Making Reform Stick

Now that the deluge of new laws and revamped rules has slowed to a trickle, comes the arduous work of pushing procurement reform out into far-flung contracting offices. That job falls to Deidre Lee, head of the Office of Federal Procurement Policy at the Office of Management and Budget. Recently Lee, who was NASA's procurement chief and served in a variety of acquisition posts at the Defense Department before taking the helm at OFPP, talked with Government Executive Associate Editor Anne Laurent. Excerpts of their conversation follow.

Q. You have said that acquisition reform has raised agency expectations about what procurement people can do, without providing them the training, information, culture or clout to fulfill those expectations. What are the new expectations and the new role for procurement and contracting people?

A. What we're saying to contracts people is that you no longer can just wait and say: "Tell me when you need something." You've got to understand the agency's mission, understand your agency's plan, read the budget, know what your agency's going to do. Then from that, work with your technical community and say, "OK, it looks like we're going to need X in the next year." You've got to be involved up front in planning so that you're involved in the business strategy. Otherwise, you only end up solving part of the problem and you have a less than ideal business relationship. Under the old structure, a lot of people thought their value was in issuing contracts and they'd get a little bit concerned when a contract didn't have their agency's name at the top. That's not our mission. Our mission is to get the result and the result is not a contract written, it is a service or product delivered. We've got to move people along this continuum so that not only are they involved earlier, but they're willing and able and free to use multiple types of contracts, not just the traditional methods.

Q.One of the most popular new forms of contracts is the governmentwide acquisition contract (GWAC) in which an agency negotiates a deal with a number of vendors for a set of products, and often services, and then lets other agencies use the contract for a fee. In January, you warned operators of these contracts not to identify "preferred sources," but to give all the vendors a fair opportunity to compete. Are you doing anything further to enforce fair opportunity?

A. We've been talking with the agencies from the old Mayflower Compact [a group of officials from the largest GWACs first convened in 1997 to agree on operating rules for the contracts]. We're trying to deal with the multiple-award contract, GWAC issues in that forum. We're learning as we go along. The agencies that used [preferred sourcing] really meant it to be a positive tool. They were trying to say, "We want to give you as much information as possible and we're saying this is the preferred source." They thought that was good information so competitors could say, "Do we have similar capabilities to this firm, does that mean we're a real competitor?"

When we peeled the onion, back we found people meant well, but in reality we found that when the "preferred source" designation was used, the majority of times only one proposal was received. So we were sending a very different message, or it was being read very differently than it had been intended. Having learned that, it was time to fix it, so we fixed it. I think we will continue to learn things as we deal with multiple-award contracts.

Q. OFPP has begun a two-year evaluation of GWACs. What are you studying?

A. First, we're looking at the decision-making process that leads someone to [choose] one contract vehicle or another, whether it's a GWAC, a multiple-agency contract, or the Federal Supply Service schedules. That is going to tell us something about communications, about education, about the knowledge of our workforce-the contracting and technical community and the user. How did they find their way to a vehicle? Is it through a good government education program? Is it through the Internet? Is it through conferences? Is it through vendor marketing? What we find is going to tell us something about our products, our services and our people.

The second piece is the responsibilities of the GWAC-issuing agency and the ordering agency. In the old world of procurement, you knew that if you issued the contract, then you were responsible for its administration. In this new world, you really have two separate entities. You may have someone at an agency that has issued a GWAC and another agency ordering against it. Who's responsible for what? Who establishes the ordering procedures? Do you just establish your procedures and put them out there and say, "Come one, come all"? Or do you say, "You need to be a good citizen and follow my ordering procedures"?

My example is the Transportation Department's Information Technology Omnibus Procurement (ITOP). They told me they believe there is such a thing as bad revenue. They said, "We feel that as an issuing agency, we have some responsibility to the people we guide, coach, work with-the people that use our contract. We will not just do anything. We feel the value, the integrity and the importance of our vehicle includes saying to some people, 'That's not appropriate, don't use this vehicle for that.' "

Shortsightedness on that responsibility could be problematic for the whole system, and we want everybody to feel that way about their multiple-agency contract or their GWAC or their schedule contracts. Right now, there is some uncertainty in the system about what is that responsibility for the issuer vs. the orderer.

