Wagner: Lessons from the past

The old process was focused on fairness and competition, but it helped neither

My first exposure to procurement 20 years ago was a good lesson in how not to handle it. The procurement process often took so long that the technology that agencies finally acquired was outdated by the time the contract was awarded. An agency’s first act after award was to process change orders — so much for those carefully negotiated prices.

The process was so painful that the standard joke on the length of the contract was that it had to be longer than the contracting official’s time to retirement.

Much of that process was supposed to support fairness and competition. It did neither. We made competition harder and expensive, and therefore we got less of it. We built a web of complex procedures that meant procedural expertise was more important than program expertise. We raised the cost of procedural mistakes, so when they happened we paid a lot. We made it harder for new companies to compete for government business because they had to become specialists in those procedures. We didn’t help the process become efficient or transparent.

I once faced the threat of a protest from the incumbent contractor if we did not relax a requirement that favored the competition. A replacement system would be cheaper, but litigation would have taken three months. The incumbent was getting $600,000 a month, so a three-month delay was $1.8 million. We relaxed the requirement to save the costs of delay.

We were trapped in an expensive and overly complex process. We had to be careful to document every step to ensure the inevitable protest would not find one step that had been skipped or could be painted in nefarious terms. We had to prepare the technical experts for an unpleasant cross examination. A minor mistake could cause a delay and more costs.

That experience has lessons for current policy-makers. First, keep contract switching costs low. The harder it is to replace an incumbent or try something new, the less competition you will get. One of the great successes of acquisition reform was that it made competition cheaper with vehicles such as the multiple award schedules. Our new joke was that the ability to walk away from a contract meant we didn’t have to.

Second, watch out for process prescriptions. Too much process takes attention from program results and creates yet another barrier to commercial competitors that have not specialized in federal contracting.

Finally, concentrate on the people and the tools. Our best acquisition employees are underpaid, pilloried for any real or perceived lapse and face an ever-increasing workload. We depend on their sense of duty and count on the fact that those who have more than about 24 years of experience are locked in by the retirement system. In a few years, we will be left with only duty.

Let’s concentrate on our people and the systems that support them. Under the new federal retirement system, anyone with less than 24 years can walk. Let’s make them not want to.

Wagner was acting commissioner of the General Services Administration’s Federal Acquisition Service. He recently retired after more than 30 years in government and joined the IBM Center for the Business of Government.

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