The Acquisition Workforce: Are We Going Backwards?

As the meat grinder of sequestration continues to move forward, the initiatives to improve and develop the acquisition workforce will more than likely come to a grinding halt, and move capabilities backwards at a time where forward movement is badly needed.

At this past week’s 2013 Acquisition Excellence Conference, The American Council for Technology-Industry Advisory Council and the General Services Administration (GSA) co-hosted what was dubbed a "training and education" event, but according to those that attended, the unspoken theme was “doing more with less” and strategic sourcing.

I regretfully was unable to attend, but it sounds like perhaps the conference was a missed opportunity to really “train and educate.” However, the fact that the conference experienced 30% less attendance from last year, that number is a symbol of what seems to be happening all across the board in the development of the acquisition workforce.

Make no mistake; the acquisition workforce is in crisis mode. With budget cuts and continued uncertainty, the opportunities to educate and develop the workforce will shrink accordingly.

This point was analyzed through the excellent publication from the Professional Service’s Council biennial Acquisition Policy Survey (formerly the Procurement Policy Survey). The section of Budget Stability discussed “doing more with less,” which also includes who will be doing the buying. Which leaves an interesting question: Who will be doing the buying?

According to Office of Federal Procurement Policy (OFPP) Joe Jordan, it may be left in the hands on the less experienced:

…The top federal procurement officer on Thursday called for “not a tweak but a full rethink” of the government’s planning for its acquisition workforce, warning that as many as 40 percent of the 36,000 federal contracting officers could retire in the next five years.

Joe Jordan, administrator of the White House Office of Federal Procurement Policy, compared the coming brain drain to water flowing out of a “giant bathtub,” saying he plans to push agencies to “widen the aperture of who they recruit.”…

Adding insult to injury is the fact that due to budgets cuts, contractor support will also be cut, along with retirees coming back as consultants. We have no choice but to hand the keys over those with the equivalent of learner’s permits.

We now are back to the original issue: How do we assure the acquisition workforce has the capabilities to perform these most difficult missions under severe budgetary pressures and through less experienced 1102s?

OFPP Administrator Joe Jordan recently signed a service-level agreement (SLA) between OFPP and GSA to strengthen their cooperation and commitment to the Federal Acquisition Institute (FAI), who I like to call the “red-headed step child” of the training institutions in government. What Defense Acquisition University (DAU) is to Defense acquisition workers, FAI is to non-Defense 1102s.

Therein lies the rub, where is the money? Is there a monetary commitment with this SLA? DAU has traditional gotten vast sums of money, much more than FAI in the past, which is why I gave FAI that moniker. Should we not be preparing all acquisition workers (which I include program managers) equally to perform effectively?

We can talk all day about people, but until a financial investment is slated and properly used to educate and develop the acquisition workforce, we will continue to experience gaps in skill sets and capabilities.

Not a silver bullet of course, but educating 1102s on effective and proper practices on how best to execute their missions is important nonetheless. Based on fewer opportunities to attend conferences, classes (in some cases mandatory for certification), and overall training and development, we can expect to go backwards in how we award and manage contracts.

Not a particularly welcome prospect.

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.

Certification and Competition, Don’t Move the Goal Posts

Office of Federal Procurement Policy Administrator Joe Jordan recently got some much needed feedback on the debate about insourcing and outsourcing, and how those decision are being made. However, the insourcing versus outsourcing issue is not just external to the government.

A recent trend seems to be developing where Contracting Officers are inserting VetBiz verification requirements in Service Disabled Veteran Owned Small Business (SDVOSB) set-aside solicitations. The Air Force and the Federal Aviation Administration (FAA) have done this recently, and this trend is happening all too often. I have seen this requirement before, and I do not understand how this can be legal, given that the FAR does not require VetBiz certification, nor does the Small Business Administration (SBA) for SDVOSB certification. This is a requirement for Veterans Affairs (VA) and the VA ONLY, yet I believe this trend will continue until someone stands up and brings this to the attention of the proper entity to rule on this seemingly illegal requirement.

A company called 347 Construction Group brought this up in a recent protest, but it was done through the  SBA. The SBA’s Office of Hearings and Appeals (OHA) shot down the protest in their decision, and noted:

…Bid protest allegations must be raised at the U.S. Government Accountability Office (GAO) or other similar forums, not at OHA…

…OHA lacks jurisdiction to decide whether the Air Force properly excluded Appellant from the competition…

Firstly, it drives me crazy when small businesses don’t understand fundamental contracting actives like filing deadlines to file a protest, but it goes to a bigger issue of feeding the beast of perception by some in government and large primes that small businesses lack the general education of being government contractors.

