I recently read an article from a respected source proposing to “blow up” the current acquisition process because it currently takes too long to deliver goods and services and doesn’t provide what everyone needs. While this makes great headlines, generates discussion, and spotlights the concern, it doesn’t constructively solve anything.
It’s easy to give sound-bite summaries of problems and solutions, while avoiding the hard analysis necessary to truly understand the issues and the difficult solutions required to address them. A very wise person recently told me that contract managers must possess competency in project and relationship management. Those same skills must also be included in the skills sets of program managers, users, and agency/company executives, along with strong leadership qualities.
Current laws, regulations, and bureaucracy are not responsible for good and bad results, but are instead the environment that visionary, task-oriented, knowledgeable, effective leaders with strong communication and interpersonal skills are given to work with. “Blowing up” the system would still leave an altered, but still unchanged, environment in its wake.
Satisfying needs with resources not available in-house still requires knowing what and when resources are necessary (i.e., “requirements definition”); where to find them (i.e., “market research”); the best way to procure them (i.e., “acquisition planning”); how to pay for them (i.e., “budget requests,” “funds appropriation,” and “allocation”); who is the best source is to provide the necessary resources (i.e., “source selection,” “past performance,” “responsibility,” “responsiveness,” “sole-source justification,” etc.); and how to ensure delivery is on time and is in fact what was asked for (i.e., “contract price,” “terms and conditions,” “use of incentives,” “changes,” “risk mitigation,” “termination procedures,” etc.).
Concluding that the process must be “blown-up” is a wrongful conclusion for a system with a lack of clear responsibility and accountability. This isn’t unique to government acquisition, but can be systemic to government operations generally. If program or contracting executives are to be held accountable, then agency superiors and legislative oversight authorities are responsible to clearly delegate and articulate that responsibility—either support those executives and stand aside, or replace them as necessary. This includes those responsible for requirements definition, resource allocation, technical oversight, legal support, etc.—provide the resources to execute or admit that it can’t be done. Those implementing satisfying contract requirements cannot be held responsible if the organizational culture is one of risk adversity and diffused responsibility. In this environment, contract managers—or the “acquisition process” as a whole—too often become the scapegoats for system failure, but they are not the cause.
Problems within government contracting include technical and interpersonal skills, but perhaps more important, organizational structure and leadership. Great private-sector organizations are led by great leaders. They also must cope with constant change in markets, whether from changing competition, technologies, demographics, consumer tastes, or society. History provides examples of those that adapted well and those that didn’t. The same is true with government. Some agencies and their respective leaders adapt well to our democratic government environment, with its constitutionally intended system of redundant, overlapping review mechanisms; on the other hand, some don’t. Attributing contracting problems to a faceless acquisition “bureaucracy” that needs to be “blown up” is an attractive, but nonproductive answer to a difficult problem and doesn’t solve anything.
Unless someone is suggesting we change our system of government and the methods by which funding is provided to government entities and how its leadership is appointed, our acquisition system simply exemplifies the positive and negative attributes of that system.
Michael P. Fischetti
National Contract Management Association
The most challenging task in Government contracting is contract pricing, which requires contracting officers to award contracts at “fair and reasonable” prices. Pricing is challenging, because it is the most regulated of all Government contracting processes. Firms that want to sell their products and services to the Government often must prepare and submit thick packages of proprietary pricing information, and face potentially serious civil and even criminal sanctions if any of the information is inaccurate, incomplete, or outdated. Government personnel must deconstruct those packages and negotiate prices subject to review and criticism by various public and private watchdog organizations. Thus, the pricing process is labor intensive and very costly, both to would-be contractors and Government agencies.
The commercial sector is not encumbered by the same rules and risks. Strictly commercial firms need not submit to the heavy administrative demands imposed on Government contractors. Many firms that might sell to the Government are deterred by its onerous rules and procedures and by the threat of civil action and prosecution in reaction to even innocent mistakes. They fear that compliance with the Government’s rules would increase their overhead costs, reduce their profits, and make them less price competitive in the long run. Firms dedicated to the Government market must incur high, but unproductive, administrative costs, which they pass on to the taxpayer whenever possible.
To illustrate the difference between Government and commercial pricing practices, consider rules such as the Truth in Negotiations Act (TINA). TINA’s purpose is to require full disclosure of confidential business information to the Government, the kind of information that a company would not disclose to a commercial customer. There are potentially significant contractual consequences and the potential for costly litigation even for unintentional noncompliance. In some cases, litigation can take many years and have unpredictable consequences.
