Government Executive - Authors - Allan V. Burman

A Stronger Voice

Allan V. Burman and Shirl Nelson — Mon, 01 Jun 2009 00:00:00 -0400

CAOs need more clout to fix the flawed acquisition system.

As the Obama administration identifies potential appointees for chief acquisition officer positions, it's a good time to re-examine the law that created this important job. The 2003 Services Acquisition Reform Act set out, among other things, to ensure effective acquisition leadership at civilian agencies through the establishment of CAO appointments, but it has fallen short.

Despite SARA's broad definition of acquisition, it fails to reach beyond the narrow procurement community. CAOs are intended to have far-reaching responsibilities, but the law does not ensure the function is full time or that appointees are qualified and have the necessary authority.

SARA also failed to forge effective stewardship for the entire acquisition life cycle. As long as agencies view acquisition and program management through separate lenses with separate solutions, they will continue to be hamstrung in acquiring services and goods.

Civilian agencies spend $132 billion annually through the acquisition process, anywhere from 25 percent to 90 percent of their discretionary budgets. Yet most CAOs have other major responsibilities-including finance, budget, human resources and acquisition-and their primary duties often eclipse their acquisition role.

Most have little or no acquisition experience. The federal acquisition system is fraught with potential missteps and pitfalls, requiring someone at the helm with leadership skills, business acumen and a fundamental understanding of government contracting.

Another hurdle is their lack of authority. CAOs cannot make decisions to continue or cancel a program, even in the face of recognized failure, nor can they direct program managers and sometimes even procurement staff. At some agencies there is little collaboration between the chief acquisition officer and the senior procurement executive, who manages the day-to-day acquisition operations.

To strengthen the role of CAOs, the new administration should direct agencies to:

Appoint individuals who have acquisition expertise.
Establish the position as a full-time function.
Make the procurement executive deputy to the CAO, to provide seamless political-career leadership.
Make CAOs accountable for the quantity and quality of the acquisition workforce, including contracting and program management.
Require CAOs to measure, monitor and publicly report on their acquisition process and programs, the same way chief financial officers provide financial statements.
Give CAOs decision authority on major acquisitions.

Each department should establish a business council as the lead authority on all acquisition matters. The council would consist of top executives-such as the chief acquisition, financial, information and human capital officers-chaired by the deputy secretary and reporting to the secretary. The Defense Department has the model structure that embodies specific decision-making roles for acquisition leaders and encompasses all acquisition functions, including program management.

Congress should evaluate the power, structure and resources at the Office of Management and Budget's Office of Federal Procurement Policy, which sets the governmentwide acquisition standard. Lawmakers should strengthen OFPP's authority over the procurement workforce and program management, and boost its staffing and resources.

These changes would enable CAOs fully to perform their role as Congress intended.

Al Burman, a former OFPP administrator, is senior vice president of Jefferson Consulting Group. Shirl Nelson is a former senior procurement executive and deputy assistant secretary, and a consultant to Acquisition Solutions Inc.

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Five Things I've Learned

Allan V. Burman — Sat, 01 Feb 2003 00:00:00 -0500

enning some 60 Federal Marketplace columns for Government Executive since the summer of 1997 has taught me innumerable lessons. These top five have been vital to writing about government procurement trends: Cultivate good sources, get the word out, celebrate success, know that people make a difference and simplify.

Good sources are No. 1. Finding out what's new and then passing the information along helps every professional improve. In my explorations for this column, I've traced the beginnings of FedBizOpps, the government's procurement Web site; learned about the hazards of automating procurement systems; and heard about award term contracting for the first time. Over the last year, the ups and downs of performance-based contracting and competitive sourcing have been the hottest topics, not only in government but also in the private sector.

One of my best inside sources was the former senior procurement executive for the General Services Administration, Ida Ustad. Ida, who died in November 1999, was the ideal civil servant: smart, conscientious, knowledgeable and always willing to help. She was attuned to the market, kept up to date on developments and had a good sense of what was important. GSA has established an award in her name, which gives $5,000 to a federal contract specialist who has distinguished himself as a business leader or adviser.

I knew Ida for many years in my role as administrator of the Office of Federal Procurement Policy and as a consultant in the private sector. I could give her a call any time and say, "Ida, any interesting things for the community?" She always had two or three issues at the top of her list and would point me in the right direction.

My goals in these pages have been to inform and celebrate success. Ida recognized what every government manager should learn: Getting the word out is easily half the battle. Contrary to popular belief, the federal work environment does not discourage independent thought. If it did, who of substance would want to work in it? Managers need to understand their agency's vision and goals as well as their role in making things happen.

Attempts to get the message across tend to be dismissed as political spinning and irrelevant to federal managers. But so much of the nuts and bolts of government management require an understanding of what's needed. Managers need to know not only the why, but also the how. Many of the diciest management issues focus on the government's ability to employ outside help, either contractors or grantees, to accomplish its mission. Understanding how to use new contracting tools is critical.

Take performance-based contracting as an example. It's been around for more than a decade, and now it's a centerpiece of the president's management agenda. But to do it well, there's a whole new contracting language that must be understood. Words such as "outcomes," "performance metrics," "surveillance plans" and "acceptable quality levels" have a special meaning in the context of performance-based contracting. If you don't have the right people working together at the outset of the project, you're never going to get the accountability and the solution the methodology promises.

Helping federal employees internalize these concepts and work in partnership is essential. Celebrating success and rewarding those involved, as the Census Bureau did in its innovative shared-mission contracting efforts for the 2000 census, encourages others to jump on the bandwagon.

Training also is vital. In one of my columns, Comptroller General David Walker decried cuts in training and professional development as the first casualties when budgets tighten. He's dead on. If you are going to try to do new things, then you need to give people the opportunity to develop the necessary skills. What's more important to the government's success than the competency of its people? Moreover, training should be provided just when it's needed and not so far in advance of a project that it's useless.

There is a greater recognition in the defense world than in civilian agencies of the breadth of the acquisition workforce and the importance of training. Too often contracting specialists are blamed when a project goes awry, when in fact someone from the program office failed to think through a strategy, look at alternatives or have a plan to mitigate risks. These critical pieces of the acquisition picture are primarily the responsibility of program and technical staff, not of contracting officers. Getting an integrated project team together at the start and developing an acquisition strategy that all can agree on goes a long way toward success.

As I write this final column, I realize that getting the word out hasn't always been easy. Having Government Executive's Sue Fourney look at my fractured syntax and ask, "Is this what you mean?" can be humbling, but has gone a long way toward making these pieces readable and understandable. Thinking back on all the government regulations, forms and documents I've plowed through over the years, I have one more recommendation for managers: Simplify. One way is to get a good editor.

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

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Public Service Is Performance

Allan V. Burman — Sun, 01 Dec 2002 00:00:00 -0500

hat's the message from Chris Wye, director of the National Academy of Public Administration's Center for Improving Government Performance. In October, Wye's book, Performance Management: A "Start Where You Are, Use What You Have" Guide, was released as part of the "Managing for Results" series by the IBM Endowment for the Business of Government.

The guide deftly deflates every excuse for not giving innovative management techniques a try, including the age-old refrains, "We're different" and "It's not my responsibility." Deriving theory from practice, Wye's guide offers a performance-based framework for managers. The fundamentals are few:

Assume responsibility, even if you're not the sole owner.
Strive for quality and efficiency.
Use what data you have to improve operations.
Promote change, in spite of the obstacles.
Keep at it, and don't be discouraged.
Remember the job is a public trust.

For experienced leaders, such as E. C. "Pete" Aldridge, Defense's undersecretary for acquisition, technology and logistics, Wye's recommendations are second nature.

Aldridge's efforts embrace two critical components of performance-based management: leadership and communication. He has instituted both structural and policy changes to strengthen Defense's acquisition programs. And he's paying attention to progress.

Using an acquisition report card, Aldridge has been assessing the changes made over the last year and a half. Any performance-based approach requires staff accountability, consistency in purpose, and useful indicators to demonstrate results. One of Aldridge's first steps as undersecretary was to designate key deputies to oversee acquisition, technology and logistics-and to be held accountable for management in those areas. A former secretary of the Air Force, Aldridge recognizes the hazards of micromanagement from the Office of the Secretary of Defense. "Let the services manage," he says, while seeing to it that they develop solid acquisition plans for each new weapons system.

Stability is a constant concern in Aldridge's efforts to assess whether programs are likely to stay on schedule and within budget. A critical factor of that stability is whether agencies have accurately predicted the costs of their programs. Overly optimistic assumptions only sow suspicion as production declines and costs skyrocket. Aldridge uses independent estimates from Defense's Program Analysis and Evaluation Office to help him make good decisions.

The Air Force's early cost estimate for the F-22 fighter, for example, was $9 billion lower than the Program Analysis and Evaluation Office's estimate. As more data became available, the differences narrowed, but on balance, the Air Force had been overly optimistic about the extent to which innovative production methods would cut costs. Historically, the military services estimate program costs 17 percent to 19 percent lower than the end result. The program analysis office, on average, comes in only 2 percent lower than the actual cost. Aldridge sees the office as critical to improvements in acquisition.

Similarly, Aldridge has advocated the "spiral development" of new weapons systems. Many complain that it takes too long to get new weapons systems into the field because the services wait for the most advanced technology to become available. Under Aldridge's approach, systems are fielded quickly, and then mature technologies are introduced as they are tested.

The Energy Department also has aggressively instilled a Wye-type, performance-based discipline in managing multibillion-dollar projects. One mission is to create exotic new capabilities, such as particle accelerators that can delve into the basic properties of matter. Another is to clean up hazardous waste sites in Rocky Flats, Colo., Richland, Wash., and elsewhere. At Rocky Flats, for example, Energy has offered its cleanup contractor strong financial incentives to complete the job on schedule and restore the site for other uses.

In August, Energy released a draft of its Program and Project Management Manual, a blueprint for acquisition changes. It emphasizes accountability for decision-makers; planning; managing risks by anticipating potential problems, such as funding shortfalls, and developing contingency plans to deal with them; and independent reviews to determine if plans are feasible.

Energy's approach stresses the importance of communicating goals and status to stakeholders. In fact, its guide would be helpful to project managers anywhere in the federal marketplace. It promotes an earned-value management system to determine the status of work. Such a system tracks work performed against work budgeted to see whether contractors are staying within cost and working on schedule. The guide also lays out the characteristics of successful risk management. It includes a list of questions to help managers determine critical factors such as whether a technology has been tested or manufacturing capacity exists.

Performance-based management tools, such as the ones at Defense and Energy, drive mission results. After all, Wye says, "Public service is performance. They're interchangeable."

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

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Getting Down to Business

Allan V. Burman — Fri, 01 Nov 2002 00:00:00 -0500

The culture shift is like moving from a "Wild, Wild West environment to a planned community."

-Rear Adm. Charles Munns

he president's goal right from the start of his term has been to make the federal government more citizen-centered, results-oriented and market-based. The Office of Management and Budget is leading 24 e-government initiatives that certainly fit the bill.

The initiatives seek "to harness the potential of technology to provide highquality services at reduced cost to the American people," Mark Everson, OMB's deputy director for management, told the House Government Reform Subcommittee on Technology and Procurement Policy at a Sept. 18 hearing. Some initiatives include:

GovBenefits. The Labor Department has created a one-stop shopping site for citizens seeking information on federal benefit programs (www.govbenefits.gov).
Recreation One-Stop. Several agencies have jointly sponsored an online portal for information on parks and recreation facilities (www.recreation.gov).
E-Training. The Office of Personnel Management has launched an online learning center for government employees (www.golearn.gov).

