarizes some of the input from this information gathering initiative and provides some thoughts on next steps. As the dialogue with OMB and ACT-IAC continues, more will posted on this initiative, along with recommended action items for execution.

Although much work needs to be done to improve communications, only by breaking down barriers, which are normally created artificially, can improvements in outcomes be realized. I hope these initiative results is a robust forum for helping structure a new paradigm where industry input is actively sought and given in return, to the betterment of acquisition initiatives and the taxpayer.

Mr. Gracia is an active member of ACT-IAC and the Acquisition Shared Interest Group or SIG. He is providing leadership in the BetterGovernmentIT initiative and the BetterBuyProject as it moves forward with OMB in helping shape the dialogue between industry and government, and as it relates to points 24 and 25 of the Kundra memo.

Let Sellers Talk to Buyers Early in Procurement

2011-03-20T16:33:00.001-07:00

This piece was originally published for Bloomberg Government on 03/11/2011.

The Obama White House announced plans in December to transform the way federal information technology projects are managed and executed. Its 25-point implementation instructions to federal agencies include many good ideas, from the adoption of light technologies and shared services to aligning the budget and acquisition process with the technology cycle.

The 24th and 25th points go to something deeper -- and actually transformative -- in the way government IT projects operate: increased engagement with private industry. They suggest new opportunities to develop relationships among industry experts and key procurement personnel that are currently closed or difficult to create.

This is the gaping hole in the government procurement process. For understandable but increasingly obsolescent reasons, government acquisition officials create artificial barriers and prevent themselves from working as closely as they could with industry experts in the earliest stages of the acquisition process.

While the Federal Acquisition Regulation encourages such exchanges, the perception of improper influence and unethical behavior, coupled with the risk-adverse nature of government in general, often prevents meaningful communications from occurring.

The results are poor requirements development and the unintended consequences of waste, fraud and abuse that are rampant in many programs across the government.

Identify Needs

The requirements phase identifies the needs and scope of a project and thus becomes its blueprint. By having more meaningful discussion with stakeholders, specifically industry stakeholders, proper requirements and can be developed, increasing the opportunities for governance and oversight.

When both government and contractors can focus on execution of common goals and objectives, based on designed metrics developed early in the program, they lessen the chances of costly change orders and foster better outcomes.

Regretfully, in the current system, stakeholders in industry are an afterthought, and industry experts have little bearing on helping program managers and acquisition officers develop sound requirements to ensure goals are realistic and achievable.

Best practices on how industry develops requirements are what the government desperately needs. By focusing on the earlier phases of an acquisition, which is to focus as far left as possible in the needs-identification phase of an agency’s acquisition lifecycle, user requirements are matched with customer needs and available resources, and products can be designed within cost, schedule and performance goals.

Social Media Tools

So how can legitimate ethics concerns be accommodated while still making room for the obvious benefits of government-industry communications?

Here's where social media technology now provides new tools to facilitate communication and maintain proper arms-length relationships.

Recently, the government launched several online wiki tools to explore collaboration between government and industry in an open-dialogue platform. Thousands of visitors participated from all 50 states. They included Fortune 500 company experts interacting in an environment where they suggested best practices and cutting-edge solutions to identified needs.

The results were an encouraging start of the future of these exchanges. The feedback was "both more comprehensive and more actionable than what could have been obtained through traditional methods," wrote Vivek Kundra, the government's chief information officer and author of the 25-point plan.

In fact, crowd sourcing and stakeholder analysis are commonly used by commercial entities in these knowledge-based environments. Many companies use a structured product-development process to ensure that a high level of knowledge exists about a product at key junctures during its development, similar to milestones or phased entry-points used by the Defense Department.

It's this knowledge-based process that helps enable decision makers to be reasonably confident about product quality, reliability and timeliness.

Through these interactive platforms, key decision makers, such as program managers, can develop the information they need, particularly in the period before issuing a request for proposal, or RFP, when they need more effective ways to perform market research.

The current acquisition process for market research uses a request for information, or RFI. Just like the stages following an RFP, and RFI requires a significant investment in business development dollars for a prospective bidder to build the relationships necessary to be on the government buyer’s radar.

As both industry and government realize the value of early interaction, both business development expenditures and procurement lead times can be drastically reduced. The new interactive platform will allow government to get more focused and value-added input from industry, improve awareness of cutting-edge technologies and allow for increased opportunities for innovation, competition and flexibility in contract development.

The platform, being built by the General Services Administration, is scheduled for beta-testing and initial operating capability by Memorial Day. I hope that industry contractors continue to keep track of this development, if only to increase their own performance along with that of government’s.

Past Performance Accountability Should Not be Punishment

2011-03-06T16:46:00.001-08:00

The Commission on Wartime Contracting in Iraq and Afghanistan met recently to raise concerns that large defense contractors are getting a pass on fraud and poor performance. However, some on the Commission seem to think that solutions should not be bilateral, or even going so far as to seemingly having a "Save me from myself" mentality.

The focus of the testimony was the effectiveness of the government’s current methods for assessing oversight and surveillance of the current $200 billion that has been spent on contracts and grants since 2002 to support military, reconstruction, and other U.S. operations in Iraq and Afghanistan. According to the Commission, the United States has wasted tens of billions of dollars of contract dollars in Iraq and Afghanistan, but of course the blame game is always the first line of defense for failing to get at the root cause of not only the failures of oversight in Iraq and Afghanistan, but in how the government evaluates performance overall.

Laying the blame squarely on industry, Commissioner Charles Tiefer called five large companies that do business with the Defense, among them KBR, the "Flagrant Five" for continuing to receive work despite claims of fraud, misconduct and poor performance.

.…"I'm beginning to get the picture that bad performance could be good business," Tiefer said at a commission hearing Monday…

Also joining in on bashing industry was The Project on Government Oversight's general counsel Scott Amey.

…Companies involved in misconduct are a "necessary evil" required to get work done. "This might be the contracting version of ‘too big to fail,'" he said…

Amey also went on to state that the Air Force issued multiple waivers in order to continue business with firms accused of wrongdoing, in addition to the Interagency Suspension and Debarment Committee not issuing the annual reports required to document federal agencies' suspension and debarment activities.

These activities bring up an interesting issue about why the government is not doing its job in providing the proper level of oversight, surveillance, and past performance reporting. Lack of time? Not wanting to correct a problem and "slow down" the process? Really?

Most of the testimony focused around the report issued a week before about the vital need for contingency contracting reform, with a particular focus on debarments and suspensions as seemingly a punitive weapon and silver bullet against contractors. Although the report discusses the failures of government, clearly malfeasance also seemed to be the root cause of waste.

...."For many years the government has abdicated its contracting responsibilities -- too often using contractors as the default mechanism, driven by considerations other than whether they provide the best solution, and without consideration for the resources needed to manage them," the commission concluded. "That is how contractors have come to account for fully half the United States presence in contingency operations."...

Not all the voices on the panels were one-sided. Dan Gordon, Administrator for the Office of Federal Procurement Policy, discussed in his testimony the facts about debarments and suspension.

...The regular evaluation of contractor performance and the use of those evaluations in decisions for future awards motivate contractors to perform well, and help ensure that we avoid doing repeat business with firms that don’t perform well. Suspending or debarring entities can help to protect taxpayers from the abuse of contractors who have been convicted of fraud or other criminal or civil offenses indicating a lack of business honesty or integrity, or who otherwise behave unethically, or engage in poor performance of government-funded work. The system works, however, only if we are willing and able to suspend or debar entities when we shouldn’t be doing business with them, and if all agencies check to be sure they are not awarding a contract to an entity that has been suspended or debarred...

Past performance data collection is the actual root cause of many of these issues. Past performance completion rates are not only low, but the reports are not being entered into the Past Performance Information Retrieval System (PPIRS) database. So accountability needs to be the first step in this reform analysis, by ensuring the information about wrong doing is available to government. However, the understanding of what and how suspensions and debarments are supposed to be used is currently a major issue that seemingly is lost on the Commission.

... Among 32 recommendations made in a report released last week, commissioners want agencies to:

• Give a written rationale for not pursuing a proposed suspension or debarment.

• Increase use of suspensions and debarments.

• Revise regulations to lower procedural barriers to contingency suspensions and debarments...

These activities are not supposed to be punitive, but that is exactly what the commission seems to be implying. The report itself lists almost double the number of activities targeted to punishment, vice creating solutions to prevent the fraud, waste, and abuse from happening in the first place.

I am not implying that some companies have not acted in the best interest of the taxpayer. Fraud, waste, and abuse has definitely occurred, and regretfully has been a part of war profiteering that goes back to the founding of the nation. However, advocating the use of debarments and suspensions as a punitive weapon will not solve the problem. I hope the Commission realizes that treating the symptoms and not the disease is simply a recipe for failure, and will be further adding to the waste it has been formed to help prevent.

Myth Busters Campaign in Full Swing to Improve Public/Private Sector Communications

2011-02-21T08:43:00.000-08:00

As part of an effort to reform the federal acquisition process for technology, US Federal CIO, Vivek Kundra, unveiled an ambitious 25-point plan for addressing many of the issues that plague the way the government purchases technology in hopes of delivering more value to the taxpayer. Part of the implementation plan was to counter the misunderstandings about how industry and government can engage with one another during the acquisition process, specifically by government. Because of the artificial barriers between government agencies and their industry partners, rampant waste and program delays have become the norm that erode the value of these IT investments.

To combat the status quo, the Office of Management and Budget (OMB) has launched a “myth-busters” campaign to educate government, and eliminate public sector barriers to communication and enhance awareness of the most efficient and effective technologies available in the private sector. Office of Federal Procurement Policy (OFFP) Administrator, Dan Gordon, outlined in his Feb. 2^nd memo the planned outcome of this campaign, which is to remove communication barriers and improve the overall acquisition process that includes specific initiatives on needs identification, requirements definition, acquisition strategy formulation, market research, the proposal process, and contract execution.

I have been writing about the need for improved communication as a central theme of acquisition reform for some time (here, here, and here), so I am glad this formalized implementation plan has taken shape. What I am also glad to see is that the communication plan is not only a public sector initiative, but is also being done with industry.

Leading this effort is the industry group the American Council for Technology (ACT) - Industry Advisory Council (IAC), which has launched an online forum called BetterGovernmentIT.org, to collect feedback that will later be reviewed by OMB, the Chief Information Officers Council and the Chief Acquisition Officers Council, according to ACT-IAC. This site, which is styled after the General Services Administration's BetterBuyProject, uses crowd-sourcing techniques for contracting professionals to identify common myths about vendor engagement and information that will help improve public/private communication. One important option included is to engage anonymously, which will hopefully encourage dialogue without the fear of retribution by government officials or providing other firms competitive information.

These encouraging efforts can only help improve what is a truly becoming a broken system where communication barriers are getting more and more entrenched. What can truly improve the overall process is having open communications with industry as early in the process as possible. These early communications, in the need identification stage, can greatly improve the requirements development process, which I believe to be a truly broken process. These early exchanges can vastly improve the chances of good acquisition outcomes, which includes reduced costs, improved performance, innovative solutions, increased competition, and with proper oversight, improved overall government management.

