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Wednesday, December 17, 2014

The always optimistic efforts to improve US DOD procurement

This post links to recent articles down below on yet another discussion to improve US defense procurement. The comments are surely interesting, maybe helpful. 

But, to put this in perspective, I begin with some observations by Prof. James F. Nagle, in his excellent study, "History of Government Contracting" (2nd Edition 1999).
If someone were asked to devise a contracting system for the federal government, it is inconceivable that one reasonable person or a committee of reasonable people could come up with our current system That system is the result of thousands of decisions made by thousands of individuals, both in and out of government. It reflects the collision and collaboration of special interests, the impact of innumerable scandals and successes, and the tensions imposed by conflicting ideologies and personalities.

Much of the country's contracting history has been spent trying to find the best combination of three factors: the right contracting apparatus, the right government-contractor relationship, and the correct contract form itself.

In its search for an efficient, fair, and reasonably priced procurement apparatus, the government has tinkered endlessly with its procurement agencies. It has experimented with centralized czars of government-wide procurement, decentralized, overlapping contracting agencies; and variations in between. Originally, contracting officers were vested with a great deal of discretion, hampered by very few regulations which constricted their judgment. They could adapt contracts and clauses to individual circumstances. Throughout the nineteenth century ... that discretion decreased.

In 1984, Congress enacted the Competition in Contracting Act (CICA). CICA required agencies to obtain "full and open" competition -- the new hallmark of government contracting -- so taxpayers received the best possible value for their funds. To ensure that all responsible sources could submit sealed bids or competitive proposals, Congress mandated extensive requirement for advertising, and struck down obstacles to competition. This completed a philosophical shift from the earliest days of the country. Now, while no one had a right to a government contract, everyone has a right to know about and compete for government contracts.

Believing that a strong mechanism was needed to enforce competition, Congress enlisted a powerful and unlimited army -- disgruntled competitor! CICA strengthened the protest process If Congress thought more protests would check abuses and assure the health of the system, it got its wish. But the result was slower procurement, more paperwork, and more expense for both contractors and the government.

From 1983 to 1989 the country experienced a collective angst that fraud and inefficiency permeated government contracting. Acting on that premise, Congress and the agencies tried behavior modification on a grand scale, adding dramatically to the process' paperwork, complexity, and risks. Professor William Kovacic points out that the 1980s revisions made three basic assumptions about the procurement system: (1) the government purchasing officials lacked the ability to choose suppliers as wisely as their private sector counterparts: (2) government purchasing officials needed greater tools to identify and prosecute contractor misconduct; (3) contractors were beset by sloth and corruption.

Between 1989 to 1993 came the recognition that such harsh medicines caused some unpleasant side effects. Government contracting had become so paperladen and fraught with financial and criminal risk that contractors shunned federal business or inflated their bids to compensate.

[More and more reforms were implemented, many criminalizing contractor misbehavior.] Professor Kovacic notes that the 1990s reforms reveal a long overdue awareness that procurement regulation is not free;

1990s reforms represent a realistic look at the problems caused by incompetence, fraud and a knee-jerk reaction to such maladies; These reforms took a comprehensive approach and made fundamentally different assumptions regarding the participants; Where the 1980s had assumed government personnel were lazy, incompetent or inefficient, the 1990s saw them as innovative hard workers who should be freed of the restrictions placed on their ability to devise flexible solutions to individual problems; Where the 1980s had assumed contractors were greedy criminals, the 1990s recognized that most contractors are industrious resources willing to fulfill the government's needs with ingenious solutions for a fair price.

The situation is as healthy as any I can recall in the history of peacetime government contracting.  That is not to say it is idyllic. Protests and lawsuits still abound. Contracting officers trained in the old system still refuse to change and many contractors still try to cheat.

My fear is that laws can not change human nature. Some contracting officer somewhere will make a stupid or corrupt decision; Some contractor somewhere will pounce on the situation to defraud the government; Headlines will blare; Congress will overreact; and the cycle of contracting reforms will continue.
The articles?

Efforts underway to improve Pentagon’s procurement system

(Also reported as Experts, lawmakers optimistic for changes to the way Pentagon buys technology)

Acquisition Reform: It’s Mostly Up to Congress

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