Kelman: Show off share-in-savings
- By Steve Kelman
- Dec 12, 2004
here is nothing the information technology procurement world needs more right now than a nice dose of innovative business practices to help agencies better meet their missions.
With headlines focusing on procurement abuse, it is important to remember that the ultimate goal of the procurement system is to accomplish good things, not only to avoid doing bad things. What would one say about the overall record of accomplishment of a police department if officials said authorities had avoided violating civil rights but had never solved a crime? Or a litigator who had never violated a canon of professional ethics but never won a case?
At a time when the media encourages us to only pay attention to avoiding bad things, we need the balance that comes from evidence we are still paying attention to doing good things.
This is why getting examples of share-in-savings contracting up and running is particularly important. Share-in-savings is one of the most attractive innovations in procurement right now. In share-in-savings contracts, vendors get paid in proportion to the value of savings their efforts generate. Share-in-savings provides the strongest possible incentive for good vendor performance. It is the opposite of paying vendors for just showing up.
Versions of share-in-savings are increasingly common in IT contracting in the commercial world. But the federal government supposedly isn't interested in share-in-savings especially in the current environment in which innovation has decreased in value. People frequently lament that they want someone else to be the first to try share-in-savings.
Guess what? There are applications for about 45 share-in-savings projects from more than 15 different agencies awaiting approval at the Office of Management and Budget. Another 10 are in the queue at the General Services Administration's share-in-savings program office. Officials are preparing to submit them to OMB, which must approve the pilots. Not all projects will be appropriate, but my guess is also that some are.
That's great news. It's a tribute to our career workforce, which, despite the nasty environment, is willing to try new approaches. Now, we need to support the career folks who have been willing to take that step.
OMB officials need to quickly review these requests. They don't need to approve each one, but they should be sympathetic rather than skeptical toward these experiments. Meanwhile, GSA specialists should provide help for the procurement process frequently described as "PhD-level contracting." Finally, members of organizations such as the Council for Excellence in Government should continue to support share-in-savings by providing kudos to successful contracts.
And given the delay in getting share-in-savings off the ground, Congress should extend the expanded share-in-savings authority in the E-Government Act for several additional years.
Kelman is a professor of public management at Harvard University's Kennedy School and former administrator of the Office of Federal Procurement Policy. He can be reached at [email protected]