Is Innovative Procurement the Answer to Budgetary Constraints?

As agencies continue to feel pressure to modernize their aging infrastructure, and find other avenues for completing their respective missions with restrained funding, several areas of interesting solutions seem to be working their way across government.

As blogged by Steve Kelman on Federal Computer Week's The Lectern, several agencies are using competitive prototyping, and other innovations, as a step to encourage groundbreaking solutions by industry, combined with evaluating process over paper.

First up the Department of Homeland Security’s (DHS) Flexible Agile Support for the Homeland or FLASH, which was designed to be a small business contract for a variety of Agile development and other DevOp services. The source selection process focused on the use of tech demonstrations, and forgoing the typical Request for Proposal process which is usually daunting for small businesses, especially newer entrants into the market.

This was an excellent approach to acquiring software development services, but was regretfully plagued with management errors in the evaluation and selection process.

A teachable moment for sure, but DHS has made a commitment to innovative, and will continue to find ways to improve its procurement processes and find the best ways to bring in innovative firms and solutions to the agency as discussed on Government Matters.

These tech demos are an excellent way to see how firms behave, think, interact with users, and of course, verify the quality of the products and services being developed. These are tangible factors for evaluation, and can simply not be done with paper-based approaches to selecting vendors.

Besides DHS and 18F from the General Services Administration, the Department of Veterans Affairs, used a tech demo to select a vendor for a task order for software development to support benefit appeals processing modernization. The Center for Medicare and Medicaid Services has done tech demos, as has the Department of Health and Human Services, who have been pioneers in digital services through the Buyers Club, and the leadership of Mark Naggar.

This past week, the Office of Personnel Management issued a Request for Information on innovative solutions to modernize their infrastructure, and how best to pay for it. Perhaps a culture shift is underway across government, which is a good thing. A very, very good thing.

Let’s hope that these initiatives continue to spread across government, and that the days of reading through 100-page RFPs are at an end for both industry and the government.

Federal Procurement Innovation Through 'Micro-Consulting'

I was intrigued by an article written by Dr. Steve Kelman on FCW on how to improve opportunities for small businesses, and also allow for rapid acquisition processes for very targeted problems (i.e. innovative procurement methods).

This approach, known as "micro-consulting", focuses on targeted initiatives providing services at or below the micro-purchase threshold. As described in the article, this is the business model of Chris Cairns, one of the co-founders of 18F, and who started a firm called Skylight.

In announcing the creation of his firm, the post announced:

...Not every problem requires a full-blown consulting engagement. Often times, a short burst of work on a specific topic is all that's needed to help propel government managers and teams forward. That's why we're introducing digital consulting services priced within the federal micro-purchase thresholds... 

This model seems to make sense on many fronts, across the entire spectrum of federal government. Take requirements development for example, one of the most critical issues that often leads to program failures.

This was a recent focus by Gen. John Michael Loh (ret.), who recently lamented on the bureaucratic, non-value added defense procurement process.

Gen. Loh stated:

...We need to learn from the past and get back to basics in the acquisition system starting with the requirements process. From the start of the F-15 and F-16 programs in the early 70s through the F-22 start in the late 80s, concept development began with small, smart teams working together from the operating and developing commands; understanding the need; conducting trade-off analyses to assess risk and cost, in continuous dialogue, producing a requirements document unfettered by top-down micromanagement or wall-to-wall reviews and nitpicking...

What if these teams can have very targeted engagements from experts in the field on particular topics, such as cyber, cloud, logistics, etc? What if the process was able to be turned on its head, and instead of contracting out for a typical engagement of years, hundreds of thousands of dollars, and questionable results, you simply purchase exactly what you need, very quickly, cheaply, and with targeted results? 

This process could open the door to many entities, consultants, and start-ups that have what the government needs, but can not be at the table because of the barriers to entry, for starters. Small businesses would have expanded opportunities for introducing innovation, risks could be taken, and experimentation can be more readily conducted. 

Firms can build past performance, and perhaps even be rated on an Amazon-like scale. Engagements can be purchased with days, and provide input and value in a short-time frame, as needed. Raising the micro-purchase threshold to $10,000, or maybe even up to $100,000, would further expand the opportunities for these types of engagements. 

