Contracting officers must be willing to take risks, panel says

Smart contracting in a time of tight budgets requires a trained agency acquisition workforce that is willing to take reasonable risks to achieve innovation, federal procurement specialists said in Washington on Thursday.

In a discussion headlined "Innovation in a Budget-Constrained Environment," the Congressional Smart Contracting Caucus, co-chaired by Reps. Rob Wittman, R-Va., and Gerry Connolly, D-Va., heard Obama administration acquisition officials and a private sector spokesman say that fears of conflicts of interest or protests from unsuccessful contract bidders should not make agencies so "risk-averse" that they can't find creative ways to invest in future innovation that benefits taxpayers.

"As we approach the federal debt problem and seek efficiencies, we need to separate what's nice to have from investments that we can't afford to walk away from," said Connolly, a former federal contractor whose district is heavily dependent on such public-private partnerships.

The examples of essentials he gave were cybersecurity and cloud computing. "Sometimes the experience doesn't exist in the federal government, so you have to rely on technical contractors, especially in larger systems integration contracts," he said. But because growth in the number of federal contractors has outstripped growth of the federal acquisition workforce, Connolly said, "investing in skills in contract management pays off for taxpayers."

Stan Soloway, president and chief executive officer of the Professional Services Council who served at the Pentagon during the Clinton administration, said he was "afraid we didn't learn the lessons from 1990s," when the Defense Department budget after the Cold War was "cut by a third across-the-board." Categories such as contract officers needed to go up, he said, adding that good acquisition also requires pricing specialists and program officers who understand the need for a "robust, mutually strong business relationship."

David McClure, associate administrator at the Office of Citizen Services and Innovative Technologies at the General Services Administration, said the current budget crisis presents a difficult "new environment that raises the bar with agency contract officers," as well as an "opportunity to use technology to get more bang for the buck."

He says it is not simply that contract officers are in short supply, but also that too many lack the requisite knowledge and skills and are "junior or entry-level managers managing a huge complex program." He called for more mentoring and on-the-job training.

Moderator Jill Aitoro, senior staff reporter for Washington Business Journal, asked whether federal agencies are comfortable talking to business in the pre-contract phase when there is risk of conflicts of interest.

Lesley Field, deputy administrator of the Office of Federal Procurement Policy, said there is sufficient detail in both the Federal Acquisition Regulation and Obama administration policies to make contract requirements clear and to "give agencies a bit of cover" in pre-contract discussions. Industry, she said, has a lot of information, and the fear of doing something wrong and of prompting a bid protest is what keeps procurement officers from communicating with industry, "but there is no need to chill the dialogue."

She said it is fine to have a "have a riskier contract vehicle if you have a good contractor management team in place," stressing the need for solid training.

McClure added that GSA encourages pre-contract dialogue that creates a platform rather than specific solutions. He mentioned using industry forums that promote "ideation," discuss best practices, produce white papers by outside experts, and even contests for ideas that offer cash awards or a handshake from the president.

Connolly was skeptical, saying many contractors and agencies worry that such exchanges could mean they face being penalized later. He acknowledged that agency representatives who take risks that turn out badly can be called on the carpet by a politically polarized Congress. This occurred in November when Office of Personnel Management officials were taken to task following widely noted troubles with OPM's takeover from a contractor of the federal website

"I wish more of my colleagues would take the higher road," Connolly said, but in Congress, the "system of reward and punishment is to seek headlines and stories by skewing the story." Sometimes, risk is worth the money, he added, citing recently deceased Apple leader Steve Jobs, whose "failures were dispositive for his career."

Whitman agreed that too often in Congress, "the response is not in the public policy realm, but the political realm. That shouldn't mean we take zero risks and become risk-averse. But it must be a reasonable risk that's worth taking."

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