April 6, 2012 by cs
Austerity is here, it’s real and it will be the rule of the road for several years. The president’s fiscal 2013 budget request for defense will likely be about $260 billion less, over the next five years, than the top line projections of just one year ago. The civilian agencies, many of which have been facing fiscal quagmires for several years as a result of a non-stop diet of continuing resolutions, also face real pressures today and further reductions for fiscal 2013, likely in the 3 percent to 5 percent range.
And if sequestration happens, the challenges will be that much more significant. What is not yet clear is what all of this means for both the effective functioning of government and, of course, for the industry that plays such a critical role in supporting it.
Recently, the Professional Services Council, along with the Aerospace Industries Association and the National Defense Industrial Association, submitted to Defense Secretary Leon Panetta and other top DOD leaders a report on the anticipated impacts of the defense spending reductions. They included job losses, reductions in company-funded research and development, investments in people, and the potential loss of key suppliers.
In addition, it is clear that, dosuring the next few years, an already highly competitive market will become even more competitive. With fewer contract opportunities, the number and range of competitors vying for those opportunities will be even greater than they are today.
While the fiscal environment is an unavoidable reality, there are a number of actions companies can and should take to help ameliorate at least some of those impacts. Indeed, these strategies and actions were prominent in discussions with the secretary of defense, the deputy secretary, and the undersecretary for acquisition, technology and logistics, following submission of our industrial base impacts report. These strategies also have applicability across the government.
Key among them is an intensified focus on performance—at all levels. This includes not only programmatic performance, which should always be the principal objective, but also a renewed focus on the financial side, such as fostering a proactive dialogue to help customers identify areas for cost savings—even if those savings might impact company revenue—and tightening company overhead as much as reasonably possible.
At the same time, the government customer must also think and act differently. Despite the budget reductions, the government will nonetheless be spending a huge amount of money through contracts for goods and services. To ensure that those expenditures deliver optimal benefits in both the short and long runs, it is crucial that the government, as the DOD and Office of Management and Budget leaders have said, focus on value and other meaningful value discriminators in the acquisition process. Indeed, DOD leadership has said that given the times, they will be focusing more intently than ever on those discriminators.
Unfortunately, the No. 1 issue identified by our member companies in our report was the government’s growing propensity to do just the opposite, even when buying complex services, including those that generate the kinds of innovation that lead to performance improvements and sustainable efficiencies.
Likewise, government teams must be open to eliminating non-value or limited-value contractual burdens. And the government must get away from its habit of using margins—too often arbitrarily set at unreasonably low levels—as a key cost savings tool. Margins should be linked to the complexity and risk associated with the work being done. Here too, a disconnect between the leadership’s objectives and the field’s implementation is clear and must be addressed.
For every company in the federal market, this must be a time of internal and external reassessment. The same is true for our government colleagues. There are some things that are well beyond either’s control. The key is to focus on those things that we can control and to turn an era of challenge into an era of innovation and opportunity.
About the Author: Stan Soloway is president and chief executive officer of the Professional Services Council. This article was published on Feb. 27, 2012 by Washington Technology at http://washingtontechnology.com/articles/2012/01/30/insights-soloway.aspx.
March 8, 2012 by cs
Companies would lose the opportunity to respond to performance reviews written by government officials under a new contracting bill. The reviews often play a major role in winning future contracts.
The Comprehensive Contingency Contracting Reform Act (S. 2139), which was introduced Feb. 29, would revise language in the Federal Acquisition Regulation that gives companies 30 days to comment, provide additional information or rebut a contracting official’s assessment of their work. The same FAR provision requires agencies to provide companies with a copy of the work performance evaluation.
Trey Hodgkins, senior vice president for national security and procurement policy at TechAmerica, said this proposed FAR revision is huge change in procurement. It eliminates the ability for contractors point out mistakes or offer their perspective on circumstances when agency officials view them differently.
“This provision may lead to a bad situation or bad feelings, at least,” Hodgkins said.
A customer agency may be unhappy because it didn’t get what it wanted, although the contractor may have been bound by the firm-fixed price contract that the agency awarded. The result might be a lackluster performance review.
“That’s not unheard of,” Hodgkins said.
