Steve Goodrich is the CEO of the Center for Organizational Excellence, Inc. and the Chairman of the Association of Management Consulting Firms. He can be reached at sgoodrich@center4oe.com.
As the largest buyer of goods and services in the world, our government has a rigorous procurement process in place to protect the American taxpayer, designed to facilitate helping Uncle Sam buy what he needs to perform his myriad missions efficiently, effectively, and economically. Unfortunately, the federal government fails to spend taxpayer money wisely with such frequency that newspapers and television reports are rife with examples of overspending, failed projects and bloated contracts.
Procurement goes through reforms every few decades, but the current environment could not be worse. From the Brooks Act in 1972 to the Service Acquisition Reform Act in 2003, much has been done to address the "mechanics of procurement," but little has been done to address the human aspect of procurement, either on the government or the contractor sides. From a $10 stapler to a $1.2 billion failed technology system, our government tries to legislate fixes, but it is hard to legislate human nature.
There are things that can be done without formal change; leaders need to lead, managers must manage, and the workforce must exhibit good judgment, be honest and realistic, achieve value, and learn to manage risk. Procurement personnel need to be well trained, their workload must be better managed, and they need to possess strong problem-solving skills. Contractors need to help the federal government with its procurement issues, provide the right solutions, and be realistic about what it can do.
The complexity of contracts has increased while the capacity of the procurement workforce has remained flat or gone down. Under such a tight budget environment, risk aversion has grown significantly, causing the government to make penny wise and pound foolish decisions, and contractors to "play the game" too much to win contracts in an increasingly difficult environment.
Over the past eight to ten years, the procurement workforce has shrunk by approximately 20 percent and the number of contract actions has dramatically increased. Today's procurement workforce is less trained. Agencies fear not being "fair and equitable" and being cheated by contractors. Contractors fear losing opportunities for reasons other than the fact that they are not the best provider of the product or service, and believe our government does not always act in its own best interests.
Consider this: we recently witnessed a group spend several meetings and countless hours discussing NAIC codes because the government assigned the wrong ones and were unwilling to address it, which could dramatically limit completion. We've seen countless hours wasted trying to interpret requirements that are weak or convoluted. Frankly, these and many other time consuming activities add no value to the service or product being provided to the federal government. They just serve to create ineffective workarounds, increase costs, or provide the government with something that will not work.
But Uncle Sam doesn't have to wait for Congress to pass a piece of legislation or for the General Services Administration to issue rule changes to begin making the procurement process much more effective. Here are six practical things our federal government can do now to make the federal acquisition process better immediately:
1.Improve Requirements. We see poorly defined requirements as one of the biggest challenges in procurement. Our government has a propensity for being very prescriptive, yet often provides poorly conceived requirements. Sometimes it is appropriate to be practically prescriptive (when things are easy to define, such as purchasing a common commodity). However, many other times the government should be asking for a proposed solution, not prescribing methodology. This desire to be prescriptive gets the government in trouble because it really does not know what the best approach or solution is, and the requirements are often lacking or convoluted. More often now we see SOW's that are cut-and-pasted from other documents without revision that include unrelated requirements. We also see SOW's with multiple authors that have not been cross-checked or edited, resulting in conflicting requirements. Let's not end up with a great car without wheels! Don't be afraid to bring in outside experts to help build requirements and evaluate proposals if necessary.
2.LPTA vs Best Value – Use Your Head. Given the budget crunch, there is currently a huge focus on LPTA. While this approach has its place, the government should not arbitrarily choose the lowest bidder on everything. Determine what you are getting and select a contractor who you believe will provide the best value to the government. Be realistic. The lowest bidder may not be the right choice to pack your parachute! Take note of what they have excluded, not just included. Contractors bid low so they can win; it's now a big part of the game. It often results in a solution that does not work, or assignment of personnel that are well meaning but too inexperienced to accomplish what is necessary. Often, low bidding is the strategy for award and then contractors "change order" their way up to a higher price. Why waste time and add risk? Do it right the first time. Select the best value to the government over the project lifecycle, include return on investment (ROI) and return on expectations (ROE) as management tools.
3.Demand Contracting Offices Work with Program Offices. Over the past several years, we have seen a strong propensity for government contracting offices to "go independent" and try to take charge of a given procurement when it should be a partnership with their program office. Program offices understand need and are often the better judge; contracting officers or specialists lack subject matter expertise. For example, we witnessed a contracting officer negotiate a contractor down by removing critical "big brain" positions from a bid without conferring with the program office. The contracting officer felt they were successful in the negotiations; the program office was livid. The contractor was willing to accommodate knowing they would have to change later. This is like having a car with an engine and a transmission, but they are not connected correctly! A one-year contract ended up taking three years and the cost had doubled.
4.Make Decisions. Procurement decisions are taking significantly more time than ever before. "Sliding to the Right" is a commonly used phrase these days. More are even being cancelled after proposals are submitted. Contractors spend countless hours and thousands of dollars bidding, often working late nights, holidays and weekends. Contractors often spend anywhere from 20-35 percent of a contract's value on business development, capture, and proposal development compared to the private sector, which typically spends three to eight percent. Make decisions quicker and be respectful; it takes a lot of money and effort to respond to your RFP's.
5.Understand What You Bought. We have seen many situations where the government is asking for more, or for something different from what it actually bought. Be aware of what you bought and what you didn't. Did you buy 10 training programs and now are asking for 15? Did you buy the car with no tires and are now demanding wheels? Contractors are not responsible because you asked for a scooter and promised your boss a limousine. But they should be responsible to tell you if you prescribed a methodology or provided specifications that would not result in the intended outcome. Generally, contractors want to help, but the government has become so rigid and prices have been pushed so low that now there is no longer any room for accommodation. Be flexible. If you need more, pay for more. Contractors, be honest. Government, listen.
6.Talk to Industry. Create environments where you can truly receive good market data and understand solutions and alternatives. Industry days or pre-proposal conferences with talking heads do not get you there. RFI's are helpful, but you may not be able to separate the wheat from the chaff. Complex systems or problems may require well managed, complex solutions. Design more interaction into your meetings with contractors. Seek demonstrations or a more agile approach. Review alternative solutions with rigor against strong requirements. When contractors submit formal questions, read them carefully, answer them robustly, but also read into them. There may be a message in there about the quality of your RFP or requirements. They may be telling you your car will not have wheels.
You don't need legislation for these fixes, just expert people and common sense. If not, your fears may come true.