(For the history of an epic litigation spanning more than a decade in which a contractor spent millions in attorney’s fees to defend itself from charges of violating TINA, see United Technologies Corp., ASBCA No. 51410, 04-1 BCA ¶ 32,556 (2004); United Technologies Corp., ASBCA No. 51410, 05-1 BCA ¶ 32,860 (2005); Wynne v. United Technologies Corp., 463 F.3d 1261 (Fed. Cir. 2006); United States v. United Technologies Corp., 626 F.3d 313 (6th Cir. 2010); and United States v. United Technologies Corp., 950 F.Supp.2d 949 (2013). The litigation concerned the pricing of a production contract for aircraft engines, something that commercial aircraft manufacturers manage to obtain without similar litigation.)
TINA is not the only such rule. There are also cost “principles”, cost accounting standards and disclosure statements, and requirements to submit to intrusive proposal and contract audits. And contractors often must “flow down” some of the burdens imposed by pricing laws and regulations to their subcontractors.
Taxpayers want the Government to pay only “fair and reasonable” prices. Congress enacted the pricing laws and required publication of the regulations in pursuit of that objective and in reaction to cases in which some bad deals. While some of the bad deals were due to inappropriate and even unlawful contractor behavior, others were due to a lack of pricing knowledge and negotiating skill among the Government’s contracting workforce, prompting Congress to use laws and regulations as proxies for competence.
Effective contract pricing requires knowledge of a convoluted system of Government rules and of business accounting and marketing practices, and the ability to use a variety of analytical pricing methods. Thus, Government and the firms that do business with it must have a well-educated, properly trained, and truly professional workforce, one with the analytical, technical, business, and managerial skills needed to navigate the sea of pricing rules, cope with budget and revenue pressures, and make sound contracting decisions. But there is widespread agreement that we do not now have that workforce.
The development and maintenance of a professional acquisition workforce might convince Congress that it does not need so many legislative proxies for competence. That, in turn, might ultimately reduce the cost of doing business with the Government, attract new companies to Government work, make more innovative products and services available to Government agencies, and reduce the prices that the public must pay. We have long talked of workforce improvement, but accomplishment must matchthe rhetoric. It is now long past the time to stop talking. Several ideas and initiatives are in various stages of development. They should be given proper consideration.
(Adapted from Federal Times post dated November 24, 2014.)
Acquisition reform discussions are again in full swing. Everyone agrees there is room for improvement in contractor-dependent government services and mission. But no consensus exists on what sort of improvement we need. We know that products and service delivery can take too long, don't always meet intent, and don’t satisfy everyone involved. Thus, as occurs whenever this topic arises, many will recommend solutions involving changes to the Federal Acquisition Regulation (FAR), if not scrapping it altogether. After all, it’s the principal regulation governing management of federal contracting, as well as a guide relied on in many other sectors (e.g., state and local government), so it clearly plays a very important role in the process. Collect some comments, draft language, pass a statute, flow down changes to the regulation, and we could relatively quickly once again declare victory—assuming that contracting managers follow prescriptive FAR-mandated behavior precluding independent business judgment and common-sense discretion and only need new guidance to succeed!
On December 4th, the Office of Federal Procurement Policy issued a memorandum to all Chief Acquisition Officers and SPEs titled “Transforming the Marketplace: Simplifying Federal Procurement to Improve Performance, Drive Innovation, and Increase Savings.” Among many admirable goals within the memo (Category Management, Driving Innovation, Stronger Relationships, etc) is one called “Removing Regulatory Barriers to Innovation,” which focuses reviewing FAR and agency level regulations generating the greatest reporting burdens or unnecessary restrictions that keep new, innovative companies from entering the Federal marketplace. The memo requires “steps to identify and remove or revise any outdated regulations.”
This is a proper, measured and specific approach to those that believe the FAR to over prescriptive, onerous, complicated and unnecessary. New laws and FAR regulation mandating incremental, tactical improvements to whatever today’s problem is perceived to be, or laying responsibility for those problems with the FAR itself, is misplaced. While incremental improvement may come through changes to the FAR, this road has been well-traveled before and the “low-hanging fruit” largely already picked.
The FAR is actually a very practical, understandable, usable, flexible, actionable, and surprisingly resilient regulation. To recall the old Carnac the Magnificent skits, “everything you ever wanted to know” and do is available through the FAR. In fact, agencies with authority to waive FAR requirements largely follow it anyway because it’s such a great and flexible regulation that’s used to buy the vast majority and variety of products and services required by government today. The FAR is adaptable to current government mission requirements and business trends in e-commerce, technology, and weapon systems and services. From cloud computing to future smart phone business transactions, almost anything can be met through the acquisition structure provided in the FAR. In short, the FAR is not the problem.
