OFPP | The Contracting Education Academy

September 15, 2011 By AMK

OMB announces final guidance on inherently governmental functions

Long-anticipated final guidance on “inherently governmental functions” is set for publication on Monday and should clarify confusion over blurred lines in agencies’ understanding of which types of work should be outsourced, top officials at the Office of Management and Budget told reporters on Friday.

The final policy letter, said Chief Performance Officer Jeffrey Zients, “helps agencies do better at balancing contracting out with management by federal employees. The mix was out of balance and we think this protects the public interest. Given our fiscal situation today, it is important more than ever that taxpayer money be well spent.”

With a few exceptions, the guidance, which takes effect Oct. 12, is similar to the draft released in March 2010, said Dan Gordon, administrator of the Office of Federal Procurement Policy. “But it is a milestone” that follows up on a memorandum of understanding about reducing waste in contracting issued by President Obama in March 2009.

The document includes lengthy lists of functions that are clearly inherently governmental and separate lists of “functions closely associated with the performance of inherently governmental functions” — where agencies can use more discretion.

One difference in the new guidance is a provision intended to “clarify the confusing and controversial” policy on the contracting out of military security operations, Gordon said. If a function is part of combat or could evolve into combat, then contractors can’t be used. “We benefited on this issue from public comments from the private sector, agencies, nonprofits and the Hill,” he added.

A second departure is a provision intended to help small businesses. “It places a lower priority on in-sourcing if the function is not inherently governmental,” Gordon said. “Insourcing is not a goal, but agencies need to understand that if an inherently governmental function is improperly contracted,” they can lose control of the work.

The administration “is sensitive” to realities of the current budget crunch, Gordon acknowledged. “We need to demonstrate fiscal responsibility on both sides” of the contracting process, he said. “We don’t want to dramatically increase [full-time equivalent] levels on the federal side, but in today’s fiscal world, the solution is not massive contracting out,” nor is it massive insourcing.

Zients presented the letter in the context of the administration’s two-and-a-half-year-old effort to trim waste by curbing contracting “after its uncontrolled growth under the prior administration.” One in six federal dollars is contracted out, and the rate, mostly in services, doubled since 2008, he said. But 2010 marked the first time in a decade that the level of contracting decreased, by $80 billion.

Examples of smarter contracting, Zients said, include “strategic sourcing,” such as pooling purchases of office supplies, which can save as much as 40 percent. “Rather than buying like 100 medium-sized businesses, take advantage of the fact that the United States is the world’s largest purchaser,” he said.

Another means is cutting spending on management support, which quadrupled over the past 10 years, he added. “In information technology and acquisition, management support produces many wasteful and unnecessary consultants’ reports that sit on a shelf.” That approach will reduce expenses by 15 percent, or $7 billion in fiscal 2012, he said.

Focusing on interaction with contractors, the administration also has “strengthened suspension and debarment” processes, Zients said, stressing, however, that “contractors do valuable work and will continue to do so.”

Over the past year and a half, Gordon said, the outsourcing-insourcing issue has been reviewed most thoroughly by the Defense and Homeland Security departments, a process now largely complete. Most agencies have already been working under the principles of the final guidance, he said, so its release won’t prompt major shifts.

Critical functions differ by agency, Gordon said, but the letter provides “clear direction to managers responsible for policy on the closely associated functions to make sure that the agency can control it and that the work doesn’t expand.”

The problem, he said, though “now largely corrected,” has been that some agencies, for example, would have a contractor write a statement of work and then award the contract to that same company. In managing IT functions, he added, he’s heard federal managers say that “no one in-house understands the work and that they’re completely dependent on the contractor. It’s intolerable.” The solution, he said, might be limited insourcing, adding two to three people, or simply applying more attention.

The guidance’s definition of inherently governmental, as in the draft, is based on the 1998 Federal Activities Inventory Reform Act, and Zients said the letter’s other changes, though small, would require adjusting the Federal Acquisition Regulation to conform.

