On April 24, the Under Secretary of Defense for Acquisition, Technology and Logistics issued a memorandum about implementation of the “Better Buying Power” initiative, phase 2.0. You can find it at:
Sigh, another acquisition improvement memo.
But, reading the thing, I came upon this interesting paragraph:
“Think”! Now that’s something you don’t often see in an official memo. You’re much more likely to see something like, Just do it. Why did the Under Secretary write that? Does he believe that people haven’t been thinking, or was “Think” just a rhetorical exhortation? Let’s give him the benefit of the doubt and assume that he really isn’t happy with the present state of acquisition thinking. He shouldn’t be.
What Is Thinking?
What does “Think” mean? Let’s think about this. “Think.” What is thinking, exactly? It’s a mental activity, we all know that. Is it something that must be accomplished, or is it a method of accomplishing something? Is it a function — a set of tasks directed towards a general purpose, like maintenance, or is it a specific task? Is it a method? If so, is it a specific method or is there more than one way to think? If there is more than one method, how many more, and in what ways do they differ? Is thinking the same as reasoning? Can one think without reasoning, or reason without thinking? Is there unreasoning thinking, or unthinking reasoning?
As I pondered thinking I recalled a book that might help and rummaged around in my library until I found it: What Is Called Thinking? (English trans., 1968) by Martin Heidegger. I shuddered as I recalled the college course (oh, so long ago) in which it was assigned reading. I frankly don’t remember much about the book, and my old underlining didn’t help. But the very first two paragraphs were a bad omen:
That book is sitting on my nightstand now, like the raven on Poe's bust of Athena. It’s time to pull out a dictionary.
One of the definitions for think in the American Heritage Dictionary of the English Language, 5th ed., is as follows:
A Dictionary of Philosophy, Rev. 2d ed. (1979), by Anthony Flew, provides something a little more expansive on pp. 352 - 353:
I found a longer entry about thinking in Volume 8 of The Encyclopedia of Philosophy, Reprint Edition (1972), pp. 100 – 103, which contains the following:
Despite their obvious shortcomings, I like those last two explanations, because I can relate them to things that contracting personnel do at work. For instance thinking about what evaluation factors to use in a source selection is deliberation. Thinking about what kind of thing an evaluation factor is and what kinds of evaluation factors there are is contemplation. Deliberation is practical. Contemplation is theoretical. You deliberate in order to decide what to do. You contemplate in order to understand and develop ideas.
So, what is thinking? (The definitions that I quoted are from lexicographers and philosophers. A psychologist might answer differently. See Thinking, Fast and Slow (2011), by Daniel Kahneman.) I believe thinking is a debate with yourself — a purposeful process of asking yourself questions about something and then trying to answer them. You ask, you answer, you challenge, you respond, and you decide, just you and yourself, in foro interno. For example: What is an evaluation factor? Answering entails definition, induction, analysis, classification, deduction, and argument. Each of those operations should be performed according to exacting standards of rigorous thought. You will get a different answer from other people. It is something to think about. But right now I like the contemplation/deliberation distinction and will run with it.
Contemplation and Deliberation
It seems to me that in order to deliberate well, you must contemplate first. You cannot deliberate well about what contract type to use until you first contemplate the concept of contract types until you understand what they are and how they are supposed to work. In order to do that you must read more than the summary descriptions in FAR Part 16 or in a set of PowerPoint slides. You must read the standard contract clauses peculiar to each type and think about how the clauses work together and with what results. You must then figure out how each contract type differs from the others. You must also contemplate contract type theory, which holds that the right distribution of cost risk “will provide the contractor the greatest incentive for efficient and economical performance.” Is that true? In order to contemplate contract type theory, you have to contemplate risk: What is it? What causes it? Can you measure it? If so, how? And on, and on. It’s never done.
In order to deliberate well a professional must have a head full of well developed professional ideas gained through contemplation, as many as possible. You will need them in your deliberations. Much deliberating is done in cooperation with others, and you can better communicate and be understood when your ideas are well-developed and deep, so that you can explain them clearly and answer questions.
Where do you get such ideas? You get them by going to school, reading, talking things over with colleagues, and, especially important, by going into a quiet corner and asking yourself questions and developing answers about the things that you have been taught, that you have read, that you have heard, and that you have worked out for yourself. It takes quite a lot of effort, and it takes a long time, a professional lifetime. It’s never done.
Understand Simple Things Deeply
According to The 5 Elements of Effective Thinking (2012) by Edward B. Burger and Michael Starbird, the first key to effective thinking is to master the fundamentals by understanding simple things deeply. “The most fundamental ideas in any subject can be understood with ever-increasing depth.” If asked to explain cost, as used in cost estimate, cost analysis, and should cost, what would you say? If asked to define cost on the spot, could you do it? A cost estimate is an estimate of what, exactly? How much and how good of an explanation could you give to someone who doesn’t know anything about it? How deeply could you go into that concept? Could you anticipate the inevitable questions? Could you answer them?
If you are a contract specialist, how much do you know about the concept of contract? Can you go beyond “an agreement that the courts will enforce” or offer, acceptance, mutual assent, consideration, competent parties, legal purpose, etc., or the definition in FAR 2.101? How long can you talk about What is a contract? Five minutes? Fifteen minutes? An hour? Longer? How much do you know about, and how deeply do you understand, the thing in which you specialize?
In his memo, the Under Secretary alludes to the importance of contemplation:
Contemplation is professional preparation for deliberation. Deliberation is the practical application of professional ideas to professional problems. You cannot deliberate well if you have not first contemplated well, and in order to contemplate well you have to put in a lot of work. And it’s never done.
The Perils of Deliberation without Prior Contemplation
What happens when you deliberate before you contemplate? Consider: The Department of Defense IG recently issued a report that is critical of the way DOD contracting personnel awarded and administered performance based payments (PBP). See DOD Inspector General Report No. DODIG-2013-063, Award and Administration of Performance Based Payments in DOD Contracts, April 8, 2013, and FAR Subpart 32.10, Performance Based Payments.
According to the DODIG:
In order to award performance based payments (instead of progress payments based on costs), contracting officers must identify and select performance events (aka, milestones) and then pay contractors based on the predetermined value of the occurrence of the event. See FAR 32.1004(a)(1). FAR doesn’t explain the concept of an event, but says that contracting officers may not use as events such occurrences as (1) the signing of contracts or modifications, (2) the exercise of options, and (3) the mere passage of time.
Maybe what the DODIG found happened because the contracting personnel deliberated about what events to use before they had contemplated the concept of an event. Perhaps they did not ask and answer some basic questions:
· What is an
· What is a performance event in the context of performance-based payments?
· Are there different kinds of events and, if so, how many kinds are there, and what are the differences?
· Of the various kinds of events, which are appropriate to use as bases for performance based payments?
Perhaps they should have contemplated those matters and identified the attributes common to (1) the signing of contracts or modifications, (2) the exercise of options, and (3) the passage of time that make those events unsuitable. Then, when deliberating about what events to use, they could have made sure not to choose any that had those attributes.
Now consider this: Suppose that a source selection team must decide what evaluation factors to use. See FAR 15.304. The team sets to thinking about their choices, and decides to look at old RFPs for examples. They then choose certain ones and cut and paste. They don’t stop to ask themselves:
· What is evaluation?
· What is an evaluation factor?
· Are there different kinds of evaluation factors?
· If so, how do they differ from one another, and what is the significance of each of those differences to the tasks of proposal preparation and proposal evaluation?
If the agency’s acquisition personnel don’t devote some time to contemplating those things, if they cut and paste from old RFPs, they may end up making bad choices and being unsuccessful or less efficient and economical than they could have been in identifying the firm that offers best value. See Vernon J. Edwards, “Streamlining Source Selection by Improving the Quality of Evaluation Factors,” The Nash and Cibinic Report, October 1994.
Is Anyone Thinking?
How good are acquisition personnel at thinking? Do they contemplate before they deliberate, and do they contemplate and deliberate well? Are they professionally prepared to do those things, as the Under Secretary says that they must be in order for their thinking to be of any use and to have a good outcome?
Based on extensive personal experience in the classroom, I believe that acquisition personnel could do much better at professional level thinking. They are not alone in that. It is often asserted that today’s undergraduate education does not prepare students to think well. The private sector has long recognized this problem. See “Executives to new grads: Shape up!” by Anne Fisher, accessible on line at CNNMoney:
See also “What are most students learning in college? Not enough, study says,” by Sara Rimer in The Hechinger Report, January 18, 2011:
Many public and private universities and some institutions of professional military education offer courses about thinking. Harvard even has a course called “Thinking about Thinking.” The National Defense University, in conjunction with the Defense Acquisition University, offers a two part, two semester course entitled, Critical Thinking and Decision Making in Defense Acquisition, ICAF 6152-1 and 6153-1, but it is available only to those who already have a Level III certification and who are enrolled in the Senior Acquisition Course. If thinking is so important in acquisition, why isn’t there a course more widely available for those in earlier phases of their professional development? Why wait until someone is a decision maker to offer them such training? Many mature students have complained to me that they didn’t get the right kinds of training early enough in their careers. Why is that so?
Assuming that acquisition personnel know what thinking is and are able to do it well, do they have enough time to think, given their professional workload and their reporting, data entry, and other clerical duties? Do they have enough administrative and clerical support?
The workload has been crushing over the last decade, and the rules keep getting more and more complex. In October 1995, the rule in FAR 16.505( b ) governing the multiple award task order contract “fair opportunity” process was 565 words long. By May 2012 the rule had grown to 2,203 words. There was a similar development in the rule in FAR Subpart 8.4 governing the placement of orders against GSA Federal Supply Schedule contracts. That kind of development means more work to process a contract action. Also, the issuance of new reporting requirements has become practically routine. Administrative and clerical support is virtually nonexistent, yet, every year, Congress and senior officials in the Executive Branch pile more reporting and data entry tasks onto the shoulders of contracting personnel. I believe that I know what a random sample of GS-1102s would say if asked whether they have enough time to think deeply about anything at work.
Thinking, however, can produce troublesome thoughts, and I wonder if the Under Secretary realizes what he has asked for and, if so, whether he means it. What if people begin to think and their thinking leads them to question fundamental tenets of acquisition dogma? For example, what if contemplation leads them to question the efficacy of proposal-based competition for development contracts? What if they argue that such competitions encourage the submission of inflated promises and foster unrealistic expectations? What if they begin to question the utility of contract incentives and to argue that they cost more to plan and administer than they yield in terms of reductions in cost and improvements in performance?
Will such thinkers be welcomed and their thoughts given serious consideration? Or will they face professional “excommunication” and see their thoughts rejected out of hand? How open will the higher ups be to their ideas? Will they encourage and support such thoughts?
Consider the DOD Source Selection Procedures issued under the previous Under Secretary on March 4, 2011:
Italics added. “All” -- no exceptions. Waivers require the “express permission” of the Director of Defense Procurement. In short: Don’t think. We’ve already done the thinking. Just do what we say. Use the standardized rating tables, whether they make sense in your case or not, whether or not you think there is a better scheme. That’s ironic in light the Under Secretary’s memo: “Our workforce should be encouraged by leaders to think and not to automatically default to a perceived school solution just because it is expected to be approved more easily.”
Yet, we need thinkers in acquisition, and good ones. I recently read the following in “Education for Critical Thinking,” by Col. Thomas M. Williams, in Military Review, January-February 2013, pp. 49- 54:
Substitute acquisition for “war” and “operational,” and I think his statement applies equally well to the work of acquisition professionals.
Acquisition is a squishy field. While there are acquisition laws, regulations, and dogma, to be sure, most of the big problems involve fuzzy logic, and experts can and do disagree about solutions. Critical thinking is an essential skill. So it makes sense that the Under Secretary demands that DOD acquisition professionals think, but it is ironic that his office has issued directives like the source selection memo.
I wonder whether the Under Secretary is serious about wanting acquisition personnel to think. If he is serious, I wonder what he is going to do about it. A memo isn’t an accomplishment. Is it? Well, is it?
Two of my students, who work for a very large government contractor, told me that the contracting officers (COs) who administer their contracts unilaterally update contract clauses from time to time when they add funds to the contract or when they exercise options. They wondered if that was okay.
It's not okay.
More than a few people believe that the government must update contract clauses when the government changes the Federal Acquisition Regulation (FAR). Some of them think that the government may do so unilaterally. Others believe that contracts are “automatically” updated when the government changes the FAR. Those beliefs are false.
Once the government and a contractor enter into a contract a deal is a deal, and the government and the contractor are bound by the clauses in the awarded contracts until the contracts are completed. Nothing in FAR and no standard FAR clause authorizes a CO to unilaterally update, add, or delete clauses in a contract after award. None of the five Changes clauses, FAR 52.243-1 through -5, empower a CO to do that.
Thus, with a few exceptions, which are discussed below, changes to FAR clauses — revisions, additions, and deletions — must be accomplished through supplemental agreement [(bilateral modification). See FAR 43.103(a)(3). Any such supplemental agreement must be supported by consideration in order to be contractually enforceable.
In this blog entry I will address two questions:
1. What FAR clauses must COs insert in their contracts and purchase orders?
2. What happens after contract award when a Federal Acquisition Circular (FAC) revises, adds, or deletes a clause that is applicable to a contract of the type awarded, or changes a portion of FAR that has been incorporated into the contract by a clause?
FAR contract clauses
The FAR and agency FAR supplements prescribe the use of standard contract clauses to implement the statutes, regulations, and policies that apply to government contracts. FAR clauses implement the statutes, regulations, and policies that are in effect on (1) the date the solicitation for the contract was issued, (2) the date of contract award, or (3) some other date, depending on the terms of the clause. See, e.g., FAR 52.202-1, “Definitions (JAN 2012),” which incorporates into contracts the FAR definitions in effect “at the time the solicitation was issued.” See also FAR 52.216-7, “Allowable Cost and Payment (JUN 2011),” subparagraph (a)(1), which incorporates the text of FAR Subpart 31.2 that is in effect “on the date of this contract.” And see FAR 52.227-11, “Patent Rights—Ownership by the Contractor (DEC 2007), which incorporates the procedures in 37 C.F.R. § 401.6 and agency supplements in effect “on the date of contract award.” The language in those clauses fixes the version of the statute, regulation, or policy for the duration of the contract, unless the contract expressly provides otherwise.
What FAR clauses must COs insert in purchase orders and solicitations?
A purchase order or solicitation states the government’s terms, and quoters or offerors are expected to base their quotes and proposals on those terms. A purchase order or a solicitation for a contract must include the clauses prescribed by the various parts of the FAR. See, generally:
For commercial items, FAR 12.301(a):
12.301 Solicitation provisions and contract clauses for the acquisition of commercial items.
(a) In accordance with Section 8002 of Public Law 103-355 (41 U.S.C. 264, note), contracts for the acquisition of commercial items shall, to the maximum extent practicable, include only those clauses—(1)
Required to implement provisions of law or executive orders
applicable to the acquisition of commercial items
For purchase orders issued pursuant to simplified acquisition procedures, FAR 13.302-5:
(a) Each purchase order (and each purchase order modification (see 13.302-3)) shall incorporate
all clauses prescribed
for the particular acquisition.
For acquisitions conducted using sealed bidding, FAR 14.201-3:
14.201-3 Part II—Contract clauses.
Section I, Contract clauses. The contracting officer shall include in this section
the clauses required by law
or by this regulation and any additional clauses expected to apply to any resulting contract, if these clauses are not required to be included in any other section of the uniform contract format.
For acquisitions conducted by negotiation, FAR 15.204-3:
15.204-3 Part II—Contract Clauses.
Section I, Contract clauses.
The contracting officer shall include in this section
the clauses required by law
or by this regulation and any additional clauses expected to be included in any resulting contract, if these clauses are not required in any other section of the uniform contract format. An index may be inserted if this section’s format is particularly complex.
What does all of that mean? It means that a CO must include in a purchase order or solicitation all clauses that FAR prescribes for a prospective contract and that are in effect on the date the solicitation is issued. When an offeror bases its offer on the solicitation, and the government accepts that offer, the contract includes the clauses that were in the solicitation and the parties are bound by those clauses. A CO cannot change (revise, add, or delete) any clauses in a contract document after the offeror has signed it without the agreement of the offeror. Any such agreement would constitute a new offer.
What happens when a Federal Acquisition Circular (FAC) containing a clause change is issued before or after a solicitation is released, but the change does not take effect until after the solicitation has been released?
Suppose that a CO is preparing a solicitation for a firm-fixed-price supply contract that is expected to exceed $10 million and that the CO plans to issue the solicitation on June 1 and award the contract on December 1. Now suppose that on May 15, a Federal Acquisition Circular (FAC) comes out that adds a new clause to FAR that must be inserted in all FFP contracts that will exceed $5 million. The FAC states that the new clause will become applicable on August 15. Now suppose further that the agency office reviewing the solicitation before its release insists that since the prospective contract will be awarded after the clause becomes applicable the CO should include the new clause in the solicitation. According to FAR 1.108(d)(1), the new clause does not apply to the solicitation and need not be included, but according to FAR 1.108(d)(2) the CO may include it in the solicitation as long as the contract will be awarded after the new clause becomes applicable.
Thus, purchase orders and solicitations must include the contract clauses that are applicable on the date the solicitation is issued, and they may include any clauses that become applicable after that date as long as they are expected to be applicable on or after the date of contract award.
What happens when a clause change takes effect after contract award?
Assuming that the CO included all applicable clauses when soliciting offers, after contract award the government and the contractor are bound by the clauses in their contract throughout the period of performance. In the absence of a contract clause that expressly authorizes the CO to revise, add, or delete a clause without the contractor’s consent, any attempt to bind a contractor to a unilateral clause change would be a breach of contract. See General Dynamics Corp. v. U.S., 47 Fed. Cl. 514, 544 - 547 (2000) and United States v. Winstar Corp., 518 U.S. 839 (1996).
However, FAR 1.108(d)(3) permits COs to include FAR changes in existing contracts “with appropriate consideration.” Thus, changes to the contract clauses must be on the basis of supplemental agreement (bilateral modification), not unilateral action by the CO. The consideration would flow from the party seeking inclusion of the clause to the party agreeing to the inclusion. The amount of the consideration is negotiable.*
Automatic Updating Of Clauses?
There are some contract clauses that provide for automatic updating of contract terms following a change in law or regulation. For example, FAR 52.222-43, “Fair Labor Standards Act and Service Contract Act — Price Adjustment (Multiple Year and Option Contracts) (SEP 2009)” and 52.222-44, “Fair Labor Standards Act and Service Contract Act — Price Adjustment (SEP 2009) provide for automatic updating in response to a change in the minimum wage pursuant to the Fair Labor Standards Act of 1938. FAR 52.230-2, “Cost Accounting Standards (May 2012),” 52.230-5, “Cost Accounting Standards—Educational Institution (May 2012),” and 52.230-6, “Administration of Cost Accounting Standards (JUN 2010)” provide for automatic updating following a change to the Cost Accounting Standards. All such changes apply prospectively, not retroactively. See FAR 52.230-2:
(a) Unless the contract is exempt under 48 CFR 9903.201-1 and 9903.201-2, the provisions of 48 CFR Part 9903 are incorporated herein by reference and the Contractor, in connection with this contract, shall…
* * *
(3) Comply with all CAS, including any modifications and interpretations indicated thereto contained in 48 CFR Part 9904, in effect on the date of award of this contract or, if the Contractor has submitted certified cost or pricing data, on the date of final agreement on price as shown on the Contractor’s signed certificate of current cost or pricing data. The Contractor shall also comply with any CAS (or modifications to CAS) which hereafter become applicable to a contract or subcontract of the Contractor. Such compliance shall be required prospectively from the date of applicability to such contract or subcontract.
(4)(i) (Agree to an equitable adjustment as provided in the Changes clause of this contract if the contract cost is affected by a change which, pursuant to paragraph (a)(3) of this clause, the Contractor is required to make to the Contractor’s established cost accounting practices.
