When Commercial Off the Shelf became a Cockup Off the Cuff

The Project On Government Oversight (POGO, as it is called) has an interesting, and somewhat disturbing, report out. This post will only go into parts of it. The whole report is well worth the read. Read it at the link below.

The Pentagon relies on the obscure Defense Contract Management Agency (DCMA) to negotiate and administer $5 trillion contracts across the Defense Department as an average of $455 million In taxpayer dollars are paid out each day to contractors. DCMA undertook to modernize its procedures and processes and contracted professionals to design and build a system. The result was a software system created to help review, implement, and track defense contracts a, a project, called the Integrated Workload Management System.

The project appears to have been a colossal cockup. But that, and the investigation it appears to have instigated, is not what this post is focused on. For that story, you must read the POGO report at the link above. The bouncing ball that traces this post is a golf ball that seems never made it onto the fairway; it was in the weeds from the gitgo. This is a tale of “Do as I say, not as I do”.

Pentagon’s Contracting Gurus Mismanaged Their Own Contracts

 In 2011, the agency got the ball rolling with a contract paying a company called Apprio to conduct a study on what a “Model Contract Management Office” would look like and to “identify relevant technology” it would use. The next year, Apprio’s contract was expanded to envision a replacement for the Electronic Document Workflow system.

Things started going south for the software project in mid-2013, when Apprio won a contract worth more than $3 million to begin testing and developing software as the replacement system. But because the agency had previously hired Apprio to help lay out the requirements for this work, under federal acquisition regulations the company was ineligible for contracts implementing its prior recommendations. Regulations specifically prohibit this so that a contractor is not tempted to misrepresent the needs of the agency in order to sell more of its own products or services. The “organizational conflict of interest violation” raised “serious concern over contracting practices and processes within DCMA.”

Because the contract involved spending more than $1 million on a system the Defense Department uses to manage its resources, then-Director of Information Technology Haynes needed approval from the Pentagon’s deputy chief management official. The official rejected Haynes’ initial request, citing missing documentation and other flaws, and asked him to resubmit it. Despite not having the Pentagon’s approval, the contract was awarded to Apprio. But during testing over the next several months, Apprio’s software “failed to properly integrate” with the agency’s other systems.

The agency turned to another company, Discover Technologies, to develop a software solution. It appears that the documents provided to the Services Acquisition Review Board to get approval for the contract were misleading. The documents, submitted just two days before the end of the fiscal year, listed the upcoming year’s projected expenses as $960,000. There was no mention of the estimates that the contract would likely cost up to $40.5 million over its lifetime. Evidently, the Pentagon had not approved the funds necessary to cover that much larger estimate. In the event, the board received and approved the contract on September 28, 2013, and reapproved it each year through 2017.

Additionally, the board failed to conduct a formal review of the Discover Technologies contract before approving it. It didn’t seem to know what the contract was intended to deliver. Personnel consistently did not understand what was being communicated by Haynes and others in the IT department, and therefore either stopped asking questions or failed to ask any at all. In the absence of any questions or objections, approvals were essentially rubber stamps, with the board approving 95 percent of IT submissions on first attempt.

If it had done a thorough review of the Discover Technologies contract before approving it, the review board might have caught numerous problems. For example, the agency used the wrong type of contract: a “Blanket Purchase Agreement,” which is intended for recurring needs for straightforward supplies or services, not the type of complex software modifications Discover Technologies would be performing. The agency mischaracterized the software as a “commercial off-the-shelf” product, which requires less oversight, despite the fact that those involved knew it required a significant amount of coding and development work. The contract’s requirements were also vague, with some overlapping with work already assigned to Apprio. In many cases, task orders within the contract were missing key components, such as statements of work and standards by which to measure performance, and the document detailing the work requirements didn’t include a list of specific objectives.

On the last day of the fiscal year, two days after the review board approved the Discover Technologies contract, the Pentagon approved spending about $6.3 million on the software project over the next year. Hours later, the agency awarded the contract. It appears there was “pressure in contracting to get contracts awarded at year end,” leaving insufficient time to plan and properly craft the project’s requirements. In summary, some of the project’s most significant problems stemmed from the structure and administration of the contract. The lack of clear objectives in the contract directly impacted performance, and the lack of planning and strategic vision led to money being wasted through duplicative work and cost overruns.

Worse, the government did not provide any oversight focused of the project. There were “essentially two budget offices with a separate one in IT, and there was no oversight of the IT budget personnel by the [agency] budget office. This meant the agency’s own budget office didn’t know the agency was spending more money than it was authorized to. In a similar vein, Pentagon budget officials didn’t adequately keep track of the numbers or talk to each other, so one office kept giving away more money than the other had authorized.

The project had become a runaway train until the agency director put a halt to things and requested both an Inspector General audit and an independent investigation into the suspected Antideficiency Act violations. By then, the agency had spent around $45 million on the project, not including government labor costs.