Dozens of interest groups had been following the evolution of final guidance on what is inherently governmental. “We are pleased OFPP has retained flexibilities for agencies to determine what functions are considered closely associated with inherently governmental functions or are critical functions to agency missions and to provide for these functions in a way that best meets their needs and capabilities,” said Stan Soloway, president of the industry group the Professional Services Council. “However, we are concerned that the list of closely associated functions could be misconstrued as a ‘do not contract’ list, even though it is not the case, nor OFPP’s intent. The checklist that identifies closely associated functions must not become a barrier to contracting for work where it is appropriate to do so.”

Scott Amey, general counsel of the watchdog group the Project on Government Oversight, said he is impressed with the guidance. “The policy comes clean about the government’s over-reliance on contractors and improves the categories of activities and functions that shouldn’t be performed by contractors,” he said. “Private security in combat areas was never a good policy, and OFPP’s changes will ensure that properly trained and mission-responsible government personnel conduct such work.” He wonders, however, whether agencies will actually retain or insource work that his group believes should be performed by public servants.

Steve Amitay, federal legislative counsel of the National Association of Security Companies, said on Friday that absence of any mention of “building security” in the guidance “validates the continued successful use of contract security by federal agencies. Furthermore, given the decades of effective and efficient use of contract security by federal agencies, any agency that is considering insourcing security jobs should, as the policy states, be required to conduct an in-depth, comprehensive cost-analysis of such a move.”

— by Charles S. Clark – Government Executive – September 9, 2011 – http://www.govexec.com/dailyfed/0911/090911cc1.htm?rss=getoday&oref=rss

September 7, 2011 By AMK

Let’s argue procurement. It’s healthy.

A few weeks ago, a little debate broke out between two of the country’s leading procurement experts — both of whom have been close friends and colleagues of mine for some 20 years.

Steve Kelman, former administrator of federal procurement policy, is a leading advocate of procurement contests and sees them as highly innovative procurement strategies that offer enormous opportunities for the government to rapidly acquire innovative solutions.

Alan Chvotkin, who has also been my partner at the Professional Services Council for the past decade, took a slightly more cautious approach. Although PSC has consistently advocated for more innovation in federal acquisition, Chvotkin also argued in a recent Washington Business Journal column that innovative strategies such as contests should not inappropriately ignore or sidestep the basic tenets of federal procurement. Kelman took Chvotkin and PSC to task for the WBJ column in his Federal Computer Week blog.

That these two icons of procurement might have a disagreement, especially one that involves relatively insignificant differences, is unsurprising — and it is healthy. Indeed, in the end, their debate is refreshing and reminds me why both are men I have long considered mentors.

There is no doubt that today’s procurement environment is generally hostile to innovation. It has actually been spiraling in quite the opposite direction. A range of external and internal pressures have increasingly limited the ability of acquisition professionals to exercise their judgment and expertise, too often driving them back to the old days when lowest cost rather than reasoned, thoughtful, best-value solutions prevailed.

As such, when innovative techniques emerge, enjoy some early successes and gain official support — as has been the case with the Office of Management and Budget’s blessing of contests — it is only natural that a lot of excitement and buzz will result, especially from leading innovators such as Kelman. But successes aside, innovations such as contests don’t apply everywhere and are not without potential significant risks to the government and/or industry, a point stressed by Chvotkin.

That’s why Kelman’s advocacy for rapidly increased adoption of promising acquisition strategies and Chvotkin’s cautions about how best to proceed represents precisely the kind of balanced dialogue we need to be having.

Think about the early days of reverse auctions. I witnessed the great enthusiasm that emerged as a result of the Navy’s early successes with auctions for the procurement of commodities. However, that enthusiasm also led others to immediately begin suggesting that reverse auctions should be used across a much broader swath of the procurement spectrum.

