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.

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.

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...

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.

How Healthcare.gov Will Not Drive Federal IT Acquisition Reform

Photo by ActiveRain

After weeks of reports about the debacle known as healthcare.gov (here and here), the latest news and actions around preventing the next IT boondoggle are now headed in the direction of reforming IT acquisition.

Although President Obama got in on the action, I do not expect any significant reforms to take place, until the root cause of the problems are addressed. Further, “fixing” IT acquisition is not a silver-bullet endeavor, but as the Professional Service Council highlights in their latest report, there are some fundamental approaches to improving the current situation that do not require any new legislation or further regulations (thankfully).

Nonetheless, if real IT acquisition reform is to be realized, the answer is to dig deep and not focus on outlying issues. Not an easy proposition.

Fixing IT Acquisition: Strip It Down to the Bolts

Just weeks before the failed launch of healthcare.gov, I was having an interesting and enlightening debate with Clay Johnson on LinkedIn regarding innovation and RFP-EZ. Clay is CEO at The Department of Better Technology and one of the original Presidential Innovation Fellows of the RFP-EZ project.

He and I were debating about the need for IT innovation and its definition, in addition to creating software and technologies that provide rapid capability at a fraction of what most IT projects cost. That is to say, it is possible to create and deliver technologies and capabilities that meet end-user expectations for functionality without breaking the bank or requiring being hauled before Congress.

My main concern regarding RFP-EZ is that this technology already exists; mainly through Federal Business Opportunities or FedBizOpps.gov. Wasn’t RFP-EZ a redundant technology? Shouldn’t we be more focused on fixing the real IT acquisition issues, like the workforce?

No question infrastructure, human capital, and execution are major problems, but after seeing healthcare.gov rolled out, and Clay’s remark about the possibilities that exist to solve the issues of IT in the federal space, I believe his vision to reform how government purchases technology is what can lead to real change.

“Big Bang” Means “Big Bucks”, With Little To Show For The Investment

One of the biggest issues I see is simply culture, as government is fully entrenched in purchasing large programs with thousands of disparate requirements and no clear vision of what capabilities are desired. Combined with an aversion to change how business is conducted, and further exacerbated by strong business (e.g. lobbyists) interests that prefer the status quo, this will be one of the hardest issues to combat.

Recent federal leadership comments, I believe, illustrate this point. Comments by former Department of Homeland Security CIO Richard Spires and former acting administrator at the General Services Administration, Jim Williams, illustrate this problem. Although their recommendations are very useful and helpful, one has to wonder about the level of success of IT programs at their respective agencies when they held their respective positions. Furthermore, they both effectively state “Next time we undergo another large program like healthcare.gov, we need to do better.”

To realize real change, we need to put the brakes on this “Big Bang” approach to purchasing IT and ensure return on investment is at the forefront of future technology acquisitions.

Photo by BCW, UK

Innovation Can Not Happen With “Big Bang”

Everyone talks about how there is ample competition in the federal acquisition marketplace, and how regulations promote this competition. If you really believe this, I have a bridge to sell you.

There is a reason that such a vast majority of federal business is won by a small number of firms, and this entrenched environment is part of the “IT Cartel” that former Federal CIO Vivek Kundra discussed. Although this moniker was regrettable, and pounced on by large government contractors and the media, his analysis was very accurate.

Although his “25 Point Implementation Plan To Reform Federal Information Technology Management” laid the groundwork for real transformation, I would argue that little has been done to fully execute these initiatives, outside of cloud computing and data center consolidation.

Until government understands that huge multi-million dollar IT programs simply are a continued recipe for waste and little innovation, we will continue to build more projects like healthcare.gov.

What Does Real Change Look Like?

For starters, Requests for Proposals (RFPs) that are hundreds of pages of requirements, that no one understands (especially with requirements that are TBD), go away. After 30+ RFP amendments and months, if not years to award the final contract where the technology requirements are now obsolete at contract award, who thinks this is a good idea anymore?

Further, getting more small businesses in the federal technology space is what will drive more innovation in technology, and improve the level of technological capability that IT projects deliver. As opposed to the business model of requiring large businesses to run these massive legacy systems at enormous expense that total billions every year, smaller firms are simply closer to cutting edge, ground-breaking technological capability that is required to change the paradigm, and improve the level of services the federal government delivers.

All at a fraction of the cost, I might add.

