A handbook on acquisition reforms

Experts offer recommendations to the Obama administration on three crucial topics in federal acquisition

No one can blame the policy wonks in the Obama administration for not diving into the weeds of acquisition policy just yet.

In the past eight months, top officials have been dealing with the economic meltdown and have spent what little time they’ve had left over on a handful of high-profile, high-impact issues: workforce development, cost-plus contracting and insourcing, the idea of bringing contracted work back into the government fold.

But the economy will settle down eventually, and administration officials will then turn their attention to the more mundane aspects of running the government and spending billions of dollars each year on technology. When that happens, they will confront a number of issues awaiting resolution.

Experts say President Barack Obama’s acquisition team needs to get up-to-speed on three topics in particular: the General Services Administration’s schedule contracts, interagency contracting and small-business set-aside contracts.

Those issues are not likely to make headlines or generate much buzz in the blogosphere. Nonetheless, those types of contracts account for much of the money that agencies spend on information technology. Poorly defined rules in those three areas could lead to wasted money and even legal problems in the case of interagency agreements.

Federal Computer Week asked three acquisition specialists to make some recommendations for the Obama administration in those areas.

Bill Gormley was assistant acquisition commissioner at the General Services Administration and is now president and chief executive officer of the Washington Management Group and FedSources. In his briefing for the Obama administration, Gormley busts some myths about GSA’s multiple-award schedules program.

Robert Burton was deputy administrator of the Office of Federal Procurement Policy and is now a partner at Venable law firm. He offers recommendations for tackling interagency agreements.

Guy Timberlake is co-founder and chief visionary officer at the American Small Business Coalition. He gives the administration some insight into how small government contractors operate.

BY Bill Gormley

This administration, more than any other in recent history, has highlighted the need for change, transparency, competition and strategic sourcing in government contracting. Those are key tenets of the General Services Administration’s multiple-award schedules program, which offers millions of commercial services and products through 18,000 contracts. Yet, an increasing number of myths have been used to support duplicate contracting, which costs taxpayer dollars that could be used more effectively toward agency missions.

Let’s start by debunking some high-profile myths about the GSA schedules program.

Myth: Indefinite-delivery, indefinite-quantity contracts are better vehicles than the schedules.

Fact: The schedules program has evolved to the point that many other commercial-item contract vehicles are redundant.

There was a time when acquisition professionals needed a broader range of contract options, which served as the catalyst for the creation of agencies’ many IDIQs, governmentwide acquisition contracts and multiple-award contracts.

GSA is not meant to be the government’s sole purchaser. But for commercial services and products, the schedules program can meet government needs. Today, it has evolved so that many GWACs, multiple-award contracts and IDIQs are simply redundant.

Myth: Government agencies can get better deals and prices by not using the schedules.

Fact: GSA schedules reduce acquisition costs for federal agencies and provide a platform for lowering the price and increasing the value of the services and products acquired.

One of the schedules program’s primary objectives is to do the acquisition legwork in advance — vetting vendors, finding the best prices, etc. GSA completes 80 percent of the acquisition process for federal agencies. The contracts are already signed, and the services and products are already available. Agencies can buy what they need rather than worry about going through the process of establishing contracts in accordance with myriad acquisition rules. GSA eliminates a significant part of the cost of acquisition for federal agencies.

And within the program, there is a built-in provision for price reductions and volume discounting. Contractors offer voluntary price reductions, and customer agencies are encouraged to seek price reductions based on their particular requirements. It is simply not true that you can automatically get better prices elsewhere.

Myth: GSA does not offer the latest solutions, services or products through the schedules program.

Fact: Schedule contracts are continuously refreshed to provide new technology and commercially available services and solutions.

Vendors can add new services and products or delete old ones at any time. Vendors can also upgrade their solutions, services or products any time — and that is exactly what they do.

It’s in a vendor’s best interest to be able to offer the latest technology and services and stay up-to-date and competitive for what might be its largest customer. The government reaps the benefit by having access to the newest services and technologies, and it is not locked into a particular level of service or product offering.

Myth: Government agencies will not get credit for socioeconomic goals if they buy through the GSA schedules program.

Fact: Small Business Administration policy allows agencies to get credit for the dollar value of orders placed against schedules contracts.

I know no other way to dispel this myth than to simply say that it’s not true. Agencies do, in fact, get socioeconomic credit when ordering from small businesses. Agencies can even search within the schedules program for those companies. Few things could be easier than meeting those requirements through the schedules, which is why more than 30 percent of sales go to small businesses.