(ii) Negotiate with the Contracting Officer to determine the terms and conditions under which a change may be made to a cost accounting practice, other than a change made under other provisions of paragraph (a)(4) of this clause; provided that no agreement may be made under this provision that will increase costs paid by the United States.
(iii) When the parties agree to a change to a cost accounting practice, other than a change under subdivision (a)(4)(i) of this clause, negotiate an equitable adjustment as provided in the Changes clause of this contract.
May COs unilaterally update contract clauses when exercising options?
No. The clauses that apply to option periods are locked in at the time of contract award. FAR does not require that COs update clauses when exercising options. Moreover, the law of contracts does not permit COs to unilaterally change the terms of an option once they have been set. Absent express agreement to the contrary, the government must exercise options in strict accord with their terms. See Chemical Technology, Inc., ASBCA No. 21863, 80-2 BCA ¶ 14728:
The general rule governing the exercise of an option has been clearly stated by this Board in
General Dynamics Corporation
, ASBCA No. 20882, 77–1 BCA ¶ 12,504 at 60,622:
An option is an offer couched in specific terms, the acceptance of which must be unconditional and in exact accord with the terms offered. The general attitude of the courts is to construe strictly this legal requirement
Williston on Contracts
, Third Edition, Secs. 61B; 61D;
United States v. T. W. Corder, Inc.
, 208 F.2d 411, 413 (1953);
International Telephone and Telegraph, ITT Defense Communications Division v. The United States
, [17 CCF ¶81,071], 197 Ct. Cl. 11 (1972).
McArthur et al. v. Rosenbaum Company of Pittsburg
, 180 F.2d 617, 620 (3rd Cir., 1950). Even substantial compliance with the terms of an option is insufficient. See 17 CJS, Contracts, Section 42, n. 83(2) at 676.
Any attempt by the government to impose new terms on a contractor when exercising an option would be breach of contract and would invalidate the option. See New England Tank Industries of New Hampshire, Inc. v. U.S., 861 F. 2d 685 (Fed. Cir. 1988):
It is well-settled that to properly exercise [an] option, the government’s acceptance of the offer [must] be unconditional and in exact accord with the terms of the contract being renewed.
* * *
The dispositive question is whether the government's exercise of its option to renew the contract was valid or invalid. As above noted, the board recognized that an attempt to alter the contract terms would “render ineffective the purported exercise of an option,” and that insertion of an “availability of funds” clause renders the option exercise “invalid”, see 88–1 BCA at 103,166, and neither party quarrels with those statements of the law.
The rule that exercise of an option must be in accordance with the terms of the option as awarded is reflected in FAR 17.207(e), which requires that before exercising an option the CO must make a written determination that the exercise “is in accordance with the terms of the option….” Thus, unless a contract contains an express term to the contrary, COs have no authority to unilaterally update contract clauses when exercising options.**
What is the effect of changes to parts of the FAR that were incorporated into a contract by reference?
Several FAR contract clauses incorporate parts of the FAR into contracts by reference. See e.g., FAR 52.202-1, which incorporates FAR definitions “in effect at the time the solicitation was issued,” and 52.216-7(a)(1), which incorporates the version of FAR Subpart 31.2 “in effect on the date of this contract.” In those examples, the terms of the FAR are fixed in time and cannot be altered without mutual agreement of the parties and consideration.
But what if the clause does not fix the terms of the FAR? See e.g., FAR 52.211-15, “Defense Priority and Allocation Requirements (APR 2008).” It requires the contractor to comply with “15 C.F.R. 700,” without further qualification. See also the various small business clauses that require the contractor to comply with Title 19 of the C.F.R., and the labor law clauses that require the contractor to comply with Title 29. If those regulations change after contract award the contractor is always bound by the current regulation. In such cases the updating is automatic and does not require a contract modification unless the clause provides for an adjustment of some kind, equitable or otherwise.
As I mentioned above, some clauses, such as the Cost Accounting Standards clause, provide for automatic updating with price adjustment.
Can Congress enact a law that changes existing contracts?
Yes, but they might breach the contract if they do. That was the holding of the Supreme Court in United States v. Winstar Corp., cited above, in which Congress changed a law, and the agency changed its regulations accordingly, after entering into contracts with financial institutions:
When the law as to capital requirements changed in the present instance, the Government was unable to perform its promise and, therefore, became liable for breach. We accept the Federal Circuit's conclusion that the Government breached these contracts when, pursuant to the new regulatory capital requirements imposed by FIRREA [Financial Institutions Reform, Recovery, and Enforcement Act of 1989], 12 U.S.C. § 1464(t), the federal regulatory agencies limited the use of supervisory goodwill and capital credits in calculating respondents' net worth. 64 F.3d, at 1545. In the case of Winstar and Statesman, the Government exacerbated its breach when it seized and liquidated respondents' thrifts for regulatory noncompliance.
In Winstar, the court quoted its decision in Sinking Fund Cases, 99 U.S. 700 (1879):
The United States are as much bound by their contracts as are individuals. If they repudiate their obligations, it is as much repudiation, with all the wrong and reproach that terms implies, as it would be if the repudiator had been a State or a municipality or a citizen.
Getting back to my two students, absent express language in the contract to the contrary, a CO may not unilaterally change the clauses in a contract when funding the contract or exercising an option. He or she may change clauses only with the assent of the contractor and with consideration for the change.
I asked my two students how they responded when their COs unilaterally updated the clauses in their contracts. They said that they went along with it, because so far none of the changes had much if any effect. That is too bad, because they are teaching the COs in question that what they are doing is okay. It is not okay. And it is not wise for one party to a contract to let the other party violate its rights by unilaterally imposing new terms.
*Note that “consideration” is not the same as an “equitable adjustment.” An equitable adjustment is a fair increase or decrease in the contract price or estimated cost and fee and the time required for contract performance, as required by a contract clause, such as a Changes clause or Differing Site Conditions clause. The amount of the equitable adjustment is based on the estimated or actual effect of the change on the cost or time required for performance. When the parties to a contract agree to modify it on the basis of mutual agreement, and not in accordance with a contract clause that provides for equitable adjustment, the parties are making a new bargain and the bargain must be supported by consideration in order to be enforceable in court. Consideration is necessary whether or not there is any effect on cost or time. The amount of the consideration is not determined or limited on the basis of the effect on cost or time, but is determined through bargaining. The consideration would flow from the party that will benefit from inclusion of the clause to the party that agrees to its inclusion.
**However, the parties may change the terms of a future option period pursuant to the terms of contract clauses, such as the Changes clause, or pursuant to a justification for other than full and open competition.
Despite the plain language of the FAR definition of claim and an overwhelming amount of case law, many contracting practitioners falsely believe that claims and requests for equitable adjustment (REA) under a contract clause are categorically different, that a contractor must submit an REA before it can submit a claim, and that there can’t be a claim until the parties have reached an impasse or are in dispute. Those beliefs are untrue. My objective in this blog entry is to explain why.
What Is a "claim"?
The Contract Disputes Act, 41 U.S.C. 7101 – 7109, does not define claim. The only official definition is in FAR 2.101, which defines "claim" as follows:
“Claim” means a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract. However, a written demand or written assertion by the contractor seeking the payment of money exceeding $100,000 is not a claim under the Contract Disputes Act of 1978 until certified as required by the Act. A voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim. The submission may be converted to a claim, by written notice to the contracting officer as provided in 33.206(a), if it is disputed either as to liability or amount or is not acted upon in a reasonable time.
Reading that definition closely, we see that there are four sentences. The first sentence defines claim as: (1) a written demand or assertion, (2) by the prime contractor or the government, (3) seeking "relief" to which the contractor or the government believes it is entitled pursuant to the terms of a contract clause or due to breach of contract by the other party. (See Note 1.) In order to be a claim a contractor's request for contractual relief must have all of the elements stated in the first sentence.
The second sentence requires certification of claims for more than $100,000. (See Note 2.) A contractor request for more than $100,000 that is not certified is not a claim.
The third sentence says that routine requests for payment must be in dispute when submitted in order to be a claim. Thus, a request for payment upon completion of performance and acceptance of the work or a request for a progress payment is not a claim unless it was in dispute when submitted.
The fourth sentence says that a routine request for payment may be converted to a claim under certain circumstances.
We need to dig still deeper. First, the words "assertion" and "demand" in the first sentence are legal terms of art for requests for what one believes he or she is entitled to. See Blacks Law Dictionary 9th (2009). They should not be understood to mean that a contractor’s request must be strident, angry, or vehement, or be the product of strife or dispute.
Second, "sum certain" means a specific amount. There can be no equivocation using language such as “approximately,” “at least,” “in excess of,” “well over,” or “no less than.” However, the sum certain requirement can be met through the use of a formula that permits the amount to be determined mathematically. (See Note 3.)
Third, although the FAR definition does not say so, the CDA and the boards and courts require that in order to be a claim a contractor's request for relief must ask the CO for a decision on the matter. See 41 U.S.C. Sec. 7103( a ). The request need not be explicit, but may be implied from the context of the assertion or demand. See James M. Ellett Construction Co. v. United States, 93 F.3d 1537, 1543 (Fed. Cir. 1996); BLR Group of America, Inc. v. United States, 96 Fed. Cl. 9, 13 (2010).
Fourth, although the second sentence in the definition says that contractors must certify claims “seeking payment of money” in excess of $100,000, the CDA requires certification of any monetary claim in excess of $100,000, whether for immediate payment or price adjustment. See 41 U.S.C. 7103( b ).
Contracting practitioners must be able to recognize a claim when they see one.
The submission and receipt of a claim have four important legal consequences:
1. Interest begins to accrue when the CO receives a claim, but not when he receives a non-claim request for contractual relief. See FAR 33.208. (But see also Note 4.)
2. COs must make final decisions on claims within statutory deadlines, see FAR 33.211( c ), but they face no deadline for responding to non-claim requests for contractual relief.
3. Contractors cannot recover the costs of claim preparation and prosecution, but they can recover the costs of the preparation of non-claim requests for contractual relief. See FAR 31.205-33( b ) and 31.205-47( f )(1).
4. The jurisdiction of the boards of contract appeals and the U.S. Court of Federal Claims to adjudicate a contractor's appeal under the CDA is predicated upon ( a ) the submission of a CDA "claim" and ( b ) issuance of a CO final decision. See Reflectone, Inc. v. Dalton, Secretary of the Navy, 60 F.3d 1572, 1575 (Fed, Cir. 1995), and James M. Ellett Construction Co. Inc. v. United States, 93 F.3d 1537, 1541 - 42 (Fed. Cir. 1996). Unless a contractor has submitted a claim and the CO has issued a final decision, the boards and the Court of Federal Claims have no jurisdiction under the CDA. They have no jurisdiction under the CDA over non-claim submissions, not even if the CO mistakenly issued a final decision when none was required. See Agility Defense & Government Services, Inc. v. United States, 103 Fed. Cl. 366 (2012). In that case the contractor submitted a document that did not possess the required elements of a claim as defined in FAR 2.101. Nevertheless, the CO issued a "final decision." The contractor appealed the decision, but the court dismissed the appeal for lack of subject matter jurisdiction, because the contractor's submission did not have all of the elements of a claim as defined in FAR 2.101. The court said:
"For the above reasons, the Court finds that it does not have jurisdiction to adjudicate Agility's complaint. The Court makes this ruling with some reluctance, given the contracting officer's contribution to a confused set of circumstances."
Thus, acquisition practitioners must know when they are submitting or when they have received a claim. Claims are not always easy to recognize, however.
A claim need not be in any particular format or use any particular language.
The definition of claim specifies no format for a claim and does not require the use of specific words of terms, except for the claim certification. The courts and boards have consistently held over the course of many years that a claim need not be in any particular format or stated in any particular language. A claim need not be labeled "Claim." See Contract Cleaning Maintenance, Inc. v. United States, 811 Fed. 2d 586, 592 (Fed. Cir. 1987):
We know of no requirement in the Disputes Act that a “claim” must be submitted in any particular form or use any particular wording.
All that is required is that the contractor submit in writing to the contracting officer a clear and unequivocal statement that gives the contracting officer adequate notice of the basis and amount of the claim.”
See also SITCO General Trading and Contracting Co. v. United States, 87 Fed. Cl. 506, 508 (2009).
A submission need not include a cost breakdown or other supporting cost data in order to be a claim. See H.L. Smith, Inc. v. Dalton, Secretary of the Navy, 49 F.3d 1563, 1564 (Fed. Cir. 1995):
“[N]either the CDA nor its implementing regulations, the Federal Acquisition Regulations (FAR), requires submission of a detailed cost breakdown or other specific cost-related documentation with the claim.”
Thus, a claim could be a simple letter. See Transamerica Insurance Corp. v. United States, 973 F.2d 1572, 1576 (Fed.Cir.1992):
“This court will not require contractors to do more than to comply as fully and reasonably as possible with the statutory requirements of the CDA when this court has definitively stated that certain “magic words” need not be used and that the intent of the “claim” governs.”
A simple claim under $100,000 might be stated in a single sentence. See Cibinic, Nash & Nagle, Administration of Government Contracts 1264 (4th ed., 2006):
"As long as the contractor's assertion contains the minimum information necessary to inform the contracting officer of what is being claimed and the grounds of the claim, the contracting officer must act on the claim and deny it if the information is insufficient to approve it,
Fred A. Arnold, Inc
., ASBCA 27151, 83-3 BCA para. 17,517."
Thus, a request for relief without supporting data might be a claim, but without the supporting data it might not be sufficient to prove the contractor's entitlement to the relief sought.
In pointing these things out I am not suggesting that contractors submit undocumented claims. My only purpose is to show that a contractor's submission need not be thoroughly documented in order be a claim and thus trigger the legal consequences of submitting a claim. Best practice is, of course, to prepare claims carefully and document them as thoroughly as possible.
The content is what matters, not what you call it.
The determination of whether a contractor’s submission to a CO is or is not a claim does not depend on what the parties call it. The mere fact that a contractor calls its submission a claim will not make it a claim if it lacks any necessary element of a claim. And calling a submission an REA does not mean that it is not a claim if it possesses all of the necessary elements of a claim. Claims and REAs are not categorically different things. It is the content of a submission, not what the parties label it or call it, that determines whether it is a claim.
In Zafer Taahhut Insaat ve Ticaret A.S., ASBCA 56770, 11-2 BCA ¶ 34841 (2011), the government argued that a contractor’s REA was not a claim because the contractor used the word “request” instead of claim in its claim certification. The board rejected that argument:
“The government objects to Zafer's 1 August 2007 REA as the basis for our jurisdiction, alleging that the document is a preliminary request for equitable adjustment, and does not adhere to CDA certification requirements because 'request' is twice substituted for 'claim' and the authority of the certifier is not stated. We find that the REA is a cognizable claim, as it adequately informs the government of the basis and precise amount of the claim and that the use of the word 'request' in lieu of 'claim' is inconsequential.”
Request for reconsideration denied, Zafer Taahhut Insaat ve Ticaret A.S., ASBCA 56770, 12-1 BCA ¶ 34951 (2012). See also Saco Defense, Inc., ASBCA 44792, 93-3 BCA ¶ 26029:
“[T]he threshold question is whether that submission constituted a “claim” under the CDA. To that end, it does not matter if the submission is styled as a ‘claim,’ a ‘proposal,’ a ‘request for equitable adjustment,’ or something else. What matters is that the submission satisfies the definition of ‘claim’ prescribed in applicable implementing regulations and contract clauses, as interpreted by the Federal Circuit.”
What is an REA?
The CDA does not mention REAs. Although the term REA appears in 31 places in the FAR System -- ten places in the FAR itself, the rest in seven agency FAR supplements -- the FAR does not define REA.
"Request for equitable adjustment" is a term of art for just what the name indicates: (a ) a request ( b ) for an equitable adjustment to one or more contract terms. REAs are grounded on contract clauses that provide for such relief, such as the "Changes" clauses, FAR 52.243-1 through - 5; the "Differing Site Conditions" clause, FAR 52.236-2; and the "Government Property" clause, FAR 52.245-1.
Contractors doing business with the Department of Defense that submit non-claim REAs valued at more than the simplified acquisition threshold must certify them as required by DFARS 243.204-71 and 252.243-7002. The certification reads as follows:
“I certify that the request is made in good faith, and that the supporting data are accurate and complete to the best of my knowledge and belief.”
An REA valued at more than the simplified acquisition threshold that includes the REA certification, but not the claim certification, is an REA that is not a claim, because it lacks one of the necessary elements of a claim. If the same REA is certified as a claim, and has the other necessary elements of a claim, then it is an REA that is a claim.
What if a contractor includes both the REA certification and the claim certification? Assuming that the REA has all of the other necessary elements of a claim, it is an REA that is a claim, notwithstanding the inclusion of the REA certification. However, the dual certification might indicate some confusion on the part of the contractor and make its intentions unclear.
Bottom line: An REA is a claim if it has the required elements of a claim as defined in FAR 2.101. An REA that lacks any required element of a claim is not a claim.
An impasse or dispute is not necessary for an REA to be a claim.
Many contracting practitioners think that there must be an impasse in negotiations or that the parties must be in dispute before REAs can be claims. That is not true, as determined in the landmark decision Relectone, Inc. v. Dalton, Secretary of the Navy, 60 F.3d 1572, 1577 (Fed. Cir, 1995):
"[W]e hold that FAR 33.201 does not require that 'a written demand ... seeking, as a matter of right, the payment of money in a sum certain' must already be in dispute when submitted to the CO to satisfy the definition of 'claim,'
where that demand or request is a 'voucher, invoice or other routine request for payment.' This interpretation, based on the plain language of the FAR, examines and reconciles the text of the entire regulation, not simply isolated sentences."
Reflectone is must reading for all practitioners. (At the time of that decision the definition of claim was in FAR 33.201. It has since been moved to FAR 2.101.)
See also Systems Development Corp. v. McHugh, Secretary of the Army, 658 F.3d 1341, 1346 - 47 (Fed. Cir. 2011):
"SDC contends that our precedent holds that a claim does not accrue until there is an impasse in negotiations between the contractor and the government. SDC, however, misapprehends our precedent. Impasse is not required for SDC's equitable adjustment claims to accrue.
In support of its impasse theory, SDC points to
Rex Systems, Inc. v. Cohen,
224 F.3d 1367 (Fed.Cir.2000). In
we considered when a submission by a contractor to a CO meets the definition of a 'claim' for the purposes of the CDA.
See also James M. Ellett Constr. Co. v. United States,
93 F.3d 1537 (Fed.Cir.1996). We acknowledged that not all contractor submissions to a CO are claims.
224 F.3d. at 1372 ('[A]ny non-routine submission by a contractor meets the definition of a claim if it is: (1) a written demand; (2) seeking as a matter of right; (3) the payment of money in a sum certain.'). In this line of cases, we clarified that termination settlement proposals submitted under the termination for convenience clause of the FAR generally are not CDA claims. Under certain circumstances, however, a termination settlement proposal may ripen into a claim.
For example, as we explained in
a termination settlement proposal may ripen into a CDA claim when the parties' negotiations reach an impasse. 93 F.3d at 1543–44. Contrary to SDC's assertion, nothing in these cases addressed situations beyond termination settlement proposals. Indeed, we emphasized that the FAR “anticipate
the submission of claims independently of the termination settlement proposal.”
at 1548. We have never indicated that such independently submitted claims require an impasse.
* * *
SDC's equitable adjustment claims were wholly separate from its termination settlement proposal.
Nothing precluded SDC from presenting them to a CO as soon as SDC knew of their basis as provided in the FAR."
An REA is not a "routine request for payment."
According to the definition of claim in FAR 2.101, the only thing that has to be in dispute in order to be a claim is a “[a] voucher, invoice, or other routine request for payment,” and REAs are not routine requests for payment. That was settled by the Federal Circuit 17 years ago, in the landmark decision Reflectone, Inc. v. Dalton, 60 F.2d 1572, 1577 (Fed. Cir. 1995):
“[A]n REA is anything but a ‘routine request for payment.’ It is a remedy payable only when unforeseen or unintended circumstances, such as government modification of the contract, differing site conditions, defective or late-delivered government property or issuance of a stop work order, cause an increase in contract performance costs.