In 2009, the congressionally created Commission on Wartime Contracting wrote, “DCMA is not aggressive in motivating contractors to improve business systems,” which it described as “the first line of defense against waste, fraud, and abuse.” The agency’s “conservative approach results in little, if any, motivation for contractors to improve their business systems, and ultimately has a direct impact on the warfighting mission.” In 2011, the Government Accountability Office attributed many of the agency’s struggles to “a seriously eroded workforce” stretched thin by the surging number and value of contracts in prior years due in part to the wars in Iraq and Afghanistan; a decentralization initiative that led to inconsistent guidance and practices across the agency that one official called a “free for all”; and the challenges posed by defense contractors’ increasing reliance on subcontractors.

While the agency has in many cases not been zealous enough in protecting taxpayer interests, the shortcomings are not across the board, and parts of the agency have at times seemed more willing to hold contractors accountable. The agency’s hard-hitting findings that Lockheed Martin had used a significantly flawed business system for the F-35 program, and the Pentagon’s subsequent willingness in 2012 and 2013 to withhold some payments from the company, is one example. Last year, it did the same with helicopter manufacturer and major defense contractor Sikorsky.

But the extent to which the agency was failing to properly manage contracts for even its own internal systems is coming into focus this year with the April Inspector General report and the documents POGO obtained.

As mentioned above, this post presents only part of the story, the mistakes made. There is another story in the article about the investigation(s) and information obtained by POGO regarding the project and loosely related others. Here, I focus on what went wrong. The rest of the story focuses on the investigation and remedies. And that's the main point of the procurement system.

While we're here, let me put in a plug for the Project On Government Oversight. Our procurement system requires the essential efforts of the private sector to police government spending in real time. POGO is one of those many sentinels along the watchtowers we rely on to keep the game clean, as best we can.

Clean audit doesn't reveal dirty procurement management laundry

House HS Subcommittee Takes Hard Look at DHS's Procurement Processes

DHS achieved a much sought-after clean audit of its financial statements by independent auditor KPMG. The audit found DHS’s financial statements were in order. The auditors certified they had “reasonable assurance that what they saw on” DHS’s books “is correct,” said Chip Fulghum, DHS’s chief financial officer and acting undersecretary of management.

“I am pleased to announce that for the second year in a row, our audit firm KPMG, working in conjunction with our Office of Inspector General, has issued the Department of Homeland Security an unqualified audit opinion -- essentially a reasonable assurance from our outside auditors and the department’s Inspector General that our financial statements are accurate,” Fulghum said, adding that, “For the third largest department of our government … consisting of 22 components, 240,000 personnel, a 60 billion dollar budget and six core financial systems and hundreds of feeder systems, I consider this a remarkable achievement.

However, the chairman of House Committee on Homeland Security Subcommittee on Oversight and Management Efficiency harshly criticized the Department of Homeland Security’s (DHS) department-wide acquisition processes last week during an acquisition oversight hearing on how effectively DHS is safeguarding taxpayer dollars. “A broken acquisition process delivers tools that are late, cost more and do less than anticipated. Watchdogs continue to find failures in DHS’s management of its acquisitions, which is unacceptable and puts taxpayer dollars at risk," said subcommittee chairman Scott Perry (R-Pa.).

“Each year, DHS invests billions of dollars in its major acquisition programs to help execute its many critical missions. In fiscal year 2014 alone, DHS planned to spend almost $11 billion on these acquisition programs, and the department expects it will ultimately invest more than $200 billion in them,” said Michele Mackin, director of Acquisition and Sourcing Management at the Government Accountability Office (GAO).

“Each of DHS’s major acquisition programs generally costs $300 million or more and can span many years,” she explained to the subcommittee, noting that, “We have reported that DHS’s acquisition policy is generally sound, in that it reflects key program management practices,” but, “Due to shortfalls in executing the policy, we have highlighted DHS acquisition management issues on our high-risk list and made numerous recommendations to improve acquisition management practices.” Mackin said, “many of our recommendations have not yet been implemented, including that DHS ensure all major acquisition programs fully comply with DHS acquisition policy.”

Mackin told lawmakers that, “In its April 2015 report, GAO reviewed 22 major programs at DHS and found that [only] two of them were on track to meet schedule and cost parameters." However, she said, “GAO was unable to assess six programs—four of which are in Customs and Border Protection—because DHS leadership had not yet approved baselines establishing their schedules and cost estimates as required by DHS policy. The remaining 14 programs had experienced schedule slips, or schedule slips and cost growth. On average, these program milestones slipped more than three-and-a-half years, and their life-cycle cost estimates increased by $9.7 billion, or 18 percent.”

Mackin said, "DHS lacks key information necessary to manage its programs. For example, GAO found ambiguity across DHS testing assessments in that they did not always clearly identify whether the systems tested met all of their key performance parameters (that is, the capability or system attributes that are required to successfully meet the DHS mission).” “In addition,” Mackin explained, “DHS’s official system for acquisition program reporting—which feeds into required congressional reports—is hampered by data problems, such as inaccurate lifecycle cost estimates.

