Making business sense
- By Steve Kelman
- Apr 03, 2000
Deidre Lee, who will be leaving her post as administrator of the Office
of Federal Procurement Policy in June to become director of Defense procurement,
has long believed that contracting professionals need to rethink the role
they play in the interaction between government and vendors.
Contracting folks have traditionally seen themselves as people who know
more about regulations than anybody else. For good reason, this is not a
"skill" that has always been particularly highly valued by information technology
or program folks. Lee has argued strongly that procurement people need to
start seeing themselves as the government's business advisers.
What contracting officials should know better than anybody else, according
to Lee, is how to establish, structure and administer a business relationship
with contractors that secures a good deal which means excellent performance
at reasonable prices while treating vendors fairly.
What does being the government's business advisor mean in practice? A recent
conversation with Ed Elgart, who heads contracting at the Army's Communications
and Electronics Command at Fort Monmouth, N.J., provides a good illustration.
Cecom buys, among other things, night-vision equipment for soldiers.
Since around 1990, Cecom has been using best-value contracting to buy the equipment.
The ongoing competition, and the best-value approach, means that equipment
the Army gets today lasts longer, works better and uses less power. Each
night-vision tube fits whatever equipment soldiers use, whether they're
infantry or aviators, which produces big logistics savings.
These days, that's pretty much garden-variety good government contracting.
But I was more impressed by another idea Elgart shared with me. Night-vision
equipment is sold commercially, but the Army does not allow the latest generation
of equipment to be sold commercially to keep it out of the hands of U.S.
The Army's old night-vision equipment was typically sold on the market
for pennies on the dollar. But Cecom now requires contractors to include
in their bid how much they would spend to buy back the old equipment. On
a piece of equipment that sells new for $2,000, the Army now gets a $1,000
credit for the trade-ins.
Elgart's story illustrates what Lee means by contracting people serving
as business advisers. It comes down to using your noodle. Every procurement
person in government should think about what they buy and work hard to come
up with one new idea like Cecom's equipment trade-in that makes business
sense for their program. That will add up to lots of further improvements
in government contracting.
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. He can be reached at [email protected].