Fortunately, thanks to dialogues like the one taking place between Kelman and Chvotkin, a more balanced approach took hold. And when strategic sourcing, which at the time was really a form of bulk buying, first gained popularity, some immediately began to advocate its use for the acquisition of higher-end services. Today’s more rational and appropriate use of strategic sourcing has resulted from a similarly thoughtful dialogue among smart folks who both know procurement and understand the need for innovation.

In other words, what makes the debate between Kelman and Chvotkin most significant is that it is a dialogue about how to make innovation work — at a time when such dialogues are all too rare. The most successful procurement innovations of the past 20 years — as one example, the emergence of commercial acquisitions under FAR Part 12 in the 1990s — have succeeded precisely because they benefited from the kind of dialogue and dissection that recently took place between Chvotkin and Kelman.

Conversely, the landscape is littered with examples of potentially effective innovative ideas that died because they were either too blithely embraced or too quickly dismissed, with little of the kind of thoughtful dialogue designed to overcome perceived or real shortcomings in ways that would enable success.

So, to my friends and colleagues, keep up the conversation and debate. By doing so, you will only help make federal procurement better and drive more successful innovation.

About the Author: Stan Soloway is president and chief executive officer of the Professional Services Council. Published Aug. 31, 2011 by Washington Technology at http://washingtontechnology.com/articles/2011/08/29/insights-soloway.aspx?s=wtdaily_010911

August 24, 2011 By AMK

Government-industry group sifts out top contracting reforms

A government-industry IT group is helping the senior procurement policy officials understand what the private sector thinks are the most important contracting reforms.

The American Council for Technology-Industry Advisory Council (ACT-IAC) launched BetterGovernmentIT.org Aug. 12 to survey the government vendor community. The survey ends Aug. 26.

The Office of Federal Procurement Policy (OFPP) asked ACT-IAC to help with its Myth-Busters Campaign, which is aimed at debunking commonly held misunderstandings about how industry and government can interact during the acquisition process.

The OFPP has identified specific strategies, and asked the organization to confirm the initial list and offer new ideas.

Donald Arnold, director of government programs at ACT-IAC, said the group intends to determine what companies consider the top 10 ideas.

“It’s great for government to get industry’s opinions and advice on things, especially in acquisition,” Arnold said.

The Myth-Busters Campaign is a part of the Office of Management and Budget’s 25-point plan on IT reforms, which was released last December. As an offshoot memo, OFPP Administrator Dan Gordon wrote about myths regarding misconceptions such as meeting with vendors one-on-one and that a meeting with a contractor is like talking with a registered lobbyist that causes a lot of headache because of the burden of disclosures.

Myths, like these and others, “reduce the government’s access to necessary market information as government officials,” officials wrote in the 25-point plan.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Washington Technology. Published Aug. 15, 2011 at http://washingtontechnology.com/articles/2011/08/15/act-iac-ofpp-top-contracting-reforms-survey.aspx?s=wtdaily_160811.

August 16, 2011 By AMK

Contracting officers, accountability and truth serum

Sen. Claire McCaskill (D-Mo.), chairwoman of the Homeland Security and Governmental Affairs Committee’s Contracting Oversight Subcommittee, prodded and poked federal small-business officials about the problems with the government’s small-business contracting goals and the sneaky ways that agencies can get credit for contracting with small businesses.

At a hearing July 26, McCaskill asked about contracting officers who tend to bend the rules to fit a contract into a particular North American Industry Classification System code to get a company to bid on a solicitation. One code over another might give the agency a broader array of potential bidders for a small-business set-aside contract or another code might boost the size standard of what a small business would be.

McCaskill is wondering about contracting officers and punishment for code shopping, as it’s called.

Let’s drop into the hearing:

McCaskill: “I’d love to get a room of contracting officers with truth serum and say, ‘Do you have any fear that if you shop the code to be able to include a company in a small-business set-aside that there will be any accountability?’ What do you think? Is anybody afraid of that in the acquisition personnel world?”

Acquisitive Mind: Madame Chair, if I may.

