The golden opportunity of deep budget cuts

The common saying that government should run like a business has been on my mind a lot lately as the details emerge about the Obama administration's fiscal 2012 budget proposal.

Another truism that government can’t run like a business because there is not profit-and-loss incentive also comes to mind.

By its nature, the government doesn’t want to be efficient. And I’m not trying to bash anyone by saying that. The government wants to be effective, but efficiency hasn’t been a guiding value.

As I read federal CIO Vivek Kundra’s comments about cutting $2 billion in wasteful IT spending, it was obvious that taking money away is the one mechanism to drive change in the government. Less money but the same expectations on delivering on your mission are sure to drive efficiency.

I heard Dell Inc. founder Michael Dell and IBM Corp. CEO Samuel Palmisano speak a couple weeks ago, and Kundra’s strategy definitely echoes what they said. To paraphrase Dell, if you want someone to save $100 million, then you take $100 million away from them.

Contractors will definitely feel the impact when you consider cuts such as those proposed for NASA: $512 million, or 24 percent, from its infrastructure budget.

But it doesn’t have to be all pain for contractors or the agencies.

For over a year now, we’ve written about how smart contractors have to market their ability to help agencies save money.

Now is the time to move beyond marketing hype. It also is time for the government to move beyond the rhetoric of collaboration and be fearless about talking to its contractors.

What is needed is willingness on both sides to sit down and talk about how to reduce costs while protecting the agency's mission and contractors' profits. Both sides of the equation need to be considered.

I’m not talking only about discussions around upcoming procurements. The real opportunity is to take contracts already awarded and look for ways to be creative in saving money.

Finding shared-savings opportunities is the first thing that comes to mind. Perhaps there are processes and procedures that needlessly eat up resources. Maybe technology can be replaced with more efficient products.

The government also needs to let go of the mentality of counting heads and hours of contractors and focusing on results. Forget about statements of work; write statements of objectives. Sure, that’s harder, but focus on the payoff.

From an industry point of view, this isn’t about protecting top-line dollars. Face it, those are going to take a hit. But it can be about becoming a partner with your customers. It’s about being innovative. And that is how you can protect your margins and your workforce.

Not to sound overly dramatic, but the sheer magnitude of the budget crisis has created a huge opportunity to drastically change how contractors and government work together. And that is a good thing that can benefit the government, contractors and, most importantly, taxpayers.

We just need to be bold enough to go for it.