The requirement for Open Systems Architecture would also go a long way to improving capability, since the current environment is to purchase “Commercial-of-the-Shelf” technologies, then spend hundreds of millions of dollars to customize the software for government use that ultimately creates proprietary software, and a nightmare for data rights and licensing fees. This only encourages less competition, since usually only the incumbent (a large business) has the resources to manage these enormous undertakings, or compete on them for that matter. Security issues, for the most part, are also nothing more than a red herring at this point.

Of course, holding those accountable for failure is also woefully lacking in the federal environment. Only in the federal government can you manage a program that wastes millions of dollars, only to have it fail, and possibly canceled, and the only response seems to be a shoulder shrug.

Risk taking and bad management are two separate things, and the former is what needs to be encouraged. Combined with using more Agile development techniques, and a renewed focus on workforce capabilities and not just box-checking certification requirements, are further areas of improving the status quo.

We do not need the next healthcare.gov to drive change. I think we taxpayers have had enough.

Saving Money Is Now A Good Thing: The Great Paradigm Shift

I always have to scratch my head at the curiosity of how the federal government operates in regards to budgetary matters. Although commercial best practices are all the rage in government, such as trying to leverage technologies and become more efficient, innovative, and agile, the one area that always seemed to be polar-opposite was the budget.

Commercial entities, specifically publically traded companies, have accountability to their shareholders and Wall Street (mostly Wall Street). As such, increasing productivity and lowering costs has always been a critical driver in efficient corporate operations. Unlike federal leaders, corporate leaders are held accountable for what is viewed as wasteful or excessive spending.

Although the federal government has made several initiatives as of late to increase productivity, it has always been, and continues to be, the accountability issue that has lagged the commercial sector.

That trend has seen a recent reversal. With the focus on cutting contracts, saving money is now a requirement. The Office of Management and Budget recently sent out a memo directing agencies to further tighten their belts, especially given the “TravelGate” scandal from the General Services Administration.  

Cuts are also hurting industry, as salaries, benefits, and jobs are being shed to withstand the environment of lower margins, and lower rates on bids.

…Agencies typically wait until contracts are up for renewal or entering another option year to negotiate with vendors for a better deal. But Hancher's reduced budget drove her to bargain with the agency's help desk support contractor, Computer Sciences Corp., in the middle of an option year…

Different negotiating tactics are being employed, but it is the low-price model that has really taken a solid grip on how the government now buys.

…Donna James, owner of Accent Global System Architects, which helps agencies map their IT network systems, said she started noticing last year that agencies were more focused on price than best value. She lost every bid she competed for based on price.

To be more competitive, her company cut back contributions to employees' health savings accounts and is hiring new staff at lower salaries, she said.

However, most of the contracts she competes for still call for highly skilled workers with special certifications, James said. "They want the sun, moon and stars and they don't want to pay for it."…

The federal government has turned into a buyers market, with procurement executives making difficult requirements without the opportunity for best value. I have seen a marked increase in small businesses getting squeezed to deliver, as the low-price model ensures that margins are squeezed as close to zero as possible just to stay viable. Best value is nothing more than lip service.

Several agencies seem to be getting the message, however, that early and upfront collaboration with industry is vital to understanding what is available, but also, what is affordable.

…At the Veterans Affairs Department, acquisition and IT executives meet with vendors early on about expectations and pricing, so there are no surprises on either side, said Luwanda Jones, VA's executive director of IT acquisition strategy and business relationships…

Nonetheless, we’ll see how the end of fiscal year buying season turns out; the period between July and September that I refer to as the “Feeding Frenzy.”

Will agencies continue to spend like drunken sailors in this period, or will senior leaders demand cuts and finding ways to not spend end-of-year money?

Stay tuned to see if this paradigm shift actually occurs… 

Contractors Are Mission Critical, Not a Necessary Evil

Former head of the Coalition for Government Procurement Larry Allen, now President of Allen Federal Business Partners, wrote a spot on article recently calling out the absurdity of the current environment of anti-contractor sentiment running rampant throughout the federal government.

Recent examples of these activities, among many, includes the Office of Management and Budget’s recent directive to ramp suspension and debarment operations, and the Air Force’s actual debarment of Iron Bow Technologies. Although this debarment was later overturned, it seems that this action was a direct result of the “get tough” policies.