This requirement was also a great example of what pre-award protests are for, since this requirement should have never made it into the final solicitation to begin with. This requirement is unduly restrictive to competition, and SBA allows self-certification. Those are the facts, and the Air Force should have been held accountable for changing the goal posts and the rules, but 347 blew it.

More importantly, why on Earth did 347 “protest” to the SBA? Again, they lacked the knowledge they needed to take the proper corrective actions. You can read all about it in FAR Subpart 15.5, Preaward, Award, and Postaward Notifications, Protests, and Mistakes. However, a simple Google search on “protesting a federal contract” would include dozens of sites that would have helped guide 347.

I certainly understand the intent of the Air Force and FAA in wanting to ensure legitimate SDVOSB companies win their contracts, but this is not how it should be done. The current process at the VA in certifying veteran and service-disabled companies is challenging to say the least, with a 50% rejection rate, a myriad of bureaucracy and landmines, and an ocean of paperwork to prove legitimacy that makes one think the contractors that are working for VA are being paid by the page. Things are improving, but have a long way to go.

This is an unfortunate issue, and one that I hope gets corrected by standardized processes for all socioeconomic designations to be properly certified by the SBA, much like the 8(a) program. However, I do not think the VA program I working. The VA should instead work on their backlog of claims for our veterans, not getting into a program they have no business being in to begin with. That is what the SBA should be doing.

Small Businesses as Primes: Beware the Scorpion

As the 2012 Fiscal Year comes to a close, procurement shops are in full gear awarding contracts in the shadow of sequestration. Many large firms are also trying to close business after months of business development, only to see last minute decisions to make their solicitation a small business set-aside. This creates another potential avenue of abuse, where small businesses are used to “prime” a contract for a large business.

We have seen constant abuse of small businesses as subcontractors, most notably large firms using small businesses to check boxes, win awards, then not provide what was promised. Although small business subcontracting plans are required per FAR Subpart 19.7, they are rarely enforced.

However, the abuse of small businesses as “primes” is really the perfect storm of potential abuse, and calls to small businesses are going on all over the greater Washington area this time of year, as large businesses cannot afford to realize loss of revenues after months of business development, and looking for a pawn to realize profit.

Small businesses struggle to get a toehold in the government contracting arena. It is a very tempting offer to prime a contract for a large business, as it creates new relationships, new sources of revenues, and opportunities for growth. Further, the past performance experience is vital for new work.

However, careful consideration and “bid/no-bid decisions,” similar to submitting a Request for Proposal, need to be made if the small business wants to prevent being used by both government officials, and large businesses.

First, what is the firm’s relationship with the agency, and the contracting official? Understand that the large business has a very close relationship with procurement personnel, and perhaps a relationship that is beyond what many consider ethical or arms-length. The large business is trying to steer a contract to you, but at what price?

Second, and under no circumstances, can the small business allow the large business to occupy the program manager (PM) position. The large business will make the case that they have the relationship, they understand the customer’s needs and requirements, and they are better positioned to support the client. Further, they may play hardball, and insist that they get the PM position, or no deal.

Be prepared to walk away. The benefits do not outweigh the costs, as it is the small businesses’ past performance and reputation on the line, not the large business. The arguments made by the large business are false. If you could not support the customer yourself, how can you even be considered for the award?

Small businesses are trusting large businesses to treat them fairly, equitably, and to ensure mutual success. Seems like a no-brainer? Think again.

In this treacherous environment of government contracting, the competition is ferocious, and every penny is being accounted for, as large businesses need to weather the storm and keep margins and market share stable.

From the perspective of the large business, why not use a small business to get 49% of a contract, and then undermine them to get it all?  Again, it is not their reputation or past performance that will suffer, and they have positioned themselves where they can show they are not at fault. Anyway, there are a hundred small businesses at the door waiting for the same “opportunity.”

Further, the undermining is convincing the procurement official that a small business cannot do the work, or to prevent a socioeconomic set-aside designation, so now the large business is in the position to get it all. They may even go as far to write the Determination and Findings for the procurement official!

