Better Buying Power v2.0, Mission Impossible at Defense?

According to recent guidance from Frank Kendall, undersecretary of defense for acquisition, technology and logistics, the initial round of Better Buying Power did not go well due to acquisition workforce personnel “creating” mandates from guidance on improving performance.

One of the biggest areas of “confusion” from the original guidance was the preference for more fixed-price contracts. However, that guidance turned into a mandate to create fixed-price contracts period, regardless of requirements or risk. The outcomes are obvious in waste and mismanagement, and will continue for years to come.

Combined with the “mandate” for low-cost, even with “best value” awards where awardees are seemingly stripped of winning bids to create a low-cost solution, there is a culture currently at the Pentagon where contract awards, and contract management itself, is in a state of disrepair.

This latest round of guidance includes a long list of items to tackle, but according to Kendall, “thinking” is the most critical item.

…”There’s a flavor that runs through it that says, ‘Here are the tools you need, and here’s the way you should be thinking about the problems you have to solve. But you have to solve them,’” he said. “You have to be professional and really understand what needs to be done.”…

Kendall further went on to say in a roundtable session with reporters discussing the memo:

…”People have to know the right thing to do, and they have to have a system that supports them in doing it”…

…”The [fixed price incentive fee item] was good guidance, but there’s a tendency in our system to say, ‘OK, that’s what they want us to do, so that’s all we’ll do now because that’s going to get whatever we want to do approved.’ So we’ve modified that. Now it tells people to use the right contract type for the job. That means there’s a burden on our professionals to figure out what that is, but we’ll give them guidance.”…

Incentivizing productivity in the defense sector? We can’t even select the correct contract type. Further, the frustration with the defense contracting process and the workforce has been an increasingly sore spot that is leaving firms behind, especially small businesses, which is decimating the defense industrial base.

Not surprisingly, the focus on Mr. Kendall’s remarks came down to improving the skills of the defense acquisition workforce, in a time where budget cuts continue to eat into opportunities for training and skill-building for those responsible for awarding billions of taxpayer funds.

“We’ve brought a lot of junior people in, and they need to be developed. We’ve got a bathtub in terms of demographics. We have a lot of older people who are going to be retiring, and we need to make sure those people’s knowledge is retained as much as possible as they go out the door. All of the services and components are working on this together.”

Somewhat curious in the memo includes several steps seemingly designed to reduce bureaucracy, although his comments seemingly seem to support the bureaucracy through affirmation of the “Chain of Command”?

People are encouraged to “think,” but nonetheless have to report to a leadership structure that is top-heavy with overhead, processes that are overly cumbersome, especially with IT buys, and Defense Acquisition University programs that need to be rethought to allow the competence and skill-set to match the level of training needed as opposed to the current system of checking of boxes for certification.

Also of note is the desire to make saving money acceptable in the use-it it lose-it mentality, and the desire to open dialogues with industry in a “closed-door” mentality of market research also seems a difficult barrier to overcome.

I fully support Mr. Kendall’s effort to simply defense contracting processes, as there is no question that the maze that is the Defense (DoD) 5000 process is challenging enough, without adding budget cuts, sequestration, and difficulties with the workforce.

An uphill struggle for Mr. Kendall, to say the least.

Accountability Update: Is Anybody Listening?

Our recent blog post about accountability had some good discussions on the GS-1102 LinkedIn group (closed group) about who actually is responsible for accountability. Should it rest squarely on government? What responsibility does the contractor have when the government is asleep at the switch?

A recent issue seems to have blurred that line, prompting the people responsible for being taxpayer watchdogs to testify incredulously about the lack of concern and the seemingly “sweeping under the rug” of the topic of accountability all together.

John Sopko, the special inspector general for Afghanistan reconstruction, recently took the Army Corps of Engineers to task for ineffective management and oversight of work by DynCorp, which is owned by affiliates of New York-based Cerberus Capital Management LP, from responsibility while long-standing deficiencies remained for work on a garrison at Camp Pamir in Kunduz province.

“The Corps’ own internal review says they didn’t make DynCorp pay to fix their shoddy construction, they didn’t collect the liquidated damages that DynCorp owed them, and they violated their own settlement policies,” he said.

“But they still think the settlement was ’proper and reasonable.’” Sopko said. “That wasn’t a settlement, it was a mugging.”

An isolated incident, and a difficult one no doubt, but it is nonetheless disconcerting when an agency seemingly ignores such damming evidence, but decides it is best to sweep it under the rug and move on.

Given the billions that have already evaporated into the sands of Iraq, yet more evidence of how the lack of accountability is hindering progress coming out of Afghanistan is not surprising.

Having performance conversations early and often is the critical component of performance measurement, and then executing lessons learned for continuous improvement. Most, if not all contracts require some rudimentary form of performance measure (i.e. weekly status reports, monthly reports, performance meetings, etc.).

Other than killing trees, what is the point of doing all this if we are not going to mutually benefit and ensure proper outcomes and meeting contractual requirements?

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.