Is Innovative Procurement the Answer to Budgetary Constraints?

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

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

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

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

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

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

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

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

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

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!

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?

Photo from blog.ketchum.org

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?

Photo by artworldsalon.com

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.

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.

Mythbusting in Action – Communications and Their Value

The July 2013 edition of Contract Management magazine, published by the National Contract Management Association (NCMA), included an encouraging article on how communications between government and industry not only can improve outcomes and business relationships, but also show positive results to improve requirements and the opportunities for better outcomes overall.

The article, “MythBusting – Communications with Industry,” (subscription required through NCMA membership), written by Jeffrey D. Claar, a senior procurement analyst with the Program Executive Office for Simulation, Training and Instrumentation (PEO STRI), describes the successes at the establishment of monthly PEO STRI Acquisition Center Procurement Administrative Lead Time (PALT) Industry Days.

These monthly forums demonstrate the way procurement offices are changing the dynamic of what most “normal” Industry Days entail, which are time-consuming ways for government to advertise requirements that most commercial professional business development types know better than government personnel at the front of the room. Further, rarely are productive question asked, as industry attendance is normally for scouting competition or finding potential teaming partners.

However, living the spirit of the Office of Federal Procurement Policy's MythBusters is principal assistant responsible for contracting (PARC), Joseph A. Giunta, Jr., who stated these forums are “a means of providing ground truth and situational awareness of PEO STRI’s Acquisition Center procurement process and ongoing procurements.”

The article goes on to talk about the value of the program, and how communications have helped foster a collaborative environment.

…Since August 2011, PEO STRI PALT Industry Days have grown exponentially, serving the contracting community, requiring activities, and industry partners alike. The monthly PALT Industry Day venue provides industry representatives with the status of PEO STRI programs, ongoing procurements, and the distinct opportunity to request updates on specific procurements of interest in a Q&A-type forum. These types of venues have indeed enhanced communication and have enabled PEO STRI to respond faster to critical, emerging requirements with innovative acquisition and technology solutions, thereby putting the power of simulation into the hands of our nation’s warfighters.

Recently, as a result of sequestration, PEO STRI’s monthly PALT Industry Days have swelled to more than 220 industry representatives and taken on a “standing room only” reputation. As a result of this overwhelming desire by industry, alternative overflow seating and viewing capacity have been predicated…

Further, the exchanges have been helpful and productive for both parties, which one would expect when open and honest transparency, combined with a spirit of collaboration are created, to develop better requirements and provide actionable information for industry consumption:

…At its core, the PALT Industry Day sessions are driven by industry’s questions and not a fixed government agenda. Industry attendees routinely ask questions to a senior PEO STRI panel—consisting of the PARC, deputy PARC, division chiefs, program managers, and legal representation, as well as the Small Business Program Office and a host of contracting officers—about contract types and PALT milestones associated with a specific procurement. This has enabled industry representatives to better allocate resources and facilitate their investment decisions.

In this unscripted setting, industry partners have been more open and comfortable with sharing information, and in turn, as Giunta noted, “Better information is obtained for the acquisition community and for industry partners to support their pre/post-award activities.” Giunta went on to state, “While the sessions are in essence driven by industry, we do have the ability to push information to industry, leading to an educated partner.”…

As the sequestration vice tightens, it is even more important than ever for industry and government to share vital information on how missions will be supported with even more limited resources and contract opportunities.

It is encouraging to see procurement shops proactively improving their relations with industry through communications, and we can expect better outcomes as a result.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Acquisition Workforce: Are We Going Backwards?

As the meat grinder of sequestration continues to move forward, the initiatives to improve and develop the acquisition workforce will more than likely come to a grinding halt, and move capabilities backwards at a time where forward movement is badly needed.

At this past week’s 2013 Acquisition Excellence Conference, The American Council for Technology-Industry Advisory Council and the General Services Administration (GSA) co-hosted what was dubbed a "training and education" event, but according to those that attended, the unspoken theme was “doing more with less” and strategic sourcing.

I regretfully was unable to attend, but it sounds like perhaps the conference was a missed opportunity to really “train and educate.” However, the fact that the conference experienced 30% less attendance from last year, that number is a symbol of what seems to be happening all across the board in the development of the acquisition workforce.

Make no mistake; the acquisition workforce is in crisis mode. With budget cuts and continued uncertainty, the opportunities to educate and develop the workforce will shrink accordingly.