Of note was the actual reversal, as a direct result of the Air Force and Iron Bow working together to address the issues leading up the debarment, and mitigation strategies to prevent any future occurrences. In other words, actions that should have occurred without the need of the seemingly knee-jerk debarment by the Air Force.

Further exacerbating the “greedy contractor” paradigm, and as noted by Allen, is Shay Assad, the director of pricing for the Department of Defense, announcing a more stringent pricing policy with contractors, in addition to the directions to cut service contracts by another 20 percent. Now with the Senate passing a Defense Authorization Bill that caps executive pay for contractors at $400,000, it seems that senior federal officials feel the need to squeeze the vice even further.

With the government continuing to freeze pay and hiring in critical areas, in addition to offering early buyouts, the expected outcome can only be further erosion of performance. With fewer government personnel, in addition fewer qualified and trained personnel since training is also getting cut, waste, fraud, and abuse will keep the Government Accountability Office (GAO) and Inspector Generals gainfully employed. On second thought, GAO is also cutting staff. Perhaps the Commission of Wartime Contracting will reopen its doors in the near future to report on billions in waste, and just drop the Wartime from its title.

Contractors perform vital functions, and more pressure will be put on industry to perform more with less. However, it is being done in an environment where profit margins are being cut to the bone, lowest cost is now the only variable, and many small businesses are in danger of extinction with cuts to contracts, and subcontracts.

The fact is this: Contractors perform messy services that no one else wants to do. They fix things that break in the middle of the night. They are absolutely essential to the efficient running of the enterprise. They should be treated with the respect commensurate with the role they play. Mistakes happen, and bad actors exist. But it’s past time to give credit where it is due.

We would be better served working together, and stopping this animosity.

Performance Outcomes: Judgment Day is Coming

So Fiscal Year (FY) 2011 is now in the books, and the new government FY 2012 begins. I don't think anyone can argue that this end of FY was one of the most challenging end of FYs in recent memory, with budgetary issues and Continuing Resolutions adding to a sense of doom in industry, if not outright confusion and desperation in most government procurement shops. Many of the acquisition divisions at federal agencies did not have a clear sense of what the budgets and fiscal environment for the rest of the year would be, thanks to a dysfunctional political system and a Congress willing to sellout stable government operations in the name of political sensationalism and outright partisanship at the expense of the nation.

From what I have seen over the last few months and winding up this FY, coupled with the bleak fiscal horizon in the next few years, government operations are in serious trouble. Frankly, if you think government operations are bad now, you ain't seen nothing yet. The Government Accountability Office, Office of Management and Budget, and other watchdog groups and organizations can expect their workload to increase to the point of trying to move a mountain with a shovel.

One only need taking a look at what is happening with alarming regularity, and will no doubt continue as the government continues to find ways to save money and reduce the amount of contractor support and contracted dollars; low price is the only price.

Granted low price, despite illusions of "best value" has always been around, things seem to be spiraling out of control. I have seen with alarming frequency contracts be awarded to low-priced bids, at prices that are ridiculously low compared to both other bidders and government estimates. Sometimes 20% or more below. So much for price not being the most important factor. Price reasonableness and realism? Looking at the bottom-line figure is not enough. Sometimes performance costs money, and should actually save money in the long-run. That is a concept seemingly lost on procurement officials right now.

Although "buying in" is a prohibited practice according to the Federal Acquisition Regulation, it has now become a sanctioned activity. Expect to see many more fixed priced contracts, despite the requirement, in addition to modification after modification. Performance will be an afterthought, as multipliers in industry (the final amount that a contractor bills the government for a dollar of labor, often referred to as “loaded” cost) get lower and lower. Anything less than 2.4 is considered inexpensive; with 2.4 – 2.7 the norm and anything greater than 2.7 considered expensive. I have heard of firms lowering their multipliers to 1.9 to be competitive. Competitive? How can you be profitable?

Size is the answer, as only very large firms can absorb that type of contract strategy. Make it up in volume, and the modification circus that poorly written and "cheap" contracts is also another outcome. This strategy simply decreases competition, especially for small businesses, and will result in even further poor contract performance. Just what we need. Forget about even developing proper requirements, as that is now a cost driver.

