Matthew Fleharty

On 6/1/2022 at 3:11 PM, REA'n Maker said:

The question is 'why' this continues...

I think Vern accurately identifies the "why" which he labels "practitioner recidivism" - we have too much training and not nearly enough education. Re-read the last two paragraphs of the article, they're spot on (emphasis added):

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Many acquisition reforms have been subverted by what we call practitioner recidivism. It happens when managers do not prepare working-level practitioners for effective implementation of something new. On-the-job training teaches them practice by cut-and-paste—“Don't reinvent the wheel!”—which is easier to teach than process design based on concepts and sound principles of practice. Faced with something new, and not knowing how to proceed without detailed instructions, they soon do what they were taught to do. So, not understanding the concept of evaluation factor, practitioners stick to the factors used in prior source selections—soundness of approach and under- standing of the requirement, though unable to define approach or soundness or explain what consti- tutes understanding. When entering into commercial contracts, not being familiar with commercial practices, products, services, and contract terms, they cut and paste from Government regulations, manuals, standards, instructions, and old specifications and statements of work. When given considerable freedom to design processes for providing multiple-award indefinite-delivery, indefinite-quantity contractors a fair opportunity to be considered for a task order, they resort to the FAR Part 15 process model.

 

No reform is immune to practitioner recidivism. It is inevitable. It will happen to other transaction authority and commercial solution openings. Just as sure as the turning of the Earth. VJE

I don't think that the summary information in the report is conducive to driving a good discussion - but I need to say the following regarding page 8:

I think these sensational quotes are cherry picked to drive your report's narrative/agenda - for example, I know enough current/former Government Contracting Officers who would take considerable exception to some of the "Why Government negotiates" quotes you provided. How many Government Contracting Officers did you talk to and what quotes from those others (if there were any) did you leave out?

Thanks @Vern Edwardsfor sharing your excellent writing with the contracting community free of charge. I think one of the challenges the workforce faces (among many) is that they simply lack access to many of these best in class resources like The Cibinic & Nash Report and Briefing Papers. When they're not taught how to write solicitations properly as part of their "acquisition training" and they don't have access to outside materials to learn anything different, they just listen to their coworkers and default to what they do: copy and paste...

I'll add this to the set of writings that I share with my contracting and acquisition colleagues.

1 hour ago, Matt_mcginn said:

We are so desperate now that we've eliminated all standards to be eligible for the career (which many have argued is necessary and forward-thinking)

Which eligibility standards are you referring to?

I think an organization only has too many warrants if there are people at the organization with a warrant who cannot/do not perform the work of a contracting officer well. You likely know your people and your organization better than any auditor does and based on your comments, it sounds like they did not justify their assessment (they likely just want to introduce more "levels" and bureaucracy into your organization because that's what they saw in other places). I would not be shy about questioning the auditors findings and conclusions - I have seen too many cases where an auditor or a reviewer, feeling compelled to write something, invents or creates a problem where there was none.

Also, put yourself in your people's shoes (and ask your leadership to do the same): if you were one of those people who was doing their job well, but losing their warrant simply because an auditor thought that more reviews and bureaucracy was a good thing (and leadership agreed with them), would you want to continue to work there if given the choice? What might that do to your morale to lose authority and responsibility despite not performing poorly?

Finally, if more reviews are necessary (which is certainly debatable) why can't a contracting officer review another contracting officer's work?

Bottom line: if the contracting officers in your organization are doing their jobs well, you don't have too many warrants. If they aren't, it shouldn't take an outside audit to fix it.

On 3/11/2022 at 12:50 PM, Don Mansfield said:

Regardless of what the committee does with the comments, I think it would be a fun exercise to develop what we (me, you, @C Culham, @Matthew Fleharty, and others in the Wifcon community) think would be a good CMS. We could brainstorm with criticism. I'll do all the work. Our product couldn't be worse than the current CMS.

Who's in?

