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Poor Acquisition Outcomes Can Also Happen With The Government Acting As The Contractor

In light of all the focus recently on federal acquisition reform, one of the agencies with the most problems is the Department of Veterans Affairs. The VA is a case study on what the failed policies of the past in regards to workforce development have done to the present difficulties with completing the acquisition mission in government.

Next Gov published an article that clearly demonstrates the focus on acquisition reform should be on process and people, not pitting contractors versus government. An internal inspector general report released by the VA highlighted contracting irregularities with an arrangement the VA signed with the Space and Naval Warfare Systems Center in the management and development of IT, including one of the high-profile systems that processes educational benefit claims.

The report describes a typical contracting arrangement of a complex IT system; insufficient clarity of requirements leading to poor cost, schedule, and performance outcomes. What is interesting about this arrangement is that it is a government-government contracting agreement, although the article and the IG report shed some more light on what the understanding actually entailed:

…But the IG found that VA had not conducted an analysis as required by the Federal Acquisition Regulation as to whether awarding IT contracts to SPAWAR “is in the best interest of the government.” The IG also concluded that SPAWAR, not VA, developed requirements for IT projects that “were often broad and general in nature and lacked specific deliverables.”…

What the report clearly spells out is that VA not only did not know what they had arranged, but little to no analysis had been done to justify this arrangement. Further, SPAWAR simply contracted out 87 percent of the work to outside contractors:

…These companies subcontracted out the work to other SPAWAR subcontractors, which increased costs because VA “must pay an additional layer of management fees and overhead,” the IG said. The VA “could not tell us who was performing the work under the [agreement], how many people were providing services, or where they were located,” the report noted.

The VA’s Office of Enterprise Development was unaware VA was paying SPAWAR a 10 percent management fee, and the center was “unable to provide justification or authority to charge” the fee, the IG concluded…

The report further stated that the VA simply handed over the keys to the oversight of performance to SPAWAR, with further information on poorly defined statements of work for the GI bill system which were vague and consisted of poorly detailed information. Recommendations included crafting more clearly defined work statements, establish realistic cost estimates, and improving oversight of contracts.

What the report leaves out is that these recommendations are for activities that are basic contract management issues. Also of note is the fact that the common denominator here is poor acquisition outcomes caused by poor oversight, which would have been the case had VA hired SPAWAR or any other business entity in or outside of government. I too hope that Roger Baker, the new CIO, can straighten out how these contract issues. However, he has his work cut out for him.

There are no silver bullets for VA, and I hope that more focus is given to their predicament as their service delivery continue to suffer with the common denominator being the lack of trained, competent personnel. Several VA leaders I spoke to recently claimed that they would love to implement new techniques to streamline contract management tools, and implement recommendations to better manage their contracts, but have recently delayed or cancelled procurements because they simply do not have the bodies. Looking at the disease of acquisition breakdowns involves a focus on both process and personnel in parallel, and should not be one or the other.

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Mary Davie

Jaime – this is absolutely correct and supports the need for standardizing the interagency agreement detailed in the OFPP guidance from June 2008 that requires roles and responsibilities of the servicing agency and the requiring agency be defined upfront. While not a silver bullet, it certainly helps. The servicing agency should also have a mission and a track record that supports the services they are signing up to provide. Yes, references (past performance) can be provided and checked even between government agencies.