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.

Past Performance Accountability Should Not be Punishment

The Commission on Wartime Contracting in Iraq and Afghanistan met recently to raise concerns that large defense contractors are getting a pass on fraud and poor performance. However, some on the Commission seem to think that solutions should not be bilateral, or even going so far as to seemingly having a "Save me from myself" mentality.

The focus of the testimony was the effectiveness of the government’s current methods for assessing oversight and surveillance of the current $200 billion that has been spent on contracts and grants since 2002 to support military, reconstruction, and other U.S. operations in Iraq and Afghanistan. According to the Commission, the United States has wasted tens of billions of dollars of contract dollars in Iraq and Afghanistan, but of course the blame game is always the first line of defense for failing to get at the root cause of not only the failures of oversight in Iraq and Afghanistan, but in how the government evaluates performance overall.

Laying the blame squarely on industry, Commissioner Charles Tiefer called five large companies that do business with the Defense, among them KBR, the "Flagrant Five" for continuing to receive work despite claims of fraud, misconduct and poor performance.

.…"I'm beginning to get the picture that bad performance could be good business," Tiefer said at a commission hearing Monday…

Also joining in on bashing industry was The Project on Government Oversight's general counsel Scott Amey.

…Companies involved in misconduct are a "necessary evil" required to get work done. "This might be the contracting version of ‘too big to fail,'" he said…

Amey also went on to state that the Air Force issued multiple waivers in order to continue business with firms accused of wrongdoing, in addition to the Interagency Suspension and Debarment Committee not issuing the annual reports required to document federal agencies' suspension and debarment activities.

These activities bring up an interesting issue about why the government is not doing its job in providing the proper level of oversight, surveillance, and past performance reporting. Lack of time? Not wanting to correct a problem and "slow down" the process? Really?

Most of the testimony focused around the report issued a week before about the vital need for contingency contracting reform, with a particular focus on debarments and suspensions as seemingly a punitive weapon and silver bullet against contractors. Although the report discusses the failures of government, clearly malfeasance also seemed to be the root cause of waste.

...."For many years the government has abdicated its contracting responsibilities -- too often using contractors as the default mechanism, driven by considerations other than whether they provide the best solution, and without consideration for the resources needed to manage them," the commission concluded. "That is how contractors have come to account for fully half the United States presence in contingency operations."...

Not all the voices on the panels were one-sided. Dan Gordon, Administrator for the Office of Federal Procurement Policy, discussed in his testimony the facts about debarments and suspension.

...The regular evaluation of contractor performance and the use of those evaluations in decisions for future awards motivate contractors to perform well, and help ensure that we avoid doing repeat business with firms that don’t perform well. Suspending or debarring entities can help to protect taxpayers from the abuse of contractors who have been convicted of fraud or other criminal or civil offenses indicating a lack of business honesty or integrity, or who otherwise behave unethically, or engage in poor performance of government-funded work. The system works, however, only if we are willing and able to suspend or debar entities when we shouldn’t be doing business with them, and if all agencies check to be sure they are not awarding a contract to an entity that has been suspended or debarred...

Past performance data collection is the actual root cause of many of these issues. Past performance completion rates are not only low, but the reports are not being entered into the Past Performance Information Retrieval System (PPIRS) database. So accountability needs to be the first step in this reform analysis, by ensuring the information about wrong doing is available to government. However, the understanding of what and how suspensions and debarments are supposed to be used is currently a major issue that seemingly is lost on the Commission.

... Among 32 recommendations made in a report released last week, commissioners want agencies to:

• Give a written rationale for not pursuing a proposed suspension or debarment.

• Increase use of suspensions and debarments.

• Revise regulations to lower procedural barriers to contingency suspensions and debarments...

These activities are not supposed to be punitive, but that is exactly what the commission seems to be implying. The report itself lists almost double the number of activities targeted to punishment, vice creating solutions to prevent the fraud, waste, and abuse from happening in the first place.

