contractor performance | The Contracting Education Academy

April 4, 2011 By AMK

DOD’s contractor database could lead to the wrong results

Senior defense official cautions against hinging contract awards on past-performance records.

A top defense acquisition policy official said the government should not overemphasize a company’s past work when awarding a contract because its limited database of information might become a barrier for some companies.

At a hearing March 28, Ashton Carter, undersecretary of Defense for acquisition, technology and logistics, said the Defense Department does not have adequate data on past performance on which to base a contract award. He also questioned how DOD would handle cases in which companies want to break into the defense industry but have no work history with the federal government. Even if the company has done similar work for a foreign government, DOD would not have a record of it.

“I think it’s important that we not do anything that erects a barrier to entry for a contractor,” he told the Commission on Wartime Contracting in Iraq and Afghanistan. (Watch the entire hearing.)

That would leave the principal burden on senior officials to get the defense acquisition workforce to collect more reliable information on companies’ work.

In its interim report, the commission recommends aligning past-performance assessments with contractors’ proposals for available awards.

The commission wants revisions to agency policies for contingency-related contracts “to limit contractors’ proposed federal past-performance references to only those contracts that have been recorded in the government’s past-performance database,” the report states.

At the same time, the commission said agency officials do not record detailed evaluations of contractors’ performance on a job because it’s not a priority for them, which could lead to giving contracts to habitual poor performers.

“Agencies’ failure to record contractor-performance assessments is costly,” the report states.

Carter’s comments echoed what other federal officials told the commission in February about the same past-performance recommendation. Maureen Shauket, chief acquisition officer at the U.S. Agency for International Development, said she was concerned about everyone getting a neutral rating on a past performance, “and that’s not in anyone’s interest.”

Dan Blalock, the Navy’s counsel, said defense officials need to make decisions based on each case’s circumstances.

Furthermore, Carter disagreed with the commission’s recommendation to increase the use of suspensions and debarments. The commission has proposed mandating automatic suspensions of indicted contractors and preventing contractors from avoiding suspensions and debarments through administrative maneuvers. Dan Gordon, administrator of the Office of Federal Procurement Policy, also disagreed with that recommendation during the February hearing.

Carter said the government needs to root out fraud early in the process, and agencies must monitor contractors’ work closely.

“My gaze is principally on prevention and detection,” Carter said, and suspending or debarring a company is well beyond the point of acting on a problem.

“We need to get back to the front end of prevention and detection of fraud,” he added.

The commission plans to send its final report to Congress in July. It will include recommendations for improving contracting in war zones.

About the Author: Matthew Weigelt is acquisition editor for Federal Computer Week – published Mar. 29, 2011 at http://fcw.com/Articles/2011/03/29/ashton-carter-past-performance-wartime-commission.aspx?admgarea=TC_CONTRACTSPRO&p=1.

March 31, 2011 By AMK

Pentagon resists automatic suspension of indicted contractors

Mandatory suspension or debarment of indicted contractors could have a “chilling effect” on contractor relations, the Defense Department’s top acquisition official told the Commission on Wartime Contracting on Monday.

In February, the congressionally chartered commission released an interim report on how the department could reduce waste, fraud and abuse through enhanced oversight and improved deployment of government resources in contingency contracting.

The report offered 32 specific legislative, regulatory and policy proposals, including limiting the government’s reliance on armed private security contractors. The commission’s final report is due out in July and likely will be considered by Congress for possible legislation.

Defense agreed with most of the suggestions in the interim report and already has begun to implement some, according to Ashton B. Carter, undersecretary of Defense for acquisition, technology and logistics. But Carter told the panel that other ideas would do more harm than good.

For example, the commission recommends automatic suspension or debarment for indicted contractors. The group would mandate that suspensions and debarments no longer be subject to the terms of agreements the contractors make with the Justice Department — agreements that allow firms to avoid prosecution in criminal actions. Also, contingency contractors operating overseas should no longer be guaranteed a hearing to dispute facts in a suspension or debarment case, according to the report.

Carter disagreed with those recommendations, noting suspension and debarment officials need the flexibility and discretion to judge each case on its own facts and circumstances.

“There is a potential unintended consequence of turning suspensions and debarments from tools to protect the government’s interest into tools that automatically punish contractors,” he testified. “Such an approach may have a chilling effect on contractor cooperation in identifying and fixing real problems, including those that affect the health and safety of our personnel.”

The department also is not on board with the commission’s recommendation to limit past performance evaluations exclusively to those records in a federal database. Carter argued some contractors could have valuable experience working for foreign governments that should be considered as part of a past performance appraisal.

“We don’t want to erect a barrier for contractors that have not worked for the [U.S.] government,” he said.

