OFPP | The Contracting Education Academy

October 5, 2011 By AMK

OMB issues guidance boosting interagency purchasing

Encouraging agencies to reduce waste by leveraging their “own buying power,” the federal chief procurement officer on Thursday issued guidance designed to reduce duplication in acquisitions by increasing interagency contracting and information sharing.

Dan Gordon, administrator of the Office of Federal Procurement Policy, in a letter to chief acquisition officers and senior procurement executives, wrote that too often, “agencies establish new overlapping and duplicative contracts for supplies or services because the agencies have not adequately considered the suitability of existing interagency contract vehicles: governmentwide acquisition contracts, multiagency contracts and blanket purchase agreements.”

Failure to exploit such opportunities for new efficiencies, he said, “results in higher prices and unnecessary administrative costs.”

Beginning in January 2012, the guidance directs, agency managers should not enter into a new contract without first performing a cost-benefit analysis to “balance the value of creating a new contract against the benefit of using an existing one, and whether the expected return from investment in the proposed contract is worth the taxpayer resources,” Gordon wrote on the White House blog.

The guidance is intended to deal with goods and services such as office supplies and wireless services. “This kind of due diligence and comparison shopping is something that many families across the country do,” the letter stated.

“The guidance will also increase information sharing among agencies,” it added, noting that for years many agencies have focused solely on doing all their own contracting. “We have seen firsthand that interagency contracting — done intelligently, and in a way that reduces duplication — can help us leverage the federal government’s buying power to get better prices.”

Such savings, Gordon said, also would help persuade the Government Accountability Office to remove interagency contracting from its high-risk list.

He praised the General Services Administration’s move in spring 2010 to sign a series of blanket purchase agreements for office supplies. GSA’s award of 15 contracts, 13 of them to small businesses, has produced savings up to 20 percent on office supplies, which will add up to more than $200 million in the next few years, Gordon said.

The new guidance is part of the Obama administration’s Campaign to Cut Waste led by Vice President Joe Biden, who met with Cabinet members on the effort this month.

The approach drew praise from Sean Moulton, director of federal information policy for the nonprofit OMB Watch. “It makes a lot of sense, this idea of coordinating purchases of common elements, getting more consistent — and probably lower — prices and not wasting time,” he said. A similar approach used by the Texas state comptroller of public accounts, he added, has saved millions of dollars.

Scott Amey, general counsel of the nonprofit Project on Government Oversight, said, “There might be slight improvements and savings associated with today’s announcement. Buying in bulk and eliminating duplication will help, but we need to make sure we ask two critical questions, what are we buying and how are we buying it?”

— by Charles S. Clark – Government Executive – September 30, 2011 – http://www.govexec.com/story_page.cfm?articleid=48938&dcn=e_gvet.

September 20, 2011 By AMK

OFPP toughens training for contract oversight

The government officials who make sure contractors perform well have new training standards because of a push by the Obama administration to strengthen the acquisition workforce for better contract supervision.

The contracting officer’s representatives (CORs) have three levels of training that range from the simple contracts, such as supply contracts, to complex IT procurements, according to a memo from the Office of Federal Procurement Policy (OFPP) Administrator Dan Gordon released Sept. 6.

Agency officials must assign their CORs, which were formerly named Contracting Officer’s Technical Representatives (COTRs), to one of three levels.

Level I means a COR has eight hours of training, and no prior experience is required. This level of COR is generally appropriate for low-risk contracts and orders.

Level II requires 40 hours of training and one year of previous COR experience. This level of COR is generally appropriate managing projects for contract with moderate to high complexity, including both supply and service contracts.

Level III requires 60 hours of training and two years of previous COR experience. The COR must have experience working on contracts of moderate to high complexity that require significant acquisition investment.

Level III CORs are the most experienced CORs in an agency and should be assigned to the most complex and mission- critical contracts. They are often chosen to handle significant program management work.

CORs, who have been certified under the previous training program, likely have certain training that matches the new program’s curriculum. As agencies transition from the single-tiered certification to the new levels of training, officials can assign their current CORs as Level II CORs, although officials have options to place them at Level III certification if they have the expertise, according to the memo.

