Stan Soloway

OPINION

Pricing roulette: Challenges vary agency to agency

Earlier this month, a group of colleagues and I had the pleasure of participating in the Partnership for Public Service’s annual “Shark Tank” exercise for their acquisition leadership program. In this exercise, the program participants present ideas (products) they think will enhance, modernize and otherwise improve acquisition. And as “sharks,” we question them, evaluate their ideas and give advice.

As usual, the “students” (virtually all of whom are mid-career acquisition professionals) impressed us with their awareness of the gaps and challenges that beset the acquisition ecosystem.

In fact, while not planned, all of the presentations we heard had a common theme: They currently lack many of the tools, from education to data, and from business insight to strategic guidance and leadership they think they need to do their jobs as well as they can, particularly in the dynamic marketplaces in which they must operate.

If that sounds familiar, it should. Those same themes figured prominently into almost every survey of the acquisition community conducted by the Professional Services Council; and are also themes that, in one way or another, routinely appear in workforce surveys conducted by other independent organizations, including the Partnership itself.

It is against the combined backdrops of the market of today and the toolsets and guidance the workforce itself feels are lacking, that three recent events are worth noting.

First, there are signs, especially in the Navy, that the backlash against contracting practices that drive rates to absurdly low levels is finally beginning to grow. As one example, SPAWAR is beginning to establish a floor for rates in competitions, to help prevent the limbo rock (“how low can you go” ) that has so distorted the system in recent years.  And Navy acquisition executive Sean Stackley even ruminated recently about whether the Navy should create “reverse tripwires” to achieve the same goal (which would be a terrific idea).

On the other hand, despite virtually unanimous input from industry, an Office of the Secretary of Defense review, and, most importantly, shear logic, the Defense Information Systems Agency is refusing to budge from its original, highly questionable low price/technically acceptable strategy for Encore III—even though this is a ten year contract with broad, unknown requirements.

Oh, and DISA also plans to dictate to contractors the labor mix they are to use on individual task orders.

And then there was news this week that the Air Force will be using IBM’s Watson in its acquisitions. That could be exciting news. After all, used wisely, cognitive computing can have a transformative effect on decision-making and outcomes.  It can collect and synthesize almost unlimited data, from contracts to pricing, market research, technology and more, to advance and enhance the outcomes.

As the Washington Post  reported on March 21, Watson is already being utilized by major hospital systems to, among other things, aid in the development of treatment plans for individual cancer cases. And in many ways, cognitive computing speaks to core elements of the defense department’s “Third Offset Strategy.” So why not use it for complex acquisition challenges?

Unfortunately, it remains unclear whether the Air Force has established a vision for its use of Watson that reflects the real power of cognitive computing. According to the Washington Post, the primary objective seems to be to use Watson to help decipher the laws, rules and compliance regimes, including the Federal Acquisition Regulation, that dominate federal contracting.

And, as a second goal, to help provide companies with information on how to be compliant with those rules and regimes. In fact, the example cited by the Air Force was using Watson to tell a contracting officer if he or she can do a sole source award for a certain product or service.

Let’s think about this from the perspective of federal acquisition professionals and the world we ask them to function in; a world in which some think the rules and policies are so complex that we need cognitive computing to decipher them.

While I happen to disagree with the premise, the question must also be asked as to whether the advent of Watson, in this narrow circumstance, will actually take our attention away from the real, core problems we face.

Which brings me back to the “Shark Tank.”

The thirty or so professionals who presented to my group were all bright, committed and clearly seeking a smarter way forward. And their proposals, unwittingly, reflected those core problems.

They are not looking for more interpretations of rules nor do they want to be pressured to follow rigid processes. Rather, they seek meaningful information, data and guidance that would actually enable them to exercise their professional and critical thinking skills; to make more thoughtful judgments and decisions.

In short, they identified many of the most problematic dynamics that have come to dominate federal acquisition. We should applaud and support them. Instead, glimmers of hope notwithstanding, we continue to throw too many of our best and brightest back into an environment that is quite the opposite.

About the Author

Stan Soloway is a former deputy undersecretary of Defense and former president and chief executive officer of the Professional Services Council. He is now the CEO of Celero Strategies.

Reader Comments

Thu, Mar 31, 2016

What suggestions did the "shark tank" presenters bring forward to methods that will work? Did they state any solicitations that avoided the LPTA problem and provided the government actual outcomes that worked?

Thu, Mar 31, 2016

A good start would be to buy them all calculators and industry standard OH and G&A rates. I have been underbid by up to 40% on contracts with a designated number of FTEs. A simple quick calculation would determine that companies bidding that low couldn't even pay their people, let alone provide sufficient confidence there would be a corporate support cell to manage HR, accounting and contracting. The gov't is negligent in this regard and the only ones who suffer are the govt PMs and the citizens of the nation. A case of you get what you pay for.

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