Defense also is opposing commission recommendations that would mandate broader governmentwide access to contractor records by oversight personnel and establish offices of contingency contracting at Defense, the State Department and the U.S. Agency for International Development.

Nonetheless, Carter conceded the department’s contingency acquisition process remains too slow and outdated to effectively serve the warfighter. “We have to create a fast lane for contingency acquisitions so requirements are not done in the ponderous usual way,” he said.

Congress recently approved a Defense request to reprogram some of its fiscal 2011 funding. But, the annual budgeting system — and the absence of permanent funding for the rest of the fiscal calendar — has created a constant headache for Defense.

“The budgeting system is not adequate for dealing with ongoing wars,” Carter said, calling for a more rapid system to implement and issue wartime contracts.

Carter is leading Defense’s Better Buying Initiative to increase contractor competition, improve acquisition practices and reduce costs. Thus far, the department has identified $100 billion in unnecessary spending that has been cut and reinvested in warfighting operations. An additional $78 billion has been returned to the treasury for deficit reduction.

— by Robert Brodsky – GovExec.com – March 28, 2011 – at http://www.govexec.com/story_page_pf.cfm?articleid=47439&printerfriendlyvers=1

March 24, 2011 By AMK

Audit credits DHS with dramatic improvement in acquisition process

A recent audit by the DHS Inspector General found that the department had dramatically improved its oversight of contracts and reduced the number of noncompetitive contracts awarded by 60 percent last year; in 2010 DHS awarded $1.3 billion in no compete contracts compared to $3.4 billion in 2009 and $3.5 billion in 2008; the inspector general reviewed forty noncompetitive contracts worth roughly $100 million dollars and found that the rate of deficiencies was only 7 percent; while the report found marked improvements, it also recognized that there were still gaps in DHS’ acquisition process

In 2010 DHS awarded $1.3 billion in no compete contracts compared to $3.4 billion in 2009 and $3.5 billion in 2008.

The report also stated that procurement officials at DHS had improved their oversight of noncompetitive contracts, maintaining sufficient documentation and research to justify noncompetitive contracts.

The inspector general reviewed forty noncompetitive contracts worth roughly $100 million dollars and found that the rate of deficiencies was only 7 percent. In 2008 similar reviews found that 76 percent of files had deficiencies, while in 2009 that number was 79 percent.

While the report found marked improvements, it also recognized that there were still gaps in DHS’ acquisition process.

Anne Richards, assistant inspector general for audits, wrote, “Acquisition personnel did not always document consideration of contractor past performance when performing background research of eligible vendors. As a result, the department cannot be sure that it received the best possible value on the goods and services acquired through these contracts, or that acquisition personnel awarded government contracts to eligible and qualified vendors.”

The report recommended that DHS improve its documentation of contracts. More than 40 percent of the contracts that were examined lacked proper documentation, while eleven of the forty contracts examined lacked research to show that past performance had been taken into account.

“The department needs to continue its emphasis on better planning and documenting its acquisitions and decision-making processes,” Richards wrote.

To that end, Homeland Security Secretary Janet Napolitano has requested $24.2 million in its 2012 budget to hire an additional 150 people for its acquisitions workforce.

Before the House Homeland Security committee last week, Napolitano testified that improving the acquisition process had contributed to her department’s overall identification of more than $800 million in cost savings.

“We are preserving essential front-line operations and bolstering our operational strength by decreasing administration and overhead,” she said.

— Published March 15, 2011 by Homeland Security Newswire at http://homelandsecuritynewswire.com/audit-finds-dhs-dramatically-improved-its-acquisition-process

March 15, 2011 By AMK

What’s DOD’s worst acquisition policy? Ashton Carter wants to know

Here’s your chance, defense contractors, to give the department a piece of your mind.

Defense Department officials want industry input on rules that provide little value while driving up costs.

In a notice in the 2/17/2011 Federal Register, DOD officials said they understand that the various reporting requirements and other acquisition practices make industry adopt processes and make investments that increase costs, especially overhead costs. At the same time, some of those requirements add little value to the overall work.

So, DOD wants to know the policies that industry believes fit that description. It will take submissions through March 31.

The request for industry’s comments is the next stage of DOD’s Better Buying Power Initiative, launched in 2010 by Ashton Carter, undersecretary of defense for acquisition, technology and logistics.

Industry sent defense officials more than 500 suggestions last summer, and Carter incorporated these comments into a Sept. 10 memo. The memo sets out 23 ways the government can improve its performance and incentivize better performance from industry. It is aimed at lowering prices without sacrificing quality.

“It is guidance from me to the acquisition workforce in the Defense Department on how we can get more without more,” Carter said in a Feb. 9 speech at the Cowen Investment Conference in New York, N.Y.