These public/private efforts have the ability to produce desired effect, but only if these efforts are coordinated. OMB, OFPP, and ACT-IAC need to ensure data and feedback from their respective efforts are all shared amongst each other, which includes sharing lessons learned, and transfer knowledge. It would be a shame if effort to improve communication were conducted in the same, stove-piped echo chamber they are being conducted now. As these initiatives move forward, the increased communications can only help shape the future of acquisitions to the benefit of the taxpayer.

Communications Are Vital to Improving Acquisitions

2011-02-05T16:15:00.000-08:00

Two opposing views have emerged this week regarding communications with industry. According to Sen McCaskill (D-MO), chairwoman of the Senate Homeland Security and Governmental Affairs Committee's Contracting Oversight Subcommittee, the current relationship has apparently clouded the judgment of contracting officials to the point where objectivity has been compromised in contract award decisions.

During a recent hearing on how federal agencies use contract audits to detect and prevent waste, fraud, and abuse in government contracts, McCaskill conceded the relationship is too close, and expressed a bias toward auditors.

“Contracting officers have an ongoing relationship with the contractors that sometimes impact their ability to see everything clearly as it relates to some of the behavior of the contractors,” said McCaskill.

As much as I respect and admire Sen. McCaskill's efforts to ferret out waste, fraud, and abuse in federal contracting, I could not disagree more with her premise. Firstly, Contracting Officers and industry should have a strategic partnership, as both parties are trying to execute the same goals and objectives. Of course government and industry have different means to achieve these goals, but it is through understanding each other and open communication that both parties will be successful. Communication between industry and government continues to be challenging, and advancing the agenda of building barriers and confrontation that Sen. McCaskill seems to be advocating will further exacerbate this issue.

Further, it is Contracting Officers that are given the authority to negotiate and enter into contracts on behalf of the government, not auditors. Financial analysts and Contracting Officers need to work together, in conjunction with industry, to get the best deal for the taxpayer and ensure all parties are setup for success. Adversarial relationships are neither objective nor productive, they just create friction and missed opportunities for successful outcomes.

Opposing this view has been Dan Gordon, administrator of the Office of Federal Procurement Policy (OFPP). Gordon launched a "myth-busting" campaign to help government officials understand that the fear of talking to industry is overblown, and that talking to industry is vital to increasing competition and to ensuring best value for the taxpayer.

“We need to be independent, but more communication can increase our independence,” he said. “In fact, more communication can overcome the tie between the contracting staff and a particular vendor.”

By opening discussions, agency officials can learn what other companies can offer them, Gordon said. However, agency officials feel like they don’t know enough about other companies due to limited interaction with industry. Too often, agencies have one contractor they have dealt with, and they will continue to work with that company, even preferring it over others.

“More communication, especially with competing vendors, may be the best oxygen to remedy that situation,” Gordon said.

Market research is prescribed in Federal Acquisition Regulation (FAR) Part 10. Yet, the environment is such that the Administrator of OFPP is on a myth-busting campaign that following the FAR is a good thing and needed?

There is no question that improved communications are essential to ensure requirements are sound, that contract types are appropriate, and that metrics are effective. I have written about this topic, and I hope Gordon’s myth-busting campaign will help melt the ice of the current environment. However, much more is needed. Mainly, acquisition officials need to have guidance and oversight to ensure that the acquisition workforce is not beaten over the head while trying to communicate with industry. Officials must give the acquisition workforce the confidence and ability to perform these crucial pre-acquisition tasks without fear of retribution. It is this risk-averse environment that is one of the main issues with communication barriers, so focusing on this impediment should help see improvements in the quality and quantity of communications with industry.

The National Contract Management Association recently issued an open letter on this subject entitled An Open Letter Addressing the Need for Cooperation between Government and Industry. It is call to action to understand that government and industry both share a common goal, and that is serving the public.

Once this common goal is understood, then progress can be made in developing new channels to communicate, and see improvements in how the government buys and realize the cost-savings that are desperately needed in federal acquisition. I hope that Sen. McCaskill realizes that she is actually making a difficult situation harder, and that she and others needed to collaborate with Mr. Gordon and industry to achieve this common goal.

Protests Will Continue the Upward Trend in 2011

2011-01-03T09:47:00.000-08:00

As 2010 is now officially in the books, one issue that we can expect to continue its trend in 2011 is contract protests. An interesting piece in the November-December 2010 Defense AT&L magazine discussed this issue, and illustrates the realities of the federal contracting environment. Mainly, budgets are tightening, competition for those shrinking dollars is ferocious, and protests have become standard operating practice.

A general impression of respondents was that protests have become more common; with nearly 70 percent saying pro- tests were either somewhat, or much more common. A striking result was that none of the respondents felt protests had become less common. That agrees with a recent Government Accountability Office (GAO) report that in fiscal year 2009, 1,989 protests were filed, a 20 percent increase over the 1,652 protests filed in fiscal year 2008, and up 50 percent over fiscal year 2006.

This article is telling in many ways, but what really is of interest are the responses, and their subsequent rankings. Ranked most important is that the protesting company expects to win, followed by the government making mistakes. This certainly seems to make sense, and is also consistent with what I have experienced. In talking to small business executives, it seems that protests are a valid way to verify if source selection procedures were followed. We have seen that go awry in the Air Force KC-X tanker program, where government officials were publically called out for not following their own procedures.

Also of interest is that the order of why protests are lodged in the first place does not seem to make sense, or is not what is experienced in reality. Respondents overwhelmingly stated they expect to win the protest, but the second reason is the critical to the analysis. Some executives I have spoken to tell me that protests are now becoming more operational policy, especially for large dollar contracts. Under the current environment, why not?

The current environment encompasses the second part of the article, where the real views of protests are on display. Predictably, shrinking opportunities and increased competition are major factors at stake, not to mention governmental factors of poorly trained acquisition workforce and poor government communications. So what to do?

I have discussed the need to rethink the protest process and why they occur here and here. As I received some pretty interesting feedback, mostly negative from industry, let me reiterate that protests are a legal and necessary tool to ensure fair competition and correct procedures for awarding contracts. However, this Defense AT&L article highlights why I think protests need to be rethought in regards to acquisition reform.

What I have an issue with is the seemingly endless cycle of protests with no consequences or accountability, both by government and industry. Industry can delay award of a contract, expect quid pro quo, or simply attempt to dig up dirt where none exists. I have been on both ends of this equation, and these strategies only help waste time and money for everybody, not to mention the user pays the price in continued loss of capability (again, look at the KC-X program). Industry looks at in terms of return on an investment, since the risk adverse nature of government may provide additional revenue sources of further opportunities to compete. Nonetheless, the government does make mistakes and should be held accountable.

The end result is that there needs to be a measure of accountability on both sides. A protest should not be taken lightly, as it is normally a disruptive and costly matter. The survey confirms that a company filing a protest expects to win, but reality states that sometimes that is not the case. Firms sometimes file protests to see what happens. I have seen this too many times to count. What if a firm losses, especially repeatedly? A measure of financially accountability to recoup costs for firms that take this approach is needed. Being accountable for phising expeditions should help the protests process be used for what it is intended: ensuring fair competition.

The government seems to also be in the habit of not wanting to deal with a protesting firm, as some government agencies award work to companies with reputations for protesting contract awards to avoid the cost of resolving disputes with those companies if the government losses and the cost of resulting project delays.

Leadership and accountability is needed to help stem this trend. Protesting is a right that industry must continue to have, but it needs to be measured and weighed against the “real” costs should accountability finally be placed into the equation. Further, government must stem the tide of allowing themselves to be bullied, but more importantly, be held accountable for following procedures, and executing sound acquisition strategies to ensure a protest is not even in the conversation.

We shall see what reform lay ahead, but we can only expect to see a continued rise in protest actions on the horizon, to the detriment of all involved.

Reverse Auctions: A Tool to Realize Real Cost Savings

2010-12-17T02:58:00.000-08:00

As Government continues to leverage its buying power through continued fiscal pressures, one process that is not getting enough attention is the use of reverse auctions. Reverse auctions are an effective and efficient means of realizing large savings on purchases of not only commodities, but highly defined services as well. Although current initiatives exist such as the General Service Administration’s (GSA) Federal Strategic Sourcing Initiative (FSSI), which encourages adoption of industry best practices, federal buyers are simply not going far enough in leveraging their buying power to maximize price savings. To achieve maximum efficiency, the Government should begin to create holistic strategic souring initiatives that include reverse auctions as a mechanism for cost savings, since programs such as FSSI are simply catalog buys to bidders that have been pre-qualified, and mimic the GSA Schedules program. Further, many Program Managers and other acquisition officials I have spoken to state that they do not always get the best prices by using these types of pre-negotiated arrangements, and thus buy either directly from vendors or execute procurements outside these initiatives. The result is ineffective buying and the continuation of not maximizing efficiencies to the detriment of the taxpayer.

Reverse auctions are by definition a structured competitive bidding event where competition can be maximized to help drive the price lower over the course of the event. One common reason I have heard for the poor adoption rate is technology barriers, which is a frankly a disingenuous reason. The benefits of potentially significant cost savings, enhanced transparency, increased collaboration, increased competition all outweigh any barriers that seem to be artificially created by Federal organizations. If the Office of Management and Budget (OMB) and the Obama Administration are serious about Open Government and accountability, then enhanced adoption of reverse auction should be further explored.

Another stumbling block to adoption is the issue of transparency, as the risk adverse nature of Government creates issues that should not exist through fear of protest that seems to be paralyzing acquisition decision-making. The reverse auction process is Acquisition 2.0 in motion, as reverse auctions create a structured and automated negotiation process with transparency at its core, since the process depends on vendors creating a clear and documented process for creating the pricing structure and the subsequent contracted price. It is the openness of the process that should be embraced, since the reverse auction allows for real time pricing feedback, and also allows acquisition officials to have real time visibility into the negotiation. This type of structure and the transparent process creates and enhances competition, reduces complexity, enhances collaboration, and ensures compliance with the acquisition policies and regulations.

It is these types of procurement methods that should be embraced, and will need to be further explored to help create holistic strategic sourcing initiatives for realizing true cost-savings by adjusting processes, ensuring leadership drives change, and breaking the endemic status-quo culture of Government. Successful examples of reverse auctions already exist through both Defense and civilian agency use, so lessons learned are available for use and need to be expanded upon to help with widespread adoption. As OMB continues to issue guidance on improving federal acquisitions and government management in general, reverse auctions need to be part of this process of continuous improvement and increasing accountability to the taxpayer.

Acquisition Reforms Will Focus on Oversight

2010-12-08T12:08:00.000-08:00

As the lame duck session of the 111^th Congress comes to a close, some in the acquisition community are left to wonder what lays ahead for the acquisition reform initiatives of the Obama Administration. According to many experts, the shift in political power may not make much difference for the IT and procurement communities.

I am not sure that is the case, according to plans that Rep. Darrell Issa (R-Calif.) has stated as incoming chairman of the House Oversight and Government Reform Committee. Issa has said that the Telework Enhancement Act (H.R. 1722) lacks many of the safeguards necessary to prevent fraud, waste, and abuse. Specifically, Issa claimed employees can take advantage of the lack of direct manager oversight, does not require agencies to prove how much money they’re saving, and does not create jobs.

Although Rep. Issa continues to draft his agenda for the new Congress, I am not going to hold my breath that this process will not be politicized, when Rep. Issa makes statements such as “I want seven hearings a week, times 40 weeks.” Rep. Issa also stated he looks forward to working with the Office of Management and Budget (OMB) and industry on ways to address wasteful spending from failed government IT programs. I think OMB is really making some important strides on this front, so we’ll either see either a real oversight agenda moving forward or more political witch-hunts as in the past.

