Executing Requirements Is Not A Zero Sum Game

As government watchdog groups continue to focus on ways to reform the acquisition process and create greater transparency, the issue of requirements seems to be a common denominator for many examples of waste, fraud, and abuse in federal procurement.

Dr. Steve Kelman wrote on his Federal Computer Week blog The Lectern about approaching the issue from the perspective of the acquisition phase. This interesting perspective offers a lot of promise, as the current process is simply not sufficient to find true best value in federal procurements. Now, vendors are made to endure writing contests in response to a government solicitation at great time and expense that don’t necessarily respond to the government’s needs. It becomes about the writing and not the substance. The result is that contractors either do not execute on what they proposed, or the government does not manage the contract effectively by holding contractors accountable, or a combination of both. How do we prevent this from happening?

One approach is the use of oral presentations. Although this technique is gathering more traction in procurements, especially for IT, it should be used with more frequency to evaluate an offeror as a potential business partner. Because of the focus on the written response, many government contractors have proposal development experts or even proposal development organizations within their respective companies that have years of experience responding to federal proposals. The end result is that contractors are great at responding to proposals, but without those responsible for actually doing the work being more involved in writing proposals, the execution will be lacking.

This approach of involving the implementers would go much further in ensuring a proposal is more than just eloquent prose, but an actionable document that becomes part of the contract, and how it will be executed and managed. Many procurement officials are left wondering if vendor program managers even read their own proposals. Government officials who do not hold contractors accountable for the successful outcome of a program exacerbate this process. The result is failure, or the status quo. Supplementing written submissions with oral presentation can help alleviate this problem by ensuring the government can have a face-to-face meeting with a potential contractor, and get a better sense of what they are buying.

For oral presentations to be successful, the government must require that the vendor personnel who will actively manage and execute the program be the ones to conduct the presentation. Otherwise, the government will get business development personnel who are trained, and excel, in selling. The government needs to focus on executing, not marketing.

Further, these oral presentations need to be rated and evaluated as part of the source selection. Increasingly oral presentations are conducted with little effort toward ensuring a program can be successful or that the offeror is a good fit to solve the government’s problem. Oral presentations are an excellent way to cut through the smoke screen of a wonderfully written proposal that either does not fully address the government’s need, is fraught with risk, or simply is marketing disguised as solutions.

Another effective tool that should be used more frequently is the post-award conference which brings together key individuals from both sides, and ensures both accountability and responsibility are at the forefront of contract management and execution. This sets up both parties for success by ensuring that the contractor understands the government’s requirements and that roles and responsibilities are established for all parties. It also ensures the government understands the proposed solution, associated risks, quality control, program management, and issues in administering the contract. Hosting ineffective conferences or simply not conducting them at all on complex acquisitions, and for many other IT programs, is inexcusable. The current process of government and industry program managers shaking hands and going off to the races to waste taxpayer money must come to an end.

Although these techniques are nothing new, they can go a long way to turning around poor acquisition outcomes. Certainly the current requirements development process is broken and needs to have a thorough review to address. However, executing on current federal requirements can see improvements if both industry and government understand that they are not reinventing the wheel. Slight changes in business processes and conducting effective contract management require simply adhering to disciplined implementation.

Improving Federal Acquisitions: Let's Do It Right

Over on Federal Computer Week, Dr. Steve Kelman has written several blog posts on The Lectern in a series of issues related to improving federal acquisitions and communications, specifically information technology projects. Although I have commented on the specific blog posts, I wanted to have a more in depth discussion here.

Improving Federal IT Acquisitions

I felt the wrong questions were being asked.