This is a very interesting way to expand innovation in federal buying, lower barriers to entry, expand the base of contractors, lower administrative costs dramatically, and also add value immediately. I too hope this initiative can have a disruptive effect on federal procurement. It can be a win-win for both parties. So why not give it a try?

Is Procurement Reform Possible Or Illusory?

This article originally appeared on the Public Spend Forum.

There has been much talk about procurement reform over the last few decades, and has been a hot topic for the last several years. Many initiatives are ongoing, most notably the Section 809 Panel for the Department of Defense. In its initial report, new policies are not being proposed, no new laws or regulations. There is actually a focus on elimination of what bogs down the ability for the desired; speed, agility, and a renewed sense of mission.

However, much talk of “acquisition reform” revolves around a discussion of what is wrong with federal procurement. This discussion is about what needs to happen if we are going to keep up with modern technology, secure our aged technological platforms, and overall improve the performance of government.

An excellent example of this type of thinking comes from Orion Hindawi, CEO and co-founder of Tanium, in a recent piece on Federal News Radio. Although I completely agree with his positions, the talk of “acquisition reform” never centers on the root cause of the issues, and why we are seemingly going in circles when it comes to federal buying.

If one wants to get at the heart of the matter, then required reading should be the guest blog of Steve Kelman’s The Lectern on Federal Computer Week.  David Eaves, Lecturer in Public Policy at the Harvard Kennedy School and Director, discusses why reform efforts may prove to be fruitless, and even dangerous.

 Mr. Eaves writes:

…Procurement is often cited as the big bad bogeyman holding us back. If only we fixed procurement, there would be more choice, better vendors and less failure among government IT projects.

I don't buy it.

We can get better choice, better vendors and less failure without reform. I'm not saying procurement is perfect. But the benefits of reforming procurement are not needed and the dangers are significant…

So what is the issue then?

…My observations have been that learning to navigate procurement is one of the key elements that differentiates successful from unsuccessful companies in the government space. Sadly, it can sometimes become the core skill of success, more relevant than even the ability to deliver an effective product or service…

Here is where we start to narrow our focus about what the real issues are, since we are talking about culture, and why this culture has created a system that is complex, slow, and does not normally satisfy needs.

Part of this situation needs to start looking beyond simply blaming contracting officers for poor performance. I never understood how this strategy would be effective. How can one possibility be expected to be “innovative” when you are not provided any resources our support for doing so? Performance metrics are misaligned with objectives, all actions are focused on simple compliance and not taking any unnecessary risks, and servicing the customer as a business advisor is often seen as less than ideal.

Leadership is a major issue. There needs to be more knowledge transfer to demonstrate to acquisition leaders that the reason things are so bad might be the reflection in the mirror. Cultivating a culture for people to really think outside the box is a good thing. The current procurement rules allow for innovation, and more commercial practices, as discussed in the Office of Science Technology Policy and the Office of Management and Budget Innovative Contracting Case Studies, a document that describes several ways federal agencies are getting more innovation per taxpayer dollar – all under existing laws and regulations.

A major shift in collaborating with industry is also in order. As Mr. Eaves points out, government personnel who can identify good technology and practices from bad ones is limited. It really is asking a lot of public servants who rarely buy technology, or who are not experts, to be able to work on this ever-changing landscape without specialization. Therefore, industry must be able to step in and help government understand the technology and practices that provide a mutually satisfactory outcome.
Win-win is always at the top of industry’s mind, regardless of the unfortunate stigmas associated with the industry-government relationship.

Finally, back to Mr. Eaves:

…The reality is procurement law allows for a fair degree of flexibility. Procurement lore does not…

…This culture change that USDS engaged in is not easy, but changing lore is probably easier and more effective than changing law…

The U.S. Digital Service TechFar handbook, is an excellent guide on procuring IT in a flexible and innovative manner, and a culture-hacking tool. It can be done, all within the existing framework, if there is a will to be better buyers, and the desire to change the status quo.