On the Senate side, Sen. Claire McCaskill (D-Mo.) remains chairwoman of the Homeland Security and Governmental Affairs Committee’s Contracting Oversight Subcommittee. Sen. McCaskill will continue her focus on interagency contracts and reforms to the 8(a) set aside programs for Alaska Native Corporations. I hope these initiatives continue, as Sen. McCaskill has much unfinished work to do regarding abuses in these programs, so I hope that Rep. Issa seizes the opportunity to really craft bipartisan and meaningful relationships with other members on ferreting out waste, fraud, and abuse.

Another important issue is the effect of the midterm elections on open government, transparency, accountability, and the overall Gov 2.0 movement. I believe that significant movement will come on this issue, as politicians move from political use of Web 2.0 for campaigns, to executing Gov 2.0 initiatives to execute transparency initiatives and hold government accountable. Again, I hope that this renewed focus on using Gov 2.0 tools to advance Open Government and allow for more citizen engagement. However, it is hard to fathom considering this hyper partisan political environment where Congress scores so low in providing these services themselves.

I would like to see the latter happen. But I have reason to lack hope. Tim Evans, a program analyst who works on Web analytics and customer service measurement at the Social Security Administration, posted a story by Larry Freed of The Digital Citizen about a recent survey in which ForeSee Results found “a clear and proven relationship between transparency, satisfaction and trust,” and “higher transparency leads to higher citizen satisfaction with government, which in turn leads to higher trust.”

Unfortunately, “when it comes to transparency, citizen satisfaction, trust, accountability, perceived goodwill, competence and integrity, American citizens give Congress the worst scores across the board,” Freed wrote.

Not the most encouraging situation, but let’s give Rep. Issa the benefit of the doubt that he will wield his gavel responsibility to protect the taxpayers and not a political party and its agenda. Change we can believe in? We have heard that before.

Fixing IT Acquisition is About Execution, not Just Personnel

2010-11-03T11:18:00.000-07:00

According to recent reporting by Federal Times on the state of federal information technology (IT) acquisition and program management, the Government is ill prepared to purchase and manage large scale IT programs due to poorly trained staff, and poor collaboration with industry. Certainly contributing factors, but the issues are much more broad and troubling.

Two independent industry trade groups, the TechAmerica Foundation and the American Council for Technology-Industry Advisory Council (ACT-IAC), have released reports on ways to improve the troubling state of federal IT programs. The industry groups' reports were done in advance of the expected Office of Management and Budget (OMB) release this month of the Administration’s plan for reforming IT procurement. Taken together, these two trade group reports provide a valuable roadmap to help improve the abysmal situation, and I hope OMB takes note.

What is important about these reports is that the recommendations have the ability to be implemented relatively quickly, and could have impacts in the short-term. As the reports also note, the laws, policies and procedures already on the books provide plenty of resources and flexibility for implementing the action items. Nonetheless, an important and valuable addition to these reports is the discussion of obstacles and challenges to implementation, along with subsequent action items for overcoming these issues. Many reports, including the recent memo from Dr. Ashton Carter on needed improvements to defense procurement, simply state what is needed without a roadmap on how to get there.

The report focuses on several areas including:

1) Professionalizing Program Management. Due to the constant rotation of program managers (PM), the reports called on a knowledgeable and empowered program manager who sees the project through to completion. The TechAmerica report also called on the establishment of a Program Management Leadership Academy, and enhancing training overall for PMs.

This recommendation focuses on building a bench of qualified PMs that have the tools and resources to be successful. Often, PMs are set up for failure by being assigned programs they simply have no business running. Managing IT programs can be a blood sport, and PMs need to be empowered, fully supported by management, and trained in best practice tools, techniques, and methodologies for managing IT programs along industry standards. Training is vital, but it also needs to focus on requirements, IT, finance, and contracting/acquisition. The cross-functional knowledge is required to ensure holistic program objectives are understood and achieved.

2) Promote Agile/Incremental Development. The TechAmerica report specifically states that agile development is not a cure-all for IT acquisition.

…The iterative, incremental and collaborative processes of agile development will significantly raise the Government’s return on its IT investment. It will do this by engaging with users more effectively, deploying capability more quickly and keeping better pace with rapid advancements in such technologies as cloud computing and software as a service…

The Government simply cannot expect to perform its mission with continued programs that are constantly behind schedule, over budget, and deliver little in terms of results or performance after spending millions in taxpayer funds. It is imperative to deliver smaller increments of capability, focusing scope on what is realistically achievable by closely collaborating between developers and users.

…Chief among the benefits of agile/incremental development are increasing the return on taxpayer investment through faster deployment of capability and reducing rework through faster and more effective interaction with users…

ACT-IAC called for a renewed focus on Governance, which would be used for accountability at the senior leadership level and promote the desperately needed communication that can lead to program success through agile development.

It is these best practices that can have significant impacts in the short-term. Advances in technology develop at a much faster rate than the federal acquisition lifecycle can keep up with, creating a capability gap that prevents Government from leveraging innovation and creates a system where Government purchases technologies that are outdated prematurely.

3) Improve Risk Management. The important recommendation is the call for an Independent Risk Review on major IT acquisitions. The report recommends a third party completely independent of the program, such that role is not filled by the program or the contractor executing the program. In essence, the report is calling for an Independent Validation and Verification (IV&V) role, either internal to Government or an outside contractor. This renewed focus on adherence to performance and Governance would go a long way to help ensure proper review cycles where all interested parties are held accountable for success.

4) Enhance Stakeholder Engagement. According to the TechAmerica report:

…The need for better engagement, collaboration and communication between Government and industry was cited by 78% of the Government-experienced IT leaders we interviewed, more than any other topic…

Also like the reports note, the trend recently is to build barriers to communicate and collaborate, effectively taking the Government in the wrong direction. The Federal Acquisition Regulation (FAR) encourages the communication, so why is it not happening? Risk aversion namely. Externally, the Government can use Gov 2.0 platforms for crowd sourcing, such as the Better Buy Project, to solicit user input and allow for outside sources to contribute to openness and transparency in the procurement process. Internally, ensuring end-users have a place at the table in requirements and the development of the program is important to ensuring the end system can meet objectives. The reports also tie the use of agile development as one way of doing this.

…Better communication can improve both the quality of an acquisition document and the quality of the proposed responses. The result will be a smoother acquisition at a lower cost. Better communication can also lead to greater awareness of how technology is being used innovatively in other marketplaces that could vastly improve mission delivery…

Improved acquisition outcomes are possible when industry knows what the mission and needs are of the Government, getting the opportunity to contribute and demonstrate technological capability through effective market research, combined with the Government knowing what their own needs are as well. This is only possible through open communications and partnerships with stakeholders, both internal and external.

5) Requirements. The Achilles heel of Government, the requirements process is one of the fundamental issues that create failing programs at program inception.

…As noted in the previous sections, a lack of communication and collaboration can lead to the development of patchwork requirements – or requirements that cannot be achieved by existing technologies and solutions. Similarly, overly rigid and defined requirements can preclude the agency from taking advantage of innovative solutions.

The Government does not always have a full understanding of how evolving solutions and technologies could benefit an agency’s goals and objectives, or how such solutions can be acquired by, and provisioned to, the Government. A key contributing factor to this development is the perception that federal officials increase the risk of protest due to “pre-selection” or wiring the requirements when they communicate with industry to consider possible alternative technological solutions or capabilities for meeting Government requirements…

Both reports called for increased collaboration and agile development to help control requirements. However, the entire requirements process needs a paradigm shift to leverage these proposed solutions.

Focusing on outcomes and allowing industry to propose innovative solutions to solve Government’s problems is the path to success. Government simply is not prepared, or has the technological acumen, to know what is in its best interest. Instead, it must focus on what it needs to perform its mission. Allow industry to present truly best value, and then manage to results. It is this renewed focus on the disease on procurement failures that can have a major impact on outcomes, but only when leadership understands that business as usual is not an option.

These proposed recommendations can go a long way to helping improve IT acquisition and management. It starts with an understanding where knowledge is housed, work to our strengths, and create real partnerships between Government and industry to stop the cycle of fraud, waste, and abuse that starts with poor requirements, poor management practices, and the inability to execute.

Executing Requirements Is Not A Zero Sum Game

2010-10-24T14:17:00.000-07:00

As government watchdog groups continue to focus on ways to reform the acquisition process and create greater transparency, the issue of requirements seems to be a common denominator for many examples of waste, fraud, and abuse in federal procurement.

Dr. Steve Kelman wrote on his Federal Computer Week blog The Lectern about approaching the issue from the perspective of the acquisition phase. This interesting perspective offers a lot of promise, as the current process is simply not sufficient to find true best value in federal procurements. Now, vendors are made to endure writing contests in response to a government solicitation at great time and expense that don’t necessarily respond to the government’s needs. It becomes about the writing and not the substance. The result is that contractors either do not execute on what they proposed, or the government does not manage the contract effectively by holding contractors accountable, or a combination of both. How do we prevent this from happening?

One approach is the use of oral presentations. Although this technique is gathering more traction in procurements, especially for IT, it should be used with more frequency to evaluate an offeror as a potential business partner. Because of the focus on the written response, many government contractors have proposal development experts or even proposal development organizations within their respective companies that have years of experience responding to federal proposals. The end result is that contractors are great at responding to proposals, but without those responsible for actually doing the work being more involved in writing proposals, the execution will be lacking.

This approach of involving the implementers would go much further in ensuring a proposal is more than just eloquent prose, but an actionable document that becomes part of the contract, and how it will be executed and managed. Many procurement officials are left wondering if vendor program managers even read their own proposals. Government officials who do not hold contractors accountable for the successful outcome of a program exacerbate this process. The result is failure, or the status quo. Supplementing written submissions with oral presentation can help alleviate this problem by ensuring the government can have a face-to-face meeting with a potential contractor, and get a better sense of what they are buying.

For oral presentations to be successful, the government must require that the vendor personnel who will actively manage and execute the program be the ones to conduct the presentation. Otherwise, the government will get business development personnel who are trained, and excel, in selling. The government needs to focus on executing, not marketing.

Further, these oral presentations need to be rated and evaluated as part of the source selection. Increasingly oral presentations are conducted with little effort toward ensuring a program can be successful or that the offeror is a good fit to solve the government’s problem. Oral presentations are an excellent way to cut through the smoke screen of a wonderfully written proposal that either does not fully address the government’s need, is fraught with risk, or simply is marketing disguised as solutions.

Another effective tool that should be used more frequently is the post-award conference which brings together key individuals from both sides, and ensures both accountability and responsibility are at the forefront of contract management and execution. This sets up both parties for success by ensuring that the contractor understands the government’s requirements and that roles and responsibilities are established for all parties. It also ensures the government understands the proposed solution, associated risks, quality control, program management, and issues in administering the contract. Hosting ineffective conferences or simply not conducting them at all on complex acquisitions, and for many other IT programs, is inexcusable. The current process of government and industry program managers shaking hands and going off to the races to waste taxpayer money must come to an end.