Q.What sort of oversight is appropriate in the GWAC and multiple-award contract arena?

A. We have some responsibility to make sure these tools are still based upon some basic, fundamental principles of government procurement: fairness, openness, equity and competition. Even though we've provided more flexible tools, they still need to comport with those fundamental principles. To do that we have to ensure we have some accountability in the system and responsibility. Right now we're letting people spread their wings and carefully monitoring progress and making corrections as we need to, i.e. "Don't use preferred sources." As we go further into these multiple-award contracts and GWACS, we're going to find out more about what works and what doesn't.

We're going to continue to implement and adjust as we need to. I want to be able say to people, "This works very well; try this." If we find some vehicle has developed an excellent, streamlined way to submit a proposal, maybe we ought to integrate it into all the other multiple-award contracts or even bring it over to the more traditional procurement system.

Q.With a set of ordering innovations, including blanket purchase agreements, GSA's federal supply schedules have become a powerful contracting competitor. Some critics suggest that FSS isn't exercising enough oversight of the schedules, particularly those for information technology services. Are you concerned about the wild and woolly competition among contracts, especially in the IT services market?

A. I am concerned, so much so that we have met with GSA on a couple of occasions. FSS is participating in the Mayflower Compact gatherings so we can all understand how these vehicles work. But I'm more concerned about the users of the schedules. GSA has put in place some very clear ordering procedures. They include that, fundamentally, a supply schedule purchase is not supposed be just quick and dirty, I-don't-have-to-think-about-it-I-just-place-an-order.

Do your planning. Know what you need to do. Know what result you need. Put in a performance-based type of activity, and then ask yourself what is the appropriate vehicle to use. If, after that, you determine the appropriate vehicle is the FSS schedule, then by all means use it. Using the schedules does not obviate the need for just plain good business judgment. What I am concerned about is that we might have some people, who, in the haste of getting a project started, will start going back and ordering services by the hour or ordering in a level-of-effort method, instead of really thinking through their procurement. That is not the purpose, nor is it the intent of GSA in setting up the schedules. GSA is willing to go to any agency upon request and teach people about using the schedules and including an emphasis on these areas.

Q.The Air Force was criticized earlier this year for using a private sector past-performance survey to help determine which firms to invite to bid on several large blanket purchase agreements. You backed the Air Force, but it still ended up changing its procedures. What message should other agencies take from this episode?

A. When people try something bold and innovative and they get a good price and a good deal, I support them trying that. Now, we might learn something from that and do it a little bit differently the next time, or they might highlight an issue that's unresolved and that we need to address. That is what happened in this case. What was highlighted was the intersection between the past-performance initiative and the use of schedules for issuing BPAs. But the folks got a great price for the products they needed in a very timely fashion. I applaud that and support that wholeheartedly.

In the meantime, we're going to continue to learn from these issues. What we learned is that in using past performance, our evaluation criteria, our equity standard, is that vendors will have an opportunity to comment on their past performance ratings, that the past performance data will be relevant. The survey that was used did not necessarily support all those fundamental principles. The solution is that you do excellent market research and that you have some [BPA vendor] selection criteria and you use them wisely.

Q.There appears to be some confusion among purchasers about the role price should pay in selecting the overall best-value provider of goods or services. What's your view?

A. I would go at it as price as part of best value. I don't think you can clearly segregate best value as technical competencies. You have to weigh those together. Depending on what you're buying, it's a greater or smaller part. If you are buying a common product at the grocery store, price may be the significant determinant. If you're buying medical care, price may not be as great a determinant. If you totally disregard price, how can you say that's the best value? The whole point of best value is the logical combination of the best technical solution and the best price in the appropriate measure for the product or service being purchased.

Q.The General Services Administration is pushing hard to get agencies interested in doing "share-in-savings" contracting. How does share in savings fit with acquisition reform and will you support agencies that try it?

A. I think shared-savings contracting fits perfectly into the scenario we've been talking about. There are going to be some issues to deal with, such as funding. We're going to have to figure out how to handle multiple-year commitments, how to structure the business relationships, what are the exit strategies if for some reason the contracts don't work or funding doesn't become available. That's all part of thinking through the business solution. I'm here to say, "Let's work it out."

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