This point was analyzed through the excellent publication from the Professional Service’s Council biennial Acquisition Policy Survey (formerly the Procurement Policy Survey). The section of Budget Stability discussed “doing more with less,” which also includes who will be doing the buying. Which leaves an interesting question: Who will be doing the buying?

According to Office of Federal Procurement Policy (OFPP) Joe Jordan, it may be left in the hands on the less experienced:

…The top federal procurement officer on Thursday called for “not a tweak but a full rethink” of the government’s planning for its acquisition workforce, warning that as many as 40 percent of the 36,000 federal contracting officers could retire in the next five years.

Joe Jordan, administrator of the White House Office of Federal Procurement Policy, compared the coming brain drain to water flowing out of a “giant bathtub,” saying he plans to push agencies to “widen the aperture of who they recruit.”…

Adding insult to injury is the fact that due to budgets cuts, contractor support will also be cut, along with retirees coming back as consultants. We have no choice but to hand the keys over those with the equivalent of learner’s permits.

We now are back to the original issue: How do we assure the acquisition workforce has the capabilities to perform these most difficult missions under severe budgetary pressures and through less experienced 1102s?

OFPP Administrator Joe Jordan recently signed a service-level agreement (SLA) between OFPP and GSA to strengthen their cooperation and commitment to the Federal Acquisition Institute (FAI), who I like to call the “red-headed step child” of the training institutions in government. What Defense Acquisition University (DAU) is to Defense acquisition workers, FAI is to non-Defense 1102s.

Therein lies the rub, where is the money? Is there a monetary commitment with this SLA? DAU has traditional gotten vast sums of money, much more than FAI in the past, which is why I gave FAI that moniker. Should we not be preparing all acquisition workers (which I include program managers) equally to perform effectively?

We can talk all day about people, but until a financial investment is slated and properly used to educate and develop the acquisition workforce, we will continue to experience gaps in skill sets and capabilities.

Not a silver bullet of course, but educating 1102s on effective and proper practices on how best to execute their missions is important nonetheless. Based on fewer opportunities to attend conferences, classes (in some cases mandatory for certification), and overall training and development, we can expect to go backwards in how we award and manage contracts.

Not a particularly welcome prospect.

Lack of Accountability Hinders Contractor Oversight and Performance

The Office of Federal Procurement Policy (OFPP) is hoping that third time really is the charm in its seemingly desperate attempts at getting agencies to properly document contractor performance using the Past Performance Information Retrieval System (PPIRS). Although similar memos in 2009 and 2011 (here and here) focused on this issue of poor past performance data, little has changed.

As a result, OFPP Administrator Joe Jordan has issued his third wave of these memos earlier last week, where he outlined specific targets for PPIRS usage and outlining other initiatives to help with the inconsistent documenting of contractor performance.

The new memo outlines stepped targeting and goals, based on the level of agency inconsistency, so that better performing agencies have higher goals than agencies performing poorly. This certainly makes sense, given that not all agencies are performing at the same level so it would be nonsensical to expect all agencies to perform and abide by the regulations. All agencies are expected to be at 100% reporting by 2015.

Although the memo discusses targets and the actions taken to date, they have had little impact in improving past performance data.

According to the memo:

...OFPP has developed a MAX site that includes metrics from the standard

PPIRS Compliance Metric Report and allows for agencies to record their baseline and target information at https://max.omb.gov/community/x/JoNKJQ. A summary of the reports and tools available for use in this exercise are listed in Attachment 1, and the site will also include best practices gathered from earlier OFPP-led Acquisition Status (AcqStat) meetings...

What ever happened to those AcqStat meetings, where senior procurement officials where so supposed to review data and make strategic decisions to improve performance outcomes? According to Freedom of Information Act requests obtained by FierceGovernment, not much. Other than sign in sheets, the lack of transparency was alarming, if not expected.

I often advocate for fewer regulations and oversight, and there is absolutely no need to create new ones to address this issue. Nonetheless, improvements in this area can go a long way to help transform how contractors are selected for awards, and dramatically improve outcomes.

