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By Nick Wakeman

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Nick Wakeman

Death to fee-for-services?

I’ve got a little bald spot on the side of my head because I’ve been scratching my head since I read my colleague’s blog about assisted acquisition services.

In his Acquisitive Mind blog, Matthew Weigelt recounted testimony by Office of Management and Budget official Jeffrey Zients that agencies should not charge fees when they help other agencies get contracts.

Zients went so far as to call it bizarre.

Sen Claire McCaskill, (D-Mo.) chairwoman of the Senate Homeland Security and Governmental Affairs Contracting Oversight Subcommittee was right there with him.

“One agency was advertising, ‘Buy your stuff here,’ to another federal agency because they were getting a cut because of the contract they had,” McCaskill said. “Well, there’s something very wrong about that — just fundamentally wrong.”

The belief is that they are all part of the government and therefore on the same “team.”

Apparently McCaskill is particularly bothered by the Interior Department’s Acquisition Services Directorate and the now closed FedSource, which was operated by the Treasury Department.

But the same logic can extend to any government organization that charges fees for providing a service. Who will they go after next? Will the General Services Administration start doing their work for free? What about the fees the Agriculture Department’s National Finance Center charges for the service it provides? Aren’t they all part of the same government team?

It just doesn’t make sense to me. The government is short of acquisition and contract officials, particularly ones who have the skills and experience to manage complex procurements, so why start bad mouthing organizations that providing a vital service?

The comments from Zients also seem to contradict the push by the Barack Obama Administration of trying to get government to work smarter and more efficiently. The comments undermine the principles of competition. Competition, whether among contractors or government agencies, is the best tool for fostering efficiency.

I’ll try to stop scratching now.

Posted by Nick Wakeman on Oct 30, 2009 at 7:23 PM


Reader Comments

Tue, Nov 3, 2009 Contractor Fairfax

It seems 1995 - 2000 was something of a Golden Age for smartening up federal procurement with respect to the taxpayer. Since about 2003 we have been descending into a Dark Age. I see no end in sight. In fact this administrations and the Democrats in Congress have made working in federal acquisition an ever more souless endeavor. None of us seem to be working to any higher good these days, just reacting to the latest hasitly thrown together rules that came in response to an anecdote. I am looking for a career change.

Tue, Nov 3, 2009 M Reston

I almost blushed for Mr Zients when I read his statements. I expect Congresspeople to be ignorant of organizational economics, but not an appointee like Zients. There are too many agencies hawking too many vehicles. Sadly most are budgeted in advance to waste money like this. Truth is we need no more than GSA and maybe one or two other joint offices buying IT Services and many products and services that do not need to vary by agency. But pay-as-you-go fees make sense and it is used within industry to keep track of costs and to keep accountability. This is one of the biggest litmus tests for the wisdom and integrity of acquisition officials. They are failing in this administration even more miserably than in the last.

Tue, Nov 3, 2009

Yes, it IS all the same store. But having said that, due to the byzantine way agency funds are parceled out and track, cost-reimbursement is the only way to provide common service functions. In a perfect world, we would not have all the duplicated functions and shops. Everyone would get their hardware and support from one lead agency (with multiple locations, of course), rather than everyone reinvent the wheel. Kinda like GSA was originally supposed to be for mundane supply items, but everyone (especially DOD) insisted on doing a lot it themselves anyway. No agency ever voluntarily gives up turf. It has to to ordered to do so.

Mon, Nov 2, 2009 Christopher Hanks

If (as the GAO is fond of doing) the Executive Branch is to be viewed as a large"corporate entity" to be managed in the same way that large, multi-division, private-sector corporations are managed, then Jeffrey Zients, because he's the OMB Deputy Director for Management, must be viewed as the "Chief Management Officer" (CMO) for the government right? (with the President being the CEO, Peter Orszag the COO, Danny Werfel the CFO, and Cabinet Secretaries the division CEOs). Under this view Mr. Zients is to be commended (isn't he?)for at least being willing to consider the possibility that not every instance of "intra-corporate" trade taking place within the federal government makes sense - either from a mission point of view or cost point of view (or both).

Mon, Nov 2, 2009 R. Eller Wash DC Metro Area

Hasn't the Federal Govt heard of inter-company charges in the private sector? Charging other business units for services provided is common practice in a lot of industries and forces business units to make rational economic decisions. If these agencies didn't charge, then the agencies using the services would tend to use more and more. Send Jeffrey Zients and Claire McCaskell back to Economics 101.

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