…Early in the conversation, Dan Gordon, on the panel as the administrator of the federal Office of Federal Procurement Policy, posed an important question in a very interesting way. He asked: "I am guessing that many in industry know when they read an RFP [request for proposals] that the government is putting out to bid a program that is likely to fail. Yet I am also guessing that industry seldom says this to the government. What can we do to change this?"…

Many issues are raised with this line of questioning. First, what benefit would industry have at this stage in the acquisition to be offering advice on an RFP? None really. In fact, I believe that this type of information would put industry at a disadvantage, since the government would never pull an RFP or even consider reshaping requirements since an enormous amount of effort and time have been dedicated at this point. For large IT acquisitions, it sometimes takes years before and RFP gets issued. Although sometimes requirements are so poorly written that cancelling an RFP and starting over really is the best solution, this seldom happens. Programs fail before they even start, and taxpayers get fleeced. This story is all too common in federal procurement.

The real issue here is to get the requirements properly structured so that the program can be successful from the beginning. Using the current Federal Acquisition Regulation (FAR), all the tools already exist in Market Research (FAR Part 10), and Exchanges with Industry Before Receipt of Proposals (FAR 15.201). So why are these techniques seldom used? What can be done to improve this process?

Contracting personnel, in addition to project and program managers, need to understand that the current process is not working. The fear of protest, possibly unethical behavior, or unknowingly giving away proprietary information (i.e. risk aversion) needs to change. If these fears proved to be the case, the FAR would outright prohibit any exchanges with industry in the first place. Government personnel need to understand that programs fail at the beginning, due to poor acquisition planning and poorly defined requirements. Almost any Government Accountability Office report on acquisition failures will undoubtedly have these statements in the Executive Summary. What was the definition of madness again?

One initiative that needs to be expanded and fully embraced is the General Service Administration’s Better Buy Project. This initiative has had successful trial runs using Gov 2.0 techniques (e.g. blogs, Wikis, etc.) to solicit input and feedback on both the federal acquisition process, but also on specific procurements using crowdsourcing methodologies to help improve the communications process between GSA and industry. There is no more equal playing field than using these techniques, since everyone has the opportunity provide input and helping ensure a procurement is successful from the beginning.

The biggest barriers are of course cultural. What is very telling are some of the comments from both sides of the issue on Dr. Kelman’s post, illustrating the great divide and skepticism that exists from increased access and communications:

Government’s Side:

…One major issue is: companies do not necessarily want to hand over their expert critiques to the government for free. Companies often find their top ideas used to fix a bad requirement--that is free consulting. They are giving away their ability to differentiate themselves from other firms that don't see the flaws and/or don't know how to solve them. Secondly, if companies were truly partners with the government, this would not be a problem. However, neither government nor contractors really want to be partners, in fact. If they were, they would accept the consequences together of bad outcomes, and the companies would make no money. No one has ever seen a government contract that reads remotely like a partnership agreement. Partnering is hackneyed, misleading, self-serving, and false in just about all its usages in the government contracting arena…

Given a chance, I believe that industry would gladly help the government resolve issues up front in the requirements development process, again if given the chance. I do not believe it is practical, nor realistic, to think that industry will voluntarily tell the government an RFP is a disaster. Several reasons include the fact that these comments will fall on deaf ears, or worse, adversely affect a company’s image. Further, the notion of best value seems to be elusive, as lowest costs seems to be the primary source of contract awards. Why bother adding value when lowest cost is desired. Perhaps value engineering should be part of every project, and adding the lessons learned to future engagements.

However, it is the partnership that will ultimately lead to program success. The comments left by this reader are unfortunately not uncommon, and somewhat true. Many firms have a vested interest in the status quo, and do not seem eager to change their approach. I also do not see the practically in using industry feedback as some kind of evaluation factor as Dr. Kelman suggests. This approach would undoubtedly lead to self-serving “improvement requests,” which is what best value is supposed to correct for anyway; what is in the best interest of the government (e.g. exceeding requirements and differentiating a proposed solution).

