GovernmentExecutive.com

Civilian agencies should increase their acquisition workforce by at least 5 percent by 2014, according to a memo the Office of Management and Budget released on Tuesday. In a second memo, OMB sought to limit the use of noncompetitive and higher-risk types of contracts.

"These steps are essential to achieving the president's goal of $40 billion in annual savings through contracting reform," said OMB Director Peter R. Orszag. "Without action, we will see more contracts that are over budget, delayed or otherwise failing to live up to performance objectives."

The strategic workforce memo noted the size and capability of the government's acquisition staff has not kept up with a steep increase in procurement spending. OMB calls for a 5 percent uptick in civilian agencies' acquisition workforce "except in unusual circumstances where analysis shows it not to be required."

According to the Federal Acquisition Institute's 2008 annual report, nearly 10,000 contracting specialists and tens of thousands in acquisition-related fields, such as program and project managers and contracting officer technical representatives, awarded $138 billion in contracts at civilian agencies in fiscal 2008.

And while the rate of spending at civilian agencies has increased 56 percent since 2000 -- based on inflation-adjusted dollars -- the size of the acquisition workforce has grown at a much slower rate, OMB's memo said.

"This lack of capacity requires the workforce to make trade-offs during the acquisition life cycle that may reduce the chance of successful acquisition outcomes," wrote Lesley Field, deputy administrator at OMB's Office of Federal Procurement Policy. "For example, with little time to plan, requirements may be less defined, which promotes the use of cost-type contracts."

Facing a lack of personnel, some agencies have resorted to outsourcing many of the acquisition workforce's traditional duties, further diminishing the government's core procurement capabilities, Field said. If left unaddressed, she said, the problem will only get worse. Slightly more than half the acquisition workforce will be eligible to retire by fiscal 2018.

"We need more well-trained, well-qualified professionals in the federal agencies for effective planning, oversight and contract management," said OMB Deputy Director for Management Jeffrey Zients.

The memo suggests agencies can build core strength through expanded use of intern programs and other training and development initiatives. In addition, each civilian agency covered by the 1990 Chief Financial Officers Act will be expected to develop an annual acquisition human capital plan, identifying specific strategies and goals for increasing the size and skill of the workforce by the end of 2014.

"Agencies will develop their target acquisition workforce profile and compare this to their current workforce profile to determine gaps in capacity and capability," Field said. "In doing so, agencies shall establish recruitment goals, retention targets and certification goals. The plan shall also address training and development needs and other operational goals such as starting an intern program, increasing the number of reemployed annuitants, gaining experience with direct hire authority and expanding rotational assignments."

Agencies' inaugural acquisition human capital plans must be submitted to OFPP by March 31, 2010. By fiscal 2011, each plan should reflect specific hiring and training needs and serve as a component of the agency's budget preparation beginning with the fiscal 2012 budget cycle, the memo said.

A second set of guidelines OMB released on Tuesday provide agencies with a blueprint for reducing their dependence on noncompetitive, cost-reimbursement, time-and-materials, and labor-hour contracts. In July, OMB directed agencies to reduce their use of such "high-risk" acquisitions by 10 percent.

Beginning in fiscal 2010, OFPP will review agencies' progress in achieving the targets on a semiannual basis and require corrective action plans if necessary. The office will set new targets for fiscal 2011 and subsequent years.

"In most cases, fixed-price contracts will be best suited for achieving this goal because they provide the contractor with the greatest incentive for efficient and economical performance," Field wrote. "In circumstances where there is considerable uncertainty regarding the requirements, however, cost-reimbursement contracts or, in more limited circumstances, time-and-materials or labor-hour contracts may provide for a more effective allocation of risk between the government and the contractor."

Agencies that use cost-plus, time-and-materials, or labor-hour contracts must increase their management and oversight and link contractor payments to performance, Field said. Noncompetitive contracts should be shorter term and regularly assessed to ensure contractor performance, the memo said.

The guidance also urges agencies to focus on developing more precise statements of work, to increase their use of strategic sourcing and performance-based acquisitions, maximize competition on task and delivery orders, and use incentive-based contracts to lower costs.

In March, President Obama directed OMB to work with agencies to reform multiple areas of procurement, including competition, the appropriate use of contract types, outsourcing and the acquisition workforce.

In July, OMB released an initial round of guidance that specified ways to improve acquisition processes, make better use of information related to contractors' past performance, and balance the blended contractor and federal workforce.

Agencies are expected to save 7 percent of their baseline contract spending by fiscal 2011. Altogether, OMB expects these reforms to save $40 billion annually.

The Senate's contracting oversight subcommittee scheduled a hearing for Wednesday to review the administration's strategy for reforming government contracting. Zients is expected to testify.

CORRECTION: The original story misidentified the time span in which the rate of spending at civilian agencies has grown. The rate of spending increased 56 percent since 2000.