“Finally,” Mackin told the subcommittee, “DHS does not have information on operations and maintenance costs for 42 operational programs for which the normal documentation requirements were waived in 2013. GAO found that only one of these 42 programs has an approved life-cycle cost estimate. Operations and maintenance costs—which can account for more than 80 percent of program lifecycle costs—could run in the billions of dollars for these 42 programs." In Fiscal Year 2014, DHS still “lack[ed] written guidance for a consistent approach to day-to-day oversight,” according to an earlier GAO audit, which stated, “Federal standards for internal control call for organizations to define and document key areas of responsibility in order to effectively plan, direct and control operations to achieve agency objectives."

Sustainment costs can account for more than 80 percent of total costs, but all but one of these programs lack an approved cost estimate. GAO said “cost estimates are necessary to support decisions about program funding and resources.”

Sen. Tom Carper (D-Del.), former chairman and now ranking member of the Senate Committee on Homeland Security and Governmental Affairs, was especially incensed about GAO having found that DHS “needs to develop more realistic baselines for the cost and schedules of major acquisitions, improve testing and ensure that senior DHS leaders and Congress have complete and reliable data on the status of major acquisitions.

DHS needs people to effectively carry out everything that is on paper (rules, guidelines, etc.),” Homeland Security Today was told by former DHS Chief Procurement Officer Dr. Nick Nayak, who along with former DHS procurement ombudsman Jose Arrieta, wrote their report, Partnering with Industry is Key to Improving Acquisition Outcomes, in the Aug./Sept. 2014 issue of Homeland Security Today. Nayak explained that, “There simply are not enough cost estimators or program management people to carry out the oversight everyone wants.”

“DHS programs are large and complex, much like DoD, and they simply do not have the capability (through people) to get every single thing done,” Nayak said, emphasizing that, “The limited people in place perform heroically -- because they are mission driven to protect the country – [but] they are stretched so far that it is humanly impossible to sustain that level of performance over time.” And it all leads “to another problem,” Nayak said, which is “employee burnout, low morale and ultimately high turnover.”

Nayak and Arrieta wrote,“DHS has developed a unique way to train its acquisition workforce to be smarter and faster. DHS has developed an innovative approach to fill a gap in acquisition training that has existed forever across government agencies - lack of industry understanding." According to Nayak and Arrieta, “Today, DHS is spending 17 billion more a year teaching acquisition professionals about how industry does business, including concepts such as how companies determine to bid on a requirement, the best approach to minimizing proposal costs in order to maximize competition, and how to minimize or eliminate protests through effective communication.”

They added that, “DHS has been able to address the systematic and market convergence pressures immediately by partnering with industry associations to develop industry led seminars for the workforce – the cost is almost zero, and the impact is immediate. The seminars,” they explained, “focus on developing DHS acquisition professionals’ understanding of the marketplace and create a safe environment outside the acquisition process for contracting professionals to learn about their potential industry partners and to gain valuable experience before ever soliciting them for a requirement. They are even frank discussions about contracting and acquisition issues that nobody typically talks about until they are adverse in nature.

Further, Nayak and Arrieta said there's also a problem with government acquisition “brain drain.” They noted that, “In every magazine, newspaper and blog on federal contracting, you will find an article about transforming the acquisition workforce. Why? Because acquisition professionals are important. The federal acquisition process is a business executed and managed by people. Annually, the federal government spends $500 billion through the acquisition process. In total, across the federal government, there are 40,000 contracting professionals, about 30 percent of whom are eligible to retire in five years."

Meanwhile, 30 percent of the acquisition workforce has less than five years of work experience. Furthermore, it takes about five years to provide adequate training and experience to develop a competent contracting professional.

There is much, much more in the article, which you should read in full at the link above.

Shhhh... IT is a procurement problem child

A Few Places Where Government Tech Procurement Works

The botched start of HealthCare.gov is just the latest big federal tech system to fail at launch. Information technology research group Standish found that during the last decade, of the large-scale federal IT projects 94 percent have been similarly unsuccessful.

Critics say the real root of government website woes is procurement, or, government's process for buying technology. So we sought out a few places where IT procurement is actually working smoothly.

Philadelphia, like the federal government, had a hard time getting innovative businesses to compete for government tech contracts. "Startups, they may have great ideas and great technology but they're not necessarily built to make it through the procurement process. Those who make it through are those who have experience working through this cumbersome process that can take a lot of time," chief digital officer Mark Headd says.

That favors large, entrenched vendors who often turn in subpar services. As the system is now, it's just not easy for young companies to find or bid on government contracts. And because all governments — federal, state and local — fear wasting taxpayer dollars on bad results — they write layers of regulations and rules around contracting. That's a turnoff for many potential bidders.

But bidding's getting easier in the City of Brotherly Love. Philadelphia leaders decided to put technology at the heart of government, hiring Headd to team up with existing tech talent in the city, and simplify bidding for government projects. To "go where the developers are," Headd created an account for the city on GitHub, a transparent code repository, and posted its open data policy there. "It's good for us, because we're gonna get more bids, it's good for [the outside developers], because it's business they might not otherwise be aware of," Headd says.

