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By Nick Wakeman

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Nick Wakeman

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.


Posted by Nick Wakeman on Feb 17, 2011 at 9:34 AM

Reader Comments

Wed, Feb 23, 2011 Another Interested Party

Nick: The comments are all good. Looks like we really need a dialog across 3 interested parties, and add Congress to the mix too. So how do we eliminated the political posturing and all work toward a common goal?

Fri, Feb 18, 2011 Kyle Shepard UNITED STATES OF AMERICA - (US)

Well said. Some excellent points. One other point, as government shrinks, there will be more capital available for private industry, which should cause it to grow in ways we cannot easily predict today.

Fri, Feb 18, 2011 Olde Sarge DC

If you really want to achieve significant IT savings consider the cost of commercial software licenses. Micrsoft Windows and Office applications are very expenssive to pay for. Even at best cost pricing it runs abut $250+$?? for support per workstation. Replacing them with Linux/Open Office would save $??M(B) per year while providing the same level of service to end users. IT professionals serious about saving government budgets will migrate their IT services to open-source solutions. Ten years ago that wouldn't have been practical but, today it is. Ubuntu, Mandriva, etc. are very mature. Open Office in some ways is even better than MS Office and remains compatible. Open-source options offer significant savings to the IT enterprise. Many of the best enterprise class services are provided by open-source solutions, especially when it comes to web technology. If you want to save your budgets and your enterprise migrate to open-source.

Fri, Feb 18, 2011 Paul Fairfax, VA

Nick, I agree with your premise that the budget cuts will provide an opportunity for change. While in government, a strong faction in Congress attempted to cut the budget of the agency I worked for by approx. 30%. That crisis created a "circle the wagons" atmosphere across the stovepipes of agency leadership, political and career, and we jointly crafted plans on how to absorb the cuts with the least effect to the mission. Cooperation was at an all time high, and we really had a sense of enterprise governance at work. When the administration beat back the proposed cuts, the cooperative spirit was lost and we went back to our "business as usual" and legacy of duplicating efforts in multiple stovepipes. The lesson I took from this was that crisies provide the environment in which to truly transform. Government is being positioned in the current budget crisis to have a generational opportunity to fundamentally change how it does business. The strategies on how to do so are pretty simple; execution is more complex. The real question is whether government can deliver the leadership necessary to take on radical change that will impact many, many organizational and individual agendas.

Fri, Feb 18, 2011 Interested Party

Nick, this is pretty naive on your part. Yes, it seems intuitive to simply take away money without reducing mission, but it is just plain wrong-headed. Most of the things that make us inefficient are mandated by Congress. Examples are socioeconomic goals, GS pay system, protests, programs we don't want but are forced by Congress, etc. Most of us are not stupid, lazy, or willfully inefficient, we are products of the environment Congress creates around us. To believe that Congress has the knowledge to make arbitrary cuts wisely is foolish. Even as close as you are to our community, you don't understand at the level of sophistication that would require. What makes you think Congress understands the work of governnment that well? They can't even figure out that they can't just apply a template to existing data and decide we are overpaid. This is all political opportunism and you are playing right into thier hands. But let me tell you what I REALLY think.

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