So how to you staff these contracts if you are "lucky" enough to win a contract? Answer: on the cheap. Hire know-nothing consultants straight out of college or inexperienced staff to support the requirement, pay them rock-bottom salaries with little if any benefits, and put them through the sausage grinder for a couple of years. Repeat the process. How will government get any decent performance? The current environment and abilities of the acquisition workforce are not conducive for governance and oversight as it is. Now you're going to expect them to provide even more?

Industry: How are you planning to succeed in this environment? What adjustments are you making? What experiences have you had in this "new" low-cost paradigm?

Government: What are you doing to ensure performance with such a low-price? What price reasonableness and realism checks are being done? What technical acceptability checks are being done?

Call For Volunteers for Better Government IT Working Group - Due April 22

On December 9, 2010 the U.S. Chief Information Officer Vivek Kundra released a "25 Point Implementation Plan to Reform Federal Information Technology Management." Many of the points in this plan are consistent with recommendations previously made by ACT-IAC. One of these recommendations, and a major priority in the Administration’s plan, is to improve communications between government and industry throughout the IT acquisition process.

Item 24 of the OMB plan directs the OMB Office of Federal Procurement Policy to launch a "myth-busters" education campaign to identify common misconceptions or myths about vendor engagement and improve overall communication between government and industry. Item 25 of the OMB plan directs GSA to launch an interactive platform for pre-RFP agency and industry collaboration.

ACT-IAC is working closely with OMB and GSA on both of these items to provide advice regarding a strategy for improving government-industry communication and collaboration. To date, we have hosted a national dialogue on Item 24 and sponsored industry focus groups on implementation of Item 25.

Overview of the Project

The Better Government IT project is expected to be an ongoing activity to improve government-industry communication and collaboration in the IT acquisition process. The working group will initially focus on working with the Administration to implement items 24 and 25 of the OMB plan. Other issues will be addressed where appropriate. The initial product to be produced by the working group will be a center of excellence on the ACT-IAC web site regarding government-industry communication. It is expected that this center will include:

• The myths identified by OMB (and truths) plus additional myths as added.
• Guidance for agencies and industry on what is allowed and not allowed regarding communication during different phases of the acquisition process.
• Best practices and examples of good communication techniques.
• Relevant policy documents and guidance from OMB and the agencies
• An FAQ section that provides answers to the most often asked questions.
• (Optional) A collaborative capability so that members of the government IT community can exchange ideas and information on this important topic.

Working Group

The working group will have an industry chair and a government chair. Jaime Gracia, President and CEO of Seville Government Consulting, will be the industry chair. A government chair is also being sought. The working group will have both government and industry members. The initial term of the working group shall be six months. At that time an assessment will be made regarding next steps.

Nominations are now being accepted for the Working Group. Individuals interested in participating in the working group should submit their name, email address, a bio of no more than 75 words as well as a brief explanation of why they are interested in joining the working group. This information should be sent to bettergovernmentIT@actgov.org no later than COB April 22, 2011. For the complete nomination information, please click here.

Providing the Blueprints for Improved Government and Industry Communications in the Acquisition Process

As part of Federal Chief Information Officer (CIO) Vivek Kundra’s 25 point plan to improve the management of Federal IT resources, a vital component in need of attention is the poor state of communications between government and industry.

Although this fact was highlighted in Office of Federal Procurement Policy (OFFP) Administrator Dan Gordon’s Mythbusters memo of February 2, 2011, this process is one of changing culture. This culture has two facets; an extremely risk-averse federal culture where the fear of liability is almost debilitating and prevents any meaningful industry input, and a culture from industry where enormous investments in status quo have created competitive advantage, coupled with the fear of disclosure and transparency.

Nonetheless, both sides agree that middle ground can be achieved to improve the ways each side communicates with one another, with ultimate outcomes that vital feedback from industry is given to the government on resource management, requirements development, and knowledge transfer on technology that clearly lies, and belongs, with industry. In conjunction with the Office of Management and Budget (OMB), the industry group American Council for Technology and Industry Advisory Council (ACT-IAC) hosted an online, moderated exchange of ideas to engage the government IT community to gather feedback and improve communications between government and industry. To host this dialogue, ACT-IAC created a dedicated website at www.bettergovernmentit.org with links from both the CIO Council and the ACT-IAC websites, respectively.

Ben Coit, chair of the Acquisition Management Shared Interest Group at ACT-IAC, and Tom Suder, the ACT-IAC lead for the Mythbusters dialogue effort, discussed the initiative on the DorobekINSIDER show earlier this month.