"What we've done in Kansas City is to be a little more proactive," the city's head of procurement, Cedric Rowan says. "By being willing to look at the marketplace and willing to interject into our scopes the ability for providers to give some solutions that are maybe a little more than what we're asking for but at least give them the opportunity to be innovative in their solutions back to us."

At the federal level — the Consumer Financial Protection Bureau gets praise for its approach to tech. "We wanted to show how government could work," says Merici Vinton, who served as the agency's digital lead and oversaw the launch of the CFPB's first website, which included projects like a simple complaint submission system and a redesign of mortgage disclosure forms.

Here's what Kansas City, Philadelphia and the CFPB have in common: Encouragement and cover from the top of their departments and cities; openness in sharing requirements behind IT projects from the very beginning of the procurement process; and eagerness to have smart tech people inside their departments, and to bring them together with existing government teams.

"The website and your services that you're providing to the citizens are now your storefront. So those have to be in alignment across the agency," says Vinton.

Michael Slaby — who was one of the people who built President Obama's much-lauded 2008 and 2012 campaign technology says, "the idea that things are stacked against government — the way that we procure, the way we design projects — is all true, but it's all something we have to fix. We should make it simple for technology to empower citizens to get things from their government in a way that's seamless and easy."

You may feel as I do that this article is short on detail, implying more questions than giving answers. Read the comments to it at the link above.

US Iraq Reconstruction payments ok, but payment for what?

A large amount of money is at risk all along the procurement trail from the time a "need" is identified to the time it is exhausted by consumption of the goods or services procured. Strict budgeting, planning and management controls are needed to make sure the need is indeed that and properly identified. Competitive oversight via effective protest systems give real time policing of the solicitation process. And accounting and auditing work are meant to control the delivery and payments functions of the contract administration end of the procurement lifecycle.

This is a tale of that last aspect of procurement.

Final Forensic Audit Report of Iraq Reconstruction Funds (SIGIR-12-017)

Public Law 108-106, as amended, requires the Special Inspector General for Iraq Reconstruction (SIGIR) to perform forensic audits and issue a final report on all funding appropriated for the relief and reconstruction of Iraq. A forensic audit involves the systematic examination of a program’s internal controls over expenditures and financial data for indications of fraudulent, wasteful, or abusive activities.

This report summarizes the results of SIGIR’s forensic audits and investigations of Iraq reconstruction funds and satisfies the requirement for a final forensic audit report.

SIGIR audits, inspections, and investigations have found serious weaknesses in the government’s controls over Iraq reconstruction funds that put billions of American taxpayer dollars at risk of waste and misappropriation. The precise amount lost to fraud and waste can never be known, but SIGIR believes it is significant. As of June 30, 2012, SIGIR audit reports had questioned $635.8 million in costs, and SIGIR Investigations, working with other agencies, had resulted in $176.84 million in fines, forfeitures, and other monetary results.

SIGIR found few problems in the agencies’ invoice payment processes. SIGIR tested 180,000 DoD Department of Defense), DoS (Department of State) and USAID payment transactions totaling about $40 billion. SIGIR looked for problem transactions such as duplicate payments, payments to fictitious vendors, or inappropriate separation of duties of individuals in the payment process. Overall, SIGIR’s tests found that once invoices were approved for payment, the payments were essentially processed correctly and to valid vendors.

However, because of the internal control weaknesses, government agencies cannot be certain that the payments were for goods and services that (1) were actually received, (2) met contractual specifications, (3) were in accordance with the contract prices, or (4) were competitively priced.

SIGIR audit reports identified internal control weaknesses such as inadequate reviews of contractors’ invoices, insufficient numbers of, or inadequately trained oversight staff, poor inventory controls, high staff turnover, poor recordkeeping, insufficient price competition by subcontractors, and weak oversight of cash disbursements.

For example, SIGIR’s audit of a DoS contract for Iraqi police training program support found that more than $2.5 billion in U.S. funds was vulnerable to fraud and waste as a result of poor DoS oversight. Another SIGIR audit of a DoD contract for warehousing and distribution services found that the contractor’s business systems had not been adequately reviewed. Business system reviews are the government’s primary control to ensure that prices paid are reasonable and allowable.

Weaknesses in internal controls open the door to opportunities for fraud and other illegal activities. As of June 30, 2012, SIGIR investigators, working with other agencies’ investigators, have developed information used to indict 87 individuals and convict 71 individuals for fraudulent activities including bribery, kick-backs, theft of government funds and property, inflated invoices, delivery of insufficient or inferior goods, and bid rigging.

For example, a U.S. Army Captain was convicted of stealing $690,000 intended for security contracts and relief and reconstruction programs. A regional vice president of a logistics company was convicted of a scheme to inflate invoices for military shipments to Baghdad through the firm’s contract. The estimated loss to the U.S. government was approximately $1 million.

Read the full report at the link.

Audit of telecommunications payments and inventories

Audit of Management Controls Within the Network Services Division Pacific Rim Region, Federal Acquisition Service May 30, 2012 by the Office of Audits, Office of Inspector General, U.S. General Services Administration. As usual, you must go to the source for full understanding. This is just an extract.

