Experts nitpick SARA panel proposals

Report elicits criticism of panel's view of procurement practices

SARA panel report (.pdf)

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The draft report of the Acquisition Advisory Panel, released in December, is drawing mixed reviews from the federal contracting community. 

No one knows yet whether the recommendations will produce procurement changes. The panel — created by the Services Acquisition Reform Act of 2003 and often called the SARA panel — will release a final version of the report by Jan. 20. 

Stan Soloway, president of the Professional Services Council, said he worries that policy-makers will cherry-pick a few appealing recommendations and miss the broad picture of federal services contracting. Trying to approach overarching issues point-by-point hasn’t worked, he added.

The report begins with a chapter on commercial practices, a topic that the panel returns to in later chapters. It addresses the role of small firms, the ethical rules that should govern contractor employees in blended workforces, the size of the acquisition workforce and improvements in the quality of publicly available procurement data.

Soloway said the panel did not seem to fully understand the distinction between products and services, a concern that the council developed as the SARA panel met and discussed procurement issues. The panel also blurred the line between defining commercial services and procuring them, he said.

Phil Kiviat, a partner at Guerra Kiviat, said the SARA panel overlooked the need for a new governance model to provide a basis for managing services contracts. For example, he cited the recommendation to use performance-based contracts as much as possible.

“For a performance-based contract where it’s agreed that needs change over time, what you really need is a new way of managing,” Kiviat said. In such a contract, “there is now a shared risk between the government and industry, and there are incentives and possibly disincentives on both sides. When you have shared risk and shared incentives, there may be ambiguities in what the needs are as things change. What you need to do is not look at specific things. You have to think about the whole process of managing.”

Performance-based contracting
The panel’s underlying assumption, shared by most procurement experts, is that service contracts should be performance-based as often as possible. Although it runs counter to the instincts of many in government, the approach allows industry to provide creative solutions and ties its compensation to the success of a project. The panel concluded, however, that although agencies often intend to award performance-based contracts, they find it hard to shake the older mentality of dictating to contractors specific steps and technologies.

“It’s a very different way of thinking,” said Carole Dunn, president and principal consultant at Red Team Consulting. Looking ahead to end results is harder than giving upfront direction. Nonetheless, she said, the culture must shift.

The panel found that in many cases, contracts billed as performance-based have only a veneer of performance metrics on top of traditional detailed statements of work.

Small business
The panel’s efforts to identify effective incentives and acquisition practices to aid small-business contracting were generally well-received, but several industry experts questioned some of its assessments and recommendations.

“The best intentions are there,” said Dan Young, a former IT executive and a member of several corporate boards. “I’m concerned that it’s the unintended consequences that are going to impact the small businesses.”

Young said that based on what he had seen, the proposed recommendations express concern for small businesses but do little to correct some long-standing problems related to their growth. Small businesses benefit from incentives and mandates that encourage agencies to hire them, but once they outgrow the small size, they suddenly become midsize firms that are no longer eligible for the benefits but are far too small to compete with truly large companies.

“A medium-sized business is the worst place to be in this market,” Young said. The panel’s findings and recommendations, he said, do little to address that situation. 

Jim Moody, CEO of Veterans Enterprise Technology Solutions, a service-disabled veteran-owned small business, was critical of the lack of depth in the small-business section. He said government leaders “need to step out of the box, work with the business community to implement new, innovative ideas for the acquisition process, and make it easier, cheaper and less time-consuming for small businesses to win contracts.”

The acquisition workforce
The panel found that assessing the federal acquisition workforce is harder than it sounds, largely because agencies have no consistent definition or method for counting their numbers. Its first workforce recommendation is for OFPP to remedy that situation by creating a definition to apply governmentwide.

Kiviat said that was a good idea. “You have too small a workforce,” he said. “Nobody really knows much about it. Everybody suspects various things but doesn’t really know them.”

Kiviat was not as pleased, however, with another acquisition workforce recommendation: That OFPP convene a panel to conduct a 12-month study on whether there is a need for a governmentwide federal acquisition university, or to find other alternatives, to provide training.

“This is government at its worst,” he said. “‘Let’s have a 12-month study.’ Not a study, but a 12-month study.” What that really means, he added, is delay and inaction.

The panel, however, said such a study group would be able to evaluate whether the existing Federal Acquisition Institute and Defense Acquisition University duplicate functions — in which case a single federal organization might be better — or provide a needed distinction between the civilian and defense sides of government.

Ethical rules in a blended workplace
The ethical questions that surround the proper relationship of contractors and agencies have arisen partially because the lines between governmental and commercial functions have blurred in recent years, the panel found. Although adequate ethics rules are in place to govern the behavior of agency employees, the panel recommended further study regarding whether contractor employees should be trained to comply with the same rules.

“They have identified long-standing issues,” said Cathy Garman, senior vice president of public policy at the Contract Services Association. “And some of the recommendations —better [ethics] enforcement, better training — I would say it’s almost like a common-sense chapter and common-sense recommendations.”
Defining the problemHere are some of the findings the Acquisition Advisory Panel offered in its draft final report.

  • Defining requirements is a critical factor in achieving the benefits of competition, but agencies often do it poorly.
  • Agencies remain uncertain about when to use performance-based contracts.
  • The Federal Procurement Data System-Next Generation has insufficient, and possibly misleading, information about the use and success of performance-based contracts.
  • The federal acquisition workforce faces larger and more complex acquisition problems than in the past.
Source: Acquisition Advisory Panel

SARA timelineThe Acquisition Advisory Panel, created by Rep. Tom Davis (R-Va.) through the Services Acquisition Reform Act, crafted a 448-page final draft report on federal acquisition policies. The panel issued a final draft report Dec. 22. Public comment on the report ended Jan. 5.

What comes next:

  • The panel will take a week to review the comments and incorporate them, if necessary, into the report. The panel plans to have the final report to the
  • Government Printing Office by Jan. 20.
  • By the end of January, the report will go to the House and Senate Armed Services committees, House Government Reform Committee, Senate Homeland Security and Governmental Affairs Committee, and Paul Denett, administrator of the Office of Management and Budget’s Office of Federal Procurement Policy.
  • After OMB receives the report, various interagency working groups will examine the recommendations. The analyses could take several months. The report will also be available to the public in an electronic format.
  • The future of the report’s recommendations depends on what officials want to do. Marcia Madsen, chairwoman of the advisory panel of 13 government contracting experts and attorneys, said the report is simply an advisory tool.
— Matthew Weigelt

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