New Contracting Takes Talent and Skill

The federal marketplace is changing as agencies focus on how to get what they need out of the acquisition process. The near-term question is how to get everyone involved in procurements to understand what's needed and to effectively tailor statements of work and proposals. The long-term challenge is to acquire the right kinds of talent and skills to mold the acquisition teams of the future.

Several years of downsizing and the 1998 Federal Activities Inventory Reform Act are pushing agencies to use contractor support in new ways. The civilian workforce is some 350,000 people smaller than it was in 1992. The FAIR Act requires agencies to further examine their ranks for work that might be shifted to the private sector and publish lists of commercial activities. Even before all the Cabinet departments reported in, the lists included more than 100,000 positions. Over the next few years, the number of jobs eligible for potential outsourcing could well exceed a quarter of the federal workforce.

As these trends continue, the government must define its needs more precisely and ensure that private-sector firms target their efforts accordingly. Those requirements pose major challenges for agencies. The old forms of acquisition--engaging in limited discussions with contractors, operating with ambiguous work statements and broadly assessing performance on a subjective basis--will become more and more problematic in an environment in which agency achievement increasingly is measured by contractor performance.

Many service contracts today can still be characterized as "support on demand," in which contractors are hired as essentially substitutes for the federal employees no longer on the rolls. That type of support has become difficult to justify when expected outcomes aren't well-defined and contributions to the agency's mission remain unmeasured.

A new Health and Human Services Department auditing services contract showcases the agency-contractor relationships that must become common in the more heavily contracted future. To ensure that the agency and its potential contractors are on the same wavelength, HHS has adopted an approach that gives real meaning to the term "partnership."

John J. Callahan, HHS assistant secretary for management and budget and chief financial officer, points to a clean financial audit as "the No. 1 financial management goal of the department." His innovative approach to acquiring audit services is designed to achieve that goal. HHS is promoting a full dialogue with potential bidders, with virtually every aspect of the procurement open for discussion.

The statement of work, evaluation criteria and performance standards are all on the negotiating table. HHS' inspector general provides contractors with information on the type of work and level of audit as well as the nature of the agency's audit workload. HHS urges contractors to seek further information in an effort to get better bids. Allowing such "due diligence" ensures that all stakeholders fully appreciate starting baselines and potential problems.

HHS requires firms to team with small businesses. This approach helps increase the skill base of firms that alone couldn't perform this work and promotes greater competition. To bring more minority firms into the market, the department also offers extra evaluation points for those who team with small and disadvantaged businesses.

In another approach to meeting new acquisition demands, the Interior Department has begun an effort to better educate those entering the contracting ranks about the dynamics of team operations and performance metrics. The Procurement Executive Council developed the recruitment and training program and beginning next spring, Interior's departmental university will offer a two-year internship for 15 to 20 college graduates. The program includes seven weeks of training and up to four rotational assignments at various government agencies. The program's mission is to train the business leaders of the future, according to Dolores Chacon, Interior's university president.

The program could falter, however, if agencies don't perceive the program's graduates as real assets. If acquisition managers don't offer the graduates opportunities to apply some of the innovations they've learned, they're unlikely to stay in the contracting profession. A board of supervising sponsors will try to make sure that doesn't happen, says Terrence J. Tychan, HHS' deputy assistant secretary for grants and acquisition management and a co-sponsor of the program. Callahan, a strong advocate for the program, suggests that recruiting students with strong information technology skills who can help carry their agencies into the e-commerce world may offer added insurance that agencies will offer them challenging work.

As approaches such as the HHS contracting effort and the new recruitment program become more widespread, the government's needs undoubtedly will be better defined and contractors will be held to more exacting performance standards.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington.

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