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By Steve Kelman

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What needs to be fixed in the FAR?

steve kelman

Steve Kelman argues that agencies often overpay for web design that could be handled better, and more cheaply, by smaller firms.

A recent FCW story by Mark Rockwell, "Teaching feds not to fear the FAR," has gotten a fair amount of attention in the Twittersphere and is definitely worth reading. It discusses a number of efforts underway -- including a “Buyer’s Club” led by Health and Human Services Chief Technology Officer Bryan Sivak and a TechFAR document being prepared at the Office of Federal Procurement Policy under the leadership of the indefatigable Mathew Blum -- to lower the fear factor in the government IT community around the Federal Acquisition Regulation (FAR) and to emphasize flexibilities available in the regs.

These are very good efforts that deserve support. Many new and exciting procurement techniques, such as contests and crowdsourcing, are -- as those quoted in Rockwell’s article note -- already permitted by the FAR. The government can access some crowdsourcing websites for less than $3,000, which means services there can be purchased without further ado using a government credit card.

We do, however, need to ask ourselves whether there are important areas of IT contracting where the FAR actually is a genuine impediment, as opposed merely to a vague source of fear.

I have two nominations, involving very different kinds of IT procurement – purchasing web design and stand-alone web app services from new, innovative firms, and then contracting for agile development. I’d like to get a dialogue going about whether these are genuine obstacles, and whether there are others that should be added to the list.

My guess is that agencies frequently dramatically overpay for mediocre web design and web app development work done by large, traditional government IT contractors. There are oodles of small startup firms out there that should be doing this work. In terms of the actual procurement process, simplified procedures for commercial-item buys up to $1.5 million should make the process relatively simple. The problem, I suspect, lies in the various “socioeconomic” contract clauses, many of which even apply to work under $100,000, that frighten small companies.

If I’m right, this is costing government and taxpayers a lot of money for benefits that are minute at best. Do these garage startups really need affirmative action plans that go beyond those applying to companies in general?

Here, though, statutory change is needed. I would propose eliminating all such clauses (as we currently do with purchases under $3,000) for contracts or task orders with small businesses that have had five or fewer government contracts.

The problem with agile is different, and centers on the bureaucratic nature of the government’s past performance system. Agile development, with its very general requirements for individual short spurts, works well in the commercial world because private-sector customers can easily and quickly stop giving work to vendors who screw up on one too many iterative "sprints." Federal agencies are not allowed to be nearly so nimble in changing or curtailing a contract.

Here my suggestion is that agencies work to obtain, either for an individual contract or for all agency software contracts using agile for a set period of time, a deviation from FAR past performance documentation requirements. We could then test what happens when the customer can stop giving orders to a poorly performing vendor with only a moderate explanation of why. Even better, Congress could pass a test program authorizing such experiments for all agile contracts for three to five years.

Posted by Steve Kelman on Jul 17, 2014 at 12:44 PM


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Reader comments

Sat, Aug 9, 2014 Trail Boss

While I was at the INS we did a variation of the agile approach. We took a single government form that needed to be automated, and wrote a small fixed priced solicitation for it, with a period of performance of only about 90 days, and sent it out to 3 small businesses. The award was based on best value, and the value of the orders was roughly $100K each time, if memory serves me correctly. We did this approach 3 times. Our experience was very successful, although we did find that the contractor was very successful in developing their program quickly, testing it was another story. The other problem was time - it took three people, including myself, to be dedicated to this approach for about two weeks on the front and back end. A lot of government effort for every $100K order.

Fri, Jul 18, 2014 Jon Johnson

Steve, As often as I have heard the call to change FAR you are the very first person to actually propose some changes. I hear this request most often from people who don't know the FAR, or acquisitions for that matter, so they never had any constructive recommendations. This is the first intelligent and thoughtful approach that I have heard to date. Kudos to you sir! And thank you for once again taking the lead.

Fri, Jul 18, 2014 Stephen Gordon United States

Steve, thank you for another excellent blog. I personally would love to see a pilot program of the type you suggest in your comment conducted. Perhaps a state or two and a large local government or two could do the same. The problem is not limited to the federal government by any means.

Fri, Jul 18, 2014 Michael Sade

Excellent points raised by all. I agree there is little change required in terms of process. I would suggest that particular focus should be on making the right selection. In my experience we do not spend enough time during preaward understanding what we are buying. Too often I have seen procurement plans that do not accomodatetime for negotiations/discussions. A particular FAR change that could facilitate this is to eliminate the clause allowing award without discussions.

Fri, Jul 18, 2014 Trey Hodgkins

Good morning Dr. Kelman. All good thoughts and the FAR (particularly the statutory underpinnings and their continued worthiness) is certainly worthy of examination and review, but I would suggest other external factors play as large a role in the effective use of the authorities the FAR provides. For example, we've moved quite a ways from the starting point on commercial items and the underlying fair and reasonable pricing tenets you and others implemented through means like the FAR. Many companies offering commercial item goods and services are finding it increasingly harder to justify entering or remaining in the public sector market when they see that the government requires them to modify their offerings with little or no latitude to recoup the expenses associated with those deviations. This is especially true when the evaluation process is driven by the search for lowest price. Kym is correct, consistent agency leadership would be beneficial to help change attitudes and cultures on these and other practices. If we can agree, and I do, that other non-acquisition objectives imposed through contracts may have a detrimental effect on getting best value for the taxpayer, then perhaps we should think about examining those for all acquisitions. It doesn't really move the needle if we focus such considerations on the lowest contract values. Perhaps we can find new ways to achieve the same objectives, instead of just chasing quotas. Another item you identified is agile development. It should be used more, but one of the institutional challenges is that the Congress still appropriates for waterfall development models and has struggled making changes for fear of losing oversight of those dollars. While I support a review of the FAR, I believe we would be better served to focus on these and other environmental impediments that, if corrected, could unlock the potential of the FAR and restore the flexibility and discretion of the workforce more fully. These won't be easy changes and there is no silver bullet - legislative or administrative - but the status quo cannot be sustained.

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