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Friday, July 24, 2015

Stepping back from the trees to view the forest

I have to be guilty of coming into the world of procurement with a bit of anti-corruption fervor. One's first dealing with such a mysterious scheme can produce paranoia, seeing evil in the many shadows kept from the light. Transparency becomes a cure-all.

Hopefully, my continued interests have moved beyond that initial perspective. A corruption-free procurement system is a necessary, but not sufficient, condition to enjoy an effective procurement regime for good governance

Good governance is concerned with "the creation of a shared sense of “us,” an imagined community on whose behalf the state acts" (as suggested by a quote from below), as envisioned, for instance, in the US Declaration of Independence, which concretely created a coalition of declared independent colonies, and its Constitution, which concretely created a new nation.  Good governance is most concerned with creating and maintaining a state that continues to provide peaceful prosperity for the community.

But good governance also requires maintaining that shared sense, not an easy task when competing interest groups bay for priority.  

As we look at the inevitable "problems" and imbalances in the procurement regime, as well as proposed "solutions" to the problems, we need to be ever mindful of which interests, political and private, contributed to the problem in the first place, and what interests benefit, or suffer, as a result of the problem and proposed solutions.  

We need to stay focused on good governance for all of us.  Not each of us, but for the whole and wholesomeness of the community on whose behalf an effective state acts.

The following articles are not all directly related to these comments but do suggest we need to step back from a close-up view of procurement problems from time to time, to observe the larger picture. (Again, read the articles in full at the links: I make no claim to representing them fully, accurately or as intended by the author, however much I may desire to keep faith with the essential message inferred.)

1/2 TRILLION spent on IT upgrades, but IRS, Feds still use DOS, Windows 97

President Obama's team has spent more than a half trillion dollars on information technology but some departments, notably the IRS, still run on DOS and Windows 97, which isn't serviced anymore by Microsoft, according to House chairman.

"Since President Obama has taken office, the federal government has spent in excess of $525 billion dollars on IT. And it doesn't work," said Rep. Jason Chaffetz, chairman of the House Oversight and Government Reform Committee. [That statement may be accurate as far as it goes, but to be fair I believe Windows 97 and DOS were introduced at least a decade before he took office.]

He said his committee is planning a deep probe into IT spending and why so many systems are still not updated.

"It's not the biggest, sexiest headline, but I don't know how you can spend a half trillion dollars and literally have" departments on out-of-date operating systems, he told Ripon according to a transcript and video provided to Secrets.

"The IRS still uses the DOS operating system. You have a Patent office that just got Windows 97. They don't even service Windows 97 anymore.  And yet they just got it.  So the procurement process is really, really broken in this regard," he added.

"I do appreciate the president's initial appointment of Beth Cobert as the acting director. She has 15 or so years at McKinsey & Co. and Nokia.  She's a much more serious player. Unfortunately, the president had put in someone in Katherine Archuleta, who was his political director on Obama for President.  She had absolutely no business running what is really the largest human resources operation on the face of the planet.  She had no technical background whatsoever, no experience dealing with these major computer issues," he said.
Cutting Troops But Letting the Civilian Army Swell
On July 9 the Army announced that 40,000 soldiers will be cut from active duty—some involuntarily. This comes on top of the 80,000 soldiers already let go since the Iraq and Afghanistan buildup. At a time of increasing global tension, the American military is smaller than it was before 9/11 at the nadir of the Clinton “peace dividend” drawdown.

Yet even as the military shrinks and readiness wanes, the Pentagon’s two civilian workforces—government employees and federal contractors—remain disproportionately large. Since 2010, the Pentagon’s civilian staff has grown 6%, to 744,000. Contractors: up 20%, to 730,000. Active duty military personnel, who number 1.36 million, are now outnumbered by the civilians supporting them—a historic shift.

The Pentagon’s purchasing power is staggering, and it now buys more services than hardware. Many tasks are contracted out, from basic IT and food service to bomber maintenance and logistics support. In 2010 the Pentagon spent $205 billion on equipment and $134 billion on services. By 2014 that relationship flipped, with $161 billion to services and $143 billion to weapons systems. This doesn’t include spending on services that are classified.

Everyone knows about cost overruns and schedule slips with the military’s flagship weapons programs, from the F-35 Joint Strike Fighter to the Navy’s newest all-electric aircraft carrier. But other bureaucratic missteps fly under the radar. Failures in IT acquisition akin to Healthcare.gov occur regularly in Pentagon service programs.

