Flyzik: Try it! It might work
Share-in-savings contracts can help further the cause of performance-based contracting.
- By Jim Flyzik
- Jan 23, 2005
Angela Styles' article (available in the Jan. 24, 2005 print issue of Federal Computer Week) questions the legitimacy of share-in-savings contracts as defined in the E-Government Act of 2002. I worked with Styles, a former administrator of the Office of Federal Procurement Policy, and I respect her abilities. But my partners and I have to respectfully disagree with her.
Her position on share-in-savings contracts represents a sensationalized view of the issue that is wrought with suspect research and unsubstantiated conclusions.
Styles' latest position criticizes Congress for supposedly abdicating its responsibility and chastises industry and federal agencies. Her comments differ from the support she gave share-in-savings contracting during testimony to Congress in April 2003 while she served at the Office of Management and Budget.
During her testimony, she said, "OMB welcomes the opportunity to work with the committee to further discuss options for facilitating the successful use of share-in-savings" contracts.
Fortunately, OFPP's current leaders have been more engaged in and supportive of accelerating the issuance of Federal Acquisition Regulation policy. We had hoped for more expediency, but we appreciate the FAR Councils' efforts to conduct a deliberate, open and comprehensive review of the issues unique to share-in-savings contracts.
There have been public debate and significant analysis of all positions, and we look forward to the publication of the final FAR rule.
In her article, Styles states that while she was at OFPP, nobody "found evidence of any savings realized through these schemes." It is not clear what studies her employees chose to review, but they ignored two seminal pieces of research conducted by the Council for Excellence in Government in January 2003 and a report by the Government Accountability Office in June 2003.
In addition, a share-in-savings program by the Education Department's Federal Student Aid office, despite some minor criticism, has been deemed by many to be a successful model for other federal agencies to follow.
Styles chose to define hypothetical scenarios that would lead readers to believe that share-in-savings contracts are a sinister attempt on the part of executive agencies to bypass congressional authority and collude with industry to make back-room deals that waste the taxpayers' money.
The reality of share-in-savings contracts is significantly different from how Styles portrays it. The contracts are not a panacea for federal agencies and will not and should not be applied to many situations. They are, however, useful tools that can help further the cause of performance-based contracting and actually save taxpayer money.
Let me suggest a simple example from a private-sector company. A small local firm thrives by reviewing commercial firms' utility bills, including telecommunications costs. They then offer a proposal to reduce the costs and share in the money that the company saves. In a majority of the cases, the savings are real and both of the parties benefit. Why wouldn't this work in government?
Flyzik is a partner with the government technology consulting company Guerra, Kiviat, Flyzik and Associates. He left government in 2002 after 28 years of service. He can be reached at email@example.com.