"The overall goal is to develop actual recommendations so the government can be more effective in their mission by improving the quality of proposals that come in through effective communications," Coit said. "The government's mission is going to be better served by industry."

To that end, feedback was received until February 28th, and asked users to focus on four different categories to post a myth:

1. Please identify "myths" that government acquisition professionals may hold that inhibit their ability to communicate with industry during the IT acquisition process.

2. Identify "myths" that industry may hold that inhibit their ability to communicate with the government during the IT acquisition process.

3. What are major impediments to improving government and industry's ability to communicate with each other? If you identify rules or regulations, please be as specific as possible.

4. Provide examples of Federal IT acquisitions that included good communication practices - by either government or industry - that resulted in better outcomes and better decisions. Explain what the practice or process was and why it was valuable.

This past week, ACT-IAC submitted a white paper to OMB, which summarizes some of the input from this information gathering initiative and provides some thoughts on next steps. As the dialogue with OMB and ACT-IAC continues, more will posted on this initiative, along with recommended action items for execution.

Although much work needs to be done to improve communications, only by breaking down barriers, which are normally created artificially, can improvements in outcomes be realized. I hope these initiative results is a robust forum for helping structure a new paradigm where industry input is actively sought and given in return, to the betterment of acquisition initiatives and the taxpayer.

Mr. Gracia is an active member of ACT-IAC and the Acquisition Shared Interest Group or SIG. He is providing leadership in the BetterGovernmentIT initiative and the BetterBuyProject as it moves forward with OMB in helping shape the dialogue between industry and government, and as it relates to points 24 and 25 of the Kundra memo.

Let Sellers Talk to Buyers Early in Procurement

This piece was originally published for Bloomberg Government on 03/11/2011.

The Obama White House announced plans in December to transform the way federal information technology projects are managed and executed. Its 25-point implementation instructions to federal agencies include many good ideas, from the adoption of light technologies and shared services to aligning the budget and acquisition process with the technology cycle.

The 24th and 25th points go to something deeper -- and actually transformative -- in the way government IT projects operate: increased engagement with private industry. They suggest new opportunities to develop relationships among industry experts and key procurement personnel that are currently closed or difficult to create.

This is the gaping hole in the government procurement process. For understandable but increasingly obsolescent reasons, government acquisition officials create artificial barriers and prevent themselves from working as closely as they could with industry experts in the earliest stages of the acquisition process.

While the Federal Acquisition Regulation encourages such exchanges, the perception of improper influence and unethical behavior, coupled with the risk-adverse nature of government in general, often prevents meaningful communications from occurring.

The results are poor requirements development and the unintended consequences of waste, fraud and abuse that are rampant in many programs across the government.

Identify Needs

The requirements phase identifies the needs and scope of a project and thus becomes its blueprint. By having more meaningful discussion with stakeholders, specifically industry stakeholders, proper requirements and can be developed, increasing the opportunities for governance and oversight.

When both government and contractors can focus on execution of common goals and objectives, based on designed metrics developed early in the program, they lessen the chances of costly change orders and foster better outcomes.

Regretfully, in the current system, stakeholders in industry are an afterthought, and industry experts have little bearing on helping program managers and acquisition officers develop sound requirements to ensure goals are realistic and achievable.

Best practices on how industry develops requirements are what the government desperately needs. By focusing on the earlier phases of an acquisition, which is to focus as far left as possible in the needs-identification phase of an agency’s acquisition lifecycle, user requirements are matched with customer needs and available resources, and products can be designed within cost, schedule and performance goals.

Social Media Tools

So how can legitimate ethics concerns be accommodated while still making room for the obvious benefits of government-industry communications?

Here's where social media technology now provides new tools to facilitate communication and maintain proper arms-length relationships.

Recently, the government launched several online wiki tools to explore collaboration between government and industry in an open-dialogue platform. Thousands of visitors participated from all 50 states. They included Fortune 500 company experts interacting in an environment where they suggested best practices and cutting-edge solutions to identified needs.

The results were an encouraging start of the future of these exchanges. The feedback was "both more comprehensive and more actionable than what could have been obtained through traditional methods," wrote Vivek Kundra, the government's chief information officer and author of the 25-point plan.

In fact, crowd sourcing and stakeholder analysis are commonly used by commercial entities in these knowledge-based environments. Many companies use a structured product-development process to ensure that a high level of knowledge exists about a product at key junctures during its development, similar to milestones or phased entry-points used by the Defense Department.

