Room For Improvement In Federal Procurement Process, OMB Rep Says

VARs who navigate the federal procurement process often find it to be an excruciating experience, with an endless number of well-intentioned regulations that either nudge them out of the running or load on the red tape. To those who believe the process requires change, the Office of Management and Budget (OMB) says it knows and is working to do something about it.

Related to the challenges associated with government purchasing is the increasing trend to buy services rather than hardware or software, according to an analysis of the federal IT market released by Federal Sources (FSI). The government IT market intelligence firm reviewed the analysis in a session at its Federal Outlook conference yesterday.

"Product is going down, and professional services is becoming the place to be," said Ray Bjorklund, senior vice president and chief knowledge officer at FSI. "It's just not easy to buy services," with such gotchas as performance-based acquisitions, strategic sourcing processes, share-in-savings contracting and prohibition against the acquisition of personal services -- all in the shadow of the Service Contract Act of 1965.

More specifically, performance-based acquisitions and share-in-savings contracting aren't working yet, Bjorklund said. The former requires agencies to describe needs in terms of what is to be achieved, not how it is to be done; the latter shifts performance risk to industry and pulls payment from resulting revenue. The prohibition against acquisition of personal services -- agencies turning to integrators for one-off projects at their own discretion -- can tie the hands of agencies and eliminate opportunities for some contractors.

"[That] will become a growing problem for governments who need a single expertise" to accomplish more immediate IT needs, Bjorklund said.

Further mucking up the process is a serious lack of a skilled acquisition workforce within agencies, both in numbers and necessary skill sets. It's what Bjorklund referred to as a lack of "smart buyers" in government. In fact, about three-fourths of senior federal acquisition executives expressed concern about their acquisition workforce, according to the FSI analysis.

But grumbles from the private sector aren't falling on deaf ears. In a lunch keynote at the event, David Safavian, administrator of the Office of Federal Procurement Policy within the OMB, promised improvement.

"It's a trick figuring out how to navigate through the rules and regulations," he said. "How do we make that process easier?"

In answer to his own question, Safavian said the OMB is focusing on three areas: competitive sourcing, acquisition and workforce management. Competitive sourcing refers to an attempt by the Bush administration to motivate in-house providers of commercial services through mandated public-private competition; it's a concept many agencies are slow to move on.

"This is not a popular topic," Safavian said. "But anyone that thinks competitive sourcing will go quietly into the night is vastly mistaken. At the end of the day, this is a presidential initiative that he takes seriously and that provides a lot of opportunity. But our initiative doesn't work if [industry] doesn't come to the table and play."

In addition to competitive pricing, the tendency to purchase according to the best-value model rather than the efficiency model -- buying according to cost rather than greatest proposed return -- stalls the acquisition process and prevents many VARs from competing beyond price point.

"The pendulum between best-value and efficiency is swinging," Safavian said, adding that he subscribes to the latter way of thinking. "My job is to make sure the pendulum slows down so industry can better plan and respond to [opportunities]."

The OMB is also engaging in a gap analysis of its acquisition workforce -- examining not only the urgency associated with a shrinking staff, but also a lacking knowledge base.

"I know it's not the private sector's job to train acquisition officers," Safavian said. "But this issue is probably most relevant for industry. We have to figure out what the hell we're going to do."

While no specific changes to the federal procurement process have yet been laid out, Safavian encouraged the private sector to help agencies think outside the box.

"We certainly don't have all the answers; we need all the help we can get to make sure we don't do something that makes zero sense," he said. "When are we going to get it right? We're not. We're constantly going to be changing and evaluating. But what I tell agencies is if it's not prohibited, you can do it. The message we need to get out is that we reward innovation."