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...

Needed or Redundant Regulation: You Make the Call

Remember those "You Make the Call" commercials that used to air during Monday Night Football games during the 1980’s and early 90’s, where you test your knowledge of the rules against the officials?

If not, here is a sample:

I was talking to several people this week about the utility of a proposed rule by the Federal Acquisition Regulatory Council in Nov. 29’s Federal Register, which is aimed at improving communications between government and industry.

According to the proposed rule:

...“government acquisition personnel are permitted and encouraged to engage in responsible and constructive exchanges with industry, so long as those exchanges are consistent with existing laws and regulations, and promote a fair competitive environment.”... 

Doesn't the language in the Federal Acquisition Regulation Part 10 (Market Research) effectively provide similar language and/or sentiment? Is this new rule even necessary? How is creating this new rule going to change anything?

As reported by Federal News Radio:

...Two mythbusters memos from the Office of Federal Procurement Policy; the reestablishment of the Frontline Forum for contracting officers; a host of Web and in-person educational sessions over the last five years, and still the idea that government and industry can communicate about contracts is hard for many acquisition workers to grasp... 

So this is where we are. Does anyone really think the communications issue is getting better? Yes and No. Is it the fear of auditors? Too much oversight? A risk averse culture that creates fear of doing something wrong? Lack of training? Leadership?

Yes on all counts.

For starters, the message of communication and collaboration with industry seems to have stayed at the top of most organizations, because most leaders in the federal procurement world state they are implementing such measures.

Really? Because someone needs to talk to the acquisition workforce. The acquisition workforce is being taken to task for not communicating more, and being more collaborative. Granted there is truth to that complaint. However, it is the equivalent of screaming at a customer service agent of a large corporation. It might make you feel better, but that person is doing their best to follow the policies placed before them, along with the resources and direction they have been given.

The acquisition workforce needs help to improve. They need resources, training, and the ability to be empowered to make decisions, do what is in the best interest of the taxpayer, and be able to make mistakes. Provide them motivation, show them how, and establish the tools they need to be more successful. 

Under the current environment of being overworked, poorly trained and supported, not having proper direction and guidance, fear of effective engagements under threat of protest, not to mention intense oversight scrutiny, I don't see how any new rule of telling the workforce to do what they already know they need to be doing will change.

We need to figure out why this collaboration is not being done, and help create a culture of being able to be more communicative. Some of the best federal contracting officers and program managers I know sadly tell me they simply have no reason to continue being collaborative and communicative with industry. Why bother, when they don't get supported by above, get misinformation or no support from legal, and continuously are getting hammered from all sides? All negative, and no positive reasons.

There is vast room for improvement on both sides of the fence, because this is not just a problem with the federal government. For example, threatening the "P" word at the drop of a hat is counterproductive, and breeds the resentment and fear that closes the doors to effective communication.

There are pockets of excellence that need to be leveraged, such as liaison positions in government, ombudsman, and great leadership at the General Services Administration in developing programs such as Alliant, OASIS and Networks 2020. You can also just follow Jose Arrieta around town in Washington, D.C., who is a maverick in this area, and did a marvelous job at the Department of Homeland Security (video), and continues this work as Director of the Office of Small and Disadvantaged Business Utilization at the Department of Treasury.

Let's do what we need to do. We don't need more rules and regulations. We know what the problems are, so let's fix it.

So, to the original question. Is this new proposed rule a path forward to improving the communications issue?

You make the call!

Contract Management Starts at the Beginning

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As part of a continuing discussion on contract management, former Administrator of the Office of Federal Procurement Policy, Steve Kelman, blogged about the need to focus on this issue on Federal Computer Week. 

Responding to this call, ASI Government is allowing access to some of their tools, which are normally only provided as part of a subscription to their Virtual Acquisition Office. These tools are a good primer on contract management, and should provide some useful reference for those seeking to learn more about how to effectively manage contracts.