It's this knowledge-based process that helps enable decision makers to be reasonably confident about product quality, reliability and timeliness.

Through these interactive platforms, key decision makers, such as program managers, can develop the information they need, particularly in the period before issuing a request for proposal, or RFP, when they need more effective ways to perform market research.

The current acquisition process for market research uses a request for information, or RFI. Just like the stages following an RFP, and RFI requires a significant investment in business development dollars for a prospective bidder to build the relationships necessary to be on the government buyer’s radar.

As both industry and government realize the value of early interaction, both business development expenditures and procurement lead times can be drastically reduced. The new interactive platform will allow government to get more focused and value-added input from industry, improve awareness of cutting-edge technologies and allow for increased opportunities for innovation, competition and flexibility in contract development.

The platform, being built by the General Services Administration, is scheduled for beta-testing and initial operating capability by Memorial Day. I hope that industry contractors continue to keep track of this development, if only to increase their own performance along with that of government’s.

Myth Busters Campaign in Full Swing to Improve Public/Private Sector Communications

As part of an effort to reform the federal acquisition process for technology, US Federal CIO, Vivek Kundra, unveiled an ambitious 25-point plan for addressing many of the issues that plague the way the government purchases technology in hopes of delivering more value to the taxpayer. Part of the implementation plan was to counter the misunderstandings about how industry and government can engage with one another during the acquisition process, specifically by government. Because of the artificial barriers between government agencies and their industry partners, rampant waste and program delays have become the norm that erode the value of these IT investments.

To combat the status quo, the Office of Management and Budget (OMB) has launched a “myth-busters” campaign to educate government, and eliminate public sector barriers to communication and enhance awareness of the most efficient and effective technologies available in the private sector. Office of Federal Procurement Policy (OFFP) Administrator, Dan Gordon, outlined in his Feb. 2^nd memo the planned outcome of this campaign, which is to remove communication barriers and improve the overall acquisition process that includes specific initiatives on needs identification, requirements definition, acquisition strategy formulation, market research, the proposal process, and contract execution.

I have been writing about the need for improved communication as a central theme of acquisition reform for some time (here, here, and here), so I am glad this formalized implementation plan has taken shape. What I am also glad to see is that the communication plan is not only a public sector initiative, but is also being done with industry.

Leading this effort is the industry group the American Council for Technology (ACT) - Industry Advisory Council (IAC), which has launched an online forum called BetterGovernmentIT.org, to collect feedback that will later be reviewed by OMB, the Chief Information Officers Council and the Chief Acquisition Officers Council, according to ACT-IAC. This site, which is styled after the General Services Administration's BetterBuyProject, uses crowd-sourcing techniques for contracting professionals to identify common myths about vendor engagement and information that will help improve public/private communication. One important option included is to engage anonymously, which will hopefully encourage dialogue without the fear of retribution by government officials or providing other firms competitive information.

These encouraging efforts can only help improve what is a truly becoming a broken system where communication barriers are getting more and more entrenched. What can truly improve the overall process is having open communications with industry as early in the process as possible. These early communications, in the need identification stage, can greatly improve the requirements development process, which I believe to be a truly broken process. These early exchanges can vastly improve the chances of good acquisition outcomes, which includes reduced costs, improved performance, innovative solutions, increased competition, and with proper oversight, improved overall government management.

These public/private efforts have the ability to produce desired effect, but only if these efforts are coordinated. OMB, OFPP, and ACT-IAC need to ensure data and feedback from their respective efforts are all shared amongst each other, which includes sharing lessons learned, and transfer knowledge. It would be a shame if effort to improve communication were conducted in the same, stove-piped echo chamber they are being conducted now. As these initiatives move forward, the increased communications can only help shape the future of acquisitions to the benefit of the taxpayer.