Pacific Architects and Eng'rs Inc. v. United States
, 491 F.2d 734, 739, 203 Ct.Cl. 499 (1974). A demand for compensation for unforeseen or unintended circumstances cannot be characterized as “routine.” The Supreme Court has confirmed the non-routine nature of an REA by equating it with assertion of a breach of contract.
Crown Coat Front Co. v. United States
, 386 U.S. 503, 511, 87 S.Ct. 1177, 1181, 18 L.Ed.2d 256 (1967) (‘With respect to claims arising under the typical government contract, the contractor has agreed in effect to convert what otherwise might be claims for breach of contract into claims for equitable adjustment.’). Thus, an REA provides an example of a written demand for payment as a matter of right which is not ‘a routine request for payment’ and, therefore, it satisfies the FAR definition of ‘claim’ whether or not the government's liability for or the amount of the REA was already disputed before submission of the REA to the CO.”
Some contracting practitioners think that REAs are routine because "they happen all the time." Indeed, they are common in some contracting offices. However, the boards and courts do not interpret "routine" on the basis of frequency, but on the basis of the nature of the cause. See Parsons Global Services, Inc., ex rel. Odell International, Inc. v. McHugh, Secretary of the Army, 677 F.3d 1166, 1170 (Fed. Cir. 2012):
"The distinction between a routine and non-routine request for payment is a factual one, dependent on the circumstances in which the requested costs arose. A routine request is one incurred and submitted ‘in accordance with the expected or scheduled progression of contract performance.’
., 93 F.3d at 1542–43. Such requests are ‘made under the contract, not outside it’ and include invoices, vouchers, progress payments, and other requests for costs under the contract's terms.
, 60 F.3d at 1577. By contrast, a non-routine request is one ‘seeking compensation because of unforeseen or unintended circumstances.’
., 93 F.3d at 1543;
, 60 F.3d at 1577. Such requests include requests for equitable adjustments for costs incurred from “government modification of the contract, differing site conditions, defective or late-delivered government property or issuance of a stop work order” and other government-ordered changes,
, 60 F.3d at 1577; for damages resulting from the government's termination for convenience and termination settlement proposals that have reached an impasse,
., 93 F.3d at 1542–43; for compensation for additional work not contemplated by the contract but demanded by the government,
Scan–Tech Sec., L.P. v. United States
, 46 Fed.Cl. 326, 333 (2000); for the return of contractor property in the government's possession,
J & E Salvage Co. v. United States
, 37 Fed.Cl. 256, 261 n. 4 (1997),
, 152 F.3d 945 (1998) (table); and for damages stemming from the government's breach of contract or cardinal change to the contract,
Ky. Bridge & Dam, Inc. v. United States
, 42 Fed.Cl. 501, 518–19 (1998). A common thread among these examples is the presence of some unexpected or unforeseen action on the government's part that ties it to the demanded costs."
So why the persistent belief in the need for a dispute? It may due to the fact that claims are addressed in FAR clause 52.233-1, "Disputes." The reasoning goes that since claims are discussed in the Disputes clause if follows that there has to be a dispute in order for there to be a claim. Not so. The Disputes clause prescribes the procedure for submitting and processing claims and issuing CO final decisions. The clause does not state that a dispute must precede the submission of a claim, nor does anything in the CDA or in FAR Subpart 33.2, "Disputes."
FAR 33.204, "Policy," might be another reason for the mistaken belief in the need for a dispute. It states, in pertinent part, “Reasonable efforts should be made to resolve controversies prior to the submission of a claim.”
That’s the government’s policy, and it makes good sense from the government's perspective. It is designed to avoid the accrual of interest by encouraging settlement before the contractor submits a claim, on which interest accrues. However, the government’s policy in no way restricts what contractors can do. It does not require that contractors submit non-claim REAs before they submit claims. The CDA requires only that contractors believe they have a right to what they want in order to submit claims. Contractors do not have to first submit a non-claim REA and then wait while the government takes its own sweet time to evaluate the submission and to make repeated requests for more information before getting down to business.
To avoid confusion about claims and REAs, read the definition of claim.
Some of my students express shock and disbelief when I tell them that an REA can be a claim. "Are you saying that all of those REAs we get are claims and have to be treated like claims?" No, I'm not saying that. Here is what I'm saying:
First, when COs receive contractor requests for relief they should use the FAR 2.101 definition of claim as a checklist. No matter what the contractor calls it, a contractor’s request should be treated as a claim if it has all of the elements of a claim as defined in FAR 2.101. If it lacks any element of a claim it need not be treated as a claim.
Second, some inexperienced contractors may not understand that "claim" is an officially defined term with legal implications. If for any reason a CO is not sure about a contractor’s intention the CO should ask the contractor. If the contractor says that it meant to submit a claim, and if the submission lacks any element of a claim, then the CO should tell the contractor so it can correct its submission. The CO should explain the implications with respect to preparation costs if the contractor says it intended to submit a claim. If an REA has the elements of a claim, but the contractor says that it did not intend to submit a claim, the CO should ask for confirmation in writing.
Finally, contractors should check the definition of claim when submitting REAs and make sure that they understand what they are submitting -- either an REA that is not a claim or an REA that is a claim -- and the consequences of submitting it. They should make their intentions clear to COs. A warning: If your intention as a contractor is to submit a claim, then make sure that you get it right. Prepare the claim document well and document it fully. That improves the chances of a successful settlement. The government will not hesitate to challenge board or court jurisdiction over the slightest flaw in your submittal. If they succeed it will result in a significant loss of time and money. If your claim is significant, hire an attorney who knows the rules to assist in its preparation.
Every year we see board and court decisions in which one of the parties disputed the tribunal's jurisdiction on the ground that an REA was not a claim. The government does so to force the parties back to the negotiating table and avoid interest. Contractors do so to retain their entitlement to submission preparation costs. Such litigation is a needless and avoidable waste of money and time.
Knowledge, clear communication, good faith, and good will can prevent misunderstandings and needless jurisdictional litigation. But knowledge must come first.
Note 1: Relief, as used in the context of the CDA, is a legal term of art that means "The redress or benefit, esp., equitable in nature, ... that a party seeks in court." Black's Law Dictionary, 9th ed. (2009). According to FAR 33.213( a ), a claim for relief` "arising under a contract" is a claim that can be resolved under a contract clause other than the Disputes clause, FAR 52.233-1. A claim for relief "relating to a contract" is a claim for which no contract clause except for the Disputes clause provides for the relief sought. It is a breach of contract claim.
The certification for claims in excess of $100,000 is stated in FAR 33.207 as follows:
I certify that the claim is made in good faith; that the supporting data are accurate and complete to the best of my knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the contractor believes the Government is liable; and that I am duly authorized to certify the claim on behalf of the contractor.
The dollar value of a claim for certification purposes is the absolute value of increases and decreases. See FAR 33.207( d ).
Note 3: Professor Ralph C. Nash, Jr. discusses the sum certain requirement in the August 2012 edition of The Nash & Cibinic Report: “Contract Disputes Act claims: the 'sum certain' requirement." 26 N&CR para. 41.
Note 4: FAR 33.208(a) says that interest begins to accrue when the CO receives the claim or when payment otherwise would be due, whichever is later. The FAR is wrong. The U.S. Court of Appeals for the Federal Circuit has thrice ruled that there is a single “red letter date” for the accrual of interest, and that is the date that the CO receives the claim. Furthermore, interest on a claim can accrue even before the contractor incurs any cost. See Richlin Security Service Co. v. United States, 437 F.3d 1296 (Fed. Cir. 2006) (rehearing and rehearing en banc denied); Caldera v. J.S. Alberici Construction Co., 153 F.3d 1381 (Fed. Cir. 1998); and Servidone Construction Corp. v. United States, 931 F.2d 860 (Fed. Cir. 1991).]
The George Washington University has announced a program for a Master of Science in Government Contracting. http://business.gwu.edu/msgc/program/. I knew this program was in the works, and it is a good thing, but the curriculum is a disappointment. Here it is:
There is a link on the webpage to the course descriptions.
Basically, what they have done is slapped together some of their standard MBA courses with some of their standard law school courses and added a research and writing project. The problem is not what's there, but what's missing. (Although some of what's there is odd for a master of science in contracting.)
Where are the courses on professional practice? Look closely at the core curriculum. Except for a class in "marketing strategies," the management courses do not focus on government contracting. The focus comes in the law school courses.
Do you see any classes about requirements analysis and specification development (a topic heavily emphasized by the Services Acquisition Reform Panel)? No, probably because this master of science program is a joint venture of the management and law schools and they have no expertise in that topic. How about decision analysis for acquisition planning and source selection, contract strategy and structure, cost estimating methods, appropriations law, contingency contracting, international contracting and foreign military sales?
Why only two credit hours for government contract costs and pricing, one of the most important courses of all, when you probably need six credit hours (three for cost-based pricing and three for market based pricing)? Read the course description. The course is about the legal aspects of pricing, not the practical aspects. You're not going to learn how commercial firms price their products or services, or how costs are analyzed and established for major systems.
Defense spending dominates government contracting and defense programs are the government's largest and most controversial. Where is the class about major systems acquisition? Where is the class about the structure and performance of the defense industry? Where is the class about contracting in a monopsony market? Why only two credit hours for intellectual property (patents and data rights), an important and complex topic, especially in defense contracting. Information technology programs are the second most controversial in government contracting. Where is the class about that?
Why a course about financial accounting, but not about cost accounting (aka management accounting), which is of greater interest and concern to contracting practitioners?
Why no class about themes and fads in the history of government contracting? Why no class about the role of Congress in contracting policy development and management? What about contracting policy development process? What about the government program planning, budgeting, appropriation, and funds management processes? What about systems analysis and engineering? What about risk management? What about about competition theory and practice and negotiation theory and practice? What about contracting process design? What about about the politics and economics of socio-economics programs? What about the politics and economics of major systems acquisition? What about statutory and regulatory interpretation? How about a class in business writing for the contracting practitioner? And why not any focus on service contracting, which has been a dominant concern in government contracting for the past decade?
While I am all for advanced education, I'm not for degree bagging, even if the degree is from GWU, especially when the degree is expensive and based on a curriculum that does not reflect the needs of today's contracting practitioners. People considering the program ought to do some market research and find out what they would be paying for if they were admitted and ask themselves whether attendance would worth the price and a best value. Ask yourself: Will this degree get me promoted? Will it enable me to get enough additional salary to make the gain worth the cost?
Knowing how much we Americans love and respect credentials, I have no doubt that GWU will receive many applications, and that many tuitions will be paid by students and employers, including the government, especially DOD. (Military officers in the D.C. area who need at least one graduate degree to get promoted will line up.) I guess it's a start, but this isn't the program that we need, and I don't recommend it as it is. I want better education for contracting professionals, but not just any education. If learning is what interests you, you'd be better off just buying some books and reading them.
I’m going to show some self-restraint here and not say that I hate Congress.
This morning’s Government Executive email reported that some representative from Florida on the House Transportation and Infrastructure Committee "spoke out" about GSA bonuses and conference spending -- “GSA hammered on outrageous bonuses, conference spending.” His complaints were based on reports by some TV station.
Enough. It is true that the agency was mismanaged in some ways for many years and wasted money. We have every right to be mad about that. We’ve gotten the news and the point. However, GSA does important work for the government and does it reasonably well given the amount of work that it does (which is not to say that it cannot do better). It makes no sense to destroy the agency through continued relentless attacks. The government needs GSA. Continued grandstanding about bonuses and conferences serves no good purpose and is not in the government’s best interests.
A new GSA Administrator has been appointed and seems to be working hard to fix things. He should be allowed to do his work without having the agency plowed under by grandstanding politicians who are obviously enjoying their brief days in the sun. There are thousands of decent, hardworking people at GSA who did their jobs and had nothing to do with creating bonus programs and setting up conferences, and there is no reason to utterly destroy whatever morale they may have left by piling on. Many of them are just starting out in their careers and might be forever turned off. Surely, given the state of transportation and infrastructure in this country, the House Committee on Transportation and Infrastructure has more important things to do.
GSA is not the only agency that has mismanaged the public’s money. Nextgov reported today that the Defense Department “quietly” shut down the Joint Tactical Radio System Program Office in San Diego, which reportedly spent $15 billion over 15 years without producing a workable product. The program has been transferred to the Army. If that report is correct, DOD "wasted" an average of one billion dollars per year for 15 years before someone decided that enough was enough. Who has been fired for that fiasco?
I have never before written this kind of blogpost. I don’t see myself as a white knight defender of government agencies and employees and have often been severely critical of them myself. But this thing about GSA has gotten to be just too much.
Presidents should be more careful about the political appointments they make. Investigations should continue until all of the mismanagement has been brought to light. Mismanagement culprits should be identified and fired if they aren't already gone. Criminals should be prosecuted. Right. But stop trashing GSA. Believe me, they are sorry about what happened.
Sorry for the outburst. (Not really.) OK, I've burned the soapbox.
A Minor League Kerfluffle
Steve Kelman and I have been involved in a minor league kerfluffle over a comment I made in response to a blog post he wrote entitled, “A new way to use past performance in contracting.” He proposed a new contracting incentive. Here is how he described it:
I commented, “I cannot tell you how awful I think the ‘fee’ return idea is. Truly awful.” I let it go at that. But feeling guilty about not explaining myself, I posted a detailed explanation in a later comment. You can read the whole thing here: http://fcw.com/Blogs...re-results.aspx.
Steve responded with a later blog post entitled, “A response to my critics,” later retitled, “How to think about new policy proposals -- feedback on my feedback.” He cited a “fascinating” paper by a Harvard Business School professor to insinuate that what he sees as my negativism is a way for me to feel better about myself. I responded by telling him that he seems to think that acquisition problems can be solved by new policies and procedural gimmicks, but that that the only way to fix deep seated problems in acquisition is to improve the workforce, and I tried to enlist him in that struggle. You can read that here: http://fcw.com/Blogs...m.aspx#Comments.
The Policy-Making Imperative
Here is the problem in acquisition today as I see it:
When someone is unhappy with something, for instance, if they think the government pays too much for goods and services, some official launches an “initiative” and issues a policy memorandum with a snappy title directing that acquisition personnel do things a certain way:
From now on, write performance work statements.
Negotiate fixed-price incentive contracts with a 50/50 share line and a 120 percent ceiling.
Set negotiation objectives for service contracts at 2010 price levels.
Definitize undefinitized contractual actions within 180 days.
They then usually provide for waivers under certain circumstances.
In short, the standard approach to problem solving is to issue policy and procedure directives. Sometimes the policy is called a policy innovation, or an innovative policy. (Innovate is second only to dream as America’s favorite magic word. If alien archeologists visit this planet after we’re gone and examine our surviving records, they will dub us the Dreaming Innovators. They will say that our civilization might have survived if we had spent less time dreaming and innovating and more time seeing reality and using our heads.)
Reactions To Policy
So what happens after a new policy is issued? First, the people in the field (or in the trenches, as some like to say, but really in the cubicles) roll their eyes and sigh. Then they start asking questions:
What do you mean, exactly?
Do you mean this or do you mean that?
Does the new policy apply to this or to that circumstance?
Does the dollar threshold include options?
What is the waiver procedure?
Who can approve waivers?
How long will it take to get a waiver?
Are you going to delegate waiver authority?
And, finally, the ultimate question: How do I do that?
The policy makers go on the conference circuit and hold virtual chautuaquas. Their staffs prepare PowerPoint presentations. They issue additional guidance about the policy and write manuals (which prompt more questions). The trade press write stories and trade associations issue cautionary white papers.
Some in the field, glad to see something new, anything new, get on board and design the innovative implementations of the policy maker’s dreams in the hope of recognition and maybe a silver hammer. Those are the Positivists. The Negativists write skeptical critiques or scathing condemnations, or simply foam at the mouth. Consultants set up shop and write slight “how to” pieces in trade and professional publications, hoping for new business. Some are dubbed “gurus” of the new policy and conduct pricey seminars devoid of details. The most ambitious write a book, or arrange for someone else to write it and then take author credit.
The policy makers set up a reporting scheme. Reporting is late and inaccurate. Ultimately, it is found that surveillance has been poor and implementation has been spotty. Congress holds hearings, complains about the spotty implementation, and enacts the new policy into law, apparently in the belief that everyone respects and fears them and will thus comply. Congress demands reports. Reports are late and inaccurate. The GAO finds that implementation of the law is spotty and ineffective or not as effective as it could be if everyone followed GAO’s recommendations.
Time passes. The policy maker moves on. The no-longer-new policy dims and may fade away entirely. It is ignored by the original policy maker’s successor, who wants her own initiative. It is mentioned no more at conferences. Seminars are offered no longer. Reporting continues, but no one really cares anymore. In time, some future official will launch an initiative that dotty old timers will say seems familiar. And then some crotchety paper hoarder will come in waving a copy of the original memo from a decade or two earlier, proving once again that there is no new thing under the sun.
The Great Game
Policy making is the great game in acquisition. We are being overwhelmed by laws, regulations, case law, policy memos, manuals, and handbooks. Policy making is the only power of the otherwise impotent. Senior officials, especially political (excuse me, I meant presidential) appointees, are touted as successes because they issued a couple of policy memos and attended a lot of meetings before moving on to better jobs on the strength of their newly padded resumes. They then write articles and make speeches about their policy memos and meetings and speak of things still to be done, even though they did not stay on to do them. The mere issuance of a policy memo is deemed a success, regardless of whether it is proven to be effective. If the policy maker is really bold, he or she will simply claim or imply success for the policy even in the absence of verifiable data. If they are modest at all they will claim limited success, which validates their theory, and say that it would have been more effective if implemented properly at the working level.
This has been going on for decades. The real way to improve acquisition is to improve the acquisition workforce -- really, seriously, improve it. But that would be hard and take time, and would be expensive. When most officials talk about improving the acquisition workforce they mean hiring more people. Oh, they will talk about improving the quality of the workforce, but they think that means ensuring that more people get to the official PowerPoint sessions ("training courses"). They have no idea what to do and how to do it. They don’t even have dreams. Innovation is putting the PowerPoint sessions online.
Acquisition works reasonably well if what you care about is that paper gets processed and stuff gets bought. Stuff does get bought. Whether we pay good prices and get good quality within a reasonable period of time is another matter. We often do and we often don’t. The vast majority of buys are for commodities and commodified services, and those go reasonably well, although there will always be something for the GAO and the IGs to complain about -- poor implementation or regulatory violations that, if fixed, might produce better results. As for the big stuff -- major defense systems and large information technology programs -- things are generally a mess, but they have been a mess pretty much throughout history. We know what the problems are, we just can’t fix them. We never will. We work in a cloud of mediocrity.
The Way To Real Improvement
In a complex system like acquisition, any attempt to fix deep seated system faults through policy will fail. The only way to get at the deep seated problems in acquisition is through workforce improvement, and I don’t mean numbers. We need well-educated, superbly trained people for the big stuff, and we do not have enough of them. Mismanagement and poor leadership will prompt many of the best of the new recruits to leave. The problems are beyond the reach of management in the organizational structure we have now for the simple reason that no one is in charge. Only someone with the power and the ruthlessness of a Stalin could fix the system. A few purges might be just the thing.
Here’s how to have a good career in contracting: First, study. Read a lot, read widely, and think about what you read. Next, find a contracting office to work for that does demanding work, like the Air Force Space and Missile Systems Center in El Segundo, California, which is doing really interesting work, is staffed by people of very high quality, and is very well led. Work, learn, and grow. If that is not enough, write articles and books. That will keep you busy. Ignore the rest, because you cannot do anything about it. Roll with the punches. Practice a wry smile.
I’ve heard that some call me the prophet of doom (or maybe it was gloom, I’m not sure). I’m not, really. I just do not rest my hopes on the system. I rest them on people, individuals. The only hope for our system is that committed individuals will never stop trying to be the best that they can be and to bring out the best in their colleagues. If enough individuals will do that, good things will happen. Try it. You’re going to like the way you feel.