Interagency agreements: Guiding agencies and modeling their agreements

BY Robert Burton

Interagency acquisitions offer one solution to the severe shortage of acquisition personnel by allowing agencies to use contract vehicles established and managed by other agencies. Those contracts also ensure the success of the government’s strategic sourcing initiative because they capitalize on the government’s enormous buying power. The challenge for the government is effectively managing those high-profile contract vehicles.

Congress recognized the importance of interagency contracts in the fiscal 2009 National Defense Authorization Act by directing the Office of Management and Budget to issue guidelines to assist agencies in improving their management of such contracts. Ironically, just a few months before the legislation was passed, the Office of Federal Procurement Policy issued guidance for that purpose in a 66-page document.

Here are a few recommendations for improving the management of interagency acquisitions, based in large part on the guidance OFPP issued.

1. Codify OFPP’s guidance in the Federal Acquisition Regulation.

OFPP developed its guidance in response to a Government Accountability Office report that criticized the government’s management of interagency acquisitions. GAO was especially concerned by the lack of clear lines of responsibility between agencies with requirements (requesting agencies) and agencies that award contracts on their behalf (servicing agencies).

The OFPP guidance defines the roles and responsibilities of both types of agencies and, more importantly, helps agencies make sound business decisions to support their use of interagency acquisitions. Therefore, the Obama administration should ensure that the best practices outlined in OFPP’s guidance are institutionalized in the FAR.

2. Modify existing interagency agreements in accordance with OFPP’s guidance.

The guidance includes a model interagency agreement for agencies to use when entering into an arrangement for an assisted acquisition. In the process of developing that agreement, OFPP found that some existing interagency agreements contain weak contract management and financial controls.

However, OFPP’s document merely asks agencies to consider modifying existing agreements in accordance with the guidance. OFPP should have gone further and required agencies to modify their existing agreements to incorporate the sound contracting and fiscal practices outlined in the model agreement.

3. Require the use of the model interagency agreement for all future assisted acquisitions.

The agreement is perhaps the most valuable aspect of the lengthy OFPP guidance document because it provides agencies with a road map to achieve the greatest value possible from assisted acquisitions. The agreement was fully vetted with agency chief acquisition officers, senior procurement executives, chief financial officers, chief information officers and GAO. Therefore, it seems appropriate for agencies to use the model agreement to ensure consistency and reliability in assisted acquisitions.

Although the guidance requires agencies to use the elements of the model agreement, it might be time to require the uniform use of the agreement by all federal agencies.

4. Require strong business cases for multiagency contracts and link them to the Federal Strategic Sourcing Initiative.

There are more than 50 multiagency contracts (MACs) available for assisted acquisitions, which does not include the governmentwide acquisition contracts managed by the General Services Administration, NASA and the National Institutes of Health. Some MACs are duplicative in scope and not supported by strong business cases.

At a minimum, the Obama administration should ensure that the MACs are supported by strong business cases that support the goals of the Federal Strategic Sourcing Initiative by taking full advantage of the government’s buying power.

5. Develop and institutionalize a governance structure for MACs.

A top priority for the Obama administration should be to develop and institutionalize a governance structure for creating and renewing MACs. That structure should include a business case review process similar to the one used for GWACs. Under the Clinger-Cohen Act, OFPP is required to review the business case for each GWAC and designate a lead agency to manage the contract.

Although OFPP’s small staff cannot review business cases for all MACs, a review board consisting of a select group of agency representatives could operate under the direction of the Chief Acquisition Officers Council for that purpose, which would go a long way to improving interagency acquisitions.

Small business: Connecting with strong partners

BY Guy Timberlake

On behalf of the members of the American Small Business Coalition, who are small and disadvantaged businesses, we extend a sincere and warm welcome to the appointed officials of the Obama administration.

As members of an industry organization focused on facilitating the development of domain-specific relationships and knowledge to government and industry, we respectfully offer the following tips about capitalizing on the portion of your industrial base that represents the backbone of the U.S. economy and stands ready to serve as a quick reaction force for you, in addition to its normal duties.

• Value us.

The level of talent and commitment to excellence in this community of small and disadvantaged businesses is tremendous. Most are more than willing to commit the same blood, sweat and tears to any task you assign that they do to pursuing their goals to support employees, families and communities.

“Small and disadvantaged” does not mean “seeking handouts” and does not imply helplessness or a diminished dedication to serving you well.

• Take advantage of the available resources.

There are many facilitation resources, such as industry associations, that can help the government conduct expeditionary-based identification and vetting of companies, products, services and solutions to support the needs of internal customer organizations.

• Communicate with us.

Industry in general and especially small businesses feel and share your pain. There are many ways to communicate with your industry partners that result in a win-win situation for those looking to achieve a common goal. All too often, the relationship is adversarial, which hinders success. Like you, we are committed to the continuation and growth of our economy, availability of citizen services, security of our homeland, and ability to defend the United States and our interests as necessary.

