By Steve Kelman

Blog archive

One more time: Contract management needs to be a core competency of government

I recently read an article in which the CEO of a consulting company specializing in complex program management described a major government project delivered through contracting. The government, the consultant wrote, "lacked the...experience and know-how to lead a project of this magnitude, much less know how to spot potential problems and influence parameters affecting quality. Meanwhile, the program management team of [the prime contractor] had more expertise than the owner's representatives, but with such woefully inadequate owner representation, it could run things as it saw fit. ...We advised [the government] to take advantage of the expertise of the program management team but not to let it overwhelm them. Unfortunately, what we feared came true, as the client team eventually was co-opted by the program management group."

The description -- from The Boston Globe -- was of our (in)famous Big Dig highway and bridge project, and the expertise referred to was construction engineering expertise for managing major contracted infrastructure projects. This was a state project, not a federal one, and it was far away from information technology. However, a version of this, sometimes less extreme, plagues many large government IT projects as well.

A few react to this problem by suggesting these major projects should not be contracted out in the first place. This is surely a bad idea. Complex IT and infrastructure construction skills should be left to organizations specializing in these skills, and we should make use of the vigorous competitive marketplace for such skills rather than leaving them to an in-house monopoly.

But in an age with many such complex projects, government needs to realize that contracting management -- developing a buying strategy, choosing a vendor and managing the contract after award -- is, for many agencies (the most obvious examples being NASA and the departments of Defense, Energy and Transportation) a core competency that will determine whether the agency's mission is successfully met.

In most agencies, contracting management is still not treated as anything like a core competency, reflecting a conception that "contracting" means buying pencils or standalone PCs. (The one possible exception is in the area of weapon systems, which is probably the most difficult area of contracting, because it involves beyond-state-of-the-art technology and lacks the kind of commercial marketplace available for IT or infrastructure projects; it would surely be in far worse shape without the management attention it gets.)

The contracting function itself is generally way down the agency food chain, and project/program management is underdeveloped. As long as we don't improve the way we manage contracts, agencies will be tempted with a cure often likely to be worse than the disease: bringing development of big systems such as these in-house. Taxpayers, agencies and (for the reason just stated) even contractors have an interest in changing this.

Posted on Oct 14, 2010 at 12:08 PM


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