We have a new Office of Federal Procurement Policy (OFPP) Administrator, The Honorable Joseph Jordan.
Most OFPP Administrators served about two years and didn’t do anything that had much of a lasting remedial effect on a system with which no one is very happy. Appointees have had a variety of qualifications. If I remember rightly, only two had ever worked in a contracting office doing contracting work.
OFPP’s job is to:
41 U.S.C. 1101. (The statutory definition of “procurement” is substantially the same as the definition of “acquisition” in FAR 2.101.)
The Administrator’s job is to:
41 U.S.C. 1121. The statute says:
There is a long list of specific functions in 41 U.S.C. 1122. However, if you read the statute closely you will see that the Administrator’s powers, as opposed to his functions, appear to be limited. Two non-political appointee positions -- the Director of Defense Procurement and the Director of Defense Pricing – have more immediate and effective power, and the appointees usually stay in their jobs longer.
The new Administrator told the Senate during his confirmation hearings that his priorities are: (1) buying smarter, (2) building the right supplier relationships, (3) strengthening the acquisition workforce, and (4) remaining “mindful” of the relationship between Federal employees and contractors. He offered few specifics, which was probably appropriate at a Senate confirmation hearing. It is not immediately clear what he can and will actually do about any of those things other than to issue memos that few will read and fewer will remember two years from now. Nevertheless, what should he try to do?
In his blog for Federal Computer Week, http://fcw.com/Blogs...l-business.aspx, Steve Kelman suggested raising the micro-purchase threshold to $250,000 for limited purposes, in order to improve opportunities for “innovative” small businesses to get into the government market. That's right, the micro-purchase threshold. (Okay, stop cheering.) In what has to be the understatement of the week, he wrote: “There would be a few implementation issues that would have to be worked out.”
So what are my ideas about what the new Administrator should try to do? What things might he try to persuade Congress and agency managers to do? Well, choosing a few from a long list:
1. Restructure the contracting workforce to reflect the workload. Hire fewer contract specialists and more purchasing agents and procurement clerks, and create a new position: “acquisition data specialist” to do all that pesky data entry.
2. Establish a uniform standard of contracting officer selection, appointment, and appointment renewal. Set the standards high. We desperately need more competent people in that role. If we had more competent people we would not need so many laws and regulations.
3. Review and clarify small business law, policy, and programs and put the rules all in one place in the C.F.R. (and, yes, yes, increase opportunities for small businesses to get government contracts).
4. Change the protest system by either (preferably) eliminating the Court of Federal Claims as a protest forum or (second best) requiring protestors to choose one forum or the other and live with the result, prohibiting them from filing with the GAO and then going to the court if they lose.
5. Free the Department of the Defense from the phony “single, simplified, uniform” FAR System and allow it to publish its own acquisition regulation. Congress has written so many laws unique to DOD acquisition that it really has a separate system. The notion that we have a "single, simplified, uniform" system of acquisition regulation is absurd. Let's face facts. It would actually make life easier for everybody.
6. Remove FAR Subpart 8.4 and Part 13 from 48 CFR Chapter 1 (the FAR itself) and put them in separate chapters of their own. The idea is to give people conducting those kinds of acquisitions smaller regulations to cope with and to make it clear that they don’t have to worry about the rest of FAR and can simplify their processes.
7. Require GSA to establish a single source for the clauses in its Federal Supply Schedule contracts and to publish them in the Federal Register through the notice and public comment process. (A lot of GSA FSS COs have no idea where the clauses come from and cut and paste from old documents.)
8. Make the test program for commercial items (FAR Subpart 13.5) permanent.
That’s enough for one blog post. No point in getting carried away.
If Steve Kelman can propose raising the micro-purchase threshold to $250,000, why can’t I fantasize?
Show of hands: How many of you think that the government can reduce costs under cost-reimbursement service contracts by tripling the number of government personnel involved in contract administration?
Steven Kelman, Harvard professor and former OFPP administrator (and the best one we?ve ever had), has proposed an ?experiment? to do just that in the February 14, 2011 print edition of Federal Computer Week, page 15. Read it here: http://fcw.com/articles/2011/02/14/comment...management.aspx. (If the link doesn't work, copy it and paste it into your browser.)
Prof. Kelman begins his commentary by pointing out that the government spends a lot on services every year and that service contract cost savings would contribute a great deal to deficit reduction. Agreed. He then says: ?We all know anecdotally about unnecessary work performed under service contracts and insufficient cost controls? .? Well, yes, I have heard that, and I believe it?s true to some extent, although I cannot say to what extent. He then makes an analogy between cutting service costs and house-to-house fighting in war. (An unfortunate analogy, but I?ll let that go.) He then says:
So he wants a surge. He then says:
He then proposes an experiment: (a) choose 20 cost-reimbursement contracts for ongoing services worth $5 to $10 million each, ( double or triple (or maybe quadruple) the number of contract management personnel current assigned to each of them, ( c) track them for two years and then (d) compare the costs with 20 similar contracts that do not receive additional personnel.
Steve acknowledges that the details of the experiment would have to be worked out.
I have strong ideas about services and service contracting. I have explained them in a number of articles published since the late 1990s, many of them are available only to subscribers to Westlaw. But Ralph Nash and I wrote an article for the September 2007 issue of Defense Acquisition Review Journal in which my ideas are briefly described. That article is accessible here: http://www.dau.mil/pubscats/PubsCats/ARJ45_Edwards.pdf. Three of my thoughts are summarized in the following three passages from that article:
Now, with those passages in mind, here is what I think about Steve?s idea: While I love experiments, I would distrust results produced by any such as he describes. Why?
First, because it would be virtually impossible to establish a valid control group of 20 ?mirror? services, due to (a) differences in the conduct of competitions for contract award, ( differences in the events and the circumstances of performance, and ( c) differences in the management styles of the government personnel involved. Every contract for long-term complex services is somewhat unique and not entirely comparable to others. Even a contract for a given service at a given location might not mirror its predecessor contract.
Second, without a valid control group to serve as bases for comparisons, it would be impossible to reliably measure savings and quality differences. Moreover, applying the experiment to cost-reimbursement contracts is problematical, because the use of a cost-reimbursement contract suggests that there is significant uncertainty with respect to cost outcomes. A cost underrun (which is unlikely in any event) could be due to savings or to estimating error. On the other hand, an overrun might reflect savings from what the costs more accurately otherwise would have been. Failure to underrun, or an overrun, might reflect a decision by the agency to use all of the funds available to it for the contract in the fiscal year.
Third, such experiments in acquisition are almost always political events, more akin to gimmicks than exercises in the scientific method. In my experience, the people who conduct them often are not trying to test a hypothesis, but trying to prove that their hypothesis is right. Thus, the tendency is to conduct the ?experiment? and then declare it a ?success? in the sense that it confirms an idea that supports a preferred course of action. Then all sorts of gurus and consultants jump on the bandwagon touting the rightness of the idea.
Performance-based contracting is a classic illustration. Something like Steve?s new idea was tried in the mid-1990s with performance-based contracting. See 59 FR 26679-01, May 23, 1994:
In May 1998, OFPP published a report of the results of the project, available here: https://www.acquisition.gov/sevensteps/libr...on-the-perf.pdf. The results are summarized nicely in the October 1998, ?final edition? of OFPP?s Guide to Best Practices for Performance-Based Services Contracting:
The Guide is available at http://georgewbush-whitehouse.archives.gov...c.html#chapter1.
The report itself concluded:
It would be an understatement to say that the "report" did not back up its claims with hard data about specific contracts or offer to provide such hard data upon request. Thus, it was impossible to independently verify the claims. As far as I?m concerned, unverifiable claims for the results of pilot projects, or experiments, are just that. To put it nicely, they are hooey. The confirmation of OFPP?s ?hypothesis? was a foregone conclusion and about as scientifically valid as professional wrestling and roller derby, which are at least fun to watch.
?Pilot project,? ?experiment,? it?s all the same.
That is not to say that increasing contract management staffing would not produce good results. Let?s consider: What would be the likely effect on cost and quality of putting more government personnel to work managing cost-reimbursement service contracts.
On the one hand, greater monitoring might detect more instances of subpar performance, which might lead to prompt corrective action and better outcomes. It might facilitate better communication between the government and its contractor. With more eyes on the contractor, the government may be better able to spot inefficient practices and performance shortfalls in progress. If we assume that to be true, then adding people would be beneficial.
But, on the other hand, adding government personnel might increase costs if the they try to squeeze more work out of the contractor or slip in unplanned requirements. It might increase costs without much to show for it if they are persnickety and demand reperformance or other corrective action in each and every instance of customer dissatisfaction, however minor or inconsequential the quality shortfall. Such a management approach will likely reduce customer satisfaction in the long run and make the government-contractor relationship more tense and disfunctional. No compromise, no savings, and a bigger bill without much real improvement.
Yet, on the other hand, if the management approach is to be helpful and cooperative, rather than merely corrective and demanding, good things could happen: cost inefficiencies might be detected and efficiencies might be found, and customer satisfaction might be improved.
Here?s a hypothesis of my own: While the government needs enough people to properly monitor performance, the quality of the government personnel, not the number, is the most important factor in the government?s contribution to performance. In other words, one wise and effective contracting officer's technical representative is better than two or three nitpicking nuisances. How can we test that hypothesis? I don?t know. Like I said, experiments in government contracting are dubious affairs.
But why test it? Why not just accept several decades of management thinking and assume that (a) the government needs the right number of people for the job, which depends on consideration of several factors ⎯ number of functions and tasks, number of performance locations, number of contractor personnel, etc. ⎯ and should not be determined by gross doubling or tripling of the current number; ( they have to be the right kind of people ⎯ wise, competent, good communicators and capable negotiators; and ( c) they have to have the right kind of contractor to work with ⎯ honest. cooperative, capable, and seeking to please.
But some government managers like demonstrations of ?success,? and so somebody is likely going to want to conduct Steve?s ?experiment.? And why not, if it can lead to getting more personnel? After all, the time honored government management approach, when you don?t know what else to do, is to throw people at the problem and hang on to them until the next round of budget cuts. And whatever else you do, declare success.
I frankly cannot see the point in this kind of thing, which strikes me as gimmicky, as is so much of acquisition management, with its experiments, pilots, and initiatives. We have done those kinds of things many times and I don't see that they have gotten us to where we need to be. What we need to do instead is the hard work of determining, on a case by case basis, the number and kind of people that we need for each contract, how we're going to get them, and from where. It is likely that we will never have enough people, which makes it all the more important that we have the right kind of people. Where do we find them? How do we prepare them for the task?
What follows is the text of a speech I gave on January 13, 2011, at the Conference for Journeymen held by the Air Force Space Command, Space and Missile Systems Center, the organization with which I started my career in 1974, when it was the Space and Missile Systems Organization (SAMSO) of the Air Force Systems Command. Several people have suggested that I publish it, so I am posting it here.
Is Contracting An Intellectual Pursuit? Are Contracting Officers Intellectuals?
Thank you for inviting me to speak to a distinguished audience of my peers, the journeymen of the Space and Missile Systems Center. I consider it a great honor.
My topic today was inspired by a sentence in a memo written by a very senior government acquisition official. The memo encourages contracting officers to use fixed-price incentive contracts, and the sentence reads as follows:
?A 50/50 share line should represent a point where the estimate is deemed equally likely to be too low or too high.?
That sentence is very bad. It is a very serious error. It stunned me to read that sentence in a memo from such a high-ranking acquisition official. We have known since Euclid in 300 B.C. that a line is not a point. The slope of a share line says nothing about probabilities, only about the agreement to distribute cost risk. The offending sentence reflects either extreme carelessness or ignorance not only of geometry, but also of fixed-price incentive contracts. It would have made sense to say that the target cost should be set at the point at which the cost estimate is deemed equally likely to be too low or too high. That would have made sense, but it would have been a very silly thing to say. And I think now that that single sentence is a symbol of much of what is wrong with acquisition management.
I have entitled my talk ?Is Contracting An Intellectual Pursuit? Are Contracting Officers Intellectuals?? In retrospect, this seems pretentious, which I do not want to be in front of this audience. But I am serious about those two questions.
Before I go any further, I had better say what I mean by ?intellectual.? I define an intellectual as someone who not only thinks, but who thinks about what they think about, how they think about it, and why they think what they do. For example, when thinking about the acquisition of service, an intellectual will ask questions about what he or she is thinking about⎯questions like:
?What is a service??
?What are the differences between supplies and services??
?How does the nature of services affect how we buy them??
Such questions are not about any particular service acquisition, but about service acquisitions generally. They stand apart from, and rise above, daily concerns. I consider those kinds of questions to be intellectual questions. I consider the asking and answering of those kinds of questions to be an intellectual pursuit. And I call people intellectuals who regularly ask themselves such questions and try to answer them.
My answers to the two questions of the title of my talk are as follows: Is contracting an intellectual pursuit? It should be. Are contracting officers intellectuals? Some, yes. But all should be. I believe that as professionals, we should think about what we think, how we think about it, and why we think what we do.
Let me give an example that may make clearer what I am trying to say. When I came to work here in 1974, one of the things I was taught about was incentive contracts. I was told about the various kinds of incentives⎯cost, schedule, and performance, and about the various types⎯fixed-price with firm target, fixed-price with successive targets, cost-plus-incentive-fee, and cost-plus-award-fee. And I was told that we use incentives to motivate contractors to produce better contract outcomes and that they work. I accepted what I was told. Why wouldn?t I? After all, I knew nothing, and the information was coming from senior people whom I respected. I call this kind of information ?received truth?⎯something we accept without question.
But after a while, prompted by my experience that incentives make everything more complicated and difficult, I began to ask myself some questions. The most important ones were: How do we know that those things work? Why do we think they are worth the trouble? And I started to dig around in libraries, looking for answers. My research led to more questions, and in trying to answer them I found that reputable researchers at Harvard University, Rand Corporation, Logistics Management Institute, and the GAO, looking at actual contract data, could not confirm that incentives work. All they found were assertions and anecdotal reports. When they collected hard data and looked for correlations, they found none. Upon close inspection, I found that the assertions and anecdotal reports were not based on verifiable information, but on feelings, unjustified assumptions, invalid arguments, and unsupported beliefs. My thinking now is that as a contracting officer I would not use a formula type incentive unless directed to do so by higher powers, as you are being directed today.
As my career progressed, I continued to think about what we thought and found that many ideas were widely accepted despite not being fully explained or demonstrated to be true. Our business is replete with received truths ⎯ about the positive effects of competition on quality and price, about the general superiority of fixed-price contracts, about the net benefits of the Truth in Negotiations Act, and about performance-based services acquisition, to name but a few. These ?truths? go largely unquestioned. What do we mean by competition? What form or forms does it take? If there is more than one form of competition, what kind do we have in weapons development? How does it work⎯cause to effect? Is our method of obtaining competition designed to produce the kinds of results that we are looking for? If competition ?works,? how do you explain the A-12, the F-22, and the Marine Corps landing craft programs, all of which ended in failure although carried out under competitively awarded contracts? If competition ?works,? why is almost everyone unhappy with the conduct of competitively awarded major system programs?
Why are we continually reforming acquisition without apparent success? The latest DOD reform "initiative," and the one with which you will be occupied for the next couple of years, is but another in a very long line of such initiatives. A friend of mine recently suggested that retirement age should not be calculated in years of service, but in cycles of reform, that instead of being able to retire after 20 or 30 years, a person should be able to retire after three reform cycles. I think I?m on my fifth or sixth, I have lost count.
At a conference in Washington DC in early December, I was on a panel that discussed DOD?s new reform initiative, and I expressed the view that we cannot fix the things that people don?t like about acquisition through such initiatives. I mentioned some of the past attempts, like the famous Carlucci Initiatives of the early 1980s that perhaps few of you will remember. I said that we try the same old remedies that have not worked in the past either because we are insincere about reform or because we simply have not thought things through. I think there is a little of both at work. But I believe that the main problem is that instead of asking ourselves the kinds of questions that would lead to better thinking about our problems, and, perhaps, better solutions, we act on the basis of received truths, like the one that says incentives work. We never get to the heart of any matter.
Contracting is an important and a fascinating field, well worth intellectual effort. The very concept of contract is one worth study and contemplation. Most of us here can recite the elements of contract: offer, acceptance, consideration, legal purpose, and competent parties. But have we thought whether the dominant concept of contract in our acquisition world ⎯ sometimes referred to as ?sharp in by clear agreement, sharp out by clear performance? ⎯ is the only one possible and, if not the only one, whether our concept is best for the kinds of acquisitions we conduct today? Should we rethink contract and the way we form and administer contracts?
Yesterday you heard about one facet of the newest reform initiative ⎯ Should Cost studies. Should Cost has been around for a very long time. It is hard to do and requires know-how, lots of people, and a lot of time. Are they worth it? Can anyone identify a major program for which a Should Cost study was done that yielded a better outcome as a result? If you think you can, ask yourself how you know that what you believe is true and how you would prove it to me. (Some of you here know what that would be like.) I am not saying that Should Cost studies do not "work"; I am just asking how we know that they do. I want evidence before investing a lot of time and effort. If the person who advocates greater use of Should Cost knows what he is talking about, why, on November 3 of last year, did he call for the development of Should Cost estimates for all ACAT II and III programs by January 1 of this year, when everyone who knows anything knew that that could not be done. Did anyone say to him before he signed that memo ⎯ ?Boss, that order will make you look silly?? I would have said it, and some of you would have said it. A man or woman whose staff is afraid to tell them that they are about to make a foolish mistake is going to be a fool in short order. One who would resent such advice is already a fool.
I have read and thought and written a great deal about contracts and contracting over the course my career, and my current thinking about contracts is informed and inspired by a 1976 article that I literally stumbled upon ⎯ ?The Many Futures of Contract? by Ian R. Macneil, who died early last year. It is one of the most influential journal articles of the second half of the 20th Century and it has had a profound effect on my thinking about service contracting. I did not learn about it in any contracting class or magazine, but by rambling in law journals looking for something to help me understand the mania for performance-based contracting. I found it by thinking about services, about how we think about them, and about why we think what we think.
In my career as a working 1102 and as a teacher and writer, I have had two sources of professional satisfaction. First, the work of negotiating contracts. Second, the intellectual work of thinking about ideas that are important to our field.
The first source of satisfaction was the negotiating table. I loved negotiating ⎯ the excitement of the receipt of the proposal, the analysis, the thinking, the planning, bargaining to agreement, and documenting the file. I thought that each opportunity to write a price negotiation memorandum was my chance to show off. I loved the camaraderie of the negotiation team, and steak and eggs at Denny?s after a handshake. I tell you truly that I lived for it. Everything else in my work was waiting for the next negotiation, life suspended.
I found the second source of satisfaction in the Aerospace Corporation Library. That source could be pursued after work and early on weekends sitting alone in a quiet corner with a book or an article, a notepad, and my thoughts: What is an evaluation factor and what characteristics do all evaluation factors have in common? How do you define and describe them? How do you use them to evaluate proposals? What is a proposal? Are they the same as offers, as FAR says, or is there more to them? What are rating and scoring, and how do you do them?
Thinking led me to question, and questioning led me to challenge. Sometimes the challenges have been successful in changing minds. More often, they have not. But if more minds would think and challenge, we just might be able to be more effective in challenging received truths and solving some of the professional problems we have faced for so long. We might come up with new ideas that could make our professional lives and results better.
I have been in this business nigh on 40 years. Most of my friends who started out with me have long since retired. I stay because I love it and I still have hope that we can make it better. To do that, we must read and think and learn to ask questions of our leaders. We must challenge them and point out when their ideas make no sense. Most of the time, we will not win our challenges. But, eventually, we may get policymakers from the questioning generation, who will not be offended when a journeyman says ⎯ Prove it. And maybe then we will start making real progress. Contracting is a game that, when played at its highest level, is an intellectual pursuit. Contracting officers, playing at the top of their game, are intellectuals.
Thank you again for the honor of speaking to you.