Nonetheless, effective contract management can only be successful if a real, outcomes-based focus is done upfront, and before the contract is even awarded. The acquisition reform initiatives currently underway across government continue to be focused primarily on pre-award contracting functions, without a clear path on how to effectively manage these contracts once they are awarded.

Why has this been problematic? First and foremost, failed leadership continues to plague effective contract management. Either through a lack of attention to agencies' contracting activities, or the inability to properly analyze data through antiquated or ineffective contract management solutions, it seems like senior officials remain blissfully ignorant of waste and abuse. As reported by the Government Accountability Office (GAO) in testimony from 1992: 

…In other cases, senior officials have not made managers accountable for effective contract administration, nor have they made a sufficient commitment to correct contracting problems that have surfaced…

It seems little has changed in the almost 25 years since this testimony was given. Even recent testimony by GAO describes ongoing issues with contract management, as they relate to services contracts: 

…As we testified before you in May, Mr. Chairman, agency procurements of services often are not being conducted as efficiently as they could be. We have found that too frequently agencies are not clearly defining their requirements, fully considering alternative solutions, performing vigorous price analyses, or adequately overseeing contractor performance. Such problems clearly point to a need for more focused management attention… 

This report describes several areas of needed improvement. Namely, strong Chief Acquisition Officers across government with clearly defined roles and responsibilities, improved training of the acquisition workforce, and better adoption of performance-based contracts.

However, if we want to start fixing contract management issues across government, we need to start at the beginning, and have leaders across government who recognize the problem. These leaders need to be engaged, and have the ability to address the problems from the ground up if we expect any real change.

Agile Development Starts With Agile Contracting

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The General Services Administration’s highly touted Blanket Purchase Agreement for Agile development, otherwise known as 18F, has been delayed until July 1. Perhaps GSA should think about delaying the solicitation some more. 

One issue that I have been discussing is the lack of capability in the acquisition workforce when it comes to Agile, in general. Their training and experience has been centered, for the most part, on large, multi-year contracts that use waterfall approaches to software development. Agile requires a new set of skills, and my fear is that 18F will face difficulties with implementation because the cart is being put before the horse.

To help alleviate this issue, the U.S. Digital Service and Office of Management and Budget’s Office of Federal Procurement Policy has recently put up a Challenge; to teach the acquisition workforce how to contract for these digital services.

According to the Challenge announcement, the program, which is deigned to be six months or fewer in length (fewer is the hope), would be aimed at helping federal contracting officers and contract specialists navigate digital services procurement.

Per the announcement, a successful program will teach contracting professional how to:

• Understand and procure digital services and supplies utilizing concepts such as those described in the Digital Services Playbook and the TechFAR (e.g, DevOps, UX, Design Services, Agile Software Development, Open Source, Cloud, Iaas, SaaS, and PaaS).
• Appropriately measure the success of these contracts based on industry standards.
• Accurately describe and define the value received.
• Encourage the use of commercial practices and innovative approaches (e.g. modular contracting, broad agency announcements, challenges and prizes) to ensure procurements can capture flexible and rapidly changing technology advancements.

This Challenge demonstrates the reality that procurement shops across government do not have the internal capability to acquire these services. However, why was this Challenge not done a year ago? Why has capability for Agile contracting not become a top priority for the Federal Acquisition Institute, or the Defense Acquisition University?

The Challenge program is set to rollout January 2016, but I hope that agencies understand the capability gaps and fill them such that the 18F program does not get further delayed in its implementation.

Project Management: The Missing Link of Acquisition Reform

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An article published this week on Federal Computer Week highlights the woeful state of the project management capability that currently exists in the federal government, and how attention needs to be paid to this critical government management function.

In the article, Healthcare.gov is once again the punching bag for the model program of what a federal boondoggle is all about. However, lessons learned from this program, along with the Government Accountability Office making Information Technology (IT) acquisition the newest member of their High Risk list , has seemingly given traction to the fact that acquisition reform is a holistic model, and must also include those activities that happen after a contract is awarded.

