Senate testimony: Intelligence community needs to keep better tabs on its contractors

The 17 agencies in the intelligence community must get a better handle on the extent of their reliance on contractors, witnesses told a Senate panel on Wednesday. Overuse of outsourcing presents risks to both national security and managerial efficiency, senators and an auditor warned.

“Contractors can provide flexibility and unique expertise, but there are risks” if internal controls, formal planning and documentation are inadequate, Timothy DiNapoli, director of acquisition and sourcing management at the Government Accountability Office (GAO), told the Senate Homeland Security and Governmental Affairs Committee. “Changes to the definition of core contract personnel limit the comparability of the information over time,” he said, noting that the civilian intelligence community agencies used various methods to calculate the number of contract personnel and did not maintain documentation to validate the number of personnel reported for 37 percent of records reviewed. GAO also found that the civilian intelligence community agencies either under- or over-reported contract obligations by more than 10 percent for one-fifth of the records.

Panel Chairman Sen. Tom Carper, D-Del., said, “The people we entrust with leadership roles at these agencies need to be able to show the American people, and Congress, that they know who is working for them and why.” Overreliance on contractors behind the intelligence agencies’ secrecy walls presents three hazards, Carper said: hollowing out the in-house workforce and making it weaker, requiring extra layers of management and paying more for work that could have been performed by federal employees.

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Federal IT reform could include bonuses for procurement staff

One plan to overhaul how the government buys and builds information technology systems would establish an awards program for excellent IT acquisition staff, including “monetary incentives.”

Language in the plan passed by the House multiple times – most recently last week — directs the Office of Personnel Management to develop a program “to recognize excellent performance by federal employees and teams in the acquisition of information systems and IT,” a summary of  the legislation said. The bill also “requires such policies to include guidance regarding the award of cash bonuses and other incentives.”

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OFPP, FAI launch new acquisition training and certification

The Federal Acquisition Certification in Contracting has not been updated since 2008, but that’s about to change — and the revised FAC-C will include specialized training for IT procurement.

A May 7, 2014 memo from the Office of Federal Procurement Policy (OFPP) outlined the new certification, and OFPP Associate Administrator Joanie Newhart and Tony Grayson, acquisition program executive at the Federal Acquisition Institute, detailed the curriculum and the thinking behind it during a May 13 presentation at FOSE.

“Nobody’s happier than I am that this certification has been issued,” Newhart said.  The old FAC-C is general and lacks a specific course on Federal Acquisition Regulation (FAR) fundamentals — whereas the Defense Department’s Defense Acquisition University (DAU) has long offered such training, along with a wide range of advanced coursework.

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‘Reverse Auctions’ draw scrutiny

It is like an eBay of Washington, a well-appointed and well-connected online marketplace for lucrative government contracts.

Deals for everything from pens to pesticides, from painting offices to performing autopsies — all that and more is up for grabs on FedBid, a fast-growing private company that has positioned itself at the profitable nexus of government and business.

Financed by an investment company connected to Stephen M. Case, of AOL fame, and Ted Leonsis, majority owner of the Washington Wizards, FedBid has assembled a roster of Beltway insiders to promote an unusual approach to how contracts are meted out. Its latest big hire is Joseph Jordan, who was until recently head of procurement policy for the Obama administration.

Through FedBid, government agencies use “reverse auctions” — in which the lowest bid wins, rather than the highest — to decide who is awarded contracts. In theory, the process can save money for taxpayers by encouraging businesses to offer the best possible prices. In practice, it also makes a lot of money for FedBid, which can collect fees from the winning bidders who, in turn, pass those costs to the government.

At issue is whether FedBid encourages competition, as its proponents argue, or simply prompts companies to submit unrealistically low bids to outmaneuver business rivals. Detractors contend that awarding contracts based solely on price means that the government risks ending up with inferior products or services, though this is a risk even when the government does not use reverse auctions. A recent government study, which reviewed reverse auctions at top agencies, found that roughly a third of all FedBid auctions involved a single bidder, meaning that they were closer to no-bid contracts than true auctions.

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Agencies setting off into the next data frontier — procurement

Agencies are starting to grasp the real value of procurement data. Several agencies are asking the General Services Administration, NASA and others for more details on what they buy, how they buy it and how they could make better decisions.

