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June 14, 2011 By AMK

Report: Contractor waste in war zones could grow

As President Obama nears his decision on reducing U.S. troop presence in Afghanistan, a new report warns of prospects for massive new waste in contractor projects in both Iraq and Afghanistan.

Newly built power plants that sit idle, water treatment plants that produce nonpotable water and facilities constructed for security forces that could potentially exceed $11 billion in costs are some examples given in the report released June 3 by the federal Commission on Wartime Contracting in Iraq and Afghanistan.

Titled “Sustainability: Hidden Costs Risk New Waste,” the fifth special report from the congressionally chartered panel set up in 2008 says many of the programs and projects carried out under federal contracts in the war zones “lack plans for staffing, technical support and funding for the long term” in such projects as health clinics and road building. As a result, said commission co-chairman Michael Thibault, billions could be wasted if projects are turned “over to a host government that can’t supply trained people to run it, pay for supplies, or perform essential maintenance.”

“A paradigm example stands in Kabul,” the report said. “American taxpayers’ dollars paid for building the $300 million Tarakhil Power Plant, also known as the Kabul Power Plant. The plant is completed. But it is little used, and the cost to operate and maintain it is too great for the Afghan government to sustain from its own resources.”

The report asks the Pentagon, State Department and U.S. Agency for International Development to examine the projects, make a detailed assessment of the host nations’ ability to complete the projects, cancel or redesign projects as warranted, and report results to Congress by the end of 2011.

On Monday, Undersecretary of State for Management Patrick Kennedy told a hearing of the Wartime Contracting Commission that the State Department will be ready to take over responsibilities in Iraq from the Defense Department on Oct. 1, as scheduled. “As the military draws down, and the [State] department’s plans are implemented to increase the civilian presence in Iraq, the department is relying on the use of contractors for certain functions which are not inherently governmental,” Kennedy said in prepared testimony. “We use contractors in contingency operations when it makes sense and is cost-efficient, as opposed to building up permanent, U.S. direct-hire staff.”

–by Charles S. Clark – Government Executive – June 6, 2011 – http://www.govexec.com/story_page_pf.cfm?articleid=47948&printerfriendlyvers=1 

Filed Under: Government Contracting News Tagged With: State Dept., sustainability, USAID

June 8, 2011 By AMK

How to cut costs and improve performance

The federal government faces an estimated annual structural deficit of $500 billion to $700 billion. A deficit of this magnitude represents a major threat to the economic health of the nation. The structural deficit is defined as the portion of the total annual deficit that results from a fundamental imbalance in receipts and expenditures, not just one-time occurrences or changes in the economic cycle. Steps to reduce and eliminate this structural deficit are urgently needed.

Congress, the Obama administration, and state and local governments must put government spending on a path of fiscal sustainability for the longer term. Policy makers have focused on three cost-cutting opportunities for doing this:

  • Eliminating wasteful programs,
  • Taking a longer-term view that focuses on entitlement program policy changes,
  • Using proven cost-saving strategies from the public and private sectors to make the daily operation of government much more efficient and deliver improved performance at a lower cost.

Recent discussion of the fiscal crisis has been limited to these three approaches, and discussion centers on draconian, across-the-board spending reduction or equally sweeping tax hikes. Based on the experience of the technology industry, there is a better way. Government has an opportunity to dramatically reduce spending and cut the deficit, while also improving its level of service. By harnessing major technological shifts and adopting proven, commercial best business practices, leaders and managers can not only make government far more productive, but also foster greater innovation in areas ranging from health care to education and energy — innovation that will generate economic growth and job creation.

Innovative approaches have been used effectively throughout the past several decades to create new technology models. Again and again, new capabilities have simultaneously reduced costs and sparked innovation. While businesses and governments are inherently different in many ways — responsibilities, objectives and mandates — both employ millions of professionals to provide goods and services to hundreds of millions of customers and constituents. Not all private-sector solutions are applicable or advisable in a government setting. In both the public and private sectors, the more productive and efficient the operations, the more services can be delivered at the lowest cost. Given the current fiscal outlook for governments at all levels, maximizing government productivity will be essential to maintaining the services citizens want at prices taxpayers can afford.

Traditional Budget-Cutting Exercises Will No Longer Work

We have heard it before — the need to “do more with less.” But the situation is different this time, and much more difficult. Drastically reducing costs is a major undertaking, not a normal budget-cutting exercise. And, importantly, it presents an opportunity to not just cut programs and discretionary costs, but to transform how government does its business.