Industry’s Side:

…Both responses to your suggestion are accurate. We, as contractors, don't want to be in the position of suggesting to an agency that their pursuit position is incorrect. We never know who accesses those types of comments nor how they may react to suggestions to improve their position. The second suggestion is more prevalent than many expect. "Cut and paste" RFIs and Sources Sought requests generally include inadequacies, inconsistencies and contradictory pictures of the agency's true environment. These are indications that they technical involvement necessary is absent or lacking and making suggestions as to how to correct these are often not received well. In addition, fear of OCI issues has reached a point where these same contracts people will not even talk with or accept input from industry well in advance of the solicitation release. Until contracting people understand that the government encourages interaction with industry up to the release of a solicitation, these issues will not go away…

I do not believe that technical incompetence is the primary issue. I believe, and have experienced, that technical competence for a program is a function of acquiring that knowledge that normally exists internally. The fragmented way that the government buys is normally the culprit, where programs develop requirements in a vacuum without conducting a thorough stakeholder analysis, soliciting feedback or input for proper requirements development, then kick it over the fence to acquisition and contract shops. At this stage, not knowing the procurement or even the customer in some cases, contracting shops try to getting the procurement of their desk and take shortcuts at the detriment of the program, as the reader suggests. Using boilerplate information, templates, and checklists are a great way to streamline an acquisition. There is certainly nothing wrong with this approach, as I certainly use these tools with federal clients. However, tailoring the information carefully is vital, and sometimes this quality control is lacking in federal procurements.

The Organization Conflict of Interest (OCI) issue is another barrier to increased communications from industry. Many firms fear that being proactive in helping shape requirements will OCI-themselves out of competition for a particular procurement. This is a major issue that needs more thoughtful analysis, as the point of crowdsourcing is to solicit information from all parties equally, and allow for even greater opportunities for competition with requirements that are not overly restrictive and well understood by industry. Firms should not be penalized, nor should they have fear of being penalized. The government is doing itself a disservice by not properly proving these protections.

Overall, the closed-door mentality to communications is doing the opposite of what the latest acquisition reforms are trying to accomplish. I hope the Office of Management and Budget provides further guidance on this issue, and give industry a greater say in helping the government execute its acquisition reforms. All parties would benefit, especially the taxpayer in the end.

Your Taxpayer Dollar$ at Work: Volume I – Follow Up

I recently started a new piece here on the The Acquisition Corner, as a result of the complete fiscal mismanagement of the U.S. Postal Service (USPS).

The Federal Times reported this week that the issues with the USPS are not only severe, but at the point that radical change is necessary if the USPS is to survive:

…Postmaster General John Potter warned Friday that the U.S. Postal Service could go broke by next September.

"If things go as expected, we will perhaps be able to get through the year and literally run out of cash in September of 2011 because we will have exhausted all of our borrowing authority," he said at a news conference.

He said losses in the fiscal year ending yesterday widened to about $6 billion…

It gets worse:

…This has been a devastating week for the Postal Service. Besides ending the year with a $6 billion loss, the agency's bid to raise stamp rates was rejected by the Postal Regulatory Commission on Thursday. The proposed rate hike would have increased first-class stamps from 44 cents to 46 cents starting in January.

Potter said the agency is studying its options in the wake of that decision. Among those options: Appeal the decision to a federal court; refile the rate request; or seek to raise rates by an amount tied to the inflation rate. That last step would not require the PRC's approval, although the commission would have to verify that the increase is no higher than a cap linked to the Consumer Price Index. According to the latest available numbers, that formula would permit an average rate increase of about 1.5 percent, a PRC spokesman said today…

What about consolidating operations, cutting costs, and other tools to improve performance to help the fiscal crisis facing the USPS? Perhaps it was not reported, but I have not seen much effort coming from USPS management on these issues other than possibly cutting Saturday delivery. The forever stamps may be an option as I commented, but hopefully they will still have utility.

Your Taxpayer Dollar$ at Work: Volume I

As reported by the Washington Post, there seems to be a culture of corruption and massive waste, fraud, and abuse according to several Inspector General reports investigating operations of the U.S. Postal Service (USPS).

Upon reading this article and other IG reports, the waste, fraud, and abuse that seems to be cultural at USPS is hard to swallow. However, I have been inspired to start a new piece here on The Acquisition Corner: Your Taxpayer Dollar$ at Work. My first edition!

