Comments on GWAC Programs Cause Unnecessary Controversy

Comments made by Ed O'Hare, assistant commissioner of the Office of Integrated Technology Services in GSA's Federal Acquisition Service, seemed to have created a bit of controversy in regards to the future of Government Wide Acquisition Contracts. Federal Computer Week reported on the story, and according to experts:

…They say the federal IT market’s sales have been driving GSA to end and merge GWACs for several years now. There are too many GWACs, causing too much overlap of services. The result is scattered sales while the cost of running the contracts still dips deeply into GSA’s pockets….

Immediately following the report by FCW, Mr. O’Hare clarified his comments by stating that GSA is fully committed to GWAC programs and their future. Although I understand his need to clarify his comments, I believe the statement from experts above to be accurate. I am not stating, nor did I believe the comments of the story indicated that GWACs were being phased-out. In fact, I was a bit surprised at the response by GSA officials at what seemed to be positive signs of streamlining business operations to improve customer service, and the encouragement by industry. Mr. O'Hare predicted GSA will more than likely merge the GWAC program with its schedules program, and I think this makes sense. However, no one is assuming this to be policy, only a prediction based on market needs and trends.

…O'Hare said during the panel discussion he believes eventually combining the contracting vehicles would be beneficial to taxpayers.

"The reasons are efficiency and effectiveness," O'Hare said. "When vendors have to bid on multiple contracts that [creates] costs and those come back to the taxpayer. It's about lowering the costs of products and services."…

Current GWACs such as Answer, Millennia and Millennia Lite, will not be renewed because they have been replaced by the Alliant and Alliant Small Business contracts. Further streamlining efforts should be reviewed to see where overlaps and redundancy exist to phase-out other GWACs in favor of the Alliant programs.

Overall, I believe industry reacted positively to Mr. O’Hare’s comments, by noting that GSA will need to phase-out underperforming GWACs, such as Commerce Information Technology Solutions-NexGen, and take over several GWACs, such as COMMITS from the Commerce Department, in an effort to streamline operations in the future.

The issue with the GWAC programs is the seemingly difficult efforts by both industry and GSA based in part on overlapping requirements and the cost to manage multiple programs.

…GWACs are expensive for government and industry and should be pared down, said Bill Perlowitz, vice president of advanced technology at Apptis. No one should be surprised that the agency is saying it won’t renew many GWACs, particularly given the Obama administration’s desire for a more efficient government…

…“GSA would be streamlining things” to close down or merge GWACs into its schedules program, said Hope Lane, officer of government contracts consulting at Aronson and Co…

The fact is that GSA has invested considerable resources to award the Alliant and Alliant Small Business GWACs, which have a large variety of services to choose from. Therefore, industry is questioning GWAC operations and seemingly applauding efforts to reconsider the use of other GWACs in favor of Alliant. I know I was when I read these comments and articles.

To further streamline efforts and help increase efficiency in GSA operations, the GWAC and schedule programs should be merged to centralize buying. Granted many issues have to be addressed, including the use of cost-type arrangements and socioeconomic goals, but I believe industry sentiment was best stated by Courtney Fairchild, President of Global Services, in regards to merging GWACs and the schedule program:

...To merge the GWAC and schedules programs would be “consistent with the spirit and message of the creation of the recent Federal Acquisition Service,”…

When the Federal Technology Service and the Federal Supply Service merged into FAS at GSA, primary objectives included eliminating redundant contracts and streamline operations. It is this focus on lowering costs, increasing efficiency, and realizing better returns to the taxpayer that I believe Mr. O’Hare was signaling, and was the main focus area of the GWAC programs comments and opinion by industry.

Poor Acquisition Outcomes Can Also Happen With The Government Acting As The Contractor

In light of all the focus recently on federal acquisition reform, one of the agencies with the most problems is the Department of Veterans Affairs. The VA is a case study on what the failed policies of the past in regards to workforce development have done to the present difficulties with completing the acquisition mission in government.

Next Gov published an article that clearly demonstrates the focus on acquisition reform should be on process and people, not pitting contractors versus government. An internal inspector general report released by the VA highlighted contracting irregularities with an arrangement the VA signed with the Space and Naval Warfare Systems Center in the management and development of IT, including one of the high-profile systems that processes educational benefit claims.