However, it is Page 3 of the memo that is most important to help understand the current failures, and the recommended actions that should be properly implemented that would have a dramatic effect:

...In support of this effort, agency CAOs and SPEs must also take the following steps to ensure that relevant performance and integrity material is reported appropriately:

1. Communicate to the workforce the importance of using past performance information, including the need to have frequent communication with contractors - such as holding interim evaluations to address performance issues, and share the agency’s plans for achieving success in this area;

2. Hold staff accountable for improving the quality and quantity of the information; [emphasis added]

3. Motivate employees to take action to fulfill this responsibility and use innovative practices to meet this requirement; and

4. Consider recognizing acquisition professionals who contribute to improvements in this area, such as through the annual CAO Council Acquisition

Excellence Awards…

Although I believe #3 above is redundant, certainly understanding the need of why this information is needed, and training the workforce on how to properly perform these reviews, are critical for these new goals to be met.

We can of course forget the opportunities for training and educating the workforce should the ridiculous meat-cleaver of Sequestration go into full effect, although those opportunities are already starting to disappear fast.

Nonetheless, what the memo fails to address is why the information is not being entered into PPIRS to begin with, and also why contractor oversight is currently so lax. It is a startling abrogation of ones duties to those responsible with being stewards of taxpayers money, and one that needs corrective actions through enforcement and proper program management.

For starters, some contracting officers that I have spoken to have taken the same attitude towards muted debriefs and the lack of transparency for reporting contractors demonstrating poor performance; that is to say "better safe than sorry, no thanks."

Because contractors have the right to appeal poor reviews, (rightly I might add, to defend against over-zealous officials abusing their power) some procurement officials just don't want to deal with the hassle. Although proper documentation should exist to demonstrate repeated poor performance, many argue the battles are not worth it.

Exacerbating the issue are highly performing procurement officials who get no top-cover from leadership due to the too-cozy relationships they have with contractors. The attitude is one of frustration, indifference, or simply ignorance.

Further, why should they? As a senior level procurement official told me while discussing the issue of the overall lack of accountability in the procurement process,

"People get paid every two weeks, if they perform or not."

I think it is safe to say we need to change this attitude. Past performance, especially for services, should be one of the most important evaluation criteria in selecting a contractor for award. However, the incomplete or missing data, combined with allowing contractors to submit their own evaluations from favored customers, often does not allow for differentiation and drives evaluations in areas that often let irresponsible contractors get way with murder because they offer ridiculously low-prices to win work in this era of institutionalizing "buying in."

In addition, what is the point of requiring in contracts status reports, weekly deliverables, monthly reports and deliverables, etc. in the areas of program management if they are not going to be used to address the issue of performance? What is the point of doing this? What contract does not already contain the interim status reviews being recommended?

Other than creating pretty pie charts, graphics, and killing trees, this vast amount of performance information is not being used properly, nor does it improve outcomes. I believe the lack of project management capability of the acquisition workforce is obviously an issue, but the one-two combination of poor accountability adds fuel to the fire.

Doing more with less is the foreseeable future in how we manage government contracts, but until enforcement and education really happen, we are epitomizing the definition of madness.

Small Businesses as Primes: Beware the Scorpion

As the 2012 Fiscal Year comes to a close, procurement shops are in full gear awarding contracts in the shadow of sequestration. Many large firms are also trying to close business after months of business development, only to see last minute decisions to make their solicitation a small business set-aside. This creates another potential avenue of abuse, where small businesses are used to “prime” a contract for a large business.

We have seen constant abuse of small businesses as subcontractors, most notably large firms using small businesses to check boxes, win awards, then not provide what was promised. Although small business subcontracting plans are required per FAR Subpart 19.7, they are rarely enforced.

However, the abuse of small businesses as “primes” is really the perfect storm of potential abuse, and calls to small businesses are going on all over the greater Washington area this time of year, as large businesses cannot afford to realize loss of revenues after months of business development, and looking for a pawn to realize profit.

Small businesses struggle to get a toehold in the government contracting arena. It is a very tempting offer to prime a contract for a large business, as it creates new relationships, new sources of revenues, and opportunities for growth. Further, the past performance experience is vital for new work.

However, careful consideration and “bid/no-bid decisions,” similar to submitting a Request for Proposal, need to be made if the small business wants to prevent being used by both government officials, and large businesses.

First, what is the firm’s relationship with the agency, and the contracting official? Understand that the large business has a very close relationship with procurement personnel, and perhaps a relationship that is beyond what many consider ethical or arms-length. The large business is trying to steer a contract to you, but at what price?

Second, and under no circumstances, can the small business allow the large business to occupy the program manager (PM) position. The large business will make the case that they have the relationship, they understand the customer’s needs and requirements, and they are better positioned to support the client. Further, they may play hardball, and insist that they get the PM position, or no deal.