These projects automate outdated business practices and try to eliminate redundant buying and poor program management. They attempt to link information technology purchases with business needs and to shore up systems that fail to interoperate and lack security. But often there are barriers to such change, including culture, resistance, insufficient resources and the lack of an enterprise-wide blueprint.

The Navy's reorganization plan is addressing many of the challenges OMB faces with its e-government agenda in the areas of people, skills, technology and business practices. Navy Secretary Gordon England, after a career in the Defense industry, has brought a private sector, metric-based focus to the Navy and Marine Corps. But pushing reforms, he says, is different in government than it is in the private sector. The government system is set up not so much to move things forward quickly, but to react to impending catastrophic failure. You need to know what you want, and articulate it and defend it well, England says. Moreover, people's perspectives can change on a moment's notice. Leaders must adapt to and manage the environment as much as they manage the issues.

A vision must be established right at the start, says England, who sees the warfighter as the driver of the reorganization plan. But it requires the following:

Eliminating unnecessary steps.
Training people more broadly so they can handle a variety of jobs.
Using technology to the best advantage.
Changing business practices to improve effectiveness and efficiency.

One frustration, England says, is the time it takes to field new technologies. For example, the Navy's budget planning cycle alone averages 36 months, and procurement time can add months to the process. By the time an IT system is actually in place, it's no longer cutting-edge technology.

To streamline operations, the Navy has set up government-industry teams to get rid of wasted steps in such areas as ship maintenance, installation operations and logistics support. In each of these cases, the goal is to shift money from support to warfighting.The Navy is cutting headquarters staff by 25 percent to eliminate unnecessary layers of management and to redirect resources to its core mission.

The Navy/Marine Corps Intranet (NMCI) offers good examples of the Navy's changes in business practices. NMCI is an initiative to purchase standard information technology services through a commercial contract. It uses a results-based approach to get industry to develop a single and secure Navy-wide network for e-mail and other computer applications. The approach involves giving contractors the flexibility in meeting the Navy's needs.

It sounds simple, except that there were some 100,000 applications and 1,000 networks throughout the Navy before the program was launched. Now, 70,000 of the applications have been eliminated, and the number eventually will drop to 2,000.

England sees the benefit of weaning people off their legacy systems, but there's a lot of inertia to overcome. Retraining workers to use the new system is a challenge, along with getting them to accept the newer and tighter NMCI security.

The promise is a system that will enable the Navy to carry out all kinds of service-wide initiatives, from providing a portal for common information to streamlining training opportunities. But the cost comes in the hard work to get staff on board. Moreover, there's a cultural price to pay. Rear Adm. Charles Munns, who heads the NMCI program, compares it with moving from "a Wild, Wild West environment to a planned community." Some IT staff may feel cramped in this tighter, more orderly structure. So, the new system must give them the freedom to get the best technologies emerging in the commercial market.

Nevertheless, these are the kinds of innovations that offer the best chance for real change, whether they are across one agency or across the government. Agencies must keep moving this transformation along if they hope to have savvy business operations.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

Getting It Right The First Time

Allan V. Burman — Tue, 01 Oct 2002 00:00:00 -0400

Amid planning and debates about the Homeland Security Department, another reality must be considered-how the government does business.

uestions abound as the Homeland Security Department joins Defense, Justice and other key agencies in protecting the nation and its citizens izens' way of life. Its creation will mark the biggest change in government since Harry Truman's restructuring of the defense establishment in the late 1940s.

Much debate has focused on the roles of the various offices to be clumped together into this new amalgam. How should the Border Patrol relate to Customs or the Coast Guard? Another issue is what kinds of information will be needed to see that the key pillars of the new department are working in sync toward common goals. And what linkages with state and local government first responders are needed to frame a truly national enterprise?

Amid the planning and discussions, another reality must be considered-how the government does business.

If the Homeland Security Department runs true to form, it's going to have to rely heavily on contractors for the systems, technology and capabilities needed to protect the nation's critical infrastructure. After all, the private sector owns 85 percent of that infrastructure. The federal government spent $218 billion on goods and services in fiscal 2001 on contracts valued over $25,000, and that figure is going up.

Already, the Transportation Security Administration has had to come up with airport security services at breakneck speed. Acquiring effective explosive detection machinery and hiring and training baggage screeners are but two of the many efforts that require private sector support.

From an acquisition standpoint, this sort of crash program presents hazards. Some of the loopholes in rushing to acquire all of these new capabilities include failure to:

Know what you want before going ahead with purchases.
Explore all of the possible alternatives.
Bring together the key stakeholders who will have an interest in the procurement.
Identify the potential risks and develop an approach for dealing with them.
Think through the data and measures needed to ensure success.
Set the business, IT and contracting strategies for getting what's needed.
Set up a project management structure to oversee procurement efforts.

The Census Bureau, which is forced to ramp up operations almost from scratch every 10 years, successfully dealt with these pitfalls in preparation for its 2000 count. In fact, the agency won a 2001 Business Solutions in the Public Interest Award, sponsored by Government Executive, the Council for Excellence in Government and the Office of Federal Procurement Policy. The key for Census was forming a senior leadership team to identify needs and develop an acquisition strategy.

Census leaders recognized they were going to rely on contractors much more for the development of sophisticated reporting and record keeping systems. And they knew timeliness was critical.

So, they created the senior team including the director for the decennial census and the chief financial officer to address such things as how to ensure the contractors they hired would be successful and that work would be done when needed. The team conducted market research to determine which contract vehicles would enable it to hire contractors quickly. And it focused on contractors' past performance to help the bureau pick the right players. Most importantly, bureau leaders assembled integrated acquisition project teams and gave them the ability to cut through stovepipes and work faster.

Other agencies, such as the Education and Energy departments, also are turning to innovative acquisition approaches. Education has created templates to help program staff develop strategies for large information technology procurements. These templates list the various factors to consider in deciding what to buy and how. The documents can be filled out electronically and are easy to use. They make sure key issues such as risk, budget needs and proposed contract type are fully considered in developing a procurement approach.

The Energy Department has been investing in similar front-end work, creating a broad project management mission and a set of tools to accomplish it. The agency has coordinated procedures that will require a top management review at the key decision points for projects worth more than $5 million. The reviews, which start with mission need, continue through facility operation to disposition. The department also is developing a training program to ensure it has a seasoned cadre of project managers that can handle the uncertainties of complex development efforts for all types of projects.

What do these acquisition strategies mean for the Homeland Security Department? Plan early with the right team before launching major projects. Homeland leaders must have an "across the enterprise" perspective and a real say in what the department buys. The stakes are too high to make mistakes.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

What Price Performance?

Allan V. Burman — Sun, 01 Sep 2002 00:00:00 -0400

If agencies can't come up with good performance measures, it may be because they haven't defined their desired results.

t's been more than a year since the Office of Management and Budget told agencies to boost their use of performance-based service contracting, an approach aimed at bringing private sector creativity to the federal marketplace. But many procurement professionals still are asking, "Can it really work in my area?"

The fundamentals aren't so difficult. You begin by defining the result you want, then identify the services required, the performance standards and a way to measure results. Then you devise incentives or disincentives to keep your contractor on track.

But a common complaint is that the right people aren't involved when the project gets started. Much of performance-based contracting is about defining expectations and ensuring everyone is on board with them. On the government side, you want subject matter experts, contracting personnel, program staff, the technical representatives, and, perhaps, legal and budget staff to be involved up front. Without them, it's impossible to come up with a basic, agreed-upon understanding of what the contractor is supposed to do. And if the government doesn't know what it wants, it's hard to see how the contractor will get it right.

International aid efforts, for example, require more than just a bilateral government-contractor relationship, according to William Reynolds of the Agency for International Development's office in Manila. Reynolds spoke about government contracting in the Philippines at an AID conference in March. The contracting and project officers for the host government as well as the U.S. government, he said, are in on the earliest discussions-when expectations are defined. Their willingness to participate and their understanding of performance-based service contracting techniques can make or break the effort.

Once you've determined the desired result for a project and expressed it in terms that everyone can understand, it's time to list all the services the contractor will perform. You must not leave anything out. If you do, and you're dealing with a fixed price contract, changes will cost the government a fortune. Nevertheless, agencies prefer fixed-price contracts, because they transfer the risk of cost overruns to the contractor. That only works, however, if the risk is manageable. Otherwise the government will likely not get the result it's looking for and the contractor will fail. If you are dealing with a lot of unknowns, as you might in the early stages of research and development on a new weapons system, then paying the contractor on a cost basis makes much more sense. In this case, you are paying the contractor for the effort it's expending, and not for a result that cannot be guaranteed.

A Health and Human Services agency seeking a contract for repairs to its elevators came up with a unique way to deal with excessive cost and technical risk. It needed a contractor for standard repairs and maintenance, and it wanted the work done on a fixed-price basis. In this scenario, if a major component in one of the older elevators failed, then the contractor would have to raise its price significantly to cover this contingency. So, the agency decided to take that risk, rather than transfer it to the contractor. The request for proposals stated that the cost of repairs for such a problem would be negotiated separately. That way, the contract could still be offered on a fixed-price basis, the competition could proceed and the agency didn't have to worry that an unseen repair would distort the price it would have to pay for the basic work.

Once an agency has identified the services it requires, the next step is setting performance standards against which the services will be measured. In some respects, this can be even more difficult than defining outcomes. A frequent problem is many agencies' inability to produce a solid baseline against which progress can be measured.

One Army facility wanted to shift a long-standing cost-type information technology support contract into a fixed-price performance-based agreement. Before Army officials could proceed, however, they needed to analyze their operations. It would have been hard to establish performance targets without defining what it was getting from its existing contract.

Carl DeMaio, director of the Performance Institute, a think tank based in Alexandria, Va., says the broader problem of agencies not being able to come up with good measures is that they haven't defined their desired results. "Agencies are finding that it is hard to draft and manage performance-based contracts with their vendors when their own programs don't have clear measures of results," he says. "Contracts serve programs, and if programs don't have clear performance goals, how can we possibly expect the contracts to have clear performance goals?"

Well-defined outcomes and solid performance standards won't mean much if agencies haven't developed sound quality assurance and surveillance plans to measure success. Even with a plan, agencies must have a knowledgeable and capable technical staff to monitor a contractor's progress. Oversight is a different role for employees who are accustomed to being doers, not managers. Changing that culture might be the toughest challenge in making performance-based contracting work.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

Big Plans for Small Business

Allan V. Burman — Thu, 01 Aug 2002 00:00:00 -0400

Contract bundling aces small firms out of the bidding process, procurement reformers say.

rocurement reform of the early 1990s has not protected small business. We need a major change in how we are thinking about this," said Sen. John Kerry, D-Mass, at a recent roundtable session with small business leaders from all over the country. Kerry, chairman of the Senate Committee on Small Business and Entrepreneurship, insisted that rules that allow contract bundling must be stricter, saying agencies often squeeze out small firms when they consolidate small contracts into larger ones.

The small business committee convened the Washington roundtable in June to elicit views on legislative remedies. A group of federal officials who deal with small business issues also attended the roundtable.

At the same time, Angela Styles, administrator of the Office of Management and Budget's Office of Federal Procurement Policy, has been addressing major hurdles that keep small businesses from gaining a stronger foothold in the federal market, including lack of accountability and access.

In September, OMB must submit recommendations to the president on how to deal with complaints from small businesses. Two multi-agency teams-one focusing on full and open competition and the other on contract bundling-are seeking nonlegislative solutions.

