Putting Contracting at the Core

Anyone who follows trends in government management knows that contracting is becoming an increasingly important way government gets its work done. A number of agencies, such as Defense, Energy and NASA, spend a majority, in some cases an overwhelming majority, of their budgets on contracted products and services-for NASA, 78 percent, and for Energy, 94 percent. Most agencies contract for development of information technology applications that are crucial to running their organizations, as well as for other central activities such as scientific research. For such functions, agency success is dependent on contracting success. Thus, contracting management must be considered a core competency of federal organizations. This is different from the traditional view of contracting as a subsidiary administrative function. In the 21st century, contracting management needs to become one of the central concerns of senior political and career executives. When government contracts for anything from technology to training, it need not know how to produce the products or services in question. But it needs to be able to do three things well:
  • Develop a business strategy, specifying requirements for what will be bought, and choosing an appropriate contract and incentives.
  • Select the right suppliers.
  • Administer the contract once signed.
Together these activities constitute what can be called "contracting management." The procurement reforms of the last decade have helped government do a better job on the first two functions above, which involve activities up to the time the contract is signed. But contract administration-what happens after the contract is signed-has been the stepchild of the reform effort. And as a general matter, except for some programs and for extensive audits of contractor bills, contract administration doesn't receive the emphasis it deserves. Technical or program contract overseers are often journeyman-level "doers," or at most first-line supervisors, sometimes doing contract administration along with their normal responsibilities. Many would rather be doing what they see as "real work" rather than overseeing the work of others. Many of the tasks these people do involve low-level paperwork-reviewing contractor employee time sheets, or creating meeting and phone call documentation. To feel-and show-that they are doing something, they often seek to micromanage details of how the contractor does the work, interventions that often are unhelpful. If contracting management is to become a core competency, the first thing to realize is that it is mainly about management. A leadership job in contract administration is not a consolation prize for people who would rather be "doing;" it is a wholly different set of responsibilities. These include strategy and goal-setting; inspiring those doing the work, including contractors, with enthusiasm and public purpose; performance management; managing horizontal interfaces between the contractor and users of the contractor's services; and managing vertical interfaces with higher levels of the organization and with the external environment. The responsibilities of a contract administration leader are analogous to those of a senior executive, not a first-line supervisor or middle manager. Agencies need to do three things to make contract administration a core competency. First, contract administration leadership jobs should be positioned as management jobs with exciting challenges and stimulation similar to that of senior executive positions. Agencies should try to attract outstanding people with program or technical backgrounds to these jobs. Training should be in management skills. Second, to allow contract administration leaders to focus on management, lower-level tasks should be split from more complex, and engaging, executive-type functions. Agencies should examine their internal paperwork requirements, just as many have looked at their requirements for contractor-generated reports, to see what might usefully be streamlined or eliminated. Acceptable progress toward meeting performance goals should trigger reduced contractor reporting requirements. Organizations should assign minute-taking and generation of meeting-related paperwork to junior people. Documentation that doesn't need to go to higher organization levels should be dictated and transcribed only if needed. Third, contract administration leaders must be given responsibility for performance measurement and management of contractors. This is a key management responsibility in all organizations, but it is often difficult in a public-sector context (whether for in-house or contracted work), because financial performance measures common in the private sector don't suffice and sometimes don't even apply. Although businesses have begun to grapple with the special challenges of developing nonfinancial performance measures, advancing the art and science of such measurement is especially important for government. The Defense Department should take the initiative in developing the discipline of nonfinancial performance measurement, just as it took the lead in the 1960s in establishing the discipline of project management for weapons systems. It is not utopian to think that contracting management leadership jobs, properly positioned with the help of the three changes suggested above, can be attractive ones. In many technical fields that place a high value on "doing," such as engineering, a number of research studies have shown that it is the overwhelming rule, not the exception, that people aspire to leave technical work for managing. Contract administration leadership jobs should be sold to senior journeymen or first-line supervisors as an opportunity to taste responsibilities normally held by people at much more senior levels, and to entry-level people as an aspiration for those on a fast track. One kind of civil servant might complain about being required to undertake executive responsibilities at modest seniority levels. Another kind of civil servant-the kind the government must try to recruit-will welcome the opportunity. These positions may be especially appealing to young people seeking quick opportunities to grow and to exercise significant responsibility. The last decade's procurement reforms have jump-started efforts to make contracting management a core competency. But much remains to be done. Senior folks must shepherd the effort. Contracting isn't just for weenies anymore.
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