CORs must ensure their training data is properly entered into the Federal Acquisition Institute Training Application System (FAITAS) by February 15, 2012. FAITAS is coming out this fall.

The Federal Acquisition Institute plans to launch a resource website for the COR by Oct. 31.

The new certification program does not apply to the Defense Department CORs.

OFPP changed the term from “Contracting Officer’s Technical Representative,” which civilian agencies have used, to “Contracting Officer’s Representatives” to match the term used in the Federal Acquisition Regulation. CORs are often the first to recognize when a program or contract is not doing well, and, more and more, agencies assign them to manage high-value, complex contracts.

Gordon is pushing the training standards as part of his focus on the acquisition workforce and President Barack Obama’s procurement memo from 2009.

“Each member of the acquisition workforce plays a critical role, including Contracting Officer’s Representatives, who ensure that contractors meet the commitments of their contracts,” Gordon wrote.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article appeared on Sept. 19, 2011 at http://fcw.com/articles/2011/09/19/contracting-officers-representative-new-training-certifications.aspx.

September 19, 2011 By AMK

Will OFPP’s new guidance be used to take jobs from contractors?

“Critical function” is now the controversial term as agency officials interpret new regulations on what work only federal employees should be doing and could be used to increase the insourcing of contractor jobs.

“Inherently governmental function isn’t the big problem,” said Robert Burton, former deputy administrator of the Office of Federal Procurement Policy (OFPP). “It’s the broad category called ‘critical function.’”

A new policy letter from OFPP defines critical function as work that is “necessary to the agency being able to effectively perform and maintain control of its mission and operations.” Beyond that, the letter tells agency officials to decide case-by-case if work should be done by their own employees or by contractors.

If a contractor is doing the work, agencies must have employees who know the job and who would be able to manage the contractor who is doing the work, according to the policy letter, which was released officially Sept. 12.

The policy holds an agency responsible for making sure it has an adequate number of positions filled by federal employees with appropriate expertise and experience. Those employees need to understand the agency’s requirements and be able to formulate alternative options, if needed, while also monitoring any contractors supporting the federal workforce, thr letter said.

“The more important the function, the more important that the agency have internal capability to maintain control of its mission and operations,” the letter stated.

However, Burton said officials can argue that any job is critical to meeting their agency’s mission and also decide the adequate number of federal employees they need to do it, under this policy.

“We’re missing the elephant in the room,” said Burton, now a partner at the Venable law firm. “What this policy letter does is institutionalize insourcing in the federal government.”

He said these critical functions are the jobs agencies are already insourcing, often to the detriment of small businesses.

The policy letter goes into effect Oct. 12, and, because it came from the OFPP, it is more than guidance. It will be added to the Federal Acquisition Regulation. These will be rules to live by.

The term “critical function” came from the fiscal 2009 National Defense Authorization Act, which told the administration to draw up a single definition of “inherently governmental function” and also lay out criteria for a critical function. OFPP drafted the definition in 75 pages.

As deputy administrator from 2001 to 2008, Burton said the issue isn’t necessarily with writing the policy. It’s how the agency officials apply it.

“The challenge of so much of this is the interpretation,” he said.

Stan Soloway, president of the Professional Services Council, said the policy must have clear guidance for interpreting the intent correctly. He has raised concerns in the past about making agencies prove that their choice to insource work is a good deal.

“As such, it is vital that clear guidance be given to the agencies on how to conduct their cost comparisons to ensure the right outcomes for the American taxpayer,” he said Sept. 9 in a statement.

Burton also said the OFPP missed two important points in the policy. It should have required agency officials to talk with small businesses about the effects that insourcing would have. And it should have required agencies to share their cost comparison data with, at least, the company who faces the loss of its work.

It’s often too late to use the Freedom of Information Act to get the data, he said. By then, the insourcing is completed.

About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Washington Technology. Published Sept. 12, 2011 at http://washingtontechnology.com/articles/2011/09/12/critical-function-interpretation-ofpp.aspx?s=wtdaily_140911

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

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