So let’s not again become distracted in our attempt to improve government acquisition through a focus on the FAR, but instead listen to what government and industry contracting executives actually doing the work are saying. We’ll then learn that today’s contracting issues are instead human resource issues; the recruitment, development and retention of contracting managers to perform what is one of the most vital roles in today’s outsourced government. This isn’t a simple FY16 legislative priority, but a long-term strategic one. It includes not only government but industry contracting managers as well, along with academia and professional associations. We must cooperate to develop contracting professionals beginning in their freshman year of college, with recruitment of highly qualified candidates by government and contractor employers before they graduate. Once on the job, they’ll have advanced technical, employer-specific training and long-term, follow-on continuous learning occurring with their peers from all sectors together. Professional competencies and standards must be managed by a professional association representing all relevant stakeholders, coalescing around widely agreed upon qualifications and testing that creates demand and drives early development back into undergraduate education. This would promote transferability between various government and industry sectors. That’s a far cry from today’s agency rules prohibiting government contracting managers from attending external professional development or industry communication forums.
The FAR doesn’t drive poor program outcomes—people do! Anyone who has worked with the FAR will admit that it’s an excellent regulatory framework. Acquisition reform is not FAR reform, but human capital reform. Meanwhile, creating budget and thus program certainty is imperative. Let’s be grateful the FAR can already support a world-class, flexible, and adaptable contracting workforce of the future. Now let’s focus on developing that world-class profession, exhibiting all of the characteristics we expect of other professions. That’s a long way from tweaking or even rewriting the FAR.
Embodied within contracting issues today is who is winning awards and who isn’t. Calls for reform start from the premise that those professionals making the awards (1) take too long; (2) don’t understand their business; (3) need more training; (4) aren’t sensitive to private sector concerns; (5) used the wrong selection methodology; (6) won’t take risks; (7) won’t talk to industry; (8) should take advice from communities (program, technical, incumbents, small business, large business, legal, trade groups, etc); (9) should act more commercial; (10) should compete more; (11) should use more past performance criteria; (11) should rely on price; etc. Certainly in a commercial market, industry success and failure is usually laid at the feet of company management and it ability to understand and meet market needs. It seems rare to hear complaints that the reason for lack of private sector success is because the supplier was right, but the customer is wrong. Not so in government contracting. One can appeal to government legislative representatives, contracting managers and agency leaders and Protest real or perceived unfair treatment. One often hears that it’s the buyer, not the seller, who is wrong, and that’s why revenue wasn’t “booked.” Its common practice, if not encouraged by government, for industry to comment on the nature of the customer’s requirements, how they ago about meeting those requirements and who is involved in doing so. That’s the nature of an open and fair process.
So, besides complaining directly or through trade groups to Congress, agency executives and the Contracting Officer, what are some positive tools to win and keep government business? While not new, they’re certainly more important in an era of increased competition and fewer opportunities. Private firms that offer such support, but the strategy is the same:
Offer superior product: Certainly providing great products or services that meets customer needs at an affordable price is Business 101, regardless of market
Ensure your firm is “qualified” to do government business: Is your accounting system compliant? Can you pass a Contracting officer’s “responsibility” determination? Are you registered and licensed to do business? Have you paid your taxes? Can you positively “certify” to the several “representations” you will need to meet, etc?
Know your market: In government contracts, that means understanding agency authorization and appropriations language, attending industry days, analyzing Federal Business Opportunity listings, reviewing competitor strengths and weaknesses, understanding past performance indicators that may help or hinder your business prospects?
Understand government contracting statutes, regulations and policy: Yes it may seem complicated, onerous and even overwhelming, but to anyone who really takes the time to learn, it makes sense and is very fair. Learn and create corporate acquisition knowledge.
Find opportunities to meet and develop relationships with program and contracting officials: Becoming involved with professional associations and events can over time develop the involvement, credibility, relationships and understanding necessary, well before specific requests for proposals are formal communications come out. Meeting top agency or contracting executives might help understand overall customer vision, but concurrently, operational contract and program managers can provide insight to customer specific requirements and acquisition planning or source selection methodology.
New strategies and policies pertaining to category, supply chain and risk management; acquisition planning and market intelligence, always foremost source selection strategy and DoD’s Better Buying Power 3 and new reform legislation are here. World Congress is quickly coming up, offering more opportunities to build understanding and interact in person with those with a different perspective, from the other side of the table, and perhaps learn innovative ways of meeting ever greater challenges.