…Dozens of former top executives and hundreds of former employees have returned to the agency in recent years as private contractors, sometimes making double the salaries they made as full-time workers, according to one of three watchdog audits released late last week…

I do not believe anything is really wrong with that, per se. Many federal government employees leave their federal positions, start companies or work as contractors, and make more money doing so. There are conflict of interest laws in place. What is wrong with that?

…"It appears unethical to hire back former executives at nearly twice their former pay to advise new executives who were placed in their position based on their expertise and years of Postal Service experience," the report said…{Emphasis mine}

…The Postal Service has awarded more than 2,700 contracts to former employees since 1991 and awarded 17 no-bid deals to former executives between 2006 and 2009, according to one of the audits. Most of those executives earned six-figure sums, the report said. One unnamed executive received a $260,000 no-bid deal in July 2009 to train his successor just two months after retiring...{Emphasis mine}

Hired as a contractor to train and get up to speed your replacement? How does that even happen?

…The reports said the cash-strapped Postal Service is doing a poor job tracking its use of no-bid contracts, contributes more to worker health and life insurance benefits than other federal agencies and should consider closing more of its regional offices to help address an expected $230 billion, 10-year budget gap.

…The Postal Service is set to report billions of dollars in losses this week because of declining mail volume. It is also awaiting permission from regulators to raise postage rates and is locked in negotiations with two of its largest unions…

…Beyond employment contracts, the Postal Service improperly classified the status of 5 percent, or $910 million, of its $18 billion annual contracting costs, according to the report…

What a mess. It seems that that the mechanisms to provide contract oversight and surveillance are not only negligently poor and inadequate, but actually appear to make the oversight mechanisms for Iraq and Afghanistan sound like the equivalent of a well-oiled machine. Further, the USPS unions appear to be also obstinate and inflexible, in the face of a needed overhaul in how the USPS does business. Not just to improve, but to survive.

Better go out and get those “Forever” stamps, as postage rate hikes will be going up, in perpetuity.

Procurement Efficiencies Through Multiple Award Contracts

As reported by Federal News Radio, The Office of Federal Procurement Policy (OFPP) is pursuing several short-term initiatives to reign in the proliferation of multiple award contracts (MACs)

"Progress has been made in improving some aspects of interagency acquisition," said Jeff Zients, acting director of the Office of Management and Budget in its annual report to Congress on interagency contracting.

"Most agencies have advised OMB that their buying organizations are strengthening internal management controls to improve the processes used to evaluate if an interagency acquisition is likely to be beneficial as well as those to manage the roles and responsibilities each agency bears in such an arrangement. However, on other fronts, progress has been insufficient and uneven. In particular, there continues to be concern that the agencies, through both single-agency and multi-agency contracts, may be duplicating each other's contracting efforts and creating redundant contracting capacity."

There is no question that the explosion of MACs has created excessive waste and administrative burdens to both the government and industry. Reigning in this problem requires a two-pronged attack strategy: stop unnecessary new MACs from being created, and consolidate the ones that currently exist.

According to the report, OFPP guidance expected later this year would require agencies to prepare business cases that describe the expected need for the contract vehicle, the value that its creation would add, and the agency's suitability to serve as an executive agent. Business cases should be mandatory for all new MACs. The focus, of course, needs to be effective resource management, not to mention a comprehensive requirements development and stakeholder analysis to ensure internal and external MAC sources are not available to meet the new requirement. OFPP guidance should also make it clear that any new MAC needs to be justified my ensuring no other vehicle can be used to execute the need. There exist few legitimate arguments, in my opinion, that can justify this explosion of MACs. What I see is continued waste through little collaboration across government and distrust in other agencies MAC products to ensure lower prices.

I believe industry would also appreciate the opportunity to cut a lot of the expensive and burdensome administration of having to compete and manage multiple MACs for similar products and services. The government has created a culture of redundancy for industry by a "Pay to Play" construct. I do not mean anything nefarious, but firms are forced to spend resources to be on multiple MACs that offer similar services. Take a look at the average website for firms that provide goods and services to the federal government, and you will see the numerous vehicles, with the subsequent overlap and redundancies.

