Creating an infrastructure for procurement innovation at DHS
Steve Kelman checks in on the Department of Homeland Security's Procurement Innovation Lab, and finds valuable lessons for other agencies.
Setting up the Department of Homeland Security's Procurement Innovation Lab was one of the first things Soraya Correa did after becoming DHS chief procurement officer in 2015. It originally had one half of one full-time employee, and the lab reported to her. Polly Hall, the PIL's current director, came to the lab in 2017 from having worked as a contracting officer on a Transportation Security Administration procurement where she had been trying to think about new techniques for doing advisory downselects. Since then the PIL has grown to a full-time staff of six, and most DHS components also have an acquisition innovation advisor (not a full-time position) who acts as a sort of local representative for what the PIL and Correa were trying to do.
With the PIL’s own staff and the acquisition innovation advisors in the components, DHS arguably has established more of an ongoing innovation capacity than any other federal agency. Correa and her colleagues are institutionalizing innovation, something we rarely see in the government.
The PIL’s operating principle is not to force itself on DHS contracting people. It is not a tiger team that swoops in and takes over a procurement. PIL staffers come in only when asked by the people doing the procurement – both program and contracting people. They provide advice to the frontline folks, and those employees then do the work. For projects being supported, staff from the PIL meet with their contracting customers every other week for 15 minutes until the contract or task order is awarded.
Last year, the PIL assisted with 38 DHS procurements. Those assisting on individual procurements, including the innovation associates in the components, are trained in being an innovation coach. (The PIL has persuaded the Office of Personnel Management to accept a contracting officer innovation coach as a position description.)
The basic idea that guides the PIL team's work are the “core guiding principles” of Part 1 of the Federal Acquisition Regulation. At the very front of their “boot camp” guide, they reproduce and highlight key text from Part 1, which established the principle for contracting operations of customer satisfaction in terms of timeliness and mission support, and that stated that if a procurement practice was not prohibited by statute or regulation and was in the interests of the government, it was allowed.
Two of the major procurement techniques the PIL has been promoting are two-stage downselects in competitive procurements and oral presentations as part of source selection. Both of these techniques actually first appeared long before the PIL during the procurement reform movement of the 1990s. I was very involved with both as administrator of the Office of Federal Procurement Policy at the time, and thus know how they came into being. So in some sense the PIL has been going back to the future.
One of the two main innovation ideas is to use “advisory downselects” to give offerors information prior to a full-blown proposal about whether they are likely to be competitive for award, to encourage them to decide not to make a full proposal. This originally began in the 1990s and was an important provision of the rewrite of Part 15 of the Federal Acquisition Regulation dealing with source selection.
At the time, it was one of the most controversial provisions of the rewrite, because procurement traditionalists didn’t want to impinge on the right established in the Competition in Contracting Act for any company to submit a bid and have it evaluated. However, I and others felt that the proliferation of proposals beyond reasonable numbers was unnecessarily slowing down the process and wasting government time. This provision, after much controversy, made it into the 1997 FAR Part 15 rewrite – but then, although it was in the regs, it very seldom got used by agencies. One big problem was that material submitted in the first step played no role in influencing the final award. So even when it was used, as in the DHS FLASH procurement that used a downselect, most bidders continued to bid in stage two despite the agency's advice, because the amount of work at stake was so large – so DHS had an enormous number of bidders going through the whole process.
One lesson from the FLASH problems was that DHS introduced its own downselect language in its FAR supplement rather than relying on the FAR’s own language. Under the new DHS language, factors about which bidders wrote in stage l are evaluated and incorporated into source selection on the final contract. This made bidders take the first stage more seriously. DHS downselects have become the most commonly used PIL technique.
A second popular PIL technique is the increased reliance on oral presentations.
The basic idea of such presentations was to have company representatives speak in front of the contracting team rather than communicate only on paper. Oral presentations were first developed around the mid-1990s by frontline procurement professionals at the Department of Transportation. I loved the idea from the beginning and promoted it in speeches and elsewhere. In my mind, it was an early version of “do, don’t say,” to use a contemporary phrase. I wanted oral presentations to be attended by the key personnel for the industry team. And I wanted as a central feature for the government personnel to ask the industry oral questions, whether prepared in advance or reacting in real time to what the industry presenters said. I wanted the government people to see how industry people thought on their feet and how knowledgeable they appeared. The FAR language that was developed in the late 1990s allowed evaluation of oral presentations to be part of source selection decisions.
However, oral presentations quickly diverged quite radically from my original intention. Very soon they became highly scripted, well-rehearsed shows typically not by key personnel but by those in the company with the best acting skills or speaking voices. The slides were dazzling. But there was no back and forth. The PIL has tried to bring conversations, questions and back and forth back into oral presentations. There has been pushback from DHS lawyers about using material from oral presentations if the agency had no transcript of the conversations. Zoom, which allows recording of sessions, will hopefully have solved this problem, and we should be seeing more back and forth in future procurements.
The PIL has also been promoting a technique for making proposal evaluation faster, less resource-intensive, and better -- what team members call on-the-spot proposal evaluation. Previously, the tradition had been for each evaluator to evaluate a proposal, write down the evaluation, and go on to the next one. Only at the end did the evaluators go back to all of their reports and try to put them together into a consensus document. By this time a lot of paper had piled up, and the individual evaluations were often not fresh in the minds of evaluators. Typically there was insufficient time to go through all the individual evaluations carefully enough, so there were inconsistencies remaining across the evaluations. What the PIL has recommended instead is for the team to talk together immediately after the evaluators have evaluated a proposal and come up with a consensus evaluation for all the evaluators. The evaluators thus have quality time to meet together to talk about each proposal as a team.
The PIL has added other new techniques to its workbook over time. The most recent is discovery, which is an opportunity for bidders who have survived a downselect to spend a day or two before finishing their proposals to ask the government questions about the procurement. The idea is that this will produce better proposals.
One of the main features of Correa’s approach to innovation is not to cover up failure. If projects are successful, the PIL seeks to share the successes; if a new technique doesn’t work, PIL “acknowledges the failure as a true measure of progress and learning.” A prime example of this was the FLASH procurement, which I wrote about at the time.
As an innovation infrastructure, the lab has produced a menu of somewhat-standardized techniques that are available for components to apply to individual procurements, rather than one-off changes that are developed once and perhaps never used again. These appear in the lab’s “boot camp” workbook.
Between 2017 and 2020 the percentage of contracting staff who believed there was support for procurement innovation in DHS increased from 43% to 59%. Slowly but surely, they Correa and her colleagues are making progress. I think they have lessons to teach other agencies working on procurement innovation.
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