Although these techniques are nothing new, they can go a long way to turning around poor acquisition outcomes. Certainly the current requirements development process is broken and needs to have a thorough review to address. However, executing on current federal requirements can see improvements if both industry and government understand that they are not reinventing the wheel. Slight changes in business processes and conducting effective contract management require simply adhering to disciplined implementation.

Improving Federal Acquisitions: Let's Do It Right

2010-10-08T09:17:00.000-07:00

Over on Federal Computer Week, Dr. Steve Kelman has written several blog posts on The Lectern in a series of issues related to improving federal acquisitions and communications, specifically information technology projects. Although I have commented on the specific blog posts, I wanted to have a more in depth discussion here.

Improving Federal IT Acquisitions

I felt the wrong questions were being asked.

…Early in the conversation, Dan Gordon, on the panel as the administrator of the federal Office of Federal Procurement Policy, posed an important question in a very interesting way. He asked: "I am guessing that many in industry know when they read an RFP [request for proposals] that the government is putting out to bid a program that is likely to fail. Yet I am also guessing that industry seldom says this to the government. What can we do to change this?"…

Many issues are raised with this line of questioning. First, what benefit would industry have at this stage in the acquisition to be offering advice on an RFP? None really. In fact, I believe that this type of information would put industry at a disadvantage, since the government would never pull an RFP or even consider reshaping requirements since an enormous amount of effort and time have been dedicated at this point. For large IT acquisitions, it sometimes takes years before and RFP gets issued. Although sometimes requirements are so poorly written that cancelling an RFP and starting over really is the best solution, this seldom happens. Programs fail before they even start, and taxpayers get fleeced. This story is all too common in federal procurement.

The real issue here is to get the requirements properly structured so that the program can be successful from the beginning. Using the current Federal Acquisition Regulation (FAR), all the tools already exist in Market Research (FAR Part 10), and Exchanges with Industry Before Receipt of Proposals (FAR 15.201). So why are these techniques seldom used? What can be done to improve this process?

Contracting personnel, in addition to project and program managers, need to understand that the current process is not working. The fear of protest, possibly unethical behavior, or unknowingly giving away proprietary information (i.e. risk aversion) needs to change. If these fears proved to be the case, the FAR would outright prohibit any exchanges with industry in the first place. Government personnel need to understand that programs fail at the beginning, due to poor acquisition planning and poorly defined requirements. Almost any Government Accountability Office report on acquisition failures will undoubtedly have these statements in the Executive Summary. What was the definition of madness again?

One initiative that needs to be expanded and fully embraced is the General Service Administration’s Better Buy Project. This initiative has had successful trial runs using Gov 2.0 techniques (e.g. blogs, Wikis, etc.) to solicit input and feedback on both the federal acquisition process, but also on specific procurements using crowdsourcing methodologies to help improve the communications process between GSA and industry. There is no more equal playing field than using these techniques, since everyone has the opportunity provide input and helping ensure a procurement is successful from the beginning.

The biggest barriers are of course cultural. What is very telling are some of the comments from both sides of the issue on Dr. Kelman’s post, illustrating the great divide and skepticism that exists from increased access and communications:

Government’s Side:

…One major issue is: companies do not necessarily want to hand over their expert critiques to the government for free. Companies often find their top ideas used to fix a bad requirement--that is free consulting. They are giving away their ability to differentiate themselves from other firms that don't see the flaws and/or don't know how to solve them. Secondly, if companies were truly partners with the government, this would not be a problem. However, neither government nor contractors really want to be partners, in fact. If they were, they would accept the consequences together of bad outcomes, and the companies would make no money. No one has ever seen a government contract that reads remotely like a partnership agreement. Partnering is hackneyed, misleading, self-serving, and false in just about all its usages in the government contracting arena…

Given a chance, I believe that industry would gladly help the government resolve issues up front in the requirements development process, again if given the chance. I do not believe it is practical, nor realistic, to think that industry will voluntarily tell the government an RFP is a disaster. Several reasons include the fact that these comments will fall on deaf ears, or worse, adversely affect a company’s image. Further, the notion of best value seems to be elusive, as lowest costs seems to be the primary source of contract awards. Why bother adding value when lowest cost is desired. Perhaps value engineering should be part of every project, and adding the lessons learned to future engagements.

However, it is the partnership that will ultimately lead to program success. The comments left by this reader are unfortunately not uncommon, and somewhat true. Many firms have a vested interest in the status quo, and do not seem eager to change their approach. I also do not see the practically in using industry feedback as some kind of evaluation factor as Dr. Kelman suggests. This approach would undoubtedly lead to self-serving “improvement requests,” which is what best value is supposed to correct for anyway; what is in the best interest of the government (e.g. exceeding requirements and differentiating a proposed solution).

Industry’s Side:

…Both responses to your suggestion are accurate. We, as contractors, don't want to be in the position of suggesting to an agency that their pursuit position is incorrect. We never know who accesses those types of comments nor how they may react to suggestions to improve their position. The second suggestion is more prevalent than many expect. "Cut and paste" RFIs and Sources Sought requests generally include inadequacies, inconsistencies and contradictory pictures of the agency's true environment. These are indications that they technical involvement necessary is absent or lacking and making suggestions as to how to correct these are often not received well. In addition, fear of OCI issues has reached a point where these same contracts people will not even talk with or accept input from industry well in advance of the solicitation release. Until contracting people understand that the government encourages interaction with industry up to the release of a solicitation, these issues will not go away…

I do not believe that technical incompetence is the primary issue. I believe, and have experienced, that technical competence for a program is a function of acquiring that knowledge that normally exists internally. The fragmented way that the government buys is normally the culprit, where programs develop requirements in a vacuum without conducting a thorough stakeholder analysis, soliciting feedback or input for proper requirements development, then kick it over the fence to acquisition and contract shops. At this stage, not knowing the procurement or even the customer in some cases, contracting shops try to getting the procurement of their desk and take shortcuts at the detriment of the program, as the reader suggests. Using boilerplate information, templates, and checklists are a great way to streamline an acquisition. There is certainly nothing wrong with this approach, as I certainly use these tools with federal clients. However, tailoring the information carefully is vital, and sometimes this quality control is lacking in federal procurements.

The Organization Conflict of Interest (OCI) issue is another barrier to increased communications from industry. Many firms fear that being proactive in helping shape requirements will OCI-themselves out of competition for a particular procurement. This is a major issue that needs more thoughtful analysis, as the point of crowdsourcing is to solicit information from all parties equally, and allow for even greater opportunities for competition with requirements that are not overly restrictive and well understood by industry. Firms should not be penalized, nor should they have fear of being penalized. The government is doing itself a disservice by not properly proving these protections.

Overall, the closed-door mentality to communications is doing the opposite of what the latest acquisition reforms are trying to accomplish. I hope the Office of Management and Budget provides further guidance on this issue, and give industry a greater say in helping the government execute its acquisition reforms. All parties would benefit, especially the taxpayer in the end.

Your Taxpayer Dollar$ at Work: Volume I – Follow Up

2010-10-02T09:19:00.000-07:00

I recently started a new piece here on the The Acquisition Corner, as a result of the complete fiscal mismanagement of the U.S. Postal Service (USPS).

The Federal Times reported this week that the issues with the USPS are not only severe, but at the point that radical change is necessary if the USPS is to survive:

…Postmaster General John Potter warned Friday that the U.S. Postal Service could go broke by next September.

"If things go as expected, we will perhaps be able to get through the year and literally run out of cash in September of 2011 because we will have exhausted all of our borrowing authority," he said at a news conference.

He said losses in the fiscal year ending yesterday widened to about $6 billion…

It gets worse:

…This has been a devastating week for the Postal Service. Besides ending the year with a $6 billion loss, the agency's bid to raise stamp rates was rejected by the Postal Regulatory Commission on Thursday. The proposed rate hike would have increased first-class stamps from 44 cents to 46 cents starting in January.

Potter said the agency is studying its options in the wake of that decision. Among those options: Appeal the decision to a federal court; refile the rate request; or seek to raise rates by an amount tied to the inflation rate. That last step would not require the PRC's approval, although the commission would have to verify that the increase is no higher than a cap linked to the Consumer Price Index. According to the latest available numbers, that formula would permit an average rate increase of about 1.5 percent, a PRC spokesman said today…

What about consolidating operations, cutting costs, and other tools to improve performance to help the fiscal crisis facing the USPS? Perhaps it was not reported, but I have not seen much effort coming from USPS management on these issues other than possibly cutting Saturday delivery. The forever stamps may be an option as I commented, but hopefully they will still have utility.

Your Taxpayer Dollar$ at Work: Volume I

2010-09-28T18:13:00.000-07:00

As reported by the Washington Post, there seems to be a culture of corruption and massive waste, fraud, and abuse according to several Inspector General reports investigating operations of the U.S. Postal Service (USPS).

Upon reading this article and other IG reports, the waste, fraud, and abuse that seems to be cultural at USPS is hard to swallow. However, I have been inspired to start a new piece here on The Acquisition Corner: Your Taxpayer Dollar$ at Work. My first edition!

…Dozens of former top executives and hundreds of former employees have returned to the agency in recent years as private contractors, sometimes making double the salaries they made as full-time workers, according to one of three watchdog audits released late last week…

I do not believe anything is really wrong with that, per se. Many federal government employees leave their federal positions, start companies or work as contractors, and make more money doing so. There are conflict of interest laws in place. What is wrong with that?

…"It appears unethical to hire back former executives at nearly twice their former pay to advise new executives who were placed in their position based on their expertise and years of Postal Service experience," the report said…{Emphasis mine}

…The Postal Service has awarded more than 2,700 contracts to former employees since 1991 and awarded 17 no-bid deals to former executives between 2006 and 2009, according to one of the audits. Most of those executives earned six-figure sums, the report said. One unnamed executive received a $260,000 no-bid deal in July 2009 to train his successor just two months after retiring...{Emphasis mine}

Hired as a contractor to train and get up to speed your replacement? How does that even happen?

…The reports said the cash-strapped Postal Service is doing a poor job tracking its use of no-bid contracts, contributes more to worker health and life insurance benefits than other federal agencies and should consider closing more of its regional offices to help address an expected $230 billion, 10-year budget gap.

…The Postal Service is set to report billions of dollars in losses this week because of declining mail volume. It is also awaiting permission from regulators to raise postage rates and is locked in negotiations with two of its largest unions…

…Beyond employment contracts, the Postal Service improperly classified the status of 5 percent, or $910 million, of its $18 billion annual contracting costs, according to the report…

What a mess. It seems that that the mechanisms to provide contract oversight and surveillance are not only negligently poor and inadequate, but actually appear to make the oversight mechanisms for Iraq and Afghanistan sound like the equivalent of a well-oiled machine. Further, the USPS unions appear to be also obstinate and inflexible, in the face of a needed overhaul in how the USPS does business. Not just to improve, but to survive.

Better go out and get those “Forever” stamps, as postage rate hikes will be going up, in perpetuity.

Procurement Efficiencies Through Multiple Award Contracts

2010-09-25T16:50:00.000-07:00

As reported by Federal News Radio, The Office of Federal Procurement Policy (OFPP) is pursuing several short-term initiatives to reign in the proliferation of multiple award contracts (MACs)

"Progress has been made in improving some aspects of interagency acquisition," said Jeff Zients, acting director of the Office of Management and Budget in its annual report to Congress on interagency contracting.