Actions industry can take toward success in government contracting today is in most cases nothing new, but should not be minimized during a climate which seeming correlates business success or failure as a result of customer (i.e. government) failures. In our system of government, it is fair and expected that citizens have the opportunity to exert influence on the expenditure of taxpayer funding. However, all of us should look in the mirror and acknowledge the responsibilities we all share in our business success.
Michael P. Fischetti, J.D., CPCM, Fellow
National Contract Management Association
All of us can probably agree that each year seems to go by faster than the year before. The older we become, the rate at which we age seems to increase. So now, with 2016 upon us, (and without providing a comprehensive listing of new contracting laws, statutes, regulations, personnel changes, or best practices during 2015), perhaps it’s best to simply summarize and reflect on what 2015 might signify regarding acquisition success. Let’s also not use the “R” word even though talking about acquisition reform keeps us blog writers and consultants busy.
Some initiatives that began with great fanfare are no longer around. The government almost “closed” again, although the list of program exceptions to shutdowns is now so large that many don’t notice. Those programs with greater lobbying power are essential, while many very worthy programs are used as pawns. Probably the greatest damage to government contracting, dwarfing any new legislative improvement, is the indecisive nature and short-term environment under which government programs must operate.
GSA launched initiatives in category management, including its acquisition gateway, eBuy Open and other initiatives intended to improve contracting officer market knowledge and vehicles available to meet specific needs and better leverage government buying power.
The Department of Defense says it’s at a 35-year best in controlling costs for major acquisition programs and bestowed a variety of 15 individual and five organization awards for the past year. Heidi Shyu stepped down as the Army’s acquisition executive and off of the acquisition “bus,” where she coined the analogy that all acquisition program “passengers” have a brake and steering wheel, but no gas pedal.
Legislation intended to improve the current process within information technology is underway and new legislation within DoD was passed. It will be sometime before it is clear how well these latest changes have performed.
Discussion with today’s acquisition leaders reveals a determination to do the right thing as best as possible despite the peripheral (beyond acquisition) system challenges at each step. This past year may best be remembered for cyber security breaches; new and enhanced multiple-crises emanating from the Middle East; successful space probes and retrieval; cyclones, earthquakes, and changing climates; gun violence from Tunis to California; and a never-ending political campaign.
For contracting managers, the faster nature of societal change and news cycles may mask the great strides being made to respond more effectively to ever-changing government requirements and outsourcing needs. Ineffective conference, education, and industry communication restrictions appear to be abating. However, lengthy debate over government salary, bonuses, or predetermined solutions to unresearched acquisition problems continues.
From a contracting standpoint, 2015 may not be momentous in terms of single legislation or headlines. However, the complexities and challenges of successfully navigating today’s acquisition environment—from reduced spending to cyber security to Federal Reserve policy to the sheer complicated nature of the business enterprise itself—continues to grow. The requirements are harder, and the solutions harder still. Contractors supporting the government (and indeed the government itself) have a more difficult time understanding how to prepare, respond, and execute to these ever-evolving challenges. From workforce to technology, uncertainty is increasing and proven solutions decreasing. A new workforce is growing up in an environment of more employment uncertainty, from challenges to the education they’ve received to the manner of training and on-the-job experience they need.
However, we should all be impressed by the professionals working within this environment and what they accomplish. They don’t have time to publicly write or promote their efforts, but they are there and are noble. The year 2016 promises to be no easier than 2015. Our contracting leaders and managers are up to the challenge, but let’s understand for ourselves the causes and concerns, offer our advice and support, and be part of the solution.
Michael P. Fischetti
National Contract Management Association
We all know that government executives drinking champagne from a Las Vegas hot tub during an agency-sponsored conference is bad. Congress and the president were right to react as they did. However, current education and training restrictions go too far. The relatively small savings gained by prohibiting employees from leaving their desks to learn or interact with industry counterparts is miniscule compared to higher contracting costs due to lack of knowledge and understanding. Poorly written or managed contracts and miscommunications ultimately cost taxpayers. Note that protests are up!
Our government now depends on contractors to do everything demanded of citizens. This increasing reliance evolved under administrations from both political parties. Current hiring restrictions, furloughs, increased missions, and accelerated retirements are exacerbating this trend. Contracting activity is increasing as agencies adjust to new fiscal realities. While there may be fewer contracting dollars, this doesn’t equate to a decreased contracting workload. Denying professional development to contract managers makes this situation even worse.
Government and industry acquisition professionals can meet these challenges by working together. But building that relationship and clear understanding from both sides of the table is best done through face-to-face communication—not by video teleconference or webinar!
