Lack of Accountability Hinders Contractor Oversight and Performance

The Office of Federal Procurement Policy (OFPP) is hoping that third time really is the charm in its seemingly desperate attempts at getting agencies to properly document contractor performance using the Past Performance Information Retrieval System (PPIRS). Although similar memos in 2009 and 2011 (here and here) focused on this issue of poor past performance data, little has changed.

As a result, OFPP Administrator Joe Jordan has issued his third wave of these memos earlier last week, where he outlined specific targets for PPIRS usage and outlining other initiatives to help with the inconsistent documenting of contractor performance.

The new memo outlines stepped targeting and goals, based on the level of agency inconsistency, so that better performing agencies have higher goals than agencies performing poorly. This certainly makes sense, given that not all agencies are performing at the same level so it would be nonsensical to expect all agencies to perform and abide by the regulations. All agencies are expected to be at 100% reporting by 2015.

Although the memo discusses targets and the actions taken to date, they have had little impact in improving past performance data.

According to the memo:

...OFPP has developed a MAX site that includes metrics from the standard

PPIRS Compliance Metric Report and allows for agencies to record their baseline and target information at https://max.omb.gov/community/x/JoNKJQ. A summary of the reports and tools available for use in this exercise are listed in Attachment 1, and the site will also include best practices gathered from earlier OFPP-led Acquisition Status (AcqStat) meetings...

What ever happened to those AcqStat meetings, where senior procurement officials where so supposed to review data and make strategic decisions to improve performance outcomes? According to Freedom of Information Act requests obtained by FierceGovernment, not much. Other than sign in sheets, the lack of transparency was alarming, if not expected.

I often advocate for fewer regulations and oversight, and there is absolutely no need to create new ones to address this issue. Nonetheless, improvements in this area can go a long way to help transform how contractors are selected for awards, and dramatically improve outcomes.

However, it is Page 3 of the memo that is most important to help understand the current failures, and the recommended actions that should be properly implemented that would have a dramatic effect:

...In support of this effort, agency CAOs and SPEs must also take the following steps to ensure that relevant performance and integrity material is reported appropriately:

1. Communicate to the workforce the importance of using past performance information, including the need to have frequent communication with contractors - such as holding interim evaluations to address performance issues, and share the agency’s plans for achieving success in this area;

2. Hold staff accountable for improving the quality and quantity of the information; [emphasis added]

3. Motivate employees to take action to fulfill this responsibility and use innovative practices to meet this requirement; and

4. Consider recognizing acquisition professionals who contribute to improvements in this area, such as through the annual CAO Council Acquisition

Excellence Awards…

Although I believe #3 above is redundant, certainly understanding the need of why this information is needed, and training the workforce on how to properly perform these reviews, are critical for these new goals to be met.

We can of course forget the opportunities for training and educating the workforce should the ridiculous meat-cleaver of Sequestration go into full effect, although those opportunities are already starting to disappear fast.

Nonetheless, what the memo fails to address is why the information is not being entered into PPIRS to begin with, and also why contractor oversight is currently so lax. It is a startling abrogation of ones duties to those responsible with being stewards of taxpayers money, and one that needs corrective actions through enforcement and proper program management.

For starters, some contracting officers that I have spoken to have taken the same attitude towards muted debriefs and the lack of transparency for reporting contractors demonstrating poor performance; that is to say "better safe than sorry, no thanks."

Because contractors have the right to appeal poor reviews, (rightly I might add, to defend against over-zealous officials abusing their power) some procurement officials just don't want to deal with the hassle. Although proper documentation should exist to demonstrate repeated poor performance, many argue the battles are not worth it.

Exacerbating the issue are highly performing procurement officials who get no top-cover from leadership due to the too-cozy relationships they have with contractors. The attitude is one of frustration, indifference, or simply ignorance.

Further, why should they? As a senior level procurement official told me while discussing the issue of the overall lack of accountability in the procurement process,

"People get paid every two weeks, if they perform or not."

I think it is safe to say we need to change this attitude. Past performance, especially for services, should be one of the most important evaluation criteria in selecting a contractor for award. However, the incomplete or missing data, combined with allowing contractors to submit their own evaluations from favored customers, often does not allow for differentiation and drives evaluations in areas that often let irresponsible contractors get way with murder because they offer ridiculously low-prices to win work in this era of institutionalizing "buying in."

In addition, what is the point of requiring in contracts status reports, weekly deliverables, monthly reports and deliverables, etc. in the areas of program management if they are not going to be used to address the issue of performance? What is the point of doing this? What contract does not already contain the interim status reviews being recommended?

Other than creating pretty pie charts, graphics, and killing trees, this vast amount of performance information is not being used properly, nor does it improve outcomes. I believe the lack of project management capability of the acquisition workforce is obviously an issue, but the one-two combination of poor accountability adds fuel to the fire.

Doing more with less is the foreseeable future in how we manage government contracts, but until enforcement and education really happen, we are epitomizing the definition of madness.