Former Department of Homeland Security CIO Richard Spires made an excellent point about the focus area:

This is not really a technology problem as much as a skill and cultural one,” he said. “Culture is the biggest issue.

This is an interesting article worth a look, as creating the culture of performance and constant improvement can have a major impact in improving federal programs, especially when it relates to IT.

It is the implementation of the U.S. Digital Services Playbook, along with theTechFAR Handbook, that holds the most promise for turning around federal IT programs through proper use of performance based contracting, and best practices of agile.

The inaugural podcast by Anne Rung, Administrator of the Office of Federal Procurement Policy, highlights successes in IT acquisitions using these prominent procurement tools. The first podcast featured Mark Naggar, project manager of the Department of Health and Human Services' (HHS) Buyers Club. He detailed his use of the TechFAR Handbook and the Digital Services Playbook, specifically noting that he tapped play No. 4, "build the service using agile and iterative practices," to help his team quickly contract with numerous firms for development of IT system prototypes.

The HHS initiative is a great foundation for the art of the possible in government, were engaged and committed leadership demands improved performance from their teams, provide the resources and means to achieve it, and have accountability at the forefront of results.

Combined with effective and agile contracting technique, effective project management can be the critical success factor for programs to succeed. It should be an concerted, integrated effort to address the failures of government management, and not an either/or proposition.

Re-branding Government Contracting, Mission Impossible?

eganenergy.com

An interesting question was posted by Francis Rose of FederalNewsRadio.com on the bad reputation of the federal contracting community in a recent article titled “Why do feds and contractors have such a bad reputation outside DC?"

The federal government, and contractors that supply goods and services to the government, do amazing, lifesaving work every day. We normally take for granted these services, like clean air, safe water, and the one of the best standards of living in the world.

So why do feds and contractors have such a bad reputation outside DC?

Well, there is no question that there is a concerted effort, driven by politics, to denigrate public service and the government itself. Regretfully, these messages are very powerful, and overshadow those messages of the important work the government, along with support contractors, currently perform.

However, the two points Mr. Rose makes are both a question and an enigma:

…Government should be more aggressive in telling its good news to people who understand it, and want to hear and repeat it…

No doubt. This is one thing that government does very poorly. Strategic communications is just something that government apparently does not seem to do well, especially as it pertains to sustaining a message, and getting stakeholder buy in.

When the MythBusters initiative launched at the Office of Federal Procurement Policy (OFPP) in 2011, I had always made it a point to cover this initiative, as it pertained to market research and communicating with industry, in classes that I taught to federal project managers. Many students had heard of this campaign, and the information we covered in the classes resonated well.

A few years later, it is rare that any student has even heard of the initiative.

One initiative that can hopefully turn this trend around comes again from OFPP, by way of the Anne Rung, the administrator, who launched a series of podcasts highlighting successes with some agency's prominent procurements.

The inaugural podcast featured Mark Naggar, project manager of the Department of Health and Human Services' Buyers Club. He detailed the use of the TechFAR Handbook and the Digital Services Playbook, on which his team built services using agile and iterative practices to and quickly contract and deliver the development of IT system prototypes.

It is these type of things that government should do more of, and get the message out there about success government is having.

The second point:

…Companies that sell in the government space should be more thoughtful about the stories they tell…

This one is a mystery. Many companies spend substantial resources on creating case studies, white papers, and discussing their products and services as a part of their marketing. Nonetheless, the message about their great work seems to be lost in the cacophony of failures of government, and how contractors are either at fault or guilty by association.

I could not agree more with Mr. Rose, as we need more success stories out there from both sides. They exist, so we all need to help overcome the challenges that missteps create in exacerbating an already bad public perception.

Acquisition 360: Will Anyone Listen?

