Kelman: Buying commercial

The debates about commercial contracting and government risk involve high stakes

Two presentations at a recent acquisition research conference at the Naval Postgraduate School in Monterey, Calif., reminded me of what is at stake in recent efforts to revert to the government procurement regime of the 1980s.

It is easy to forget the situation back then, when the government routinely demanded that contractors provide cost data for commercial items, not just those developed for the government.

In the 1990s, the government moved away from requesting cost data when buying commercial technology to encourage vendors, particularly information technology companies, to sell modified or cutting-edge items to the government. Typically, companies are not willing to do that if they are required to provide cost data that is proprietary or, in many cases, not available in the form that the government demands.

Speaking in Monterey, Pierre Chao of the Center for Strategic and International Studies contrasted the Defense Department’s need for traditional weapons that require long lead times and involve considerable development work with newer needs for rapidly deployable small-scale technologies to fight terrorism and other asymmetric threats. To a much greater degree than traditional weapons functions, such capabilities are based on applying, modifying and integrating commercial technology. Any procurement regime that makes acquisition of such technology more difficult hampers our ability to develop quick responses to today’s threats.

Marine Corps Lt. Col. Larry Ryder gave a fascinating presentation on the Joint High-Speed Vessel for troop transport. The ship is a modified fast commercial ferry. DOD chose to adopt that inexpensive, sensible vessel in 2001, when it was looking for opportunities to use commercial solutions. But changes in the procurement climate since then have nudged DOD back to a more traditional approach, which features delays and increased costs.

That backsliding has raised concerns among program customers. Ryder criticized the “lack of acceptance of commercial solutions and best commercial practices.”

Like any big change, DOD’s push for greater use of commercial technology was not perfect. The Air Force should never have classified the C-130J fighter as a commercial item. A few sole-source, spare-parts vendors took advantage of DOD. On occasion, commercial technology did not work as well as hoped. But if change is prohibited unless it is error-free, there will never be change.

An intelligent approach is to learn from failures. An example of sensible change is DOD’s proposal to allow contracting officers to receive certified cost data for sole-source buys if there is no other way to establish that prices are reasonable.

Unfortunately, not everyone embraces the idea of building on successes and learning from mistakes. Dinosaur Age Exhibit 1 is self-styled watchdog the Project on Government Oversight, which has advocated repealing the Federal Acquisition Streamlining Act and the revival of the cost-data-for-everything world of the 1980s. Such an approach, straight from the hoary days of the earliest PCs, would cut the government off from many of the benefits of the Information Age. That is what’s at stake in the current debates.

Kelman is professor of public management at Harvard University’s Kennedy School of Government and former administrator of the Office of Federal Procurement Policy. He can be reached at steve_kelman@harvard.edu.

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