Are you a small business with a federal government contract? Not for long…

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There is no question that the current environment in the federal market for small businesses is challenging, to say the least. However, the environment for small business may soon need to be declared a full on disaster zone.

Two recent developments are moving forward to continue making being a prime contractor and a small business more difficult, if not impossible.

First is the recent decision by a federal judge to rule against the small business community. One of the leading voices fighting for small business federal government contractors is Lloyd Chapman, President of the American Small Business League (ASBL). Mr. Chapman had hoped to bring to light the state of the small business federal government contracting market, and the way that small businesses get cheated out of billions of dollars in potential contracts.

In the wake of the decision, Mr. Chapman stated:

"This case would uncover billions in fraud in federal small business contracting programs. If the Federal courts cannot stop fraud in federal small contracting, where do you go?"

According to a Government Accountability Office report, the Small Business Administration had included billions of dollars in federal small business contracts to over 5,300 Fortune 500 firms and other large businesses. Therefore, the government's compliance with the goal of awarding 23% of government contracts to small business continues to be in question.

Even government contract experts agree that the small business community is seeing a large share of lost contracting opportunities:

Professor Charles Tiefer, one of the nation's leading experts in federal contracting law and former Commissioner of Wartime Contracting in Iraq and Afghanistan, submitted a declaration in support of the ASBL case. "If the lawsuit had been allowed to get its rightful day in court on the merits, the lawsuit would have required the SBA to give all small businesses -- and doubly so for minority, women-owned, and disabled veteran businesses -- a larger and proper share of federal procurement."

The ASBL plans to appeal the ruling to the 9th Circuit Court of Appeals.

Second, and more pernicious, is the unthinkable actions by Congress, who are supposed to be fixing this problem.

With no surprises behind the impetus, Section 838 of the 2017 National Defense Authorization Act, Counting of major defense acquisition program subcontracts toward small business goals, is nothing short of a small business killer.

The impact would be catastrophic on the small business community, since the Pentagon spends the most. This provision allows the Department of Defense to count first tier and second tier subcontract dollars towards the current goal established for competitive and noncompetitive set-aside awards to small business. Subcontract dollars would therefore replace dollars being awarded to small contractors today.

To see the potential impact, and the potential disaster awaiting small businesses, Guy Timberlake, the Chief Visionary Officer of the American Small Business Coalition, has an excellent analysis on the situation.

In three separate events in Washington D.C. this week where this issue was mentioned, all three representatives of the small business office for agencies at the individual events were excited at the prospect. They falsely believe this will help meet their numbers, but correctly believe this will be much less work for them. It was clear where the priorities are for these, and other, small business offices across federal government.

All small businesses should be up in arms over these developments, as the powers that be are aligned to punch down and cheat small businesses out of billions of dollars in federal contracts. Small businesses need to be aware of what is happening, and contact their members of Congress.

If this gets adopted across the federal government, small business government contracting can be a thing of the past. 

Improving Transparency in Federal Government May Improve Innovation

A while back, Nick Wakeman, of Washington Technology, went on a self-described “rant” about the lack of transparency in awarding task orders on certain contract vehicles. 

Allow me to continue the rant.

One only needs to do a cursory review of the Interagency Contract Directory (contractdirectory.gov) to see the enormous amount of contract vehicles across government. By applying a layer of data analysis on top of it, a frustrating pattern emerges at the lack of information available on awards off of these vehicles, or information on the vehicles to begin with.

According to the website:

…The main purpose of ICD is to help agencies take advantage of interagency contracts by supporting market research and the identification of suitable contracts that can facilitate the efficient and effective placement of orders, including with small and disadvantaged businesses. The new ICD will strengthen both of these goals by making the tool more intuitive and easier to use… 

As Nick mentioned is his blog:

…This task order is worth $224.4 million. That’s nearly a quarter of a billion dollars. This is a big deal. Why keep it hidden?...

Why indeed. 

I agree wholeheartedly with Nick that transparency into larger awards should be mandatory, as there simply is too much secrecy with the amount of money flowing through all the contract vehicles across government. Perhaps the $10 million threshold Nick mentions might be a good start. I know many small businesses spend countless hours trying to find out information about these activities, with little success unless you have some insider knowledge. 

As Nick mentions, disclosure would not only bring more transparency to the process, but valuable data can be another component to offer small businesses an important pathway to opportunities which are currently closed. 

However, I also want to take transparency a step further in the pre-solicitation phase, by finally allowing some transparency to shine on responses to sources sought notices across government. 

One of the main issues here is that procurement personnel often complain about the poor responses, or lack of responses, by small businesses. Granted there is very little review of why this might be occurring, but perhaps another data point on Fedbizopps.gov might be something to explore.

Currently, firms can list themselves as an “interested party”, and appear under the tab labeled Interested Vendors List. What if we took this a step further, eliminated the Interested Vendors List, and actually created a way to show firms that have actually responded, and create a tab with this data called “Respondents”?

This would eliminate many of the firms that are simply fishing or unqualified, unscrupulous legal firms who are “experts in protests” advertising on these notices, scammers and spammers, and provide real data on who is responding and their capabilities. 

I know I always wonder: 

• Whatever happened to my response?
• Was it received?
• Is there any opportunity for follow up?
• Who I might team with?
• What were the results?

Perhaps with this data, small businesses can find more opportunities to find teaming partners, and for firms to find complementary solutions to improve service delivery and performance. 