• Recognize that we’re here to help.

The companies you want to do business with are not focused on getting work because they fit into a specific socioeconomic profile. Hire small companies because you are convinced they have the capacity and requisite expertise to get the job done. Take advantage of contracting methods that suit your needs but do not simultaneously create barriers that hinder you from reaching a viable solution. In our opinion, most small businesses in the government sector are here for the right reasons and are focused on innovation, problem-solving and quality in exchange for fair rates.

• Understand us.

The segment of U.S. owned/controlled small and disadvantaged companies represents a cross-section of the United States at every level. We are citizens willing to put in an honest day’s work, and we constantly strive to better ourselves and our offerings to provide for those who depend on us. Although the mission of the government is always Job One, we ask that you consider the ramifications of some decisions made during the acquisition cycle. In the past, some of those actions have resulted in unnecessary burdens beyond the normal risk of doing business. That only serves to diminish your industrial base and results in the loss of the next great advance in human capital management, health care or technology to counter improvised explosive devices.

Just as there is no magic pill or silver bullet to develop success for small companies, the development of meaningful government/industry partnerships takes time. Good leadership is the key to achieving the desired success.

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Reader comments

Thu, Oct 1, 2009 Retired Acquisition Official WASHDC

I agree in principle with all of the authors’ thoughts and recommendations. I have personally worked with Bill and Robert and have the greatest respect for all them, but I think we lose an excellent opportunity by not bringing several of their ideas/recommendations into a concise picture of what could be.

As Bill and Robert mentioned, there are hundreds if not thousands of multiagency contract vehicles (including GWACs, ID/IQ, and Federal Schedules) available for assisted acquisitions and many are duplicative in scope and not supported by strong business cases. Robert Burton mentions that the challenge for the government is in effectively managing those high-profile contract vehicles. He also mentions that a governance structure for creating and renewing MACs should be developed.

Using multiagency contract vehicles is beneficial to the government as it saves the ordering agency roughly 80 percent of the work involved in contracting and if done correctly, achieves lower prices by leveraging the power of govt purchasing thru strategic sourcing.

In a perfect world there would be a single contract vehicle from which anyone from any Federal agency could order needed supplies and or services. The vehicle would be accessed from an Amazon.com-like government website and the prices would be the best available.

However, we are living in a far from perfect world and getting disparate people and organizations to agree on a single solution let alone a single contract is a daunting task. Agencies are not going to want to give up their contracts as they represent workload and hence people and in some cases revenue and they will continue to expend money on Ecommerce sites that are also duplicative. So, I believe OFPP must be not only an active player but the one that takes the lead in directing the government in an effort to develop and execute a plan that addresses the what ifs.

What if OFPP appointed specific agencies government-wide contracting authority based on types of services/supplies being procured? What if applicable supplies and services had to be procured under those vehicles? What if there was a single Ecommerce site agencies would go to access the vehicles? And what if non-contracting purchase card holders were given authority to order against these priced vehicles? A lot of ifs but just think about the potential for savings the government could realize.

Mon, Sep 28, 2009 M Reston

Thanks for the opporunity to clear some things up. First, GSA rates are usually ceilings. Genuine competition takes care of price. Second, any single agency can use and tailor GSA contracts without using their assisted services.

Thu, Sep 24, 2009 Interested Party

Nice marketing piece and carries about the same weight in my book. The reason for the proliferation of GWACs and MACs was that GSA was NOT meeting its customers needs. Anyone who thinks GSA contract prices are "award ready" is naive. Most agencies find that they can negotiate a lower price than the GSA schedule price at least 90% of the time. Even GSA made this arguement with regard to the Laurita Doane - Sun Micro bruhaha. All of that having been said, I support GSA schedule use and I think we would all be wrong to deny that they have an important part in Government contracting. I'm not part of GSA but I respect what they do for us. I just don't want to be held hostage to them being the only way to buy certain supplies and services. For instance, I still remember buying computers under the Brooks Act. What a mess that was.

Thu, Sep 24, 2009 M Reston, VA

"Some MACs are duplicative in scope and not supported by strong business cases." This is not completely accurate. Try this: "Nearly every MAC is duplicative in scope, as are the organizations who run them. None have a strong business case." The MACs that are not duplicative have made a mockery of the concept of scope by throwing in all sorts of odds and ends on top of IT Services. This practice makes a mockery of the very concept of scope and reduces the qualified vendors to the very large only. I cannot imagine a "strong business case for a MAC" in an efficient government. MACS are a case study in government bureaucracy out of control.

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