The Federal Acquisition Service’s (FAS) Network Services Division (NSD) assists customer agencies on a broad range of telecommunication solutions/services. The goal of the NSD is to obtain the lowest aggregate prices for these services through local services acquisition contracts and other acquisition vehicles. The division consists of a Director and a professional staff of 16 area telecommunication managers who are responsible for making sound procurement decisions in fulfilling customer orders. The NSD also uses contract employees to assist in initiating customer orders.

Area telecommunication managers are required to record and complete sales transactions accurately and timely using FAS’s billing system, known as Telecommunications Operating and Payment System or TOPS. NSD’s sales are primarily from monthly telecommunication services (also known as recurring services), which are designated as B13 in TOPS. In addition, area telecommunication managers are responsible for maintaining an accurate and reliable inventory of these recurring services.

WHAT WE FOUND
We identified the following during our audit:

Finding 1 – NSD lacks inventory control procedures.

The lack of control procedures over the Region’s recurring services inventory impedes NSD’s ability to effectively manage its operations. Although NSD maintains an inventory of recurring services provided to customers, it cannot demonstrate that this inventory is accurate or reliable. Nearly a third of the customer base is impacted by errors in the inventory.

Finding 2 – NSD lacks written procedures and management controls over contract administration.

This would include: (1) providing required training to NSD employees; (2) improving personnel management; and (3) improving contract order processing.

The Fair Opportunity Clause (Federal Acquisition Regulation 16.505b) requires contracting officers to take into consideration all eligible vendors when awarding a local services acquisition contract valued in excess of $3,000. While no purchases in our sample met this criterion, we noted that NSD management does not have written policies and procedures to ensure contracting officers understand and comply with this regulation.

OMB requires contracting officers’ technical representatives to complete 40 hours of continuing education every two years to maintain their certifications. However, none of NSD’s four designated contracting officers’ technical representatives met this requirement.

NSD did not clearly define the roles, responsibilities, and expectations for the newly appointed supervisors. Prior to the appointments, two area telecommunication managers (GS-13 grade level), designated as team leaders, were expected to oversee the work of their colleagues even though they had no direct supervisory authority. As such, they are limited to providing advice on best practices but cannot compel their assign staff to follow through on that advice.

We found little evidence of contract oversight despite the fact that independent contract employees initiated 35 percent of the purchases made under local services acquisition contracts during the 9-month period ended June 30, 2011. Therefore, we recommend that management develop procedures to more effectively direct the work performed by independent contract employees.

Of the 11 new customer orders placed during the 9-month period ended June 30, 2011, 10 were placed under the higher priced tariff agreements. As a result, customer agencies are most likely paying more for telecommunication services than they should.

Finding 3 – NSD management needs to establish effective criteria for evaluating staff performance.

NSD provides no differentiation in performance criteria among grade levels and job series within the NSD’s professional staff. No distinction or differentiation exists between grade levels for NSD employees with regard to evaluation criteria. Further, no methodology exists to measure employee performance concerning client satisfaction, which represents 30 percent of an employee’s performance.

WHAT WE RECOMMEND
The FAS Regional Commissioner in the Pacific Rim Region should:
1. Conduct a comprehensive inventory of recurring services (B1) to identify errors, missing transactions, and outdated or expired services.
2. Ensure accurate accounting of the recurring services inventory by developing and implementing written procedures and management controls for training NSD employees on how to update and monitor the inventory.
3. Take action to ensure contracting officers’ technical representatives receive all required acquisition training.
4. Clearly define roles, responsibilities, and expectations for the newly appointed Branch Chiefs.
5. Develop and implement written procedures in the following areas:
a. Compliance with training mandates for contracting officers’ technical representatives.
b. Management oversight of independent contract employees.
c. Compliance with Fair Opportunity requirements under local services acquisition contracts for client requested telecommunication services.
d. Justification to award telecommunication services under tariff agreements.
e. Timely completion of customer orders in TOPS.
6. Re-evaluate and revise NSD’s Associate Performance Plans to accurately reflect employees’ skill sets.
7. Develop and implement a methodology to measure customer satisfaction with employee performance; this methodology should be included in the Associate Performance Plans.

MANAGEMENT COMMENTS
The Regional Commissioner of the Pacific Rim Region concurred with the audit report findings and recommendations.

US aims to myth bust

Daniel I. Gordon, Administrator for Federal Procurement Policy, has launched a "myth-busting" campaign to educate the federal procurement workforce, to address so-called misconceptions and improve communications with the procurement industry. It's a back-to-basic building blocks reminder.

His "MEMORANDUM FOR CHIEF ACQUISITION OFFICERS, SENIOR PROCUREMENT EXECUTIVES, and CHIEF INFORMATION OFFICERS" is dated February 2, 2011, but went public on February 17, as reported in media stories here and here.

Here are some selected excerpts, arranged and edited to suit myself.

