New version of IT reform gets on the right track

The crabby budget negotiations, or lack of negotiation, make it seem as if everything in Washington is at an impasse. But some earnest back and forth among stakeholders in, and the authors of, the Federal Information Technology Acquisition Reform Act, or FITARA, have resulted in a new draft with significant changes.

Companies selling IT products and services should welcome most of the changes. As always, watch the progress of this important bill because it will eventually inform go-to market practices for the federal market.

Rep. Darrell Issa’s House Committee on Oversight and Government Reform provided a Cliff Notes version of the changes, and why the committee made them. If you sell, you should read it.

Among the many large and small changes, I think three are particularly significant. Namely:

• Change in language about commodities
• Removal or modification of potentially burdensome oversight and bureaucracy
• Clarification of federal leadership roles.

For sellers of electronics and information technology products, and for that matter, professional services, perhaps the most significant change concerns commodity IT. Recall that the first draft said much about commodity IT, on the grounds that the OMB has been using the term for several years.

My concern, and that of groups such as the Professional Services Council, was that 1) it’s vague and 2) it seems to fly in the face of the notion of “commercial” products and services, which are emphasized in law and in the Federal Acquisition Regulation.

In the new draft, the committee deleted references to “commodity IT.” In its place, the draft refers to “infrastructure and common applications.” The sales implication here is important; it means that in sales and business development, you can put more emphasis on product differentiation, value and results, rather than on pricing, as implied by the word “commodity.”

A second concern was establishment of IT acquisition structures that almost seemed to take the industry back to the Brooks Act, and to the delegation of procurement authority that used to reside, mostly unsuccessfully, with the General Services Administration.

Here, again, the committee listened.

The first draft laid out a Commodity IT Center to, in effect, compete with GSA schedule and government-wide acquisition contracts. With “commodity” out of the picture, instead there’s a Common Application Collaboration Center made up of program managers from across government reporting to the director of the Office of Management and Budget.

It will help develop what the committee calls “program and technical management expertise necessary for coordinated IT acquisition best practices.”  This is the group that could define requirements for actual government-wide commitments. This is how corporations do strategic sourcing, and it will be interesting to see if the government will ever be able to actually aggregate requirements and pool money to do the same.

The original also created Assisted Acquisition Centers of Excellence, to be designated by OMB. Industry saw these as working against efficiency because contracting shops don’t have the authority to create demand or pool money, the two things required to leverage the government’s buying power. The committee didn’t expunge the AACEs, but it made their use optional in the new draft.

The idea is that the CIO Council will identify the most commonly needed IT infrastructure and applications used across government.  The Collaboration Center will then point to standards-based solutions that work and help herd the agencies toward common solutions, presumably aggregating requirements for actual commitments. 

The AACEs will presumably be able to point to contract vehicles and conduct procurements.  Since they are optional, there is little danger that they will become immovable roadblocks. 

The bill also requires that all buyers see what other customers have paid for the same thing.  This is a key strategic sourcing concept. Conversely, sellers will need to start counting cost of sales and quantifying the role of partners, lest the government demand pricing down the road that is not sustainable from a sales perspective.

It seems to me that the seeds for meaningful strategic sourcing of commonly used items are planted by this bill; unfortunately, however, we all know most government employees believe their agency is unique.  As industry, we’ve had to learn to deal with the half-million or so people in the acquisition workforce, and the 36,000 contracting officers across some 1,600 locations. Centralization for certain types of goods and services could help lower our cost of sales, but until Congress makes even more changes than are contemplated in this bill, we will all be taking baby steps. 

Fortunately, the bill seems to recognize that creating more contract vehicles is not the answer, but it still stops short of showing how actual requirements can be aggregated and money pooled to make the commitments required of a commercial-grade strategic sourcing relationship.

The big sticking points in my mind are the constraints of fiscal law. The rigidity with Congress grants spending authority to programs with no incentive, some even say authority, for program managers to give up funds for the greater good.  I just don’t see how the committee’s objectives, and the objectives of OMB, are really going to work until Congress tackles this head-on.

In the meantime, sellers should beware of strategic sourcing talk without actual commitment.