Reverse Auctions: A Tool to Realize Real Cost Savings

As Government continues to leverage its buying power through continued fiscal pressures, one process that is not getting enough attention is the use of reverse auctions. Reverse auctions are an effective and efficient means of realizing large savings on purchases of not only commodities, but highly defined services as well. Although current initiatives exist such as the General Service Administration’s (GSA) Federal Strategic Sourcing Initiative (FSSI), which encourages adoption of industry best practices, federal buyers are simply not going far enough in leveraging their buying power to maximize price savings. To achieve maximum efficiency, the Government should begin to create holistic strategic souring initiatives that include reverse auctions as a mechanism for cost savings, since programs such as FSSI are simply catalog buys to bidders that have been pre-qualified, and mimic the GSA Schedules program. Further, many Program Managers and other acquisition officials I have spoken to state that they do not always get the best prices by using these types of pre-negotiated arrangements, and thus buy either directly from vendors or execute procurements outside these initiatives. The result is ineffective buying and the continuation of not maximizing efficiencies to the detriment of the taxpayer.

Reverse auctions are by definition a structured competitive bidding event where competition can be maximized to help drive the price lower over the course of the event. One common reason I have heard for the poor adoption rate is technology barriers, which is a frankly a disingenuous reason. The benefits of potentially significant cost savings, enhanced transparency, increased collaboration, increased competition all outweigh any barriers that seem to be artificially created by Federal organizations. If the Office of Management and Budget (OMB) and the Obama Administration are serious about Open Government and accountability, then enhanced adoption of reverse auction should be further explored.

Another stumbling block to adoption is the issue of transparency, as the risk adverse nature of Government creates issues that should not exist through fear of protest that seems to be paralyzing acquisition decision-making. The reverse auction process is Acquisition 2.0 in motion, as reverse auctions create a structured and automated negotiation process with transparency at its core, since the process depends on vendors creating a clear and documented process for creating the pricing structure and the subsequent contracted price. It is the openness of the process that should be embraced, since the reverse auction allows for real time pricing feedback, and also allows acquisition officials to have real time visibility into the negotiation. This type of structure and the transparent process creates and enhances competition, reduces complexity, enhances collaboration, and ensures compliance with the acquisition policies and regulations.

It is these types of procurement methods that should be embraced, and will need to be further explored to help create holistic strategic sourcing initiatives for realizing true cost-savings by adjusting processes, ensuring leadership drives change, and breaking the endemic status-quo culture of Government. Successful examples of reverse auctions already exist through both Defense and civilian agency use, so lessons learned are available for use and need to be expanded upon to help with widespread adoption. As OMB continues to issue guidance on improving federal acquisitions and government management in general, reverse auctions need to be part of this process of continuous improvement and increasing accountability to the taxpayer.

Fixing IT Acquisition is About Execution, not Just Personnel

According to recent reporting by Federal Times on the state of federal information technology (IT) acquisition and program management, the Government is ill prepared to purchase and manage large scale IT programs due to poorly trained staff, and poor collaboration with industry. Certainly contributing factors, but the issues are much more broad and troubling.

Two independent industry trade groups, the TechAmerica Foundation and the American Council for Technology-Industry Advisory Council (ACT-IAC), have released reports on ways to improve the troubling state of federal IT programs. The industry groups' reports were done in advance of the expected Office of Management and Budget (OMB) release this month of the Administration’s plan for reforming IT procurement. Taken together, these two trade group reports provide a valuable roadmap to help improve the abysmal situation, and I hope OMB takes note.

What is important about these reports is that the recommendations have the ability to be implemented relatively quickly, and could have impacts in the short-term. As the reports also note, the laws, policies and procedures already on the books provide plenty of resources and flexibility for implementing the action items. Nonetheless, an important and valuable addition to these reports is the discussion of obstacles and challenges to implementation, along with subsequent action items for overcoming these issues. Many reports, including the recent memo from Dr. Ashton Carter on needed improvements to defense procurement, simply state what is needed without a roadmap on how to get there.

The report focuses on several areas including:

1) Professionalizing Program Management. Due to the constant rotation of program managers (PM), the reports called on a knowledgeable and empowered program manager who sees the project through to completion. The TechAmerica report also called on the establishment of a Program Management Leadership Academy, and enhancing training overall for PMs.

This recommendation focuses on building a bench of qualified PMs that have the tools and resources to be successful. Often, PMs are set up for failure by being assigned programs they simply have no business running. Managing IT programs can be a blood sport, and PMs need to be empowered, fully supported by management, and trained in best practice tools, techniques, and methodologies for managing IT programs along industry standards. Training is vital, but it also needs to focus on requirements, IT, finance, and contracting/acquisition. The cross-functional knowledge is required to ensure holistic program objectives are understood and achieved.

2) Promote Agile/Incremental Development. The TechAmerica report specifically states that agile development is not a cure-all for IT acquisition.

