Trailblazers of Acquisition Reform

T he Federal Supply Service has been recognized as one of the leading innovators in the acquisition reform movement inspired by the National Performance Review and legislative initiatives such as the 1994 Federal Acquisition Streamlining Act, the 1996 Federal Acquisition Reform Act and the 1996 Information Technology Management Reform Act. The agency's reinvention efforts were highlighted at a recent acquisition reform conference organized by Government Executive and the Council for Excellence in Government, and sponsored by BDM, Informix and Northrop Grumman. Here are four other agency case studies examined at the conference:

  • Air Force. When the Joint Direct Attack Munitions program set out two years ago to obtain a tail kit that converts "dumb" gravity bombs into "smart" bombs, it tested a new acquisition process. Instead of giving contractors detailed military design specifications, the Air Force issued a simple, two-page request for proposals that listed only a few general performance objectives. (It stated, for example, that the bomb "must perform in all weather to within 13 meters or less.") The adversarial government-industry relationship was replaced by cooperative work teams that jointly decided which nonessential performance factors to drop in order to reduce the price of the project. As a result, development costs were slashed by 25 percent while the price of each tail kit was cut by 67 percent. Performance-based contracting also trimmed production and delivery time by 33 percent. In addition, about 60 percent fewer staffers were needed.
  • Federal Aviation Administration. In a recent procurement for a digital voice-recording system, the FAA used an integrated product team to do a low-cost review of commercial documentation. Formal RFP solicitation was replaced by a sequential screening in which vendors were "down-selected" by virtue of their technical merit, with no focus at that stage on price. Frank discussions about target requirements were substituted for written communications of mandatory requirements. The statement of work was rewritten to conform to bidders' actual equipment, and "smart" product testing was done during the competition, instead of operational testing after the award. One price evaluation was done after the down-selection process, without any best and final offers. FAA believes this approach lowered acquisition costs by 75 percent and minimized the risk of post-award modifications. In addition, procurement time was cut from 11 months to seven months, while deployment time was reduced from two years to one year.
  • NASA. In an effort to save money and preserve NASA's mission after severe budget cuts, Goddard Space Flight Center recently merged two existing cost-plus-award-fee contracts and contractors into a single performance-based contract. The consolidation was built on a partnership between Goddard and two in-place contractors. A shared cost savings clause provided the prime contractor with the discretion and flexibility to cut operating costs and reassign agency personnel. NASA expects full-time employees on the project to be reduced from 3,500 to 700. As an incentive, the contractor received 20 percent of the savings. Service level agreements were used to set performance requirements and specifications. NASA estimates $40 million will be saved during the remaining 18 months of the contract.
  • Veterans Affairs. To save money on large-volume buys of commercial products, VA set up a program last year to standardize purchases. Competition for single-source award contracts has resulted in significant price discounts. During the next two years, the program will cover approximately $200 million worth of goods ranging from sutures to IV solution and wheelchairs. More than $1 billion worth of products are expected to be covered over the next eight years. Partnerships with health-care professionals have resulted in product descriptions agreeable to all concerned parties. A computerized ordering system helps the VA identify targets for standardization and monitor savings.
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