"Most agencies have advised OMB that their buying organizations are strengthening internal management controls to improve the processes used to evaluate if an interagency acquisition is likely to be beneficial as well as those to manage the roles and responsibilities each agency bears in such an arrangement. However, on other fronts, progress has been insufficient and uneven. In particular, there continues to be concern that the agencies, through both single-agency and multi-agency contracts, may be duplicating each other's contracting efforts and creating redundant contracting capacity."

There is no question that the explosion of MACs has created excessive waste and administrative burdens to both the government and industry. Reigning in this problem requires a two-pronged attack strategy: stop unnecessary new MACs from being created, and consolidate the ones that currently exist.

According to the report, OFPP guidance expected later this year would require agencies to prepare business cases that describe the expected need for the contract vehicle, the value that its creation would add, and the agency's suitability to serve as an executive agent. Business cases should be mandatory for all new MACs. The focus, of course, needs to be effective resource management, not to mention a comprehensive requirements development and stakeholder analysis to ensure internal and external MAC sources are not available to meet the new requirement. OFPP guidance should also make it clear that any new MAC needs to be justified my ensuring no other vehicle can be used to execute the need. There exist few legitimate arguments, in my opinion, that can justify this explosion of MACs. What I see is continued waste through little collaboration across government and distrust in other agencies MAC products to ensure lower prices.

I believe industry would also appreciate the opportunity to cut a lot of the expensive and burdensome administration of having to compete and manage multiple MACs for similar products and services. The government has created a culture of redundancy for industry by a "Pay to Play" construct. I do not mean anything nefarious, but firms are forced to spend resources to be on multiple MACs that offer similar services. Take a look at the average website for firms that provide goods and services to the federal government, and you will see the numerous vehicles, with the subsequent overlap and redundancies.

What about small business participation and ensuring consolidation does not turn into a bundling exercise? Accountability is the answer. Ensuring small business participation and execution of small business objectives for MAC awardees is crucial to ensure small businesses can compete. Also finding ways to include small business only MACs, such as Alliant Small Business (Alliant SB), is another appropriate activity.

I am not a big believer in reinventing the wheel, but yet another government database to capture even more data that exists? Really OFPP? I believe this already exists in the Interagency Contract Directory (ICD). Not the best system in the world, but with investment and increased capability, it can be very effective so long as the interfaces and information in Federal Procurement Data Systems-Next Generation (FPDS-NG) are correct and robust.

Overall, a lot of work is needed to improve this process, but it must be done through a standardized and centralized approach. There are way too many contracts for similar products and services these days, and the government will not be able to effectively implement any consolidated, strategic sourcing without a real push by leaders across government to get on the same team and work for the taxpayers vice their own self-interests.

Behind the Curtain: Communications in the Acquisition Process

2010-09-02T15:25:00.000-07:00

With the end of the fiscal year comes the right of passage for government contracting personnel and contractors alike; the end-of year budget dump or as I like to call it, the end of fiscal year feeding frenzy. This time of year is characterized by the worst practices in federal contracting: lack of any real acquisition planning, abundance of improperly justified sole-source contracts, and the overall lack of meaningful competition.

Coming off the heels of a new report by GAO on the lack of competition, one clear issue is the woefully inadequate communication between industry and government.

The SBA takes the general position that a procuring agency does not need to document in a contract file any other prospective sources if the agency selects an 8(a) participant to perform the requirement, offers it to SBA, and SBA accepts the requirement into the 8(a) program. SBA officials note that it is the procuring agency’s responsibility to conduct market research to determine whether the requirements of the Small Business Act can be met, and then to determine the appropriate contracting vehicle to use. However, SBA considers market research requirements to be satisfied when a participant in the 8(a) program self-markets its abilities to a procuring agency and is subsequently offered a sole source 8(a) requirement. When we discussed this issue with procurement policy officials at DHS, they said that, while these activities may meet the regulatory requirements, in practice they like to see additional market research so that the offer to the 8(a) firm has a more solid basis. {Emphasis added}

Get it off one’s desk seems to be the prevailing attitude, along with the closing down of accepting any new requirements to handle the end-of-year rush to get dollars out the door. Is it just simple correlation that more procurement activity carries more risk of protest? If so, then something has gone wrong.

To improve competition and get meaningful best value outcomes, communication with potential vendors is an essential part of the market research process. Common forms include written exchanges of information (e.g., submission of marketing materials or responses to Requests for Information), in addition to also meetings with potential vendors.

However, it is the risk aversion and untrained contracting officials, combined with poor integration with program management and contracting that often makes this process difficult. A recent article in Government Procurement magazine shared a similar sentiment:

This concern can have a chilling effect on communication with vendors. In response to a request for a meeting prior to release of an RFP, one state official recently wrote: “If I meet with them even as an introductory meeting, then I assume they understand they will be precluded from bidding on any project we bid out the next six months.” Is this level of concern by state and local officials warranted? We think clearly it is not.

Nor do I. In fact, Federal Acquisition Regulation (FAR) Part 15, “Contracting by Negotiation,” balances the dual goals of “openness” and “integrity” in the procurement process by specifically encouraging pre-RFP meetings and exchanges of information between public officials and potential vendors. Good acquisition planning needs open communications, not to mention the FAR specifically identifies “one-on-one meetings” as an appropriate means of accomplishing these exchanges. Program Managers needs to ensure they know what is appropriate, and Contracting Officers need to provide this guidance and act as business advisors in this process. Simple processes to help alleviate end-of-year fiascos before they happen.

What really are the goals here? Openness, transparency, and fairness for starters. Procurement official must treat all potential vendors impartially and provide equal access to all. This ensures the process is fair. For these reasons, I believe initiatives like the Better Buy Project are an important tool to meet these procurement goals, since crowd sourcing is the foundation for access to all, along with Acquisition 2.0 tools that continue to provide the transparency and openness required of the contracting process.

An informed understanding of current industry capabilities and practices results in both better RFPs and better contracts, since industry will have participated in requirements development to ensure fairness, but also realistic objectives and schedules to also help ensure positive outcomes.

More communication with industry promotes more competition, better solutions and better pricing. Ambiguity in the final RFP translates to misaligned solutions or risk for a vendor who responds with higher pricing. The latest developments, especially in such complex fields as information technology, healthcare and environmental sciences, are difficult to harness unless you put industry competitors to work for you.

Let’s capture innovation and stop reinventing the wheel, as I too believe it is ridiculous to think that government officials are so easily manipulated or influenced with these approaches that communications and Acquisition 2.0 initiatives will rig procurements. It is risk aversion and the lack of accountability indicative in the procurement process that acts as barriers to success. Continued advancements through Acquisition 2.0 pilots will hopefully not only demonstrate the potential of openness and transparency, but also provide guidance on transforming the way government does business and allow for accountability to the taxpayer, which should be the ultimate goal.

Insourcing: More Specific Guidance from OMB is Needed For Success

2010-07-10T08:51:00.000-07:00

Under guidance from the Office of Federal Procurement Policy (OFPP), expected later this summer, agencies will need to develop a business case before launching a multi-agency contract (MAC). According to the preliminary guidance, the business cases will require agencies to address the government’s ability to leverage its buying power with the creation of the new ability vehicle.

“We believe it is prudent for an agency to develop a business case before moving forward with that approach,” said OFPP Administrator Daniel Gordon.

Although this guidance is long overdue, and is a significant step in helping stem the tide of further waste and consolidating buying, what remains undone is the needed guidance and specifics on dealing with insourcing.

The Government Accountability Office (GAO) issued findings last fall about how insourcing policy was being developed, and the results remain disappointing. In March 2009, Congress enacted section 736 of the Omnibus Appropriations Act, which required all federal agencies except the Department of Defense (DOD) to devise and implement guidelines for insourcing new and contracted-out functions by mid-July 2009. Curiously, section 736 does not specify a role for OMB in the development and implementation of the civilian agency insourcing guidelines, which has resulted in failures to properly address this critical issue to the government workforce.

Nonetheless, OMB has issued guidance to facilitate the management of the federal government’s multi-sector workforce through an approach that uses best practices to human capital management and costs analysis, but clear guidelines for creating proper business cases continues to be missing or unclear. Further complicating this issue is the continued review of the term “inherently governmental,” and lessons learned from the multi-sector workforce pilots.

OMB must take the lead in developing the guidelines and providing the oversight and approval of agency-specific guidelines, as agencies claim these insourcing guidelines are complex and involve many agency functions. This exacerbates workforce issues that are difficult enough in dealing with multiple management initiatives in addition to regular core duties. OMB must provide government the direction necessary to ensure that insourcing is done correctly, which includes business cases and stakeholder analyses to ensure agency missions are performed with the right set of skills and capabilities.

What has happened is that confusion as to when a cost analysis is needed, in addition to the appropriate methodology to conduct the cost analysis, has made defining procedures necessary to sufficiently address cost issues challenging. Standardization is necessary, as GAO stated that OMB’s criteria do not specify the procedures for conducting a cost analysis or define what constitutes full cost of performance, while some agency officials insist they need to have the flexibility in determining how it should conduct cost analyses when making insourcing decisions. This is a recipe for disaster without uniformity and proper service-contract data, which also remains difficult to gather and analyze.

It also appears that OMB guidance is being viewed as a directive. More pressure is being put on acquisition workforce to use fixed-price contracts, regardless of requirements. This also appears to be the case in how insourcing is being conducted, as illustrated by the case of Rohmann Services Inc., a small business who successfully challenged an insourcing decision by the Air Force due to improper cost analysis in its reasoning for its decision.

There needs to be consolidated, overall guidance on insourcing across government, and the DOD should not be excluded. OMB should have a coordinated effort to help ensure insourcing is conducted in a proper and fair manner for all parties involved, and proper business cases get conducted to ensure the taxpayer gets the best deal.

Blended Workforce Done Strategically is Right Sizing

2010-05-24T19:33:00.001-07:00

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.

Performance Based Contracting Needs a Continued Push through Acquisition 2.0

2010-05-09T17:22:00.001-07:00

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.

Acquisition 2.0 Starts With FAR 2.0

2010-03-05T18:04:00.001-08:00

Originally posted on BetterBlog, this official blog of the Better Buy Project.

Let me first apologize to Andy Krzmarzick (@krazykris on Twitter), as I have been promising a post on performance-based contracting and how it relates to the Better Buy Project and the Acquisition 2.0 initiative. I actually started that post, but put in on hold a bit as I found something of interest that I have also been meaning to discuss.

At the Better Buy Project forum at the National Association of Public Administration (NAPA) last December, I was discussing with Mary Davie of the General Services Administration the need to reform not only acquisition, but the Federal Acquisition Regulation (FAR) itself. We both commented that we often get curious looks when we mention this in conversation, but part of the rebuilding of the acquisition mission is to look at the FAR, as it seems ripe for an overhaul. In fact, the FAR can be fertile ground for change, and that change can certainly be done under the umbrella of Acquisition 2.0 tools and methodologies, much like performance-based contracting.

The FAR, in my opinion, has become a snake-pit of over-regulation; a maze of parochial interest. As lawmakers turned to help constituencies and thus narrow interests, or through well-meaning yet poorly planned and poorly though out policy, the current FAR is an example of simply how not to conduct world-class buying.

I was revisiting a wonderful piece of common sense approaches to reform by the Procurement Roundtable (PRT) that are very relevant to the current transformation discussion, not to mention illustrative of how difficult reform can be as the report is dated December, 1999.

