Communications Are Vital to Improving Acquisitions

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.

Speed Over Prudence in Stimulus Spending

Last week at the National Contract Management Association World Congress, we discussed many issues facing the federal contracting community. Among them was the push for transparency and accountability from the Obama Administration, specifically in the oversight that will be associated with Stimulus spending.

I would like to begin that conversation with the article in the Washington Post, which begins with the assumption that waste, fraud, and abuse to the tunes of billions is somehow inevitable in the rush and urgency to spend the money and get the economy rolling again.

…Missing amid all these high-minded calls to protect taxpayer dollars is an awkward question: When the whole point of a major government spending program is to stimulate the faltering economy as quickly as possible, what exactly counts as "wasted" money? After all, if some stimulus cash is misspent -- say an errant official or contractor buys himself a Cadillac or a Harley Davidson, only to suffer the full force of law -- might not such fraud boost the economy more than if the cash languished in a law-abiding state account? All that monitoring, however well-intentioned, may undercut recovery by compelling officials to spend more slowly to avoid hearings, prosecution, or embarrassment in the media… (Emphasis mine)

This is an interesting point that is causing serious issues with how best to keep track of the funds, and may lead to what I call an “analysis paralysis.” Relating this theory to DoD programs, officials often want the best solution, which to DoD means a system that meets 100% capability. Perfection is nice, but is it realistic? Is it in the best interest of the warfighter or taxpayer? Instead, focus on the 80% solution, and get capability quickly fielded and perfected with incremental additions of mature technology. For the Stimulus funding, it is the same theory. Federal officials may be so paralyzed of making a mistake and being called out on the carpet, that spending decisions may be slow-rolled and second-guessed in an environment of risk aversion.

My colleague Steve Schooner of George Washington University makes the point in the article:

… "If the goal for the stimulus spending is to minimize fraud and waste to the point of zero, I know how to do that: All I have to do is not spend the money,"

.. "Are we capable of grasping the concept that in a struggling economy, it's more important to throw money at the problem, even if it's possibly inefficient and possibly inaccurate?"…

The purpose of the Recovery Act was to help push broader policy initiatives for healthcare, energy, and education. Therefore, the stimulus funding needs to have the desired impacts on policy, but also has been placed under the microscope of oversight. Here is the where the paralysis is feared, as some in Congress are keeping a very close eye for even the slightest hints of problems amid association with Iraq or Katrina contracts and pictures of millions in $100 bricks being handed out with little accountability.

The enormous amount of attention to stimulus funding is creating a burdensome process that continues to be defined, and redefined. Agencies and contractors must spend enormous amount of resources creating reports, further burdening an acquisition workforce under siege. There appears to be a lack of commitment on data feeds with Recovery.gov, with complaints on the rise that little useful information is being provided to create the real-time informational reports that were envisioned with its creation. Therefore, just the reporting is becoming a huge impediment to Stimulus will processes and procedures that seem to be conflicting or self-defeating.

Further complicating the issue is what gets defined as "waste," and what is being targeted. Some in Congress, along with Offices of the Inspector General, are concerned with blatant fraud and abuse, while some see anything short of the bill's specific policy aims as a failure. This of course includes political gamesmanship on both sides of the aisle, which will invariable further slow the process and question spending that can be used as a political weapon. Of course the issue of risk aversion is never far away, as stated by Alan Chvotkin of the Professional Services Council:

… the oversight is putting a scare into federal officials whose agencies are undermanned as it is when it comes to contracting and procurement. "Most of the agency officials, the career officials, are risk averse," he said. One such individual he spoke with told him that the White House was behind the official "with a hot pitchfork to get the funds out," Chvotkin said, "yet he knows whatever action he takes is going to be reviewed by a lawyer or his inspector general or Mr. Devaney, so he's saying, if it's going to be [me] in a sling, this is going to be done on my timetable.".. (Emphasis mine)

We seem to be repeating some of the issues and tensions experienced by President Roosevelt, who in 1933 created the Public Works Administration and the Civil Works Administration to get America out of the Great Depression. These two agencies had different philosophies, and different imperatives on stressing speed over prudence. It is a policy focus being fought today, although I fear that prudence may be winning the fight over speed. Some in Congress, however, are bringing important questions to light:

…Amid the calls for oversight, Sen. George Voinovich (R-Ohio) issued a rare dissent. "Does this make sense?" he said at last month's hearing. Officials "are filling out all these reports and they're going to ask the question, 'Do they want us to do [stimulus] or are they more interested in the reports?'…

Some level of waste or fraud is inevitable, but the questions have to be raised about what level we are willing to accept with the broader focus of getting the economy back on track and getting people back to work. I agree with the Interior Department's highly regarded inspector general, Earl Devaney, who stated in Congressional testimony that assuming fraud will be ferreted out with the tremendous amount of transparency and accountability called for in the Recovery Act is naïve. There has to be a proper balance between actual stimulus, and creating so many policies, reports, layers of bureaucracy, etc. that risk aversion takes hold, and the Stimulus becomes a trickle as opposed to the envisioned flood for our struggling economy.