Roundtable participants from industry complained that government isn't meeting its goals of awarding a percentage of its contracts to small businesses and that agencies face no real consequences for that failure.

The goals for the last two years have been narrowly missed, but the encouraging news is that the money going to small business on prime contracts has increased, from $42.4 billion in 1997 to $50.1 billion in 2001-a rise of more than 18 percent.

One participant said the Pentagon has improved responsiveness by requiring regular performance reports from Defense agencies. Kerry has proposed a similar approach for civilian agencies. He wants to establish an ombudsman at the Small Business Administration to monitor how well agencies are doing and to require plans for improvement if goals aren't being met. Having the means for measuring progress and the plans to deal with shortfalls would keep agencies focused on their targets.

Ralph Thomas, NASA's associate administrator for small and disadvantaged business utilization, said at the roundtable that progress has been understated because government figures don't account for subcontracting dollars. It doesn't matter if small business revenues flow from prime contracts or subcontracts, said one roundtable participant, "it's money." And one way to focus prime contractors on meeting subcontracting goals is to measure their performance in terms of dollars they provide to small business.

"Instilling a culture that always looks at small business," and using "a strong, integrated planning process" has helped the IRS to channel 30 percent of its funding to small businesses, Steven App, the Treasury Department's deputy chief financial officer, said at the roundtable.

Agencies must figure out what work they'll need and whether small businesses can fulfill those requirements. Knowing the marketplace is critical if contracting officers are to be effective business managers.

Sen. Kerry and other committee members introduced the Small Business Federal Contractor Safeguard Act, S 2466, in May to strengthen rules on bundled contracts. Bundling makes contract oversight easier for agencies, but it frequently makes new awards so big that small businesses can't compete for the work, critics say. Kerry proposes requiring agencies to justify any consolidated contract of more than $2 million and to conduct more extensive analysis for consolidations of more than $5 million.

hoosing the best value doesn't mean making the expedient choice at the expense of denying small businesses their rightful opportunity to compete.

Action is not expected from Congress or the administration before the fall. But given the administration's and Congress' view that that bundling hurts small businesses, further constraints on consolidations are likely.

A number of approaches intended to speed the contracting process have sparked concerns among small businesses. GSA schedules and governmentwide acquisition contracts list prequalified bidders who've won past awards. Agencies can make awards to those on these lists in a heartbeat. But some say these contracting tools limit competition to only those few chosen firms.

A huge transformation in contracting has taken place over the last decade as the government has sought to bring commercial firms, technology companies in particular, into its marketplace. These firms are essential if the government is to keep pace with new technology.

No two firms offer precisely the same qualifications, products, approaches or solutions to meet the government's needs.

An expeditious "best value" selection process, with all its inherent subjectivity and risks, is the most logical approach to buying products and services. The alternative is to return to the Dark Ages of procurement, when the government required firms to follow a detailed set of specifications and then picked the lowest bidder-back when it took four years to award a contract.

But choosing the best value doesn't mean making the expedient choice at the expense of denying small businesses their rightful opportunity to compete.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

Death Knell for A-76

Allan V. Burman — Sat, 01 Jun 2002 00:00:00 -0400

Panel votes to scrap A-76 for "best value" competitions.

n April, the Commercial Activities Panel, a congressionally chartered group of 12 representatives from the Defense Department, the Office of Management and Budget, private industry, federal unions and academia, unanimously agreed on 10 principles that lay the foundation for a new federal outsourcing policy. A two-thirds majority voted to urge OMB to scrap the current process, embodied in OMB Circular A-76, for conducting public-private competitions for federal services and replace it with "best value" competitions based on the Federal Acquisition Regulation. Having described the A-76 commercial activities effort as the "program everyone loves to hate," I'm not surprised that the panel, headed by Comptroller General David Walker, has sounded its death knell.

The panel had a broad mandate to study federal outsourcing issues, but focused instead on the competitions governed by Circular A-76. That means that decisions about what agencies should include on their inventories of jobs open to competition will continue to be informed by OMB Circular 92-1, which details inherently governmental functions, such as warfighting, setting policies and approving contracts. Circular 92-1 also describes many support and advisory type functions that can legitimately be performed by contractors. The panel argues that A-76, with its overriding focus on cost, has failed to keep up with the acquisition reforms of the last decade. Most large-scale procurements follow a "best value" evaluation process. While costs are important in every acquisition, it is such nonprice factors as innovation in getting the job done that frequently tip the scale for the winning bidder. The panel suggests that these types of considerations should apply equally in the competitive sourcing environment. Federal unions and other observers believe that this change could put federal workers at a disadvantage because the lowest bid would no longer automatically prevail. Panel member Stan Soloway, president of the Professional Services Council, says the new process needs "to treat everybody as a bidder," not only during the competitive process, but also afterwards. Whichever competitor wins, be it a company or an agency team, its work should be governed by a contract, Soloway says.

Transformation to a process governed by acquisition rules will pose definite challenges, since those rules govern business with private firms, not governmental entities. New requirements will have to be drafted for government agencies. The panel recommended that "although some changes in the process will be necessary to accommodate the public sector proposal," the private and public sectors should have the same basic rights and responsibilities, "including accountability for performance and the right to protest." Ironically, the Defense Department cannot use the FAR-based, best-value method until Congress repeals a statute that prohibits it, so Defense, which has conducted more A-76 competitions than any other agency, will have to wait for legislators to clear the way before it can take advantage of the changes suggested by the panel.

The panel acknowledged these sorts of constraints on implementation of its recommendations, suggesting that current A-76 competitions continue and the A-76 process be improved simultaneously with development of a new FAR-based approach. Specifically, the panel recommended agencies adopt activity-based costing, improve labor-management cooperation in the sourcing process, and strengthen rules governing which agency employees are permitted to oversee evaluations of competitive sourcing proposals. Each recommendation is aimed at countering criticisms of the current A-76 process.

Finally, the panel urged the development of continuously improving High Performance Organizations, "independent of the use of public-private competitions." These organizations would, for a time, be exempt from competitive-sourcing studies and could reinvest any savings to further refine and improve their operations. Soloway suggests that inherently governmental functions, rather than those deemed commercial, become HPOs. Inherently governmental activities stand to improve the most under the high-performance approach since they lack the competition necessary to leverage the best result for the taxpayers, he says.

The HPO idea should sit well with those who contend the government ought not increase its reliance on the private sector for the provision of services. This camp also will welcome the panel's recommendation that both public and private teams be allowed to compete for work currently performed in-house, work currently contracted to the private sector and new work. In fact, OMB will add language along these lines to the guidance it is giving to agencies on how to develop their competitive sourcing plans.

Despite criticism from unions and others, Comptroller General Walker believes the new approach will be better than the old. "I care as much or more about public service as anybody," he says. "There is no way I would have voted for it if it weren't fair and balanced." And he expects to stay involved, in part because he leads the panel, and also because he believes the issue is important to government performance and, therefore, the taxpayer. That's good news. His continuing involvement should help what promises to be a knotty transformation go more smoothly.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

New Marching Orders

Allan V. Burman — Wed, 01 May 2002 00:00:00 -0400

Tight deadlines are pushing the new Transportation Security Administration toward innovative, results-oriented contracting approaches.

he new Transportation Security Administration will be a radical departure in federal governance. Its mission-securing all modes of transportation-will be done mostly by federal employees, not contractors.

Other agencies created in the past 30 years, such as the Environmental Protection Agency and the Education and Energy departments, were structured to accomplish their missions mostly through contractor support. Ninety percent of Energy's work, for example, is done by contractors. Among these agencies' biggest challenges is taking full advantage of private sector expertise. They must develop the right contracting vehicles and then oversee the work done by contractors. In contrast, the TSA will rely heavily on its own employees to carry out its business. Rather than being overseers, agency workers will be the doers.

With a staff of more than 30,000 in baggage screeners alone, the new Transportation agency will be larger than the FBI, Customs Service and Border Patrol combined. Its duties will include "creating a new federal airport security force, an expanded federal air marshal program, the deployment and creation of new screening technologies, administrative and support staff, and high-tech researchers, as well as a host of other new improvements in aviation and transportation security," says Transportation Secretary Norman Mineta. Even though federal workers will perform key TSA missions, such as baggage screening, the agency will still need support from the private sector. The 2001 Aviation and Transportation Security Act requires each checked bag at the nation's 429 airports to be screened by explosive detection equipment by the end of 2002. Cutting edge procurement practices will be critical to meeting that ambitious schedule. The urgency of setting up the TSA and meeting legislative requirements might actually work to the agency's advantage. The tight schedule is pushing the agency toward innovative, results-oriented contracting approaches that are central to the president's management agenda. For example, the TSA is seeking a prime contractor to help the agency meet the December 2002 screening equipment deadline. Rather than taking the traditional approach of laying out all the details of how the work should be done, the TSA has asked firms to propose a full solution. The prime contractor will be expected to perform the following functions:

Purchase and coordinate the supply of needed equipment.
Manage the installation of the equipment at airports.
Provide support for screener training.
Manage maintenance services.

Richard Lieber, contracting officer for the TSA, is trying to ensure that small disadvantaged firms also will have an opportunity to perform some of the agency's work. Subcontracting goals for the screening equipment project include:

40 percent to small businesses.
5 percent to small disadvantaged businesses.
5 percent to women-owned businesses.
3 percent to small businesses owned by disabled veterans.

As in similar types of large-scale procurements, the agency will pay particular attention to firms' past performance in handling similar requirements and to the resources available to them. A key distinction with the equipment screening contract, though, is the magnitude of this nationwide task. For the equipment screening contract, to be awarded in May, the TSA used market research to identify likely prime contractors. Rather than following the normal open competitive process, the TSA justified this limited competition with its tight deadline. Then the agency announced an open invitation for other potential prime contractors and subcontractors to submit brief statements describing how they would perform the work. The agency shared subcontractor statements with the primes to maximize the opportunity for small business participation. By allowing potential bidders to focus on results, performance metrics, and contracting approaches, the TSA will reap the most creative and innovative ideas that industry has to offer. In another departure, the TSA is tapping industry expertise for business advice as it sets up shop. Senior executives from leading firms are working with the TSA to share best practices in procurement, recruiting, metrics and quality, operations and process modeling, training and development, and organizational design and effectiveness. These consultants from Walt Disney World, Fluor, Solectron, Intel, A.T. Kearney, FedEx, Renaissance Hotels and Cisco Systems are subject to conflict of interest and other ethics requirements that preclude their firms from reaping any unfair advantages. The goal is "to bring business processes to government in creating a new agency of the future," says Lieber. "The agency is taking advantage of the acquisition reform legislation of the 1990s while at the same time getting input from corporate America." Given the demanding time frame for meeting the nation's new security challenges, TSA should be applauded for its efforts to bring the best possible expertise to bear on an important mission.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com.

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New Marching Orders

Allan V. Burman — Mon, 01 Apr 2002 00:00:00 -0500

While management gurus have longed for "government in the sunshine," the administration's new system is more like "government in the spotlight." It certainly fits well with the president's focus on measurement and achieving results. Unfortunately, the scorecard features a blinding sea of red dots. Agencies have their work cut out for them.

The White House isn't alone in demanding improvement. The General Accounting Office listed strategic human capital management on its governmentwide list of high-risk areas in 2001. At stake here is the ability of agencies to carry out their missions, not only today but over the next five to 10 years, as many of their employees, mostly baby boomers, become eligible for retirement. Moreover, agencies need to transform their workforces into customer-oriented, results-focused organizations that can adapt to rapidly changing environments. The path to transformation requires a workforce with numbers, skills and savvy. The leaders of the acquisition community have certainly taken that message to heart. The Procurement Executives Council (made up of agency heads of procurement) and the Office of the Undersecretary of Defense for Acquisition, Technology and Logistics are working to meet these challenges.

