Benefits of contract management need no proof

Many experts support the notion that investing more resources in contract management will yield savings. But they question whether we need to test the theory.

Many high-level administration officials and contracting experts say they believe improving the early stage of the procurement process will yield savings down the line. They have no doubt that if enough money goes to enhancing contracting offices’ resources and abilities, the investment will more than pay for itself.

So when Steve Kelman, former administrator of the Office of Federal Procurement Policy and now a professor at Harvard University, wrote a column in Federal Computer Week proposing an experiment to test those assumptions, I asked experts to share their thoughts on what such an experiment might entail and what it could show us.

In his column (“Can we radically improve service contract management?”), Kelman proposed allocating a significant amount of money to boost management resources for a set of 20 service contracts while giving no such money to a set of similar contracts. His notion was that the experiment would prove whether — and how much — money could be saved by front-loading investment in contract management.

“If costs go down and/or performance goes up on the contracts receiving additional resources, we should use that approach more broadly in the future,” Kelman wrote. “If there is no improvement, we will need to re-examine assumptions about the impact of adding resources and how easy it might be to cut contracting costs through better management.”

Many acquisition experts who already believe in contract management as a money-saver liked Kelman’s idea. “We already know that it does work, but to get more data is certainly useful,” said Allan Burman, former OFPP administrator and now president of Jefferson Solutions.

Nevertheless, he also said the experiment would take a lot of work without the promise of empirically sound results. Generating relevant data would be tough because no two service contracts are identical, he said.

Officials would need to establish criteria for the experiment and set baseline conditions for the contracts, perhaps choosing a certain type of service or a cross-section, said Diann McCoy, practice management executive at ASI Government.

She added that the experiment could go beyond saving money to demonstrate the intangible benefits of such an approach.

Indeed, Peter Tuttle, senior acquisition manager at Distributed Solutions, said the outcome of the experiment could be just the sort of proof officials need to convince appropriators that it is worthwhile to invest more money in contract management.

The need for sound data

Dan Gordon, administrator of OFPP, said the government as a whole is already investing in the ideas Kelman cited. Officials are improving training in contract oversight, particularly for contracting officers' technical representatives, who are the government’s eyes and ears on a contract’s performance. The administration is also developing a career path for IT program management, Gordon said.

“We are very focused on improving contract management” by minimizing high-risk contracts and keeping contractors accountable, he added.

“While what [Kelman] sets out in his blog is obviously just an outline, it is certainly an idea worth exploring,” he added.

Others, however, say the experiment wouldn’t yield enough results to justify the effort.

For example, Shay Assad, director of procurement, acquisition policy and strategic sourcing at the Defense Department, praised the idea but said the experiment is not necessary to prove the principles of good management.

“I don’t think we need to conduct an experiment to assign double or triple the contracting staff in any one organization in order to validate that point,” Assad said.

In fact, DOD is already working to improve its contracting shops. Several years ago, officials embarked on an initiative to assess the acquisition workforce’s needs. They gathered input from most of the employees and all senior leaders to identify competency gaps, and officials are using that knowledge to help employees become smarter buyers. Last year, DOD focused on initiatives aimed at recruiting, hiring, training and encouraging employees to stay in the acquisition field.

Assad said he agrees with Kelman’s premise that the government would benefit from having more employees focused on contract management, but Assad added that he has all the proof he needs.

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