Access to current market information is critical for agency program managers as they define requirements and for contracting officers as they develop acquisition strategies, seek opportunities for small businesses, and negotiate contract terms. Our industry partners are often the best source of this information, so productive interactions between federal agencies and our industry partners should be encouraged to ensure that the government clearly understands the marketplace and can award a contract or order for an effective solution at a reasonable price. Early, frequent, and constructive engagement with industry is especially important for complex, high-risk procurements, including (but not limited to) those for large information technology (IT) projects. This is why increasing communication, in the form of a “myth-busters” educational campaign, is one of the key tenets of the Office of Management and Budget’s 25 Point Implementation Plan to Reform Federal IT Management.

Some agency officials may be reluctant to engage in these exchanges out of fear of protests or fear of binding the agency in an unauthorized manner; others may be unaware of effective strategies that can help the acquisition workforce and industry make the best use of their time and resources. Similarly, industry may be concerned that talking with an agency may create a conflict of interest that will preclude them from competing on future requirements, or industry may be apprehensive about engaging in meaningful conversations in the presence of other vendors.

In light of these challenges, the purposes of this memorandum are to:
1) identify common misconceptions about vendor engagement that may be unnecessarily hindering agencies’ appropriate use of the existing flexibilities, and provide facts and strategies to help acquisition professionals benefit from industry’s knowledge and insight;
2) direct agencies to remove unnecessary barriers to reasonable communication and develop vendor communications plans, consistent with existing law and regulation, that promote responsible and constructive exchanges; and
3) outline steps for continued engagement with agencies and industry to increase awareness and education.

Nothing in this memorandum should be read to alter, or authorize violations of, applicable ethics rules, procurement integrity requirements, or other statutes or regulations that govern communication and information sharing. However, all methods of communication that are not prohibited, either by those rules or otherwise, should be considered, if they would be helpful.3 In addition, contracting officers, program managers, and other acquisition officials should continue to exercise appropriate discretion to balance the practical limitations of frequent vendor engagement, including the demand such engagement places on the time of the acquisition workforce, with the need to better understand the market and make decisions in the best interest of the government.

His Memorandum introduces the "Top 10 Misconceptions and Facts". My favorites among the Top 10 are:

1. Misconception – “We can’t meet one-on-one with a potential offeror.”
Fact – Government officials can generally meet one-on-one with potential offerors as long as no vendor receives preferential treatment.

Prior to issuance of the solicitation, government officials – including the program manager, users, or contracting officer – may meet with potential offerors to exchange general information and conduct market research related to an acquisition. In fact, the FAR, in Part 15, encourages exchanges of information with interested parties during the solicitation process, ending with the receipt of proposals. There is no requirement that the meetings include all possible offerors, nor is there a prohibition on one-on-one meetings. Any information that is shared in a meeting that could directly affect proposal preparation must be shared in a timely manner with all potential offerors to avoid providing any offeror with an unfair advantage (FAR 15.201(f)).
The government ethics rules and Competition in Contracting Act, (10 U.S.C. § 2304), prohibit preferential treatment of one vendor over another.

While a vendor who, as part of contract performance, drafts the specification for a future procurement will almost certainly be barred by OCI rules from competing for that future procurement, pre-solicitation communications are generally less structured, less binding, and much less problematic. When a vendor, in its role supporting the government, is drafting specifications for a future acquisition, the government is relying on the vendor to provide impartial advice regarding the requirements needed to meet the government’s future needs. Ensuring that the vendor will not be motivated by a desire to win the future contract is the way we try to ensure that this advice will be impartial. This differs dramatically from the pre-solicitation context. In the latter context, the government is not looking for impartial advice from one source, but is instead looking for a variety of options from a variety of sources, each one understandably, and reasonably, attempting to demonstrate the value of its own approach. These marketing efforts, in themselves, do not raise OCI concerns.

3. Misconception – “A protest is something to be avoided at all costs - even if it means the government limits conversations with industry.”
Fact – Restricting communication won’t prevent a protest, and limiting communication might actually increase the chance of a protest – in addition to depriving the government of potentially useful information.

Protests are, in fact, quite rare. At least 99 percent of procurements are never protested, although high dollar procurements, of course, are more likely to be protested. The overriding goal of the agency and its program managers, contracting officers, and attorneys should be the best procurement solution, and industry engagement can improve the supplies or services received or can reduce the price paid by the government. If contracting officers conduct responsible, meaningful, and constructive communications during the course of a procurement, issues that could give rise to a bid protest are likely eliminated. Trying to make a procurement ‘protest-proof’ is rarely a good use of agency resources, and it may lead to decisions that aren’t in the interest of the government. Moreover, restricting communication for fear of protests may actually increase the likelihood of a protest – for example, by a vendor that hopes to get more information through ‘discovery’ during the protest.

7. Misconception – “Industry days and similar events attended by multiple vendors are of low value to industry and the government because industry won’t provide useful information in front of competitors, and the government doesn’t release new information.”
Fact – Well-organized industry days, as well as pre-solicitation and pre-proposal conferences, are valuable opportunities for the government and for potential vendors – both prime contractors and subcontractors, many of whom are small businesses.