Under the new request for comments, DOD will use the suggestions as part of internal deliberations on the buying initiative, officials said. When contractors submit a suggestion on a costly policy, officials want to know the magnitude of the cost and have the recommendations identify the sources of the costs, backed by credible and convincing data.

“DOD’s goal is to develop a fact-based program to reform cost-inflating practices,” the Federal Register notice states.

With detailed suggestions, officials can evaluate and prioritize them. More specifically, they want to follow up on industry’s recommendations from 2010 on the thresholds related to the provisions in the Truth in Negotiations Act. In particular, they want to review audit practices and certain barriers to correctly balancing industry’s abilities as DOD’s buying shifts and moves based on demands, the notice states.

About the Author: Matthew Weigelt is acquisition editor for Federal Computer Week, published Feb. 17, 2011.

February 11, 2011 By AMK

Army suspends all ongoing insourcing plans

In an about-face, the Army has suspended all of its ongoing insourcing activities, potentially savings thousands of private sector positions.

In a Feb. 1 memorandum, Army Secretary John McHugh announced he was halting the service’s insourcing initiative immediately in favor of a scaled-back approach in which his office would have to directly approve projects.

“In an era of significantly constrained resources, the Army must approach the insourcing of functions currently performed by contract in a well-reasoned, analytically based and systemic manner, consistent with law and prevailing presidential and Department of Defense guidance,” McHugh wrote in the memo, released on Thursday by the Professional Services Council, an industry group that has opposed plans to bring contractor jobs back in-house.

The memo suspends all ongoing insourcing transitions, but does not reverse efforts that already have been completed.

Army spokeswoman Anne Edgecomb said the memo is not intended to stop insourcing altogether but to ensure that the process is conducted responsibly and deliberately. “We are trying to make sure we do everything we can to be fiscally responsible,” Edgecomb said. “We see the writing on the wall.”

Edgecomb did not have figures immediately available on the number of contractor positions the policy change would effect.

The Defense Department’s insourcing program leader said on Thursday that the Pentagon did not direct Army to change its policy.

“The department is committed to meeting its statutory obligations under Title 10 to annually review its contracted services, identifying those that are inappropriately being performed by the private sector and should be insourced to government performance,” said Thomas Hessel, a senior manpower analyst in the Office of the Undersecretary of Defense for Personnel and Readiness, in a statement to Government Executive. “This includes services that are inherently governmental or closely associated with inherently governmental in nature; provide unauthorized personal services; or may otherwise be exempted from private sector performance … While some contracted services may be identified for insourcing, some services determined to be no longer required or of low priority may be eliminated or reduced in scope while others will continue to be provided by the private sector.”

All future insourcing proposals, McHugh wrote, must include “at minimum, a manpower requirements determination, an analysis of all potential alternatives to the establishment of permanent civilian authorizations to perform the contracted work, certification of fund availability and a comprehensive legal review.”

Thomas Lamont, assistant secretary of the Army for manpower and reserve affairs, along with Mary Sally Matiella, assistant secretary of the Army for financial management and comptroller, will be responsible for developing criteria to evaluate the efficiencies generated from the policy change, McHugh said.

Contractor groups, which have long criticized the Defense Department’s insourcing plans as driven by quotas and lacking any verifiable cost savings, applauded the development.

“Secretary McHugh is taking the right approach to insourcing,” PSC President Stan Soloway said. “We have said all along that all sourcing decisions for clearly commercial work — whether insourcing or outsourcing — must be done strategically with the best interests of the government mission and American taxpayer in mind.”

John Palatiello, president of the Business Coalition for Fair Competition, a group formed to challenge the Obama administration’s insourcing plans, said the memo is proof the initiative has been poorly executed.

“BCFC renews its call for a governmentwide moratorium on insourcing until common-sense standards and metrics for assuring that any insourcing is in the taxpayers’ interests, does not increase unemployment, and is focused on statutorily defined inherently governmental activities, not commercial activities,” Palatiello said.

The memo comes only a few weeks after the Government Accountability Office reported the Army had identified more than 4,200 full-time jobs in which contractors are performing either inherently governmental or unauthorized personal services. In both the inherently governmental and the unauthorized personal services contracts, the Army typically would be required to bring those functions back in-house.

Defense Secretary Robert Gates announced in August 2010 that the Pentagon was implementing a fiscal 2011 billet freeze and halting its insourcing plans because of a lack of cost savings. But, the plan affected only civilian agencies and offices. The military services were exempt from the freeze, allowing them to continue with their insourcing plans.

Soloway called on the other military services to follow the Army’s approach. “Through such a process the Army, DoD and the taxpayer will gain vital insight into the total life-cycle costs associated with these decisions, the degree to which they address the Army’s workforce needs, and more,” he said. “We hope, as they say, the Army leads the way.”

– by Robert Brodsky – GovExec.com – February 3, 2011

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