Stan Soloway

COMMENTARY

Is it time to flip the table on procurement?

In case you haven’t been paying attention, there is a new president being inaugurated this week and among his core positions is regulatory reform. While we don’t yet have any clear sense of what that will look like and where the new administration will focus, one such effort, mandated by Congress, is already underway and offers a rare and important opportunity to focus attention again on major reforms to the defense and federal acquisition regime.

The “Section 809 Panel,” (named for the provision in the 2016 defense authorization bill that created it) is charged with identifying and making recommendations for changes to any non-value added acquisition laws, regulations or policies. While not the first effort of its kind, the 809 Panel  has the imprimatur of the Congress and has the potential to be the most significant review since the Coopers and Lybrand study of thirty years ago that was a key driver of the acquisition reforms of the 1990s.

The panel’s deliberations could take it in one of two directions: tinkering with existing laws and regulations or recommending really impactful change that would bring federal acquisition into the current era and set it up for the future. 

The latter is by far the more preferable outcome, but it will only happen if there is a concerted effort to provide bold ideas for the panel’s consideration.

I recently had the opportunity to meet with members of the panel and our discussion centered less on each individual rule in the regulations and laws and more broadly on the current environment, how it differs greatly from the past, and why it is so important to take a holistic approach to their charter.

Make no mistake about it.  Today’s environment is very different than it has ever been. While the reforms of the 1990s were driven by the realization that the government was no longer either the principal progenitor nor buyer of many of the critical capabilities it needed, that trend has continued to the point that the gap between the federal government and the commercial sector is narrower than ever. 

Meanwhile, as fast as the pace of changes were during the 1990s, it is actually getting faster. Think of Carl Lewis’s then-stunning 9.86 100 meter world record of 1992 and how routine that now looks in comparison to Usain Bolt’s 9.58.

So too is it in the world of technology-driven advances across the economy; and those that fail to keep pace fall further behind ever faster.

Unfortunately, some progress notwithstanding, some of the most crucial advances of the 1990s have regressed, particularly as regards accessing commercial items and services in commercial-like contracts. 

As is its natural wont, the bureaucracy has over time diluted-and sought to dilute even further—many of those new and special authorities to the point that they are no longer all that special and actually bear a close resemblance to the traditional modes they were intended to replace.

As such my message to the panel, which I hope will be repeated in various forms by others, is that it’s time to flip the table. It’s time to learn from, rather than just observe, the lessons of the last twenty years.

Given that the gap between the government’s needs and the commercial marketplace is narrower than ever, and given that the bureaucracy does indeed tend to dilute exceptions and change, we should flip the table and make commercial acquisition the norm, the default, for everything other than the most government- or defense-unique of needs.

This would include not only strengthening Part 12 of the Federal Acquisition Regulation, but also flipping the table on other government-unique requirements that were borne of, and relevant to, a very different era.

Why do we need government-unique cost accounting standards (CAS) when the rest of the world functions pretty well under generally accepted cost accounting principles (GAAP)?

Why do we need government-imposed certifications on contract or unique business systems that look nothing like and do not align with best commercial practices to insure quality, cost control and more? 

The list is long.

That is not to say there should be no rules; we are, after all, dealing with the public’s dollars and trust. But the other key lesson is that even when given tremendous latitude, government and industry recognize that reality and their responsibility.

Just take a look at contracts awarded under “Other Transactions Authority,” the most permissive of the special authorities; they tend to look a lot like FAR Part 12 contracts as FAR Part 12 was originally envisioned.

In short, it’s not about reducing accountability or transparency; it’s about achieving the same results with more commonly accepted and equally effective tools.

Understandably, there are many who are skeptical that real change is possible. And they could be right. But we won’t know until we try, again.

A new administration is taking shape and came to office promising change. And the 809 Panel’s mandate from Congress is to recommend change.

It is therefore an opportunity to take a shot and push hard. If we undervalue the opportunity the consequences could be real and long-lasting. It need not be that way.

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

Fri, Jan 20, 2017 Tom Duffy

Agree with you, Stan. And let's not get started on all the reviews of source selections in DOD which have really slowed the process down. Plus, why do OTA contracts look like FAR contracts---maybe we should be "far" less tied to the FAR and more creative.

Fri, Jan 20, 2017

Stan proves yet again that it takes a good Democrat to open the door to real change. However, the industry is not ready to embrace it. Commonly right now, on Inauguration Day, industry execs think they are celebrating a new business-friendly regime. Few of them have taken on board that these guys are bargainers, negotiators, and will want cut waste and end taxpayer and customer abuse. Profit margins for services, not just HW, will be under strong pressure. Sure, rules will be thinned out, but look for more competition, LPTA selections and less tolerance for over-runs, blown scheds, and nonworking systems. Reputations will be lost or won. Commercial companies will invade gov con space. Time to repent.

Thu, Jan 19, 2017 Tim Long

Not to mention promoting the use of acquisition models that leverage private capital for public good in third party financed infrastructure upgrades delivered as service offerings.

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