Thanks for the invitation Don - I'll share a few thoughts on where my head is at and we can see where we can go from there:

• Purpose: I don't think the goal should be to merely "improve productivity, increase efficiency, and reduce costs" - this idea that everything should be minimized/maximized is misplaced as I prefer optimizing. For instance, if the goal is to go as fast as possible with as few expenditures as possible and a team has to "write" a solicitation, odds are they're going to copy and paste so they can "go fast" vs. taking the extra time to start with a clean sheet, think things through, and actually write a solicitation (less efficient, but more effective both in the short term, a better solicitation, and in the long term, more learning).
• Tasks: For most things beyond mere purchasing, there is a level of complexity that makes it difficult to clearly define a standard for tasks (or, in some cases, to even adequately identify the tasks). The CMS takes this for granted - see description of job tasks on page 2 "contract managers systematically process the job tasks to achieve the expected results of the competences" (emphasis added). I think successful contracting professionals are able to use good judgment and adapt to varying situations versus operating "systematically" (i.e. according to a fixed plan). I will note it's not like they ignored the notion of adaptation completely - they mention it on page 5 ("must be adaptable to a changing business environment") - but that gets to another problem with the task focus and the drafting process they're utilizing is that it produces inconsistencies like this (losing the forest for the trees).
• Standards: It is not clear whether the CMS seeks to establish a baseline minimum or if the goal is to establish something aspirational - the difference between satisfactory and excellent. Regardless of what it is, I think it ought to be the latter - a profession deserves more than mere minimums and a professional organization should seek to show their members standards for professionalism so they can become more than just practitioners.

What are your thoughts Don? I haven't had the chance to watch the video Jamaal posted so my apologies if I'm asking you to regurgitate what you've already said (just reply with a timestamp if they're in that video).

I find it lacking and I am not sure it will add much value. For one, I don't see many "standards" in the document - instead it is full of attempts to provide concise definitions for a litany of tasks. Maybe my understanding of a standard is lacking though.

Overall, my initial assessment is that, in some ways, it may actually be harmful to our profession as it is hard enough to get people to understand the basics/fundamentals without misleading them with minutia or inaccuracies. Take, for example, the definition of "contract" on page 1 which limits contracts to furnishing supplies or services - I find that inadequate as it leaves a lot out (e.g. intellectual property, NDAs, etc). For a profession in which words matter, I wonder how the "rigorous process involving materially affected and interested parties...based on due process, which was established through consensus, openness, lack of dominance, and a balance of interests" got, arguably, the most important definition wrong...never mind, I just re-read the sentence I quoted and answered my own question.

20 hours ago, Fara Fasat said:

The larger point is that an established firm accepted the court's poor wording and warned clients that services might not be commercial items.

I wonder if this established firm you speak of is aware of the change in definitions - "commercial item" was bifurcated to "commercial products" and "commercial services" in Dec 2021

7 hours ago, Don Mansfield said:

Watched this over the weekend. Thanks for the recommendation.

The one problem I have with the criticism of Boeing and the FAA is that they are being judged on the result of their decision to not ground the 737 MAX. At the time of the decision, it may have been reasonable to believe that the risk of catastrophe was very low. Perhaps the probability of another crash within the time it would take to fix the problem was the same as a non-737 MAX crash. Yes, a second crash happened, but was it reasonable to believe that a second crash would happen based on the data available at the time?

Glad you watched it! 😀 Though you must have taken a break at some key parts of the documentary because there is plenty of information in the documentary to show that there were fair process criticisms and not just results focused Monday morning quarterbacking. For instance, the FAA analysis after the first crash that estimated the 737 MAX would have 15 fatal crashes over it's life span or Boeing's own communications, both to the FAA which was outright deception ("jedi mind trick") and internally which showed that financials and absolutely no simulator training were the clear priorities over safety. There was enough information internally that leaders of Boeing were aware of that indicated a fair chance the aircraft might be responsible (single point of failure sensor, new software, no simulator training with only 10 seconds to respond...)

All that aside, what confirms in my mind that Boeing had a process problem (and not just a results issue) is that at no point, even after the second crash, did Boeing willingly ground their own airplanes. Instead, it still took governments around the world to stop the 737 MAX from flying until it was fixed/recertified. I have to believe that someone in the senior leadership at Boeing attended a top business school which routinely use the famous Tylenol recall case study; however, whoever it was must have slept through that lesson...Companies cannot purchase credibility, it has to be earned - and when it is lost, it can be difficult (if not impossible) to earn it back. More broadly, situations like this one only further erode trust in our society, it's tragic.