Be prepared to walk away. The benefits do not outweigh the costs, as it is the small businesses’ past performance and reputation on the line, not the large business. The arguments made by the large business are false. If you could not support the customer yourself, how can you even be considered for the award?

Small businesses are trusting large businesses to treat them fairly, equitably, and to ensure mutual success. Seems like a no-brainer? Think again.

In this treacherous environment of government contracting, the competition is ferocious, and every penny is being accounted for, as large businesses need to weather the storm and keep margins and market share stable.

From the perspective of the large business, why not use a small business to get 49% of a contract, and then undermine them to get it all?  Again, it is not their reputation or past performance that will suffer, and they have positioned themselves where they can show they are not at fault. Anyway, there are a hundred small businesses at the door waiting for the same “opportunity.”

Further, the undermining is convincing the procurement official that a small business cannot do the work, or to prevent a socioeconomic set-aside designation, so now the large business is in the position to get it all. They may even go as far to write the Determination and Findings for the procurement official!

Regretfully, this happens much more than either side wants to admit. Accountability and oversight are lax to begin with, but at this time of the year, contractual irregularities happen with an alarming degree of frequency to satisfy last-minute requirements, spend money, and award contracts. Leadership is simply asleep at the switch, and OSDBU offices seem to be shrugging their shoulders at these complaints.

Before you put the scorpion on your back to cross the river, understand that the scorpion has a stinger, and is prepared to use it. Only in this scenario, the small business drowns by itself.

Buying In Now Effectively Policy Across Government

In a recent breakfast  hosted by the Coalition for Government Procurement, Office of Federal Procurement Policy Administrator Joe Jordan effectively punted on the notion of best value versus the realities of federal procurement; lowest priced offers win contracts.

…Generally speaking, he said industry likes best-value procurements. They allow companies to propose higher prices, since officials will consider other evaluation criteria beyond price. On the other hand, the government is pushing low price and not always fully analyzing the entire lifecycle of a project, Jordan said. Both sides have good arguments, so the contracting officer's judgment is the final arbiter….

Due to the intense focus on budget cuts, and sequestration still casting a very ominous shadow on the federal government, price has become the most important factor in any source selection, and will remain so for the foreseeable future.

Any talks of best value are out the window, so agencies should state as such in their solicitations. The issue really is about how do determine technical acceptability, given the foundations of what are normally poorly defined requirements.

Firstly, requirements for proper use of Lowest Price, Technically Acceptable (LPTA) should be very standardized, commodity based purchases that require no other factors other than price. That means just the commodity itself through very rigid, specific, and accurate requirements. No opportunities for customer service, shipping, transport, customization, etc. These requirements require the use of best value, and the ability to offer better service.

You get what you pay for. There lies the rub.

Often times, the government simply does not know what it wants. It thinks it does, so it puts horribly written Requests for Proposal on the street, that result in dozens and dozens of questions, since the requirements are either redundant, confusing, circular logic, not achievable, unrealistic, boilerplate and not applicable, etc. Further exacerbating the problem is the lack of engagement with industry during the pre-acquisition phase, assuring poor requirements. Lack of leadership, poor capabilities, and the excuse of lack of time are the usual suspects.

The pressures to save money are overwhelming, so prices are driven downward to unrealistic levels. Is anyone still doing cost realism assessments? You know the answer.

How often does the Government Accountability Office sustain a protest where the losing offeror, and often an incumbent, claims they lost to a competitor who underbid them by 40%, even though the incumbent knows exactly what the real cost of doing, at a satisfactory level, entails?

This vicious circle ensures performance will fail, and it is the lack of a long-term focus that is troublesome. Poor leadership, combined with continued declines in the skills and capabilities of the acquisition workforce (I include PMs in that bunch) have created a perfect storm of continued poor performance and waste. Just look at the fiasco that is the System for Award Management (SAM) for a perfect example of this.

The General Services Administration can claim SAM was best value, but price is kingmaker. “Buying In” is seen as an improper business practice per Federal Acquisition Regulation 3.501, but it seems to be standardized now.

Investment analysis is a foreign concept, since saving a few bucks today will lead to inevitable rise in costs tomorrow, failed programs, and poor performance.

Awarding to the lowest bidder is a disaster waiting to happen. Only when innovation is desired, through the use of performance-based contracting, combined with properly written requirements and effective contract management and execution, can best value be realized.

That is the best outcome for the taxpayer. Easier said than done.