The report describes a typical contracting arrangement of a complex IT system; insufficient clarity of requirements leading to poor cost, schedule, and performance outcomes. What is interesting about this arrangement is that it is a government-government contracting agreement, although the article and the IG report shed some more light on what the understanding actually entailed:

…But the IG found that VA had not conducted an analysis as required by the Federal Acquisition Regulation as to whether awarding IT contracts to SPAWAR "is in the best interest of the government." The IG also concluded that SPAWAR, not VA, developed requirements for IT projects that "were often broad and general in nature and lacked specific deliverables."…

What the report clearly spells out is that VA not only did not know what they had arranged, but little to no analysis had been done to justify this arrangement. Further, SPAWAR simply contracted out 87 percent of the work to outside contractors:

…These companies subcontracted out the work to other SPAWAR subcontractors, which increased costs because VA "must pay an additional layer of management fees and overhead," the IG said. The VA "could not tell us who was performing the work under the [agreement], how many people were providing services, or where they were located," the report noted.

The VA's Office of Enterprise Development was unaware VA was paying SPAWAR a 10 percent management fee, and the center was "unable to provide justification or authority to charge" the fee, the IG concluded…

The report further stated that the VA simply handed over the keys to the oversight of performance to SPAWAR, with further information on poorly defined statements of work for the GI bill system which were vague and consisted of poorly detailed information. Recommendations included crafting more clearly defined work statements, establish realistic cost estimates, and improving oversight of contracts.

What the report leaves out is that these recommendations are for activities that are basic contract management issues. Also of note is the fact that the common denominator here is poor acquisition outcomes caused by poor oversight, which would have been the case had VA hired SPAWAR or any other business entity in or outside of government. I too hope that Roger Baker, the new CIO, can straighten out how these contract issues. However, he has his work cut out for him.

There are no silver bullets for VA, and I hope that more focus is given to their predicament as their service delivery continue to suffer with the common denominator being the lack of trained, competent personnel. Several VA leaders I spoke to recently claimed that they would love to implement new techniques to streamline contract management tools, and implement recommendations to better manage their contracts, but have recently delayed or cancelled procurements because they simply do not have the bodies. Looking at the disease of acquisition breakdowns involves a focus on both process and personnel in parallel, and should not be one or the other.

The Outsourcing Debate: Realism versus Rhetoric

The Federal Acquisition Innovation and Reform (FAIR) Institute, a new nonprofit focusing on federal contracting reform, released a report in response to the push by the Obama administration to reevaluate when it is appropriate to outsource and use contractors. Specifically, the report provides high-level policy guidance on the specifics of President Obama’s March memo on contracting reform, which directed OMB to issue guidance on the appropriateness of outsourcing, in addition to providing further guidance on defining “inherently governmental” positions.

The report describes some good recommendations on the insourcing issue by taking a deliberate and systematic approach based on facts and analysis. In effect, they are advocating a business case analysis, which I also believe is the best approach and serves the needs of all parties involved in a fair and thorough manner. Although there seems to be quite a bit of reporting on the consternation this issue has caused in exacerbating the anti-contractor sentiment that seems to be fomenting in government, the policy does need to be weighed carefully to ensure the government does not completely hamstring itself and be in the position where the mission is completely in jeopardy.

What seems to be missing from the conversation in the anti-contractor discussions is the fact that neglect and inattention by federal leaders has created an environment where contractors are necessary due to the lack of trained, qualified federal personnel to complete acquisition tasks. The report lists several reasons:

• Inattention to “right sizing” and “right skilling” the government workforce to support the growth and complexity of its workload.
• The antiquated and uncompetitive government personnel system, including hiring processes and pay scales, that can leave contractors as the only source of capabilities available to agency management.
• Underinvestment in training and developing people to ensure that they have the skills to perform their jobs.
• “Competitive sourcing” program that has led to outsourcing of some positions based on a complex “make vs. buy” analysis (A-76 studies).

Contractors are hired simply because the government does not have the flexibility to hire the right people, at the right time, for the right position. Therefore, hiring contractors, or “outsourcing,” remains the only alternative to obtain personnel. Instead of a focus on vilifying contractors, I believe the conversation can and should be more constructive to find common ground for common sense approaches to long-term solutions to these issues, and thus the point of the FAIR report.

