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There is an undercurrent of a debate going on at my agency that I thought was interesting enough to share. It usually goes something like this:

Me: Here's this new thing I would like to do. I've researched the applicable policy, guidance, and laws and the new thing I'm trying to do appears consistent with those things. We don't have local policy on the matter because we've never tried or thought to try this new thing.

Someone More Important Than Me: Why don't we have policy on this? You need to write the policy before you can do this new thing.

Me: Do you have specific concerns with the thing I'm trying to do? If so, I can incorporate measures that will mitigate those concerns.

Important Person: Yes I do. You need a policy. 

I'm sure almost everyone here has come across something similar; it's the bureaucrat's way to avoid risk and pursue comfort. But I started thinking about where innovation comes from. And in almost every instance I can think of, it comes from practitioners, not policy.

I don't say that to irritate policy folks. In a perfect world, policy would expand the art of the possible in the contracting career field. In reality, policy types get stuck with Acquisition Career Management, hosting and tracking training events, auditing and responding to audits, ensuring FPDS data quality, and a million other things of varying importance.

I also don't want to let practitioners off the hook. Most 1102s aren't interested in expanding the art of the possible either. Many have the same or similar excuses as policy--we all know what they are.

So my answer the question is that practitioners create most of the innovation that happens inside our field, and the policy folks catch up later. (So when I have the conversation above with my "betters" I'm always left a little flummoxed as to how to effectively respond.) One of the bigger (biggest?) innovations in our field over the past several years was the Highest Technically Rated at a Fair and Reasonable Price evaluation schema championed by John Cavadias (and many others I'm sure) at GSA. As I understand it, he had the idea as a practitioner, researched it and convinced GSA to embrace it. 

So what is your feeling? Where does innovation come from?

 

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18 minutes ago, KeithB18 said:

Where does innovation come from?

Personal initiative regardless of what pigeon hole a person might otherwise fit into in a bureaucratic organization.  

I can not help myself to add - here is a regulation that you ought to show to the More Important.....

 The role of each member of the Acquisition Team is to exercise personal initiative and sound business judgment in providing the best value product or service to meet the customer’s needs. In exercising initiative, Government members of the Acquisition Team may assume if a specific strategy, practice, policy or procedure is in the best interests of the Government and is not addressed in the FAR, nor prohibited by law (statute or case law), Executive order or other regulation, that the strategy, practice, policy or procedure is a permissible exercise of authority.

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6 hours ago, KeithB18 said:

But I started thinking about where innovation comes from. And in almost every instance I can think of, it comes from practitioners, not policy.

I agree with that, because innovation in general with respect to ongoing practices and procedures cannot come from theory alone. It must come from deep knowledge and experience.

But where do specific innovations come from? I think they spring from annoyance and dissatisfaction—the desire to solve a specific problem—and hard thinking about the problem and possible solutions.

It usually or often begins with a complaint: Why do we have to read these $@&*%! awful boring technical proposals? How can we get away from that? It takes so much time. Well, the tech people want to be assured that a prospective contractor knows what the job is and can do it. Well, what if we evaluated oral presentations, instead? Would it be legal to do so? What are the pros? What are the cons? What would the procedure be? What would be the advantage? What would be the disadvantage? What could go wrong? What would be the objections? From colleagues? From higher-ups?

And so we make notes and draft schemes and procedures, and we talk to people and describe the innovation and make a case for it, and we argue with and maneuver against opponents (there will always be opponents), and, hopefully, we get permission, and then we try to pull it off, and we try not to screw up. And we learn and adjust, because it rarely works perfectly the first time we do it. And if we succeed we say, "Piece of cake," even if it wasn't.

And then we patiently answer questions from the clueless and the unimaginative, the same questions, over and over again.

"Wouldn't oral presentations constitute discussions?"

Sigh.

Now can we talk about asking for responses to specific questions instead of telling offerors to prepare "narrative" technical proposals?

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4 hours ago, Vern Edwards said:

I agree with that, because innovation in general with respect to ongoing practices and procedures cannot come from theory alone. It must come from deep knowledge and experience.

But where do specific innovations come from? I think they spring from annoyance and dissatisfaction—the desire to solve a specific problem—and hard thinking about the problem and possible solutions.

It usually or often begins with a complaint: Why do we have to read these $@&*%! awful boring technical proposals? How can we get away from that? It takes so much time. Well, the tech people want to be assured that a prospective contractor knows what the job is and can do it. Well, what if we evaluated oral presentations, instead? Would it be legal to do so? What are the pros? What are the cons? What would the procedure be? What would be the advantage? What would be the disadvantage? What could go wrong? What would be the objections? From colleagues? From higher-ups?