Sens. Claire McCaskill (D-Mo.) and Jim Webb (D-Va.) introduced the contracting reform bill, which is based on recommendations from the Commission on Wartime Contracting in Iraq and Afghanistan. McCaskill and Webb created the independent commission in 2007, and the commission issued a final report in 2011.
Among its other provisions, the bill would expand what goes into the Federal Awardee Performance and Integrity Information System, a database of contractors’ past performance and other related information. It would have agencies include information on any of a contractor’s parent or subsidiary entities.
The legislation would elevate oversight responsibilities for procurement officials and enhance management structures for the agencies handling contingency contracting. McCaskill and Webb want procurement training added to education curricula for both professional military and contingency operations. The training would deal with defining requirements and the strategic impacts of contracts on the mission.
The legislation would require justifications for sole-source contracts to handle compelling demands.
The bill has been referred to the Homeland Security and Governmental Affairs Committee for further review.
The Wartime Contracting Commission spent three years investigating contracts in Iraq and Afghanistan. In its final report to Congress, the panel estimated that the United States had lost as much as $60 billion through contract waste and fraud in those countries. The commission also identified major failures in contingency contracting planning, execution and oversight.
It concluded that such waste will increase if officials don’t toughen accountability as U.S. operations wind down, support for programs declines, and major reconstruction projects become unsustainable.
McCaskill, who introduced legislation with Webb to create the commission, has been focused on procurement and contracting reform. She’s chairwoman of the Senate Homeland Security and Governmental Affairs Committee’s Contracting Oversight Subcommittee and also chairwoman of the Senate Armed Services Committee’s Readiness and Management Support Subcommittee.
“When Jim and I got here, nobody was paying attention to the billions of taxpayer dollars being wasted in Iraq and Afghanistan,” McCaskill said in a statement. “But with the roadmap provided by the commission report, we can change the way our government contracts during wartime, and make sure these failures are never repeated.”
About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article was published on Mar. 1, 2012 at http://washingtontechnology.com/articles/2012/03/01/no-review-past-performance-evaluation.aspx?s=wtdaily_020312.
February 16, 2012 by cs
Almost every proposal you write has a requirement for information on past performance. The government uses this information to evaluate how well your company has performed on similar programs and expects your past performance to be a predictor of how well you will perform on the program you’re currently bidding.
Because past performance can be an important discriminator in the evaluation and selection process, there are some things you should know about how to write your past performance response.
Past performance versus past experience
Past performance comprises a set of specific contracts that you select to demonstrate how well your company, or your team, has performed on contracts that are similar in size, scope, and complexity to your current bid.
Past experience, which is sometimes confused with past performance, is about the broader issue of what experience and expertise the bidding organization has gained from all of its contract work and the work of its teammates.
Select contracts to demonstrate past performance
Past performance is all about relevancy and how well you performed the work you’re referencing. The government will consider these two factors together when developing your past-performance score — and both are important. However, performance is more important than relevancy. It is better to showcase your best-performing contracts and argue that they are relevant than to select contracts that are highly relevant and had poor performance.
Expect the government evaluator to ask your customers how well you did performing each contract. Typically, this happens via a formal past-performance questionnaire submission process and/or direct communication from the government evaluators to your customers. The government keeps two databases—the Contractor Performance Assessment Reporting System (CPARS) and Past Performance Information Retrieval System (PPIRS)—to determine how well your company performs its contracts.
Government access is restricted to those individuals who are working on source selections, to include contractor responsibility determinations.
With the CPARS, companies can regularly review their own ratings for each evaluated contract, but cannot check ratings for other companies. In order to access PPIRS information, a contractor must be registered in the Central Contractor Registration (CCR) system and must have created a Marketing Partner Identification Number (MPIN) in the CCR profile. Because past-performance ratings are such an important factor in proposal evaluations, every company should regularly review its CPARS ratings and challenge any evaluations they consider unfair.
Write your past performance summary
Each RFP will be very prescriptive about the information you need to provide when you describe each past-performance contract. While it may seem obvious, you really do need to provide all the requested information in order to submit a “compliant” proposal (see my Washington Technology article, “6 reasons your proposals fail,” October 2011).
