The Air Force goes to the front lines for cost-savings ideas

The Air Force's "Every Dollar Counts" campaign intends to put the squeeze on costs. (Stock image)

My friend Jim Tisdale at Los Angeles Air Force Base has called to my attention a campaign that is going on this month (it started May 1 and goes through May 30) to involve frontline uniformed and civilian Air Force people in efforts to save money in a tight budget environment where the Air Force has taken $11 billion in sequestration cuts. Jim is a dedicated contracting professional who takes seriously the cost-savings mission of contracting.

The campaign is called "Every Dollar Counts," and you can learn more about it by going to the Air Force home page. There you will see the campaign as the "featured link" in the top left corner of the site (just above the second featured link, on Sexual Assault Awareness and Prevention). If you click through, you will see an interview with Gen. Larry Spencer, vice chief of staff of the Air Force, a place to submit suggestions, and a listing of some suggestions that have been accepted so far.

Posted on May 16, 2013 at 10:29 AM2 comments

The power of slow thinking

In 2011, Daniel Kahneman published a book called "Thinking, Fast and Slow," which was a non-fiction bestseller. I write about it now because it just came out in paperback. It is a great read, and I guarantee it will teach you a great deal.

Kahneman is an emeritus professor at Princeton University's Woodrow Wilson School of Public and International Affairs and the first non-economist by profession to win the Nobel Prize in Economics. In his book, he tells us that our minds have two systems for making decisions, which he straightforwardly calls System 1 and System 2.

System 1 has arisen from millennia of human evolution and from repeated experiences people have over the course of their lives. System 1 is fast. It provides intuitive reactions to what we should do. System 2 is methodical and deliberative thinking, when we ponder evidence and weigh pros and cons. It is much slower, and it takes mental effort and energy. Often, Kahneman notes, System 2 acts as a check on System 1.

Academics like me and Kahneman are unsurprisingly (dare I say instinctively?) System 2 believers, though a minority of scholars who study decisions argue that such expertise has become largely intuitive.

Here's what Kahneman says: For many situations in which our reactions are governed by System 1, speed is essential. We are extremely sensitive to danger, quickly noticing and reacting to it because a microsecond advantage could determine whether our pre-human ancestors were eaten or not. Furthermore, in situations in which people have frequent experience — say, in playing basketball or diagnosing disease — and where feedback about the result of a decision is quick and unambiguous, the mind eventually develops good intuition that often cannot be expressed in words.

However, System 1 often does not provide an intuitive answer. To cite an example Kahneman provides, there is no System 1 answer to the question "How much is 49 times 27?" We need to develop and use System 2 to help us.

Beyond that, though, System 1 answers are sometimes just wrong. Our instincts lead us in a direction that generally makes sense but produces absurd results. These are the kinds of situations Kahneman became famous for studying. People will prefer being subjected to 10 minutes of severe pain followed by 5 minutes of mild pain rather than only 10 minutes of severe pain, though a moment's thought tells us this is irrational. Many experiments show that people are dramatically overconfident about how much they know or how successful their efforts are likely to be. And in situations in which there is not frequent, unambiguous feedback, expert intuitions have a poor record of success.

So, true to his status as a professor, Kahneman wants to see more System 2 in our decisions. But System 2 takes effort, and our minds prefer to be lazy. And often the times we most need System 2 as a check are those when we least realize we need it because System 1's message is so unequivocal.

At the end of the book, Kahneman extends his analysis from the individual to the organization.

"Organizations are better than individuals when it comes to avoiding errors because they naturally think more slowly and have the power to impose orderly procedures.… Whatever else it produces, an organization is a factory that manufactures judgments and decisions. Every factory must have ways to ensure the quality of its products in the initial design, in fabrication and in final inspections."

Sounds like a topic for another book.

Posted on May 09, 2013 at 9:39 AM1 comments

GSA is saying what?

Stan Soloway, head of the Professional Services Council and about the most-enlightened government contracting trade association executive out there, wrote a column recently in Washington Technology (subscription required) discussing the widely watched GSA OASIS procurement, which will be a crucial GSA multiple-award vehicle for IT-related professional services.
 
Soloway is effusive in his praise for the pre-solicitation communication with industry about the content of the RFP. As he notes, in an environment where many inside the government are not taking advantage of the opportunity for the government to improve an RFP based on industry comments, this is good news.
 
But as he also notes, there is also something very disturbing about the draft RFP:  it states that past-performance information from government projects will be counted more heavily than information from work that contractors have done for private-sector customers.
 
This is really not a good idea.
 
One of the problems with the government's procurement system is that government-unique regulations create a barrier to commercial, predominantly private-sector oriented companies doing more business in the government marketplace. This is a problem because -- like any tariff barrier -- it creates a hothouse environment where competition is lower and insiders can gain business based on mastery of procurement rules more than satisfying their customers. And the commercial environment is one where performance is strongly prioritized, and failure to perform is punished more swiftly than in a government environment. It's good for the government to hire firms that are used to such an environment.
 
Some government folks feel more comfortable with government-unique contractors who know the government's environment better. But if I were in the government and wanted to put a premium on performance, I would want to be sure I had access to predominantly commercial firms. At a minimum, such firms should be in a multiple-award mix, to increase the range of options available to government customers.
 
GSA is arguing that it's easier to evaluate past performance on government business. I don't buy this -- if anything, the opposite may be true. The RFP should require bidders wishing to give commercial references to list their last five jobs over a certain dollar amount, and government people should just call references and briefly interview them. The information -- unfortunately -- might actually be better than much of the material in the government's past-performance databases.
 
The good news is that, with the consultation they are doing, the OASIS program still has time to rectify this mistake.

Posted on May 08, 2013 at 4:09 PM9 comments