National Contract Management Association (NCMA) members take great pride in this work. Contracting managers are responsible for over $1 trillion on contracts, grants, and loans per year. Being trained and experienced is essential to efficient government operations. Contract managers protect taxpayer and ownership interests by managing the laws, regulations, and policies demanded by the president, Congress, and their own organizations’ chief executive officers. OMB’s 25-Point Myth-Busting Plan encourages productive interactions between federal agencies and industry during acquisition: “Industry partners are the experts in what solutions are available in the marketplace.” The FAR also encourages vendor communication. Just as in any other profession, contracting managers require professional development to remain current.
Recent GAO Report 13-231 highlighted the government’s failure to determine relevant metrics, funding, and staff for training. Yet commonly adopted, competency-based principles for this profession already exist. NCMA programming aligns directly to the Contract Management Body of Knowledge (CMBOK) and its competencies. This is why the Office of Personnel Management last week again approved employee attendance for NCMA’s World Congress educational event in July. Not unlike bodies of knowledge in other professions, the CMBOK should be widely supported and ultimately adopted, starting with removing current employee training and travel restrictions.
Government and industry acquisition professionals are patriotic and hard-working. They dedicate themselves to a “fair and reasonable price” for the billions in taxpayer dollars they manage each day. Let them professionally develop and ultimately lower government costs for us all!
Michael P. Fischetti
National Contract Management Association (NCMA)
NCMA just completed its World Congress in Nashville, where many contract managers and related professionals came together for learning and interaction. A recurring perspective heard from attendees regarding contracting and the current environment: It is gratifying and reassuring to see so many government and industry attendees present who were able to convince their employers and higher-ups of the value of training and keeping current with trends and thought in today’s environment. In fact, many paid their own way or were in attendance while on furlough, PTO, or annual leave. With all the obstacles thrown in front of contracting professionals who are trying to keep up with best practices, their dedication in rising above it is admirable.
The issues being discussed in and out of the training rooms during this event, include themes such as maintaining adequate staffing in the face of hiring freezes, furloughs, and increased attrition. The workload is not decreasing, so who will perform the work? The inhibited communication between government and industry is another concern. Not having time to maintain adequate lines of communication can cause plenty of problems when developing requirements, during the solicitation phase, and during contract performance.
Related to this issue is that of morale. Increasing rules, policies, and legislation; years of pay freezes, combined with today’s furloughs; and continued bashing of the workforce may be chasing away new prospective professionals. Those young enough in their career may consider other alternatives or opportunities. Furloughs are resulting in more than just one day (or 20 percent) of productivity loss each week. Because of the requirement that these professionals “work to the clock,” the actual resulting productivity loss under furloughs may be as high as 40 percent as these folks adhere to a statutorily required “clock-watching” eight-hour day. This is not the way to approach the busiest fourth quarter of the fiscal year.
As a consequence, less overall contracting dollars and increased errors made during the acquisition process is resulting in additional protest activity. The protest process is a legal backstop to ensuring proper management of source selections. There is no short cut or easy workaround (although low-priced technically acceptable source selection evaluations may assist). You have to manage these activities well since everything is subject to later review.
Many prominent speakers complimented World Congress attendees on their professionalism in the face of external events and expressed their appreciation for what they do. We can agree that our leaders from all branches of government and both political parties need to support dedicated professionals that are responsible for executing the multiple programs they themselves have directed to be performed and not tie their hands while they do so. This is accomplished by supporting education and professionalism opportunities; by streamlining and simplifying the laws, policies, and regulations guiding this process; by eliminating conflicting priorities and unnecessary complexity; by providing adequate resources and staff to ensure success; by supporting reasonable risk mitigation strategies and avoiding an after-the-fact oversight mindset; and maybe by saying thank you.
But in the absence of these actions (and most importantly), it will be up to the contracting community itself to come together and demonstrate the professionalism they embody to achieve success against these odds. This is done by displaying the business acumen they are responsible for providing to ensure the business and government they support achieve their goals. Those contracting professionals present at World Congress, by their perseverance in making their way to Nashville, may have demonstrated that professionalism. Against all odds, they obtained 20 hours of contracting education that met all the required training guidelines from OPM, OMB, FAI and DAU. The many thousands of dedicated contracting managers who spent that week (and every other week) working hard to satisfy their customers, stockholders, and citizens, and the many who continue to meet their mission requirements against the many obstacles for not doing so, certainly demonstrate that professionalism.
Thank you to the dedicated contracting professionals who support our government and nation’s economy every day, through the quality of their work and the expertise of their decisions, in managing the programs demanded by our citizens and delivering the goods and services necessary to our nation, even though it often isn’t understood or appreciated!
