Help a Govie Out: Control Contract Cost Growth

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This topic contains 6 replies, has 4 voices, and was last updated by  Chris Hamm 9 years, 7 months ago.

  • Author
  • #129135

    Sterling Whitehead

    My HCA has asked his contract specialists to tap other agency contract specialists and contracting officers on how their agencies control contract cost growth.

    Contracts costs can often grow at a rate of 3% or more; the Defense Secretary’s Office is putting a lot of energy into controlling that cost growth.

    What does your agency do to control yearly contract cost growth?

  • #129147

    Chris Hamm

    Strong, integrated program management. It strikes me as an incomplete solution to task the 1102 to tackle the problem of cost growth without including the program/mission side in the dialogue.

  • #129145

    Candace Riddle

    Anyone using data mining to adress this problem or to eliminate contract fraud?

  • #129143

    Sterling Whitehead

    Chris, can you provide a brief of example of what you mean by strong, integrated program management. We have program management here, but I want to make sure I grasp your vision.

  • #129141

    Sterling Whitehead

    I am sure that the Office of the Secretary of Defense (OSD) is doing this. It’s important to note that data mining is only as good as the data, and much procurement data is very bad. This is one reason why is heavily criticized.

  • #129139

    Steve Zaro

    Hi, Sterling. I consult with a lot of agencies on managing their contract spend and procurement practices, so i will throw in my two cents. you don’t offer a lot of detail about your situation so in general, successfully exercising control over contract growth requires:

    • Requiring accurate and conforming information about what’s being provided, including supplier quality, timeliness, performance and price (just accepting that data is bad won’t change anything)
    • A method to rank suppliers based on the criteria most important to the department.
    • Flexible and focused strategies designed to deliver continual cost savings.
    • Incentivizing supplier compliance to deparmental requirements to control costs
  • #129137

    Chris Hamm

    My main point is that the best strategy is not to ask other agency contract specialists and KOs only. To do so implies that they have dominion over contract cost growth, and I do not think that they do without a partnership with the program/mission folks.

    Think of it like a marriage. Mom owns the checkbook, but Dad keeps spending. You need both parties to devise the solution. Our acquisition professionals set the foundation by using the proper contract types, and the COTR/CORs then drive the cost savings through quality assurance surveillance, award/incentive fee monitor, effective use of EVM, conducting meaningful IBRs, etc.

    I think the contract part only gets half of the way where you are trying to go . . . .

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