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What It Will Take to Move the Needle on Reform

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This is a good year for advocates of acquisition reform. The House and Senate fiscal 2016 defense authorization bills, traditionally the acquisition table setters, contain significant, forward-leaning reforms that are both overdue and essential.

The Senate bill in particular contains provisions that are designed to refocus the government toward broader use of commercial items and, in so doing, commercial best practices. This would open the door to new, innovative market participants, either independently or as part of a larger team, a more likely and logical route for government access to innovations that can actually drive broad systemic or programmatic change.

These are all positive steps. But the impact of these changes could be sharply limited if, for each major step forward, other actions or inaction stall the kind of reform that is so important.

In that sense, two issues stand out. First is the continued debate over imposing arbitrary limits on how much the Defense Department and civilian agencies should spend on services contracts. The alleged intent of these limits is to ensure that statutory government personnel limits are not sidestepped by agencies through additional contracting. While on the surface that may sound sensible and fair, as a performance metric it makes no sense at all. What does the amount of government contracting have to do with government performance? After all, performance is not about “who” does the work but about how effectively and efficiently it is done.

More importantly, these arbitrary caps on services contracting ignore the most significant shift taking place in the federal marketplace and the broader economy -- the move to the “as a service” business model. Cloud computing is one example of this shift. Instead of buying infrastructure like hardware and equipment, the government is now buying, often on demand, the capability to use “the cloud” to meet its computing needs. And cloud is just the beginning. This shift is having monumental effects on almost everything across the economy. By definition, it also means the federal government’s acquisition of “services” is likely to measurably increase. Yet the legislation completely ignores this reality.

Second, there has been a great deal of talk, but no real action, on the costs of doing business with the government. The administration, the Defense Department and Congress all understand that the costs of compliance have gotten out of control and that contractors are subject to a wide array of unique compliance and other requirements that add little or no value, yet they add meaningful costs for companies and, ultimately, the government. We see this on many levels, from demands for ever-increasing audit access and redundant auditing to mandating expensive government-unique cost accounting, earned value management and other systems that are irrelevant and useless to the procurement process and the customer. But no one has acted on the remarkably broad array of recommendations for change that have been made.

Worse, industry faces an ever-growing array of new compliance requirements, including the granddaddy of them all -- the Fair Pay and Safe Workplaces Executive Order. That order and the proposed rules, subject contractors to a de facto exclusion from the market without the benefit of the most basic protections that underpin our legal system and could, according to some experts, add as much as 20 percent to the cost of government-unique compliance. All that for a “problem” the administration admits involves only “a fraction” of government contractors.

The bottom line is not complicated. The 2016 defense authorization bills move the needle in the right direction and have the right intent. But other factors sharply limit how much that needle can actually move.

Think the government needs an infusion of new, nontraditional contractors, particularly from Silicon Valley?

Think we need to build an innovation economy in the government marketplace?

Frustrated at the progress you see all around you in government?

You’re not alone. But until we take an approach to acquisition that not only moves the needle, but fundamentally frees it up, change will come only incrementally, progress will continue to be elusive and our collective frustrations will remain unabated.

(Image via Markus Gann/Shutterstock.com)

Stan Soloway is president and CEO of Celero Strategies, LLC. He formerly served as president and CEO of the Professional Services Council, and was deputy undersecretary of Defense for acquisition reform and director of the Defense Reform Initiative during the Clinton administration, receiving the Secretary of Defense Medals for Outstanding and Distinguished Public Service. He is a principal of the Partnership for Public Service and a member of National Contract Management Association's Executive Advisory Board.

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