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By Nick Wakeman

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Nick Wakeman

Contractors lament death of partnering

The mood around the table the evening of Wednesday, Sept. 16, was somber and gloomy. We gathered a group of executives from a variety of contractors for a not-for-attribution discussion about the state of the industry.

The group included senior executives from large systems integrators, mid-sized companies, small businesses and hardware and software makers. Washington Technology and Technical Communities, a value-added reseller, hosted the dinner.  

To start, we asked: "When was the last time you formed a partnership with a customer, and why has that become so difficult?"

Well, that opened the flood gates to stories about the rise of unreasonable demands and requirements. One of the frequently mentioned villians is the Defense Contract Audit Agency, which has been pushing contractors for more information and disclosure.

In at least one case, DCAA is going back five years and comparing the resumes of people in the contract proposal with those of the people who did the work.

If a gap is found, DCAA is demanding that the contractor reimburse what was paid for that position, plus a 5 percent penalty.

The example, the executive gave, was from a successful project where the customer is pleased with the work being done. But that doesn’t matter, the contractor said, the audit isn’t tied to results.

Two factors are behind this. One, there are half the number of government auditors as there were 10 or 12 years ago, so there is little hope that they can keep up with the workload. What's more, there is a loss of experience and institutional knowledge.

A second factor is that government auditors are working from laws and rules that were designed for a manufacturing-based industry that was prevalent 50 years ago. Today, the contracting base and the majority of spending by the government is on services.

One executive told the story of a customer who wanted to dock his company because they felt the contractor didn’t have enough people on the help desk. He had to remind the government customer that the company was meeting its service-level and performance agreements on the fixed-price contract. “Why should it matter if I have five people or 50 people?” he asked. “It is that factory mentality. They just want to count butts in the seats.”

SIDENOTE: There is a hearing today by the Defense Acquisition Reform Panel of the House Armed Service Committee on whether acqusition policies match the contractor industrial base.

The situation is likely to continue to get worse because of the leadership void in government. The General Services Administration and the Office of Federal Procurement Policy are still missing their administrators. Also, precious few chief information officers have been confirmed for cabinet-level agencies.

While the people in these positions are not a silver bullet, they can provide direction and cover for acquisition officers who are under the gun.

Interestingly, none of the executives sees the issue as a partisan problem. It is not an Obama administration initiative. “We’ve been on this collision course for 10 years,” one executive said.

In my next blog, I’ll cover another topic from the dinner – insourcing, or as one executive put it, death by a thousand cuts.

In the meantime, share your thoughts and comments.

Posted by Nick Wakeman on Sep 17, 2009 at 7:22 PM


Reader Comments

Tue, Sep 22, 2009

The only assumption that cannot be debated is that the vast, vast majority of Gov. CO's ARE incompetent. Spoken like a true cool-aide drinking "Govi". God, I mean Government can do no wrong, or as 'Hawkeye' Pierce put it on one episode of MASH, "To err is Truman, to forgive is against DOD policy". The number one problem I have faced with over the past 30 years working with the government is the incompetence. The vast, vast majority of Gov't employees are worse than the unions. They come to work for exactly eight hours take 10 smoke breaks, 4 coffee breaks, 1 and 1/2 hour lunches and spend the rest of their day in pointless meetings venting false rage at non-existent or impertinent problems. They have no vested interest in making a program or contract better so they use the opportunity to blast contractors in order to further their own pathetic careers. And this is the "organization" that wants to bring you national health-care. WOW! May God Bless what's left of America!

Mon, Sep 21, 2009

I've been in the federal contracting space for a little over 20 years now and this article is spot on. I've never seen a climate where perception mattered more and results mattered less. Most government PMs I work with are not interested in outcomes but rather the perception of their program publicly. I work in this industry because I want to help the government function better and serve the people better. That is getting harder and harder to do.

Fri, Sep 18, 2009 Keith E. Nelson HQ AETC - Randolph AFB, TX

It's sad to see such an article. I've been a program manager with the Air Force (comparable to a program integrator in most cases) for nearly 16 years over both fixed price and T&M contracts. True, I've had some cost and schedule overruns but I believe most were justified under the circumstances. And not all the blame belonged to the CO or the contractor. Some came from vestiges of the past, many contracts were written on the "last shift" and we inherited them. Clauses, phrases and timelines were written into contracts, performance work statements, and performance thresholds with little or no thought of the consequences and someone got to be the "bad guy". I have a LOT of respect for the contractors I've worked with. They know STUFF and they're willing to share with the government and not all of it costs a pretty penny. Some wise man(?) once said, "Can't we all just get along?" - it really works when given a chance.

Fri, Sep 18, 2009 California

The vast majority of the government procurement and adquisition system today is working from laws and rules that were designed for a manufacturing-based industry that was prevalent 50 years ago. were there were only FEW very large primes and the only players Today, the contracting base and the majority of spending by the government is on services- were small business owners- are presented with the same set of 50 years wit a set or cumbersome material to be digested by one person with few employees- from the tech service industry- ie: the typical RFP today average 100 or more pages- the DCAA audit for an small business can take weeks to prepare for and pass etc. In detriment to the government efficiency and the contractors ability to deliver today's solutions for the government technology services needs. Updating the procurement system to today's USA economic base is paramount This should be done first, and then determine the mampower and skill set requirements to fill it- It may surprised to find out that the new technologies are less labor intense and higher skills set based

Fri, Sep 18, 2009

In the Thursday comment, several assumptions are made that, when aggregated, create a likely inaccurate scenario: 1. IF the contract was T&M, then the CO should not have accepted a lesser quality person at all. 2. You assume same labor rate for lesser skill (unconfirmed in this story)which cannot be invoiced at all unless signed off by the CO. In fact, if a lesser skill can do the job and the rate is adjusted downward, it saves the government money, as a responsible contractor is encouraged to do. That also fully fits this scenario described above. 3. You assume more hours charged, but that is also not congruous with a T&M, where government maintains full control of labor service and approves the time and accpetable progress. Either government has control or doesn't. 4. More dangerous is your dual assumption that contractors are criminals and government COs are incompentent. Despite what the papers like to say the vast, vast majority of daily transactions shows that neither are true. Salacious headlines aside, almost all contractors are proud of their work and stand by the successes they gain in concert with their government counterparts. If that weren't true, contractors would each have short careers. We are proud of our work and our service and are honest about our business practices as well.

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