What about small business participation and ensuring consolidation does not turn into a bundling exercise? Accountability is the answer. Ensuring small business participation and execution of small business objectives for MAC awardees is crucial to ensure small businesses can compete. Also finding ways to include small business only MACs, such as Alliant Small Business (Alliant SB), is another appropriate activity.

I am not a big believer in reinventing the wheel, but yet another government database to capture even more data that exists? Really OFPP? I believe this already exists in the Interagency Contract Directory (ICD). Not the best system in the world, but with investment and increased capability, it can be very effective so long as the interfaces and information in Federal Procurement Data Systems-Next Generation (FPDS-NG) are correct and robust.

Overall, a lot of work is needed to improve this process, but it must be done through a standardized and centralized approach. There are way too many contracts for similar products and services these days, and the government will not be able to effectively implement any consolidated, strategic sourcing without a real push by leaders across government to get on the same team and work for the taxpayers vice their own self-interests.

Behind the Curtain: Communications in the Acquisition Process

With the end of the fiscal year comes the right of passage for government contracting personnel and contractors alike; the end-of year budget dump or as I like to call it, the end of fiscal year feeding frenzy. This time of year is characterized by the worst practices in federal contracting: lack of any real acquisition planning, abundance of improperly justified sole-source contracts, and the overall lack of meaningful competition.

Coming off the heels of a new report by GAO on the lack of competition, one clear issue is the woefully inadequate communication between industry and government.

The SBA takes the general position that a procuring agency does not need to document in a contract file any other prospective sources if the agency selects an 8(a) participant to perform the requirement, offers it to SBA, and SBA accepts the requirement into the 8(a) program. SBA officials note that it is the procuring agency’s responsibility to conduct market research to determine whether the requirements of the Small Business Act can be met, and then to determine the appropriate contracting vehicle to use. However, SBA considers market research requirements to be satisfied when a participant in the 8(a) program self-markets its abilities to a procuring agency and is subsequently offered a sole source 8(a) requirement. When we discussed this issue with procurement policy officials at DHS, they said that, while these activities may meet the regulatory requirements, in practice they like to see additional market research so that the offer to the 8(a) firm has a more solid basis. {Emphasis added}

Get it off one’s desk seems to be the prevailing attitude, along with the closing down of accepting any new requirements to handle the end-of-year rush to get dollars out the door. Is it just simple correlation that more procurement activity carries more risk of protest? If so, then something has gone wrong.

To improve competition and get meaningful best value outcomes, communication with potential vendors is an essential part of the market research process. Common forms include written exchanges of information (e.g., submission of marketing materials or responses to Requests for Information), in addition to also meetings with potential vendors.

However, it is the risk aversion and untrained contracting officials, combined with poor integration with program management and contracting that often makes this process difficult. A recent article in Government Procurement magazine shared a similar sentiment:

This concern can have a chilling effect on communication with vendors. In response to a request for a meeting prior to release of an RFP, one state official recently wrote: “If I meet with them even as an introductory meeting, then I assume they understand they will be precluded from bidding on any project we bid out the next six months.” Is this level of concern by state and local officials warranted? We think clearly it is not.

Nor do I. In fact, Federal Acquisition Regulation (FAR) Part 15, “Contracting by Negotiation,” balances the dual goals of “openness” and “integrity” in the procurement process by specifically encouraging pre-RFP meetings and exchanges of information between public officials and potential vendors. Good acquisition planning needs open communications, not to mention the FAR specifically identifies “one-on-one meetings” as an appropriate means of accomplishing these exchanges. Program Managers needs to ensure they know what is appropriate, and Contracting Officers need to provide this guidance and act as business advisors in this process. Simple processes to help alleviate end-of-year fiascos before they happen.

What really are the goals here? Openness, transparency, and fairness for starters. Procurement official must treat all potential vendors impartially and provide equal access to all. This ensures the process is fair. For these reasons, I believe initiatives like the Better Buy Project are an important tool to meet these procurement goals, since crowd sourcing is the foundation for access to all, along with Acquisition 2.0 tools that continue to provide the transparency and openness required of the contracting process.