P.S. For anyone interested in another example see "Dopesick" (the series on Hulu - Michael Keaton puts on an excellent performance - and the book the show is based on) along with "Empire of Pain" which highlight a similar tragic tale about the opioid epidemic. In this case the regulators were both deceived and coopted (along with many doctors and patients). It helped me understand some of the vaccine hesitancy throughout the country, which is higher in communities that were/are impacted by the opioid epidemic.

A documentary on the 737 MAX tragedy is now available on Netflix. It’s called “Downfall: The Case Against Boeing”

On my morning commute I was reading a book from the CSAF's reading list -  "The Last Warrior - Andrew Marshall and the Shaping of Modern American Defense Strategy" by Krepinevich and Watts. I underlined the following text discussing an interagency working group in 1972 which seems relevant to The PRICE Act's Working Group:

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The steering group was populated with senior officials who lacked the time to devote serious intellectual effort to the assessment, and who also needed to satisfy the views of a wide range of  bureaucratic players and organizations. As anyone familiar with the workings of large government bureaucracies knows, the interagency process generally produces results that reflect compromises on substantive areas of disagreement among the group's participants. This leads to findings that are the least objectionable to everybody involved rather than those that are the most insightful and, not surprisingly, often the most controversial. p. 99-100

👍👍

1 hour ago, here_2_help said:

You're making an assumption based on ... something.

Look, I don't want to argue with you. I'll assert that you don't understand Boeing, especially the interplay between its commercial division and its government division. Let's just leave it at that.

If you don't want to argue the issue why make an assertion directed at me and then state to just leave it at that?

Besides, if you re-read my post, my primary exception to your issuance of kudos wasn't the financial performance, but the problems with the program(s) themselves...why laud efforts like the KC-46 when it's been behind schedule and consistently failed to deliver on its performance? I'll assert that you don't understand the bigger picture. Shall we just leave it at that?

18 minutes ago, here_2_help said:

Stop your timelines just before the 737-MAX tragedy/debacle/fiasco and rerun your numbers. I think you'll reach a different conclusion.

Why do that when the same focus on the financials strategy is a root cause of the 737 MAX?

1 hour ago, Vern Edwards said:

In 1926, Congress enacted the Air Corps Act of 1926, 44 Stat. 780. The Act created the Army Air Corps and authorized the Army and Navy to buy aircraft through the use of design competitions instead of sealed bidding. The story of that development is told in Holley, Jr., Unites States Army in World War II, Special Studies, Buying Aircraft: Materiel Procurement for the Army Air Forces (U.S. Army, 1964).

Thanks for sharing this reading recommendation Vern. I found a free download here for anyone else interested in reading it. Based on those excerpts you provided I look forward to it.

I just finished reading the book "Stealth" by Peter Westwick and I can't help but juxtapose the processes used for developing and fielding stealth aircraft to how many approach acquisitions today. I understand the exponential reduction of the radar cross section of an aircraft is a considerably different technological feat than placing a camera on a boom but, to me, that's the point - would it really have cost us that much in time and money to test the remote vision system concept before commiting the future of the tanker fleet to it?

2 hours ago, here_2_help said:

This story shows me that Boeing's people were the smartest people in the room, despite what DoD and USAF leadership said at the time about their team(s).

Boeing's strategy of "investing" in new programs by intentionally submitting a price that it knows is less than the expected cost of performance, and then riding out the initial losses--expecting to make its investment back plus a return on that investment in the long-term, continues to work for the company. The company apparently has outstanding financial strategists.

Kudos to them.

Does it work for Boeing though? KC-46, 737-MAX, 787 Dreamliner...each plagued programs that are not deserving of kudos...

And if you want to default to financial performance as the standard (versus delivering good product) consider the following: Starting in Feb 2011 with the KC-46 award Boeing was valued at $72.30 and today is valued at $206.79 (a 186% percent increase) whereas Airbus was valued at $7.13 in Feb 2011 and is valued today at $32.07 (a 350% increase). Compared to it's chief competitor in the defense marketplace, Lockheed Martin, they still lag (Lockheed experienced a 373% increase over that same period, from $81.81 to $387.15)...Boeing has even lagged the market as the S&P 500 experienced a 249% increase over that same period.

