Industry and Government Relations Continue To Be A Challenge

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

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?

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

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

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

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

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.