I had an interesting exchange about my last blog post with a very thoughtful Wifcon member who is an attorney. The member advocated attendance by lawyers at debriefings and made a good argument based on assertions about certain special skills and capabilities of lawyers. I want to post my last reply to the member. I am not quoting the member's comments because I have not sought his/her permission. In our last exchange, the member suggested that American Bar Association Model Rules of Practice mandated attendance by the Government's lawyer if the offeror being debriefed brings a lawyer. There were other arguments as well. Here is my response, which I have edited to exclude the member's comments:
It's not a matter of what I would let a CO have. COs can do as they please. If they think they need a lawyer's help and want a lawyer at their debriefing, then they can bring a lawyer. It is a matter of what I think a CO should want, and I do not think a CO should want a lawyer.
First, as for the ABA's model rules, with which I am familiar, they do not compel a CO to bring an attorney. They compel the attorney who accompanies the offeror being debriefed to behave ethically. If the CO doesn't bring a lawyer (and I absolutely would not bring one), then the offeror's lawyer can observe, take notes, and remain quiet so as to not violate Rule 4.2. A debriefing is neither a negotiation nor a legal proceeding in the ordinary sense of those terms. It is supposed to be an informative communication from the Government to the contractor. A competent CO should be able to relate facts and provide explanations and respond to fact inquiries from anybody, including an offeror's attorney. A CO should not respond to inquiries, whether from a lawyer or a layman, about the applicability or application of case law. If a lawyer or a layman asked me such a question I would politely say that such inquiries are beyond the scope of a debriefing and should be submitted to me in writing, either on the spot or at their leisure. I would promise a prompt response. I would explain that I am not being evasive, just thoughtful. If the offeror's lawyers read Rule 4.2 like you do, not bringing a lawyer might keep the debriefing from turning into an inquiry. In my experience, they do not hesitate to ask questions, Government lawyer or no Government lawyer. (Upon receipt of a written inquiry, I would consult with the Government lawyer about the proper response.)
Second, when I say competent CO, I am referring to a person who does know the case law. We're not talking antitrust case law or case law bearing on the rules of evidence. FAR charges COs with knowledge of case law. In my opinion, a CO who is not thoroughly familiar with the rules, including the case law, is not competent to conduct a source selection. The CO is charged with responsibility for the proper conduct of the source selection. You say you have known many competent COs who did not know the case law. At what were they competent? How can a CO make an intelligent competitive range determine or source selection decision, or conduct meaningful discussions, if he or she is not familiar with the case law? When another official is the SSA, the CO is supposed to be the go-to advisor. We have allowed COs to become such know-nothings through poor workforce preparation and poor CO appointment practices that they run down the hall to the legal office at the drop of a hat, even to ask what the FAR says about this or that. This is one of the things that makes source selection so cumbersome and costly. The CO is supposed to be THE expert.
Third, as for objectivity, I teach COs that the laws, regulations, and courts charge them with objectivity and fairness in their treatment of offerors and contractors. We have allowed and even encouraged COs to become partisan and adversarial in their conduct toward contractors, both before and after award. That is not proper conduct, and they should be taught to behave appropriately, which means to listen sympathetically and keep an open mind, even in the trenches.
Fourth... As I have said, I believe in full disclosure debriefings. A competent CO should be able to respond to all of the kinds of inquiries that you described--questions about the evaluation, the process, the strengths and weaknesses of the proposal, and why its competitor won--all without legal assistance.
If the CO is asked about the legal propriety of this or that course of conduct by the Government, the proper thing to say would be:
This is not a forum for debating or resolving legal issues. I am happy to tell you what we did and why, but I will not discuss the propriety of this or that course of action. I am very interested in your concerns and eager to respond, but I need time to ensure that I understand the issues you are raising and the points that you are making and to consider your assertions and arguments. Why don't you take a few moments now, write down your issues and concerns, your assertions and arguments. I'll give you this room to talk among yourselves. I promise you a complete and open-minded response by tomorrow at... . If I were to respond in this setting it might cause confusion. I'm sure you understand.
Would I exclude the cost analyst or engineer [from the debriefing]? No, but they are in a very different category. Their information describes the evaluation, but does not justify it. The mere presence of a Government lawyer at a debriefing suggests defensiveness and potential adversariality (They've lawyered up. The CO is carrying a lawyer. She brought her mouthpiece.) And nothing looks worse than the lawyer interrupting the CO to provide a "clearer" or "more appropriate" explanation. What I want to see in a CO is confidence, patience, and openness tempered by thoughtfulness.
I am all about raising the standards of professional performance by COs. I want them to be what they are supposed to be, experts and wise advisers within the scope of their expertise. Telling them to lawyer up for debriefings not only sets the wrong tone at the debriefing, but suggests to COs that they need not be competent to control their own processes. However, I recognize that I'm talking about the ideal world, not the real world.
At the Nash & Cibinic Roundtable this past December 2 and 3 in Washington, DC, an issue came up that has bothered me for many years. The issue is the role of the government contract lawyer in the contracting process. Specifically, what role does the government contract lawyer play in debriefings of unsuccessful offerors? During a discussion of debriefings, one of the attendees identified herself as a government attorney and said that she always made a point of attending debriefings given by the contracting officers of her agency. I don?t remember the entire comment, but the impression that I got was that she did so in order to ensure that all went well.
The comment made my contracting officer blood boil. I oppose the practice of having government lawyers attend debriefings. The main reason is that it sends the wrong signal to the company that is being debriefed. If I go to a meeting with someone who is unhappy with me and bring my lawyer, it sends a signal (whether accurate or not) that I expect trouble and feel the need to have a counselor present. Another reason is that I don?t want any interruptions, interjections, note passing, whispering in my ear, or requests to caucus. Those things look bad. A debriefing is not supposed to be an interrogation, a negotiation, a debate, or an adversarial proceeding.
Of course, I am assuming that the CO is competent, that he or she understands the rules of the source selection process, understands how the source selection in question was conducted, knows the facts of the evaluation of the proposal in question, can explain the findings and conclusions of the evaluation team, and understands the basis for the source selection decision. If that is not the case, it raises the question of whether the CO should provide a face-to-face or telephonic debriefing. If the person responsible for the debriefing, the CO, cannot be trusted to do a good job, then perhaps a written debriefing, prepared or reviewed by an attorney, is the thing to do. But to send an incompetent CO into a debriefing armed with his or her lawyer does not strike me as a particularly intelligent course of action.
At one point during the Roundtable discussion, someone in the audience shouted out, ?What if the offeror brings an attorney?? So what? As a CO, I asked offerors on more than one occasion if they had an attorney and, if so, would they please bring him or her to the debriefing. Why? I respect attorneys for their ability to think clearly and be dispassionate. An attorney is likely to recognize and acknowledge that a source selection was conducted properly even when their client is climbing the walls. If we did a good job and if I could explain the job that we did, then there was nothing to worry about. In my last source selection as a government CO, the loser filed a protest with the GAO right away. I called the protester, asked them to attend a debriefing, and asked them to bring their lawyer. They brought Professor Gilbert J. Ginsburg of The George Washington University Law School, a renowned government contracts expert. At the debriefing I handed them a copy of our request for proposals, a copy of their proposal, our complete source selection file for their proposal, including the write-ups by the individual evaluators and the scores, and told them to go through the material and to ask any questions they had. I left them in the conference room. They called me about an hour later, thanked me, and said goodbye. The next day I received a copy of their communication with the GAO withdrawing their protest.
Would I meet with my attorney before a debriefing? Not unless I had a legal question. As a CO, I would not need advice about what to say and what not to say. I believe in full disclosure debriefings. I believe in giving the loser everything. If a protest is filed, the protester?s lawyer is going to get everything anyway, including the proposals of the other offerors, so why withhold? While as a CO I cannot release the proposals of the other offerors, I see no reason to withhold anything else. if we made a mistake I would rather be told and be given a chance to take corrective action before a protest is filed. Full disclosure shows no fear.
Don?t take this as dislike of attorneys. I work with them all the time and both like and admire most of the ones I meet. I have deep respect for the profession, which I consider to be admirable. But as I see it they and the CO have different roles to play in acquisition. If the attorney reviewed the source selection decision and found it to be legally sufficient, then he or she has played their part. Debriefing the losers is the CO?s role. If the CO is competent, then he or she will not need an attorney's services during the debriefings. If the CO is not competent, then a face-to-face or telephonic debriefing should be avoided at all costs. Having an attorney present will not make things go better.
Reading some of the Wifcon posts of last week, it occurred to me that a lot of people are busily doing things that they don?t know much about. That has occurred to me many times over the years, but this past week has been an especially ignorance-rich environment.
Some of us at Wifcon Forum talk by phone among ourselves about posts, and we are often astonished that people who are asking really basic (not dumb) questions are apparently in the very middle of doing something and don?t realize that their question shows that they know even less than they think they do. It is not the fact that they are asking a question that troubles me⎯everybody has to ask questions, myself included⎯it is the nature of the question asked.
I am not surprised that people do not know the rules, meaning FAR and its progeny: the supplements, handbooks, manuals, and policy statements, which is not to say that it is okay that they don?t. But much of the ignorance is of fundamental concepts. It is one thing when people do not know the rules about cost-reimbursement contracts, such as the rules of cost allowability, but it is another thing entirely when they do not understand the concept of the cost-reimbursement contract.
One poster asked if there is a rule against awarding a ?CPFF? contract with ?FFP? labor rates. The answer is no, there is no rule against it, but why would you do it? The inclusion of ceiling rates, in which the contractor is reimbursed either the ceiling rate or the actual amount paid, whichever is less, might make sense, but not ?firm-fixed-price? rates. Why not? A full understanding of the concepts of the cost-reimbursement contract and of firm-fixed-price contract should make it apparent that firm-fixed-price labor rates in a cost-plus-fixed-fee contract would be a bad business deal for the buyer, in much the same way as a time-and-materials contract is a bad business deal, but worse.
Last week someone asked me (not at Wifcon) why, in a source selection, a CO would include an unacceptable proposal in the competitive range. The question revealed ignorance of the concepts of acceptability, competitive range, and discussions in source selection. The problem was that the person who asked the question was not aware of their ignorance of those concepts, and it was the person?s very unawareness of their ignorance that caused the matter to seem paradoxical.
Conceptual ignorance is undoubtedly due in part to (1) poor quality training and (2) a shortage of knowledgeable people in the office. But it is also due to lack of study and thought.
If a person worked for me conducting source selections, I would expect them to know FAR Part 15, except Subpart 15.6, like the back of their hand, as well as the agency supplement, handbooks, manuals, and policy issuances, and to be able to quote them chapter and verse. I would also expect them to have read, at the very least, Chapter 6, Basic Negotiation Procedures, of Formation of Government Contracts, 3d ed., and any other relevant explanatory material they can get their hands on. But none of that knowledge would be any good without complete understanding of fundamental concepts: evaluation, evaluation factor, scales and scaling, score/rating, acceptability, tradeoff, rank ordering, competitive range, clarification, and discussion.
A conceptual understanding of the term evaluation factor is knowledge of what an evaluation factor is -- the essential nature of such a factor. A person who understands that concept can tell you what all evaluation factors have in common. If asked, What is an evaluation factor?, she would not just give examples, like soundness of approach, past performance, price, qualifications of key personnel. Instead, he would say something like:
An evaluation factor is an attribute of an offeror or of an offeror's promises--a feature, quality, or characteristic that contributes in some way to the value of the offeror or offer to the buyer and thus can serve as a basis for the comparison of competing offerors and their offers. Evaluation factors can be positive or negative. A positive factor is an attribute that is desired, such that the more of it there is the greater the value. In some procurements, the durability of an offered product is a positive factor. The greater the durability of an infantry rifle the greater the value. A negative factor is an undesirable attribute, such that the more of it there is the lesser the value. The weight of a rifle would be a negative factor. The greater the weight of a rifle the lesser its value. Evaluation factors can be assessed and rated or scored on a variable scale or on a pass/fail scale.
A person who has that conceptual understanding of evaluation factor is ready to learn the rules about evaluation factors and to select evaluation factors for an acquisition.
People often refer to contracting folk at the GS-11 through GS-13 level as journeymen. Webster?s Third New International Dictionary defines journeyman as follows:
I do not expect every journeyman involved in a source selection to be a master at it. I expect that from contracting officers. But I expect journeymen to know what they are doing and what they are talking about.
As for trainees (apprentices)--well, they must be trained. Training entails more than telling them to prepare some documents and giving them old ones from which to cut and paste. Training does not have to include classroom instruction, but it should include having a knowledgeable person direct the trainee's reading and explain things to them in some depth. Of course, there must be someone in the office who is capable of that, which I suspect is often not the case.
Ignorance happens, and it?s not necessarily a crime, but it is a bad thing and always the fault of the ignorant, as in the song ?Father and Son,? by Cat Stevens (now called Yusuf Islam):
When I first heard that line, many years ago, I didn?t get it. How could youth and youthful ignorance be the youth?s fault? But now I understand that each of us is responsible for knowing what we need to know. It?s true that others ought to teach us, but in the end we are the ones who have to know, which means we have to get out there and learn, whether anyone teaches us or not.
I?m not young, but there is still so much I have to know about the contracting business, and I?m mad at myself whenever I realize that I don?t know it, which happens almost every day. I feel embarrassed and a little sick, and I mope. Then I go find out. What else can we do?
Contracting officers are charged with ensuring that contracts are awarded in compliance with the law. See FAR 1.602-1(. Consider, for example, FAR 6.101(a):
Almost everyone in contracting knows that U.S.C. is the abbreviation for United States Code. Almost everyone, but I recently taught a contracting class in which 12 out of 26 students did not know what U.S.C. stood for. (One person, a contracting officer, thought it meant United States Court. Another person thought it meant United States Circular.) Most of the students did not know that the ?10? and ?41? refer to titles of the code, what a "title" is, or how many there are. Most did not know that ?2304? and ?253? refer to sections. Very few people knew why the U.S.C. is a ?code? or what that means. And even fewer people could accurately describe the content of the U.S.C.
What is the United States Code and what does it contain? In order to understand the answers to those questions, we have to know something about how our laws are enacted at the Federal level.
When both houses of Congress pass a bill, they send the ?enrolled bill? to the President printed on ?parchment or paper of suitable quality.? See 1 U.S.C. 107. The Constitution gives the President 10 days to sign it into law or veto it, not counting Sundays. If the President does nothing, the bill becomes law by default. (I won?t go into vetoes and ?pocket vetoes, but you can look it up.)
Assuming that the President signs the bill into law, it is sent to the Office of the Federal Register within the National Archives and Records Administration, where it is given a public law number. (There are also private laws, but they have no bearing on this topic, so I won?t go into that.) A public law number contains the number of the Congress which enacted the law and the number of the law itself, e.g., Public Law (Pub.L. or P.L.) 111-23, the 23rd law enacted during the 111th Congress. That law is called the ?Weapons Systems Reform Act of 2009,? which is its ?popular name.?
From the Office of the Federal Register the law goes to the Government Printing Office, where it is published as a pamphlet called a ?slip law.? That is the first publication of the new law.
At the end of each session of a Congress, the laws enacted during that session are published in book-form as a volume of the United States Statutes at Large, in which the laws appear in the order of their enactment. Title 1 U.S.C. 112 provides as follows concerning the Statutes at Large:
In short, the Statutes at Large are ?positive law,? meaning that they are the law as enacted by Congress.
Now, here?s the problem with the Statutes at Large. Think about the Truth in Negotiations Act (TINA), which was enacted during the second session of the 87th Congress, signed into law on September 10, 1962, as Public Law 87-653, and published in Volume 76 of the Statutes at Large at page 528, cited 76 Stat. 528. (TINA is now implemented by FAR 15.403, 15.406-2, and 15.407-1, and by several FAR clauses.) The original law has been amended several times, and the law making each amendment appears in its own place in some volume of the Statutes at Large. If you want to find out what that law says today by searching through the Statutes at Large and then collating the original law and all of the amendments, you are going to have quite a job on your hands. You will have to work your way through several volumes, cutting and pasting in order to take the amendments into account. Who wants to do that? Hence, the United States Code, the U.S.C.
The purpose of the U.S.C. is to make legal life a little easier. The Office of the Law Revision Counsel of the U.S. House of Representatives ?codifies? the general and permanent public laws enacted by Congress by cutting and pasting the laws together to form topical sets called ?titles.? There are 50 titles in the U.S.C. The topical re-arrangement of existing laws eliminates the work of finding the laws in the Statutes at Large and collating the ones that apply in a given subject area. For example, the laws pertaining to the military are, for the most part, but not entirely, collected in Title 10 of the U.S.C., Armed Forces, and arranged into subject matter chapters and sections. Many, but not all, of the laws about Government contracts are collected in Title 41, Public Contracts. Many, but not all, of the laws about labor are collected in Title 29, Labor. And so on.
Not every law gets codified, only general and permanent laws. ?General? means applicable to the public, not just to specific persons. ?Permanent? means that the law continues in effect for an indefinite time. (However, some ?permanent? laws have ?sunset? provisions, which provide for their expiration at a specified point in time unless extended.) Appropriations are examples of laws that are not permanent. (However, appropriations laws often contain provisions that enact, amend, or repeal permanent laws.)
There is a problem, however, with codification. In order to cut and paste intelligibly, the Office of the Law Revision Counsel sometimes has to make minor changes in the text of the laws, which means that they no longer read as enacted by Congress and signed by the President, and they sometimes make mistakes. They do not intend to change the meaning of any law, but even minor changes or errors could affect meaning. What if there is a conflict between the wording of the law in the Statutes at Large and the U.S.C.? See 1 U.S.C. 204(a), which provides in part as follows:
The U.S.C. is "prima facie" evidence of the law. According to Black?s Law Dictionary, prima facie evidence is ?Evidence that will establish a fact or sustain a judgment unless contradictory evidence is produced.? Thus, language in the U.S.C. is subject to challenge by comparison with the language in the Statutes at Large, with the Statutes at Large taking precedence. But if Congress enacts a title into positive law, it repeals earlier versions of the laws and the language in the title becomes the law in fact and is no longer subject to challenge by comparison with the Statutes at Large. See the rest of 1 U.S.C. 204(a):
See Office of the Law Revision Counsel, Positive Law Codification in the United States Code, which may be found at http://uscode.house.gov/codification/Posit...odification.pdf.
According to the Office of the Law Revision Counsel, the following titles have been enacted into positive law: 1, 3, 4, 5, 9, 10, 11, 13, 14, 17, 18, 23, 28, 31, 32, 35, 36, 37, 38, 39, 40, 44, 46, and 49. A bill pending before Congress, H.R. 1101, would enact Title 41, Public Contracts, into positive law. Projects are underway codify other laws and enact five new titles, which would raise the total to 55. The new titles would be:
51, National and Commercial Space Programs
52, Voting and Elections
53, Small Business
54, National Park System
The Government Printing Office publishes the U.S.C. every six years, which makes determination of its current content somewhat difficult. See Kelly, "Legal Research on the Internet: A Primer and an Update to the United States Code on the Web," Arkansas Law Notes, 1999, 1999 ALRN 27. However, two private publishers print their own editions⎯the Unites States Code Annotated (USCA.), published by West, and the United States Code Service (USCS), published by LexisNexis. The annotations in those additions are very helpful to legal researchers.
So that?s the Unites States Code, a collection of 50 topical sets of the general and permanent laws of the United States. It is prima facie evidence of the law, unless enacted into positive law, in which case it is the law.
There is a very good and much more comprehensive discussion of this topic in an article by Mary Whisner in the Fall 2009 issue of Law Library Journal, 101 Law Libr. J. 545, entitled, ?The United States Code, Prima Facie Evidence, and Positive Law.? Another good article is Tress, "Lost Laws: What We Can't Find in the United States Code," in the Winter 2010 edition of Golden Gate University Law Review, 40 Golden Gate U. L. Rev. 129. Those are very much worth reading, and I recommend that all contracting officers do so.