The council's governmentwide approach, which is led by David Litman, procurement executive at the Transportation Department, and Frank Anderson, president of the Defense Acquisition University, aims to position acquisition workers as the leaders of the government's business operations. The procurement council says this strategy depends on acquisitions workers' ability to:

Develop, negotiate and manage business deals.
Communicate effectively.
Lead and manage change.
Solve problems in ambiguous environments.
Analyze and understand the marketplace.
Build and manage relationships across functions and organizations.
Understand and operate in the customer's environment.
Develop and implement outcome- oriented solutions.
Make plans a reality.

With these goals in mind, the Procurement Executives Council is developing a career map that will integrate the types of education and experience needed for acquisition professionals to become leaders. The council is identifying ways the government can attract the right kinds of employees, including middle managers from the private sector; manage careers; and reward "business leader" performance. The acquisition workforce includes far more people than those in the contracting and purchasing fields, and career development is essential for all of them.

The Defense Department has long recognized the broad range of its acquisition workforce, which totals about 130,000. Only 20,000 of those employees work in contracting and purchasing. The major occupation is engineering, with more than 35,000 acquisition employees, while 26,000 are in program management and business operations. This reflects Defense's view that professionals need to be trained and skilled at handling all parts of the acquisition life cycle, from defining a goal to ultimately disposing of what's bought.At all agencies, contracting and program staff must work together as acquisition professionals, all working more efficiently to accomplish the same result.

Defense has already taken a huge step toward anticipating future workforce needs. Last year, the Defense Department's Acquisition Initiatives and Acquisition Career Management offices developed a strategic human capital plan. Each branch of the military and the largest Defense agencies participated in the exercise. The goal was challenging-to predict the number of acquisition workers and the skills needed from 2005 through 2008, and then compare that makeup with the business needs in each component's strategic vision. This time-consuming and demanding exercise has produced some real benefits. "The plan offers the leadership a means for carrying its guidance and strategic intent out to the workforce," says James McMichael, director of Defense's Acquisition, Education, Training and Career Development Office. This vision can then be translated into recruiting, training and developing the right staff. McMichael points to the importance of pilot projects such as Defense's effort to give managers more flexibility in linking pay to performance. "These demonstrations provide the tools for front-line managers to align the workforce to meet the leadership's strategic intent," McMichael says.

The government must deal with the coming wave of retirements and the challenge of shaping a nimble, results-oriented acquisition workforce. The Procurement Executives Council and Defense's initiatives are a step in the right direction.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

Cracking The Code

Allan V. Burman — Fri, 01 Mar 2002 00:00:00 -0500

A strategy for navigating the competitive sourcing maze.

s civilian agencies weigh the prospects of opening up their commercial-type functions to competition from private firms, they're all asking the same question: "Isn't there someone who can show us the way?"

Office of Management and Budget Circular A-76 directs agencies to target activities that could be performed by private firms for competitive sourcing. But it's up to each agency to identify which activities fit the criteria and then determine how to set up competitions. Rather than resorting to trial and error, agency officials could figure that out more quickly and with better results through someone like Jerry Stark, the former head of the Marine Corps commercial activities program.

Stark, who retired from the Navy in January, spent much of his 34-year career focusing on the business of outsourcing. Having been involved in hundreds of contracting studies, he's developed his own ideas about how competitions should be run. Here's his step-by-step strategy:

Conduct an activity-based costing analysis. By linking costs and activities, agencies can assess their workloads by area, pinpointing factors that drive costs and the potential for savings from competitions. This linkage also creates a baseline for measuring performance improvements.
Create an inventory of all of the jobs performed by the agency. From this list, agencies can identify commercial-type positions that lend themselves to competitions. OMB, for example, has identified administrative support services; grants management; and research, development, testing and evaluation activities as potential areas for outsourcing.
Seek strong leadership. Management 101 dictates a strong leader for the success of virtually any innovation. It's no different here.
Develop a consistent approach. Agencies often rely on contractors to help them set up the competitions and to develop performance requirements and work statements. Developing a template and refining it increases the likelihood of success.
Create a strategic plan that highlights the key areas to be explored for potential outsourcing. Such a plan also would bring together agency partners with a stake in the outcome at the beginning of the effort.
Identify areas that are likely to be quick successes. For the program to catch on, its benefits need to be real and reasonably immediate. Many have criticized the time it takes to complete outsourcing studies. However, as in other complex undertakings, there's a learning curve. The more studies an agency completes, the more efficient it will get. Starting with projects that promise to be the easiest often makes a lot of sense.
Work with the human resources staff early on. Ask personnel officials to look for tools to ease the hardships caused by outsourcing jobs. For example, buyout authority can make retirement more attractive to those who are eligible to retire and at risk of losing their jobs. Contracting and program staffs must work together, taking advantage of each other's skills and expertise.
Communicate frequently and fully with everyone involved. The same advice applies in any performance-based activity. Agency officials must be available to answer questions and to assuage fears.
Lay out a plan to oversee the process, from planning the acquisition to monitoring the performance of whoever wins the competition. Make sure that enough people are available to oversee the entire effort. As in any performance-based operation, effective monitoring and measurement are critical.

Stan Soloway, president of the Professional Services Council, brings the industry perspective to the competitive sourcing process. Soloway oversaw many competitions as a senior Defense Department official in the Clinton administration. Now he promotes competitive sourcing as a key component of his industry base.

Government officials must be "willing to step up to the plate and defuse the mythology," Soloway says. Conducting these competitions is not a "life or death" matter, though some officials would like to treat them as such. Leaders must deal fairly and directly with their workforces and with all bidders, explaining right from the start how the process will work and the roles everyone will play. Soloway says the best way to do that, as Stark recommends, is through frequent and straightforward communications.

Where many of these efforts fall apart is in the lack of planning. "Poor upfront planning drives bad outcomes," Soloway says. As in any other type of contracting effort, a good acquisition strategy is key to success.

The messages from Stark and Soloway are surprisingly similar, even though they come from opposite sides of the fence. The bottom line: Know where you are, know where you're going, and be as open as possible about how you're going to get there.

Resources

For more information on competitive sourcing, go to the Defense Department's Share A-76! Web site at http://emissary.acq.osd.mil/inst/share.nsf.

Another source is the fall 2001 Public Contract Law Journal article, "The Crossroads of the A-76 Costs Debate: Cost Comparisons and Some Attractive Alternatives." In the article, attorneys Stephen Sorett, Brad Bender and Lorraine Mullings of the Washington office of Reed Smith LLP, describe innovations such as the Transitional Benefits Corporation model that Sorett developed. It presents an interesting concept for allowing outsourced federal employees to keep and continue to accrue their health and retirement benefits if they are transferred to the private sector.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

Pressure For More Change

Allan V. Burman — Tue, 01 Jan 2002 00:00:00 -0500

The director of the Office of Federal Procurement Policy says reforms should be assessed before launching any new initiatives.

ith $200 billion in purchases at stake, a smooth acquisition process is critical to the government's bottom line. It's also important to Angela Styles, the new administrator of the Office of Federal Procurement Policy, whose 2002 agenda will require an agile acquisition workforce.

Styles became the government's procurement chief six months ago, and her top priority is clear: the administration's competitive sourcing initiative. The President highlighted this initiative in a campaign speech in June 2000, and it continues to be a major focus in every one of his management plans. These include the "Blueprint for New Beginnings," a report issued in February that set out the administration's management goals and the budget revisions that followed in the spring.

The competitive sourcing initiative requires agencies to identify their commercial-type activities and then open them up for competition from the private sector. Experience has shown that competition can cut agencies' costs by 20 percent to 30 percent regardless of whether the government or the contractor wins. The focus on results in such competitions parallels that of other Bush initiatives on performance-based service contracting and workforce restructuring.

Styles has been meeting with the senior leaders of key agencies to emphasize the importance of competitive sourcing and get their buy-in. In reviewing agency plans for studying and competing positions, Styles has created color-coded scorecards to measure their progress. Many are full of red dots that indicate a lack of progress, but Styles is optimistic about getting the job done. She believes agencies are taking the initiative seriously.

Commerce has been doing better on its scorecard than most, with a clear plan and preparations for competitions actually under way. But many agencies are still trying to decide what to compete.

In the past, these competitions have been fraught with controversy, given the likelihood of lost jobs and suspicions by contractors about an uneven playing field with federal officials controlling the outcomes and the comparisons. Federal employees, unions, contractors, overseers such as the inspectors general and the General Accounting Office and even members of Congress have all raised objections. Styles' No. 1 challenge will be making this program successful.

Other areas that command Styles' attention relate to the aftermath of Sept. 11 and the pressure for further changes to the acquisition process. The good news about acquisition reforms over the last decade is that they've made the process resilient and responsive to an emergency, Styles says. She points out that in just a matter of days after the attack on the Pentagon, the Defense Department had contracts in place to rebuild the damaged portions of the building. Likewise, the General Services Administration responded quickly and effectively to the Defense Department's needs and to those of federal agencies at ground zero in New York.

Nevertheless, Styles points out that there still hasn't been enough cultural change at some agencies to make the new streamlined acquisition reforms of the last decade work. In fact, some agencies are now seeking exemptions from governmentwide acquisition regulations to avoid any possible procurement-related constraints. Certain agencies have already obtained such leeway, notably the Federal Aviation Administration and the U.S. Mint. Each such exception erodes the unified front that government strives for in working with industry. That consistency underlies the purposes of the Federal Acquisition Regulation. It's just one more battle that comes with the position of OFPP administrator, and one that Styles knows she must fight.

Styles' effort to assess the gains in acquisition reform colors her views on whether further changes are really needed right now. Rep. Tom Davis, R-Va., chairman of the House Government Reform Subcommittee on Technology and Procurement Policy, has developed a legislative proposal for a Services Acquisition Reform Act that would accomplish a number of things, including further streamlining the procurement process.

The legislation would likely come to a vote sometime next spring. At a November hearing, Styles questioned whether enough had been done to test the success of past reforms, before proposing new ones.

To a degree, Styles' notion of stability means doing a better job at institutionalizing the changes already being made. "I think people need a breather," she says. Styles is concerned that some of the efforts to streamline and simplify may have strayed too far from the basic tenets of an effective and fair acquisition process. These tenets demand a transparent, open system where rules and processes are well understood by all and where firms are offered a real chance to compete.

For now, Styles will "wait and see" as she continues to seek data on what has really been achieved so far. And few argue with her philosophy: "We need to assess what's working and what's not."

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

Buying Better All The Time

Allan V. Burman — Sat, 01 Dec 2001 00:00:00 -0500

Here's a sample of what GSA purchased for New York and Pentagon relief efforts within hours and days of the attacks-all using existing contracting processes:

65,000 protective suits
5,000 face masks
3,000 respirators
400 vehicles
250 cell phones
More than 2,000 computers
1,200 pieces of office furniture and equipment
300 fax machines and photocopiers

Let's hope the skeptics who worry that the reforms of the 1990s may have been at the expense of competition and openness don't ignore these pluses as they draw their conclusions.

Perhaps former NASA Administrator Daniel Goldin's mantra of "faster, better, cheaper" best characterizes the forces driving acquisition reform in the last decade. Simplification, speed, a willingness to look to others for good ideas, and a focus on performance are all part of this transformation. Today you see these innovations almost wherever you look.