Industry days, as well as pre-solicitation and pre-proposal conferences, directly benefit the government by promoting a common understanding of the procurement requirements, the solicitation terms and conditions, and the evaluation criteria. These events also benefit industry – especially small businesses – by providing prime contractors and subcontractors an opportunity to meet and develop relationships or teaming agreements that benefit contract performance. However, the value of these events derives from the government providing the maximum information to potential offerors on its requirements, answering questions, and improving the solicitation based on feedback from the potential offerors. In that way, the requirements can be made as clear as possible to assist potential offerors in providing the best solution to the government.

8. Misconception – “The program manager already talked to industry to develop the technical requirements, so the contracting officer doesn’t need to do anything else before issuing the RFP.”
Fact – The technical requirements are only part of the acquisition; getting feedback on terms and conditions, pricing structure, performance metrics, evaluation criteria, and contract administration matters will improve the award and implementation process.

Issuing a high quality solicitation requires engaging with industry on issues that go beyond the government’s technical requirements. In order to appropriately price proposals and reduce the number of potential change orders, industry needs information about any unique terms and conditions, small business set-aside requirements, subcontracting goals, and other matters about which the contracting officer is the expert. Although industry may have had their best technical representatives engaged with the program manager, the contracting officer should communicate to vendors as much information as possible about the government’s needs as early as possible. As a result of early communication, the contracting officer may learn some things that suggest that an approach somewhat different than planned may cause increased competition, more small business participation, lower prices, or even a better definition of the government’s technical requirements.

Issue an RFI to make sure the government not only understands the capabilities of industry, but can develop or improve its acquisition strategy regarding contract type, performance requirements, performance work statements/statements of work, and performance metrics. Release a draft request for proposal to be sure the solicitation instructions are clear.

9. Misconception – “Giving industry only a few days to respond to an RFP is OK since the government has been talking to industry about this procurement for over a year.”
Fact – Providing only short response times may result in the government receiving fewer proposals and the ones received may not be as well-developed - which can lead to a flawed contract. This approach signals that the government isn’t really interested in competition.

Contracting officers should consider that allowing offerors additional time to prepare their proposals will likely yield better proposals, streamlined evaluations, and a reduction in the need for (or scope of) discussions. While the workforce is stretched thin and requirements often arise unexpectedly, shortcutting the proposal development process often results in fewer proposals, and/or proposals that are more difficult to evaluate. This situation can lead to expensive outcomes. Providing adequate time for vendor communication throughout the procurement process – including adequate time for proposals – indicates that the government is interested in obtaining the best outcomes. Contracting officers should have the full support of their customers in determining the right amount of time for receipt of proposals.

10. Misconception – “Getting broad participation by many different vendors is too difficult; we’re better off dealing with the established companies we know.”
Fact – The government loses when we limit ourselves to the companies we already work with. Instead, we need to look for opportunities to increase competition and ensure that all vendors, including small businesses, get fair consideration.

Use the procurement forecast to generate interest. Consider holding an outreach session to announce the release or update, and don’t bundle or over-promise requirements. Hold industry days, public meetings, or small business conferences, and consider hosting multiple outreach sessions for large or complex requirements.

What are your favorite ones?

Related to the media campaign conducted by Gordon is this item from Federal News Radio:

OFPP zeroes in on acquisition workforce

Dan Gordon, administrator of the Office of Federal Procurement Policy (OFPP), said the acquisition workforce isn't equipped to manage the large number of government contracts. His office wants to change that.

Gordon said over the past 15 years the government has been on an unsustainable path of increased contracting and a flat acquisition workforce.

"Putting that tsunami of spending onto an acquisition workforce that had shrunk and wasn't getting the investment and training was a recipe for problems, and we've had a good number of problems," Gordon said.

"Our number one priority is strengthening the acquisition workforce."

Gordon said agencies can help the existing acquisition workforce by improving internal communication. He said poor communication within agencies leads to significant problems with contract design.

"We have our IT shops that are often focused on sophisticated IT solutions," Gordon said. "We have the program shops - the people who actually need what the contract is for - who may not be explaining to the IT people what they need properly. We have a contract shop that doesn't define requirements. They just listen to make sure they've got requirements that make sense in terms of 'will this be a competitive situation', but contract people can't define requirements. They need input from the program people and the IT people to do that."

Gordon also said he wants to increase training for the acquisition workforce. One of OMB's goals in scaling back contract spending was to reduce the number of high risk contracts such as time-and-materials and labor-hours contracts.

"We're not telling agencies to go fixed-price no matter what," Gordon said. "Sometimes is just a matter of looking. Have we come far enough that we can define our requirements and switch to fixed price? Then we should. But we shouldn't switch to fixed price without thinking."

Gordon said insufficient contract management personnel also is a significant challenge. "Of course we need contractors, but contractors support us in the federal government, which means that we have to be in charge," Gordon said. "There are too many situations where there is no federal employee that has oversight of what's going on, or there aren't enough federal employees so that they maintain control. That is an unbalanced, unhealthy situation."

