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Federal procurement update

At last Thursday’s Bisnow Federal Procurement Update Dan Gordon, Administrator for Federal Procurement Policy with OMB and Steve Schooner, Co-director of the Government Procurement Law Program at George Washington University, discussed federal procurement and how it needs to change in the current budget environment.

Increase in procurement dollars

Beginning in 2001 government procurement figures soared at a rate of 12% per year (five times the rate of inflation). That increase was from under $200 billion to $500 billion in the span of nine years. However things changed in 2009 with an increase of only four percent and likely very little increase in the foreseeable future.

Much of the growth has been the transition from purchasing things to purchasing services. However the government’s “rule book” and senior management grew up in a world of purchasing things not services, so the culture needs to adapt.

Insourcing is not the goal

Dan pointed out that insourcing personnel is not a goal, what they are seeking is rebalancing the government’s relationship with contractors. For example government contractors should not be running operations. No corporation would have someone else running their operations. There are too many situations where government has yielded control to contractors. The solution doesn’t require massive insourcing. Targeted, limited numbers of positions should be insourced. For critical functions the government needs enough internal capacity to maintain control.

The greatest need is the area of contracting reports. Whereas ten years ago the focus was on awarding the contract, today the focus is on acquisition planning and managing contracts once they are awarded.

Dan stressed that current regulations do allow meeting with industry far more than presently occurs. Too many times contractors are told by contracting officers in government that they can’t discuss or communicate. But the contracting officers need to be listening and talking to industry. This is especially important in acquisition planning.

Contract Protests

Steven shared that the number of contract protests today seems large only because there were so few in recent years. The peak was 1993 when over 3,300 protests. The number is now around 2,300 per year, but a lot more money is being spent now than in 1993.

The chance of a procurement being protested is under 1/10 of one percent, and government rarely loses. GAO sustains about 70 protests per year in honor of contractors. Good debriefings after contracts are awarded would result in fewer protests.

OMB Federal IT restructuring

The new initiative announced last week is not calling for more statutes or regulations on acquisition as there is a lot of flexibility under the current system. Dan’s high points from the announcement:
1. Government needs better program management with dedicated program managers for large IT projects.
2. There should be an integrated team. A contracting officer needs to be part of the team from day one.
3. There should be much more communication with industry. OMB will be rolling out a myth-busting campaign to encourage contract officers to communicate with industry, letting them know that they will not be punished for taking risk and encouraging innovation.

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Was there any discussion of increasing the credit card limit for small purchases? Was at event over weekend and people discussed that as a way to make procurement more efficient