Procurement

Better contracting through multisourcing

man graphs performance

The ongoing battles over federal government spending highlight the challenges faced by many federal workers, including those responsible for the acquisition of IT goods and services.

Government Accountability Office reports affirm the need for continual oversight and effective management of IT projects, but agency budget and staffing allocations are not rising to meet those oversight needs. Consider, for example, a GAO report released earlier this year that discussed the actions needed to protect government information systems and cyber critical infrastructures. The report recommends further definition of roles and responsibilities, milestones and performance measures — and greater oversight of strategy.

GAO reviews emphasize the critical factors of successful IT programs, which include knowledgeable program staff, effective communication, defined and accepted requirements, and stable, consistent staff.

In a perfect world, it would be easy. But federal workers must do their best in a decidedly imperfect world. Agencies must continually innovate while maintaining critical legacy systems, and they must plan for the long term while adapting to evolving priorities.

In the face of those challenges, agencies’ strategies for outsourcing IT services become very important. One promising approach is multisourcing, or the use of multiple providers of IT services instead of a single, large provider of a suite of services.

The single-source provider with a long-term contract has been a common model of federal IT services acquisition. Such contracts give agencies the benefit of having one contractor responsible for the provision of IT services over a period of time. The downside, though, is that agencies might have to be more proactive in requiring cost-saving initiatives and innovation from the contractor over the life of the contract.

Enter multisourcing, with its promise of innovation and increased opportunities for competition among multiple contractors. Multisourcing gives agencies the flexibility to select better-performing contractors, boosts the potential for competition and innovation, and saves money because agencies are not paying the margin of a large contractor managing many subcontractors.

Multisourcing does, however present some risks for agencies. Agency employees must manage and coordinate the activities of many contractors in a multisourcing environment. Unless responsibilities and roles are clearly defined, certain functions might be duplicated or overlooked. If performance is not up to par, disputes might arise over the cause, particularly where one contractor’s performance is dependent on another’s. And the time federal employees spend addressing issues might quickly erode any cost savings.

Multisourcing gives agencies the flexibility to select better-performing contractors, and boosts the potential for competition and innovation.

When you consider that some of the critical elements of successful multisourcing — defined roles and responsibilities, requirements and measurements, and close communication — are the same ones that are already difficult for agencies in single-source contracting, it becomes clear that officials must carefully plan for successful multisourcing.

One key tool is the use of operating level agreements (OLAs) in conjunction with contractual provisions and service-level agreements. Among other terms, an OLA might define the functions of the multisource contractors, ensure protection of their confidential information and intellectual property, and establish processes for coordinating deliverables. OLAs are an important preliminary step in multisource contracting to bind all the participating contractors to the same basic ground rules.

Like any acquisition strategy, multisource contracting only works if it fits the agency’s needs and environment. Multisourcing is well-suited to acquisitions in which:

  • The requirements and outcomes are well defined.
  • Agency personnel will stay relatively constant throughout the project.
  • Agency priorities and requirements are not likely to shift over the life of the project.
  • Operating procedures and platforms are standardized.
  • Selected contractors have proven expertise and experience in collaborative environments.

About the Author

Fern Ward is general counsel at IntelliDyne, where she oversees legal, ethics and compliance matters.

Who's Fed 100-worthy?

Nominations are now open for the 2015 Federal 100 awards. Get the details and submit your picks!

Featured

Reader comments

Mon, Dec 9, 2013 Peter G. Tuttle, CPCM

The notion that single-source providers with a long-term contracts can be held responsible for the provision of IT services over a period of time is pretty much misplaced. Most providers are savvy enough to proactively engage their Federal customers in “acceptance” activities throughout the entire contract period of performance, thus pushing any issue of fault back to the government….since they accepted what the contractor provided in the first place. In reality, the Feds gain nothing from “one belly button to push” type programs other than feeling that they have to expend less oversight & management labor….which is not always the case.

Fri, Dec 6, 2013 OccupyIT

“The downside, though, is that agencies might have to be more proactive in requiring cost-saving initiatives and innovation from the contractor over the life of the contract.” – How is this not possible with a single award? Because you don’t think about the future when writing it? It seems like the downside to multi-sourcing, as presented by the article, is that the recommended “OLA might define the functions of the multisource contractors, ensure protection of their confidential information and intellectual property, and establish processes for coordinating deliverables.” Do you not get that this extra layer of management and switching horses is a real performance risk and cost? Overall The important take away is that you want to encourage excellence of execution – not competition and innovation, per se (although that sounds sexier). Creative and relevant SLAs and contract provisions that encourage reinvestment of cost avoidance in mission execution can be layered on to ANY contract model, be it sole-source, single-award, multiple-award, or schedule buy. It is applicable to firm-fixed-price, cost reimbursement, labor-hour, whatever. There are some good points in this article – don’t leap to conclusions that they only apply to the new gimmick.

Fri, Dec 6, 2013 Good luck...

This sounds like another "great theoretical" concept. I can't imagine many doing it well and the government being lumped into that. There are WAY too many risks and that's why most organizations including the federal government pay someone to manage that if that means a larger contractor "with greater margins" or a consultant. It would be like if you bought a lot of land and acted as the general contractor to build a custom home with very little experience. Good luck!

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above