…The iterative, incremental and collaborative processes of agile development will significantly raise the Government’s return on its IT investment. It will do this by engaging with users more effectively, deploying capability more quickly and keeping better pace with rapid advancements in such technologies as cloud computing and software as a service…

The Government simply cannot expect to perform its mission with continued programs that are constantly behind schedule, over budget, and deliver little in terms of results or performance after spending millions in taxpayer funds. It is imperative to deliver smaller increments of capability, focusing scope on what is realistically achievable by closely collaborating between developers and users.

…Chief among the benefits of agile/incremental development are increasing the return on taxpayer investment through faster deployment of capability and reducing rework through faster and more effective interaction with users…

ACT-IAC called for a renewed focus on Governance, which would be used for accountability at the senior leadership level and promote the desperately needed communication that can lead to program success through agile development.

It is these best practices that can have significant impacts in the short-term. Advances in technology develop at a much faster rate than the federal acquisition lifecycle can keep up with, creating a capability gap that prevents Government from leveraging innovation and creates a system where Government purchases technologies that are outdated prematurely.

3) Improve Risk Management. The important recommendation is the call for an Independent Risk Review on major IT acquisitions. The report recommends a third party completely independent of the program, such that role is not filled by the program or the contractor executing the program. In essence, the report is calling for an Independent Validation and Verification (IV&V) role, either internal to Government or an outside contractor. This renewed focus on adherence to performance and Governance would go a long way to help ensure proper review cycles where all interested parties are held accountable for success.

4) Enhance Stakeholder Engagement. According to the TechAmerica report:

…The need for better engagement, collaboration and communication between Government and industry was cited by 78% of the Government-experienced IT leaders we interviewed, more than any other topic…

Also like the reports note, the trend recently is to build barriers to communicate and collaborate, effectively taking the Government in the wrong direction. The Federal Acquisition Regulation (FAR) encourages the communication, so why is it not happening? Risk aversion namely. Externally, the Government can use Gov 2.0 platforms for crowd sourcing, such as the Better Buy Project, to solicit user input and allow for outside sources to contribute to openness and transparency in the procurement process. Internally, ensuring end-users have a place at the table in requirements and the development of the program is important to ensuring the end system can meet objectives. The reports also tie the use of agile development as one way of doing this.

…Better communication can improve both the quality of an acquisition document and the quality of the proposed responses. The result will be a smoother acquisition at a lower cost. Better communication can also lead to greater awareness of how technology is being used innovatively in other marketplaces that could vastly improve mission delivery…

Improved acquisition outcomes are possible when industry knows what the mission and needs are of the Government, getting the opportunity to contribute and demonstrate technological capability through effective market research, combined with the Government knowing what their own needs are as well. This is only possible through open communications and partnerships with stakeholders, both internal and external.

5) Requirements. The Achilles heel of Government, the requirements process is one of the fundamental issues that create failing programs at program inception.

…As noted in the previous sections, a lack of communication and collaboration can lead to the development of patchwork requirements – or requirements that cannot be achieved by existing technologies and solutions. Similarly, overly rigid and defined requirements can preclude the agency from taking advantage of innovative solutions.

The Government does not always have a full understanding of how evolving solutions and technologies could benefit an agency’s goals and objectives, or how such solutions can be acquired by, and provisioned to, the Government. A key contributing factor to this development is the perception that federal officials increase the risk of protest due to “pre-selection” or wiring the requirements when they communicate with industry to consider possible alternative technological solutions or capabilities for meeting Government requirements…

Both reports called for increased collaboration and agile development to help control requirements. However, the entire requirements process needs a paradigm shift to leverage these proposed solutions.

Focusing on outcomes and allowing industry to propose innovative solutions to solve Government’s problems is the path to success. Government simply is not prepared, or has the technological acumen, to know what is in its best interest. Instead, it must focus on what it needs to perform its mission. Allow industry to present truly best value, and then manage to results. It is this renewed focus on the disease on procurement failures that can have a major impact on outcomes, but only when leadership understands that business as usual is not an option.

These proposed recommendations can go a long way to helping improve IT acquisition and management. It starts with an understanding where knowledge is housed, work to our strengths, and create real partnerships between Government and industry to stop the cycle of fraud, waste, and abuse that starts with poor requirements, poor management practices, and the inability to execute.