Just because one party got something wrong, doesn't mean the other party got it right - I hope for all our sakes we do learn from the KC-46 source selection and do better as we acquire the next tanker.

4 hours ago, formerfed said:

Lots of luck with that DoDIG.  The majority of the contracting work was done by HHS.  I also don’t think any cost data was involved.  Even though sources claim production cost is $1.20 per dose, it’s just speculative and there’s no real basis for that.  This is one of those instances where suppliers have everyone over a barrel.  We don’t want to pay that?  Suppliers respond with “We will sell it elsewhere.”

I think the Army awarded the contracts for the original round of COVID vaccines. Nevertheless, I wasn't being serious - just trying to establish the absurdity of using an arbitrary 15% markup brightline with a product that is relevant in all of our lives

Duplicate Post

On 1/21/2022 at 2:52 PM, joel hoffman said:

That’s great. Now, please show how a part that allegedly cost $128 to produce and sold for over $7000 is a fair and reasonable price buying it from the manufacturer, not a dealer.

 

As Vern points out, cost of production is only one way to analyze whether a price is fair and reasonable.

Consider this: if more than 15% profit is "unreasonable" I expect the DODIG to investigate the COVID vaccine contracts next. The vaccine reportedly costs approximately $1.20 per dose to produce, yet the US Government paid anywhere from $15-$20 per dose...that's a "profit" of over 1,000%! 😳

I forget where I first found this, but here is a quote by Henry Ford on prices/costs that I often share when I hear/see similar debates as this one:

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"Our policy is to reduce the price, extend the operations, and improve the article. You will notice that the reduction of price comes first. We have never considered any costs as fixed. Therefore, we first reduce the price to the point where we believe more sales will result. Then we go ahead and try to make the prices. We do not bother about the costs. The new price forces the costs down. The more usual way is to take the costs and then determine the price; and although that method may be scientific in the narrow sense, it is not scientific in the broad sense because what earthly use is it to know the cost if it tells you that you cannot manufacture at a price at which the article can be sold? But more to the point is the fact that although one may calculate what a cost is, and of course all of our costs are carefully calculated, no one knows what a cost ought to be. One of the ways of discovering it...is to name a price so low as to force everybody to dig for profits. We make more discoveries concerning manufacturing and selling under this forced method than by any method of leisurely investigation." - Henry Ford

On 1/7/2022 at 8:32 AM, Mike Twardoski said:

You spoke about negotiating some multiple large sole source contracts quite rapidly. What are the keys to achieving that beyond trust, commitment, and focus? Could you share any lessons learned? 

A couple thoughts (which may or may not be worth what you're paying for them) 😉:

• Optimal speed vs. faster: speed is just one aspect of any acquisition and and the right speed depends on what you're trying to accomplish. Just as an athlete trying to run and win a marathon will not run the race at 100m pace, acquisition professionals need to think purposefully about their particular acquisition to find the optimal speed rather than just trying to go as fast as possible with the potential for unintended consequences. 

• Work in parallel (both between government/industry and internally): I found it beneficial to get the cost data the government thought it needed as early in the process as possible, certainly well before the contractor delivered their proposal. This way we could start analyzing methodologies and estimating a fair and reasonable price concurrently with the contractor. In some cases the information we requested was not what the contractor relied on to build their estimates, but that's okay - there is usually more than one way to generate an estimate and we could always discuss which were best during negotiations. This requires the cooperation of industry, who can be reluctant to share information with the government early before it goes through their own internal review processes, but thankfully I have worked with and established trust with some excellent individuals on the contractor side which facilitated early exchanges of information. 

• Transparency & Expectations: see my comments on this thread.

Ever since I heard the term "Alpha Contracting" I thought it was a funny thing - if it is simultanesouly so different AND successful, why not use it for every sole source acquisition? I think those who understand sole source negotiated contracts understand that the factors that determine whether "Alpha Contracting" is successful are not unique to it - that second article you post talks about the importance of factors like "trust," "top management support," and "commitment and focus" - does "Alpha Contracting" automatically come with those characteristics? I highly doubt it - trust has to be earned and maintained, not every acquisition is a top priority, and depending on who the players are on each side will determine if they are professional enough to remain committed and focused.

