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The Worst Thing That Has Happened To Contract Management?

Vern Edwards

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I just read an online column in which the author (1) asserted that the government neglects contract performance management to its detriment and (2) called for the devotion of more resources to that acquisition function. I don’t know on what basis the assertion was made or whether it is true, but I would not be surprised to learn that it is. My impression is that most contracting people devote most of their time to acquisition planning, contractor selection, contract award, and to unavoidable contract mods and postaward administrative matters. I suspect that most have little or no time for actual contract performance oversight and management.

If that is true, why would it be so? I am not sure, but I believe that a major contributing factor is the multiple-award task order contract. (By “task order contract” I mean an indefinite-delivery indefinite-quantity (IDIQ) contract for services.)

We spend more on services than supplies, and we conduct a lot of competitions in order to spend that money. We conduct competitions under FAR Part 13, FAR Part 14 (a few), FAR Part 15, FAR Subpart 8.4, and FAR Subpart 16.5. The reason for conducting Part 13, 14, and 15 competitions is obvious and understandable, but the Subpart 8.4 and 16.5 task order competitions are competitions on top of competitions. We do them because Congress wants agencies to continue the pursuit of lower prices after contract award and keep pressure on contractors to perform well.

Competition is resource intensive, time-consuming, and costly to all involved. How much time and money do all the 8.4 and 16.5 competitions cost and how much money, if any, do they actually save in the long run? Do they, in fact, result in better quality than could be had through effective contract management? No one knows, because no one keeps track.

The preference for multiple awards of task order contracts was a provision of the Federal Acquisition Streamlining Act of 1994, Pub. L. 103-355, §§ 1004 and 1054. The FAR councils implemented the statutory preference in FAR 16.504 and 16.505. FAC 90-33, 60 FR 49723, Sep. 26, 1995.

I commented on the proposed rule, 60 FR 14346, Mar. 16, 1995, in an article for The Nash & Cibinic Report entitled, “The New Rules for Multiple Award Task Order Contracting” (June 1995, 9 N&CR ¶ 35). In that article, I said:

[T]he proposed rule is significant because of the policy preference for multiple awards and task order competition. Presumably, multiple awards and competition among the awardees for task orders would pressure the awardees to continuously increase their productivity and the quality of their output. But multiple awards and task order competition could also increase the administrative cost and lead time associated with the issuance of task orders, and those effects could cancel out or even overwhelm the advantages accruing from task order competition. Although the idea of awarding multiple task order contracts for the same service and requiring that the awardees compete for individual task orders is not new (a few agencies have been doing this for many years), the vast majority of task order contracts have been single awards. Thus, the new policy can be expected to have a significant effect on procurement operations.

I also said:

The multiple award preference policy states that every awardee must be given a “fair opportunity” to be considered for the award of each task order in excess of $2,500. The proposed rule leaves the choice of evaluation factors to the CO's discretion. The CO need not publish a synopsis, solicit written proposals, or conduct discussions with awardees prior to the award of a task order, proposed FAR 16.505
(1). The rule precludes protests against task order award decisions. Agencies must appoint task order “ombudsmen” to handle complaints from awardees about task order selections, proposed FAR 16.505
(4).

Notwithstanding these liberal policies, it is not difficult to imagine Government procurement officials conducting a mini-source selection before the issuance of each task order. Some will almost certainly consider a more formal procedure to be necessary to ensure fairness. One can easily imagine requests for proposed task order “performance” plans or “management” plans, especially for task orders of significant dollar value. One can also imagine requests for extensive cost breakdowns, certified cost or pricing data, and proposal audits. If too complex and demanding, such procedures would significantly increase an agency's administrative costs, extend the lead time associated with task order issuance, and force awardees to incur significant costs in the preparation and negotiation of task order proposals.

And I concluded:

The objectives of the proposed rule about the task order contract multiple award policy preference are unstated, but one objective is undoubtedly to lower the cost of services provided under task order contracts by maintaining competitive pressure on contractors throughout the life of the contract. This may be a reasonable expectation based on theory, but there are many reasons to believe that it will not work as intended. The proposed rule of March 16, 1995, if issued unchanged as a final rule, will not increase the policy's prospects for success. It simply fails to address all the issues that the policy creates in ways that will assist working-level procurement officials to implement the policy in an intelligent manner.

Well, we all know what happened after FASA and FAC 90-33. The number and dollar value of acquisitions of services under multiple-award task order contracts (and GSA FSS contracts) soared. There was a lot of misuse and sloppy practice. In reaction, Congress and the FAR councils made the once liberal rules more voluminous and restrictive, not only for task order contracts under FAR Subpart 16.5, but also for orders against GSA Federal Supply Schedule contracts under FAR Subpart 8.4.

Competition is an essential part of acquisition policy, but competitions clog the acquisition system by absorbing a lot of human resources, taking a lot of time, and costing a lot of money. I believe that the multiple-award preference has made for a lot of unnecessary and ineffective competitions. It is not at all clear that the contracting results have been better than they would have been had agencies been allowed to make single awards without hectoring by the GAO, review teams, IGs, and other critics. Would America really be worse off if agencies simply conducted one competition for a task order contract, chose one contractor, awarded one contract, and focused on getting the best performance from that firm under that contract?

Multiple awards can be useful and have a place in acquisition practice, but I think that the statutory and regulatory preference for multiple awards has been one of the worst things that has happened to postaward contract management. It has diverted precious human resources to processes of dubious effectiveness and away from work that, if done well, would likely have a much more direct and immediate impact on results.

If anyone believes that better contract performance management yields better results and is looking for more resources to devote to that work, start by seeking the elimination or moderation of the multiple-award preference.

Four ideas to make elimination or moderation of the multiple-award preference more palatable to Congress:

1. Limit the duration of ordering periods under single-award task order contracts to three years, including options.

2. Amend the applicable statutes to expressly allow agencies to renegotiate prices and rates in single award contracts and prices and rates in contract extension options after contract award, without conducting a new competition.

3. Allow agencies to negotiate and award a new contract of up to three years duration with one of the original competitors without conducting a new competition if the original awardee's contract is terminated for convenience or default during the first year of the ordering period.

4. Develop a special course in services pricing and price negotiation for all COs who manage task order contracts and require them to attend and successfully complete the course within the first year of their assignment to such a contract.




5 Comments


I don't know if the increased emphasis on award of multiple award ID/IQ contracts in the 90's was the worst thing to ever happen to government contracting. But I do know that contractors' B&P costs skyrocketed afterwards, since they have to keep competing for the work over and over -- and very very few ID/IQ contracts provide funding for post-award task/delivery order proposal preparation.

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Jamaal,

Yes, I suppose that is a factor.

The bigger factor is simply that there are only so many resources available, and when you dedicate some of them to continually doing proposals (for the same or very similar work), then that's all they do. They don't actually, you know, DO the work. They generate indirect B&P labor dollars instead of direct contract labor dollars.

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Preparing a task order proposal or quote that seems simple to a government contract specialist takes time, and time is money. Preparing an elaborate proposal or quote takes a lot of time, and a lot of time is a lot of money.

It's one thing to email a price. It's another thing entirely to read even a short competitive RFP or RFQ and then write and mail a custom product or service description or explanation and provide a cost breakdown. Only people who have never done that work think it's easy or cheap. It's tedious and expensive.

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Vern,

Great perspective. You state:

If anyone believes that better contract performance management yields better results and is looking for more resources to devote to that work, start by seeking the elimination or moderation of the multiple-award preference.

   Do you have any resources or recommendations where one (in the Government) can go to get information on how to better manage contract performance? Thanks

 

 

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