Because the Pentagon cannot adequately manage this unaccountable army of contractors, it ends up shortchanging the military, which is starting to lose critical staff, notably mid-grade field officers and senior noncommissioned officers.

Congressional and Pentagon leaders must impose oversight on the Pentagon’s shadow workforce. A start would be to get a handle on what contracts are in effect now. The Pentagon’s inventory of contracted services lacks a standardized classification, so it’s difficult to compare by type of service, price paid and contractor employed. With an adequate data set and support from top leaders, procurement professionals could analyze services spending, recommend better choices and avoid wasting precious defense dollars on excess or redundant services.

The arcane purchasing process is a high-profile issue inside the Beltway at the moment. This year’s National Defense Authorization Act contains more than 150 legislative provisions on acquisition reform alone—but only for weapons systems, not Pentagon services.
Fighting Corruption Won’t End Poverty
Countries are poor because governments are corrupt. And, unless they ensure that public resources are not stolen, and that public power is not used for private gain, they will remain poor, right? It certainly is tempting to believe so. Here, after all, is a narrative that neatly aligns the promise of prosperity with the struggle against injustice.

But that won’t necessarily make their countries more prosperous.

Consider the data. Probably the best measure of corruption is the World Bank’s Control of Corruption Indicator, which has been published since 1996 for over 180 countries. The CCI shows that while rich countries tend to be less corrupt than poor ones, countries that are relatively less corrupt, for their level of development, such as Ghana, Costa Rica, or Denmark, do not grow any faster than others.

Nor do countries that improve in their CCI score, such as Zambia, Macedonia, Uruguay, or New Zealand, grow faster. By contrast, the World Bank’s Government Effectiveness Indicator suggests that countries that, given their income level, have relatively effective governments or improve their performance, do tend to grow faster.

Our moral sentiments are strongly related to feelings of empathy in the face of harm and unfairness. It is easier to mobilize against injustice than for justice. We are more enthusiastic to fight the bad – say, hunger and poverty – than to fight for, say, the kind of growth and development that makes food and sustainable livelihoods plentiful. But, in the case of corruption, which is a bad that is caused by the absence of a good, attacking the bad is very different from creating the good.

Aside from prosecuting some bad apples, measures to fight corruption typically involve reforming procurement rules, public financial-management systems, and anti-corruption legislation. The underlying assumption is that the new rules, unlike the previous rules, will be enforced.

That has not been Uganda’s experience. In 2009, under pressure from the aid community, the government enacted what was billed at the time as the best anti-corruption legislation in the world; and yet all corruption indicators have continued moving south. Uganda is not an exception.

The anti-corruption agenda often ends up stimulating the creation of organizations that are more obsessed with abiding by the new and burdensome processes than they are with achieving their stated goals. As Harvard’s Lant Pritchett, Michael Woolcock, and Andrews argue, when inept organizations adopt “best practices” such as financial management systems and procurement rules, they become too distracted by decision-distorting protocols to do what they were established to do.

As Francis Fukuyama has pointed out, the development of a capable state that is accountable and ruled by law is one of the crowning achievements of human civilization. It involves the creation of a shared sense of “us,” an imagined community on whose behalf the state acts.

Some might argue that reducing corruption entails the creation of a capable state; the good is created out of the fight against the bad. The good is a capable state: a bureaucracy that can protect the country and its people, keep the peace, enforce rules and contracts, provide infrastructure and social services, regulate economic activity, credibly enter into inter-temporal obligations, and tax society to pay for it all. It is the absence of a capable state that causes corruption (the inability to prevent public officials, often in collusion with other members of society, from subverting decision-making for private gain), as well as poverty and backwardness.

This is not an easy task when societies are deeply divided by ethnicity, religion, or social status. After all, who is the state for?

What is to prevent the ethnic group currently in power from diverting resources to itself on the argument that “it’s our turn to eat?” Why shouldn’t those currently in control of the state transform it into their patrimony, as in Venezuela, where, more than two years after former President Hugo Ch├ívez’s death, his daughters still occupy the presidential residence?

The fight against corruption mobilizes all of us because we want to do away with evil and injustice. But we should remember that casting the bad into the sea does not imply the sudden appearance on our shores of the good that we need.

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