Looking inward at systemic and cultural issues is one the first things that needs to be done if real change in personnel policies will have any effect on acquisition reform:

To bring talented people into government in large numbers, federal employment must once again become attractive. President Obama’s call to service certainly has heightened interest in public positions. But that by itself won’t be enough. Federal recruiting, compensation, and professional development policies and processes must change and become competitive with the private sector. While it may be feasible to hire thousands of people during the current economic downturn, it will be difficult to retain this talent unless systemic human capital issues are addressed.

Workforce development is a strategic imperative, and not a short-term fix. The federal government must reinvent its human capital strategies to see real change. The report also tackles three types of positions that should be considered for possible insourcing: inherently governmental positions, agency core competencies and long-term contracted positions.

The report cites Policy Letter 92-1, which characterized inherently governmental activities by definition

…governmental decision making because they are so intimately related to the public interest that no ulterior motivation can be allowed to arise concerning those choices and those activities…

The policy letter makes the distinction between inherently governmental and those supporting activities that contractors can provide by stating:

Inherently governmental actions do not normally include gathering information for or providing advice, opinions, recommendations, or ideas to government officials. That distinction allows the government to take advantage of private sector analysis and expertise while remaining fully in charge and in command of the decision-making.

What the report further recommends, and what is vital to ensure the inherently government function wall is not breached, is creating that strict firewall through clear and documented roles and responsibilities of any contractor personnel that are supporting activities that are closely related to inherently governmental functions (e.g. acquisition). It is when this firewall is not established that the breakdowns normally occur, and government outsources its decision making authority to contractors. The single, most important recommendation is to clearly define roles and responsibilities upfront during post-award contracting activities, as reported by the GAO on many occasions.

Agency core competencies are the second category the report outlines. This category has always been challenging to define, as subjective analysis was always used to verify what agencies considered a core competency. However, the report recommends an analysis methodology that needs to be considered to ensure a realistic approach is employed to find true definitions and impacts on core competency through an objective lens.

Value stream analysis, a common tool used in Lean Six Sigma and continuous improvement programs, can help identify activities that should be staffed with federal employees. Through value stream analysis, an agency can break down functions (such as finance, IT or acquisition) into major activities, which can be profiled relative to key decisions made, supporting analysis, information and expertise required, and expected level of activity throughout the fiscal year (among other categories). By adding the other criteria (i.e. mission related technical expertise, scale and efficiency, etc.), agencies can systematically determine core competency positions.

These types of measures should be used in the business case analysis, with a focus on cost versus benefit, and long-term financial analysis to also verify the “make/buy” decision when it comes to outsourcing positions. The report gives an example through systems engineering activities at DoD for weapons systems development, another subject area of GAO reporting on the core competencies that the Pentagon needs to retain in-house to maintain control of the decision making process.

The third item in the report is long-term contracted positions. In identifying these positions, FAIR recommends a policy that takes into consideration the duration and time frame for the positions being considered (e.g. requirements for at least an additional five years), focus on a cost/benefit analysis for most efficiency, and a continued focus on hiring and retention.

Although this pragmatic approach by FAIR is a good blueprint for further discussion on addressing the issues faced in the federal acquisition arena, the overarching issue is people. According to the Project on Government Oversight, some of the negative reaction seems partly motivated by perceived ulterior motives of the FAIR Institute itself. POGO seems to imply that the FAIR board includes members with current or past ties to industry, and thus should be treated with a watchful eye. I have no problem with this criticism, but I caution that this attitude seems to exacerbate the vilifying of contractors and does not move discussion forward in a productive manner. Based on what I have seen so far, I look forward to further work by FAIR.

Past Performance Data and the Need to Change the Source Selection Paradigm

The GAO report entitled Better Performance Information Needed to Support Agency Contract Award Decisions (GAO-09-374), lays out a disturbing trend in government oversight and contract management that needs to be corrected on many levels if the government is to increase performance of federal contracts.

