No love for profit in DOD's Better Buying Power 3.0

There are things to like and not like in the latest version of the Defense Department’s Better Buying Power initiavie.

We are now up to version 3.0, which Frank Kendall, undersecretary of Defense for acquisition, technology and logistics, outlined in a session this morning at the Center for Strategic and International Studies.

While I wasn’t able to attend the event, I have been reading his whitepaper and some reactions from industry are starting to flow in.

In a nutshell – well, you can’t really fit BBP 3.0 into a nutshell – Kendall’s plan is focused on affordability, incentives for government and industry, better competition, eliminating unproductive processes, more innovation and a more professional acquisition workforce.

It is hard to argue with those goals, but it’s as you dive deeper into the plan that some might find objections.

Stan Soloway of the Professional Services Council for one isn’t all that happy. Kendall’s plan doesn’t go far enough, Soloway said in a statement.

Soloway, a WT columnist, says that there isn’t enough focus on “achieving extraordinary outcomes.” Instead there is too much focus on internal process changes and there are still too many barriers to innovation and efficiency.

This is an issue close to PSC’s core. The industry group has issued multiple sets of recommendations to the Defense Department and the rest of the government including PSC’s Acquisition and Technology Policy Agenda and the 2013 Leadership Commission Report.

Few of the recommendations in those reports made it into BBP 3.0, Soloway said.

One item that jumped out at me was one of the goals under the section about incentivizing productivity. It was the first goal, in fact. A “core” initiative, Kendall said.

I quote:

“Align profitability more tightly with Department goals.”

In the white paper, Kendall recognizes the need for profits but wants to make sure profits are appropriate.

I think this is an example of what Soloway calls the focus on internal process and a barrier to innovation. Why pay attention to profits when the focus should be on the results and the cost to the government?

I just don’t get why the government cares so much about profits. Leave it to the market and competition to determine what an appropriate profit, not acquisition officials.

The government should hold contractors accountable, but the accountability should be focused on the results that get delivered and the cost to the government.

If a company meets the government’s goals on cost and performance, why care about how big or little its profits are?

I love what Amber Corrin of Federal Times wrote:

Kendall at #CSISLive: Defense industry shouldn't expect to be Googles & Apples of the world; high profit margins isn't the biz they're in

— Amber Corrin (@CorrinAmber) September 19, 2014

But why shouldn’t government contractors strive to be Google or Apple? If you are looking for innovation why not emulate those companies?

But if you are so focused on squeezing profits, you’ll never get a culture of innovation in the government market. You’ll never get the risk taking and flexibility that’s needed to solve some of the big problems we face.

As you can probably tell, the whole profit thing is a bit of a pet peeve of mine, so I’ll jump off the soapbox now.

Just remember profits, don’t equal greed.