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Wednesday, November 20, 2013

Contract administration is equally important as contract acquisition

The following article was written by Danielle M. Conway. Guam readers will hopefully remember her presentations to us in 2012, where she also emphasized the importance of contract administration.

The Importance of Strong Government Oversight
I wonder if President Obama and Governor Abercrombie would like to push a “do over” button on the roll out of the Affordable Healthcare Act website,, and the Hawaii Health Connector project. More importantly, I would like to know how each of them plan to address and correct the glaring lack of oversight that is apparent throughout the administration phases of these contracts.

Any qualified procurement professional will tell you, the administration phase of a public procurement is equally as important as the solicitation phase. The administration phase of a public contract is critical to success of the project. It is during the contract administration phase that the government contract managers assess whether the contractor’s performance meets the government’s strategic objectives as expressed in the contract’s “Statement of Work.” If the contractor is not meeting the Statement of Work requirements, the government contract manager has the oversight authority to demand corrective action that will ensure the contractor meets its obligations.

The contract’s Statement of Work is the government manager’s key tool to evaluate contractor performance and ensure the contractor’s work accomplishes the purposes of the contract. The Statement of Work is a clear, comprehensive, and concise statement of the contractor’s obligations. It also delineates the performance measurements and milestones the contractor must meet to ensure full and timely completion of the contract Statement of Work.

Even small government failures in overseeing the contractor’s compliance with the Statement of Work can cause big problems. Inadequate oversight and enforcement of the contract Statement of Work will lead inevitably to the kinds of failures we are seeing now in the development and operation of the websites intended to achieve the Affordable Care Act policy goals and objectives.

To ensure successful performance of every public contract, the government must do two things:

• First, the government must ensure its contract managers are fully trained and fundamentally competent in the “Best Practices” of public contracting.

• Next, the government must demand real accountability on all parties to the contract, including its own technical staff and contract managers.

The government’s commitment to competence and accountability must apply to all procurement steps from the drafting of the Statement of Work, the inspection and evaluation of contractor performance, and the final acceptance of the contractor product or service.

If the government does not ensure its contract managers are trained and competent or if the government does not ensure accountability, the risk of failure is high. Worse yet, there will be no meaningful way to determine who is at fault for the failure.

The result is often a dramatic waste of public funds and long delays in obtaining what the public needs. In the context of the Affordable Healthcare Act website and the Hawaii Health Connector website, we are all a bit to blame because we have not insisted on real accountability, transparency, and competency of those to whom we entrust with the public procurement function.

The best way to avoid the failures we have seen in these procurements is to determine whether our state procurement procedures are based on common sense business considerations and whether they conform to “Best Practices” in public contracting. From this perspective, is an example of political objectives eclipsing procurement best practices by attempting to obtain a deliverable according to a political timeline as opposed to establishing a more realistic timeline for delivery of a properly functioning, well integrated and fully tested system.

Further, the initial indications are that the government relied upon unqualified or uninformed managers to exercise necessary contractor oversight. This failure to ensure qualified officials enforced a clear Statement of Work is emblematic of the problems that will occur when contracting officials are unfamiliar with public procurement best practices.

The Hawaii Health Connector website seems riddled with similar problems. Part of Hawaii’s procurement difficulties stem from the government’s almost immediate reaction to exempt certain agencies, such as the Hawaii Health Connector, from the state’s procurement code laws and rules.

Many state officials rely on arguments that “streamlining” is necessary for the special procurement they must oversee. To achieve the necessary “streamlining,” these officials seek (and often obtain) exemption from the procurement code’s statutory and regulatory scheme of “Best Practices.” These public officials seem to overlook the fact that Hawaii’s procurement code is built upon more than 100 years of contracting experience and offers the very streamlining needed for successful completion of complex government requirements.

Our state and local public contracting shortcomings have nothing to do with the need to “streamline” existing procurement procedures. Our shortcoming is in failing to ensure competency of our contracting professionals and their inability to ensure accountability in contract performance. We can correct these failures by ensuring (1) comprehensive training and education of government contracting personnel about procurement “Best Practices”, and (2) by making a concerted effort to create a professional corps of contract managers who know how to hold the contractor accountable for successful performance of the contract Statement of Work.
Hattip to the Hawaii Procurement Institute for alerting me to the article.

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