You’ll be asked to provide information to show contract relevance, so keep this in mind when you write your response. Measures of relevance include contract size, scope and complexity, as well as the technical scope of work performed.
The description of the work is where you can stand out. Write your response to not only show that you performed relevant work — which every bidder does — but that you also had specific accomplishments that were meaningful to the government. Don’t just parrot back the statement of work from the contract you are citing. Focus on accomplishments because it’s these achievements that can make your contract past performance stand out from the crowd.
Most importantly, make sure you have outstanding past performance on the contracts you present. Confirm this information with your customers and with your teammates’ customers before you submit your proposal.
The government will read what you write, and they will validate the content. A good writer can present your past performance in a credible, compelling way, but if the underlying performance is less than desirable, it’s hard to overcome the truth.
About the Author: Bob Lohfeld is the chief executive officer of the Lohfeld Consulting Group. This article was published by Washington Technology on Feb. 10, 2012 at http://washingtontechnology.com/articles/2012/01/30/insights-lohfeld.aspx?s=wtdaily_130212.
January 18, 2012 by cs
Contractors can still challenge information tjat goes into the Federal Awardee Performance and Integrity System, but they have just a two-week window before the information becomes public.
The new provision takes affect Jan. 17, 2012. The start date was missing when the final rule was published Jan. 3.
Any information that agencies enter into database from Jan. 17 onward will be subject to a two-week delay before it is transferred to the publicly available part of FAPIIS. Past performance information won’t be published at all. Contractors will receive notice when new information about their company goes into FAPIIS, and they will have 7 days to point out information that should be exempt under the Freedom of Information Act.
In the new Federal Register notice, officials wrote that the delay until Jan. 17 will give agencies time to complete necessary system changes to support the two-week waiting period before contractors’ information goes live.
The current system is designed to automatically transfer information to the publicly available part of FAPIIS. Until officials make the change, companies would not have an opportunity to request withholding the information, the notice states.
FAPIIS is a one-stop website for contracting officers and federal employees to look at the history of companies’ work with the federal government. It includes data from the Performance Information Retrieval System, as well as information from other databases, including the Excluded Parties List System, which cites companies that are suspended or debarred from federal contracting.
The final rule gives companies seven days to find any information that should not be disclosed because it should be considered exempt. In such a case, officials will remove the information from FAPIIS to resolve the issue.
If the government official does not remove the item, it will be automatically released to the public website within 14 days after beginning entered into FAPIIS, according to the notice.
About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article appeared Jan. 11, 2012 at http://washingtontechnology.com/articles/2012/01/10/fapiis-contractor-information.aspx?s=wtdaily_120112.
January 6, 2012 by cs
The Obama administration solidified an interim rule that requires agency officials to post a government contractor’s work history in a publicly accessible website.
The Federal Awardee Performance and Integrity Information System (FAPIIS) is a one-stop web site for contracting officers and federal employees to look at the history of companies’ work with the federal government.
FAPIIS includes data from the Performance Information Retrieval System, as well as information from other databases, including the Excluded Parties List System, which lists companies that are suspended or debarred from federal contracting. The overall purpose of FAPIIS is to make it easier for contracting officers to get an overall assessment of a company before awarding a contract by not having to search numerous databases.
A year ago, acquisition officials issued an interim rule making all the information public, except for past performance reviews by agencies.
The final rule took effect Jan. 3.
In the Federal Register notice about the rule, officials recognized the risks about the information going public though.
The final rule gives companies seven days to find any information that should not be disclosed because it should be considered exempt from disclosure. In such a case, officials will remove the information from FAPIIS to resolve the issue.
If the government official does not remove the item, it will be automatically released to the public site within two weeks after the review period began, according to the notice.
About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article was published Jan. 4, 2012 at http://washingtontechnology.com/articles/2012/01/04/fapiis-public-disclosure-objections.aspx?s=wtdaily_050112.
March 16, 2011 by cs
President Obama’s Management Advisory Board, an independent panel of corporate leaders, suggested on Friday that the government must do more to incentivize its leadership and improve its operational management.
At its first meeting, the new board that was established to provide the White House with strategic advice on government management and operations, heard from administration officials on a range of topics, including the salaries of senior executives and the consolidated procurement efforts of federal agencies. Presentations also were delivered on information technology and federal customer service initiatives — each of which the group will tackle.