Of course this would all need to be automated, as the last thing we want, or need to do, is put further burdens on the acquisition workforce. 

Transparency is always a good thing to improve competition, opportunities for small businesses, and procurement outcomes. Let’s open the curtains and see what is possible.

Is Acquisition Reform at the Pentagon a Lost Cause?

wired.co.uk

One of the clearest signs that the Pentagon, or at least the Air Force, has seemingly thrown in the towel on any reasonable approaches to “acquisition reform” is the news that the Air Force has turned to IBM’s Jeopardy-winning cognitive computer, Watson, to tame the beast that is defense procurement.

…The idea is to create a “bureaucracy buster, or let’s call it a decoder,” said Camron Gorguinpour, a senior official in the Air Force’s acquisitions office…

…The Pentagon’s procurement system is the “perfect application for Watson,” Gorguinpour said. “While our acquisition system is very complex, it is document based. . .It’s unreasonable to expect that a single individual or even a group of individuals to be able to fully understand all of the relevant documents to answer a specific question.”…

This initiative is not intended to replace the acquisition workforce, but to help enhance making more efficient procurement decisions.

…The system will not only help government procurement officials do their jobs—by being able to query the system to find out, for example, whether a contract can be awarded on a sole-source basis…

This is nothing short of textbook treating the systems of a disease, and expecting a silver bullet approach to taming a monster that has many cooks in the kitchen. Decades of neglect and cutting the acquisition workforce has made the proverbial chicken come home to roost. Not only is training insufficient, it is not preparing the workforce for the types of challenges they currently face. Further, the hiring process is just not getting the type of talent in the contracting, project management, engineering, and IT fields that are necessary to execute the mission.

Nonetheless, Congress needs a hard look in the mirror as to why the system is so complex, and in many regards, broken. The years of “fixing” issues with more and more legislation, more and more broken policy, and more and more oversight has created a bureaucratic mess.

One lonely voice in the crowd is Dan Ward, a retired Air Force Lieutenant Colonel, who has written several books on real world examples of rapid technological innovation, despite the defense procurement system. His work should be must-reading for all involved in acquiring goods and services at the Pentagon, and hopefully help those realize there is a better way.

 I just find it disheartening the sheer frustration at the inability to make real change happen at Defense, to the point that Watson has to be brought in for relief. Mr. Ward demonstrates that there is a better way, but when no one is listening, I suppose the approach is akin to surgery using a chainsaw, and not a scalpel.

I wonder if Watson will find fault with it’s own contract?

Performance Incentive Strategies for Improved Contract Management

www.ecohome.net 

Continuing the conversation started by Dr. Steve Kelman on FCW and from mylast post on improving contract management, one way highlighted was better use of performance-based contracts.

During some research for a project this week, I couldn't help notice the supposed incentives these performance work statements (PWS) included. I reviewed the PWS for almost five contracts across several agencies, and what was almost the universal incentive?

...Satisfactory contract performance will result in a positive past performance review...

The negative incentives were almost all the same as well, namely:

...Unsatisfactory contract performance will result in a negative past performance review...

I suppose you can categorize this "incentive/disincentive" plan as non-monetary. However, this is nothing short of mandatory contract management functions required under Federal Acquisition Regulation Part 42.

However, the reality is that incentives should motivate a contractor to achieve higher than average performance levels, consistent with economic efficiency and risk. To this end, incentives need to ensure that they are effective, and that they reflect value both to the government and to the contractor.

As I previously stated, effective contract management starts in the beginning. Early planning is essential in determining and defining requirements in clear, concise language. Further, there needs to be a focus on specific work outcomes to ensure that they are to the greatest extent practicable based on the SMART acronym: 

• Specific – target a specific requirement. 
• Measurable – quantify an indicator of progress. 
• Achievable – specify outcomes that are possible and can be successful. 
• Realistic – state what results can realistically be achieved, given available resources. 
• Time-phased – specify when the result(s) can be achieved. 

Collaboration with industry is also essential. Through market research (i.e. industry days, one-on-one sessions, draft solicitations, etc.), industry feedback needs to be solicited regarding performance objectives, requirements, standards, and incentives.

I always prefer monetary incentives, again keeping in mind SMART. Working in conjunction with industry partners to achieve the desired outcomes, incentives should be consistent with the effort and the contract value. They also must be carefully structured to consider the overall impact for providing value in achieving the mission, and to avoid any unintended consequences. Further, if the incentives are not clearly communicated, or through a lack of communications between the government and the agency regarding desires and expectations, there will be little chance of achieving the desired outcome.

Positive incentive examples: 

• When performance exceeds standard, pay x% of monthly payment into pool. At end of y months, pay contractor amount accrued in pool. 
• When performance exceeds standard, pay x% of monthly payment into pool. When pool has reached y dollars, pay contractor amount accrued in pool.

Negative incentive examples: 

• When performance is below standard for a given time period, x% of that period’s payment will be withheld. 
• When performance is below standard for a given time period, require the contractor to re-perform the service at no additional cost to the government.

Simply stating that a negative past performance rating will be the result of poor performance, with little information or desire about how the contract will be managed, is a recipe for mediocre performance and not an effective way to execute performance-based acquisition.

A very effective tool is the Guidebook for Performance-Based Services Acquisition (PBSA) in the Department of Defense. It is worth a read, and provides a good roadmap to helping ensure a contract has a better chance of success through the upfront work necessary to realize better contract management outcomes.