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This past week, Office of Federal Procurement Policy (OFPP) Administrator Anne Rung, released guidance on a new initiative to help improve the acquisition process. This new initiative, known as Acquisition 360, is a proposed rating system to gather feedback from government and industry stakeholders on particular IT acquisitions. Ms. Rung’s memo provided stakeholders the surveys necessary to garner this feedback, but many questions remain about the utility of this initiative, and whether or not stakeholders will use the data to actually improve the acquisition process itself.

The idea is not necessarily new, as it has been compared to a “Yelp” like review tool to give broad information to give decision makers a high-level view of potential problems with a particular acquisition at the tactical level. Further, the mechanism was piloted at the General Services Administration with their Governmentwide Acquisition Contract One Acquisition Solution for Integrated Services or OASIS.

Acquisition 360 has review mechanisms for both industry and government. The surveys are not meant to be a tool to provide a critique of individuals, but rather, the process itself.

Although Ms. Rung, and Deputy Administrator Leslie Field addressed some of the questions about the efficacy of this initiative with Jason Miller of FederalNewsRadio.com, three fundamental questions remain about potential for these surveys to be successful:

(1) Will stakeholders actually complete them?  – From the government’s perspective, it is yet more potential paperwork given to overburdened acquisition personnel. Stakeholder engagement may be difficult, even though thoughtful feedback may pinpoint potential issues that require further root cause analysis and subsequent re-engineering to address. Nonetheless, this initiative can be seen as a way to target personnel, or further mechanisms for oversight and accountability. Although these surveys will not be used for this purpose, perception can be reality.

(2) Is anonymity ensured? – Although industry covets the opportunity to provide constructive criticism to improve the overall process to engagement and doing business with the federal government, firms may be weary to provide this type of information for fear of possible retribution. Companies often dare not rock the boat, as retribution can be swift and damaging to a company’s reputation. Further, the government can certainly make an educated guess about who would be providing the criticism, based on the circumstances of a particular acquisition.

(3) Will the feedback be useful? – The surveys are intended to provide comprehensive, high-level feedback on the end-to-end pre-acquisition process. Assuming thoughtful comments that provide enough information for decision-makers, will these managers for both government and industry use the information to improve their internal processes?

The reality is that the current environment is a type of Cold War, where industry and government are in a state of almost rampant animosity. It is a vicious circle where firms are on the offensive with protests and challenges to government procurement, due to budgetary pressures and ferocious competition for every federal dollar spent on goods and services. Government has almost battened down the hatches, hoping to weather the storm of criticism of every move, and thus believing that openness and transparency through collaboration and communications is a losing proposition.

These barriers only continue to grow stronger, and productive opportunities to improve the process through communications continue to be a challenge. However, changes are desperately needed. 

No one is expecting this initiative to be a silver bullet, but I applaud OFFP and Ms. Rung for proactive action to break the barriers that hinder constructive change and open the doors to communications. 

Reverse Auctions: Where Are The Cost Savings?

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Reverse auctions are back in the news this week, highlighted by a Government Accountability (GAO) report critical of the process, and by the Small Business Committee’s Contracting and Workforce Subcommittee, which held a joint hearing with the Veterans’ Affairs Committee’s Oversight and Investigations Subcommittee earlier this week as well.

The title of the hearing, Contracting Away Accountability – Reverse Auctions in Federal Agency Acquisitions, was a good indication of what Congress thought of the procurement tool.

Firstly, I think reverse auctions are a great tool to save money, increase competition (especially for small businesses), and speed up procurement times. However, there is one caveat: when used appropriately.

I have written about this issue in the past (click here), and the GAO report started the salvo of calling into the question the use of reverse auctions through disturbing findings at the center of testimony provided by Michelle Mackin, Director of Acquisition and Sourcing Management at the GAO

…Competition and savings-two of the key benefits of reverse auctions cited by the agencies we reviewed-are not always being maximized… because not all reverse auctions involve what we refer to as interactive bidding, where vendors engage in multiple rounds of bids against each other to drive prices lower. We found that over a third of the fiscal year 2012 reverse auctions had no interactive bidding-and agencies paid $3.9 million in fees for these auctions…

Further disturbing news in the report and testimony from Mackin was that many federal users did not understand that fees were associated with the reverse auction platform, most notably through the use of FedBid, a Vienna, Va.-based company that offers the most popular tool. FedBid charges a fee of 3 percent of the winning contract, not to exceed $10,000. However, FedBid can, and sometimes does, offer discounts on those fees.