To your question about wanting to meet with contracting officers and talk about fears of accountability, I suggest going with Dan Gordon, administrator of the Office of Federal Procurement Policy, to the meetings he has with all sorts of contracting officers on the front lines of the acquisition personnel world.

The Frontline Forum is a group of contracting professionals — who aren’t managers or supervisors — that meets in the White House about once a quarter to share ideas and give reactions to procurement initiatives the administration is planning or considering.

Gordon has said he finds the meetings important for him to hear from the workers who deal daily with acquisition decisions, even choosing NAICS codes. He gets a chance to understand their concerns and objections. He talks with them about the world of acquisition in which they live, and their opinions don’t come through a managerial translator.

The forum began in the 1990s when Steve Kelman was OFPP administrator while Bill Clinton was president, but the meetings fell away after Kelman’s departure. Gordon revived the meetings in the past several years while he’s been administrator.

It would be a good place to meet with these contracting officers and find out if they’re frightened at all by punishments for shopping the code, as you called it.

Yes, Mr. Gordon also hosts AcqStat meetings, but he meets with managers and supervisors in those meetings.

But the Frontline Forums would allow you to get some answers about the fear of accountability for bending the procurement rules to get a small-business contract credit.

No, I don’t have the exact dates of the meetings. I don’t have that information with me. I would have to get back with you on when they meet.

However, I do know that you should bring the truth serum.

— Posted by Matthew Weigelt, Federal Computer Week, on Jul 26, 2011 at http://fcw.com/Blogs/Acquisitive-Mind/2011/07/Sen-Claire-McCaskill-contracting-officers-accountability-frontline-forum.aspx

July 28, 2011 By AMK

Acquisition workforce showing signs of change

The acquisition workforce has long been the victim and scapegoat for all that is wrong with federal procurement.

Dan Gordon, however, said that is starting to change. The administrator of the Office of Federal Procurement Policy said agency contracting officers, program managers and others are starting to show signs of morale and process improvements.

“The idea we now have a network of a group, which calls themselves rising acquisition professionals-they did this on their own, I didn’t go out there and tell them to do it-a governmentwide informal network of relatively junior acquisition professionals,” Gordon said in a recent exclusive interview with Federal News Radio in his office in Washington. “People are proud to be in this business and happy to be doing public service. That morale component is a very important one.”

Gordon said new leadership at the Defense Acquisition University and the Federal Acquisition Institute as well as the efforts by the Veterans Affairs Department’s Acquisition Academy are helping to lead this transformation.

Additionally, the Office of Management and Budget has focused on specific areas of the acquisition workforce that needs to be addressed. One is program managers for IT projects. Federal chief information officer Vivek Kundra made creating a career path for IT program and project managers one of the goals of the 25-point plan.

And the Office of Personnel Management late last week met that goal by publishing the Competency Model for IT Program Management.

“The competencies identified through the study will be used to develop an IT program management career path,” wrote OPM Director John Berry in a memo to agency Chief Human Capital Officers. “We included IT project managers in the competency study to assist with the career path effort.”

OPM developed the model based on the results of their January 2011 survey to identify critical skills and abilities for IT program and project management.

The model details IT program and IT project general and technical competencies by grade level starting with GS-13. It also ranks the skills the survey showed are most important for each position, and defines each competency.

“The competencies identified may be used in such agency efforts as workforce planning, training and development, performance management, recruitment and selection,” Berry wrote. “When used for selection, the competencies must be used in conjunction with the appropriate qualification standard.”

This is the second major change for IT program managers. In May, OPM made IT program management part of the 2210 job series.

Gordon said training is an important part of acquisition reform.

He said OFPP will ensure there is training ready before the Federal Acquisition Regulations Council issues new rules.

“We can’t have the situation where there is a new FAR rule and there is no training on it,” he said. “I sense a real change when I’m out at the agencies-and I’m out at the agencies a lot-there is a renewed commitment to their work, a renewed belief in their work and their ability to make a difference in improving contracting and saving taxpayer’s funds.”

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