Although services account for most dollars obligated annually, FAR gives services short shrift. FAR Part 37 is only 18 pages long, including the table of contents and pages intentionally left blank. FAR does not define service or services. It defines service contract, but that definition is unsatisfactory because it tries to make a distinction between performing an identifiable task and furnishing an item of supply, despite the fact that furnishing an item of supply is an identifiable task. Taken altogether, the terms statement of work, performance work statement, and work statement appear in only 28 places in the FAR, while the noun specification (traditionally applied to supplies) appears in 190 places. Most of FAR was written when supplies accounted for the biggest share of annual obligations, and most of its clauses for services were developed from clauses for supplies.
The acquisition of services confronts the government with challenges not encountered in the acquisition of supplies, especially with respect to contractual description and contract quality assurance, and practitioners have not adequately responded to those challenges. For some time now I have been trying to work out a theory (system of ideas) about service contracting. What follows are some preliminary notes that reflect a work in progress. The notes are designed to be used as a basis for thinking about policy and procedure. Food for thought.
My thinking has been heavily influenced by T. P. Hill?s paper, entitled, ?On Goods and Services,? which appeared in The Review of Income and Wealth, Vol. 23, No. 4, pp. 315 ? 338, December 1977, and which has been cited in scholarly journals at least 561 times and by the Office of Management and Budget as a reference with respect to its work in developing a comprehensive product classification system. See 64 FR 18984, 18986 (April 26, 1999).
Some Preliminary Notes On Service Contracting
(in the interest of spurring further thought)
1. A service is a process in which labor and capital are employed by a service provider in order to bring about changes desired by the service recipient.
2. A service is always applied to a service object.
3. A service object is a person, a group of persons, an organization, a thing, a process, or information.
4. A service object can exist at the present time or be envisioned as existing at some future time.
5. The performance of a service changes the state of the service object.
6. The state of a service object is the set of its relevant attributes at a given point in time.
7. An attribute of a service object is a feature, quality, or characteristic of the object.
8. The result or outcome of a service is a new object state.
9. A service result may be tangible or intangible.
10. A service result may be transitory or permanent.
11. A bi-product of service performance, such as a physical or mathematical model, a report, a log, design drawings, or a test record, is called a performance artifact. A service object is not a performance artifact. A performance artifact is not a service result.
12. A performance artifact is always a tangible thing.
13. A performance artifact may or may not be evidence of a service result.
14. To inspect a service is to conclusively determine or infer the state of the service object by (a) observing the performance process, ( examining the service object or performance artifacts, or ( c) both.
15. For inspection purposes, a service process or result may be directly examinable or only indirectly examinable.
16. A service process or result is directly examinable (a) when the acts of performance can be observed or ( when the state of the service object can be determined through the senses, without the aid of an instrument.
17. A service process or result is only indirectly examinable (a) when the acts of performance are mental processes that cannot be observed and must be inferred on the basis of performance artifacts, such as reports and other records; ( when it is necessary to use an instrument to aid the senses in order to determine the state of the service object; or ( c) when the state of the service object must be inferred based on observation of the performance process or examination performance artifacts, such as test records.
18. In order to contractually specify a service, one should use transitive verbs in the imperative mood, e.g.: Repair the engine. Clean the building. Treat the patient. Teach the students. Design a system. Maintain the facility. The general form is Do something to something.
19. A specification of a service is called a statement of work.
20. A statement of work can describe the service process, the service result, or both, and performance artifacts.
21. All statements of work are in some way and to some extent incomplete. This is unavoidable due to the intangibility of many elements of services, which make them difficult to describe, and to the inherent limitations of language and human planning.
22. A description of a service result is vague if it permits the inclusion of borderline cases, making one or more conclusions about the state of the service object a matter of opinion, instead of fact. Adjectives tend to be vague, but even numbers can be vague if not used carefully.
23. When the statement of work describes the service process, the result, whatever it may be, must be accepted if the contractor adhered to the specified process and executed it correctly.
24. When the statement of work describes both the process and the result, the result is acceptable if and only if the contractor both adhered to the specified process and produced the specified result, unless the statement of work is defective and the process cannot produce the desired result.
Please feel free to comment and/or challenge.
I just read my umpteenth summer reading list, so I thought: What the heck. I know that we?re already past the middle of summer and it?s a little late for a list, but why not? We have a month until Labor Day. Well, almost a month. Still time to get in one or more books.
Summer?s about fun reading, so no ?professional? books and no heavy reads. These are some of my favorites of this year, new and old.
Matterhorn, by Karl Marlantes (2010)
A novel about a Marine rifle company in Vietnam. Ordered to assault a hill named Matterhorn, they take it in a bloody fight and are then told to withdraw. Later they are told to take it again in an even bloodier fight. The story is told from the point of view of a young lieutenant serving as a platoon commander. It is the author?s first novel. He is a Vietnam vet and it took him 30 years to write it. It has received universally sensational reviews. I read it while in New Orleans for the French Quarter Festival and could not put it down. It was all anybody could do to get me to leave the hotel room. The characters are engaging, and the combat scenes are sensational (I won?t say realistic, because nothing but combat is realistic when it comes to combat). Gripping, sad, and ultimately inspirational.
99 Dreams of Whiskey: The Accidental Hedonist?s Quest for the Perfect Shot and the History of the Drink, by Kate Hopkins (2009)
The title speaks for itself. Two gals set out to learn about whiskey. They visit Ireland, Scotland, Canada, and the U.S. Fun and very informative. My favorite description is of Maker?s Mark: ?Maker?s Mark is like that blue-collar genius people run into from time to time. Sure, he follows Zen philosophy, and can discuss the intricacies of Nietzsche and Rousseau. But really? He prefers to be in his garage, working on his car.?
Hell in a Very Small Place: The Siege of Dien Bien Phu, by Bernard Fall (1968)
A riveting account of the 1954 battle that was a milestone in the revolts against European colonialism after World War II. In November 1953, French paratroopers jumped into the valley of the Nam Yung river in northwest Vietnam and seized the sleepy town of Dien Bien Phu. They built a fortress of strongpoints, which were given the names of the commander?s mistresses. (They were French, you see.) The Viet Minh army decided to engage in a ?set-piece? battle, surrounded the valley, and sealed off the fortress from ground reinforcement. The fight began in earnest in late March 1954 as the monsoons began, and it ended in mid-May. The fighting was continuous and desperate. Thousands were killed in a few weeks. Hand to hand fighting occurred throughout the battle. Near the end, a unit commander reports that he is about to be overrun and asks for reinforcement. He is told he will get none and, ?You are a paratrooper. You are expected to fight to the death.? The French were overrun at Dien Bien Phu, but they never raised the white flag of surrender. The author tells the story at the tactical level, thick with detail, and we see the greatly outnumbered and surrounded paratroopers and Foreign Legion infantry holding out against Viet Minh artillery and human wave attacks. One of the best military histories ever written. As you will see, America was very much involved. This was my second reading, in preparation for a trip to Dien Bien Phu early next year. There are two more recent accounts of the battle: The Last Valley: Dien Bien Phu and the French Defeat in Vietnam (2005) by Martin Windrow and Valley of Death: The Tragedy at Dien Bien Phu that Led America Into the Vietnam War (2010) by Ted Morgan. But Hell In A Very Small Place is the one to read.
Freedom Summer, by Bruce Watson (2010)
Battle takes many forms, and so does bravery. This is the story of the college students who went to Mississippi in 1964 to register Black voters. The story is scary and inspiring. Youthful idealism against what sometimes amounted to barbarism, when headlights in the rear view mirror on a dark road might mean the approach of a horrible death. I was in the Army when this happened and was totally unaware that anything like this was going on. This is the most detailed narrative of the events that I have ever read, a harrowing account of a seminal moment in American history. A fast, unputdownable read.
Empire of the Summer Moon, by S. C. Gwynne (2010)
The story of the Comanches, of the Texas frontier, and of Quanah Parker, one of the last great war chiefs. If you have never been to the southern Great Plains, you don?t know what wide open spaces really are. Vast, featureless, and from the 1600s until near the end of the 19th Century, the domain of what some historians now call the Comanche Empire. The Comanches were the fiercest and most frightening warriors on the plains. Superb horsemen, they fought other tribes (especially the Apaches) the Spanish, the Mexicans, and the Texans. They would travel 400 miles to launch a raid. A Comanche warrior could launch 20 arrows in the time it took a soldier to reload a musket. They made the Texas frontier one of the most dangerous places in the known universe. Nevertheless, white settlers pushed forward into their lands, knowing they could expect no help from their government, and formed militia that would become known as the Texas Rangers to defend themselves. Finally, a Texas governor announced a policy of annihilation. One of the things I learned: the great western move, The Searchers, is based on the true story of James Parker (the basis for John Wayne's character), who searched for his niece, Cynthia Ann Parker (on whom Natalie Wood?s character was based). Taken by the Comanches in a raid in 1836, she became the mother of Quanah Parker, one of the fiercest of all Comanche war chiefs. She became a Texas legend, and he died a famous and respected old man in 1911. He and his mother are buried in the Fort Sill Cemetery in Lawton, Oklahoma.
Adventures Among Ants: A Global Safari with a Cast of Trillions, by Mark W. Moffett (2010)
A great book about a critter that almost everyone found fascinating at one time or another. How many kids have never sat in captivation watching ants come and go from the entry of a nest? The author is a research associate at the Smithsonian. The book is entirely nontechnical and written with a sense of fascination and pleasure. Really. It?s a good read, and you don't have to read it all at once, since each chapter stands more or less alone. Good thing the little beasts aren?t bigger, like in Them! (one of my all-time favorite movies). An ant the size of a dog could move your house.
Blood Meridian, Or the Evening Redness in the West, by Cormac McCarthy (1985)
Considered by many critics, including Harold Bloom, to be one of the greatest American novels of the 20th Century. (Tommy Lee Jones owns the movie rights.) A violent, allegorical, apocalyptic story about a gang of scalphunters in the Southwest. Terrific prose. If you go to the bookstore, find the paperback, turn to page 50, and begin reading with ?The following day on the skyline to the south they saw clouds of dust that lay across the earth for miles,? and continue to page 54 and the last line, ?? the dying groaned and gibbered and horses lay screaming.? I have never read anything quite like it. You?ll never forget the eerie Judge Holden, although you may want to. I first read this book several years ago, but read it again after reading Empire of the Summer Moon. Full of action. Not for the faint of heart. The mysterious epilogue is perfect.
The Selected Poetry of Robinson Jeffers, edited by Tim Hunt (2001)
Writing at his stone house in Big Sur in the first half of the 20th Century, Robinson Jeffers wrote what many consider to be some of the finest American poetry. Out of favor for many years due to his anti-war stance during World War II and his misanthropy, he is now being remembered and celebrated. He wrote long narrative poems, like "Give Your Heart to the Hawks," "Tamar," and "The Women at Point Sur." But his most famous poems now are ?Hurt Hawks? and the profound ?Rock and Hawk,? which appear in many anthologies. His house in Big Sur is now a pilgrimage site for his fans. A shorter anthology of his works is The Wild God of the World.
The Selected Poems of Li Po, translated by David Hinton (1996)
Li Po was one of the great poets who wrote during the period known as the High Tang (712 ? 760). He is one of the revered poets of China, known as the Banished Immortal. There are many translations of his short lyric poems, but I think this is my favorite. He writes of journeys, friendships, war, and drinking. All the good stuff. My favorites in this anthology: "Looking for Yung, the Recluse Master," "Farewell to a Visitor Returning East," "Thoughts of You Unending," and the much-translated and widely anthologized "Drinking Alone Beneath the Moon":
Raising my cup, I toast the bright moon,
and facing my shadow makes friends three,
intimates forever, we?ll wander carefree
and meet again in Star River distances.
Feel free to post a comment with your own favorites and recommendations.
Every now and then somebody comes along and proves your point for you in a wonderful way. Earlier this week I wrote about gimmicky reform "initiatives." Now I have learned that as the outgoing OMB director prepares to leave office he has published a memo that claims great success for the Obama administration?s acquisition waste reduction initiatives. You can see it at www.whitehouse.gov/omb/assets/blog/Update_on_Contracting_Reforms.pdf. Here are some of its claims:
All those facts are good news, I guess. But are we supposed to believe that those wonderful things (if, indeed, they are good) are evidence that the president?s memos have had the desired and a lasting effect? In any case, we could ask a lot of probing questions about those numbers and what they indicate, but why bother? We won't get answers.
Sorry, but I think the OMB memo is a classic illustration of what logicians and rhetoricians call the ?post hoc? fallacy⎯post hoc ergo propter hoc, that is, because one event happened after another we can conclude that the second event was caused by the first. See http://www.skepdic.com/posthoc.html. Non sequitur. http://www.skepdic.com/nonsequitur.html. We don?t know why the statistics are different, but since it takes a long time to plan and award contracts, I am skeptical that the statistics prove that a couple of presidential memos are the reason for the changes in the numbers. (If only it were that easy!) There could be any number of reasons for differences from one year to the next, forces at work entirely independent of the president?s wishes. Moreover, even if the changes were the product of the president?s memos, we are a long way from knowing that we have seen a lasting change in the way we?re doing business.
The memo makes other claims:
?New contract,? you say? Then, what have we got other than expectations of savings? And how did you measure ?savings?? Savings of what from what? And were the new contracts entirely planned and awarded since the Obama memos, which were issued just last year?
We then get:
Uhhh, some questions: What do you mean by ?successfully acquired?? Were the contracts in question planned, awarded, and performed since the president published his memos? Really? Have the contracts been completed? Has all the work under them been done and accepted? If so, what is the difference between the award prices and the final prices, including settlements of requests for equitable adjustments and claims? If the contracts have not been completed, how do you know how much if anything has been ?saved?? As you say, things have been the way they've been "for many years." And you're claiming that you created all this "change" in a few months through the issuance of a couple of memos? Really? You're saying that?
OMB?s overall conclusion?
Why the hurry to take credit? Answer: a four-year election cycle, a two-year campaign cycle, and the outgoing presidential appointee wants something good for his resume. Now, I?ll be the first to admit that the general public might be naive enough to take all this at face value, but I?m not. I?m not saying that the president?s program has not, will not, and cannot work, although I have my doubts. But the OMB memo strikes me as just the kind of ?success story? bull---- that I mentioned in my last blog post.
Actually, I might as well be blunt: I think the OMB memo is presidential appointee hogwash. But I?m willing to be convinced⎯by evidence.
Does the memo reflect the kind of thinking that they teach at Princeton and Harvard, where the OMB director and the president went to school? No. So why have the OMB director and the president sent this out? Is it because they think we're naive or stupid? Is it because they don't know better? I'm not sure which would be worst. I?m more than a little disappointed in the president for this, but he?s just a politician. What else could we expect?
Steve Kelman has said that I?m a contrarian. He said it after I pooh-poohed the idea of the government holding contests and awarding prizes to encourage its employees to come up with new ideas to save money and promote ?open government,? i.e., ?transparency,? the new buzzword. OMB has issued 12 pages (!) of guidance about it. See OMB M-10-11, Guidance on the Use of Challenges and Prizes to Promote Open Government. http://www.whitehouse.gov/omb/memoranda_default/. I said that such ideas are ?middle school? and demeaning to professionals. Steve said that they were no such thing, because one of the prizes is getting to meet the president. Celebrity worship--I think that proves my point. I like the president, but I don't need an offer to meet him to motivate me to propose a way for my agency to improve its work. In any event, if prizes work so well, why not just bring back Al Gore?s ?Silver Hammer? awards? Why reinvent the wheel?
I agree that I am a contrarian, but not for the sake of being one. I have a very low bull---- tolerance level. I guess that?s because in my 36 years in this business I have gotten sick of the gimmicks promoted by presidential appointees seeking quick fixes. Here?s how they work: first, there is the announcement of the next new big thing, often called an ?initiative,? launched to correct some long-standing problem; then there is the soon-to-follow announcement of the initiative?s success in doing whatever it was supposed to do, with congratulations all around, but usually without verifiable supporting data; then there are awards and photo ops; then a new administration comes in and the last administration?s initiative is the old new big thing and you don?t hear about it for a while. The cycle begins again with the announcement of the new administration's next new big thing, designed to fix the problem that the old new big thing did not fix. After a bit, we read complaints about abuses arising out of the old new big thing of the last administration, which requires another new initiative to fix.
Where are Jonathan Swift, Mark Twain, and Groucho Marx now that we really need them?
I don?t question the sincerity of the people who initiate and promote such reforms. I believe that they really want to make things better. I only criticize their methods and lack of commitment.
An important reason for this kind of namby pamby management is the nature of our government, with its four-year presidential administrations, it?s two-year election cycles (President Obama will begin campaigning for re-election next year), its presidential appointee management structure, and its partisan and lengthy Senate advice and consent appointment approval process. It all leads to a kind of management attention deficit disorder (MADD). We start things, but we don?t finish them⎯Management By Objectives, Zero Defects, Total Quality Management, Reinvention, Continuous Process Improvement, Performance Management and Metrics, et cetera, et cetera. Some people advance their careers by getting on board and going along for the ride, becoming a resident ?expert" and making PowerPoint presentations. (There are many people who have never seen a gimmick that they did not like or a bandwagon that they would not ride.) This kind of thing yields unverified and sometimes unverifiable claims of ?success,? but little if any deep and lasting improvement, and it creates cynicism, a lot of cynicism. By the time most people reach the end of their government careers they have seen it all, much of it at least twice, though fronted by different names and faces, and their reaction to the latest new big thing is to yawn.
For example: The Undersecretary of Defense for Acquisition, Technology, and Logistics has issued a memo to ?acquisition professionals? dated June 28 and entitled, Better Buying Power: Mandate for Restoring Affordability and Productivity in Defense Spending. http://www.acq.osd.mil/docs/USD(AT&L)_...une_28_2010.pdf. (Restoring? When was it ever?) The memo announces an ?initiative? that asks acquisition professionals to find ways to reduce the costs of defense programs by identifying savings. D?j? vu all over again.
I wish I had a list of all of the DOD reform ?initiatives? I have seen in the course of my career. My favorite was the program launched by Deputy Secretary of Defense Frank Carlucci in 1981: the ?Defense Acquisition Improvement Program,? popularly known as the ?Carlucci Initiatives.? There were 32 of them. You can read about the program in GAO?s 1986 report: GAO-NSIAD-86-148, DOD?s Defense Acquisition Improvement Program: A Status Report (July 1986), which you can find by Googling ?Defense Acquisition Improvement Program? and then downloading it from the acc.dau.mil website. A list of the individual initiatives which comprised the program appear in Appendix IV. They were all worthwhile, but one paragraph of the GAO report reflects both the intractability of acquisition problems and the shortness of management?s attention span:
That was written in 1986, slightly more than three years after Frank Carlucci left DOD. Once its appointee-sponsor was gone, the Carlucci Initiatives died quickly. In 1990, referring to the Carlucci Initiatives in yet another report about yet another DOD management initiative, GAO said that the Carlucci Initiatives had ?failed.? See GAO/NSIAD-91-11, Acquisition Reform: Defense Management Report Savings Initiatives (December 1990). http://archive.gao.gov/d21t9/142879.pdf. (The Defense Management Report referred to in the title was the report of the President?s Blue Ribbon Commission on Defense Management, the so-called ?Packard Commission.? The Packard Commission?s report did, however, yield at least one improvement: the ?streamlining? of acquisition by reducing the number of acquisition personnel. That made everybody happy. Right?) Two-year electoral campaign cycles, short-term presidential appointments, entrenched interests, inexpert managers, the need to show quick results for political gain, reliance on gimmicks, phony ?success stories,? and the lack of long-term commitment to the hard work of real and deep reform are at the heart of our acquisition problems.
There is only one real solution to the problems in acquisition: the creation and maintenance of a truly top-notch professional class of career program managers, contracting officers, and contracting officer representatives⎯people with deep professional knowledge, extensive practical know-how and skill, business acumen, respect for law and regulation, professional self-respect, and unimpeachable integrity⎯well-educated and trained, literate and well-read, articulate, and able and willing to accept responsibility and to be held accountable--an elite corps in the very best sense of the word.