Michael P. Fischetti
National Contract Management Association (NCMA)
A report was recently issued by the Professional Services Council: “From Crisis to Opportunity: Creating a New Era of Government Efficiency, Innovation, and Performance.” Through their “2013 Leadership Commission,” the report “calls on the government and industry to join forces in pursuing fundamental changes to turn the current fiscal and human capital crises into significant opportunities.” It further “identified critical challenges facing the government and makes actionable recommendations about new approaches to workforce development, incentivizing innovation, developing smart business and acquisition strategies, and enhancing collaboration within government and between government and its industry partners.”
In government contracting, we are all aware of a pattern of multiple, similar concerns that have been expressed in the past:
The process takes too long,
The workforce isn’t properly trained or professionalized,
The outcomes are late and expensive, or
The process is overly taxing on government and industry.
In short, the perception is that the acquisition process doesn’t work at the level most expect and that taxpayers deserve. Is this true, or is it loud voices from a small community?
This report offers many good and objective suggestions; some that are new and some heard before; some objective and some with a writer’s bias. However, the “takeaways” clearly stress the importance of leadership, communication, and inclusiveness. For real progress, we must avoid engineering “top-down” legislative or regulatory solutions, as well as the tendency to perceive one party or another as more responsible than the other for the problems or their solutions. The issues within today’s acquisition system result from previous “reforms.” Shouldn’t all sides talk and work with each other this time before developing additional legislation that doesn’t fully consider what success is from the perspective of everyone involved? What does everyone else think?
Perhaps the biggest issue is a lack of knowledge, understanding, and appreciation of the complexities of government contracting. Because public funds are involved, there are many stakeholders from many diverse communities. Pursuing, understanding, and managing government contracts requires not just management, marketing, legal, networking, and communication skills, but particularly technical skills from the variety of professionals that belong to NCMA. One must understand the technical nuances of government contracting, which can’t be learned overnight. NCMA is one of the few places where you can rub shoulders with instructors, business managers, contracting officers and industry executives in a neutral, non-adversarial forum and understand more about how they think and why things are happening the way they do. Are we in agreement that you have to be somewhat knowledgeable in contract management and willing to view issues from other, diverse perspectives?
From government to industry, senior contracting executives to chief executive officers, contracting officers to entry level administrators and specialists, and attorneys to marketing specialists, NCMA advocates for those working in this field. A diverse working group representing all involved constituencies could be drawn from the NCMA Board of Advisors, appointed by representative government and private sector (including law and academia) leadership to further develop the report’s recommendations. This working group should be given an aggressive deadline for completion and develop further specific action items, briefed in public forums with proper notice (e.g., the Federal Register), to be implemented immediately upon completion. This should be something all related contract management communities can all agree on, where everyone has a say, since everyone has a stake in its outcome. Let’s pull together as a community and address the problems of our time. I would be interested in other ideas anyone else has.
Michael P. Fischetti, Executive Director
National Contract Management Association (NCMA)
Lately there has been considerable concern regarding the government’s greater reliance on a minimum acceptable technical standard for performance, thus leaving the remaining selection criteria to low price. The fear is that this is squeezing contractor margins concurrent with a “race to the bottom” in the quality in performance of government programs. While none of us wants the “low-bidder” surgeon performing open-heart surgery on us, is this really the issue?
If that standard is defined well enough, the lowest price within that standard will result in a good value for the both parties. If that standard is not well defined, you might end up with the cheapest part and the old adage, you get what you pay for becomes reality for government managers.
Today we see the salaries of many professionals being cut, in order that their firm is better able to win the government’s solicitation. Some of this is part of any business strategy. On the other hand, a price point will be reached where quality and a proper minimum technical standard won’t be reached and something has to give.
Therefore, the problem may not be the source selection strategy selected to determine who gets the contract, but how well the requirement is defined and how well the buyers understand their market and its capabilities.
Historically, if you ask contracting officers what is number one on their wish list (along with supportive management), they most likely will request a solid statement of work (or statement of objectives, performance work statement, or other similar requirements definition) along with a good grasp of what is happening in the marketplace to determine how best to satisfy the government’s needs.
If requirements are very well defined and widely understood, the quality of what is acceptable is not an issue. Government officials must clearly articulate and not accept anything less than the standard of acceptability proper for their needs. If they do so, price comparison is simpler and best value is achieved.