The recommendation regarding policy guidance I believe to be spot on, and concur with the PRT that the way forward is much less regulation and far fewer detailed procurement laws. The reform process would work in an Acquisition 2.0 construct, where mission and broad policy statements commence the process of the final outcome; a digital, e-procurement guidance or FAR 2.0.

Under FAR 2.0, guidance should focus on outcomes and mission by concentrating on National or agency goals and objectives. This guidance would not be regulation, and would certainly not be details about how to perform the mission.

The next step is recreating FAR 2.0 would be a crowd sourcing initiative, much like the Better Buy Project. The acquisition community would be able to comment on eliminating the redundancy and over-regulation, focus on commercial best practices, and eliminate those existing statutes, agency regulations, and other directives that burden procurement and detail how to perform the mission. This approach is what the PRT referred to as a "zero-based" approach; which is to start with a blank sheet and add only what can be thoroughly justified.

Further input would of course be proposals for re-creating and streamlining the buying process, changing the new FAR to make it a "what, not how" model of world-class procurement. The rule for streamlining and creating FAR 2.0 would be to follow those commercial processes that allow for a fair and open acquisition process, and allow for real transparency and accountability to the taxpayer. This new process would be based on constant innovation; eliminating and revising any existing guidance or policy that does not allow for the leveraging of new information technology. The goal is to build an acquisition process for the 21st century, and executed by a right-sized and blended 21st century acquisition workforce with the right skills and capabilities to leverage this new process.

Not an easy task, no doubt. However, recognizing the institutional challenges that have hampered reform in the past are the first areas to attack by change agents and leaders who claim to want real, meaningful reform, and who are also demanding accountability and transparency. Some agencies will continue claiming uniqueness, and Congress may the biggest obstacle. However, the Acquisition 2.0 forum and the collaborative nature of this FAR 2.0 initiative can use the successes and lessons learned from Better Buy to involve all the concerned stakeholders, including the organizations that published the overly prescriptive guidance and have legitimacy to claims of uniqueness. Only by taking risks and exploring innovative ideas can we expect to see change that matters.

Portraying Government Procurement: Is It The Media Or The Culture?

2010-03-02T06:55:00.001-08:00

Recent testimony by Steve Schooner, co-director of The George Washington University's Government Procurement Law Program, and others before the House Armed Services Committee's Defense Acquisition Reform Panel, helped paint the picture and made valid points about how the media portrays the federal acquisition environment and the current state it is in.

"The pervasive anti-contractor rhetoric emanating from the media, not-for-profit organizations, the legislature, the executive branch (including, among others, the Justice Department, Defense Contract Audit Agency and the inspectors general) colors public perceptions of contractors and the acquisition profession," said Mr. Schooner. "There is more truth to black humor in Jacques Gansler's popular new moniker for the current environment -- the 'global war on contractors.' "

However, I believe this is only half the story. I believe the media is simply reporting on what is becoming a culture of “Insource at All Costs,” with little regard to quality of the acquisition workforce, and thus creating the term that Mr. Gansler referenced.

The current environment and culture of the acquisition workforce that new hires enter into is not a pretty picture. For years the workforce has been neglected, with little attention to building skills or future capabilities. Furthermore, the environment has been one of risk aversion, exacerbated with little need for innovation or developing the tools necessary to be true business advisors and partners for programs. The result is that the acquisition workforce has stagnated on many fronts, and new hires seem to be lost in developing their own skills.

The average professional in the current workforce is very experienced, but it is becoming more and more difficult for them to train and mentor new hires, which tend to be younger and less experienced. I do not believe this is a result of generational friction, which may the case in some instances, but more of a function of the lack of resources. Many simply do not have the time, or leadership does not see it as a priority. This very fact was further discussed by Steve Kelman in a recent blog post on this topic.

The federal procurement process is a maze of bureaucracy and mind-numbing regulations that takes years of experience and know-how on navigating these difficult waters. But as Mr. Kelman pointed out, new hires seem to be given very little focused training to the point that the new hires he was talking to had received no guidance on learning anything about the products or services they were buying. The overall feedback he received was alarming, as was the lack of innovation and underutilization of these talented people who want to serve. Chairman Rep. Rob Andrews, D-N.J, said it best:

…"If you make the proper investment in experience and skill, if you motivate and reward experienced and skilled people and empower them to do the things that need to be done, they can make improvements that can turn the whole system around."

Ultimately these issues need to be solved by changing the culture and environment, and driven by the supervisors, senior contracting officials, and acquisition leaders at the agencies to create the 21st century acquisition workforce. Further, empowering the next generation is ultimately necessary to succeed, and not be treated as a necessary-evil but a strategic imperative by leadership.

However, the guidance from the Office and Management and Budget seems to be more distressing, as I see further evidence of the counter product attitude that seems to be emanating from the various institutions Mr. Schooner identified in his testimony. Leadership is vitality needed to help solve these daunting issues, as industry and government need to be working more collaboratively, expanding ways they communicate, and fining solutions together. However, it seems that the pervasive attitude is for the pendulum to drastically swing in the government’s direction, vice finding the right balance to perform the vital missions of government to ensure the best outcomes for cost, schedule, and performance.

Progress in Afghanistan Contract Oversight; Measured Optimism

2010-02-17T20:47:00.001-08:00

I recently wrote a piece for contract management improvements in reconstruction and nation-building initiatives. Updates were provided by Senator Claire McCaskill, (D-Mo), who is completing an overseas trip, including Afghanistan, and stated she was encouraged by what she saw in Afghanistan.

During the trip, auditors told McCaskill oversight agencies are working more collaboratively, ensuring contracts are properly scoped and are not duplicative.

According to Sen. McCaskill, she was encouraged by “indications” that training is being conducted for auditors, contract managers and others with procurement oversight. What those indications entail is not specified. As Sen. McCaskill is a former auditor, I fear those “indications” she was privy too may seem reasonable to her, but may not be adequate for the type of responsibilities and workload these contract personnel will be undertaking.

McCaskill also focused the contracting oversight portion of her trip on the Commander's Emergency Response Program (CERP) funds – which are a type of micro-lending program for small scale projects. She went on to say that most projects under CERP were in the $20,000 range, but now about half the programs cost $500,000 or more. This is a troubling development, as it seems that larger contracts are being awarded under CERP, presumably as a work around to bypass procurement processes in the name of speed. The Senator stated that she will further investigate CERP funds and how they are being used when she returns to Washington, and I hope she lives up to that commitment. CERP is also referred to as “Walking Around Money,” and I believe waste, fraud, and abuse seem to be inevitable with this program as I do not know anybody that walks around with $500,000 in their wallets.

Unfortunately, little progress has been made with monitoring of U.S. Agency for International Development contracts for reconstruction, humanitarian and other development work in Afghanistan, according to the Senator:

…"There's an awful lot of oversight being done there by e-mail because the work is done outside the wire," McCaskill said. "The work is being done in places government officials cannot easily get to, to oversee them."…

Oversight done via email? I’m all for using technology to increase procurement efficiency, but that seems to be taking things a bit too far.

Oversight of Contracting Needs To Be Overhauled In Rebuilding Efforts

2010-02-14T14:35:00.000-08:00

As the devastation unfolds in the aftermath of the earthquake in Haiti, it is clear that rebuilding the country will be one of the greatest nation-building exercises ever undertaken. To that end, federal agencies have started turning to contractors to support the missions of recovery and relief, and ultimately, reconstruction.

What is troubling is the lack of oversight and accountability whenever disaster strikes, both domestically and abroad. The United States is certainly no stranger to devastation, most notably with Hurricanes Katrina and Rita, and the floods that devastated the Midwest last year. However, processes and systems seem to still lack the capability to track the contract funding and ensure that performance is being managed and monitored. The Department of Defense has predictably been spending the most in Haiti, on items such as barges, ships, and relief supplies. However, there never seems to be little efforts to account for the spending. It is always a focus after the fact, but even then contract data is either incorrect or non-existent. It is this lack of accountability that seems to be unfolding in Haiti, and the Department of State and the U.S. Agency for International Development (USAID), who will no doubt be heavily involved in any reconstruction mission, have had their contract management failures in the spotlight with the their reconstruction efforts in Iraq and Afghanistan.

The Special Inspector General for Iraq Reconstruction recently issued a scathing report taking State to task on it contracting and oversight practices.

…The Department of State (DoS) Bureau of International Narcotics and Law Enforcement Affairs (INL) contract with DynCorp International includes task orders to support the Department of Defense’s (DoD) Iraqi police training program...

…INL continues to exhibit weak oversight of the DynCorp task orders for support of the Iraqi police training program. INL lacks sufficient resources and controls to adequately manage the task orders with DynCorp. As a result, over $2.5 billion in U.S. funds are vulnerable to waste and fraud…

Apparently in 2005, the Inspector General told State that INL's staffing was inadequate to keep pace with its workload, and oversight of the contracts for Iraq needed to be strengthened. Again the calls went out in 2007, with the same response that INL “planned” to increase staffing and improve contract management. Those “plans” seem to still be in the works, as by November 2009, there were three contract monitors in Iraq for the police training work; a $2.5 billion contract. State had responded with plans to boost that figure to 11. Although I am not a fan of talking about numbers, but rather favor skills and capability, it seems that fraud, waste, and abuse will continue to be difficult to manage with such few personnel.

The situation in Afghanistan is no different. Recent congressional hearings focused on Defense and the State departments' ability to handle a rise of contractors in Afghanistan.

…According to the Congressional Research Service, if the ratio of contractors to U.S. military personnel remains roughly the same, the deployment of 30,000 more troops to Afghanistan would require 26,000 to 56,000 additional contractors. The number of contractors in Afghanistan already is growing; from June to September, there was a 40 percent increase in Defense contractors alone...

…Auditors found "much of [the] waste [in Iraq] stemmed from inadequate contracting management, including contractors overseeing contractors, poor coordination of interagency efforts, continual personnel turnover and the challenges of contracting in a war zone," Senator Claire McCaskill (D-Mo) said…

USAID responded with their mitigation plan for Afghanistan by hiring more contracting officer technical representatives (COTR) and regional inspectors general, improve COTR training for quality-control and assurance, and boost the number and quality of site visits, according to Charles North, senior deputy director of the USAID Afghanistan-Pakistan Task Force. The report also stated that the agency also is modifying contracts to include more stringent reporting measures and providing additional guidance for COTRs in ensuring compliance. This would certainly be a step in the right direction, but it is the accountability to execute that ultimately will lead to results and improvements in ensuring the mission is being achieved and that taxpayer funds are not being wasted.

These efforts by USAID needs to be established by all contracting offices as a matter of course and contracting strategies before execution and not after the fact, as it is seems to be unfolding in Haiti. Only by establishing procedures and processes upfront can the reconstruction mission be done effectively and efficiently. Further, lessons learned need to be incorporated and accountability needs to be brought into the process in hopes of putting Inspector General reports and recommendations to good use as tools for improvement and not triggers for congressional hearings and investigations.

Insourcing Debate Is About Strategy, Not Numbers

2010-01-08T06:58:00.001-08:00

As the federal government continues to find ways to move contracted work back in-house, it must overcome some major obstacles. One area that has been significantly neglected is effective human capital planning. As a result, the government’s lack of in-house resources has increased its reliance on contractors to help it perform vital functions. This issue became acute with the federal acquisition workforce, but only recently garnered substantial attention. Although human capital plans are being implemented as part of the Office of Management and Budget’s (OMB) guidance on contract savings initiatives, the real challenge remains understanding the roles and responsibilities of current contract activities and how a blended workforce will be managed in order to continue performing the acquisition mission.