First, acquire the skills and the skulls

DoD needs robust acquisition work force

The Pentagon's new contracting rules call for more competition, increased emphasis on defining requirements, setting firm prices, implementing smarter incentives for cutting costs and avoiding overruns, and better scrutiny of procurements.

There potentially is a big payoff to Pentagon acquisition chief Ashton Carter's reform, outlined in a Sept. 14 memo, of how the Defense Department goes about spending $400 billion a year in goods and services.

The most important next step for Carter is to ensure the department's acquisition work force has the skills, numbers and understanding of the new rules to implement the reforms.

The reforms will add a bigger and more complex workload upon contracting staffs. They will need to: coordinate more with program managers early on to better define requirements; increase competition among vendors; award more contracts to small businesses; do more market research to set pricing targets; and negotiate contracts that use incentives more effectively to minimize risk and control costs.

This requires robust training and development, clear guidance for the acquisition work force and far more acquisition professionals to meet the increased workload.

staff training must be updated and adequate resources must be directed toward developing a work force that fosters competition and demands cost efficiencies. Nothing is more critical as the department aims to trim and redirect billions of dollars in overhead costs.

it will be vital to provide guidance to the work force on how to execute the new rules while allowing flexibility to make decisions that best promote competition, innovation and efficiencies.

Carter's plan could truly reform Defense Department procurement. But getting these next steps right, and close monitoring of how these reforms are playing out, will be critical to success.

Effective procurement requires effective staffing

USAF Helps The Army Hit The Target

By the end of 2003, it was clear that bribery, and corruption in general, were going to be the biggest threat to stability and the introduction of democracy in Iraq. Massive dishonesty is a problem throughout the region

For example, captured Iraqi oil ministry documents revealed a pattern of international bribery, from the 1991 Gulf War until the 2003 invasion, involving millions of barrels of Iraqi oil (worth over $100 million). This was paid, in return for support for Saddam Hussein, to 46 organizations and individuals.

The recipients included prominent Arab families, religious organizations, politicians and political parties in Egypt, Jordan, Syria, the United Arab Emirates, Turkey, Sudan, China, Austria, France and several other countries.

Some of the organizations named, included the Russian Orthodox Church, the Russian Communist Party, India's Congress Party and the Palestinian Liberation Organization.

Buying kind words is nothing new, but in a democracy, you're expected to be open about it. In the United States, lobbyists have to register with the government, and payments from foreign governments reported. In the Middle East, you give, or take, the money, do the job, and keep quiet about it. This was not unique to Iraq, after U.S. forces got into Afghanistan in late 2001, they captured Taliban records revealing that even these Holy Warriors had big problems with corruption.

Within Iraq, American civil affairs troops, and soldiers in general, constantly come up against Iraqis who offered to bribe them for special treatment. It's unnerving for Americans to encounter such a pervasively corrupt atmosphere. The Iraqis take it for granted that the rules are for fools and that you buy your way to success, and screw those who can't.

There were also problems with corruption among Kuwaiti government officials, who apparently demanded, and got, kickbacks from the American firms doing reconstruction work in Iraq. The corruption was not only pervasive, but often a major obstruction to getting anything done.

This was especially true in Kuwait, which was a U.S. ally, and not under the control of the American military, as was the case in Iraq. Thus Kuwaiti suppliers could sometimes threaten to hold up vital military operations unless a bribe was paid, The only choice was to pay, or delay (and have the State Department or senior U.S. military officials go through the Kuwaiti government to apply pressure to the obstructive supplier.)

There was a body of knowledge in the American military contracting community that U.S. Army officials could use to get around a lot of these problems. But the army didn't have it

So, following the example of the U.S. Air Force, the U.S. Army established a "Contracting Command" and staffed it with contracting professionals, to handle the larger volumes of contract personnel and organizations hired for the war on terror. Iraq, in particular, was a struggle. There were nearly 200,000 contractor personnel in Iraq (including Kuwait) and Afghanistan, during peak operations. This was an unprecedented contracting situation for the American military.

Iraq was what broke the army's existing contracting capability. Before the 2003 invasion of Iraq, the army had one base in Kuwait (through which most army troops pass, on their way to Iraq), and contracting officers there handled $150 million worth of business a year. By 2007, there were eight bases in Kuwait, and a billion dollars a year in contracts to deal with. Since 2003, over 800,000 U.S. Army troops have passed through Kuwait, on their way to Iraq, where tens of billions in contracts have been issued, and often not administered well.

The army got lots of help from the air force, which sent many of its contracting officers to help out.

In the air force, contracting is a career path, and the air force people really knew their stuff. The army could see that after a few years, when they measured rate of contracts with problems, and found it was much lower for air force personnel than for army contracting officers.

It was only two years ago that the Army Contracting Command was established, with a strength of over 4,000 personnel, including 400 military and 1,100 civilian personnel specializing in contracting. The rest were existing acquisition people, who will benefit from having their own command and career path. The command is led by a Major (two star) General, and will take at least five years to come near the level of effectiveness the air force already enjoys in this area.