We haven't achieved acquisition nirvana

Before acquisition reform, procurements often were conducted in an atmosphere of industry ignorance and government hostility. Agencies that issued complex and ambiguous solicitations often would not answer reasonable industry questions. Companies submitted bids that were designed to win the contract rather than perform under real-world conditions.

When the Industry Advisory Council (IAC) was formed 10 years ago, its principal objective was to improve the acquisition process by opening communications between government and industry. It sought to break down barriers that kept people and organizations from talking openly about needs and requirements.

With the passage of the Federal Acquisition Reform Act, the Federal Acquisition Streamlining Act and the Clinger-Cohen Act, most, if not all, of IAC's objectives were realized. Now the concept of a government/industry partnership is put into practice every day. Early communication about agency needs and objectives takes place as government and industry executives exchange information in many open forums. Timely, cost-effective and mission-oriented results flow from a speedier and more businesslike approach to doing business. Performance has replaced low cost as a key evaluation discriminator.

Have we reached acquisition nirvana?

I think not.

While communication has improved markedly, the dynamics of the acquisition life cycle have changed even more so. Many, maybe even most, companies enter their new fiscal years with only 50 percent of their revenue plans covered by firm contract backlogs, and the sale and delivery of the remaining 50 percent has to take place within the fiscal year - a daunting task for companies and people used to long acquisition cycles, with sales and marketing organizations trained and organized to respond to formal solicitations and with technology-focused rather than mission-focused views of the world.

Adjustments have been and are being made. Companies have reorganized for a faster-paced, task-order-oriented world that seeks solutions rather than technology. But the adjustments have not always yielded hoped-for results.

Why?

The information needed today for businesses to operate in the post-Clinger-Cohen environment is not the same information needed in yesterday's Competition in Contracting Act/Brooks Act world. Companies need to know more about agency missions in order to propose and provide workable solutions than they needed to know when they only proposed and provided technology. Companies need fast access to agency plans and personnel so that they can respond to quick-turnaround task-order competitions. Because most companies do not have enough "feet on the street" to cover their sales territories, making a quick and informed decision to bid or not to bid becomes difficult.

Acquisition reform has changed the dynamics of the acquisition process. Demand for timely information now outstrips the supply. Companies also are hiring more direct-sales people, chasing more business and spending more on marketing and administration than ever before. Unless changes are made to bring information supply and demand into balance and give industry the opportunity to improve profit margins, the government's rush to become more businesslike may become counterproductive. Information inequities and inefficiencies will force companies to make ill-informed and uneconomic decisions. Commodity-scale margins will not sustain the infrastructure needed to compete profitably in the marketplace.

We need to take a new look at how government and industry communicate. Are the right industry people hearing the right government things at the right times? Are government buyers exposed to as much company information as they should be? Because it is in the government's best interest to have multiple well-informed bidders for its contract opportunities, will the government - indeed, can the government - recognize that thin margins are a roadblock to well-

informed competition? Acquisition reform brought the benefits of commercial business practices to government contracting. Isn't it about time that the cost side of the business equation be brought into balance?

This is a hard problem with no obvious solutions. Yet we must address it if we want a financially healthy federal IT industry. Couldn't IAC and the CIO Council come together to help the government work better and cost less in a free market of proficient and profitable companies?

-- Kiviat is a founder of IAC and president of the Kiviat Group, which advises federal information technology marketing and sales organizations.