Moving the feds from difficult buyer to smart buyer
- By Steve Kelman
- Jun 20, 1999
Traditionally, the federal government has been a difficult buyer. By a difficult buyer I mean one that imposes lots of extra costs and risks of doing business on vendors. Extra costs have included those arising from unique contract clauses, such as Buy American, or government-unique specifications, high bid/proposal costs, and costs and risks arising from government audits and oversight.
At the same time, the government traditionally has not been a demanding buyer. By a demanding buyer I mean one that is serious about vendor performance and that expects a level of customer service and care consistent with its status as a large-volume buyer. The government often accepted a "good enough for government work" standard, failed to place or enforce strict performance requirements on vendors and put up with the kind of contempt for the customer epitomized by the old bid protest culture.
Being a difficult but undemanding buyer is exactly the wrong thing for the government to be. The goal should be the opposite: The government should be easy to do business with but demanding in its expectations.
There are signs that the government is becoming less difficult and more demanding. Many of the procurement reforms of the past few years have sought to make it easier to do business with the government. The days of proposals brought in by forklift trucks are gone. Audits and cost or pricing data requests are clearly down, though not as much as industry wants. Government specifications for IT hardware are a thing of the past. And the burden of special clauses has been pared back, although not dramatically. Clearly, the government is a less difficult customer than in the past.
An article I saw recently got me thinking about how the government is becoming a more demanding customer as well. The article talked about how the Air Force Standard Systems Group (SSG) in Montgomery, Ala., had arranged - as part of an Air Force-wide deal for 65,000 site licenses for an Oracle Corp. database product - to get two resident Oracle technicians on site at SSG. The technicians came at no additional cost to deal with customer issues full time.
In the late 1980s, when I did research on IT procurement in government and industry, I learned that it was routine in Corporate America for IT hardware and software vendors to pamper their large customers with on-site technical and engineering personnel so that they would be around to deal with customer problems. The practice was essentially unknown in government.
If there is a federal hardware buying organization that has come to epitomize the concept of a demanding customer, it's SSG. So I called Col. Glenn Taylor at SSG to ask him what kind of treatment SSG is looking for from its major vendors these days. First, Taylor told me that the kind of agreement SSG negotiated with Oracle, with dedicated on-site personnel at no extra charge, is standard for its large deals, although it wasn't in the past.
Then he told me another example of a recent situation where SSG demanded, and received, world-class customer service. A reseller was delivering PCs under a major SSG contract. A large Air Force customer had bought a batch of boxes and was experiencing a high rate of hard drive failures because of problems in a production run. The contractual warranty provided that customers call when they experienced a failure and return the box for replacement.
However, the customer wasn't satisfied with the warranty provisions, given the high failure rate. So the reseller, under the contract, offered to deliver 300 hard drives to the customer's site in case other hard drives failed. Nice first move. At this point, though, SSG asked, "Can you do anything more for us?" Then the manufacturer, Micron Government Computer Systems Inc., got involved. It agreed to send technicians to the customer site and simply take the drives the reseller had delivered and install them on the batch of computers, including downloading user data into the new drives.
I asked Taylor about the reasons for the changes. "First, we've recognized we need strong vendor partners and therefore decided to do business only with world-class providers. Second, we've come to understand what kind of leverage we have - something we didn't always realize in the past." And, he added, vendors know that SSG is serious about past performance during source selection.
Taylor noted that SSG conducts aggressive market research to learn about the contract terms and conditions that large commercial customers receive to help guide its own negotiations with vendors. That's good advice to other agencies.
But the most important advice to other agencies involves attitude. Doris Kearns Goodwin, in her book No Ordinary Time, notes that the expression "good enough for government work" originally was a compliment designed to note that something was of high enough quality to satisfy the government. We need to return to that original meaning, not just in the hardware and commercial off-the-shelf software arena but in IT services and systems development as well.
--Kelman was the administrator of the Office of Federal Procurement Policy from 1993 to 1997. He is now Weatherhead Professor of Public Management at Harvard's Kennedy School of Government.