Across-the-board cuts and undifferentiated freezes that affect all programs and services in the same way can have perverse effects. Such cuts erode the quality of services and affect the morale of public servants. Over time, they erode citizens’ confidence in government. Too often, budget-cutting exercises involve a small number of people working in relative secrecy. In contrast, drastic austerity measures require a more open and inclusive approach, one that engages a large set of stakeholders and gives greater emphasis on program evaluations and cost/benefit analyses than occurs in the normal budget process. Rather than looking only at program cuts, leaders and managers should view the need to achieve drastic reductions as an opportunity to reconsider their entire organizational structure as well as program business models.

Traditional Cost-Cutting Exercises Often Prove to be Temporary

Government organizations often cut discretionary costs, such as information technology, travel, and training, which can have an immediate, significant impact. Unfortunately, as soon as the external pressure is gone, these costs creep back into the cost base. More successful organizations invest in central staff who help identify systemic costs associated with organizational and program complexity and supply chain improvements. In doing so, they must be mindful of two important points:

  • Establish top-down cost savings targets. Delegating the responsibility for cost-cutting to the frontline organizations often results in cuts to long-term investments, like training, not to low-priority or poorly performing projects. Central staff focused on operational improvements can provide an enterprise-wide view to objectively identify high-priority and high- performance activities, not just set overall cost-reduction targets for the organization.
  • Recognize and capitalize on the cost of complexity. Failing to estimate and account for the cost of too many separate operations and support activities can lead organizations to overlook savings from reducing, standardizing, or sharing services, or making supply chain improvements. Central staff are in a better position to identify enterprise-wide and cross-agency opportunities to capitalize on redundancies.

New Approaches are Needed to Truly Transform the Way Government Does Business

Faced with the need to make severe budget cuts, government organizations may react in one of two ways:

  • One group of leaders and managers will use the necessity for cuts as a catalyst for change. They will seize the opportunity to streamline business processes, shed unnecessary functions and optimize IT systems.
  • Another group will adopt a bunker mentality and sideline management reform, cutting projects and jettisoning management improvements, believing that management reforms represent a luxury they can no longer afford.

A big risk in the current cost-cutting debate is that not enough attention will be focused on the opportunity to improve operational performance by being smarter about the way government does business. The IBM Center for the Business of Government’s Strategies to Cut Costs and Improve Performance describes seven specific initiatives where technology-enabled productivity solutions can make a material difference in the performance of government programs, based on the experience of real cost savings and efficiencies achieved by public and private sector organizations. These seven strategies constitute a starter list of initiatives of this type.

By aggressively implementing these strategies, sustainable cost savings can be realized while, in many cases, improving operational performance.

    Seven Strategies to Cut Costs and Improve Performance

  • Consolidate information technology infrastructures
  • Streamline government supply chains
  • Reduce energy use
  • Move to shared services for mission-support activities
  • Apply advanced business analytics to reduce improper payments
  • Reduce field operations footprint and move to electronic self-service
  • Monetize the government’s assets

Source: Charles L. Prow, Debra Cammer Hines, and Daniel B. Prieto, Strategies to Cut Costs and Improve Performance. IBM Center for the Business of Government. 2010.

Getting It Done

The problems of mounting debt and deficits can’t be solved overnight, but must be addressed now. An initial step in achieving dramatic cost savings — the “how” it will be done — is deciding “who” will do it. In the private sector, this would be the job of the chief financial officer. However, in many government organizations, the CFO or the budget officer, as one former CFO expresses it, is very good at getting money from Congress to fund various programs and making sure that money is spent — but is not experienced with considering how effectively or efficiently that money is spent.

The chief executive officer/chief operating officer model that is prevalent in the private sector does not work as well in government. Cabinet secretaries have huge jobs. With many direct reports just in the Office of the Secretary, they need their deputy to serve as an alter-ego in many capacities, not just as a chief operating officer. While some deputy secretaries have been very attentive to management, others have not.

The best approach is for top officials to appoint and empower a single individual to manage cost-cutting activity. While they may be supported by departmental staff or outside volunteers, someone needs to own the task and, ideally, report directly to the agency head. The secretary or deputy secretary should recruit a highly respected and experienced former CFO from the private sector to serve as the department’s “uber-manager” with the explicit mission to achieve dramatic cost saving.

