FDA said to choose speed when buying IT

Officials at the Food and Drug Administration's Center for Drug Evaluation and Research stressed speed and flexibility when buying technology, but lacked clearly defined requirements, according to a report released today.

Officials entered risky contracts, known as time-and-materials contracts, which pay a company based on labor hours and reimburses them for materials, the Health and Human Services Department’s inspector general wrote in the report. That type of contract doesn’t give a company incentive to control costs, the report added.

In streamlining its purchases, the center used the General Services Administration’s Federal Supply Service contracts or governmentwide acquisition contracts for 27 of 28 information technology purchases from fiscal 2004 to 2007. These types of contract vehicles limited competition for the center’s work, the report stated.

The center “acquired IT services primarily through flexible acquisition methods and time-and-material contract actions that reduce the agency’s administrative burden but increase the risk for the government,” the report stated.

As for its planning, officials at the center used broad language in their work statements to describe IT and services they intended to buy.

The IG wrote that agencies must lay out acquisition plans and clearly define what they are buying in a statement of work. They also must choose an appropriate type of contract, which doesn't heap the risk on the agency. The Food and Drug Administration intends to begin identifying and defining IT requirements early in the process of developing a new system, wrote Susan Winckler, FDA chief of staff, in a letter to the IG.

The IG also recommended that the center convert its time-and-material contracts to contracts with fixed prices. Fixed-price contracts “would reduce the financial risk borne by the government and may allow FDA to obtain the same services at a reduced cost,” the report states. Winckler agreed to change contract types when appropriate.

The center also should use quality assurance plans to check a contractor’s work and give contractors performance incentives, which would tie the company’s profits to specific performance standards, the report recommended.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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Reader comments

Wed, Jun 5, 2013 Jack

The IG should be careful regarding what it's recommending. Firm Fixed Price contracts do not always eliminate the risk or administrative overhead to the government. In fact it can greatly increase both. Lets take a general support system like a network. Under time and materials I am paying for bodies to maintain the network through a series of tasks. If I wrote the SOW correctly they will need to report each hour spent on a project or activity. If they can't when the invoice comes the COR doesn't authorize the payment. Money is saved. The converse of this is the firm fixed price contract. The contract states the contractor will keep the network up 99% of the time. The contractor hires half the staff the at half the quality and skill government thinks should be there but the government can't do anything about it because it's a FFP and the contractor simply has to meet the SLA. In fact as long as the SLA is met the contractor technically doesn't have to hire anyone. Now the government is obligated to pay the monthly FFP contract at full price every month unless the GOVERNMENT can PROVE the contractor (without any interference from the government) didn't meet an SLA. So lets say the network is at 90% uptime for the month... the government says "well we are not going to pay you 20% for this month (or whatever the penalty is.) The contractor responds with "but how were you measuring us? our measurements show us at 99% up time? Ohhhhhh you were measuring with application accessibility? Well we measure using ping because we are not responsible for the apps so unless you can prove definitively the network was down you should pay us. Thus the burden of proof is now on government instead of the contractor to prove work didn't get done. Less administrative overhead? I think not, better savings and performance? I think not as you will have to pay them the full amount by default. FFP has it's place, like for widgets, computers, and highly certain and definable functions. For professional services in a changing environment you are better off with a good COR and T&M.

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