Many in industry believe that acquisition reform efforts will have a net positive outcome, that will lower barriers to entry, and allow them more opportunities. Mr. Eaves believes this to be fantasy, and I agree.

What Is The Future of 18F?

After another scathing inspector general (IG) report about the 18F program at the General Services Administration, it seems like perhaps this program needs some retooling.

This report was was covered extensively by FCW and many other federal IT media outlets, in addition to the Washington Post. 18F has been a bit of a punching bag, as they also got negative press for spending a weekend redesigning their logo, and of course the first IG report discussing their finances and their management failures.

What has always bothered me about 18F is how they seemingly have been able to operate outside the constraints that all other IT service providers are forced into. Further, why does following established enterprise architecture, cyber, QA, and IA standards seem like "needless bureaucracy", which seems to be the pervasive attitude of many at 18F, according to internal sources? I understand that many of these developers and engineers have little to no government experience, but doesn't management?

It just seems like you have to either have innovation or be trapped by rules and regulations. Can they not co-exist? It is akin to saying you cannot have both procurement innovation and the FAR? Steve Kelman's piece on his FCW blog countered that argument, discussing share in savings.

Government management can be frustrating, messy, and sometimes redundant. However, it takes effective leadership to produce results. I have no doubt in the talents of 18F, but the IG reports are highlighting important shortcomings in the program that need to be addressed.

Is the IG report seemingly biased and possibly agenda driven? Maybe. Nonetheless, it does not make what they found not true either.

On the Horizon: Small Business IT Opportunities in the Trump Administration

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Although the Trump Administration is only into its first week, it certainly has been a busy one so far. Granted many of the initiatives and priorities that the new Administration will fund are still coming into focus, however recent developments signal where small businesses may want to focus, or continue to focus, in fiscal year 2017. 

Cybersecurity 

Cybersecurity will continue to be an important mission, and one that will continue to see more growth. Given the steady stream of data protection contracts that have been awarded recently, small businesses offering these services would be wise to research some of the contracts, the awardees, and the vehicles used to award these contracts to build relationships and develop opportunities. 

Examples include: 

Department of Homeland Security (DHS) – DHS awarded a contract to Lockheed Martin, with a potential value of $395 million, for various cybersecurity protection services designed to prevent, detect, contain and eradicate cyberthreats.

General Services Administration (GSA) – GSA continues to expand and modify their existing cadre of procurement vehicles for cyber. According to GSA, in commenting on their recent contract with Adobe: 

…The agreement will help agencies "comply with current information security and electronic government policy recommendations and requirements," including the Cybersecurity National Action Plan, the Cybersecurity Strategy and Implementation Plan, the Cybersecurity Act of 2015, the Government Paperwork Elimination Act, and the E-Sign Act of 2000, according to GSA… 

GSA chose Adobe as a provider of data protection capabilities for federal agencies, via Carahsoft, as an existing GSA Schedule 70 provider, and designated reseller of Adobe offerings. 

Other awards of note: 

GSA awarded two contracts with a potential total value of $110 million to ManTech, on behalf of DHS, under the GSA Alliant Government-Wide Acquisition Contract vehicle. 

The Center for Medicare and Medicaid Services awarded a contract to Iron Vale, for providing a comprehensive cybersecurity support, using GSA’s IT 70 schedule. 

DHS awarded Advanced Concepts and Technologies International a $21 million contract through the GSA’s OASIS Small Business Pool. 

The U.S. Air Force awarded Engility Holdings a $31 million contract to provide cyber-research, security assessments, and analysis. The Defense Technical Information Center, a centralized agency within the Defense Department, facilitated the contract award. 

The U.S. Army awarded Booz Allen Hamilton a $13.2 million contract for cyber security enterprise support via the Army Contracting Command. 

Federal agencies will continue to look for opportunities to enhance cybersecurity capabilities, so small businesses should see more prospects to build relationships with these agencies, and other firms in the space. 

Big Data Analytics 

After two Senate confirmation hearings, President Trump’s nominee to head the Office of Management and Budget, Rep. Mick Mulvaney, clearly sees big data analytics as a path to improving efficiency of government operations.

