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Policy will not fix acquisition.

Posted by Vern Edwards, 19 July 2012 · 6,721 views

A Minor League Kerfluffle

Steve Kelman and I have been involved in a minor league kerfluffle over a comment I made in response to a blog post he wrote entitled, “A new way to use past performance in contracting.” He proposed a new contracting incentive. Here is how he described it:

Here’s my proposal: if a contractor, at the end of the contract where performance has met requirements, returns 3 percent of the fee on a fixed-price contract to the government customer (maybe make it 5 percent for a contract under $500,000), the contractor will automatically be given the highest-possible rating on the cost control element of the past performance evaluation, with an explanation in the evaluation of why the rating was received. With the increased attention these days to cost control, this may be a valuable incentive for contractors to return money (to which, it should be remembered, they are entitled to by the contract) to the government.

I commented, “I cannot tell you how awful I think the ‘fee’ return idea is. Truly awful.” I let it go at that. But feeling guilty about not explaining myself, I posted a detailed explanation in a later comment. You can read the whole thing here: http://fcw.com/Blogs...re-results.aspx.

Steve responded with a later blog post entitled, “A response to my critics,” later retitled, “How to think about new policy proposals -- feedback on my feedback.” He cited a “fascinating” paper by a Harvard Business School professor to insinuate that what he sees as my negativism is a way for me to feel better about myself. I responded by telling him that he seems to think that acquisition problems can be solved by new policies and procedural gimmicks, but that that the only way to fix deep seated problems in acquisition is to improve the workforce, and I tried to enlist him in that struggle. You can read that here: http://fcw.com/Blogs...m.aspx#Comments.

The Policy-Making Imperative

Here is the problem in acquisition today as I see it:

When someone is unhappy with something, for instance, if they think the government pays too much for goods and services, some official launches an “initiative” and issues a policy memorandum with a snappy title directing that acquisition personnel do things a certain way:
  • From now on, write performance work statements.
  • Negotiate fixed-price incentive contracts with a 50/50 share line and a 120 percent ceiling.
  • Set negotiation objectives for service contracts at 2010 price levels.
  • Definitize undefinitized contractual actions within 180 days.
They then usually provide for waivers under certain circumstances.

In short, the standard approach to problem solving is to issue policy and procedure directives. Sometimes the policy is called a policy innovation, or an innovative policy. (Innovate is second only to dream as America’s favorite magic word. If alien archeologists visit this planet after we’re gone and examine our surviving records, they will dub us the Dreaming Innovators. They will say that our civilization might have survived if we had spent less time dreaming and innovating and more time seeing reality and using our heads.)

Reactions To Policy

So what happens after a new policy is issued? First, the people in the field (or in the trenches, as some like to say, but really in the cubicles) roll their eyes and sigh. Then they start asking questions:
  • What do you mean, exactly?
  • Do you mean this or do you mean that?
  • Does the new policy apply to this or to that circumstance?
  • Does the dollar threshold include options?
  • What is the waiver procedure?
  • Who can approve waivers?
  • How long will it take to get a waiver?
  • Are you going to delegate waiver authority?
  • And, finally, the ultimate question: How do I do that?
The policy makers go on the conference circuit and hold virtual chautuaquas. Their staffs prepare PowerPoint presentations. They issue additional guidance about the policy and write manuals (which prompt more questions). The trade press write stories and trade associations issue cautionary white papers.

Some in the field, glad to see something new, anything new, get on board and design the innovative implementations of the policy maker’s dreams in the hope of recognition and maybe a silver hammer. Those are the Positivists. The Negativists write skeptical critiques or scathing condemnations, or simply foam at the mouth. Consultants set up shop and write slight “how to” pieces in trade and professional publications, hoping for new business. Some are dubbed “gurus” of the new policy and conduct pricey seminars devoid of details. The most ambitious write a book, or arrange for someone else to write it and then take author credit.

The Implementation

The policy makers set up a reporting scheme. Reporting is late and inaccurate. Ultimately, it is found that surveillance has been poor and implementation has been spotty. Congress holds hearings, complains about the spotty implementation, and enacts the new policy into law, apparently in the belief that everyone respects and fears them and will thus comply. Congress demands reports. Reports are late and inaccurate. The GAO finds that implementation of the law is spotty and ineffective or not as effective as it could be if everyone followed GAO’s recommendations.

