Acquisition Reform Seems More Like Industry Wish ListTweet
November 7, 2014
Come on, everyone’s doing it! So true, but who would have thought “it” would include recommending improvements to the way the government buys goods and services? The latest cool kids in town are the New Democrat Coalition (NDC), who are the “pro-growth, fiscally-responsible wing of the Democratic Party.”
In September, the NDC submitted acquisition reform recommendations to Representative Mac Thornberry (R-TX). Thornberry was selected by House Armed Services Committee Chairman “Buck” McKeon (R-CA) to identify ways to reform the Department of Defense and its acquisition processes, and he is the likely chair of the House Armed Services Committee.
Acquisition reforms proposed by the NDC have five main themes:
- End sequestration
- Protect and partner with contractors
- Help the overworked acquisition workforce
- Allow the workforce to specialize
- Improve the culture
The Project On Government Oversight doesn’t disagree with the basic concepts. Sequestration is resulting in non-strategic budget cuts. Contractors can provide innovative solutions. Competition is good for taxpayers. The workforce is stretched thin and more targeted caseloads will result in better buying. And government acquisition is a thankless job.
That said, some of the details for each theme seem more like the proposals advanced by contractors and industry squawk boxes than reforms that will help agencies provide savings or better results for taxpayers. The Professional Services Council (PSC), a contractor trade association, has even praised the NDC’s reforms and thanked it for working with the industry. PSC has pushed for acquisition reform for years. The industry often uses the word crisis to describe federal acquisition and contracting, and asserts that the “crisis” will continue if pro-contractor reforms are not implemented.
For example, despite the Acquisition Advisory Panel (AAP) and the Department of Defense (DoD) imploring Congress to tighten restrictions on commercial item contracting, the NDC is actually recommending that commercial buying restrictions be eased—in essence, adopting the contractors’ talking point on the issue. The AAP even stated in its report that industry has tried to expand “the definition of commercial services far beyond what the record indicates Congress and the FAR drafters intended.”
The basic premise of commercial buying was to force the government to buy goods that are offered in the phone book and at the local mall where competition already rules the day. Unfortunately, the government is buying a lot of “commercial” goods, and now services, that are not offered or actually sold anywhere but to the government, including military cargo planes, refueling tankers, and aircraft spare parts. Truth be told, the “commercial item” definition was developed by industry and enacted into law in the 1990s in order to prevent the government from obtaining cost or pricing data when adequate price competition—which exists for actual commercial items—does not exist. Simply stated, the government is buying goods and services that don’t have a commercial market and now it doesn’t have access to contractor data that would show whether or not we’re getting a good deal. Would you buy a car without seeing the sticker price? I hope not—but that’s essentially what the government is doing with the goods and services labeled “commercial.”
The NDC recommends expanding the definition of commercial, creating a “government-industry working group to develop market research and price analysis tools/techniques,” and restricting commercial item audits. Based on the number of DoD Inspector General audits that find contractors charging prices far above “fair and reasonable” prices, I hope those recommendations are rejected. DoD has purchased way too many screws or other spare parts that cost just a few cents in the actual commercial market, but for which contractors charged the government hundreds of dollars.
The NDC also recommends:
- Cutting audits and contractor compliance measures
- Allowing industry to create contract requirements
- Permitting contractors to attend and teach government acquisition classes
- Converting permanent acquisition personnel positions to rotating positions, essentially weakening DoD oversight and policy offices
- Breaking out specific portfolios to allow experienced government professionals to make contracting decisions
The last recommendation makes sense if the industry isn’t allowed to cozy up too close to government purchasers. For example, the fear is that IT contracting officials might curry favor with prospective employers and the government might get a bad deal. However, the rest of the recommendations are more troubling and flat-out impractical.
Contract waste, fraud, and abuse cost taxpayers billions of dollars each year. The NDC’s recommendations will most likely add to the problem. At the risk of sounding cynical, all of these recommendations seem like efforts to hamper federal contract planning, administration, and oversight, and to outsource all phases of acquisition to contractors. These recommendations are based on the false notion that the industry assumes all risk and compliance burdens. Nothing is further from the truth, and real acquisition reform will only move forward when senior policymakers come to the realization that the government should not be responsible for propping up an inflated industry, spending taxpayer money without full transparency and oversight, or allowing contractors to run every aspect of the acquisition process.
I often hear about best practices and the ease of buying in the commercial sector, but many of the industry-driven so-called reforms actually get rid of the best practices that businesses use daily, including thorough market research, clear requirement definitions, ample competition, and the use of fixed-priced contracts. POGO agrees with the NDC that the acquisition workforce is stretched thin, but the solution isn’t to allow contractors to run the show—didn’t we learn anything when we “partnered” with industry and allowed contractors to decide what to buy and how to buy it as lead systems integrators? We should be investing in program and contracting personnel and focusing more on buying smarter, although that may not always be quicker or in a way that pleases contractors.
The Defense Department has its own thoughts on better buying, and is asking Congress to make buying easier. Anne Rung, the new head of the Office of Federal Procurement Policy at the Office of Management and Budget, wants to find ways to make contracting simpler. POGO supports those general concepts and would love to see contracting opened up to non-traditional contractors, but let’s not throw out tools that help the government decide what to buy, how to buy it, and to oversee the $460 billion spent on contracts annually.
Scott Amey is General Counsel for the Project On Government Oversight. Some of Scott's investigations center on contract oversight, human trafficking, the revolving door, and ethics issues.
Topics: Contract Oversight
Authors: Scott H. Amey, J.D.
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