For example, John Berry, director of the Office of Personnel Management, explained how the difficulties of attracting — and then retaining — the best and brightest to work in the government instead of taking more lucrative private sector positions are exacerbated by charges that federal employees are overpaid.
Berry said the board could help dispel this notion because of its credibility in the business world. “When you carry that mission, it carries some weight,” he said.
The panel likely will focus on ways to better train and develop senior government leadership, recruit candidates from outside of government, improve the federal performance management system and reward high-performing employees.
There are limits to what the group can address, however. The administration does not have much flexibility in its compensation scale for its Senior Executive Service, with salaries generally ranging from $120,000 to $180,000, said W. Scott Gould, deputy secretary of the Veterans Affairs Department.
Removing poor-performing senior executives is on the table, but Gould, who has eliminated 20 such positions at VA in the past two years, suggested reform will not be easy. “It’s hard to do and takes a long time to go through the process,” he said.
The board also heard about the government’s efforts to improve its strategic sourcing of common commodities. The General Services Administration, which has developed blanket purchasing agreements that all agencies can use for the procurement of office supplies, plans to expand the practice in the future.
“Budget pressures are forcing agencies into these cooperative purchases,” GSA Administrator Martha Johnson said.
Dan Gordon, administrator of the Office of Federal Procurement Policy, said the government “struggles mightily” to define its acquisition requirements and is too dependent on contractors for core services. “We use contractors to write contracts for other contractors,” Gordon said.
Obama established the advisory board last April through an executive order to provide advice on how to implement best business practices on issues such as productivity, the application of technology and customer service.
The order called for the board, which is chaired by Jeffrey Zients, deputy director of management for the Office of Management and Budget, to include no more than 17 leaders from the private sector. On Thursday, Obama appointed 10 members to the board. An OMB spokeswoman said it’s possible that more board members will be named.
The board members are Greg Brown, president and chief executive officer of Motorola Solutions Inc.; Sam Gilliland, chairman and CEO of Sabre Holdings, a travel technology company; Jeffrey Kindler, former chairman and CEO of Pfizer Inc.; Debra Lee, chairwoman and CEO of BET Networks; Gail McGovern, president and CEO of the American Red Cross; Shantanu Narayen, president and CEO of Adobe Systems Inc.; Enrique Salem, president and CEO of Symantec Corp.; Elizabeth Smith, CEO of OSI Restaurant Partners LLC; Tim Solso, chairman and CEO of Cummins Inc.; and Ronald Williams, chairman of Aetna Inc.
The board, which is purely advisory, will operate for two years, unless the White House extends it.
– by Robert Brodsky – GovExec.com – March 11, 2011
January 26, 2011 by cs
In one of the most dramatic steps to date in shining a light on the conduct of firms that do business with the government, the General Services Administration will open its Federal Awardee Performance and Integrity Information System — otherwise known as FAPIIS — to public scrutiny within the next three months, GSA’s Senior Procurement Executive Joseph Neurauter said in an interview on Thursday.
A provision in the wartime supplemental appropriations bill, sponsored by Sen. Bernie Sanders, I-Vt., and signed into law by President Obama in July 2010, mandated that GSA disclose on a public website all information in FAPIIS, with the exception of past performance evaluations.
The bill did not provide a deadline for publicizing the information, which now is accessible only to a handful of government officials, lawmakers and contractors that are listed in the database.
“This is a good thing because it gives more transparency,” said Neurauter, who also serves as GSA’s suspension and debarment official. “That’s really what we are about. The more information that you can legally and within reason make available to the public, the better.”
FAPIIS, used by federal contracting officials since April, culls information dating back five years from a number of disparate federal databases and government records.
The database includes criminal, civil and administrative proceedings against suppliers in connection with federal awards; past performance evaluations; records of suspensions and debarments; administrative agreements issued in lieu of suspension or debarment; nonresponsibility determinations; contracts that were terminated for fault and defective price determinations.
And in a new development, the database also will include instances when a company’s behavior might have put its employees in harm’s way.