Regretfully, this happens much more than either side wants to admit. Accountability and oversight are lax to begin with, but at this time of the year, contractual irregularities happen with an alarming degree of frequency to satisfy last-minute requirements, spend money, and award contracts. Leadership is simply asleep at the switch, and OSDBU offices seem to be shrugging their shoulders at these complaints.

Before you put the scorpion on your back to cross the river, understand that the scorpion has a stinger, and is prepared to use it. Only in this scenario, the small business drowns by itself.

Buying In Now Effectively Policy Across Government

In a recent breakfast  hosted by the Coalition for Government Procurement, Office of Federal Procurement Policy Administrator Joe Jordan effectively punted on the notion of best value versus the realities of federal procurement; lowest priced offers win contracts.

…Generally speaking, he said industry likes best-value procurements. They allow companies to propose higher prices, since officials will consider other evaluation criteria beyond price. On the other hand, the government is pushing low price and not always fully analyzing the entire lifecycle of a project, Jordan said. Both sides have good arguments, so the contracting officer's judgment is the final arbiter….

Due to the intense focus on budget cuts, and sequestration still casting a very ominous shadow on the federal government, price has become the most important factor in any source selection, and will remain so for the foreseeable future.

Any talks of best value are out the window, so agencies should state as such in their solicitations. The issue really is about how do determine technical acceptability, given the foundations of what are normally poorly defined requirements.

Firstly, requirements for proper use of Lowest Price, Technically Acceptable (LPTA) should be very standardized, commodity based purchases that require no other factors other than price. That means just the commodity itself through very rigid, specific, and accurate requirements. No opportunities for customer service, shipping, transport, customization, etc. These requirements require the use of best value, and the ability to offer better service.

You get what you pay for. There lies the rub.

Often times, the government simply does not know what it wants. It thinks it does, so it puts horribly written Requests for Proposal on the street, that result in dozens and dozens of questions, since the requirements are either redundant, confusing, circular logic, not achievable, unrealistic, boilerplate and not applicable, etc. Further exacerbating the problem is the lack of engagement with industry during the pre-acquisition phase, assuring poor requirements. Lack of leadership, poor capabilities, and the excuse of lack of time are the usual suspects.

The pressures to save money are overwhelming, so prices are driven downward to unrealistic levels. Is anyone still doing cost realism assessments? You know the answer.

How often does the Government Accountability Office sustain a protest where the losing offeror, and often an incumbent, claims they lost to a competitor who underbid them by 40%, even though the incumbent knows exactly what the real cost of doing, at a satisfactory level, entails?

This vicious circle ensures performance will fail, and it is the lack of a long-term focus that is troublesome. Poor leadership, combined with continued declines in the skills and capabilities of the acquisition workforce (I include PMs in that bunch) have created a perfect storm of continued poor performance and waste. Just look at the fiasco that is the System for Award Management (SAM) for a perfect example of this.

The General Services Administration can claim SAM was best value, but price is kingmaker. “Buying In” is seen as an improper business practice per Federal Acquisition Regulation 3.501, but it seems to be standardized now.

Investment analysis is a foreign concept, since saving a few bucks today will lead to inevitable rise in costs tomorrow, failed programs, and poor performance.

Awarding to the lowest bidder is a disaster waiting to happen. Only when innovation is desired, through the use of performance-based contracting, combined with properly written requirements and effective contract management and execution, can best value be realized.

That is the best outcome for the taxpayer. Easier said than done.

DHS Rule Protects Small Business? Think Again.

Federal Computer Week reported on a proposed change  to the Homeland Security Acquisition Regulation, the supplement to the Federal Acquisition Regulation by the Department of Homeland Security (DHS), in order to help small businesses fend off rapacious primes contractors from “windfall” payments on Time and Materials contracts.

“Help” like this is not desired by small businesses.

The first part of the proposed change, per the Federal Register notice,  states:

…The first of the two existing FAR policies provides the option to require separate labor hour rates for each subcontractor under a T&M/LH contract, in addition to the labor hour rates established for the prime contractor. See FAR 16.601(e). The current FAR policy authorizes an agency either to permit individual contracting officers to decide if separate labor hour rates are necessary or to establish an agency procedure making separate rates mandatory. This rule proposes to establish a DHS-wide procedure to make the FAR option for consistent use of separate rates mandatory for DHS T&M/LH contracts…

The second part of the ruling is to require consistency with contractors and subcontractors in the way they account for labor hour expenditures, requiring them to check a box for which accounting process will be used to account for overtime labor hours for employees exempt from the Fair Labor Standards Act.