Time passes. The policy maker moves on. The no-longer-new policy dims and may fade away entirely. It is ignored by the original policy maker’s successor, who wants her own initiative. It is mentioned no more at conferences. Seminars are offered no longer. Reporting continues, but no one really cares anymore. In time, some future official will launch an initiative that dotty old timers will say seems familiar. And then some crotchety paper hoarder will come in waving a copy of the original memo from a decade or two earlier, proving once again that there is no new thing under the sun.

The Great Game

Policy making is the great game in acquisition. We are being overwhelmed by laws, regulations, case law, policy memos, manuals, and handbooks. Policy making is the only power of the otherwise impotent. Senior officials, especially political (excuse me, I meant presidential) appointees, are touted as successes because they issued a couple of policy memos and attended a lot of meetings before moving on to better jobs on the strength of their newly padded resumes. They then write articles and make speeches about their policy memos and meetings and speak of things still to be done, even though they did not stay on to do them. The mere issuance of a policy memo is deemed a success, regardless of whether it is proven to be effective. If the policy maker is really bold, he or she will simply claim or imply success for the policy even in the absence of verifiable data. If they are modest at all they will claim limited success, which validates their theory, and say that it would have been more effective if implemented properly at the working level.

This has been going on for decades. The real way to improve acquisition is to improve the acquisition workforce -- really, seriously, improve it. But that would be hard and take time, and would be expensive. When most officials talk about improving the acquisition workforce they mean hiring more people. Oh, they will talk about improving the quality of the workforce, but they think that means ensuring that more people get to the official PowerPoint sessions ("training courses"). They have no idea what to do and how to do it. They don’t even have dreams. Innovation is putting the PowerPoint sessions online.

Reality Check

Acquisition works reasonably well if what you care about is that paper gets processed and stuff gets bought. Stuff does get bought. Whether we pay good prices and get good quality within a reasonable period of time is another matter. We often do and we often don’t. The vast majority of buys are for commodities and commodified services, and those go reasonably well, although there will always be something for the GAO and the IGs to complain about -- poor implementation or regulatory violations that, if fixed, might produce better results. As for the big stuff -- major defense systems and large information technology programs -- things are generally a mess, but they have been a mess pretty much throughout history. We know what the problems are, we just can’t fix them. We never will. We work in a cloud of mediocrity.

The Way To Real Improvement

In a complex system like acquisition, any attempt to fix deep seated system faults through policy will fail. The only way to get at the deep seated problems in acquisition is through workforce improvement, and I don’t mean numbers. We need well-educated, superbly trained people for the big stuff, and we do not have enough of them. Mismanagement and poor leadership will prompt many of the best of the new recruits to leave. The problems are beyond the reach of management in the organizational structure we have now for the simple reason that no one is in charge. Only someone with the power and the ruthlessness of a Stalin could fix the system. A few purges might be just the thing.

Here’s how to have a good career in contracting: First, study. Read a lot, read widely, and think about what you read. Next, find a contracting office to work for that does demanding work, like the Air Force Space and Missile Systems Center in El Segundo, California, which is doing really interesting work, is staffed by people of very high quality, and is very well led. Work, learn, and grow. If that is not enough, write articles and books. That will keep you busy. Ignore the rest, because you cannot do anything about it. Roll with the punches. Practice a wry smile.

I’ve heard that some call me the prophet of doom (or maybe it was gloom, I’m not sure). I’m not, really. I just do not rest my hopes on the system. I rest them on people, individuals. The only hope for our system is that committed individuals will never stop trying to be the best that they can be and to bring out the best in their colleagues. If enough individuals will do that, good things will happen. Try it. You’re going to like the way you feel.

I hope it's okay with you, Vern, that I linked to this post on the intranet of a very large defense contractor. I asked whether the contractor ought to consider your words as a call to action with respect to employee training and development.

Nice job.
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It's fine with me. Thanks, help.
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Great post Vern. Could not agree more. I linked back to this on my latest blog post about the need to focus on the acquisition workforce:

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I agree 100%!. Until the development and retention of a capable Acquisition Workforce is viewed as an investment and not overhead no amount of policy will make a difference. Alas I don't think this will ever happen.
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Vern - Since 2003 I have been reading and absorbing your posts on WIFCON. My opinion - This is one of the best you have written. I could not agree with you more. I see it as a major obligation for me to mentor, train, coach, encourage, challenge and otherwise grow the next generation of the acquisition workforce. Your input, and that of other WIFCON members (gurus), put me on that path. I find that DAU can only do so much and some supervisors and contracting officers just want to continue to do things the way they have done them for years without regard to policy or procedural changes.
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