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Friday, October 4, 2013

The (procurement) problem with services

Without vouching for the accuracy of the data, there is a provocative view of the amount of money spent on goods vs services in the US government in the recent fiscal year, compared to the numbers of contracts awarded to spend the money. It is posted on/at The Federal Government Spent Hundreds of Billions on Contractors in 2013 [INFOGRAPHICS].

I'll take that at face value for this post.

With 3 out of every 4 awards being made going to goods, we are only spending 1 out of every 3 dollars on goods. Conversely, 1 out of 4 awards spent on services consumes 2 out of 3 dollars spent. This is consistent with the trend of recent decades, from a "things" requisitioning system to a "people" hiring system. During this time, we have found that the more objectively simple means of acquiring things just does not work as well as the subjectively complicated means to hire people skills. And the means of hiring people skills through the procurement system is made all the more competitively adversarial by the big money at stake in people skill contracts.

In the early days of US government contracting, the US made a lot of the things it needed, and did so quite effectively. Indeed, the phrase "good enough for government work" was coined in that time to refer to the gold standard of the product. But investment in manufacture of things, as the private sector knows too well, is fickle, and a government, lumbered with political influence, is not limber enough to move with times and new needs and ways and means of meeting those needs. So, the government gradually moved to outsourcing the manufacture of (most) things.

The same would not be true of hiring people skills if the civil service system, which creates jobs for life, were more facile. Bringing people skills inside would avoid a lot of the procurement headaches associated with the acquisition of services.

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