At the Energy Department, the Web-based Industry Interactive Procurement System quickly informs a potential bidder of a new contract solicitation. A company can register online with the department by providing some basic information about its business. Once registered, the contractor can receive e-mail notifications about new Energy solicitations and guidance on where to find more information. A recent Office of Civilian Radioactive Waste Management notification, for example, seeks a firm with engineering and scientific skills relating to the design of a geologic repository for nuclear materials. The information includes when the proposal is due, contact information for the contracting officer and the type of competition.

Not only is the all information electronic, but the bidders email their responses as well. It's simple, fast and paperless. In another move to smooth the procurement process, the Housing and Urban Development Department has released draft requests for proposal for its projected Information Technology Service solicitation that potential bidders can review. This multimillion-dollar procurement requires a full range of integrated IT services, including data processing and management, data recovery, local area network communications and Web site administration.

By putting out these drafts, the department hopes to get feedback from companies on:

Features of the request for proposal that are unclear.
Recommendations for improvement.
Omissions or inconsistencies.
The overall procurement approach.

In other words, HUD is asking contractors for their advice on how to make the procurement more effective. But the agency has gone one step further. In the section of the draft request that ordinarily outlines the work to be performed, bidders are asked to develop their own strategy for achieving the project's objectives. This approach is another step toward encouraging contractors to provide innovative, commercial solutions to satisfy government needs.

Defense's Special Operations Command in Florida also is seeking advice from its industry partners on "comprehensive end-to-end communications services through a common computing and communications environment." The Defense Department's expectation is that contractors will propose a performance-based approach for conducting the work.

The draft request for proposal outlines how a contractor could extend the five-year contract to a more lucrative nine years with solid performance. This type of incentive reinforces the concept that results really matter.

As American philosopher and educator John Dewey said, "what works is good." This new acquisition system certainly seems to be working. And staff are no longer forced to use their ingenuity to circumvent the system. Rather, they're challenged to bring in innovations to make it even better.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

The Pentagon’s People Person

Allan V. Burman — Thu, 01 Nov 2001 00:00:00 -0500

Chu, a Pentagon veteran, is at the center of the debate about the military's "up or out" policy.

key official involved in determining the future of the Pentagon's procurement operations doesn't even have the word "acquisition" in his title. He's David S. Chu, the new undersecretary of Defense for personnel and readiness. Chu is no stranger to the Pentagon. He served for 12 years in the Reagan administration and the first Bush administration as head of Defense's Program Analysis and Evaluation Office. Now, he's responsible for training, human resource planning, military and civilian personnel policies and health care at the department.

That means Chu is responsible for handling some of the biggest challenges facing the Pentagon today. He is, for example, at the center of a new debate about the wisdom of such long-standing policies as the the "up or out" promotion practice, which forces officers in their prime out of the ranks if they fail to keep advancing.

While personnel and readiness is Chu's central responsibility, he is also well versed in acquisition matters. He has, for example, served as director of the Procurement Round Table, a group of former senior government acquisition officials chaired by former Comptroller General Elmer Staats. This background will hold him in good stead as he works in partnership with the Pentagon's acquisition office on crosscutting issues.

Chu serves on the Defense Acquisition Board, which is chaired by the undersecretary for acquisition, technology and logistics, with the vice chairman of the Joint Chiefs of Staff serving as vice chair. The military service secretaries as well as the Defense comptroller also participate in this body, which advises the Defense Secretary on all major systems acquisitions.

A major issue confronting the board is the need to view new systems acquisitions in light of not just procurement costs, but total life cycle costs. When viewed on a life cycle basis, the costs of operating and maintaining major Defense systems is a significant portion of total program costs.

The types of systems bought and how they are upgraded can have significant implications for how Defense employees are trained. As systems undergo continuing changes to maintain effectiveness, staff will likewise have to be kept up to date. "Training strategies for this kind of transformation will have to move away from calendar time. We can't send all these people away to school," says Chu. Web-based instruction programs may provide a solution to the problem, he says.

Chu notes that traditionally, Defense has focused on detailed goals for shaping and training its officer corps, with less pressure to do the same with its civilian workforce. Now, however, with civilian attrition rates projected to skyrocket in coming years, training issues are becoming increasingly important. On the acquisition front, for example, each of the services is examining its career professionals to see what must be done to respond to future needs. These include both staffing and skill requirements. Defense officials are reviewing strategic plans that lay out new approaches for recruiting, retaining and training acquisition employees.

When that process is complete, the department may propose new legislation to change the structure and the management of its civilian workforce. Such proposals will need to be carefully considered within the context of reassessment of the "up or out" policy for uniformed service members. Changes to the lengths of military tours of duty and career options, if implemented, will have major implications for all aspects of how the department conducts its business.

Another area where Chu's role ties directly to the acquisition world is his responsibility for managing the health care programs of the department. Central to this role is ensuring that the military's Tricare system for service families is both affordable and well-managed. Tricare is a nationwide multitiered health benefit plan. It's been much maligned, but Chu believes that it may be more effective than its critics contend. He points out that on independent surveys of patient satisfaction, Tricare "scores quite well," particularly in the context of other health plans.

One of the factors contributing to Tricare's problems is a contracting issue. When the program was established, Defense, in keeping with acquisition reform pressures, insisted that Tricare contractors shoulder a major portion of the risk of escalating costs. What many have now come to realize is that contractors under the program are akin to benefits plan administrators under private health plans, and have relatively little control over rising health care costs. So Defense officials have proposed a contracting approach that builds on best practices in the corporate world. It would reduce the contractors' portion of the cost risk, yet still evaluate and reward them on the basis of measures of how well they administer the Tricare program. Legislation to effect this change is awaiting congressional action. Tackling problems like the Tricare contracting issue and restructuring the Defense civilian acquisition workforce will take someone who knows both the personnel and the procurement worlds. It's comforting to know that Chu has experience and expertise in both realms.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

Reforms With An E-Gov Twist

Allan V. Burman — Sat, 01 Sep 2001 00:00:00 -0400

In the early 1990s, the world of grand-scale, multi-year mega-procurements compelled contractors to bet the company on the bid. The government had to contend with tedious, lengthy, process-focused requests for proposals. Moreover, the General Services Administration's Board of Contract Appeals eyed practically every procurement. The stakes were so high and the regulations so obtuse that nearly 50 percent of contract awards were overturned by the board.

The 1996 Clinger-Cohen Act emphasized better planning, cutting back on bureaucratic barriers to purchases and sizing projects to manageable levels. The government's new technology czar, Mark Forman, helped draft the bill as a staff member on the Senate Governmental Affairs Committee. Forman says the law was intended as a roadmap for purchasing information technology. Its major elements included:

Establishing chief information officers to develop strategic visions for agency IT efforts.
Decentralizing purchasing authority by eliminating GSA oversight of procurements.
Placing overall responsibility for IT acquisition reforms on the Office of Management and Budget.
Establishing agency review boards of senior agency officials to consider the costs and benefits of IT purchases.

Some of these goals have proved difficult. CIOs are in place, but their authority is a mixed bag across the agencies. With little independent funding and limited power over program-related IT systems, a number of CIOs are still struggling to make their mark. Nevertheless, their work in averting a Y2K crisis afforded many CIOs a chance to demonstrate their value.

Despite the uncertain role of CIOs, some IT acquisition reforms have taken off. Most notably, agencies regularly use GSA schedules and governmentwide acquisition contracts such as the Commerce Department's COMMITS (directed at small businesses) to acquire all types of IT services much more quickly than they had in the past. The new approach is aimed at acquiring solutions rather than buying things. The Navy-Marine Corps Intranet procurement, for example, provides a Navy-wide e-mail service with a contractor fully accountable for successful performance.

While Clinger-Cohen focused on IT procurements, Forman believes today's e-commerce demands even more robust reforms. The vision of Clinger-Cohen was to give agencies a better means for purchasing IT. "E-business has really changed that strategy," Forman says. "Today's focus is on designing a system to integrate multiple IT tools into the business itself." Information technology is at the core of practically everything an agency does.

Clinger-Cohen has been effective in meeting specific IT procurement needs, Forman says, but those needs have vastly expanded. E-government is the environment in which the Internet and digital technologies connect employees, suppliers and customers. In this sense, the vision for government mirrors that of the business world, with the Internet at the core of transactions.

The e-government vision still encompasses the Clinger-Cohen notion of effectively using technology to meet agency missions, but its customer base has grown. The challenge now includes not only improving agency management but also:

Creating convenient one-stop shops for citizens.
Consolidating and reducing business reporting requirements.
Linking agencies in a performance-based IT environment.

Agencies spend an estimated $45 billion to $70 billion on IT each year. The challenge isn't so much getting each procurement right but rather consolidating and integrating what Forman calls "islands of automation." The goal is to enable one agency to take advantage or make use of another's data or business systems, thereby reducing duplication and potentially cutting costs. Forman calls the operative principles of this effort "unifying and simplifying."

Forman, whose formal title is associate director for information technology and e-government at OMB, will oversee this process. He sees two ways to make it happen:

Get OMB budget examiners to focus on e-government initiatives as part of the President's budget review effort.
Get control of the $100 million of seed money in a proposed IT fund to focus on initiatives most in need of support.

If Forman can get budgeteers to focus on agencies' performance in cross-pollinating IT processes governmentwide, he's a long way toward achieving his goals. His success is an even surer bet if he actually gets to distribute $100 million of seed money. As the old saw goes at OMB: "Power flows where the money goes."

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

For Small Business, It’s a Jungle Out There

Allan V. Burman — Wed, 01 Aug 2001 00:00:00 -0400

Much of the acquisition legislation of the 1990s was based on the notion that the federal contracting process had become so rule-bound and inefficient that it was no longer serving the needs of the nation. Eliminating special provisions or making them inapplicable at lower dollar levels was one way to promote simplification. For example, the 1994 Federal Acquisition Streamlining Act (FASA) exempted procurements below $100,000 from certain procedural requirements, including those of the 1988 Drug-Free Workplace Act, the 1935 Miller Act and the 1965 Solid Waste Disposal Act.

FASA also allowed agencies to establish multiple award contracts that, in effect, created pre-approved lists of bidders. Of course, small businesses that were not teamed up with someone on the list would be ineligible to bid for tasks under this contracting vehicle. In fact, these types of indefinite delivery, indefinite quantity contracts have become contracts of choice for federal agencies because they are quick and easy to administer. General Services Administration schedule contracts offer similar benefits. Plenty of small businesses have schedule contracts. But for those that aren't on one of these schedules, the market is closed.

FASA also eliminated the obligation to seek small businesses for micro-purchases under $2,500. This provision greatly expanded the potential of the government purchase card to simplify purchases. Card purchases are projected to account for more than $20 billion in business in 2001. Unfortunately, there is no good way to determine how much of the credit card business is going to small companies. That sort of tracking would require administratively cumbersome reporting that defeats the simplified process of using purchase cards.

In spite of these reforms, small businesses appear to be faring well, the General Accounting Office concluded in its January 2001 study, "Small Business: Trends in Federal Procurement in the 1990s" (01-119). From 1993 through 1997, agencies met or exceeded the annual goal set by law to award 20 percent of prime contracts to small businesses, GAO said. In 1998 and 1999, agencies hit the newer goal of 23 percent, set in the 1997 Small Business Reauthorization Act.

