By Steve Kelman

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Vendors gripe at contracting conference

While Washington, D.C., swelters under scorching heat, Denver offered cool, pleasant weather and unusual heavy rains for the 1,300 people who journeyed to the city for the big annual meeting of the professional association of contracting professionals in industry and government., the National Contract Management Association World Congress.

The overall atmosphere here reflects a fairly sour mood about the state of government contracting. Partly, the contractors (most contractors in NCMA are from the defense industry, and some are from IT) are realizing that contracting dollars are going to be really tight given the budget situation. But there also seems to be a feeling — among the government people as well as industry — that the system is still in a mode, dating to the George W. Bush years, of laying on more regulations, requirements and burdens that are hard for the government to meet given limited resources.

Industry resents such regulations as attacks on their integrity and their bottom line.

The first morning of the conference was a sort of nonstop "woe is me" recitation from contractors — in the keynote address by Linda Hudson, CEO of the defense contractor BAE Systems, and in an all-industry panel that followed. Some government people I spoke to were somewhat annoyed that the first morning departed from the NCMA tradition of mixed government-industry panels.

At the risk of oversimplifcation, I can say that the big message of the industry panel seemed to be that the government isn't allowing contractors to make enough money. Of course, reasonable people agree that private firms need to make a profit in order to do the work they do — panel chairman Steve Schooner, co-director of the Government Procurement Law Program at George Washington University, noted that if the government doesn't want the defense industry to make a profit, it could nationalize it, but few would predict this would turn out to be a good solution.

But the tone of the panel came across, to me (and some others), as whining and self-serving, acknowledging in passing the government's need to watch out for its own interests in a buyer-seller relationship but quickly going on from there to a litany of complaints. And while the industry people attacked government folks for demonizing defense contractors, they were pretty heavy into the business of demonizing the government. Given the very tight budget environment, the presentations left sort of a bad taste.

There was an interesting discussion of the trend in the government away from best-value trade-offs between price and quality, and towards an older "low price technically acceptable" approach, even for complex services. I agree this is a worrisome trend. If budgets are tight, the reaction should be to scale back on how demanding and expensive the requirements are, not to cut corners by choosing marginally performing contractors for whatever work the government is requesting. Having said that, I think it is perfectly acceptable — indeed desirable — for the government to negotiate aggressively on price, as well as to seek quantity discounts on labor rates from suppliers selling a lot of services.

The conference reflects the generational transition in government contracting. By show of hands, it looked like about a quarter of the delegates had just two to 10 years experience in contracting, and the other three-quarters more than 20 years, with almost nobody in between. I led a session for new government contracting professionals and was, as usual, impressed by their intelligence and commitment. I was surprised that 12 of those with less than three years experience reported having a mentor at work, and only one did not. This, I suspect, may reflect that buying shops that sent young people to the NCMA Congress are probably not typical ones but ones that are showing interest, in many ways, in developing their new hires. It is nice to learn, however, that, even if not typical, there are some places trying to do a good job developing their new hires.

Posted on Jul 12, 2011 at 12:09 PM


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