An informed understanding of current industry capabilities and practices results in both better RFPs and better contracts, since industry will have participated in requirements development to ensure fairness, but also realistic objectives and schedules to also help ensure positive outcomes.

More communication with industry promotes more competition, better solutions and better pricing. Ambiguity in the final RFP translates to misaligned solutions or risk for a vendor who responds with higher pricing. The latest developments, especially in such complex fields as information technology, healthcare and environmental sciences, are difficult to harness unless you put industry competitors to work for you.

Let’s capture innovation and stop reinventing the wheel, as I too believe it is ridiculous to think that government officials are so easily manipulated or influenced with these approaches that communications and Acquisition 2.0 initiatives will rig procurements. It is risk aversion and the lack of accountability indicative in the procurement process that acts as barriers to success. Continued advancements through Acquisition 2.0 pilots will hopefully not only demonstrate the potential of openness and transparency, but also provide guidance on transforming the way government does business and allow for accountability to the taxpayer, which should be the ultimate goal.

Insourcing: More Specific Guidance from OMB is Needed For Success

Under guidance from the Office of Federal Procurement Policy (OFPP), expected later this summer, agencies will need to develop a business case before launching a multi-agency contract (MAC). According to the preliminary guidance, the business cases will require agencies to address the government’s ability to leverage its buying power with the creation of the new ability vehicle.

“We believe it is prudent for an agency to develop a business case before moving forward with that approach,” said OFPP Administrator Daniel Gordon.

Although this guidance is long overdue, and is a significant step in helping stem the tide of further waste and consolidating buying, what remains undone is the needed guidance and specifics on dealing with insourcing.

The Government Accountability Office (GAO) issued findings last fall about how insourcing policy was being developed, and the results remain disappointing. In March 2009, Congress enacted section 736 of the Omnibus Appropriations Act, which required all federal agencies except the Department of Defense (DOD) to devise and implement guidelines for insourcing new and contracted-out functions by mid-July 2009. Curiously, section 736 does not specify a role for OMB in the development and implementation of the civilian agency insourcing guidelines, which has resulted in failures to properly address this critical issue to the government workforce.

Nonetheless, OMB has issued guidance to facilitate the management of the federal government’s multi-sector workforce through an approach that uses best practices to human capital management and costs analysis, but clear guidelines for creating proper business cases continues to be missing or unclear. Further complicating this issue is the continued review of the term “inherently governmental,” and lessons learned from the multi-sector workforce pilots.

OMB must take the lead in developing the guidelines and providing the oversight and approval of agency-specific guidelines, as agencies claim these insourcing guidelines are complex and involve many agency functions. This exacerbates workforce issues that are difficult enough in dealing with multiple management initiatives in addition to regular core duties. OMB must provide government the direction necessary to ensure that insourcing is done correctly, which includes business cases and stakeholder analyses to ensure agency missions are performed with the right set of skills and capabilities.

What has happened is that confusion as to when a cost analysis is needed, in addition to the appropriate methodology to conduct the cost analysis, has made defining procedures necessary to sufficiently address cost issues challenging. Standardization is necessary, as GAO stated that OMB’s criteria do not specify the procedures for conducting a cost analysis or define what constitutes full cost of performance, while some agency officials insist they need to have the flexibility in determining how it should conduct cost analyses when making insourcing decisions. This is a recipe for disaster without uniformity and proper service-contract data, which also remains difficult to gather and analyze.

It also appears that OMB guidance is being viewed as a directive. More pressure is being put on acquisition workforce to use fixed-price contracts, regardless of requirements. This also appears to be the case in how insourcing is being conducted, as illustrated by the case of Rohmann Services Inc., a small business who successfully challenged an insourcing decision by the Air Force due to improper cost analysis in its reasoning for its decision.

There needs to be consolidated, overall guidance on insourcing across government, and the DOD should not be excluded. OMB should have a coordinated effort to help ensure insourcing is conducted in a proper and fair manner for all parties involved, and proper business cases get conducted to ensure the taxpayer gets the best deal.