Michael P. Fischetti, Executive Director
National Contract Management Association
A key challenge to improving acquisition is defining what good contracting really is—and the proper skill sets necessary for those working within it. There are many different views on this topic that show up in various legislation, course curricula, job descriptions, and a variety of professional certifications across public- and private-sector agencies, firms, and associations. These include large government contractors; Defense Acquisition University; Federal Acquisition Institute; colleges and universities with supply chain, contract management, and business programs; corporate training criteria; and all manner of nonprofit standards and certifications. Unlike many other professions, there is no universally agreed upon “Good Housekeeping Seal of Approval” that gives those working in or contemplating entry into contracting a universally adopted set of competencies for today’s acquisition manager. Instead, “good contracting” and its skill sets are defined (if at all) piecemeal, employer by employer, segmented by type and size of organization.
However, there are models in use today that could be a starting point. For example, the Volcker Alliance recently published a list of fundamental skills and experience required for those responsible for public procurement, based on interviews with procurement officials and academic experts, leveraging their expertise to develop a competency model and evaluate the current public procurement workforce against those competencies.
Very close to this model, with perhaps more depth and historical iterations, is the Contract Management Body of Knowledge (CMBOK), maintained by the National Contract Management Association. The initial compilation began with a job analysis of functions performed in public- and private-sector contracting. Now in its fourth edition, the CMBOK is a comprehensive standard that includes definitions from within the field, practices and processes, and the procedural steps applicable to contract management generally and to the commercial and government sectors in particular.
Other organizations related to the field offer certifications based on smaller standards or high-level competency models. How difficult would it be to align these models more closely, recognizing their similarities? Are the basic principles of contract/procurement/supply chain/acquisition so unique to each sector, devoid of any overlap or redundancy? Or is it simply the case that depending on where the function is performed, some competencies require a greater or lesser degree of knowledge, experience, complexity, emphasis, or prominence?
As is often the case, most organizations consider themselves unique, different, one of a kind, etc. However, aren’t the skill sets required for effective acquisition uniform, regardless of sector or employer? Leveraging the overwhelming numbers working in this field (known as strategic sourcing when involving purchasing power) could create a large, influential “market” of existing and potential professionals. This would drive competency-based education and training at the university level and offer lucrative, flexible career opportunities to entice people into the field earlier and convince them to stay longer.
At the federal level, this might limit the routine attempts to legislate competencies and skill sets only pertinent to the U.S. government, (leaving large and small organizations throughout the nation to figure it out for themselves, depending on a smorgasbord of competency models to choose or ignore).
An agreed to standard can emanate from existing competency models and professional communities, with the leadership of existing professionals in the field and existing professional organizations. It’s likely that some could view such collaboration as a threat, affecting existing business models and profit centers. However, aligning the profession together will bring far greater improvement and efficiencies to private and public sector costs of doing business, so the sooner the process begins, the sooner the fruits of this labor will be realized.
Michael P. Fischetti
National Contract Management Association
Of all areas in contracting, the one often taken most for granted, yet of vital importance, is that of the prime contractor/subcontractor relationship. We all know how much the requirements, contractual specifications, terms and conditions, and funding on a prime contract flow down the supply chain, but this flowdown doesn’t just happen. Although some may argue it’s as easy as placing clauses into a subcontract, it more complex than that. Subcontracting can exponentially increase the complexity of whatever product or service is to be delivered to the ultimate customer.
For all the attention placed on the customer and prime contract, all these same complex issues, and more, are placed on firms managing both ends of the subsequent subcontracting relationships at each successive tier. These firms may be competitors with each other in some respects, yet working for one another in other respects. Prime and subcontractors must develop tools and systems for tracking performance, compliance, and results—not only of themselves, but of each other. Creating these processes, systems, and documents defines their relationship and responsibilities. Determining the terms and conditions of what the prime needs—including what, how, where, and when—must be precisely articulated to ensure the sub delivers exactly what the prime customer asked for (as defined in the prime’s solicitation, the sub’s proposal, and subsequent (proper) communications).
Within both federal and commercial contracting, competitive pressures and expectations continue to dramatically increase. In most cases, everyone has increasing alternatives to go elsewhere if needed to get their requirements met. The prime customer, as we know, is obligated to flow down certain expectations, and to manage the increased pressures “downhill.” Within federal contracting, increased oversight and review of the managing of subcontracts or purchasing has increased from the contracting office to the Defense Contract Management Agency.
As in all things, this comes down to people. While many of these activities lend themselves to automation, much also requires the ever-growing need for professionals with interpersonal skills—particularly relationship building. Hard and so-called “soft” skills (or competencies) such as contract management, pricing, written and verbal communication, knowledge of technology, research, finance, marketing, or general business acumen—as well as adaptability to change—are competencies no firm can short-change in the people that ensure this is done internally, or in representing itself to the outside business world.