Simply put, you can't simply declare that an acquisition is going to use "Alpha Contracting" and expect success. Conversely, you can achieve success without even knowing a thing about "Alpha Contracting." I successfully negotiated multiple large sole source contracts (some quite rapidly) before I even knew the term "Alpha Contracting" existed. It is not a prerequisite nor is it a panacea - I think if both parties promise to do a professional job and strive to maintain a healthy working relationship throughout the process you'll achieve success, regardless of whether you use or call it "Alpha Contracting" or not.

I'd encourage anyone interested in AI's capabilities and its limitations to read "The Myth of Artificial Intelligence: Why Computers Can't Think the Way We Do." I found it well argued and well written (which makes it an enjoyable read). I've loaned my copy out at the moment, but once I get it back I'll post some relevant excerpts for the community's consideration.

On 9/3/2021 at 10:55 AM, WifWaf said:

Assume a FFP mod is being negotiated over the CCoPD threshold.  Do you start your negotiations out on the topic of the profit percentage, or do you end them on that note?  Why?

I recommend starting any negotiations with an exploration of expectations and responsibilities. From an expectations standpoint, I would describe what the other party can expect from me and what I expect from the other party. Those expectations are largely reciprocal - if an expectation isn't reciprocal, stop to think about why and whether or not it is fair to make that an expectation. Come to an agreement on those expectations first with an understanding between both parties that we're all fallible so when those expectations are broken it's in the collective interest to identify that and correct it immediately.

Sounds like you're on the Government side - I would add that I often see an asymmetry of information/transparency for negotiations over the CCoPD threshold. The Government requires contractors to prepare extensive estimates and provide current, accurate, and complete data in extensive/elaborate proposals, yet I see some Government negotiators reluctant to provide the details behind the Government's estimates to contractors. That baffles me and I think it violates the norm of reciprocity and, consequently, trust during negotiations. One thing I did during every major negotiation was to provide the same information/estimate for every Basis of Estimate (BoE) and put it side-by-side with the contractor's estimate so that we could compare the methodologies, assumptions, and data to talk about which ones held more merit than the others.

That's the other key point in my opinion - focus less on the total/results and more on what the right methodologies, assumptions, and data to use are and let the numbers come out however they come out. I was in a negotiation where we did this and both parties treated the negotiation as a problem solving exercise, not a battle of wills. At one point we came across a BoE where the Government thought a different methodology was more appropriate - after listening to our explanation the contractor agreed. That methodology happened to calculate that the labor effort was significantly lower than the contractor proposed which would result in considerable savings for the Government; however, a day later, the negotiation team realized we used the wrong number in our computations and that the methodology we agreed on now estimated that the effort would take significantly more labor than both the Government's and the contractor's original estimates. I checked the revised math and it was now correct so I accepted the results, much to everyone's dismay - including my own...the delta was not only surprising but significant so a natural inclination could have been to fight it. But I am glad that I didn't because following that single decision, our negotiations proceeded remarkably well - the contractor understood that I meant what I said about my expectations and my responsibility to negotiate a fair and reasonable price (not the lowest price possible).

If you find a way to establish trust and teamwork in your negotiations, when you discuss the topic of profit percentage won't matter.

12 hours ago, here_2_help said:

What is the purpose of a PoP, if not to signal contract completion to the parties? Why is it important?

Let's note that "PoP" is regularly misused in place of more proper terms such as "delivery date" or "completion date" (your original post was not specific as to if this was a supply, service, or project) - I have seen many a contracting practitioner worry or fall prey to a contractor's claim that they could not continue to work beyond the contract's "PoP" and, in some cases, improperly extend the "PoP" without any consideration. The reality is that the contractor could continue to work and that their delivery or completion would just be considered late (based on the "PoP" dates established by the two parties in the contract). An expiration of a "PoP" is not a license to stop fulfilling one's contractual commitments - just consider how a contractor might feel if the government chose to stop paying invoices once a "PoP" ends because it allegedly signals contract completion to the parties...