People often ask how the role of Cabinet secretary, department head, or legislator fits into this model and whether these officials should own cost-savings activity in their areas of influence. These leaders will be critical enablers for cost-savings ideas, but we recommend that someone outside the impacted agencies be appointed to take the lead role for two reasons. First, those officials, like their elected bosses, have a great deal on their plate. Their days are filled with a constant stream of crises. Second, we believe that appointing an external voice can help inform the decision-making of agency heads as they make the tough choices about what must be cut.

The Role of Leaders and Managers

Cost-cutting is tough, unpleasant work. It requires choices that most of us would rather not make. Therefore, unwavering leadership is the most important characteristic for senior officials to display in a successful cost-cutting effort. While an individual department head might be able to reduce costs for a few years in an agency, it is very hard to bend the overall cost curve unless top leadership demands it.

How this process will play out over the next few years remains to be seen. In many respects, identifying sources of savings (whether policy changes or operational improvements) is the easy part. The challenge will be to turn ideas into action. Most important, we know that the proposed operational and process improvements do not just cut costs; they also foster collaboration, idea sharing, and a culture of innovation.

This will be where government leaders and managers come in. They will be the ones who do the heavy lifting to implement major program adjustments and cutbacks, as well as harness major technological shifts and not just cut costs, but also adopt innovative practices to make government far more productive.

This article was reprinted from GovExec.com on June 3, 2011 at http://www.govexec.com/story_page_pf.cfm?articleid=47935&printerfriendlyvers=1 and is adapted from “Seven Management Imperatives,” a report by the IBM Center for the Business of Government on broad societal trends that are changing the way federal agencies and their leaders must operate. The report’s authors are Mark A. Abramson, Gadi Ben-Yehuda, Jonathan D. Breul, Daniel J. Chenok, John M. Kamensky, Michael J. Keegan and Frank B. Strickland Jr.

Filed Under: Government Contracting News Tagged With: budget cuts, cost reduction, deficit reduction, efficiency, innovation, performance, sustainability, technology, waste

June 6, 2011 By AMK

Agencies told to go green on 95 percent of purchasing

The Obama administration’s campaign to have agencies “lead by example” in sustainable purchasing became stricter this week when the Federal Acquisition Regulations Council released an interim rule on green procurement.

Following up on President Obama’s 2009 executive order on green management, the draft published Tuesday in the Federal Register would require agencies “to leverage agency acquisitions to foster markets for sustainable technologies, materials, products and services.”

It tasks the head of each agency with ensuring that 95 percent of new contract actions are for products and services that are energy efficient, water efficient, bio-based, environmentally preferable or non-ozone depleting, adhering to criteria set out by the Environmental Protection Agency and the Agriculture Department. With the exception of weapons systems, agencies also must aim to procure items that contain recycled content and are nontoxic.

The toughened policy is being spearheaded by the Defense Department, NASA and the General Services Administration. It requires all federal contractors to support the government’s goals in environmental management, and includes new requirements for electronic or other paper-saving methods for submitting documents required by contracts.

“In the face of changing environmental circumstances and our nation’s heightened energy demands, the federal government must lead by example to create a clean-energy economy that will increase prosperity, promote energy security, protect the interests of taxpayers and safeguard the health of our environment,” the rule states.

Agencies have until Aug. 1 to submit comment.

— by Charles S. Clark – Government Executive – June 1, 2011 – http://www.govexec.com/story_page.cfm?articleid=47921&dcn=e_gvet

Filed Under: Government Contracting News Tagged With: Agriculture Dept., clean energy, DoD, EPA, green procurement, green products, GSA, NASA, sustainability

March 30, 2011 By AMK

GSA plans BPAs with green IT in mind

The General Services Administration’s IT Commodity Division is gathering input from industry as it considers the possibility of several blanket purchase agreements (BPAs) for buying a variety of leading IT products.

The BPAs, which could last between three and five years, would include IT products and related services, such as hardware, laptop PCs, smart phones, maintenance and product training, among others, according to an new information request. GSA officials are expecting discounts by volume sales and the latest technology through GSA’s IT 70 Multiple Award Schedule.

GSA plans to issue a request for quotes in April.

The Washington Management Group reported the request for information in today’s Wednesday Weekly newsletter.