As noted in the report, the typical information management problem of federal databases is persistent in the Past Performance Information Retrieval System (PPIRS); garbage in equals garbage out. Past performance data is crucial to evaluation of past performance of course, such as contract terminations for default and subcontract management. However, this data can also be a good indicator of future performance and the ability of contractors to perform at the level required by the government. This data should be specifically documented, relevant, and reliable. However, the GAO report indicates a very low confidence level for PPIRS:

…GAO’s review of PPIRS data for fiscal years 2006 and 2007 indicates that only a small percentage of contracts had a documented performance assessment; in particular, we found little contractor performance information for orders against the General Services Administration’s Multiple Award Schedule…

The lack of standardized, streamlined processes for performance evaluations seemed to be at the heart of the GAO report for the reasoning behind the poor quality and quantity of data:

…Some officials noted that a lack of accountability and lack of system tools and metrics made it difficult for managers to ensure timely performance reports. Variations in evaluation and rating factors have also limited the usefulness of past performance information. Finally, a lack of central oversight and management of PPIRS data has hindered efforts to address these and other shortcomings…

As the Federal Acquisition Regulation (FAR) requires past performance information to be considered as an evaluation factor in certain negotiated competitive procurements (FAR 15.304(c)(3)), agencies have broad latitude in determining the importance of past performance data and its use in evaluations, such as evaluating past contracts in terms of size, scope, complexity, contract type and relative importance to the solicitation at hand. However, many solicitations for which requirements may not be clearly defined (e.g. many current federal acquisitions) and a higher risk of unsuccessful contract performance, past performance, technical capability, and other factors are weighed as more important than cost or price. It is this pursuit of “best value” where government source selections often break down, and where the paradigm shift needs to occur to truly get the performance the government desires and needs.

Since the FAR requires agencies to document and evaluate contractor performance for each contract that exceeds the simplified acquisition threshold upon completion of the work (FAR 42.1502(a)), past performance must be made a higher priority during not only the contract term, but before contract award during the evaluation process. As noted by the GAO:

…Agencies considered past performance information in evaluating contractors for the contract solicitations we reviewed, but many of the officials we spoke with noted that past performance rarely, if ever, was the deciding factor in their contract award decisions. Their reluctance to base award decisions on past performance was due, in part, to their skepticism about the comprehensiveness and reliability of past performance information and difficulty assessing its relevance to specific acquisitions…

Technical and Management capability are often the most important factors in source selections where the government seeks to award based on best value, which is often counterproductive to the realities of the government market. Further, this process actually hinders accountability as performance not only is poorly documented, but also not effectively integrated into proper program management techniques in the execution of government contracts. Getting past performance as the key to contract management oversight would go a long way to improving cost, schedule and performance goals and thus improving acquisition outcomes.

…Contracting officials who viewed past performance as an important evaluation factor noted that basing contract award decisions, in part, on past performance encourages companies to achieve better acquisition outcomes over the long term. For example, according to officials at one Air Force location, an incumbent contractor was not awarded a follow-on contract worth over $1 billion primarily because of poor performance on the prior contract. As a result, the contractor implemented several management and procedural changes to improve its performance on future contracts…

Nonetheless, many contracting officers, the report noted, preferred to rely on other more objective factors such as technical approach or price due to their reluctance to rely more on past performance in making award decisions and obtaining candid past performance information. Reasons given included the fact that contracts are so poorly managed that the government has such difficulty separating issues caused by the contractor from those caused by the government, most notably changing or poorly defined requirements. Other factors included fear of damaging contractor relations, and further fear of contractors challenging negative ratings and thus the “watering of down” of assessments by contracting officials.

Focusing on technical approaches to solicitations has not been successful, and will continue to lead to poor outcomes. Most federal contractors provide high levels of goods and services to the federal government, although the bad ones are rarely or poorly held accountable through poorly documented performance reviews. It is not common to have a company be so exceptionally superior during source selections that they are the clear winner, as the requirements would have to be very unique, along with the goods and services being offered. The reality of source selections is that technical factors are often weighed the most important, followed by past performance, then price. However many times during “best value,” it ultimately leads to price as the differentiators of technical and past performance seldom exist, thus negating best value. Although performance based acquisition is a methodology that would help offset this scenario, this process is poorly planned and executed by the government as well.

Accountability and transparency are the central themes of government contracting reforms by the Obama administration, and improving performance data and making it a more important factor can help play a vital role is reaching these objectives. The GAO made several important and common sense recommendations to help improve the data, including having standardized evaluation factors and rating scales governmentwide for documenting contractor performance, establishing policy for documenting performance-related information not captured systematically across agencies, and having controls and oversight responsibilities for updating PPIRS.

By improving the processes and the incentives to adequately evaluate, monitor, and document past performance information, the government can realize a vast improvement on acquisition outcomes that hold contractors accountable for performance.