As Examinations Intensify, Past Performance Matters More

As Examinations Intensify, Past Performance Matters More<@VM>Performance-Related Legislation

Rep. Stephen Horn

By Trish Williams

As information technology companies adjust to the government's increased emphasis on past performance in awarding new business, the federal government is struggling to overhaul its own business processes and measure agency performance in order to tie budgets to results.

The first major hearing this year on implementation of the Government Performance and Results Act of 1993 ? which calls on agencies to use performance data to improve organizational processes, identify performance gaps and set improvement goals ? will be held early this month.

Rep. Stephen Horn, R-Calif., whose quarterly report cards on the government's year 2000 software repair efforts became legendary, now is turning his attention to agency efforts to comply with GPRA.

At a hearing set for April 5 before the House Government Reform subcommittee on government management, information and technology, a panel that Horn chairs, lawmakers will examine where agencies are in compliance with the ambitious reform effort that became law seven years ago.

They should have plenty of fodder, because in addition to filing requisite performance and strategic plans, federal agencies were scheduled to provide, for the first time, annual performance reports to Congress by March 31 in connection with GPRA.

These reports are intended to demonstrate what the agencies have accomplished, how effectively they achieved their goals and how completely they met the needs of their customers.

In essence, it marks the first time agencies have had to evaluate their own performance and measure the results of their programs.

Horn, who has called GPRA a work in progress, said recently that members of Congress want to see results that measure the satisfaction and effectiveness of federal programs, and not hear "more talk of future plans or programs in progress."

The Republican lawmaker is looking for quantifiable results "in the government's ability to manage by performance and link the money it spends to the successes of its programs," he told a group of industry and government officials Jan. 28 at a session on navigating GPRA for government program success in Arlington, Va.

But the reform-minded lawmaker is not counting on it to happen any time soon. While the government has made some progress toward that goal, he said, it has been at a pace "slower than a turtle's crawl."

Horn, who gave the keynote address at that session, said that only a handful of agencies have had limited success in linking their long- and short-term strategic plans to the cost of their activities, "even though this process is supposed to form the basis of their budget requests."

One of the goals of the law was to improve the federal government's efficiency and accountability by shifting its preoccupation with day-to-day activities to focus on the outcomes of those activities.

When the government's departments and agencies achieve this goal, Horn said, Congress will able to make knowledgeable decisions on which federal programs are worthy of support and which should be abandoned, a process known as results-oriented budgeting.

Horn, whose subcommittee has held numerous hearings on progress in performance-based governing since 1995, said officials from the General Accounting Office testified in July 1999 that federal agencies have made only limited progress in assessing the cost of individual programs, much less linking those costs to results.

Horn said GAO officials who examined preliminary agency performance plans for fiscal 2000 found that only 14 of 35 agencies achieved some success in relating resources to results.

Among the 14 agencies were the Administration for Children and Families, the Environmental Protection Agency, the Health Resources and Services Administration, the Internal Revenue Service and the Nuclear Regulatory Commission.

Some of these agencies had fully integrated their performance plans with their congressional budget justifications. In some cases, the agencies chose to change their program budget structure to reflect the goals in their performance plans, Horn said.

And he said one thing was clear: These agencies are far ahead of their counterparts in meeting GPRA requirements.

Walter Groszyk, an Office of Management and Budget official who helped draft GPRA and now is overseeing and coordinating its governmentwide implementation, said that the U.S. government has begun to introduce some fundamental change.

Three to four years ago, he said, about 80 percent of the agencies had not done a strategic plan or a business plan.

"The act tells agencies to compare actual performance with goals, and where they fail, to identify the steps [they] will take to meet them," Groszyk said.

Robert Shea, counsel for the Senate Governmental Affairs Committee, which has held a number of hearings on GPRA, said Senate lawmakers likely will shift their focus in 2000 from strict compliance with the law to seeing "where we can learn and improve the process."

No Senate hearings on the results act are scheduled, but a staff member who oversees this area said hearings likely would be held later this year.

In addition, both the Budget and Appropriations committees are beginning to show interest in the law's implementation, according to Horn.

While the pace of reform seems unhurried to Horn, many industry officials believe agency officials face a daunting challenge.