…”We were, frankly, a bit surprised to learn that agencies didn’t know how much they were paying FedBid in fees. They didn’t know how much duplicative fees–for lack of a better word–they were paying when they were using a schedule contract, for example, for a reverse auction,” said Mackin…

Some agencies, such as the Department of Veterans Affairs (VA), are now trying to capture and track fee data, but it remains an illusive goal. VA had halted the use of reverse auctions last year, as according to Jan Frye, deputy assistant secretary at VA’s Office of Acquisition and Logistics, who said in a keynote at the April 26 Coalition for Government Procurement 2012 Spring Conference:

…“I’m not against reverse auctions, but I’m concerned that sometimes we don’t know what we’re doing when we set about to do reverse auctions”…

Apparently the doubt remains, as the VA has once again halted the use of reverse auctions this week, further pointing to issues on the use of this technique at the VA, and especially when it comes to construction contracts.

Also disturbing in the testimony from GAO was that more than one-third of auctions reviewed by the GAO in their report had only one bidder, and over half of auctions were used to procure items from pre-existing contracts.

…There’s a notion, said Mackin, that reverse auctions result in the lowest price. But at times the final price exceeded the government estimate and agencies may have been able to get a better price through other mechanisms…

GAO auditors also found issue with FedBid’s savings calculation across the four agencies GAO analyzed, which according to Mackin, was an estimated $98 million in 2012.

…”We have questions about the accuracy of these savings. For example, if there was no interactive bidding, agencies perhaps could have gotten a better price using other mechanisms,” she said. “Also, the target price or government estimate may not be sound. For example, we found over 1,000 cases where the winning bid actually exceeded the government’s estimate even with interactive bidding.”…

Some of the most insightful testimony came from construction firms, who denounced the use of reverse auctions. Nigel Cary, president of Cox Construction Co., discussed the negative effects of using reverse auctions  for complex construction projects, and further stated agencies are hindering competition on specific contracts due to issues with unrealistic requirements for unrealistic prices.

“Reverse auctions ignore best value,” he said. “It’s unfortunate and misguided that each agency learns the lesson on their own.”

Not to be outdone was Louis Celli Jr., director of the legislative division of the American Legion, who shared the message with the Committee on how his members feels about reverse auctions, as he stated that his members believe reverse auctions “unfair, deceptive and fraught with cheating.”

What is the path forward?

It seems that reverse auctions are a “love them or hate them” proposition. The vast majority of small businesses I know who actively use reverse auctions have negative attitudes toward the use of this tool, for the same reasons highlighted in the testimony. The overwhelming feedback is that they are being used for the wrong procurement (e.g. wrong requirements for the wrong price point), and not necessarily think that reverse auctions in and of themselves are a negative procurement method.

What do we do about this issue? Some solutions that were offered at the hearing included increased oversight and training, and passage of H.R. 2157, which prohibits the use of reverse auctions on construction contracts which are specifically suitable for awards to small businesses. Mackin also stated that the Office of Federal Procurement Policy (OFPP) has also agreed that new guidance is needed.

Nonetheless, I think construction contracts are the wrong requirement for reverse auctions, as sealed bidding is a preferred method to ensure best value, and ensure the right vendor, with the right requirements, at the right price.

Further, OFPP guidance, along with oversight, is clearly needed, as reverse auctions seem to be doing more harm than good. 

We’ll see what comes of this, but I hope reverse auctions do not go away entirely, as I am not a fan on taking tools away from the procurement process. We just need to do a better job of using the right tool for the right job.