COMMENTARY

More talk needed if defense reforms are to succeed

A two-way dialogue is necessary to achieve cost reductions and efficiencies

In response to acute budgetary pressures, agencies across the federal government are seeking to reduce costs and eliminate wasteful spending. Their efforts have included high-profile IT program reviews and cancellations, procurement reforms, and, at the Defense Department in particular, top-level directives to slash overhead and other administrative costs. In addition, the administration has directed agencies to develop budget plans for fiscal 2012 that reflect at least 5 percent cost reductions in agency spending.

Objectively, there is little doubt that finding efficiencies and reducing costs are both possible and necessary. But for agencies to deliver real, sustainable results, two key obstacles must be removed.

First, the term "efficiency" is being inappropriately equated with reductions in the use of contractors when, in reality, it has little to do with who does the work and everything to do with the work itself and its relationship to the agency’s mission. Some contractor-performed work might be redundant, no longer necessary or inefficient. To the extent that is true, change is appropriate.

But meaningful efforts to reduce costs and enhance efficiency should not be limited to merely setting arbitrary goals tied to contract spending. Rather, they should be tied to holistic and objective reviews of overall agency or component missions and spending. Difficult as it might be to include all agency activities, as opposed to solely focusing on contracts, it is nonetheless the right thing to do if we are serious about addressing the fiscal crisis. It is also consistent with the Office of Management and Budget’s goals of eliminating unneeded or redundant programs.

Second, one of the principal tenets of good commercial customer/supplier relationships is clear communication and collaboration. It is no different between the government and its implementing partners. Close, open and in-depth communication through which all stakeholders work together offers the best means to identify programmatic and other cost drivers that can be reduced or eliminated. It is simple and logical. But early indications suggest a different trend is emerging, whereby predetermined contract cost reductions are simply dictated, sometimes without any corollary adjustment of the required outcomes.

Moreover, there are questions as to whether such communication is being encouraged or even allowed. Many companies report that even routine communication with existing or potential government customers is increasingly limited. Within DOD especially, components have refused to share any analytical data to support insourcing decisions. At some industry days, the purpose of which is to help potential bidders fully understand the government’s needs, briefers have refused to entertain any questions to clarify even the most basic elements of the program requirements. In still other cases, government offices have told their existing suppliers that they no longer meet with for-profit entities for any reason. And it is fairly universally accepted that the quality of post-award debriefings has significantly diminished.

Deputy Defense Secretary William Lynn issued a memo in June to the department’s workforce to remind employees of the importance of early, frequent and clear communications with the department’s private-sector partners. That such a memo was even necessary is a disturbing sign of the times and highlights one of the most significant challenges for the government and industry. And that challenge is not limited to DOD.

Simply put, attempting to achieve savings and performance improvements in a vacuum violates the most basic principles of smart management. Just as open communications are essential to understanding and responding to customer needs and objectives, so too are they essential to improving performance and reducing costs on existing programs. Almost every government official talks about the vital public/private partnership that is so essential to the government’s missions. Now is the time for them to walk the talk.

About the Author

Stan Soloway is president and chief executive officer of the Professional Services Council.

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