A provision in the fiscal 2011 Defense Authorization Act requires department contracting officials to publicly disclose cases when a procurement official denied or reduced a contractor’s award fee because of a company’s reckless or negligent behavior. The database also will include a determination of fault by Defense Department leadership.
For contracts above the simplified acquisition threshold of $150,000, federal contracting and grant officers are required to check FAPIIS before making a responsibility determination. The new public site, Neurauter said, will be searchable and user-friendly.
While much of the information available in FAPIIS is already publicly available on myriad federal websites, the data has never before been comprehensively assembled for public viewing.
On Monday, Jan. 24, an interim rule is expected to be published in the Federal Register informing the contractor community that FAPIIS data soon will be made public, Neurauter said. The public will have 60 days to comment on the notice.
But contractor officials already are raising concerns that opening the database to the public could jeopardize the integrity of the acquisition process and potentially risk the disclosure of private information.
“Making this data public opens the door to all kinds of misperceptions, misunderstandings and even mischief,” said Stan Soloway, president of the Professional Services Council, an industry trade association.
GSA officials are aware of industry’s concerns and are taking steps to redact data prohibited by the 1974 Privacy Act or that concerns a contractor’s proprietary information. Other information also could be withheld based on pending litigation, according to Neurauter.
“We can’t mindlessly put things in there,” he said. “We have to give it thought and consideration and understand there is a balance of competing regulatory and statutory interests that we have to be mindful of.”
Soloway, however, is concerned that the administration has yet to develop governmentwide business rules spelling out how contracting officials should use the information in FAPIIS. For example, the government has not provided guidance to procurement officials regarding how much weight a years-old tax discrepancy or equal employment violation should have in a company’s post-award responsibility determination.
“We are looking for clarity on how this information is going to be used,” Soloway said.
The Federal Acquisition Institute has developed a tutorial detailing the purpose of FAPIIS and the types of data it will include. The site is available at http://www.fai.gov/FAPIIS/trailer/module.htm.
– By Robert Brodsky – GovExec.com – January 21, 2011
August 10, 2010 by cs
Industry groups are expressing concern about a proposed Navy program that would reward contractors that best control costs, meet schedules, provide quality services and reduce energy consumption.
In May, the Navy announced it would establish a preferred supplier pilot program that would rate the service’s top 25 contractors based on “exemplary performance at their corporate level in the areas of cost, schedule, performance, quality and business relations.”
Companies designated as preferred suppliers would receive benefits such as more favorable progress payments, tailored reporting requirements and special award fee pools, but the conferred status would not be a factor in source selection, according to a May 24 Federal Register notice.
But, the Council of Defense and Space Industry Associations, made up of eight trade groups that represent thousands of contractors, argues the initiative is vague and poorly defined.
In comments issued to the Navy late last week, the council suggested that while it supports the program’s general concept, the proposal fails to clearly explain the criteria for entrance into the program or how it would accommodate new market entrants or small businesses with only a handful of contracts.
“It is right for the Navy to incentivize exemplary performance with the promise of preferred status,” said Alan Chvotkin, executive vice president and counsel for the Professional Services Council, a contractor trade association that is part of CODSIA. “However, any such program must also balance that preference with the innovations new entrants and small businesses may offer.”
Chvotkin noted the Navy’s initial guidance fails to answer several key questions. For example, while the preferred status will be conferred only at the corporate level — rather than on individual affiliates or subdivisions — it does not address joint ventures or business combinations. It also is unclear whether the Navy will evaluate only active contracts or if the program will encompass previous awards dating back several years.
In addition, the guidance fails to specify whether contracts with other Defense services will be considered, the groups said.
In a statement, the Navy said it had “received numerous comments during the open comment period, and we are analyzing input now. The Navy has not yet finalized how the Preferred Supplier Program pilot will be structured, but expects to do so after careful review of public and industry input.”
Preferred supplier programs are popular in the private sector and have been useful in incentivizing performance, according to the May Federal Register guidance. The Navy currently negotiates business arrangements on a contract-by-contract basis and “as a result of this decentralized and individual approach, loses an extremely important opportunity,” the notice said.
During the initial rollout, the Navy plans to use a five-star rating system based on Contractor Performance Assessment Reporting System data, although other sources of public information will be considered, the notice said. The Navy will consider a company’s technical competence, its ability to meet schedule and price, the responsiveness of management, oversight of key personnel, and the use of small business.