I am not implying that some companies have not acted in the best interest of the taxpayer. Fraud, waste, and abuse has definitely occurred, and regretfully has been a part of war profiteering that goes back to the founding of the nation. However, advocating the use of debarments and suspensions as a punitive weapon will not solve the problem. I hope the Commission realizes that treating the symptoms and not the disease is simply a recipe for failure, and will be further adding to the waste it has been formed to help prevent.

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.

Communications Are Vital to Improving Acquisitions

Two opposing views have emerged this week regarding communications with industry. According to Sen McCaskill (D-MO), chairwoman of the Senate Homeland Security and Governmental Affairs Committee's Contracting Oversight Subcommittee, the current relationship has apparently clouded the judgment of contracting officials to the point where objectivity has been compromised in contract award decisions.

During a recent hearing on how federal agencies use contract audits to detect and prevent waste, fraud, and abuse in government contracts, McCaskill conceded the relationship is too close, and expressed a bias toward auditors.

“Contracting officers have an ongoing relationship with the contractors that sometimes impact their ability to see everything clearly as it relates to some of the behavior of the contractors,” said McCaskill.

As much as I respect and admire Sen. McCaskill's efforts to ferret out waste, fraud, and abuse in federal contracting, I could not disagree more with her premise. Firstly, Contracting Officers and industry should have a strategic partnership, as both parties are trying to execute the same goals and objectives. Of course government and industry have different means to achieve these goals, but it is through understanding each other and open communication that both parties will be successful. Communication between industry and government continues to be challenging, and advancing the agenda of building barriers and confrontation that Sen. McCaskill seems to be advocating will further exacerbate this issue.

Further, it is Contracting Officers that are given the authority to negotiate and enter into contracts on behalf of the government, not auditors. Financial analysts and Contracting Officers need to work together, in conjunction with industry, to get the best deal for the taxpayer and ensure all parties are setup for success. Adversarial relationships are neither objective nor productive, they just create friction and missed opportunities for successful outcomes.

Opposing this view has been Dan Gordon, administrator of the Office of Federal Procurement Policy (OFPP). Gordon launched a "myth-busting" campaign to help government officials understand that the fear of talking to industry is overblown, and that talking to industry is vital to increasing competition and to ensuring best value for the taxpayer.

“We need to be independent, but more communication can increase our independence,” he said. “In fact, more communication can overcome the tie between the contracting staff and a particular vendor.”

By opening discussions, agency officials can learn what other companies can offer them, Gordon said. However, agency officials feel like they don’t know enough about other companies due to limited interaction with industry. Too often, agencies have one contractor they have dealt with, and they will continue to work with that company, even preferring it over others.

“More communication, especially with competing vendors, may be the best oxygen to remedy that situation,” Gordon said.

Market research is prescribed in Federal Acquisition Regulation (FAR) Part 10. Yet, the environment is such that the Administrator of OFPP is on a myth-busting campaign that following the FAR is a good thing and needed?

There is no question that improved communications are essential to ensure requirements are sound, that contract types are appropriate, and that metrics are effective. I have written about this topic, and I hope Gordon’s myth-busting campaign will help melt the ice of the current environment. However, much more is needed. Mainly, acquisition officials need to have guidance and oversight to ensure that the acquisition workforce is not beaten over the head while trying to communicate with industry. Officials must give the acquisition workforce the confidence and ability to perform these crucial pre-acquisition tasks without fear of retribution. It is this risk-averse environment that is one of the main issues with communication barriers, so focusing on this impediment should help see improvements in the quality and quantity of communications with industry.

The National Contract Management Association recently issued an open letter on this subject entitled An Open Letter Addressing the Need for Cooperation between Government and Industry. It is call to action to understand that government and industry both share a common goal, and that is serving the public.