Past Performance Data and the Need to Change the Source Selection Paradigm

The GAO report entitled Better Performance Information Needed to Support Agency Contract Award Decisions (GAO-09-374), lays out a disturbing trend in government oversight and contract management that needs to be corrected on many levels if the government is to increase performance of federal contracts.

As noted in the report, the typical information management problem of federal databases is persistent in the Past Performance Information Retrieval System (PPIRS); garbage in equals garbage out. Past performance data is crucial to evaluation of past performance of course, such as contract terminations for default and subcontract management. However, this data can also be a good indicator of future performance and the ability of contractors to perform at the level required by the government. This data should be specifically documented, relevant, and reliable. However, the GAO report indicates a very low confidence level for PPIRS:

…GAO’s review of PPIRS data for fiscal years 2006 and 2007 indicates that only a small percentage of contracts had a documented performance assessment; in particular, we found little contractor performance information for orders against the General Services Administration’s Multiple Award Schedule…

The lack of standardized, streamlined processes for performance evaluations seemed to be at the heart of the GAO report for the reasoning behind the poor quality and quantity of data:

…Some officials noted that a lack of accountability and lack of system tools and metrics made it difficult for managers to ensure timely performance reports. Variations in evaluation and rating factors have also limited the usefulness of past performance information. Finally, a lack of central oversight and management of PPIRS data has hindered efforts to address these and other shortcomings…

As the Federal Acquisition Regulation (FAR) requires past performance information to be considered as an evaluation factor in certain negotiated competitive procurements (FAR 15.304(c)(3)), agencies have broad latitude in determining the importance of past performance data and its use in evaluations, such as evaluating past contracts in terms of size, scope, complexity, contract type and relative importance to the solicitation at hand. However, many solicitations for which requirements may not be clearly defined (e.g. many current federal acquisitions) and a higher risk of unsuccessful contract performance, past performance, technical capability, and other factors are weighed as more important than cost or price. It is this pursuit of “best value” where government source selections often break down, and where the paradigm shift needs to occur to truly get the performance the government desires and needs.

Since the FAR requires agencies to document and evaluate contractor performance for each contract that exceeds the simplified acquisition threshold upon completion of the work (FAR 42.1502(a)), past performance must be made a higher priority during not only the contract term, but before contract award during the evaluation process. As noted by the GAO:

…Agencies considered past performance information in evaluating contractors for the contract solicitations we reviewed, but many of the officials we spoke with noted that past performance rarely, if ever, was the deciding factor in their contract award decisions. Their reluctance to base award decisions on past performance was due, in part, to their skepticism about the comprehensiveness and reliability of past performance information and difficulty assessing its relevance to specific acquisitions…

Technical and Management capability are often the most important factors in source selections where the government seeks to award based on best value, which is often counterproductive to the realities of the government market. Further, this process actually hinders accountability as performance not only is poorly documented, but also not effectively integrated into proper program management techniques in the execution of government contracts. Getting past performance as the key to contract management oversight would go a long way to improving cost, schedule and performance goals and thus improving acquisition outcomes.

…Contracting officials who viewed past performance as an important evaluation factor noted that basing contract award decisions, in part, on past performance encourages companies to achieve better acquisition outcomes over the long term. For example, according to officials at one Air Force location, an incumbent contractor was not awarded a follow-on contract worth over $1 billion primarily because of poor performance on the prior contract. As a result, the contractor implemented several management and procedural changes to improve its performance on future contracts…

Nonetheless, many contracting officers, the report noted, preferred to rely on other more objective factors such as technical approach or price due to their reluctance to rely more on past performance in making award decisions and obtaining candid past performance information. Reasons given included the fact that contracts are so poorly managed that the government has such difficulty separating issues caused by the contractor from those caused by the government, most notably changing or poorly defined requirements. Other factors included fear of damaging contractor relations, and further fear of contractors challenging negative ratings and thus the “watering of down” of assessments by contracting officials.

Focusing on technical approaches to solicitations has not been successful, and will continue to lead to poor outcomes. Most federal contractors provide high levels of goods and services to the federal government, although the bad ones are rarely or poorly held accountable through poorly documented performance reviews. It is not common to have a company be so exceptionally superior during source selections that they are the clear winner, as the requirements would have to be very unique, along with the goods and services being offered. The reality of source selections is that technical factors are often weighed the most important, followed by past performance, then price. However many times during “best value,” it ultimately leads to price as the differentiators of technical and past performance seldom exist, thus negating best value. Although performance based acquisition is a methodology that would help offset this scenario, this process is poorly planned and executed by the government as well.

Accountability and transparency are the central themes of government contracting reforms by the Obama administration, and improving performance data and making it a more important factor can help play a vital role is reaching these objectives. The GAO made several important and common sense recommendations to help improve the data, including having standardized evaluation factors and rating scales governmentwide for documenting contractor performance, establishing policy for documenting performance-related information not captured systematically across agencies, and having controls and oversight responsibilities for updating PPIRS.

By improving the processes and the incentives to adequately evaluate, monitor, and document past performance information, the government can realize a vast improvement on acquisition outcomes that hold contractors accountable for performance.