Subcontracting, supply chain, or purchasing managers; buyers, contract specialists, pricing specialists, estimators, or category managers—whatever the title, they are interrelated within the same overall profession. Whether on the buying or selling side, the prime or the subcontractor, the top-tier or several layers down the supply chain, this is as important a relationship and imperative a technical expertise as ever there was in how our economy is driven.
Within small businesses, it can be well argued that these activities are everyone’s responsibility. Whether it’s someone working in finance, information technology, law, or business development; even the CEO needs to understand and perform parts or all of these subcontract management functions.
So what are you waiting for? The business that you may help thrive or just survive may be your own. Good Luck!
Michael P. Fischetti
National Contract Management Association
NCMA invites you and your colleagues to attend SubCon Training Workshops—NCMA’s new training event for subcontracting professionals—March 30–31, 2017, in Dulles, VA; offering four workshops, each with six sessions to choose from. Participants can choose their own schedule or come for two full days of training and networking. Learn more at www.ncmahq.org/subcon17.
Last year, a conversation between Amazon Business and one of the senior leaders in government contract management today was hosted at NCMA’s Government Contract Management Symposium. This session opened many people’s eyes to the technological “disruption” we’re all familiar with in our private lives, but not always in our professional ones.
Today, many of us have fully “plugged” ourselves into the digital automation of the modern day. We shop and acquire a whole host of products and services online; stream our music, books, and other forms of entertainment; engage actively in social media and other forms of previously non-existent forms of communication; hail car rides here and there, etc. while continually downloading new apps to our smartphones (anyone still hanging on to their flip phones out there?) to facilitate ever more management of daily tasks and lifestyle behaviors. Looking back just five years ago, when compared to today and the changes in our lives are quite dramatic.
However, any form of significant, wide-scale implementation of this “technological disruption” in federal programs or contracts is still in relative infancy. Yet, seemingly out of nowhere, a proposed “DATA Act” this year would require the Department of Defense to develop an “online marketplace” (that is, an Amazon-like platform solely for defense acquisition), which has many thinking of how that may upend existing policies and processes. What about small business or other socioeconomic goals? What about the Competition in Contracting Act (CICA)? What about sealed bidding and negotiated procurement as we know it today? What about the roles of agencies such as GSA, DLA, and VA in centralized contracting and provisioning? Similarly, what about the future of governmentwide acquisition contracts—such as SEWP, NITACC, and the Federal Acquisition Schedules—as centralized contracting instruments?
There is much to learn and define as this form of “disruption” comes, just as there is much to prepare for as those tools used to execute “smart contract management” become more intelligent. Yes, the roles and responsibilities of today’s contract management professional may change, but certainly how those roles and responsibilities are executed will definitely change.
Today’s contract management professional must (like everyone else) be prepared for this forthcoming sea change. If you didn’t think it could happen to you—think again. NCMA’s Contract Management Body of Knowledge (CMBOK) already reflects this shifting paradigm, adding new professional competencies and expanding the “reach” of today’s contract management professional to become more multidisciplinary in role, including ever greater reliance on “soft-skills” for success. If you pride yourself on your complete understanding of the FAR and strict adherence to processes and policy, congratulations; you know the rules and can apply them. However, start complementing and expanding those abilities by developing other business competencies, which will be necessary for future success. Don’t wait for some policy office to issue guidance, or DAU to offer a new class.
Just as many of us no longer use agents to book hotels, cruises, or other vacations in favor of online travel services such as Expedia and Orbitz; or have traded in our cable TV packages for streaming video services (known as “cutting the cord”); or cancelled our newspaper and magazine subscriptions for free or paywall online news services, the entire contract management enterprise is shifting to more digitally driven, results-oriented models—which means today’s contract management professionals must reevaluate their skill sets and reassess their value-add. The analytics and measuring tools available continue to increase. Can you not only use them, but just as with understanding existing statute and regulation, can you interpret and apply them? Do you have relationship-building skills relevant in today’s team-oriented, business management program culture?
There was a time when being strict and inflexible might have been considered an asset in the contract management profession—e.g., noncompromising or hardball tactics that ensure adherence to process, technical integrity, and meeting negotiation goals. All that still matters, but automation has filled some of that expertise with improved analytics and data, placing greater reliance on “soft skills” for professional growth and success.
It’s important for all of us to prepare for this coming technological “disruption.” It’s already arriving. Make sure you’re ready, so you offer the improved professional contract management alternative when your company or agency “cuts the contract management cord!”