Along with the lower prices for buying more, GSA officials want contractors to be working to lower their greenhouse gas (GHG) emissions, to have no impact on the environment, and to promote the agency’s sustainability initiatives. The green requirements are part of GSA Administrator Martha Johnson’s main focus since taking the position.

GSA has said it plans to “make and move markets” by emphasizing green products and procurements.

In the request for information, GSA asks whether a company has done a comprehensive GHG emissions inventory as well as its goals for reducing GHG emissions and making a zero environmental footprint. It also asks about IT product sustainability efforts or achievements.

Since 2010, agency officials have wanted more information from companies on their GHG emissions and how those emissions are measured. They have been planning to determine the benefits and challenges for companies to make inventories and disclose emissions data in a registry.

GSA’s sustainability initiatives are about not wasting anything and using resources efficiently, as much as they are about protecting the environment, Johnson said in a keynote address at GSA’s Interagency Resources Management Conference March 15.

In its BPA research, GSA officials are also pushing contractors to meet hard-and-fast deadlines and they want real-time tracking of their orders on company websites.

“A goal of this initiative is to reduce both cost and delivery time for existing and emerging technology,” the information request states.

About the Author: Matthew Weigelt is acquisition editor for Federal Computer Week. Published Mar. 23, 2011 at http://washingtontechnology.com/articles/2011/03/23/it-commodity-bpa-with-environmental-concerns.aspx?s=wtdaily_250311.


Filed Under: Government Contracting News Tagged With: acquisition strategy, green products, GSA, sustainability

March 18, 2011 By AMK

New GSA acquisition chief calls for government-contractor cooperation

The General Services Administration’s new acquisition chief is calling for greater cooperation and communication between the government and its industry contractors, echoing a familiar refrain from members of the Obama administration’s procurement team in recent months.

In an interview last week with Government Executive, new GSA Chief Acquisition Officer Mindy Connolly said the two sides should have better dialogue in the lead-up to contract awards and during the process of implementing Federal Acquisition Regulations. GSA, like all contracting agencies, is required to develop a vendor communication plan for its workforce and the public by June 30.

“If we want to have a government that is leaner and more transparent and ready for the 21st century, anything we can do to reduce that burden on industry is really to our advantage,” said Connolly, whose first day on the job at GSA was Feb. 28.

The administration has made it a priority of late to myth-bust the perception that contracting officers should not meet with vendors for fear of causing contract delays, or committing potential ethical violations.

Last month, Dan Gordon, administrator of federal procurement policy at the Office of Management and Budget issued a 13-page memorandum that addresses 10 of the most widely held misconceptions, including communicating with a bidder could result in a competing firm filing a protest.

Connolly has experienced the often arcane world of federal contracting from two perspectives, administering awards in both the public and private sectors. She has awarded contracts at NASA, Customs and Borders Protection, and the Treasury Department and was the Transportation Security Agency’s first contracting officer. She previously served as chief of contracting for Bureau of Land Management’s Western Region and held similar roles in industry, most notably as a contracting manager for Honeywell Defense and Space Electronics.

At GSA, Connolly plans to work with industry to clarify the impact of FAR rules so that industry is not left struggling for answers.

“Because of my experience both in government acquisition and in industry acquisition as the government customer, my interest is that it works better,” she said. “It works pretty well, but there are opportunities for it to work better through communications and doing a little different planning in our rule-making.”

Most recently, Connolly served as a senior procurement policy analyst at OFPP, where she led the office’s natural resources’ division on contracting policy matters, including implementing White House requirements for sustainable procurements and green building design.

She helped draft Obama’s October 2009 executive order requiring agencies to set a 2020 greenhouse gas emissions reduction target, increase energy efficiency, reduce fleet petroleum consumption, and “leverage federal purchasing power to promote environmentally responsible products and technologies.”

The order states 95 percent of all new nonweapons contracts meet sustainability requirements, including being water and energy-efficient and safe for the environment, and containing recycled materials.

Connolly’s job is to take the broad-ranging policy for environmentally preferable products and services and sustainable technologies and make it executable through regulations in the FAR.

“Each agency would be able to look at how they can put [directives] into their specifications, or requirements for products,” she explained. “Some things are easy, like office paper. Other things are more challenging like a building, or a lease.”

– By Robert Brodsky – GovExec.com – March 14, 2011

Filed Under: Government Contracting News Tagged With: acquisition, FAR, GSA, OFPP, OMB, procurement reform, sustainability

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