NASA, for example, is working closely with the Veterans Affairs Department to provide them with an assortment of data points around energy efficiency, such as how VA’s IT products are rated for Energy Star or E-Peat. NASA also plans to provide VA with information about how their purchases meet the Trade Agreements Act and about their buying habits based on product classifications.

Joanne Woytek, the program manager for NASA SEWP governmentwide acquisition contract, said the fact that VA and other agencies are asking for and receiving this type of data is a sign of maturity for both the GWAC providers and the agencies in understanding what’s available and why the data matters.

“I’ve seen this happening more with our contracts and SEWP V. A lot of what we are putting into that is to make it a more mature model. We can’t just say, ‘we can do that,’ we will actually demonstrate the things we can do,” she said at the 2014 Acquisition Excellence conference in Washington Thursday sponsored by GSA, the Homeland Security Department and ACT-IAC. “We will be able to show agencies what they are buying. We’re going to be able to provide them with more information. We always said we could do that, but we actually are going to start doing that. I think that’s going to have a bigger effect on agencies who no longer will say ‘I don’t want to use you because I’m not sure you can give me that information. I’m not sure you can control what we’re purchasing.’ We can do that for them and we’ll actually start showing that. So I see us having a better impact on people now that we’ve gotten to this point.”

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Cheapest contract isn’t always the best, acquisition officials say

Confusion over “lowest price, technically acceptable” contracts have rendered the Pentagon’s acquisition workforce “brutalized” by critics and the press who mistake shrinking defense budgets for a lack of ambition for innovation, a top acquisition official said Thursday.

Katrina McFarland, assistant Defense secretary for acquisition and past president of the Defense Acquisition University, said “Low-cost, technically acceptable is good when appropriate, but shouldn’t be used to achieve innovation.” Her “very junior-level” acquisition workforce has a learning curve when it comes to taking the next step toward value added in contracts, McFarland told several hundred industry and government executives at a conference titled “Agility, Velocity and Service Excellence” sponsored by the General Services Administration, the Homeland Security Department and the American Council for Technology-Industry Advisory Council.

Seeking industry input on how to prioritize Defense spending on weapons and information technology, McFarland gave a capsule history of how the acquisition workforce in the 1990s was cut by 20 percent to “reap the peace dividend,” and how, following the 9/11 terrorist attacks, the civilian force was then flush with money and focused more on “pushing product out the door to the warfighter. We weren’t focused on honing business skills or maintaining a good customer-provider relationship,” she said.  “We were a bad customer.”

An injection of money by Congress in 2008 allowed planners beginning in 2010 to assemble 53 experts from agencies and industry and boil down 325 proposed initiatives to 23, which eventually resulted in the Pentagon’s pair of Better Buying Power initiatives. These include rewards and incentives for the workforce, McFarland noted, including the first-ever visits to contractor sites by deputy and undersecretaries to explain “from the horse’s mouth” the distinctions between low-cost contracts, value-added innovations and affordability in the context of the long-term costs of ownership of a system. “Instead of beating the workforce about the ears, it is a guide to help you think,” she said. If the workforce doesn’t understand low-cost technically acceptable, it will fumble around a bit,” she added, telling the business representatives, “if [acquisition] people ask questions and say this is not logical, do not stop them,” for this is how risks are taken that succeed.

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GSA’s chief acquisition officer becomes head of OFPP

GSA Chief Acquisition Officer Anne Rung will move to the White House to head up the Office of Management and Budget’s Office of Federal Procurement Policy, sources with  knowledge of the move told FCW.

Rung will replace Joe Jordan as administrator at OFPP. Jordan stepped down in January to accept a position as president of public sector at FedBid, a privately held company that offers a reverse-auction marketplace in which companies compete for government business by bidding down their prices

At GSA, Rung has had a dual role as chief acquisition officer and associate administrator for the Office of Governmentwide Policy.

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Jordan exits OFPP knowing progress toward buying smarter is real

Joe Jordan, the outgoing administrator of the Office of Federal Procurement Policy (OFPP), said agencies have only scratched the surface of the administration’s campaign to buy smarter.