Rep. Mulvaney stated that the Digital Accountability and Transparency Act (DATA Act), a 2014 law that requires standardized reporting on spending data across the federal government, as a critical tool to eliminating waste.

He also stated in one of the hearings: 

…“We’re living in an age of big data, and then here we are as the federal government and we probably have some of the best big data available anywhere, but we can’t use it because no one can share it or read it.”…

Small businesses with data analytic services, which also help support DATA ACT, can perhaps find some interesting opportunities in this sector. Further, helping the government with decision-making analytics about improper payments, and other means of rooting out waste, fraud, and abuse, should also continue proving to be an interesting market for further exploration. These capabilities should create new and expanded opportunities at agencies across the government, and the Pentagon.

As always, being successful in these areas requires good intelligence about how best to add value, and how to solve your customer’s problem. Although modernization should also see significant investment in the Trump Administration, cyber and analytics tools should continue to prove fruitful for new and continuing contracting opportunities.

Small Businesses Escape Major Contract Killer

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Update - Back in the fall, the U.S. Senate, with help of executives of major defense contractors, crafted the FY 2017 defense authorization bill that would potentially cut federal government contracts to small companies by as much as a 25 percent. I also commented on this legislation on LinkedIn. 

The legislation in question was Section 838 of the annual National Defense Authorization Act (NDAA), which allowed the Department of Defense to count subcontracts with small businesses against the agency's prime contract goals. This was a huge issue for the small business community, since the provision could have replaced as much as $22 billion in prime contracts with subcontracts. 

Section 838 was thankfully stripped from legislation — for now — when President Obama recently signed the 2017 NDAA into law, and replaced it with a call for information from the Pentagon.

The Pentagon will also have to recalculate its annual performance goals for small business contracting after excluding some other types of contracts, such as overseas contracts that typically are not awarded to small businesses.

Small businesses were rightfully worried about this provision, but can breath a sigh of relief, for the time being. Hopefully the Trump Administration will allow for better opportunities for small businesses, and overall improving performance goals for the taxpayer.

Will Category Management Take a Pause, or Full Speed Ahead?

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One of the initiatives that the Office of Management and Budget (OMB) continues to diligently institutionalize is Category Management. This initiative, a governmentwide effort to consolidate contracts to save money through reduced duplication, is widely used in the private sector.

However, many in industry and government are concerned, and with good reason. Improving federal acquisition is a very difficult task, and OMB and the General Services Administration's (GSA) efforts are laudable and should be commended, especially those that look to reduce contract duplication, and save taxpayer money. However, the OMB Circular No. A-XXX, “Implementing Category Management for Common Goods and Services” raises many issues.

My principal concern is the way that contracts are to be consolidated, and the way execution of this goal under Category Management will affect the small business community. My firm's comments to the circular can be found here.

Roger Waldron, president of the The Coalition for Government Procurement, has raised a number of significant issues when it comes to Category Management, and the concerns with the “best-in-class” (BIC) contract solutions for mandatory use, I believe, are worth noting.

...Mandatory contract vehicles could lead to significant risk for government and industry. Without vigilance, a well-intended cross-functional team could designate “winners and losers” through mandatory contract solutions for customer agencies and contractors in an attempt to manage the market. Such an approach can limit access to ongoing commercial competition and innovation, as well as negatively impact the small business community... 

One size does not necessarily fit all, and this is one of the major concerns for both government and industry that needs further review. Also of note is the fact that BIC contract solutions are seemingly not getting enough industry input. For these initiatives to be successful, more input, not less, is necessary from both industry and government stakeholders.

Certainly input from industry partners should be sought to help government make more informed decisions about commercial solutions.

It will be interesting to see how this initiative moves forward under a Trump Administration. I believe the goals to be important, but I know many in industry do not have the information they need to help government reduce regulations, streamline processes, and improve competition and innovation.

Perhaps a pause is in order, and a fully vetted review and cost benefit analysis can be conducted or shared. If after all the facts are in, and the initiatives need to move forward as-is, then I believe we can call agree to get on board and do what is necessary for successful implementation.

I am just not sure we are there yet...