K.M. "Chick" Baboyian, president and chief executive officer of Vredenburg of Reston, Va., which provides project management, financial, engineering and IT services to federal, state and local government organizations, called GPRA a very ambitious effort.

"I don't think it's a slam-dunk to sit there and quantify some of the things that GPRA is trying to do. It's a pretty bold move to assess the value of some of these efforts," said Baboyian, whose company had revenue of $38 million in 1999.

Add to the massive reform environment the coming of a new administration, and the outlook for speedy change becomes even fuzzier.

Alan Balutis, deputy chief information officer at the Commerce Department, said the timing for the presentation of GPRA program results ? slated to occur during a period of transition to a new administration ? adds a new layer of uncertainty to the picture.

Balutis, who headed GPRA's implementation at the Commerce Department as the director for budget, management and information, said that three years into the GPRA implementation process is "a relatively short period" to bring about the cultural changes the legislation was intended to make.

In Balutis' view, government and
industry now are at a key point in
GPRA implementation. And he warned that a tidal wave of government reforms could drown agency management capacity unless some integrated approaches are developed and used.

GPRA and other related legislation have spurred changes in his company's operations, said Baboyian.

"We have our project managers assessing themselves and participating with the clients in assessing our performance, so that we are proactive. We must be sure we understand what the client is thinking before we get the report," he said.

Vredenburg focuses closely on managing client expectations on the IT side, Baboyian said. The company has both prime and subcontractor roles on government efforts in two main areas: support contracting for the Defense Department and IT solutions-based contracting.

In some cases, the client has greater expectations, or something that is beyond the contractual terms, and that could affect a performance evaluation, he said.

These days, it is especially important for a subcontractor to work closely with a prime contractor to ensure that those expectations "are what you contractually can deliver, relative to what you committed to," he said.

Both large and small government contractors have developed organizations, procedures and tools to help them monitor and influence the past performance process, company executives said.

Recognizing that there is both opportunity and risk in the past performance process, these contractors always are looking for new ways to monitor the process, company executives said.

In fact, just capturing data on past performance has become a cottage industry, said Harry Martin, president of Intelligent Decisions Inc., a Chantilly, Va.-based systems integrator and IT services company focused on the public sector.

"There is an opportunity out there, and we are the land of opportunity," said Martin. He was referring to the growing throng of IT market research firms, including Stamford, Conn.-based GartnerGroup, that gather government contractor performance data for a fee.

Because of the results act and other legislation relating to performance measurement and achievement in government programs, the government has taken on the characteristics of a regular consumer.

"It's good for us, the taxpayer, the government and those of us who try and do the job right the first time," said Martin, whose company had revenue of $200 million in 1999.

And with a government contractor's past performance now becoming that much more crucial to its future business, success stories take on a new meaning.

"Past performance is one of the most important factors in how a manufacturer, vendor or service provider will do in the future," said Martin.

Industry officials have said there is no question that the weight given past performance is on the rise. On many contracts, past performance counts for 40 percent to 60 percent of overall scores, industry officials said.

In the past, there were cases where people were able to bid out of a garage, without any history, on opportunities that they simply could not sustain, said Martin. The government has spent a lot of time recovering from those mistakes, he added.

In the current climate, Martin said, the government does more due diligence, and a contractor must ensure a company is capable of providing a good quality service by asking questions, such as has the company done it well, and has it done it more than once.

Martin said the government's increased reliance on past performance has been a boon to Intelligent Decisions, which was ranked 34th in this year's Washington Technology "Fast 50" list, and whose revenue leapt 640 percent from 1995 to 1999.

"We don't spend a ton of marketing dollars in the marketplace, even though the budget should grow in the coming year," said Martin. "The primary factor in driving our business has been past performance."
The Chief Financial Officers Act of 1990 required agencies to modernize their financial management systems so they can routinely produce accurate and timely cost information.

The Federal Acquisition Streamlining Act of 1994 and subsequent regulations put renewed emphasis on the notion of looking to reputation and past performance as reliable indicators of future performance.

The Information Technology Management Reform Act of 1996, also known as the Clinger-Cohen Act, decentralized information technology purchasing. Under the law, each agency is responsible for the acquisition and management of its IT systems under the direction of a chief information officer.

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