 

This resonated with me. I can recall doing a complicated cost analysis a couple years ago for a 10 year cost reimbursement service contract. I built a spreadsheet with 13K lines on it and I got to the point where I thought to myself, "This is absolute non-sense. Useless. How can I ensure that I never have to do this again?" And that's one reason I'm so interested in putting into practice relational contracting. 

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6 hours ago, KeithB18 said:

And in almost every instance I can think of, it comes from practitioners, not policy.

6 hours ago, KeithB18 said:

So what is your feeling? Where does innovation come from?

In the areas where there are few or no restrictions is where innovation happens. It's the thinkers (practitioners) that innovate. The heavy-handed policy people 99% of the time just want to put limits on the right and the left of the full realm of possibilities.

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32 minutes ago, Don Mansfield said:

Do you have ideas on how to do this?

I do.

First, my agency, NSF, has a somewhat broader OTA authority than most. So where I can get organizational approval to engage in an "other arrangement" transaction, I can design a solicitation that fully embraces the it. This is/has been difficult and where the "But the policy!" objection comes in. Anyway, your mileage will vary on your ability there; mine certainly does.

I'm about 2/3rds the way through Contracting in the New Economy with plans to finish this week. Here are some thoughts. (Please don't take these as some sort of gospel, these are just ideas I've had.)

- When you engage in relational contracting, you have to identify a willing partner. That means a partner that understands the difference between a relational contract and a transactional contract. This can (and should) be incorporated into evaluation criteria. Vern calls for asking specific questions rather than asking for narratives (and we've done some to a some of this, it really works!), but there's nothing stopping us from asking questions about an interested party's willingness, knowledge, and ability to engage in relational contracting. I suspect most offerors won't "get it" and fail the test very quickly. 

- Where you have the ability to engage in a two-phase down select process, you could contemplate the first phase as assessing the offeror's basic capabilities in the designated field or subject and their ability/willingness/knowledge of entering into a relational contract. Phase II could be an oral presentation designed to assess an organization's compatibility with the agency in terms of values, norms, and strategic objectives. 

- CICA is going to make you consider price, but you could signal a willingness to make use (proper use?) of the relevant changes clause. "Within the general scope" gives you quite a bit of latitude and a smart CO and program official can write a scope for a medium term requirement where almost all subsequent changes will be "within the general scope." It might be worth making this a part of negotiations with the selected partner. You could come to some shared understanding of what the changes clause means and handle changes swiftly, efficiently, and fairly.

- It should be obvious that you want to carefully select which service contracts require a relational contract. The book cited above has a chapter on it and I think it is pretty solid. It comes at it from a commercial perspective, but I think it fairly easily adapted for government purposes. 

- I say that because I can contemplate certain folks complaining that you are engaging in personal services or inherently governmental functions. To that I'd say that the personal services ship sailed long ago (almost every service contract has all six of the personal services indicators) and there are 20 items the FAR says are likely inherently governmental. We've had contractors working for us longer than many or most Feds. It is more accurate (and honest, imo) to say that they work for the government than it is to say that they work for the contractor. So lean into it and make the relationship work for you, the contractor, the agency, and the taxpayer. But pick your opportunities carefully.

I may have some more thoughts as I finish the book. 

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13 hours ago, Don Mansfield said:

@KeithB18,

Thanks for sharing. Regarding your thoughts, is the assumption that you would be constrained by the FAR? You mentioned OTAs in the beginning of your post, but your bullet points all seem to assume the award of a procurement contract.

Yes sorry. The bullet points relate to things that I consider FAR-compliant. 

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On 2/23/2022 at 5:03 PM, KeithB18 said:

 

- When you engage in relational contracting, you have to identify a willing partner. That means a partner that understands the difference between a relational contract and a transactional contract. This can (and should) be incorporated into evaluation criteria. Vern calls for asking specific questions rather than asking for narratives (and we've done some to a some of this, it really works!), but there's nothing stopping us from asking questions about an interested party's willingness, knowledge, and ability to engage in relational contracting. I suspect most offerors won't "get it" and fail the test very quickly. 

@KeithB18 I applaud your efforts and hope you succeed.  I’ll also share my experiences with proposal evaluations.  First you are right on with evaluation criteria.  You need a solid way to get down to the real contenders and the evaluation process is an important piece.  But you need true differentiators.  One thing I’ve found helpful is market research - ask true market leaders what they do differently as well as other government agencies about their experiences and lessons learned.