The program also will assess a contractor’s energy efficiency, but the council fears that such criteria could be an impediment for small businesses.
“What will be the impact on a small business that may not be in a financial position to implement specific energy efficiency or other PSP program components?,” the group asked in its comments. “Will the Navy have the resources to provide timely evaluation and responses to the influx of applications from potentially hundreds of primarily small and mid-tier businesses that will want to be designated a PSP? A gap in any of these areas will undercut the necessary legal and business foundations for a Navy PSP.”
The council urged the Navy to take a cautious approach in implementing the program. But, the Defense Department might have other ideas. In a June 28 departmentwide memorandum, Ashton B. Carter, undersecretary of Defense for acquisition, technology and logistics, suggested that as part of his industry efficiency initiative the Pentagon could “emulate the Navy’s pilot program to provide special benefits to consistently excellent industrial performers.”
Chvotkin said expanding a yet-untested program would be a mistake. “Adopting this model across DoD before it is even tested in the Navy would be premature and could hurt the ability of firms to compete in the Defense marketplace,” he said.
– by Robert Brodsky – GovExec.com – August 3, 2010
July 3, 2010 by cs
Georgia Tech’s Enterprise Innovation Institute will offer two courses this month approved by the International Economic Development Council (IEDC) as qualifying for the highly sought-after Level Two recertification credits for Certified Economic Developers (CEcDs). The courses – How to Conduct Business Intelligence to Gain a Competitive Advantage and How to Conduct Performance Tracking to Demonstrate ROI – will be held on July 20 and 21 in Atlanta, Georgia and are part of Georgia Tech’s new “Tools of the Trade” series.
“These courses will contribute to the continued growth of knowledge within the economic development profession,” said Jeffrey A. Finkle, CEcD, president and CEO of the International Economic Development Council. “Providing practitioners with access to information is consistent with our mission.”
The July 20 class – How to Conduct Business Intelligence to Gain a Competitive Advantage – will help participants learn how to conduct basic business intelligence research to gather a wide variety of information about companies, their competitors and the total business environment. Market and industry trends, environmental conditions and legal and regulatory issues will be discussed.
In How to Conduct Performance Tracking to Demonstrate ROI on July 21, participants will learn how to manage their economic development programs more effectively and how to maintain public support by demonstrating that their program is results-oriented. Leading-edge economic development organizations measure their progress in meeting strategic goals and objectives, gather and analyze performance data and use that information to translate strategy into action.
The design for these courses was based on findings from a 2009 survey on professional development courses for economic development in which more than 60 percent of the respondents identified these two topic areas as areas of interest.
“For more than 40 years, Georgia Tech has served economic development leaders through professional development offerings,” said Joy Wilkins, CEcD, manager of community innovation services at Georgia Tech’s Enterprise Innovation Institute. “We are honored to continue this commitment with these new courses. Our goal is to bring in thought leaders for the economic development profession on key strategic matters.”
The CEcD program is the leading industry designation administered by IEDC – the world’s largest membership organization serving the economic development profession – and demonstrates a breadth of knowledge to perform at the top level in the profession. CEcDs must reapply for recertification every three years by participating in professional development events, such as these Georgia Tech courses, and by contributing to the growth of the profession.
To register or to learn about Georgia Tech’s full menu of economic development course offerings, including IEDC courses which count toward the certification and recertification of economic developers, go to http://www.pe.gatech.edu/subjects/economic-development.
For more information, contact course administrator Hortense Jackson (229-430-4327); e-mail: (email@example.com) or Joy Wilkins, CEcD (404-895-6115); e-mail: (firstname.lastname@example.org).
About Enterprise Innovation Institute:
The Georgia Tech Enterprise Innovation Institute helps companies, entrepreneurs, economic developers and communities improve their competitiveness through the application of science, technology and innovation. It is one of the most comprehensive university-based programs of business and industry assistance, technology commercialization and economic development in the nation.
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Writer: Nancy Fullbright on June 30, 2010
June 8, 2010 by cs
Frank Kendall arguably has the most difficult job in all of federal acquisition — rooting out the source of entrenched waste in the Defense Department’s $375 billion-per-year contracting system.