Those results may imply no problem exists, but another issue complicates the contracting equation. The governmentwide small business goal masks a multitude of smaller goals focused on all types of programs. Ones like the 8(a) Business Development Program for small disadvantaged businesses get their clout from special contracting provisions, such as the ability to award on a sole-source basis. Others such as the Women-Owned Small Business Program have nothing but goodwill to drive them along.

Here's a list of other small business programs and annual goals for their share of prime contracts:

Small disadvantaged businesses, 5 percent.
Women-owned businesses, 5 percent.
Historically underutilized business zone businesses, up to 3 percent by 2003.
Disabled veteran-owned, 3 percent.

In some cases, pushing for one program means pushing against another, so that women may be pitted against veterans for a share of the market. The likely result is a zero-sum game in which no one gains.

The problem is further complicated by the shrinking pool of government contracting officers. These officials are hard-pressed to keep up with the rules and various protocols associated with each legislative requirement and reporting tools that are frequently weak or nonexistent.

The dilemma is reminiscent of the confusing array of acquisition rules in the 1980s and 1990s that ended up thwarting the good purposes of the programs they were intended to support. The paramount issue is whether these programs can be streamlined and consolidated without negating long fought-for benefits. Moreover, it remains to be seen whether the government can really obtain the data necessary to set baselines and measure performance.

During testimony June 20 before the House Small Business Committee, Deidre Lee, director of Defense Procurement, cited a newly established Defense Department policy as one way to force accountability and better focus on results. Since Defense accounts for almost two-thirds of the federal government's purchases, its initiatives are major factors in determining whether small business goals will be met.

The policy will require twice-yearly reporting on progress on small business programs to the undersecretary of Defense for acquisition, technology and logistics and the deputy secretary. According to Lee, "each DoD activity and the department as a whole will be responsible for annual small business improvement plans and will be rated on its performance."

Perhaps it's time to establish a Hill-administration task force with a similar performance-based focus to see that small businesses are, in fact, getting the support so many believe they deserve.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

Performance-based Pointers

Allan V. Burman — Sun, 01 Jul 2001 00:00:00 -0400

Here's the 30-second elevator speech describing performance-based contracting: "Tell the contractor the result you want, not how to do the work, and then be sure you can measure whether that result has been achieved." Performance metrics and incentives or disincentives that focus the contractor's actions on the agency's goals provide the framework for evaluation.

Since the federal mandate to use performance-based contracting is a decade old, many agencies have taken a stab at it, but it's by no means prevalent nor is it uniformly applied. Only a handful of senior agency officials attending a May Brookings Institution workshop on performance metrics knew much about performance-based contracting and even fewer had received any training in doing it. For the approach to work, two factors are critical: agreeing on results and setting up an effective contract administration and monitoring plan.

One of the toughest parts of contracting is getting the right team together early on and having them agree on the outcome they're seeking. It's amazing how frequently people differ on what they expect from a contract. But if the government isn't sure what it wants, it's awfully hard to hold a contractor accountable for achieving that result. The notion of "outcome" itself is difficult. All too often, the goal of a contract is a deliverable, a study perhaps, which will be seen as the outcome of the effort. At other times, the outcome will be "approval to proceed to the next stage of the project." What's missing in both examples is a clear rendering of the impact of the contract on the agency's mission.

One way to express an outcome successfully is to insert the phrase "to enable the agency to" in the middle of the outcome statement. Here's an example: "A business case on the pros and cons of consolidating data centers will be developed to enable the agency to decide whether to proceed with consolidation." This type of outcome deals with an effort early in a project where the focus still is on studies or analyses. Here's another example for later in the project: "Fourteen data centers will be consolidated into three to enable the agency to achieve equivalent performance at a 10-year savings of $50 million."

While the upfront work is demanding, administering the contract is equally critical. If performance metrics haven't been well thought through, or if an effective measurement scheme hasn't been put in place to document results, then accountability is lost. The Veterans Affairs Department has been operating a performance-based contract with QTC Medical Services Inc., a Diamond Bar, Calif., firm, since an initial pilot effort in May 1998. The contract now is in its third year and is operating at 10 Veterans Benefits Administration regional offices.

The new approach for this contract is to have a private sector firm, rather than VA hospitals, provide disability exams for veterans. Performance is the key to the arrangement. Measures include timeliness, quality, cost and customer satisfaction. All other elements of the contract revolve around a requirement to get the job done within 40 days. QTC must contact the veteran, scan and image the veteran's medical records, schedule and perform the exam, get the test results, do a report and get it back to the VA within 40 days or suffer significant penalties. The "how" is left up to the contractor.

As Gary Krump, VA's procurement executive, says, the agency took on the new approach "without a well-developed body of law or a six-foot-long file to tell you how to do it." That meant that all parties had to think things through from the start with the VA's clinical and business sides working in close partnership with each other and the contractor.

Why has it worked? Right from the start a clear contract administration plan identified action items for each party and defined team responsibilities. The contract-monitoring plan doesn't micromanage, but it does provide for oversight visits, monthly audits and continuous feedback on quality and performance.

What does Krump see as the key to success from a contract administration standpoint? "Constant communication between the contracting officer's technical representative, the contracting officer, the vendor and the program official." In fact, the vendor and the VA regional offices communicate daily, so problems can be resolved before they become major issues.

What are the lessons learned here? Define your outcomes well upfront so there's no ambiguity about expectations from any team member, whether government or contractor. For advice on administering the contract, Krump quotes Ronald Reagan: "Trust, but verify."

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

IGs Brave the New World

Allan V. Burman — Fri, 01 Jun 2001 00:00:00 -0400

Probably more than anything, the Y2K challenge pointed up government's huge dependence on IT. Not only has this reality modified staffing and skill needs in IG offices, but it has also affected their operational goals.

At the Defense Department, the largest IG operation, the demands for quality and speed that have pushed the acquisition envelope have played the same role in IG performance, Lieberman says. "As a result of automation, everything is done at so much faster a pace," he says. Audit processing time is down to half of what it was in 1992, while the number of audit reports has almost doubled over the same period. In 1992, an audit took an average of 511 days to process, compared with 270 days in 2000. The average cost per audit dropped by 45 percent over this same period, from $392,000 to $216,000. And in 1992, 142 final reports were produced, compared with 202 last year.

Some of the efficiencies are the result of such automated tools and processes as videoconferencing and e-mail, which cut down on travel and coordination time. Similarly, audit software allows IG offices to use already-formulated survey instruments without having to create a new survey each time. But the real gains come from a performance management focus, which measures results. And, as Lieberman says, "nothing can be measured better than time."

Lieberman says timeliness is critical in audits. "It's like fruit ripening. They lose strength every day," Lieberman says, "It's the same with audit results. They get stale." The IG used to take two years to review an issue in all four services before releasing a final audit, but now that's never done. Now reports are issued as useable pieces are completed, so the results are much more timely. It's an effective way to counter complaints about lack of currency or relevance.

These types of improvements have been made while the Defense IG's office has been on a staffing roller coaster ride. The IG staff is 28 percent smaller than its 1995 high of 1,800 employees. The cuts have followed the same across-the-board pattern as that of the entire department, with no real planning behind them.

As the IG's office has focused on improving its own operations, its auditors continue to detail problems in how Defense conducts its business. An audit last year pointed to a 50 percent reduction in Defense's acquisition workforce from 1990 to 1999, a cut that has been particularly troublesome, Lieberman says. The cuts took place at a time when the acquisition workload increased by 28 percent. The cutback has resulted in an increased backlog in closing completed contracts and insufficient staff to carry out required work. The workforce is now afflicted with skill imbalances and high staff turnover, among other things.

Another area of concern for auditors at Defense is IT contracting. "Every IT project has major flaws," Lieberman says. In services contracting, in general, which now covers over half of all government purchases, an IG review of 105 Defense contract actions revealed problems with each one of them. These included such things as failure to do independent cost estimates or lack of supporting documents in contract files.

Lieberman remains skeptical about many of the efficiency gains being cited across government and whether agencies recognize the importance of information technology in their operations. "We're not buying nearly as much process reform across the department as people think," he says. "We're layering these new systems over old processes."

Under the Bush administration, the Defense IG office will continue to focus on IT and services contracting audits, with a special emphasis on health care fraud, such as improper billing and fraudulent claims. That area has "almost an unlimited amount of workload," Lieberman says, with some 500 cases. Assessing the quality of the products that Defense purchases will remain a priority, particularly in light of quality assurance staff cuts over the last decade.

The result of all these pressures is that those involved in services contracting may soon find themselves visited by their local inspector general. In the past, "we, like everybody else, have ignored service contracting issues," Lieberman says. You can bet that won't be the case in the future.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

Building on Blueprints

Allan V. Burman — Tue, 01 May 2001 00:00:00 -0400

The President's point man, Office of Management and Budget Director Mitch Daniels, carries the banner of governmentwide management reform through his deputy director for management. That position, created in 1988, serves as the focal point for management improvement. In early April, the President was still weighing his selection for deputy director for management.

In the meantime, the job of moving the management agenda forward has fallen to Sean O'Keefe, OMB's deputy director and the first Cabinet-level deputy to be confirmed by the Senate. No stranger to government, O'Keefe has been a presidential management intern at OMB's National Security Division, a Capitol Hill staffer, comptroller of the Defense Department and Secretary of the Navy.

At O'Keefe's confirmation hearing in February, Senate Governmental Affairs Committee Chairman Fred Thompson, R-Tenn., cited the "endless agency inspector general and General Accounting Office reports that detail the poor state of management today in the executive branch." Complaining that OMB's management responsibilities have been "neglected," Thompson urged O'Keefe to "leverage the power of the purse" to improve performance, address information technology and workforce deficiencies, and demonstrate results across government.

O'Keefe attempted to do just that in a March memorandum to agency heads. It's a first step on the management side of the budget to mold the general precepts of the President's blueprint into agency action plans. The memo provides guidance for fiscal 2002 on three key elements of reform:

Making greater use of performance-based contracts.
Expanding online procurement.
Expanding A-76 competitions and more accurate FAIR Act inventories.

Each of these goals was a priority in the President's campaign. Highlighting them now, O'Keefe says, serves two key purposes. It shows the President is going to follow through on his commitments and it reflects a clearly focused management agenda.

The guidance urges agencies to use performance-based techniques on at least 20 percent by dollar value of their services contracts exceeding $25,000 in fiscal 2002. Contracts can be counted as performance-based even if only 80 percent of the funding complies with performance-based service contracting criteria. That means only four-fifths of the contract needs to be tied to performance standards or quality assurance plans. This kind of leeway makes a lot of sense, given the difficulties agencies encounter in forecasting outcomes for those portions of contracts addressing unanticipated needs or on-call services.

The memo directs agencies to post virtually all synopses and solicitation materials for acquisitions exceeding $25,000 on the General Services Administration's www.FedBizOpps.gov Web site. This effort marks a clear continuation of the previous administration's initiative to improve access and to bring government transactions in line with the private sector. The guidance also says agencies should conduct competitions for at least 5 percent of the full-time positions listed on their Federal Activities Inventory Reform Act inventories in fiscal 2002. Agency plans must include not only number of positions by function and location, but also, for the first time, costs for training and contractor assistance. This effort marks the first step in carrying out a presidential commitment to opening at least half of all federal positions on agency FAIR Act lists to competition.

While 5 percent seems small, this new approach is much more demanding. In the past, agencies may have identified certain government activities as commercial in nature, but in order to retain core competencies, declined to make them eligible for competition. These loopholes are not allowed under the Bush guidelines.

The new administration's approach to these management initiatives is incremental. "In each case, you need to start with the fundamental question, what do you want the outcome to be?" O'Keefe says.

