Government's decision-making role deserves scrutiny

The most important premise for the success of the ongoing experiment in federal procurement reform is the expectation that government officials when given the opportunity will make wise business decisions.

In this case "wise" refers to the promotion of optimum solutions geared toward achieving clearly articulated long-term business objectives. In the commercial world these objectives are usually well-defined and consistent and the measurement of success or failure in achieving them is relatively easy to quantify.

No such luck with government.

Here objectives and associated policies are seldom clearly understood are subject to frequent and sometimes radical change are in many ways inconsistent and are not easily measured. Nowhere in government are there greater challenges posed by this environment than in the acquisition process. This is where all the organizational management and policy problems of an agency come screaming to the surface.

So far the federal government has focused most of its attention on the information technology acquisition process with little concern for the rationale for investment or the results achieved through implementation. But procurement reform including the recently enacted Information Technology Management Reform Act (ITMRA) is radically changing this by placing the greatest emphasis on results not micro-management.

According to ITMRA agency management should focus on three questions: * Is this function something the government should be doing? * Is it better for government or private industry to be doing the work? * Has the government optimized the processes before developing or buying the solutions?

Because of this and other elements of procurement reform the dynamics between program managers and procurement officials have changed completely. Until recently the procurement offices have been quite independent in their actions generally more concerned with treating vendors fairly and insisting on strict legal and regulatory compliance. That environment was not however conducive to the rapid efficient satisfaction of program officials' needs.

This had come about because of a deliberate establishment of checks and balances intended for public monitoring of agency actions and subsequent protests over perceived injustices or faulty decisions. Over the last 30 years this situation escalated especially where information technology was concerned. The result was effective and fair competition for government business. Ultimately this resulted in the Competition in Contracting Act and establishment of the General Services Administration's Board of Contract Appeals as an effective enforcer.

Now that's all changed. With the rewriting and reduction of regulations downsizing of the procurement workforce and elimination of an effective enforcement tribunal program managers have gained the upper hand. The primary focus of the procurement community now is to quickly provide any solution necessary to keep the program officials happy. Fairness competition and protests are secondary.

In the past program officials had relatively few choices in developing their procurement strategy and selecting suppliers. Typically they would develop their requirements then get the necessary internal approvals and budget then march into the procurement office to start the procurement. This would lead to the release of an RFP several offers being submitted and lengthy evaluations leading to a single award. Often this single award would lead quickly to expensive changes budget overruns and delays.

Two things changed this situation. First Frank McDonough at GSA encouraged agencies to break their big procurements into smaller bite-size pieces and this was followed by ITMRA which virtually mandates incremental development of large systems. Second the Federal Acquisition Streamlining Act all but requires the use of multiple awards in indefinite-delivery indefinite-quantity (IDIQ) contracts and once these are awarded that no public notice is required to issue task orders. Instead awardees need only be given a "fair opportunity" to get the task orders and the decision of who gets the task orders cannot be protested.

Where has all this brought us? Now instead of severely limited solutions that took too long program managers are faced with almost the opposite problem: too many solutions for near instant gratification.

A bit of caution: Developing systems piecemeal using IDIQ contracts and GSA schedules has many benefits but it also transfers some of the risk from the contractor to the agency. Without proper management this can produce helter-skelter solutions with different components leading to long-term support problems.

Witness the wise tough and very unpopular decision by the Air Force to restrict GSA schedule usage while the Desktop V protest was being resolved. How many agencies do you know that would have the management nerve to issue such an edict?

One of my main concerns is that this new-found autonomy will lead to less-than-optimal solutions that will lead to bigger long-term problems.

I also see a loss of real competition as a fundamental objective and its role in stimulating innovative solutions good prices and the nurturing of new companies. Business will increasingly be concentrated with fewer vendors as a result of the use of past-performance evaluations which will pigeonhole firms in their current lines of business.

With very little public awareness of business activity "efficient procurement" down-selects purely based on convenience and no-brainer sole-source task orders the few companies that have the prime contracts will become gatekeepers. These companies will decide which subcontractors get the work if any and exact a toll as payment for their beneficence.

The decision of who gets these plums and how the decisions are made is also of concern. In some cases real discrimination is exercised in selecting relatively few contractors qualified to perform specific requirements. But in other cases there seems to be little or no discrimination or - even worse - arbitrary decisions with little justification.

Defining the success of this reform experiment then figuring out how to measure it will be extremely difficult.

The only significant indication of how well we can expect our managers to make decisions is the now-ended DEIS I contract from the Defense Information Systems Agency. Although this contract was awarded before much of the procurement reform took place it is still an indication of the manager's ability to plan workload to avoid this pressure.

In three years the contract spent $1 billion with six prime contractors. It is not encouraging to see that one-fourth of that total was issued in the last week of fiscal '94 alone and more than $200 million was issued in the last week of fiscal '95. One wonders how much of that business was directed sole-source to a specific company.

The DEIS II program office to its credit is taking steps to manage this contract more closely to minimize this problem and to teach its "customers" (program managers) how to implement this new-found authority. I have a higher degree of confidence in its ability to manage the new contract which is in line with the Defense Department mission objectives thus the office is not as prone to do anything it can to drum up business for its contract vehicle just to make some money from the surcharge levied on non-DOD customers.

I have little confidence however in those contracting offices that run sham procurements in just a few weeks award dozens of contracts and then hold fire sales to promote business through their contracts.

This is a bleak scenario. But it doesn't have to be if managers resist the temptation to abuse their new freedom. The ability to make and implement wise decisions will not come easily to federal managers who have been insulated from this responsibility by layers of bureaucracy and regulations.

Only the collective good judgment by program managers and their associates in the procurement offices can sustain this experiment.Dornan is senior vice president of Federal Sources Inc. McLean Va.