But our chance of even starting to develop a true professional class of acquisition managers during this presidential administration is nil. The president has too many other things on his plate and we have no visionary leaders in acquisition. The current hiring binge combined with fourth-rate classroom and on-the-job training and an unbalanced workforce structure (not enough purchasing agents and procurement clerks) probably means that we won?t get started for at least another generation. My hope is that the new generation coming on board today will recognize and understand the problem and commit itself, once it reaches the managerial ranks, to taking on the challenge that its predecessors did not, and that it will not be distracted from the main task by short-term "managers" with big but half-baked ideas. As I said in another article I wrote recently, quoting from an 18th century English poem entitled, "Namby Pamby":
Learn your Jingles to Reform!
Crop your Numbers and Conform!
Namby Pamby is your Guide.
Yes, but don?t be led from the main task by people with high-sounding titles. Your task will be to create a first-rate professional corps worthy of conducting the public?s business--a generation better than your own. We are in a $500 billion/year business financed by taxpayers. It?s worth the effort, which will be hard.
So I dedicate this piece to the young interns that I have met and will meet. I hope that when they read it they will know that what I write and what I say I write and say for them, so that they won?t fall under the spell of the gimmick promoters and bandwagon drivers, who are very seductive. The road to mediocrity is paved by well-spoken people with good intentions and short-term objectives. To the interns I say: Teach yourself to think and then think hard and deeply about everything you see, hear, and read. Read widely and deeply in your field. Question what you are told. Be skeptical, but open-minded. Learn to say ?Prove it.? Most importantly, for every half-baked idea that you criticize, offer a well-thought-out and well-developed idea of your own. If you do those things, and if you have energy and determination enough to act and lead others to act, you will have a chance to make real improvements and a real difference. The real prize will come when you look back and say, I made a positive and long-lasting difference.
Why do acquisition people love awards so much? There are all kinds of acquisition awards. For a list, go to http://www.fai.gov/acm/awards.asp. It prints out to more than three full pages, and it doesn't come close to listing all of the available awards.
How can it be that a function/process that is the focus of so much dissatisfaction and criticism hands out so many awards?
The really good people that I know don't care about awards. They can't be bothered. In my experience, people and organizations who lust for or brag about awards aren't very good. I'm thinking now of one organization that loves to trumpet its awards. It does a poor job, but once said to me that it couldn't understand my criticism of it, because it has won so many awards. There are organizations that give awards as marketing and public relations gimmicks. Many professional organizations give awards to encourage and reward dues-paying membership. (Let us now praise ourselves!) I have to laugh at the way chiefs of contracting offices hand out awards for doing a good job of planning an acquisition, preparing an RFP, or conducting a source selection. That's what contracting people are supposed to do. Why give them awards for doing it? Aren't they getting a paycheck? I cringe every time some new presidential appointee establishes a new award. I guess the idea is that people might do the jobs they're being paid to do if you offer them an award for doing it.
I enjoy giving praise more than getting it, although I don't give praise very often. When someone praises me I immediately feel like a phony, because, truth be told, I don't think I'm all that good. I think I'm just okay, and not even that sometimes. Maybe that's why I distrust people who are award-oriented and who have won a lot of awards. They are immediately suspect in my eyes, even though I know that some awards are well-deserved.
I consider myself mainly a critic of the acquisition "profession," because I am more interested in what we did wrong and in how we do better next time than in how good we maybe were in the past.
The best award is when you walk down a hallway and, as you pass, someone says to someone else, "That CO really knows her stuff." That's a great award, even if you didn't hear it. But if you're that kind of CO you're probably upset about something that you just learned that you hadn't known about, and you are wondering: How can I have lived so long without knowing that before now?
We?ve all heard of performance-based contracting. Well, now I want to talk about consultant-based contracting. While searching for something through Google I came to the website of a prominent, beltway acquisition consulting firm. Curious, I scrolled down their homepage and spotted this:
Oh, boy. If I were the Undersecretary of Defense for Acquisition, Technology, and Logistics and I came across that, I would have a conniption. As soon as my blood pressure returned to normal, if it ever did, the first thing I would want to do is fire the chief of the contracting office who, in this time of deficits, paid a private firm to do what the taxpayers are already paying government employees good money to do. The second thing I would want to do is strip the warrants of the contracting officers who had been in charge of those 14 procurements. The third thing I would want to do is terminate the contract for convenience. (I wonder if it is performance-based.) If I were the chief of the contracting office that hired the firm, I would tell the idiots to get that boast off their website before some congressional representative or acquisition watchdog (POGO--here?s one for you) demands to know what office hired them and how much they have been paid since 2007. If I were a journalist, (working for the serious media, not Government Executive), I would want names, RFP numbers, contract number, the contract, including the statement of work, and dollar amounts.
This is the pathetic state of affairs in which we find ourselves in mid-2010. If we are to believe the boast on the website, and I do, a DOD contracting office had to pay a consulting firm to properly do the job that the contracting office is supposed to do. This is DOD management admitting that it has done a poor job of workforce development and that it has appointed incompetents to be contracting officers. Of course, that?s been going on for quite a while, and everybody knows it. I don?t blame the contractor one bit. Good for them. They saw a market and they sold to it. They have done nothing wrong (well, except for the website boast). I wouldn?t even bother to write about this if I hadn?t been so startled by the contractor's boast. Every competent person in that contracting office ought to quit it out of shame.
But maybe there is no reason to be ashamed. The true professionals work for the contractor. Maybe the contracting officers in that office are really nothing more than hard-working data-entry clerks, just happy to have a job in these hard times. Maybe they can?t afford to be ashamed. And to think: the people in that office will train new hires--unless, of course, they pay the contractor to do that, too. I wonder where the very best of the new hires will be working in a few years. Maybe for a consultant.
A SAD STORY
On February 19, the Armed Services Board of Contact Appeals issued its decision in the matter of Bernard Cap Co., Inc., ASBCA Nos. 56679, 56703, 56705, and 56716, 10-1 BCA ? 34387, in which the board dismissed the contractor?s appeals from the deemed denial of four claims for payment. The contractor had won four indefinite-delivery indefinite-quantity contracts with Defense Supply Center Philadelphia for men?s garrison caps⎯in 1996, 1997, 1999, and 2000. The government issued several delivery orders under each of the four contracts over a span of years from 1996 to 2005. The contractor delivered and submitted DD Forms 250, Material Inspection and Receiving Report, for payment. The contracts contained the clause at FAR 52.232-25, Prompt Payment (MAR 1994). The contracts were administered by the Defense Contract Management Command⎯Orlando. The paying office was the Defense Finance and Accounting Service, presumably also in Orlando.
Under each of the contracts, DFAS paid some of the invoices, but not others. The contractor repeatedly inquired. DFAS would then make late payment of some of the invoices, but not others.
According to the board?s decision, the contractor wrote to the contracting officer about one of the four contracts in December 1999, pleading for help:
We have been trying to collect past due money from DFAS through our ACO and DCMC Orlando for the past year? We are talking about $600,000 of accounts receivable that are PAST DUE⎯some going back years and most past due over 90 days.
The contractor wrote to DCMC Orlando in January 2000:
You will note that the vast majority of these are very, very past due. Promises from DFAS have not been kept and we are not getting enough oxygen to keep breathing.
The contractor met with DFAS in 2001 and 2002, after which meetings many invoices were paid, but not all.
In 2003, the contractor wrote to DFAS:
[We] have been government contactors since the 1930?s and with all the technology that has been added to the accounting area at DFAS we cannot understand why we still have to wait, wait, and wait some more⎯all the time sending repeated evidence of shipment. HELP!!!!
In 2006, the contractor wrote to DFAS to express its ?extreme frustration? at not getting paid.
[P]lease know that from 1996-1999 we are owed $32,630 and from 2000-2005 we have $409,008 that is unpaid.
The contractor asked its congressional representative for help. DFAS then made some payments, but the contractor said it was still owed about $200,000.
This went on for years. Then, in March 2008, DFAS wrote to the contractor:
The old contracts have been reconciled to the best of our ability and the documents to include payment histories are being shipped to you. At this time, we cannot pay anything additional on the old contracts.
Finally, in October and November 2008, the contractor submitted four separate claims, ranging from a low of $13,804.66 to a high of $111,465.57 and totaling $205,078.04. The contracting officer issued no final decisions, and the contractor appealed to the ASBCA based on denial through inaction. The government did not contest any of the claims, but moved for dismissal of each on grounds that the contractor had not submitted the claims within six years of their accrual. The board held that a claim for each unpaid invoice accrued 30 days after submittal of a proper invoice, saying of one of the contracts:
By appellant?s own account ? which the government does not dispute for purposes of the motion to dismiss ? appellant made shipments and tendered proper invoices for accepted goods under this contract on or about 30 December 1996; 24 September 1997; 18 March 1998; 24 September 1998; 3 December 1998; 17 December 1998; 28 January 1999 and 29 December 1999 (SOF ?? 3-10), for which the government failed to pay in full within 30 days as required by the contract (SOF ? 2). Hence, appellant?s claims for these unpaid invoices accrued, respectively, on or about 30 January 1997; 24 October 1997; 18 April 1998; 24 October 1998; 3 January 1999; 17 January 1999; 28 February 1999; and 29 January 2000. At that point, all events fixing liability for these unpaid invoices were or should have been known, FAR 33.201. See also Oceanic Steamship Co. v. United States, 165 Ct. Cl. 217, 225 (1964) (claim against the United States, based upon a contract obligation to pay, accrues on the date when payment becomes due and is wrongfully withheld). Clearly, appellant?s claim letter to the CO for these unpaid amounts, dated 14 November 2008, was submitted more than six years from the date of the accrual of these claims. We believe they are all time barred under the [Contract Disputes Act].
The board rejected the contractor?s arguments for equitable estoppel and equitable tolling:
Appellant suggests that DFAS? general assurances that it would review and/or seek to reconcile the payment records served to equitably toll the running of the limitations period, or equitably estopped the government from relying upon the same. We do not agree. For appellant to prove equitable estoppel against the government, it must adduce facts showing some affirmative government misconduct. Frazer v. United States, 288 F.3d 1347, 1354 (Fed. Cir. 2002); Zacharin v. United States, 213 F.3d 1366, 1371 (Fed. Cir. 2000). Appellant asserts no such facts here.
As for equitable tolling, federal courts have extended such dispensation only sparingly and under limited circumstances. Irwin v. Dep?t of Veterans Affairs, 498 U.S. 89, 96 (1990) (e.g., claimant filed timely defective pleading; claimant induced or tricked by adversary, allowing deadline to pass). Former Employees of Sunoco Products Co. v. Chao, 372 F.3d 1291, 1299 (Fed. Cir. 2004); Frazer, 288 F.3d at 1354 (lateness attributable, in part, to some misleading government action). Appellant presents no such equitable basis to support the tolling of the limitation period of the statute. Rather, the record shows a claimant that failed to exercise due diligence in preserving and protecting its legal rights under the contract. As stated by the Federal Circuit in Esso Standard Oil Co. (PR) v. United States, 559 F.3d 1297, 1305 (Fed. Cir. 2009):
"The Supreme Court has warned that '[o]ne who fails to act diligently cannot invoke equitable principles to excuse that lack of diligence,' Baldwin County Welcome Ctr. v. Brown, 466 U.S. 147, 151, 104 S.Ct. 1723, 80 L.Ed.2d 196 (1984), and 'the principles of equitable tolling...do not extend to what is at best a garden variety claim of excusable neglect,' Irwin v. Dep?t of Veterans Affairs, 498 U.S. 89, 96, 111 S.Ct. 453, 112 L.Ed.2d 435 (1990)."
We have reviewed the cases cited by appellant but they are factually and legally distinguishable.
The board granted the government?s motions for dismissal.
The contractor should have submitted a claim on each invoice when the government did not pay within 30 days and did not respond promptly and definitely to inquiries. It is likely that each claim would have been less than $100,000, and the contractor thus could have demanded a decision on each within 60 days from the date that the contracting officer received each claim. Why didn?t it do so? Maybe, despite its many years as a government contractor, it did not know the rules. Maybe it was one of those contractors who are reluctant to submit claims because the contracting officer will get mad. Contractors are often intimidated by contracting officers and reluctant to demand their rights. Maybe it didn?t want its claims preparation costs to be unallowable pursuant to FAR 31.205-47, although that seems unlikely.
CLUELESS WOULD-BE CONTRACTORS
Many small to medium sized companies go into government contracting without any idea of what they are getting themselves into. That might be okay with very small sales, but, otherwise, contracting with the U.S. government is the most complex business in the world. It?s right up there with trading derivatives. There are countless rules and contract clauses, many of which are exceedingly hard to understand. Moreover, ?the Government? is not a unified organization. The contractor in this case was supplying a simple item, yet it had to deal with a PCO in Philadelphia, an ACO in a DCMC office in Orlando, and a DFAS office (presumably, also in Orlando). Appeals for help (including the pathetic plea, ?HELP!!!!?) did not resolve the payment problems, and, in the end, the government told the contractor to get lost because it could not find or make sense of its own records.
I do not know who was to blame for the payment problems. In my opinion, the ACO was responsible for sorting things out in a timely fashion, and I don?t know why he/she didn?t. Maybe it was all the contractor?s fault. Maybe it did something wrong, although the government apparently did not reject any deliveries and it does not appear that any deliveries were late. But the contractor, and only the contractor, was to blame for failing to submit claims demanding a final decision as soon as it became apparent that the government wasn?t going to fulfill its payment obligations.
I often see questions at the Wifcon discussions board from People Without A Clue (PWACs) about government contracting. And I am always of two minds about such questions: the good Vern wants to help, but the bad Vern is possessed by the spirit of John Galt (Ayn Rand?s fictional hero in Atlas Shrugged) and wants to say, ?If you can?t play with the big boys you should have stayed off the field. Too bad for you.?
Here are 14 tips for the Truly Clueless Would-Be Government Contractors who think that winning a government contract is the yellow brick road to riches:
1. If you are thinking of competing for a government contract, hire good professional help to negotiate and manage the contract, and listen to them.
2. Your technical and marketing employees are the ones who are going to get you into trouble on a government contract. Keep them on a leash.
3. Buy first-rate training for all of the people who will be involved with government contracts. If you will not invest in training you have no business doing business with the government.
4. Don?t compete for a government contract if you are not sure that you can do the job to the government?s satisfaction. Make sure that you know what it will take to satisfy the government before you submit a bid or proposal.
5. Don?t assume that the government?s representatives know what they?re talking about when they explain rules, specifications, and the contract clauses. In my experience, most of them don?t.
6. READ THE SOLICITATION. THE WHOLE THING.
7. If you win the contract, take a firm, formal, arm?s-length, businesslike approach to all aspects of the deal. Comply strictly with all contract terms and insist that the government do the same. Know all of your contractual deadlines and meet them. Know all of the government?s contractual deadlines and notify them in writing the moment that they are late. The very moment. Neither ask for nor grant exceptions except through formal processes, such as engineering change proposals, formal waivers, and change orders. Know your obligations and fulfill them. Know your rights and insist upon them. When you truly believe that the government owes you something, ask for it in writing. If you don't get favorable action within a reasonable period of time, submit a claim in accordance with the contract Disputes clause and FAR Subpart 33.2. If the contracting officer does not make a decision within the deadlines set by the Disputes clause, hire an attorney and appeal to a board of contract appeals or to the Court of Federal Claims, unless you are willing to let the government keep what you think is yours.
8. Never yield to threats from a contracting officer or a contracting officer's representative. If you do, things will only get worse. When you insist upon your rights and the contracting officer?s representative says: That cuts both ways, just say: Yes, and we can live with that.
9. Don?t rely on personal relationships with government personnel. Good personal relations are important and desirable; but, in the end, it?s a dog-eat-dog world. Never consider a government representative to be your ?friend.? Remember that government personnel are not business persons. They are government officials with limited authority, limited knowledge, a heavy workload, and lots of people looking over their shoulders. They will not (and should not) stick their necks out for you. If they do they are either stupid or dishonest and cannot be trusted. Some will make an extra effort for you, which is okay, but many will not. Assume from day one that you are on your own.
10. Keep good records. Document every telephone call and meeting. EACH AND EVERY ONE. Write down who, what, when, where, why, and how, and make your people do it as well. Check to see that they do. File every email and letter. EACH AND EVERY ONE. He or she who does not document or who skimps on documentation is a fool.
11. Promptly follow up on oral understandings and agreements in writing. Send crucially important communications by certified mail, return receipt requested, including confirmation of emailed and oral understandings and agreements.
12. It's business, not personal. When speaking with and corresponding with government personnel, always be calm and polite, no matter how badly they have behaved or how angry about it you are, but always be determined and firm.
13. Remember the 999/1,000 rule: You can do things wrongly 999 times out of 1,000 and nothing bad will happen. It?s the 1,000th time that will do you in.
14. Make sure that you have the telephone number, email address, and street address of a good government contracts attorney and a good government contracts accountant. If you can't afford that kind of help, stay away from government contracts.
Now, I know that many readers will consider some of the above to be impractical. Business people are risk takers, and many will consider what I suggest to be too formal and stern. In their experience, business doesn?t work well when there is too much formality and insistence upon strict contractual compliance. So be it. I bow and yield to your superior wisdom. I have to admit that as a government contractor I have not always followed all of my own advice. So if you don't follow my advice and things go badly for you, the good Vern will not say I told you so, but the bad Vern will laugh.
Those of you who have read what I have written over the years know that I think Steve Kelman was the best Administrator of Federal Procurement Policy that we have ever had. He had more effect on the acquisition process, mostly positive, than any Administrator before or since. But he recently wrote something in his April 8 column in the online edition of Federal Computer Week that distressed me. The entry is entitled, ?Keep your contracting staff in the loop,? and it urges program offices to include their contracting offices in their early planning and in the development of their ?procurement packages.? Here is the first sentence of the fourth paragraph of the column:
What has upset me is the disparaging phrase: ?wallowing in Federal Acquisition Regulation provisions.? Contracting officers are charged with ensuring that acquisitions are conducted in accordance with law, regulation, and policy. See FAR 1.602-1( :
A CO can be held personally responsible for knowingly violating the rules when conducting a contract action. See John Martino, Comp. Gen. Dec. B--262168, 96-1 CPD ? 256; 1996 WL 283964:
The CO had exercised an option to buy additional quantities of supplies needed by the user and deliberately did not bother to check the market price before doing so, as required by FAR. As a result, the agency paid too much for the supplies. The amount taken from the CO?s retirement fund was $88,040. I do not know why the CO didn?t check. Perhaps he knew that checking the market would take time and might have revealed that the option price was too high, which it was, and which meant that the CO would have had to conduct a new procurement or get approval to negotiate a new price without full and open competition. Maybe the CO chose not to wallow in the FAR because it would have inconvenienced the user, so he took the easy way out. If that's what happened it was a bad call, because it cost him 88 grand out of his own pocket. That's a big price to pay to support a user that maybe hadn't planned properly. Talk about customer service!
When I look in my dictionary I see that the verb wallow is defined as ?to luxuriate; revel.? I don?t know why anyone would want to luxuriate in or revel in the FAR. I urge contracting people to know it and know it well, but I don?t urge them to celebrate it. The thing is a mess. But it?s a fact of life and failing to accept that can lead to trouble. Among other things it can lead to more regulation. On the other hand, knowledge of it can reveal ways to streamline and accelerate the acquisition process.
We Americans have a peculiar relationship with regulations. We are ready to hang an official who violates one that is personally important to us, but we sneer and rail at those who insist upon following regulations that inconvenience us and that we consider petty. Paul Hein summed it up as follows: "Are we fools for obeying rules? Absolutely, yes ? and no. I am firmly committed to both sides of the question. On the other hand, are we fools to make rules? Without a doubt, except sometimes. Again, I am securely and comfortably ensconced astride the fence."
My attitude is that I'll play any game, just tell me the rules so we can get on with it and quit standing around. I want COs to know those parts of the FAR that govern their procurements so that they can get things done. Anyone who knows the FAR well knows that it is not as restrictive as ignorant people make it out to be. For instance, nothing in FAR Part 15 requires COs to conduct source selections in the mind-numbing, resource-intensive, time-consuming, costly ways in which they so often do it, and knowing the rules well enables me to come up with ways to pick the contractor, award the contract, and get on with the job in the shortest time possible and with the least unnecessary expenditure of human resources and money. COs shouldn't read the FAR in order to find a way to say no or to make a power play. COs should read the FAR in order to secure the objectives of their clients efficiently and effectively while operating within the bounds of the law.