Marketing and business development people are sharp in reading solicitations and gathering information about agency needs. Then they quickly become “experts” through Google in things like relational contracts.  The good ones write proposals that sound like they wrote the book on the subject.  So when you define your evaluation process, be sure if sorts through the fluff.  Be sure you get at the really meaningful stuff and verify through past performance checking.  Things like CPARS and boilerplate surveys don’t even get close.  Be prepared to ask pointed questions to prior customers on what offerers say.  You need to give some serious thought about “how do I really know this company understands and does this stuff?”

 

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On 2/24/2022 at 5:35 AM, KeithB18 said:

Yes sorry. The bullet points relate to things that I consider FAR-compliant. 

Here's another thought for your consideration.

In a FAR part 12 acquisition, the solicitation could invite offerors to propose their own version of FAR 52.212-4 (except for the paragraphs that can't be tailored). The Government could evaluate those terms and conditions for conformance to relational contracting principles. 

Also, you could evaluate the offeror's experience and past performance with relational contracts

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39 minutes ago, Don Mansfield said:

Here's another thought for your consideration.

In a FAR part 12 acquisition, the solicitation could invite offerors to propose their own version of FAR 52.212-4 (except for the paragraphs that can't be tailored). The Government could evaluate those terms and conditions for conformance to relational contracting principles. 

Also, you could evaluate the offeror's experience and past performance with relational contracts

Although contracts based on relational principles and terms have been in widespread use in some industries, "relational contract" is an academic term and may not be widely understood. Offerors with contracts based on relational principles and terms may not know what you're talking about.

This is a problem in government contracting. People are introduced to an idea and want to talk about it rather than just do it. So we have to call a work statement a "performance work statement" instead of just stating the contractor's obligations in terms of outcomes instead of processes and procedures without applying a label so that idiots can recognize it. Then people start asking what the difference is between a performance work statement and a statement of work.

Just do it. Don't label it.

If I saw an RFP that listed experience with relational contracts as an evaluation factor and asked offerors to describe their experience with relational contracts I would consider the CO a fool.

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3 hours ago, Don Mansfield said:

Isn't there some rule about withholding criticism when brainstorming ideas?

@Don MansfieldMaybe brainstorming doesn't work all that well:

Quote

Research shows unequivocally that brainstorming groups produce fewer and poorer quality ideas than the same number of individuals working alone. Yet firms continue to use brainstorming as a technique for generating ideas. This continuing use of an ineffective technique is interesting psychologically. 

Business Strategy Review, 2000, Volume 11 Issue 4, pp 21-28.

See also, Lehrer, "Groupthink: The Brainstorming Myth," The New Yorker, January 22, 2012:

Quote

In 2003, Charlan Nemeth, a professor of psychology at the University of California at Berkeley, divided two hundred and sixty-ȩve female undergraduates into teams of ȩve. She gave all the teams the same problem—“How can traffic congestion be reduced in the San Francisco Bay Area?”and assigned each team one of three conditions. The ȩrst set of teams got the standard brainstorming spiel, including the no-criticism ground rules. Other teams—assigned what Nemeth called the “debate” condition—were told, “Most research and advice suggest that the best way to come up with good solutions is to come up with many solutions. Freewheeling is welcome; don’t be afraid to say anything that comes to mind. However, in addition, most studies suggest that you should debate and even criticize each other’s ideas.” The rest received no further instructions, leaving them free to collaborate however they wanted. All the teams had twenty minutes to come up with as many good solutions as possible.

The results were telling. The brainstorming groups slightly outperformed the groups given no instructions, but teams given the debate condition were the most creative by far. On average, they generated nearly twenty per cent more ideas. And, after the teams disbanded, another interesting result became apparent. Researchers asked each subject individually if she had any more ideas about traffic. The brainstormers and the people given no guidelines produced an average of three additional ideas; the debaters produced seven.

Nemeth’s studies suggest that the ineffectiveness of brainstorming stems from the very thing that Osborn thought was most important. As Nemeth puts it, “While the instruction ‘Do not criticize’ is often cited as the important instruction in brainstorming, this appears to be a counterproductive strategy. Our findings show that debate and criticism do not inhibit ideas but, rather, stimulate them relative to every other condition.” Osborn thought that imagination is inhibited by the merest hint of criticism, but Nemeth’s work and a number of other studies have demonstrated that it can thrive on conflict.

According to Nemeth, dissent stimulates new ideas because it encourages us to engage more fully with the work of others and to reassess our viewpoints. “There’s this Pollyannaish notion that the most important thing to do when working together is stay positive and get along, to not hurt anyone’s feelings,” she says. “Well, that’s just wrong. Maybe debate is going to be less pleasant, but it will always be more productive. True creativity requires some trade-offs.”

