3 Ways to Make Government a Smarter Shopper
Focusing on the low bid can ultimately be more costly for agencies.
It is time to rethink federal acquisition, particularly as we move into a new era of governing—one that is focused on delivering public service for the future. There is a groundswell of energy around making procurement a more efficient and outcomes-driven process.
Forward-looking agencies are not simply improving the acquisitions function, they are strategically aligning acquisitions with the organizational strategy, creating holistic business units focused on a highly engaged workforce, total cost of ownership and predictable outcomes.
Taking three major steps can help agencies fundamentally transform federal acquisition:
1. Align acquisition with outcomes
Agencies that demonstrate high performance in acquisitions are those that are able to mobilize the acquisition process to achieve business goals. They understand and document the outcomes they want to attain and prioritize their buying criteria to meet those targets. Less concerned with “lowest price/technically acceptable,” which can ultimately be more costly, they align their acquisition targets with bottom-line goals.
Simply realizing cost savings is not the desired outcome if agencies are not achieving real value. Lowest price, technically acceptable contracting, for example, can sometimes skew cost-to-value ratios. A survey conducted by Deltek/Centurion Research Solutions found that a majority of contractors—79 percent—said they do not even respond to LPTA bids because they do not afford the opportunity to offer value-added solutions. Additionally, a majority of federal employees—71 percent—said LPTA contracts can lead to hiring companies that have fewer qualifications.
2. Improve procurement workforce retention and education
To drive acquisition excellence, both defense and civilian agencies need to provide clearly defined career paths that can promote longevity and professional development opportunities. It is critical to provide opportunities to develop deep functional expertise, but also flexibility to work cross-functionally, to impact acquisition process decisions. Ronald Fox, former assistant secretary of the Army who was responsible for procurement and contracting, said at a congressional hearing: “As long as defense acquisition is largely in the hands of managers for whom it is merely one step in a career path directed elsewhere, we will continue to see the same quality, cost and scheduling problems.”
There are steps government organizations can take to remediate attrition and encourage greater teamwork and commitment, such as providing acquisition managers with broad exposure to the entire organization. The Transportation Security Administration, for example, appointed its head of acquisitions to acting chief of human resources, providing valuable hands-on insight into how that function operates as well as its procurement needs.
Another resource to improve procurement workforce retention and education is knowledge management. Prevalent among many high-performing agencies, knowledge management fosters leadership competency, continuity, organization-wide sharing of skills and an environment of continuous learning. Implementing tools such as MAX.gov, the Office of Management and Budget’s cloud-based collaboration site, groups such as the MAX Federal Community of Knowledge Management Professionals can help reduce ramp-up time for employees who are new to particular roles as well as those who need more knowledge in a specific area.
3. Build a better business case for total cost of ownership
“Strategic acquisition” means focusing on all costs, not just functional costs, on a project-by-project or one-off basis. Smart agency leaders are instituting checks and balances to hold people accountable for total cost of ownership. They also educate their procurement professionals about the range of options available so they can make more informed decisions.
Accenture research indicates that when agencies optimize their acquisition processes to strengthen their purchasing power, they can achieve savings of 10 percent to 20 percent. Pennsylvania saved millions using a strategic sourcing program that centered on TCO. Without cutting programs or sacrificing level of service, the state saved more than $140 million—21 percent of its annual $700 million spend—on items ranging from office and cleaning supplies and tires to information technology services.
Although it is by no means an easy feat, with the right focus, agencies across the federal sector can save costs, strengthen their workforce, improve productivity, increase government efficiency and develop a rigorous focus on outcomes. Forward-thinking acquisition leaders understand there is a wide and varying degree of results and risks that must be considered.
Ron Ash is managing director of management consulting at Accenture Federal Services.