Strategic human capital plans can only be effective and executed properly by identifying an organization’s skills and capabilities, and recognizing how that current skill set performs the mission. Contractor visibility and transparency remain areas of concern for the government because of poor information management, lack of oversight and accountability, and most importantly, poor leadership. A renewed focus by the government on contract management is critical to alleviating these continuing problems. In short, the government must have a better grasp of who the agency contractors are and what activities they are performing.

On the other side, industry must also engage by providing information crucial to human capital planning so they too can be more effective. Contractors have more accurate and current data on their workers because of their necessity to maximize profitability and utilization. Obtaining this data from industry will help the government make informed decisions and strike a much needed balance. Only through this partnership and trust can workforce plans be created that are of any value.

Furthermore, vast information to help make these decisions already exists, but because of the lack of contract oversight and administration, in addition to poor overall program management skills by government, this data is either incorrect or incomplete. This creates a vicious cycle because inadequate staffing contributes to contract management issues, which in turn fuels reliance on contractors. Additionally, lack of staffing and bad practices have led to poor quality assurance principles, making it difficult to determine whether contractors are meeting their contract requirements. The end result is that skills, capabilities, and outcomes are obfuscated because of shortcomings in following guidelines for contract execution.

These quandaries must be solved to help shape the balanced workforce and human capital management plans, as contractors will continue to perform vital functions such as the acquisition mission. The government simply does not have the manpower to perform all necessary tasks, and thus contractors help fill a critical gap. However, it is this gap that needs to be the central focus of any debate on insourcing and managing a blended workforce.

A comprehensive review must also be conducted of current contracted services, what services and skills are being purchased, the size and complexity of the contracts, and the efficiency and costs associated with these contracts. This will be an exercise in information management, and the power of collaboration tools, or Gov 2.0, can undoubtedly play an important and essential role.

Solving these problems requires strong leadership, and a demand for accountability and transparency, from both the government and the private sector. Only by working together can both succeed, and provide the tools necessary to create the foundation for effective government management.

Execution is the Key to Improving the Federal Acquisition Process

2010-01-02T07:53:00.001-08:00

As 2009 is now in the books, the year ended with plans submitted to the Office of Management and Budget (OMB) by the 24 federal agencies that account for 98% of contract actions. As reported by NextGov, these agencies have identified $19 billion in acquisition-related savings, also announced by OMB in their report on the plans.

These plans will not be made public until spring 2010, when an online dashboard focusing on the savings is launched, in addition to “a combination of strategies,” according to Jeff Zients, federal chief performance officer and OMB's deputy director for management. These plans will apparently focus on program terminations and reductions, spending caps, and more competition with procurement actions.

I for one look forward to the plans, because the lack of information and the “identified savings” seem to be cherry-picked actions with no real long-term impact, focus on real process improvements and business case analyses, contract restructuring, or ways to improve human capital strategic planning. One good area of the plans are a renewed commitment to strategic sourcing and leveraging the buying power of the government. However, details are non-existent, in addition to a strategy that relies on increased use of agency-wide and government-wide contract vehicles, which also need a further look as abundant waste is indicative in the use of these contract vehicles as standardization is needed. However, the inherent culture of “uniqueness” across government will deter this needed analysis on these contract vehicles, and create further waste with any strategic-sourcing initiatives since buying power will not be leveraged to the maximum extent possible.

Encouraging examples were given in the report, such as the Department of Homeland Security (DHS) standardizing desktop operating systems across the department, allowing DHS to award a single contract for all necessary IT products and projecting cost savings of $87.5 million. Also included are examples of savings through in-house engineering expertise for a manufacturing or design flaw, and a new online reverse auction service implemented by Energy. Although these are steps in the right direction, I hope the plans move forward in a more strategic way, or these initiatives will be the equivalent of placing band-aids on wounds that require a tourniquet.

The report continues by discussing how agencies are also seeking to find the right balance of contractors and federal employees. The reporting agencies have apparently developed pilot programs to determine the appropriate number of contractors and federal workers and will report on progress under these programs by May 2010. According to OMB, these pilots will be assessed to find ways to “insource” or add resources for contract management. A better use of resources would to create strategic human capital plans now that include a balanced workforce based on skills and capability needs. I would like to think that adding resources for contract management would be a known fact, so it makes better sense to forgo pilots and execute. The time for further pilots and studies has passed, we need action now. Although each reporting agency is required to submit a human capital plan for acquisition by March 31, 2010, I hope the balanced workforce is part of the plan. We shall see.

Finally, the third area of the report is to address one of the vital administration priorities; a reduction of high-risk and noncompetitively awarded contracts. In discussing these contracts, Zients said:

…"carry the greatest potential risk of overspending taxpayer resources." He said the "explosion" of these contracts -- the use of which increased by 129 percent between 2002 and 2008 -- is a concern. Agencies are working to meet the president's goal of reducing money spent through such contracts by 10 percent, and will report twice a year on their progress…

This is an area of concern, as the administration and OMB want to restrict the tools available to the workforce, and add insult to injury by focusing on symptoms and not the disease. The acquisition workforce is understaffed and undertrained, and do not have skills, capabilities, or tools to perform. One of the resulting factors is an explosion in sole source procurement actions, as contracting personnel forgo competition in an effort to increase contract velocity in a desperate and increasingly futile attempt to keep up with the workload. Creating an environment where only fixed-priced contracts should be used, regardless of the requirement or appropriateness of another contract type, has already been attempted and will only lead to more waste, fraud, and abuse. The reality is that more needs to be done with less, and increased communications and collaboration through Gov 2.0 tools is a promising endeavor that should bear fruit (See Better Buy Project). These tools will not solve everything certainly, but will go a long way to improving the acquisition process, and help standardize and improve methods to increase competition, lower costs, and change outcomes for the better.

This year-end report from OMB continued a disturbing trend on their part in 2009 through a lack of specificity, guidance, and leadership instead of creating an environment of risk-taking, accountability, and a renewed focus on oversight. I hope that 2010 is a year for execution, but apparently we’ll have to wait until March 2010 before we get a roadmap on how we can move the process forward.

Moving The Better Buy Project Forward: An Exercise in Change

2009-12-21T10:56:00.001-08:00

Originally posted on the Better Buy Blog

After attending the recent Better Buy Project panel this past week, I blogged about my observations and some issues that came up from that conversation.

That lively discussion continued on the GovLoop Acquisition 2.0 community. Although many commentators took different takes, I think we all agreed that one of the central tenets of successfully implementing Gov 2.0 can focus on one principal area: change management.

Like the Better Buy Project and all Gov 2.0 projects, these initiatives are typically undertaken to changing the overall business environment, and the federal procurement process for Acquisition 2.0. Whether trying to improve the requirements definition process, change roles, or define new ways of doing business, and effective Change Management Process is paramount to stress the benefits, demonstrate long-term value, and minimize the resulting impact on current projects.

Implement a Change Management Process in Gov 2.0

Unlike most projects with a typical project manager, I do believe in the need for the extra project leadership via change agents; committed leaders who are willing to take the risks associated with these initiatives and drive them to fruition. Due to the nature of the current environment in Government procurement (e.g. risk-aversion and status-quo mentality), change is a difficult pill to swallow. This mindset is further exacerbated by the perception of disrupting productivity, as the acquisition workforce has been forced to do more with less. Many past improvement initiatives have also not been driven by change agents, and thus go nowhere. In regards to Gov 2.0, many procurement officials feel they do not have the time to bother with yet another program from leadership that only makes one roll their eyes with the perception of no real value or benefit to helping one do their job better, faster, and cheaper; another passing fad. Thus the need for real commitment from the top and the change agents as demonstrated with Better Buy, as the project is showing real value and a commitment to execute.

Successful implementation will rest with Change Management, which is defined as the process of monitoring and controlling change within a project. By managing the implementation of Gov 2.0 initiatives in regards to acquisition, leaders can:

Reduce the negative impact on current acquisition projects
Identify new issues and risks, and implement lessons learned as a result of changes implemented during execution
Ensure that implemented changes do not affect overall desired objectives and outcomes
Control cost of implemented changes

Successful Change Process: A Four Step Model

Change Management in itself is a project within a project. It is already being executed at the General Services Administration (GSA), where projects are actively being sought to pilot the inputs from Better Buy users. Nonetheless, implementing and executing on Gov 2.0 initiatives can follow these Change Management steps:

Identify: The first step in the change process is to identify the need for change, which is apparent in federal acquisitions. This is the overall objective of the Better Buy Project, where any member can suggest a change to the process. Some of the discussion at the panel included capturing statistical data of the user community and their input. However, it is the relevancy of the input that is most important. Further, anonymity can be a powerful tool to providing desired input, free from possible managerial reprisals. The Better Buy Project will hopefully serve as a template for capturing input for change, and helping leaders identify needed focus on process improvements and areas to retool business operations. The Securing Americans Value and Efficiency (SAVE) program is another example of real benefit through collaborative processes, although these types of tools should be done with more frequency. Identifying the need to change is driven by value added; describing the change, and identifying drivers, benefits, costs and likely impact of the change on the project, process, or agency.

Review: This is what the Better Buy Project is currently doing in its Phase II, which is to investigate the recommended changes to identify feasibility and impact, both long and short-term. GSA experts are looking for the low-hanging fruit, and those suggestions that can be successful delivered to have the greatest impact with the least disruption. Normally changes which are not critical to project delivery should be avoided whenever possible to prevent "scope creep," but the Web 2.0 construct seemingly turns this project management dictum on its head. Implemented changes will have impact on project delivery, specifically by buying better, faster, cheaper. It is the disruption on current delivery that can not suffer, and why Butter Buy implementation will be so difficult. Finding ways to implement gradual change is preferred, as lessons learned can be studied, reviewed, and implemented with more meaningful impact.

Approve: Experts have to review the recommended changes and input, as some recommendations are real and others use these forums as an outlet for venting frustration. Nonetheless, it is the naysayers that can also have value on the conversation, as they may point things out that are not always clear to those who are committed and engaged towards success. As discussed at the panel, the suggestions on Better Buy with the greatest number of votes does not necessarily mean ranking, so leaders do need to weigh the value of the input. More importantly, these decisions need to be communicated to the user community, as members should be able to see what input is being considered, and what is not. Ultimately, these decisions should be based on the level of risk, impact, benefits and cost to the overall project or process, and the decision may be to decline, delay or approve the change request. Either way, this level of communication and transparency can go a long way to refining input. More importantly, input will hopefully keep coming as users can see execution is the real end goal, and the initiative is a worthwhile investment of time to participate.

Implement: Here is another way to use collaboration tools with user input. Who knows best on the projects or processes that can be improved than users? Of course members will no doubt vent some more, but that is why input is vetted by experts and leaders to ensure the cream rises to the top. Leadership needs to ensure proper input gets implemented, and also ensure that proper communications strategies are put in place such that changes are scheduled and implemented accordingly. After implementation, leadership, helped with the users, can review the effects of the change on selected project and processes to ensure that they have achieved the desired outcomes. This in effect creates a change agent community, which helps leadership further communicate outcomes and execute more efficiently. Further, these successful changes then need to be broadly communicated to the overall Gov 2.0 community, to further build bridges and roadmaps for successful implementations across Government.