The President's first-year management agenda has generated little fanfare, but O'Keefe expects agencies to develop their own ways of accomplishing the goals he has set out for them. O'Keefe expects agencies will spend the next few months "breathing life into the blueprint.

Also, the President's approach has a real element of practicality. With only a minimum number of senior management appointees in place, it makes sense to give agencies time to develop the agenda in order to have a solid foundation in place to meet next year's goals.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

The keys to better business

Allan V. Burman — Sun, 01 Apr 2001 00:00:00 -0500

The issue isn't so much one of bowing to industry's wishes as it is of giving federal organizations more flexibility in providing businesslike services. One way to gain this freedom is to become a performance-based organization (PBO). The Education Department's Office of Student Financial Assistance (SFA) was the first agency to be designated a PBO by Congress in October 1998. SFA's $50 billion mission is to provide some 8 million students with grants, loans and work-study opportunities to help them get through school.

As reinventing government teams reviewed agency operations, they encountered a number of organizations performing businesslike functions for public purposes. "While not suitable for privatization, these functions have the potential to be managed much more effectively," John Koskinen, then-deputy director for management at the Office of Management and Budget, told the House Government Reform Subcommittee on Government Management, Information and Technology in July 1997.

The reinvention wizards came up with a list of agencies that fit this definition. The list included Commerce's National Technical Information Service and Patent and Trademark Office, the Saint Lawrence Seaway Development Corp. and Housing and Urban Development's Federal Housing Administration, among others.

As might be expected, PBOs have challenged the way Washington does business. One such problem involves accountability. While the career civil service is the foundation of effective government, its freedom to act is proscribed by people who are ultimately linked to the President. For PBOs, the goal is to divorce their directors from politics and tie their success to business outcomes. The heads of PBOs even have different job titles than in other organizations-they're called chief operating officers-to distance them from typical bureaucratic relationships with appointees. Can these executives then set policy outside the boundaries dictated by the administration? The politically correct answer is, "Not a problem. We'll leave policy formulation and control with the head of the department; the COO just runs the business." But having once agonized as Office of Federal Procurement Policy administrator over creating a "bright-line test" to distinguish inherently governmental functions from other ones, I suspect that distinction is equally difficult to devise for PBOs. The other key element in establishing PBOs is coming up with effective measurement schemes for demonstrating progress and success. SFA has used measures such as customer satisfaction surveys, unit cost analyses and employee satisfaction data.

The agency uses the American Customer Satisfaction Index, a national survey. It's the same index used by many businesses including FedEx, banks and other financial institutions. SFA's most recent score was 72.9 on a scale of 100, some 4.2 points above the government average and only a point below the private financial services sector. Moreover, SFA has established a complete baseline of its business processes to facilitate even more accurate comparisons in the future.

SFA's unit costs reflect the overall funds for agency operations divided by the number of financial aid recipients. The costs dropped significantly from 1998 to 1999 and then rose again in 2000 with a sizable investment in new technology. The dollar values per recipient were $19.52, $18.72 and $19.08 respectively, for the three years.

Employee satisfaction data showed the percentages of workers reporting they were satisfied or very satisfied with their jobs rose from 61 percent in 1998 to 68 percent in 2000.

While these numbers don't show a huge leap in performance, they demonstrate progress in a short time. Moreover, in trying to improve technology and shift to an e-commerce, Web-based business approach, SFA hasn't had the luxury of being exempt from most of the government's procurement rules. Rather, the agency has taken advantage of the flexibility inherent in the existing system. For example, SFA was the first to develop an effective information technology procurement approach that relied on paying contractors only when they achieve results. In addition, the agency applies the same performance measures it uses to its business partners. In return, SFA cuts back significantly on contractors' reporting burdens.

Perhaps the message here is that agencies don't have to be official performance-based organizations to push the envelope of success. Focusing on the customer, an innovative business approach and effective leadership go a long way in making good things happen. As Greg Woods, SFA's chief operating officer, says, "It's all about attitude."

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>

Staying the course on acquisition change

Allan V. Burman — Thu, 01 Mar 2001 00:00:00 -0500

For the new administration, the key to acquisition change will be staying the course. ow that the new administration is largely in place, the big question is how President Bush will alter the direction of acquisition change. The path to reform over the last decade has encompassed a search for best business practices, streamlining opportunities, management solutions from contractors and government-industry partnerships. The picture is different from that of the 1980s when newspaper headlines screamed of outrageously priced hammers and crooked contractors stealing sensitive information. The response then was tighter constraints, reduced flexibility and greater oversight.

In the 1990s, however, the administration and Congress had a different agenda. Rather than ferreting out abuses, they looked for models to make government work better. Frequently those models hailed from the private sector. The 1993 Government Performance and Results Act, the 1994 Federal Acquisition Streamlining Act, the 1996 Clinger-Cohen Act and the 1998 Federal Activities Inventory Reform Act are just a handful of laws intended to tighten accountability while seeking better ways for agencies to acquire goods and services.

President Bush's acquisition agenda is likely to continue this trend. The core elements of his campaign-accepting accountability and getting results-are in line with this bipartisan legislation.

But the challenge of any administration is to take the "good government" issues that lack high drama and give them the time and attention they deserve. In a November 2000 Brookings Institution study, "rebuilding Europe after World War II" and "expanding the right to vote" topped the list of the federal government's 50 greatest achievements ("Government's Greatest Hits," Government Executive, January). "Improving government performance" sits at No. 41.

One reason federal performance efforts have gotten low ratings is the jumble of initiatives that come and go with different administrations. Gains are made incrementally by staying the course, says Paul C. Light, Brookings' director of governmental studies.

The President's management scenario does just that, focusing on three major elements: Making government more citizen-centered, results-oriented and market-based.

Citizen-Centered

The administration wants to flatten the federal hierarchy and emphsize front-line employees who deal with the public. Some 40,000 senior and middle management positions would be phased out over eight years. Senior government and private sector auditors reviewing the Bush reform agenda at a recent roundtable suggested cutting jobs strategically rather than across the board, in order to retain needed skills. They recommended giving agencies the tools needed to acquire and keep employees with those skills.

Another way to improve government services is to rely more on technology. This includes making it easier for citizens to find what they need on the World Wide Web.

The Bush administration has proposed naming a federal chief information officer, who would manage a $100 million budget to support interagency e-government initiatives. The CIO also would serve as deputy director for management at the Office of Management and Budget. The challenge is to find someone who could handle the dual roles. Perhaps creating a deputy federal CIO with a staff would help.

Results-Oriented Bush's agenda promotes clean audits for agencies and the effective use of the Results Act. According to the auditors, the real challenge is cleaning up legacy systems to make aggregate data reliable. Under the new administration's plan for using the Results Act, agency inspectors general would validate performance results and OMB would use them in the budget process. Unfortunately, the jury is still out on the Results Act. If agencies don't use it to manage, no degree of oversight is going to make it effective.

Performance-based contracting, first proposed in 1991, will be the focus of more attention under President Bush. But an information system that will document agency performance should be developed.

Finally, a bipartisan Sunset Review Board would test the value of programs and eliminate those that don't measure up.

Market-Based

Moving government procurement to the Internet and opening federal positions to competition with the private sector are key parts of the Bush administration's management strategy. Given past controversies over contracting out government services, making public-private competitions work will be the greatest challenge.

Many parts of the Bush reform agenda are linked to the reform legislation and policies of the 1990s. Continuing the pressure to achieve results and staying the course is vital in order to lift "improving government performance" from the bottom of the list of government's greatest achievements.

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Some Advice for good measure

Allan V. Burman — Thu, 01 Mar 2001 00:00:00 -0500

Advice for new political appointees: Use the Results Act as a management tool. slew of new political appointees are heading to Washington in hopes of accomplishing great things. In determining what levers are available to them to spur achievement, these newcomers-and even longtime career managers-aren't likely to be thinking much about the 1993 Government Performance and Results Act. That's a big mistake.

It's easy to see why their enthusiasm for the Results Act is underwhelming. In most of the rhetoric, performance measurement is presented as a way to hold agencies accountable. The mantra is, "We'll praise an agency when it does well and criticize it when it fails," but it's easy to see why senior leaders are skeptical. After all, one never hears: "You have done such a fantastic job that we're holding you accountable by giving you a promotion." By its nature, accountability is linked to punishment.

This negative perception has led many agencies to establish separate staffs-outside the senior management loop and day-to-day operations-to implement the Results Act, preparing reports that whiz back and forth between the agency and the Office of Management and Budget and Capitol Hill. By segregating these dealings into a staff that is expert in the arcana of strategic plans and performance plans but has no influence over agency leadership, agencies hope to proceed with their business undisturbed.

But new appointees and seasoned career executives need to understand the enormous upside of using results-oriented performance measures: It can help them achieve their agency goals. Last July, I argued in a Government Executive column that missing from much of Washington's discussion of performance measurement is the central point that measuring results can improve an organization's performance.

Performance measurement should not be seen as a thermometer, gauging a fixed phenomenon, but as a lever for change. When leaders use performance measures in managing their organizations, they improve results by motivating employees and communicating where they should concentrate their efforts and where they need improvement. Indeed, federal executives have fewer incentives to influence performance than their private sector counterparts because of restrictions on pay and promotions. So performance management may be the most important lever a federal executive has.

The Gift of Goals

In The Strategy-Focused Organization (Harvard Business School Press, 2000), Harvard Business School Professor Robert S. Kaplan and consultant David P. Norton emphasize for a predominantly business readership the crucial role of performance measurement in top management strategy. The book's key message is that performance measurement should exist for managers, not for a measurement staff. Developing an organization's strategy and measures, the authors argue, should go hand in hand.

Discussion about Results Act measures at the Veterans Benefits Administration, for example, led people to realize that the organization traditionally measured only internal operating efficiency, not customer satisfaction. Noting that an important part of the agency's mission was to serve veterans, agency managers established customer satisfaction measures. For the city of Charlotte, N.C., once leaders developed five strategic goals for the city, individual departments could develop performance measures advancing those goals. Measures also can link an organization's activities and real-world results. McDonald's, for example, measures the cleanliness of its stores on the theory that cleanliness produces sales, and the Transportation Department measures the condition of interstate highways on the theory that doing so reduces traffic deaths.

Promoting Performance Although measurement improves performance in a number of ways, Kaplan and Norton concentrate on its potential to align employees' behavior with the organization's overall strategy. Performance measures can send a signal about what senior executives believe should be an employee's priorities. Success increasingly depends on getting people on the front lines to come up with ideas that advance the organization's strategy. Performance measures don't tell people what to do, but tell them what goals are sought. The aim is "making strategy everyone's everyday job," Kaplan and Norton say.

Performance measures, Kaplan and Norton argue, must be communicated throughout the organization with the kind of marketing campaign used to launch a new product. "Would you simply put the new product on the shelf, hoping that (customers) notice it?" the authors ask. Most organizations just let their performance measures float out there, even though "the changes in behavior required for a workforce to execute a new strategy are far greater than the changes required to get consumers to try a new product," Kaplan and Norton say. Speeches, town meetings and agency intranets should all be used to create awareness of the organization's performance measures.

Making Up the Difference

In the public sector, establishing a list of strategic goals and measures can be more complicated than it is in the private sector. The involvement of actors outside the agency, most importantly of elected officials, and conflicts among potential agency goals sometimes hinder the process. But not every agency is a Forest Service, where some see the mission as wilderness protection while others see it as timber supply. For many agencies, there aren't conflicts over what goals to pursue. In addition, private sector performance often involves conflicting goals as well, the authors point out, such as productivity versus growth at Mobil Corp.