Jordan, whose last day at OFPP was Friday, January 17, 2014, said savings from strategic sourcing are up, there’s more competition among vendors than in previous years, and he expects overall federal procurement spending to go down once again when the final fiscal 2013 numbers come in next month.

“You’ve seen the largest two-year decrease in contract spending in history. The President has long said we need to reign in contract spending, and I’ve said we have to buy smarter,” Jordan said in an exclusive interview with Federal News Radio. “I think you see some clear evidence we’ve been able to do that, and not just because the topline went down. A lot of that is due to smarter buying techniques and some of that is due to budgetary issues.”

He pointed to several areas, including a larger number of agencies buying more strategically, cutting management support service contracts, increasing contracts to small businesses and ensuring there is real competition for procurements.

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OFPP updates rules for how agencies should analyze ways to lower costs

The Office of Federal Procurement Policy is reinvigorating the concepts of share- in-savings and lowering life-cycle costs of programs by analyzing all facets of the approach.

OFPP released the first update to Circular A-131 in more than two decades in the Federal Register on Dec. 26, 2013.  The Office of Management and Budget first issued A-131 in 1988 and updated it in 1993, but since then has only offered memos encouraging its use.

A-131 promotes the use of value engineering (VE), which is an organized effort by an integrated product team to evaluate functions of systems, facilities, services and supplies with an eye toward lowering costs and maintaining performance, quality, safety and reliability.

“VE challenges agencies to continually think about their mission and functions — in the most basic terms — in order to determine if their requirements are properly defined and if they have considered the broadest possible range of alternatives to optimize value,” OFPP Administrator Joe Jordan wrote in the notice. “Most importantly, VE enables agencies to achieve greater fiscal responsibility and operate within tighter budgetary constraints. By identifying and eliminating unnecessary program and acquisition costs that do not contribute to the value, function and performance of the product or service, VE can permit programs to continue delivering the same, or an even higher, level of service for less money — a critical capability for managing in a fiscally austere environment.”

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New OFPP rule: Program managers must meet acquisition certification requirements

The New Year brings new requirements for federal program and project managers.

Under new guidance issued by the Office of Federal Procurement Policy (OFPP) program managers now must meet all Federal Acquisition Certification (FAC) requirements.

What’s more, agency chief acquisition officers (CAOs) no longer have the option to waive the program and project certification prerequisites.  The only latitude granted by OFPP is that CAOs may extend a current certification on a case-by-case basis for up to one year.  If an extension is granted, a date by which the program or project manager must meet the new certification requirements is to be set.

The new requirements become effective on March 31, 2014 and are outlined in the following chart:

(click on chart to enlarge)

(click on chart to enlarge)

To maintain a FAC-P/PM, certified professionals are required to earn 80 CLPs of skills currency every two years. The two-year anniversary is set by the date the individual is certified.

“The revised program is designed to strengthen civilian agency P/PMs to improve program outcomes, and reflects the need to improve the management of high-risk, high-impact programs,” stated OFPP director Joe Jordan in the Dec. 16, 2013 guidance entitled Revisions to the Federal Acquisition Certification for Program and Project Managers (FAC-P/PM).  “Having skilled, competent, and professional program and project managers (P/PMs) is essential to the success of critical agency missions. P/PMs ensure that requirements are appropriately written, performance standards are established, and contractors deliver what they promise. P/PMs develop requirements, lead integrated project teams (IPTs), and oversee budgeting and governance processes, all of which are critical to ensuring that agency mission needs are filled and expected outcomes achieved.”

While a specific curriculum is not articulated by OFPP, the new guidance recommends “an instructional approach best suited to deliver the learning outcomes that align to the competencies.”   FAC-P/PM core-plus professionals now are required to earn 80 CLPs of skills currency every two years. Maintenance of CLPs is shared between the core-plus area and the core FAC-P/PM continuous learning requirement. At least 20 of the 80 CLPs required must be dedicated to continuous learning in topics associated with the core-plus area. If an individual fails to obtain the 80 CLP requirement, the core FAC-P/PM and core-plus specialization will simultaneously lapse. To regain certification status after a certification has lapsed, the 80 CLP requirement must be completed within the two year period, including the requirement for 20 of the 80 CLPs dedicated to continuous learning in topics associated with the core-plus area.

For a copy of the OFPP’s Dec. 16, 2013 guidance, click here.