 

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45 minutes ago, Don Mansfield said:

I didn't say it was an effective rule.

😏 

But did you think it was?

I wish I had a nickel for every civil service management course I attended in which we did a brainstorming exercise and I thought, "This is kinda dumb."

Here's a quote from the Harvard Business Review, no less:

Quote

A meta-analytic review of over 800 teams indicated that individuals are more likely to generate a higher number of original ideas when they don’t interact with others. 

I'll bet they're still teaching traditional brainstorming in civil service management classes.

Sometimes I wonder how much that I've been told is true, and believe is true, is really true. I worry about that.

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8 hours ago, Vern Edwards said:

If I saw an RFP that listed experience with relational contracts as an evaluation factor and asked offerors to describe their experience with relational contracts I would consider the CO a fool.

So if someone wanted to do a relational contract, what would you suggest they do?  How would you move a company and government from traditional dealings to a relational one?  You don’t see demonstrated experience important?

Edit: I just don’t see how you could successfully move from a traditional contract relationship to a relational one unless a company knew what the government was talking about and had experience with it.

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17 hours ago, Vern Edwards said:

I'll bet they're still teaching traditional brainstorming in civil service management classes.

I know I taught that as part of the DAU curriculum.

17 hours ago, Vern Edwards said:

Sometimes I wonder how much that I've been told is true, and believe is true, is really true. I worry about that.

I think a good goal is to discover you were wrong about something at least once a day. It's not that hard for me.

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19 hours ago, formerfed said:

So if someone wanted to do a relational contract, what would you suggest they do?  How would you move a company and government from traditional dealings to a relational one?  You don’t see demonstrated experience important?

@formerfedMy answer to your first question would be much too long for this forum. But I have written a lot of stuff about it, some of it has been made available at Wifcon, and you can look it up. The second question would also require a very long answer, but I will address it in a limited way in what follows. My answer to your third question is addressed below. The short answer to that questions is that asking offerors for their demonstrated experience with relational contracting would be ridiculous.

The phrase "relational contract" pertains to a kind of contractual relationship. Look it up in your Black's Law Dictionary. There is no entry for "relational contract," but there is one for "relational contract theory," which says: "See essential contract theory." Look that up. The entry says:

Quote

The view that contracts are primarily relations rather than discrete transactions, so that even a simple transaction can be understood as involving a wider social and economic context. • This view was originally developed by Ian R. Macneil in response to Grant Gilmore's The Death of Contract (1974). See Ian R. Macneil, The Many Futures of Contract, 47 Cal. L. Rev. 691 (1974). — Also (and earlier) termed relational contract theory.

(I have mentioned Macneil's article several times in this forum, and have encouraged people to read it. I wonder how many have done so. In fact, I have addressed relational contracting many times here. As you know, I almost always cite references. So you've had plenty of chances to read up.)

The term "relational contract" does not encompass any specific or special contract terms. If you ask offerors to tell you about their experience with relational contracts, what kind of contracts would you expect them to tell you about? Ones labeled "relational contract" or that say they are "relational contracts"? Good luck with that.

A relational contract is not a distinct species of contract, like Asian elephant versus African elephant. It is not something specified. It is not a specific set of contract clauses. Rather, it is a mindset and an approach. It is about the way the parties relate to each other and do things in cooperation in a long-term business relationship in which performance must adapt to changing requirements, conditions, and situations.

A relational contract might include some specific facilitative contract terms, like what I have called "joint management to budget," "ad hoc specification of requirements," and a clause requiring mandatory alternative dispute resolution. In government procurement, relational contracting would mainly require giving up the command style—"the contractor shall," "the contracting officer hereby directs"—and adopting a more commercial and informal approach to long-term business relations. It is about adaptive, ad hoc specification of requirements instead of full specification at the outset of performance. It is about the two parties making things up as they go along in response to emergent conditions and situations.

Making experience with specifically relational contracts an evaluation factor and requiring offerors to state their experience with relational contracts is typical government amateurishness. It reflects the "innovation success story" mindset. I can think of no shorter route to failure than for an agency to undertake relational contracting without a deep understanding of its theoretical roots and of the reasons why and how it is different from standard government contracting practice. An agency that assigns an unsophisticated CO with CORs who have not been fully briefed and prepped to contract relationally is courting failure.

Sophisticated businesspersons operating in the world of long term business relations engage in relational contracting naturally. Relational contract theory sprung not from innovation (a word indicative of government amateurism), but from the realization that contract legal theory did not reflect how business people really do business. It sought to adapt contract legal theory to the real world. Ian R. Macneil opened his famous essay by quoting the definition of contract from the Restatement, Second:

Quote

A contract is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty.