What does ?knowing the FAR? mean? First, it means knowing what kinds of content are in the FAR. The FAR contains (1) rules, (2) guidance, and (3) solicitation provisions and contract clauses. Second, it means knowing how to find the specific rules, guidance, provisions, and clauses that apply to particular issues and problems. Third, it means know howing to read the FAR, which is not the same as reading a novel or history book. Reading regulations entails a special kind of reading that requires a very high level of attentiveness and, very often, sentence by sentence and even word by word analysis. Finally, it means understanding what the FAR means, which is not necessarily the same as knowing what it says, and which is often impossible without an extensive knowledge of case law. Consider two FAR passages: 15.306(d) and 52.243-1( . It is easy enough to know what they say, but it is very hard to know what they mean unless you are familiar with the decisions of the GAO about discussions in source selection and the decisions of the boards of contract appeals and the federal courts about equitable adjustments. Those two passages have spawned countless pages of decisions and analysis. Only a pro can really understand them.
While I don?t luxuriate or revel in the FAR, I do wallow in it, metaphorically speaking, in another sense: I read certain parts of it a lot. For example, I reread Part 15 constantly. Why? So I can know the rules about conducting negotiated procurements. Why? So I can things done in compliance with the law and without doing things that are not necessary, and so I can do what FAR 1.102-4(e) says that contracting officers should do: "take the lead in encouraging business process innovations and ensuring that business decisions are sound.? I?ve had a long career and a very successful one. Knowing the FAR (and, before it, the DAR and the ASPR) hasn?t hurt me one bit. Program managers loved me. I was a very "let's get on with it" kind of CO. I didn't say no very often, so people took me seriously when I did, and they didn't worry because they knew I'd figure something else out. Oh, and neither I nor any of my bosses ever got into trouble over one of my contract actions.
Knowledge is influence. Influence is power, the power to get things done. So wallow in the FAR. It's the professional thing to do.
I have long argued that the structure of the contracting workforce is out of balance. Most contracting work is simple and repetitive, and includes a large amount of administrative and clerical work, yet most of the 29,000+ people in the contracting workforce (excluding 1101s) are 1102 contract specialists, with 1105 purchasing agents being a very small minority and 1106 procurement technicians/clerks being virtually nonexistent. I have proposed that the government reduce the number of 1102s and hire more 1105s and procurement technicians/clerks (1106s).
It looks like I have won over one very important person. See Steve Kelman's blog at Federal Computer Week, the entry entitled, "A practical way to spice things up for new contracting employees," http://fcw.com/Blogs/Lectern/2010/03/A-pra...sting-work.aspx.
I wrote at some length about this topic in the August 12, 2009 issue of The Government Contractor, in an article entitled, ?Throwing People At The Problem⎯Massive Hiring Will Not Revitalize The Acquisition Workforce.? In that piece I focused on workforce structure, job design, and training, and said the following about workforce structure:
The most populous pay grade in the 1102 workforce is GS-12, followed by GS-13 and GS-11, in that order. The average 1102 pay grade is 11.75. The average grade among 1105s is 7.11. Among 1106s the average grade is 6.14. Our threadbare government is paying relatively high salaries for the performance of relatively simple work. In more than one agency, GS-14s are dong simplified acquisitions.
1102s should be doing complex contracting work, such as strategizing, writing or editing statements of work, analyzing risk, writing plans and special contract clauses, writing proposal preparation instructions and developing evaluation factors for award, advising evaluation teams and reviewing evaluation documentation, performing tradeoff analyses, developing pre-negotiation objectives, negotiating prices and equitable adjustments, resolving claims and disputes, writing final decisions under the Disputes clause, determining cost allowability, negotiating data rights, and developing solutions to contracting problems. They should not have to write synopses and do routine solicitation tasks, like identifying prescribed contract clauses. They definitely should not have to spend significant amounts of time entering data into fields on a computer screen. When 1102s have to spend time doing administrative and clerical tasks instead of being active participants in contract formation and contract administration decision-making and giving contracting advice to others in acquisition, the career field loses prestige and influence.
Some object to the idea of bringing ?low-skilled? 1105s and 1106s back into contracting offices. (One commenter at Steve's blog accused Steve and me of reading "dusty" books and living in the past.) They worry about a return of the old ?caste system? which divided office members into those with college degrees and those without. No one should think of 1105s and 1106s as "low-skilled." That may have been true in the past, but in the future they will have to be very well trained. Consider the military, which uses noncommissioned officers to do purchasing agent work. OJT programs for military personnel are quite good. No one who has known and worked with those personnel, as I have, would consider them ?low-skilled.? They are among the most highly skilled and motivated people I know. For good people without college degrees, the return of 1105 and 1106 positions would open many career opportunities. And those jobs would be a good place to learn some contracting while working on a degree part time. Upon graduation, qualified 1105s and 1106s should be welcomed to compete for entry level 1102 positions.
A different idea is that the government should hire more 1105s and 1106s, but keep 1102 numbers at the current levels of about 29,000+. The government must assign the right people to the right work. Large acquisitions do account for most of the contracting dollars, but they account for very few of the contract actions above the micropurchase threshold. If we assign the simpler work to purchasing agents and the administrative and clerical work to procurement technicians/clerks, we will not need nearly so many 1102s, which means that we could hire proportionately more 1105s and 1106s. Even for large acquisitions, much of the paperwork could be done by procurement clerks. Many actions which show up as large dollar acquisitions are relatively simple, such as exercises of options and funding mods. Procurement clerks could do most of the paperwork associated with such actions, subject to 1102 contracting officer review and signature. Procurement clerks could prepare synopses and do all of the reporting. No, we need to replace 1102s with 1105s and 1106s. This will free 1102s to do the more challenging work and increase their prestige. Retention of all 29,000+ 1102s would neither be necessary nor cost effective. The workload data do not support it.
In a private communication with Steve Kelman, I wrote:
Workforce restructuring would be painful and slow. There is no central workforce management organization in the Executive Branch. Each agency is a kingdom and each contracting office is a fiefdom within. There are many reasons not to restructure. Many managers will not like to admit that their office does mainly simple work. They will prefer to say that they conduct ?complex? acquisitions. Managing a staff of 1105s is not as prestigious as managing a staff of 1102s, and management grades are lower. Moreover, managers simply don't like giving up what they already have. It will take top-level leadership to prompt agencies and contracting offices to assign the right people to the right work, and leadership in contracting is in short supply these days. If you oppose restructuring, don't worry. Nothing is going to happen any time soon. 1102s and the work that they are supposed to do will continue to suffer.
It is hard for today's young 1102s to imagine a world in which 1102s do mainly professional and complex work, assisted by others who do the routine administrative and clerical work and in which 1105s do the relatively simple buys. The world in which they work today is all that they know and it does not seem strange to them. But I and others like me have watched the career field lose the prestige and organizational influence that it once had, and we are troubled and saddened. If I were looking for a career today, I would not choose contracting. I would be bored to death. If a bright young person whom I know and care for were to ask me about an 1102 job, I would advise against it. Except for the challenge of having to do too much with too little, most of the work simply is not very interesting. I know that this is not true in every office, but it is true in far too many offices.
If you are an 1102 with a long time to serve until retirement, you cannot be neutral about this. This is your career I'm talking about.
Our webmaster, Bob Antonio, had to put his little dog Ambrose to sleep today. Bob and Ambrose had been companions for nearly 17 years.
Those of you who have owned dogs know how painful it is when they die, especially when they've been with you for a long time. I have seen some very tough people break down and cry like babies over the death of a dog. If you've never owned a dog and suffered the death of one, this may be hard to understand. All I can say is that the love of a dog is the most unconditional mortal love known to mankind. The loss of that love can break even the toughest heart. You either know this or you don't.
In memory of Ambrose, here is a poem by Robinson Jeffers, the American poet.
THE HOUSE DOG'S GRAVE
(Haig, an English bulldog)
I've changed my ways a little: I cannot now
Run with you in the evenings along the shore,
Except in a kind of dream: and you, if you dream a moment,
You see me there.
So leave awhile the paw-marks on the front door
Where I used to scratch to go out or in,
And you'd soon open; leave on the kitchen floor
The marks of my drinking-pan.
I cannot lie by your fire as I used to do
On the warm stone,
Nor at the foot of your bed: no, all the nights through
I lie alone.
But your kind thought has laid me less than six feet
Outside your window where firelight so often plays,
And where you sit to read--and I fear often grieving for me--
Every night your lamplight lies on my place.
You, man and woman, live so long it is hard
To think of you ever dying.
A little dog would get tired living so long.
I hope that when you are lying
Under the ground like me your lives will appear
As good and joyful as mine.
No, dears, that's too much hope: you are not so well cared for
As I have been,
And never have known the passionate undivided
Fidelities that I knew.
Your minds are perhaps too active, too many-sided....
But to me you were true.
You were never masters, but friends. I was your friend.
I loved you well, and was loved. Deep love endures
To the end and far past the end. If this is my end,
I am not lonely. I am not afraid. I am still yours.
Bob is feeling badly right now. If you get a chance, please drop him a line by email and let him know you're thinking of him.
The opinion pages of the January 12 edition of The Washington Post contained a guest column by Paul C. Light entitled, ?The Real Crisis in Government.? http://www.washingtonpost.com/wp-dyn/conte...0011103255.html In that column he makes an important point: our government is no longer competent enough to guarantee ?the faithful execution of our laws.? Everyone should read that column, because the biggest threat to our safety and well-being today is not Al-Qaeda, but our own incompetence.
Our government depends on contractors to do its work, and I see incompetence at work in contracting almost every day. It is pervasive at all organizational levels, in policy and in all phases and tasks of contracting operations. A recent, low-level example can be seen in C&B Construction, Inc., Comp. Gen. Dec. B-401988.2, http://www.wifcon.com/cgen/4019882.pdf:
How can any contracting office make such a mistake today? For even worse incompetence, and at a higher level, see Navistar Defense, LLC; BAE Systems, Tactical Vehicle Systems LP, Comp. Gen. Dec. B-401865, http://www.gao.gov/decisions/bidpro/401865.pdf. And need I mention the Air Force's conduct of the tanker competition more than a year ago? (They still have not released the new RFP.) Such foul-ups are avoidable, and they are not even the tip of the proverbial iceberg.
The most desperate need in contracting today is to develop a competent workforce, but I don?t know who is going to do it or how.
I plan to write more about this in the near future, but in the meantime everyone should read Paul Light?s column in The Washington Post and his book, A Government Ill-Executed.
Here is an in-house training exercise for new acquisition personnel. The objectives are to: (a) give the participants a good overview of the acquisition process and ( introduce them to the FAR and to the language of acquisition. These objectives are achieved by requiring the participants to actively engage with acquisition language and concepts.
The exercise entails directing the trainees to (1) read FAR Subpart 7.1, Acquisition Plans, (2) look up officially defined words and terms in FAR Part 2 and in an official glossary of acquisition terms, and (3) develop a list of questions for discussion. It then entails conducting a discussion/Q&A session.
The teacher must be a competent professional with a thorough understanding of the acquisition process and better than average knowledge of the FAR. He or she must conduct two meetings one week apart. These will take a total of five hours. The trainees' work will require between six and ten hours of private study time, the actual length depending on the abilities and diligence of the individual trainee.
Unlike the passive lecture-cum-PowerPoint-slides approach to training, this exercise requires the trainees to work and struggle at learning. Making them work and struggle will deepen their knowledge and improve their retention of the knowledge gained. There are few things more pointless and less enjoyable to bright people than a turn-off-your-brain-sit-in-your-chair-read-the-slides briefing-style "lecture," and nothing less likely to yield pleasure, learning, and retention.
Why FAR Subpart 7.1? Why not Subpart 8.4, Part 13, or Part 15? Wouldn't a reading of any of those parts be more practical? Not in light of the objectives, which are introductory in nature and not "how-to." Making newcomers plunge into parts of the FAR which are associated with so much controversy and disagreement would be to send them into the heart of darkness. FAR 7.1 is a better starting place. It covers the entire acquisition process, is not too long, and doesn't require an understanding of complex acquisition concepts.
The exercise can serve as a launching pad for further training exercises.
STEP 1. PRE-MEETING PREPARATION BY THE TEACHER
a. The teacher should download the Defense Acquisition University Glossary of Acquisition Acronyms and Terms, 12 ed. (July 2005) and print one for each trainee. (Use the DAU glossary even if you work for a civilian agency, because the Federal Acquisition Institute version apparently has not been updated since 1998, which makes it too old to be used today.)
b. The teacher should download the pdf version of the current FAR from www.acquisition.gov and print out FAR Part 2, Definitions of Words and Terms; FAR Subpart 7.1, Acquisition Plans; and the contract clause at FAR 52.202-1, Definitions (July 2004). Print a copy of each for each trainee.
c. The teacher should be (or become) thoroughly familiar with the reading materials and do the work the trainees will have to do before the first meeting with them.
STEP 2. THE FIRST MEETING
The teacher meets with the trainees on a Monday morning for two hours. There need be no limit to the number of trainees at this meeting. The trainees will need a highlighter, a ballpoint pen, and a notebook.
The teacher must:
a. Explain the exercise and its objectives.
b. Distribute the copies of FAR Part 2 and 52.202-1 and then lead the trainees through FAR Section 2.000 and the introductory paragraphs of 2.101. Then lead them through FAR 52.202-1 and explain its importance during contract formation and contract performance. Point out that definitions appear throughout the FAR, but that the only ones they must look up for the exercise are the ones in FAR Part 2 and the DAU glossary.
Emphasize the importance of knowing the language of acquisition, using some examples of words and terms defined in FAR Part 2, such as contract, cost or pricing data, day, executive agency, and United States to show them how even familiar words and terms can take on special meanings in the context of acquisition.
c. Instruct the trainees to go through FAR Part 2 and highlight every word or term that is defined (not the complete definitions), telling them not to take time to read the definitions and giving them 20 minutes to complete the task.
d. Distribute the copies of FAR Subpart 7.1 and instruct the trainees to read FAR sections 7.101 through 7.106⎯3,925 words, about five and one-half pages. Tell them not to bother with sections 7.107 and 7.108. Tell them to read briskly to get an overall sense of the contents, but not for understanding--more than a scan, but less than a careful read. Tell them that they have one hour.
e. After they have read FAR Subpart 7.1 through the first time, instruct them to go through it again and place a forward slash (/) at the end of every sentence. Do not tell them to do this until after they have read the material through the first time. Tell them that they have 30 minutes to complete that task.
Why make them do that? The participants must learn that they cannot read regulations, the FAR in particular, the way that they read newspapers, magazines, and novels. They must read in a state of heightened attention. Making them place a forward slash at the end of every sentence will force them to be consciously analytical and reveal to them that sentences in the FAR are sometimes quite long and complex. The act of placing the slashes will reveal the structure of the text, the slashes being more striking than the periods. The syntactic effect of periods is sometimes diminished in text that uses a lot of abstract words and terms. The slash helps them to focus on sentences as units of meaning, each with its own subject and predicate.
f. After they have read the material through the second time and placed slashes at the end of every sentence, tell them that they have a week to read the material through a third time for complete understanding. Tell them not to bother reading the parts of FAR that are referenced in Subpart 7.1. (Some of those references can be the basis for future exercises.)
g. Instruct them to (1) look up the definitions of abbreviations, acronyms, words, and terms in FAR Part 2 and the DAU glossary, (2) type a list of all words and terms that they looked up, and (3) type a list of any questions they have about what they read. Tell them that they must turn in their two lists on the following Monday morning. Instruct them to write their questions in complete sentences, properly punctuated. Tell them that you will evaluate them on the basis of the clarity of their questions.
STEP 3. ORGANIZE THE DISCUSSION GROUPS
If there are more than 10 trainees, then organize them into discussion groups of 10 or less. As a general rule, no discussion group should include more than 10 people. Notify the trainees of their group assignments.
STEP 4. RECEIVE, REVIEW, SORT, AND CONSOLIDATE THE LISTS
The trainees are to turn in their lists on the Monday morning after the first meeting. The teacher then must review, sort, and consolidate the lists of words and terms and the lists of questions into single lists for each discussion group. If there are too many questions for a three-hour meeting, select a reasonable number (about 10) of the best. Eliminate any incoherent questions. Make a copy of each of the two discussion group lists for each group member.
Don't reward people who write incoherent questions by spending time trying to figure their questions out. Don't baby trainees that way. Reject poor work. The trainees are presumably college-educated persons who ought to be able to read the material, do the research on definitions, think about what they have read, figure out what they understand and what they don't, and write intelligent and coherent questions. Don't accept any excuses based on "the material unfamiliar to me" or "I'm new." Of course it's unfamiliar to them. Of course they're new. The purpose of the exercise is for new people to begin to familiarize themselves with acquisition and the FAR. They must familiarize themselves, and that's not easy, but they are being paid to learn. Make them earn their paychecks by thinking hard and writing clearly. Do not molly-coddle trainees. Acquisition is a business for tough-minded people who spend other people's money. Demand first-rate work from day one. This is an important part of the training and of workforce conditioning and development.
You can learn a lot about the attentiveness, intellectual curiosity, diligence, reading and writing ability, and relative need for hand-holding of each of the trainees from their two lists and their participation at the second meeting. This is a chance to separate the thoughtfully clueless from the clueless-without-a-thought.
STEP 5. THE SECOND MEETING
On the Wednesday after the submissions of the lists, meet with the trainees in groups of 10 or less for three hours (no more than that) to discuss the definitions and questions. (Don't wait too long after the submissions to hold the second meeting. You want the trainees to have the materials freshly in mind.) Hand out the copies of the two consolidated lists for the group and use the list of questions as an agenda.
The purpose of this meeting is not for the teacher to answer the questions, but to get the trainees to think about and discuss them. Think of the meeting as more of an "exploration" session than a Q&A session. Also, remember that you are not teaching about acquisition plans or acquisition planning, per se, but using the FAR coverage of those topics to teach about the acquisition process and acquisition language in general. Don't turn the meeting into an acquisition planning how-to session.
Handle this meeting like a graduate school seminar meeting. The teacher should prepare thoroughly and not try to wing it. Have a discussion plan for each question; don't just ask for "thoughts," comments, or additional questions. The teacher should bring his or her own list of words or terms in FAR Subpart 7.1 that are defined in FAR Part 2 or in the DAU glossary, and also a list of words or terms that are defined elsewhere in the FAR, e.g., multi-year contracting.
The teacher should not act as though every question has a definitive answer. There are lots of "unsolved" mysteries in acquisition, such as the definition of subcontract and of subcontractor as used in FAR 52.215-12, which are problematical. The trainees must learn of the existence of such problems and learn to be prepared to cope with them.
Bring additional materials for further reading after the meeting. For example, the teacher could prepare a set of one-page elaborations or "fact-sheets," and bibliographies for selected topics, such as FAR 7.105(a)(1), statement of need; 7.105(a)(4), capability or performance; 7.105(a)(7), risks; 7.105((2) competition; and 7.105((5), budgeting and funding. Subpart 7.1 is an especially rich source of training topics.
It is crucially important when going over the questions to point out any officially defined words and terms that the students missed. Emphasize again that learning the language of acquisition is an important part of their early career development. Point out the numerous references throughout Subpart 7.1 to other parts of FAR and emphasize the scope and complexity of the acquisition process. Point out how much there is for them to learn and the importance of developing and maintaining their own personal learning plan.
It would be extremely beneficial for each trainee to bring a copy of the FAR to the meeting, so that the teacher can refer to it when discussing the questions. If the three-ring binder version is too unwieldy, then the small CCH or West editions will do, but since they are always out of date by the time they are published the teacher should use a three-ring binder version and alert the students to changes.
This exercise should not be too demanding for college graduates and will serve as a good kickoff to an acquisition education.