Once this common goal is understood, then progress can be made in developing new channels to communicate, and see improvements in how the government buys and realize the cost-savings that are desperately needed in federal acquisition. I hope that Sen. McCaskill realizes that she is actually making a difficult situation harder, and that she and others needed to collaborate with Mr. Gordon and industry to achieve this common goal.

Protests Will Continue the Upward Trend in 2011

As 2010 is now officially in the books, one issue that we can expect to continue its trend in 2011 is contract protests. An interesting piece in the November-December 2010 Defense AT&L magazine discussed this issue, and illustrates the realities of the federal contracting environment. Mainly, budgets are tightening, competition for those shrinking dollars is ferocious, and protests have become standard operating practice.

A general impression of respondents was that protests have become more common; with nearly 70 percent saying pro- tests were either somewhat, or much more common. A striking result was that none of the respondents felt protests had become less common. That agrees with a recent Government Accountability Office (GAO) report that in fiscal year 2009, 1,989 protests were filed, a 20 percent increase over the 1,652 protests filed in fiscal year 2008, and up 50 percent over fiscal year 2006.

This article is telling in many ways, but what really is of interest are the responses, and their subsequent rankings. Ranked most important is that the protesting company expects to win, followed by the government making mistakes. This certainly seems to make sense, and is also consistent with what I have experienced. In talking to small business executives, it seems that protests are a valid way to verify if source selection procedures were followed. We have seen that go awry in the Air Force KC-X tanker program, where government officials were publically called out for not following their own procedures.

Also of interest is that the order of why protests are lodged in the first place does not seem to make sense, or is not what is experienced in reality. Respondents overwhelmingly stated they expect to win the protest, but the second reason is the critical to the analysis. Some executives I have spoken to tell me that protests are now becoming more operational policy, especially for large dollar contracts. Under the current environment, why not?

The current environment encompasses the second part of the article, where the real views of protests are on display. Predictably, shrinking opportunities and increased competition are major factors at stake, not to mention governmental factors of poorly trained acquisition workforce and poor government communications. So what to do?

I have discussed the need to rethink the protest process and why they occur here and here. As I received some pretty interesting feedback, mostly negative from industry, let me reiterate that protests are a legal and necessary tool to ensure fair competition and correct procedures for awarding contracts. However, this Defense AT&L article highlights why I think protests need to be rethought in regards to acquisition reform.

What I have an issue with is the seemingly endless cycle of protests with no consequences or accountability, both by government and industry. Industry can delay award of a contract, expect quid pro quo, or simply attempt to dig up dirt where none exists. I have been on both ends of this equation, and these strategies only help waste time and money for everybody, not to mention the user pays the price in continued loss of capability (again, look at the KC-X program). Industry looks at in terms of return on an investment, since the risk adverse nature of government may provide additional revenue sources of further opportunities to compete. Nonetheless, the government does make mistakes and should be held accountable.

The end result is that there needs to be a measure of accountability on both sides. A protest should not be taken lightly, as it is normally a disruptive and costly matter. The survey confirms that a company filing a protest expects to win, but reality states that sometimes that is not the case. Firms sometimes file protests to see what happens. I have seen this too many times to count. What if a firm losses, especially repeatedly? A measure of financially accountability to recoup costs for firms that take this approach is needed. Being accountable for phising expeditions should help the protests process be used for what it is intended: ensuring fair competition.

The government seems to also be in the habit of not wanting to deal with a protesting firm, as some government agencies award work to companies with reputations for protesting contract awards to avoid the cost of resolving disputes with those companies if the government losses and the cost of resulting project delays.

Leadership and accountability is needed to help stem this trend. Protesting is a right that industry must continue to have, but it needs to be measured and weighed against the “real” costs should accountability finally be placed into the equation. Further, government must stem the tide of allowing themselves to be bullied, but more importantly, be held accountable for following procedures, and executing sound acquisition strategies to ensure a protest is not even in the conversation.

We shall see what reform lay ahead, but we can only expect to see a continued rise in protest actions on the horizon, to the detriment of all involved.

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.