He then said:

Quote

The future of contract under this Restatement definition is promise ("manifestation of intention to act or refrain from acting in a specified way") and law. A long and unsuccessful struggle to reconcile this pure and simple concept with what seems to me the real life of contractual behavior has led to this essay. [Footnotes omitted.]

I have long advocated a relational contracting approach to the procurement of long-term complex services. I first wrote about it in a 1999 guest article for The Nash & Cibinic Report, "Long Term Service Contracting in the Year 2000 and Beyond," in which I wrote:

Quote

I've done some research and thinking about Government service contracting, and I've reached two conclusions:

(1) The ideas that underlie Government policies about the role of contracts in the acquisition of services reflect the Government's historical experience in buying goods and are not suited to the realities of buying long-term services.

(2) The procurement policies and procedures in the Federal Acquisition Regulation (and agency FAR supplements) are not suited to the exigencies of contracting for long-term (one year or longer), complex (multifunction or multitask) services.

The orthodox ideas about the role of contracts in the acquisition of services that underlie today's acquisition policy are ill-suited to the exigencies of long-term, complex service requirements. These ideas envision contracts containing terms that are clear, unambiguous, specific, and detailed descriptions of a contractor's duties and that serve as the bases for inspection, acceptance, payment, and court enforce. They arose out of the Government's need to enforce fixed-price contracts for goods awarded through sealed bidding and, thus, emphasize the need for specificity and “measurable” detail in statements of work. But goods are easier to specify than services, and acquisition personnel lack a common, coherent concept of the nature of services.

I have advocated relational contracting because I think it is more "real world" than what we try to do now.

But any CO who undertakes "relational contracting" had better be steeped in the origin writings about it and in the writings that have been published since then. They had better understand what it is they are trying to do and why, the pros and cons, and the necessary adaptations. There must be none of that hasty and superficial "innovation" and "success story" quick fix b.s. that contracting policy makers and "laboratories" love to promote in a half-baked way. Otherwise, instead of a success, they'll have another embarrassing failure on their hands or another fruitless "reinvention."

I don't know of any cookbooks or how-to's, and I don't intend to write one. In short, don't try relational contracting if you need someone to tell you how to do it.


  

 

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@Vern Edwards Thank you for taking the time to respond.  That is very insightful.  I need to take some time thinking over what you said before responding in any detail.  

I’ve seen several successful contracts for services that had common elements - a spirit of mutual collaboration, continuous communication, and a focus on achieving high level objectives without specifying details of accomplishing the work.  In one instance a person said the best contracts evolved from a source selection process ending with in a handshake.  Once signed, the contract is filed away and never looked at again. 

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On 2/26/2022 at 8:38 PM, formerfed said:

Once signed, the contract is filed away and never looked at again. 

@formerfedWell, that might be going too far. As you know, government contracts include legal requirements, such as the Service Contract Act, small business subcontracting, limitations on subcontracting, etc., that cannot be "filed away."

In government service contracting, the main advantage of a relational approach is the conscious recognition of the nature of services, the conditions and circumstances under which long-term and complex services are performed, and the realization that ex ante (up-front) full specification of requirements is not possible. Thus, PBSA, as described in FAR, is not realistic. The parties will, to some extent, have to make it up as they go along, adjusting to unforeseen conditions and circumstances as necessary and appropriate. The government's typical "command-style" ("the contractor shall") and formal approach to contract management is poorly adapted to such contracts. It is too formal and too often creates needless conflict. A relational, businesslike approach, undertaken by knowledgeable, sophisticated, and reasonable persons, is much more likely to be fully satisfying to all. But it takes know-how and self-confidence.

Properly understood, if the U.S. Government were to adopt (I should say, attempt) a relational approach to contracting, it would not be an innovation. It would be a recognition of and adaptation to reality.

P.S. Since you mentioned source selection, I will add that award without discussions would be entirely inappropriate when aiming to take a relational approach to contracting. Relationships begin with talk.

 

Edited by Vern Edwards
Edited to fix typos.
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Another roadblock I keep coming to, mentally anyway, is that most of our large and traditional business partners are as ill-suited for relational contracting as the Government is. They are as stuck in existing model just as deeply as we are. Even if you could find a partner willing to engage in the forming a relational contract, I can just imagine the corporate lawyer saying, "Where is clause X, Y, or Z?" I might be overstating that, but I routinely have big contractors ask me for pointless modifications. 

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