Throughout a sound Change Management Process, Government leaders can monitor and control changes to selected projects and processes by communicating often, and in turn ensuring that communication is broadcast using the same collaboration tools and keeping track of changes that have been accepted, rejected, or in review. This in effect creates a transparent, up-to-date Change Register.

By completing these steps, Government leaders can carefully monitor and control project and process changes, which in turn increase the likelihood of success. I look forward to further actions by the Better Buy Project, and other initiatives that are leading the way in changing how the Government operates.

Better Buy Project Moves Forward

2009-12-16T19:29:00.001-08:00

As collaboration tools, Gov 2.0, and other initiatives to encourage transparency and solicit input from stakeholders move forward, a pilot on this front met today to discuss implementing these ideas and creating further momentum via proof of concept.

The Better Buy Project, as I discussed in a previous post, is a collaborative initiative between the General Services Administration (GSA), the American Council for Technology/Industry Advisory Council (ACT-IAC) and the National Academy for Public Administration (NAPA). The initiative is focused on collecting ideas to help shape the future of acquisition, with the ultimate goals of creating an acquisition process that is world-class through a concept of “crowdsourcing.”

Moderating the panel was Chris Dorobek of Federal News Radio, who was jokingly introduced as the Most Interesting Man in the World (I told him I would include in this post, so here it is!). Although I did not actively ask questions, and Chris did a great job moderating and going around the room soliciting input, my primary objective was to get the sense of the questions being asked and the level of awareness of the project. Further, I wanted to hear from the panelists, most notably Mary Davie of GSA, who has spearheaded the initiative through thoughtful and visionary leadership. Some of the issues addressed were interesting for what was discussed, but more so for issues that were left outstanding.

Of course one of the biggest issues to executing Gov 2.0 initiatives are the regulations and policies that need to be addressed to ensure compliance. The group discussed Section 508 and Federal Information Security Management Act or FISMA, in addition to overall security requirements most notably at Defense and raised by resident expert Noel Dickover. However, what remained mostly silent, and what interests me, is getting acquisition leaders interested and engaged. That seems to be one of the biggest obstacles to Gov 2.0; the metrics, the ROI, the impacts on the profession, and that real value can be difficult to measure or remains intangible. Although I think headway is being made on that front, certainly the need to communicate the real value added is vital for this and similar Gov 2.0 initiatives. For the Better Buy Project, and the overall Acquisition 2.0 movement, the message campaign is about buying faster, cheaper, and more effectively. Further, the tools should allow procurement professionals in both Government and industry to exchange meaningful information to create better requirements, facilitate market research, and help create the foundation for successful outcomes up front.

The Better Buy Project needs to do a better job of communicating to the user community what is being done with the ideas that are being posted and voted on, such that people can see that this initiative is for real. Just because an idea has the most votes does not necessarily mean it will get implemented. In fact, some of the ideas that have the most votes and commentary are due in part because they are out-of-scope, or require more clarification to understand the user’s intent. Along those lines, these initiatives need to get better input from naysayers, those who think these initiatives are fads and meaningless. Their input is just as vital to those who are engaged and actively participating. Only through a holistic approach to soliciting input can these pilots create the most value to overcome obstacles and come to fruition.

It is the end-state that ultimately matters, and to that end, GSA is actively taking input from Better Buy and looking for ways to implement them. As Chris Hamm, Operations Director of GSA’s Federal Systems Integration and Management Center (FEDSIM), and also a panelist mentioned, this is the hard part. Who is going to take the risk, and possibly the hit, for sticking their neck out to use these unproven tools in a risk-averse environment? What projects and in what state are needed? These are questions that of course need to be answered, but also prime areas for answers by Better Buy users. The collaboration could help GSA figure this out. Further, leadership and change management are again at the forefront of getting to the next step towards execution.

My end-state for federal procurement is to focus on outcomes and needs, and for Government to get out of the requirements writing business. The world-class federal procurement environment would be performance-based, with the focus on buying real best value through innovation, and to allow acquisition professionals to focus on oversight, surveillance, program management, and performance. I am a strong proponent of streamlining and standardization, as the uniqueness of agency missions, and in some cases, different organizations within an agency, is a canard to continuing status quo. I often consult with federal clients who have very commercial-like operations, yet feel they are unique and have to have everything custom built. Granted I am not proposing a one-size-fits-all approach, but looking for ways to streamline and standardize is not such a bad thing, and can go a long way to creating real savings through the elimination of redundancy and waste. These Gov 2.0 tools, and the initiatives like the Better Buy project, can go a long way to making this end-state a reality.

I hope that Better Buy and similar initiatives continue to find ways to engage the acquisition community, because I believe these tools are a badly needed tool for change. Combined with common sense approaches to process improvements, and working in the current environment without further legislation and laws that create confusion and ambiguity, federal procurement can once again be the starting point for successful government management and get the respect and positive attention it deserves.

Becoming Engaged with NCMA Enhances Professionalism and Mission Success

2009-12-14T19:11:00.001-08:00

The NCMA recently published an open letter to Government employees on how to become engaged with the NCMA without conflicts of interest or ethical violations. NCMA provides a collection of neutral networks or communities, at the local and national level, where contract management professionals from all types of government and industry agencies and organizations can come together with a common goal: To enhance their professional expertise in a non adversarial environment, thus enabling them to more effectively accomplish the mission of their organizations.

Acquisition professionals are encouraged to read this letter, as many misconceptions can be addressed about government employees getting involved with the association. Only by working together can we help solve the complex problems faced by the government contracting community, and NCMA is at the forefront of leading this change.

Open Letter to Government Employees

Increasing Competition Means Raising the Bar on Value

2009-11-14T14:19:00.001-08:00

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, 21^st 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.

Acquisition Reform Should Include Protest Actions

2009-11-03T15:03:00.001-08:00

Recent reporting by Federal Computer Week (FCW) highlights an issue that is not being addressed by acquisition reform initiatives; reforming the contract protest process.

Writing in the Editor’s Notebook blog at Washington Technology, Nick Wakeman discusses the protest by Unisys and General Dynamics of TSA’s contract award to Computer Sciences Corp for the agencies information technology infrastructure.

According to FCW:

…the number of protests filed with the Government Accountability Office jumped 17 percent between fiscal 2007 and 2008, according to a December 2008 report. Part of that can be attributed to an increase in GAO’s jurisdiction. But even if you take that out, Wakeman notes, that still leaves a jump of 10.9 percent, which followed an increase of 6 percent the year before. In contrast, the number of protests had declined 2 and 9 percent in the preceding years…

I see three fundamental issues at play here that need to be addressed regarding this rise in protests:

1) Business Strategy

With such large awards like the TSA contract seemingly the norm for information technology, many companies cannot afford to not have the business. These contract wins are often built into the bottom line profit projections, so protests are a vehicle to open competition, or even go on fishing expeditions in hopes of finding errors in process that can sustain a protest. Further, there is now an understanding in the market that protests are almost a given for these large acquisitions, therefore companies competing for opportunities are creating internal process teams as part of proposal centers to execute protest actions as part of capture management.

Also reported by FCW earlier this year was a piece by Robert J. Guerra, a partner at consulting firm Guerra and Kiviat, who was horrified to receive an e-mail advertising a seminar titled “A Successful Bid Protest Can Produce a Contract Win.”

…“It is appalling that in a time when government acquisition personnel are under increased stress to conduct ever more complex acquisitions, we as a community should seek ways to protest more contract awards,” Guerra wrote in a Federal Computer Week column. “It isn’t bad enough that we already have protests that in many cases are ‘fishing expeditions.’ Now we want sales reps and managers pursuing protests as a way to make their quotas.”…

I also wrote about this phenomenon in a piece for Defense AT&L magazine, as the increase in protests is a sign that more companies are competing against one another for smaller shares of a shrinking market for multibillion-dollar projects. As a result of poor source-selection practices and award decisions, the government has opened the door for the opportunities to protest. Industry is simply taking advantage.

2) Acquisition Workforce

I do not think anyone is under any illusions that workforce issues are a common denominator for many acquisition problems, and protests are no different. There has been a significant decline in solicitation quality, with the subsequent rise in the number of mistakes or lack of adherence to policy and regulations being committed by personnel conducting source selections. Further, these issues have been exacerbated by poor leadership that allows this to happen.

This goes back to a constant theme of mine that the skills of the acquisition workforce need to be restructured to encompass the life cycle of contract management, to include requirements development, contracting, and program management. Business advisors, and well-trained ones at that, are what the workforce should be, combined with having the technology and tools to increase productivity and quality. Mistakes often happen because source selections are often conducted by disinterested parties with little to no background in contracting, the requirement, or training on process. Again it is not a focus on numbers, although obviously a larger workforce is needed, but also the quality and caliber of new hires that bring business management skills to the table. Knowledge transfer is also vital from the experienced contract managers for success on this front, to help reduce mistakes and errors that are easily corrected, and shut the door to protest opportunities.

3) Accountability

It seems that there was a time when companies that protested contract after contract received a reputation for being troublemakers, or unethical. Further, these companies were often shunned by industry as well for poor management and toxic reputation. Those days are now gone.

The fact of the matter is that there are little to no consequences for companies to protest, whether it is for one contract or many. This needs to change. Although I am not advocating for industry to lose the right to protest, there does need to be a balance of accountability to the taxpayers. The way the system is structured now, firms can protest at will without having to reimburse the Government if they lose, or reimburse the Government for damages, lost time, and expenses for defending the protest. Further, firms that often protest are no longer treated with any animosity, as it is just business as usual. Under these circumstances, what does a company have to lose? Very little. In fact, the current system encourages companies to protest since there are no consequences for being wrong, or filing what can be viewed as a “frivolous lawsuit.”

There needs to be punitive consequences for firms that protest. Certainly if protests get upheld, that is one thing. But firms that habitually protest and lose must be held accountable for the lost time and costs of defending the protest to the program. Further, firms that lose a certain number of protests in a given period should also be held accountable, such as being barred from competition for a set period of time.

I disagree with a statement submitted to Congress by GAO General Counsel Gary Kepplinger:

…Well-meaning attempts to ward off such protests “may have, on balance, the unintended consequence of harming the federal procurement system by discouraging participation in federal contracting and, in turn, limiting competition.”…

I believe these measures would actually help improve the quality of vendors who compete, as companies that waste taxpayer money will think twice before filing protests without actual justification. Only when firms are held accountable for their actions will we see real change. This is contract management and acquisition reform 101.

Although protests are not going away anytime soon, I feel that the current system needs to be relooked, as we cannot afford a process that allows industry to protest with impunity, bully and intimidate contracting officials, and waste taxpayer funds. A balance is needed, and badly overdue.

Lessons Learned From Rapid Acquisition of the MRAP

2009-10-25T19:59:00.000-07:00

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.

Ideas to Improve Federal Acquisition and the Better Buy Project

2009-10-04T14:03:00.000-07:00

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.

With New Fiscal Year Comes New OMB Guidance

2009-10-01T05:06:00.000-07:00

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.

Capturing Past Performance Data is Not Enough

2009-09-28T19:26:00.000-07:00

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.

Hitting a Home Run; Baseball and the Acquisition Process

2009-09-24T17:46:00.000-07:00

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.