Despite these obstacles, political appointees worth their salt should have a list of big things they'd like to accomplish, and performance management is crucial to moving that list forward.

Kaplan and Norton's book, while it targets a predominantly business readership, applies the performance management framework to government and nonprofit organizations, using illustrations ranging from the city of Charlotte at the local level to the National Reconnaissance Office and the Energy Department's procurement shop in Washington. The book sends a message to its corporate readers that government organizations can be a source of lessons in good management for private sector ones-a real pat on the back for government executives. It is a valuable resource for new executives who've never had government experience or believe the many stereotypes about federal agencies.

Sure, performance measurement carries a risk that agencies' results will be used against them. But performance measurement exists. It's mandated by law. If executives don't use such measures to improve performance, they could land in the worst of both worlds: Measures would be there to hammer them and they would not have taken advantage of the measures to achieve improvements, which could have deflected criticism.

Advice to new appointees: Get the Results Act out of the back room and into the front office.

Steven Kelman, Weatherhead professor of Public Management at Harvard University's John F. Kennedy School of Government, was administrator of OMB's Office of Federal Procurement Policy from 1993 to 1997. ]]>

A-76: The Program Everyone Loves to Hate

Allan V. Burman — Thu, 01 Feb 2001 00:00:00 -0500

Contractors complain that the competitions used to determine who should do the work are rigged. Federal employees argue that savings projections are overstated and fail to account for quality.

The program has undergone several name changes over the years, from "contracting out," to "outsourcing" and now "competitive sourcing." Both "outsourcing" and "contracting out" imply a built-in bias toward shifting work to the private sector. But "competitive sourcing" suggests a more neutral outcome. The government doesn't care whether federal employees or contractors win, as long as it gets the best deal. The emphasis was on public-private competitions during the Reagan years, and then the program was revived under President Clinton. During his campaign, President Bush highlighted "opening government activities to competition" as a major element of his reform agenda. We can expect, therefore, an equivalent if not greater focus over the next four years.

The Defense Department continues to be the strongest proponent of "competitive sourcing." In a December 2000 study, the General Accounting Office reported that Defense had completed 286 A-76 public-private competitions between 1995 and June 2000. Of these, 138 involved cost comparisons between the public and private sectors and 148 resulted in some type of improvement in contractor or government performance. Of the 138 cost comparisons, the private sector won 40 percent. According to Defense, savings from all 286 studies totaled $290 million in fiscal 1999. GAO acknowledged in its report that there were savings. But it was unable to verify the precise amount, citing ambiguities in cost data.

Problems with determining credible savings data have plagued the program since its inception. The overall amount of savings is suspect, as is the validity of individual cost comparisons. These are critical elements in deciding whether a private sector firm or a government agency wins a competition.

The savings equation is muddied by such factors as:

Estimating only average salary costs rather than actual costs and applying these costs to authorized positions (as opposed to positions that are, in fact, filled).
Not accounting for or underestimating the costs of conducting the study when identifying savings. These costs can be as much as $9,000 per position studied.
Projecting savings resulting from reduced military positions when those positions are not eliminated, but transferred elsewhere.
Not fully covering such transition costs as separation pay for civilian employees who lose their jobs.
Reduced savings because studies are not completed on time and therefore the savings either don't show up or show up much later.

Complaints continue about the fairness of the cost comparison methodology OMB prescribes for deciding competition winners. Charles Cantus of the Professional Services Council, a trade association of the professional and technical services industry, has called the metholdology "fatally flawed," citing the "lack of full cost accounting" needed to understand the basis of selection decisions. Barry Holman, GAO's senior executive who oversees work involving A-76 issues, has participated in many of these reviews on behalf of GAO's Defense Management Issues office and is also concerned about the cost issue. "A major issue is faith in the process-with the private sector not seeing a level playing field with the cost data," he says.

Professor Lawrence L. Martin of Columbia University has studied public-private competitions and has worked with both public sector and private sector groups on this problem. His assessment: "I haven't spoken to anyone on either side who feels that the process is fair and equitable."

A new effort just getting under way will address all aspects of this issue. The 2001 Defense Authorization Act requires the comptroller general to convene a panel of experts to review the gamut of "contracting out" issues, from the adequacy of the A-76 process to the implementation of the 1998 Federal Activities Inventory Reform Act. The panel must include representatives from Defense, OMB, private industry and federal labor organizations. The comptroller general, who will chair the panel, must report to Congress by May 1, 2002, to present the results of the study and recommendations for improvements.

With the comptroller general's leadership and the right participation, this panel may well offer the best chance yet for reform. Bill Woods, project director for the GAO effort says, "We really want this panel to make a difference."

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

Getting the Biggest Bang for the Buck

Allan V. Burman — Mon, 01 Jan 2001 00:00:00 -0500

Gansler emphasized getting the right weaponry to meet 21st century defense needs, instead of focusing on the purchasing process. Those weapons weren't necessarily the planes, tanks and ships that formed the core buys of traditional defense budgets. After assessing the likely threat and working with the Joint Chiefs of Staff, Gansler looked to new technologies to forge a nontraditional beachhead in the procurement process. These technologies included remotely piloted vehicles, anti-missile systems, advanced communications systems and similar programs.

In this shift toward new technology, Gansler sought to shorten the systems development cycle with new acquisition techniques. In particular, he looked to create better ways to balance cost and performance. In the past, building major aircraft systems took 15 years or more. Nowadays, new commercial technology systems or upgrades frequently enter the market at 18-month or even shorter intervals. Historically, as weight and quality increased in aircraft development, costs soared and availability plummeted. In the commercial world, it's customary for quality to go up and costs to go down.

Defense's new evolutionary or so-called "spiral" development process emulates the private sector's strategy in reducing the time it takes to deploy a system. And cost is viewed as an independent variable in the equation. Rather than pushing for state-of-the-art performance, the approach bases system development on future availability of funds. Increments of capability are added over time to match the emerging threat to national security.

Under DoD's revised directives on major weapon and information systems acquisition, released on Oct. 26, systems can be fielded much more quickly by adding performance improvements later. In addition, tests to demonstrate computer compatibility are used to move systems more quickly from a design state into a useful military product. Finally, reliance on competition and commercially available technology keeps costs in check. The evolutionary approach has proved to save time and money for some programs. The Air Force's new remotely piloted vehicle program, for example, progressed from initiation to deployment in just five years. The Joint Strike Fighter program relies on a similar strategy. Competition helps to keep costs down, while performance is balanced against cost in the aircraft's design equation.

However, the approach runs counter to long held beliefs that state-of-the-art technology offers the best discriminator in wartime and that no costs should be spared to maintain that edge. As Gansler says, "people may not want to compromise on performance for earlier availability and proven technology."

Another potential weakness of the new strategy is that it anticipates development as a continuing process that needs to be funded and supported throughout the life of the program. Skeptics wonder whether those resources will be provided or whether tighter budgets will result in inferior systems fielded with no money for subsequent improvements. Only top-level support can ensure this strategy's survival in a culture that prizes peak performance and is skeptical about future budget largesse. It's a path that will require a clear commitment from both the Congress and the new administration.

Another acquisition initiative that will require support from Congress and the administration is loosening restrictions on transferring technology to our allies. To respond to future threats, Defense sees a much greater likelihood of working in a coalition environment, where interoperability among allies is critical. As a result, Defense has been working with the State Department and Congress to relax technology transfer processes. This would allow a freer exchange of high technology goods among coalition members. Not only warfighting but also business strategies fuel this new emphasis. The expanded market should produce not only common systems and support for wartime, but also lower costs as a result of increased competition.

The barrier, however, is a concern that inadequate controls might result in critical technology falling into the wrong hands. Again, only a concerted effort from the new administration can ensure the success of exchanging technology.

Gansler has a piece of advice for incoming political appointees. In spite of the Defense Department's hierarchical organizational structure, "you need to work at consensus building" to achieve such reforms, he says. "You can't get it done on your own in this building."

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Transition Tips on Boosting Reform

Allan V. Burman — Fri, 01 Dec 2000 00:00:00 -0500

Enhance the workforce.
Continue to simplify and streamline.
Promote e-commerce.

Enhancing the Workforce
The acquisition workforce is experiencing the same retirement and capacity problems common across government: bringing new employees on board quickly, keeping the right people and ensuring that effective training is available.

Acquisition managers face the problem of waiting six months or more to hire new staff members, according to Oscar. He has assembled a team to determine what policy changes are needed to allow agencies to fill these positions expeditiously.

In Oscar's view, one way to keep procurement specialists and make sure they have the right skills is to establish a growth path for acquisition professionals. This path would be similar to the one followed by lawyers or scientists, allowing them to rise in grade without links to the number of people they supervise. For years, OMB has followed a similar model for its budget staff members.

OMB has recognized that these senior employees' enhanced technical skills and experience are valuable to the office's mission. Oscar sees similar benefits for the acquisition mission as employees broaden their skills and acquire more competencies. The General Services Administration's Federal Acquisition Institute plans to identify a new set of competencies for acquisition employees. This list of competencies will help provide a framework for linking skills, performance and grade levels.

Oscar has also been working with the institute and the Defense Acquisition University to expand training across the government. He has encouraged the Defense university to open up its offerings to civilian employees. At the same time, he has encouraged the acquisition institute to create a governmentwide database that would provide more details on training courses, and he has urged agencies to join together to develop new courses.

In line with these efforts, Oscar is working with the Federal Acquisition Institute to develop a "knowledge management" Web site that will provide managers at any agency with templates for all kinds of contracts as well as training information.

Simplifying and Streamlining

A lot has been done to reform the acquisition process, including using charge cards and lifting the small purchase threshold, but Oscar says much more needs to be done. Two areas he is focusing on are automating the Federal Acquisition Regulation and streamlining the FAR's contract format. Ironically, acquisition reform has "streamlined" the FAR from 1,500 to 1,900 pages, Oscar says. Automating the document, he says, could be cut it in half just by reducing redundancy. "Did you know that there are five different definitions of the United States of America in the FAR?" Oscar says.

Oscar is exploring ways to make it easier for both contract and proposal writers to understand agencies' needs. "The current contract is too daunting," Oscar says. "We need to trim it and simplify it." Drawing on an earlier Army-Air Force effort, Oscar suggests a reengineered format that would condense the FAR's uniform contract of 13 sections into only six, all written in plain English.

Promoting E-Commerce
On the e-commerce front, Oscar points to FedBizOpps.Gov as the place anyone can go to determine agency procurement needs. While only 20 agencies are linked to the site, he expects that all will be online by the end of the year. Pulling together each agency's offerings and presenting them at one site is a tremendous accomplishment that should make it much easier for any firm to identify agency needs and respond to them.

Oscar is working on ways to bring information on grants, asset disposal and real property to the Internet using the FirstGov.Gov site. The goal is to create a keyword approach so that a person looking for information doesn't have to specify a Web site. The searcher would just need to know a subject area, rather than which agency funds it.

A Web-enabled federal procurement data system, where information will ultimately flow directly from electronic contract files, offers tremendous benefits for anyone wanting to see how the acquisition process is working and where federal funds are going. Currently, data are transcribed by hand and, therefore, the information provided has been suspect. This approach would avoid the transcription errors that have continued to plague the system.

Acquisition reform is a critical issue for managers to address in their transition papers. It's hard to believe any administration wouldn't want to pursue goals that would hone the skills of acquisition professionals and simplify the procurement process.

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington. Contact him at aburman@govexec.com. ]]>