DHS wants “to eliminate unintentional windfall payments to the prime contractor" that can come when work done by subcontractors is billed at the prime contractor's labor rate, according to the notice.

It amazes me when proposed policy changes like this are announced. Does anyone in government understand business anymore? We can expect higher direct labor rates to cover the overhead of managing subcontractors, which would have been previously earned by the markup on the labor.

Those pesky “pass through” fees that subcontractors pay for the privilege of getting crumbs on the contract. Subcontractors can expect fewer profits on a contract, as the “low cost” buying model means even smaller margins.

Profits are not wasteful, and they certainly are not “windfall” payments. Who came up with that language?

More importantly, how does this help small business?

I think one of the commentators on the FCW article gave a very clear picture of the environment that small businesses face:

…The so called "windfall" payments are the only real justification to the Prime to include subcontractors. Do you really think we add subs out of the kindness of our hearts? We do it because you require us to reach out to the small business community. If we lose all incentives to do this, why would we continue to add subs unless they provide a part of the solution that we don't have the ability to provide. The Prime has to get something out of the contract to bring on a sub. There is a cost to administering subcontracts, or had you forgotten that fact? I am sad to see how many skilled acquisition professionals have left the Government for private industry or to retire. The remaining staff just don't understand how Private Industry works. What a shame!...

Small businesses do not need this type of “help.”   

Contractors and Procurement Officials: Customer Service Is A Two Way Street

There seems to be a development that is coming more and more to the forefront: the case of the out-of-control Contracting Officer (KO).

There are usually two paths to interactions with a KO, one being the KO who is overwhelmed with the workload, doing the best they can to handle it, and simply have very little interactions with the contractors. Further, these KOs are very professional, and want to help and guide businesses to be successful, especially small businesses.

This path I would say is the vast majority of the 1102s, and the environment that most contractors work in. That is to say that contract execution, and subsequent performance or contract issues, result in interactions mostly with Contracting Officer’s Representative (COR), and the Program Manager (PM). If you are dealing with the KO, you have some serious problems.

However, there seems to be encroachment in federal acquisition, and government contracting in general, of the second path of KOs, those who act as KO, COR, PM, judge, jury, and executioner. These KOs take advantage of their power over the contractors, and are the first to threaten termination when issues arise in performance, both actual and perceived.

I started a discussion on GovLoop about this topic, but it was something that perhaps no one wants to discuss. Certainly the manifestation of inexperience and subsequent performance issues by 1102s was covered recently in the Washington Post, but talking truth to power and holding those in power accountable can always be difficult, especially with vindictive acquisition personnel.

It should not, and does not, have to be this way. For every conversation I have with a small business colleague on a great relationship with a client, there seems to be another where a company is being crucified for one cent on an invoice, then being threatened with poor past performance and possible termination. What has gone wrong?

I think the pressure cooker that is being an 1102 is creating an environment where those in the trenches are being left to their own devices, without proper leadership, guidance, and direction. Since training on being a business advisor, negotiating, customer service, or understanding how businesses function is effectively non-existent, bad habits develop. Left unchecked, these bad apples rotten the organization, and it seems like more and more rot is advancing. Further, those bad habits get exacerbated by firms that get bullied and intimated, and enable this behavior because they fear being retaliated against through options that get dangled like weapons, or through adverse past performance.

Something has to give.

The mission has to come first, and the “gotcha” attitudes simply help create more problems for performance by both parties. Many contracts call for monthly meetings with stakeholders to discuss issues, and these platforms should be productive ways to help resolve problems, and help create trust and attitudes that enable an environment to work like partners, not adversaries.

It has been alarming at the rate of complaints by small businesses to small business advocates at federal agencies of maltreatment by procurement personnel, and the rise of protests is also a manifestation of these negative and mistrustful attitudes.

Of course, some companies deserve what they get when they under bid work, don’t perform, and simply use the government as an ATM.

However, contracts are expected to provide exceptional service for the taxpayer’s investment. That is a given, and understood. Nonetheless, that goal is a two-way street, and requires both parties to act in the best interest of the taxpayer.

Can’t we all just get along?