Senior acquisition officials question procurement policy direction

Senior federal acquisition officials do not believe that many of the signature procurement policy changes the Obama administration and the Democratic Congress have implemented in recent years are adding significant value to the government’s mission, according to a new report from a pair of industry groups.

The biennial survey by the Professional Services Council, a contractor trade association, and Grant Thornton LLP, a business advisory firm, interviewed 33 officials from across government, including senior acquisition executives, congressional staff and oversight employees, on a host of topics.

On many key issues there appears to be a widening chasm between operational and oversight officials, but they generally concurred that the implementation of major policies and rules — from the insourcing of private sector functions to the push to use fixed-price contracts — were failing to meet their stated objectives.

“The idea of showing contract savings is nothing more than an accounting exercise,” said one interviewee. “When you have policy that doesn’t make sense to subject matter experts, you lose credibility,” another said. All the quotes were provided anonymously, although the officials interviewed were identified at the end of the report.

Stan Soloway, president of PSC, suggested that many senior acquisition officials supported the administration’s overall policy direction, but felt “neutered” by a one-size-fits-all execution approach.

For example, recent legislative and regulatory actions have shown a preference for fixed-price contracts above cost-plus or time-and-materials awards. In many cases, officials are required to provide lengthy written explanations when using the latter contract types. But the survey showed that 71 percent of respondents felt the fixed-price mandates had not resulted in better contract outcomes for the government or the taxpayer.

A similar disconnect between a policy’s intention and result was found in response to questions about insourcing. Many officials argued the concept, while necessary to restore core government capabilities, has not been conducted thoughtfully or strategically and might be moving too rapidly. Meanwhile, a whopping 94 percent of respondents said insourcing will hurt small businesses.

“Insourcing is moving too quickly and it is too focused on hitting metrics,” one interviewee said. “The administration is proceeding without a larger view of how the government does business. The decision should be strategic and not rushed.”

The redefinition of inherently governmental activities, one of the key procurement regulatory changes the Obama administration has embraced, also failed to impress senior acquisition officials.

Two-thirds of all interviewees said the March guidance from the Office of Management and Budget was not clear or actionable. As was the case with several policy proposals, many cited the lack of resources needed to implement the guidance.

The survey also revealed palpable frustration among acquisition and oversight leaders regarding implementation of the Recovery Act. Two-thirds of all respondents felt they were not provided adequate resources to comply with stimulus rules and that reporting requirements were neither manageable nor sustainable. Congress, however, has shown some support for implementing Recovery Act-type requirements for all procurements.

Retired Vice Adm. Lou Crenshaw, a principal at Grant Thornton, suggested that too much focus has been placed on regulatory compliance rather than operational outcomes. “This is rocket science,” Crenshaw said. “It’s a complicated process.”

As in previous surveys, enhancing, training and managing the acquisition workforce remain the biggest operational challenges in acquisition, respondents said. They noted that while the addition of direct hiring authority at some agencies has helped to a point, constant turnover, insufficient training and a reliance on interns have created functional concerns. Acquisition officials suggested the system might be improving, but oversight officials generally were more skeptical.

Contract administrators also appeared to be struggling under the weight of oversight mandates. Nearly 90 percent of those surveyed agreed more resources were devoted to back-end oversight than front-end contract management. Others suggested overly burdensome oversight was inhibiting innovation while stressing rigidity and a focus on lowest cost.

“Resources are absolutely not in balance,” one interviewee said. “They have thrown resources at [inspectors general] and auditors, but they have done nothing to facilitate contract administration.”

The divide was evident in other areas. More than 70 percent of operational executives said existing structures designed to prevent organizational conflicts of interest function effectively. Sixty percent of oversight professionals disagreed. The two sides also disagreed on the need to reform personal conflict-of-interest rules, with operational officials generally in favor of maintaining the existing structure.

While the report did not take sides on the respective issues, it did recommend improving the communication and collaboration between the oversight and operational communities, backing up policy directives with sufficient resources, and avoiding one-size-fits-all mandates.

— By Robert Brodsky – –  November 15, 2010