Remembering just how bad the bad old days were
- By Steve Kelman
- Nov 14, 1999
I am not someone who normally gets into chats on airplanes. I surround myself with a pen, a pile of books and magazines, and a notepad (no, I don't bring a laptop), sending the silent signal, "Don't even think about striking up a conversation with me."
On a recent flight, however, my interest was piqued when I glimpsed the celluloid pocket notepad holder of the woman sitting next to me. In the holder were business cards from Ericsson, a leading supplier of mobile phone and telecommunications equipment to the commercial marketplace. My interest had nothing to do with cellular phones or telecom gear. Instead, I have a long-standing interest in Sweden dating from when I was there on a Fulbright scholarship many years ago, and I was curious to learn more about how the company was doing. Ericsson has had some problems, including turmoil at the top. So I struck up a conversation.
I learned that my seatmate, Jane Stanley, a marketing manager for the Ericsson private radio systems division, worked from 1991 until the beginning of this year in federal government sales for her company. Without mentioning anything about my previous position in the government, I inquired whether there had been any changes in the last few years in Ericsson's ability to sell to the government. She began talking with increasing enthusiasm about the new federal buying environment for high-tech commercial companies and the benefits for her company and taxpayers.
Her division sells mobile radios and transmission equipment to commercial companies that have dispersed workers who need to be in touch with each other or with a home base. Police and fire departments and the military services also are big users of field radios.
However, until the early 1990s, the military services bought such equipment off military specifications, or milspecs, that could not be met, even with modifications, by commercial producers. Furthermore, the Defense Department required contractors to submit cost and accounting information, even though the equipment was being bought competitively at fixed prices. The agency also required vendors to comply with special quality-assurance standards different from those in the commercial marketplace.
As such, Ericsson did not bid for government mobile radio work. "The way they bought, competition was limited to traditional defense contractors," Stanley said.
The Army began to breach the milspec wall in 1991, before procurement reform, when the Training and Doctrine Command bought commercial radios for training. That's how Stanley got involved in the federal marketplace—Ericsson successfully bid on that contract.
However, in those days the Army still demanded cost data, although this was a non-sole-source buy for commercial items; Ericsson was able to accept the contract only when it received a waiver for cost data and other government-unique requirements it was unable to meet.
But, Stanley said, it was only with then-Defense Secretary William Perry's memo on specs and standards, issued at the beginning of acquisition reform in 1993, that a complete buying change really took hold at DOD. That memo, which announced a radical policy shift toward a preference for commercial items, was so important to Stanley that years later she still had phrases from it committed to memory.
One of the big early successes Ericsson had with the military after the Perry memo was a sale of land mobile communication system flight deck radios to the Navy in 1994. Previously, the Navy had bought milspec radios from a defense contractor. This time, they looked for modified commercial off-the-shelf technology, although ruggedized in terms of packaging, protected against electromagnetic surge and adapted to low-power requirements. Ericsson could make some simple modifications to its COTS product to meet those special requirements, Stanley said. It also developed an interface between the radio and a sailor's headgear.
The milspec radios the Navy had been buying, produced specially for the government, cost $14,000 each. Ericsson's modified COTS product costs $2,500. Navy stats show the COTS product has fewer breakdowns than the old radio, and when repairs are needed, parts are available because supplies are tied to the demand of the marketplace, not just the Navy.
When they did the 1994 buy, which also was competitive, the Navy asked for no cost data or other special government requirements. "I don't recall the last contract we bid on where the government asked for any of that," Stanley said. "It's pretty much all gone now."
Has acquisition reform had a positive impact for agency missions and taxpayers? Stories such as Stanley's—how quickly we might otherwise forget—remind us that the "bad old days" really were pretty nonsensical.
Stanley has left federal sales but wishes she were back. "Lots of people have these prejudices about selling to the government," she said. "But I worked with some great people, and I really enjoyed it. I try to tell the people I work with that their prejudices about how the government buys aren't true anymore."
--Kelman was 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.