It’s an assignment that, over the years, many have undertaken, but few have completed. In his first interview since being confirmed in March as principal deputy undersecretary of Defense for acquisition, technology and logistics, Kendall told Government Executive that he plans to approach the mission from a different perspective — a ground-up strategy examining the root causes of waste and inefficiency.
“I have been around this business for about 40 years and have been through every cycle of acquisition reform at least once or twice,” Kendall said. “But, I don’t know that we have really gotten at the built-in incentives to optimism that exist in our system or gotten at what we are really paying for with our somewhat unrealistic projections about schedule, technology or cost.”
As the department’s second-highest ranking politically appointed acquisition official, Kendall has assembled a team of people from Pentagon headquarters and the various service agencies to decipher and measure the sources of acquisition waste.
But the examination is more than a simple process-oriented review to eliminate system redundancy or streams of paperwork. Kendall wants to reform the behavior and incentives that lead to cost inefficiencies, some of which are deeply engrained in the Defense acquisition process.
“DoD is in the business of doing programs and we have been a factory for programs for many years,” he said. “But we still don’t have the process of doing programs well understood and well under control.”
For example, Defense has a tendency to sign on to the next latest and greatest technological advance, no matter if the program is necessary, ready or affordable, he said. Budget operators and service leaders, meanwhile, want to spend as little as possible for weapons systems, but then impose unrealistic schedules on contractors. And companies place bids on contracts that are overly optimistic, hoping they will recoup costs further downstream, according to Kendall.
“I am hopeful that once we understand what those behaviors are costing us in terms of inefficiency then it will be easier to change them,” he said. “That is a hypothesis that has yet to be proved.”
Reforming the acquisition system of the largest single buyer of goods and services on the planet will not be easy. Interest groups scattered throughout the Pentagon advocate passionately for pet projects. Congress is deeply invested in keeping Defense projects — and the jobs associated with them — in their backyard, an all-too familiar scenario that most recently has played out with the F-35 Joint Strike Fighter.
“There is a certain amount of institutional inertia that needs to be overcome,” Kendall said.
The West Point alumnus has seen the Defense system from all angles. He spent a decade on active duty in the Army and later held various departmental jobs, including director of tactical warfare programs. Kendall has served as a consultant to industry and nonprofit research firms and was vice president of engineering at Raytheon, one of the largest Pentagon contractors. Most recently, he was a managing partner at Renaissance Strategic Advisors, a Virginia aerospace and defense sector consulting firm.
Kendall returns to Defense at a time of intense transition. The Pentagon has cut several big-ticket programs, addressed significant reforms to its weapons procurement system and begun the process of building up its in-house skill sets, particularly in the fields of engineering, program management and acquisition.
Last year, Defense Secretary Robert Gates announced he would reduce the percentage of support service contractors from its current level of 39 percent of the workforce to its pre-2001 level of 26 percent. The Pentagon will replace those contractors during the next five years with 39,000 new full-time government employees, 20,000 of whom would be acquisition professionals, although the latter figure could grow, Kendall said.
The additions to the Pentagon acquisition workforce would be split roughly between 10,000 insourcing conversions and 10,000 new hires. As of the end of March, the department has hired approximately 4,800 new employees, nearly two-thirds through insourcing, according to Defense spokeswoman Cheryl Irwin.
Industry officials have criticized the insourcing initiative as “quota driven,” arguing routine commercial activities are being moved in-house without any verifiable cost savings. But Kendall claims those concerns are off target and miss the big picture.
“Our focus has been on bringing certain skills and certain capabilities back into the government that had gone out,” he said. “We are less concerned about cost comparisons.”
And while the department and the various service agencies have set specific insourcing targets through discussions with their buying commands, Kendall said the process is being conducted carefully and deliberately. “When people use the word ‘quota’ there is a perception of arbitrariness,” he said. “That is not our intent. We are trying to bring in specific needs of the government to do jobs where they atrophied too much. … We are not measuring performance in terms of pure numbers. We want quality and we want the right kinds of people brought in to do the work that needs to get done.”
– By Robert Brodsky - GovExec.com - June 2, 2010