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Impact of the Federal Appropriations Process on Procurement Outcomes and Requirements Definition
July 17, 2009 at 10:31 pm #76021
OK, so I have this theory I’m kicking around that the appropriations rules (mostly the 1-year period of availability) attached to much of the federal procurement money are actually a source of many of the ills experienced by the acquisition community. Specifically, I think that the fact many agencies dont get their budget until the 2nd FY quarter and then they have to execute that money by the end of the 4th FY quarter contributes to poor requirements definition, which is widely acknowledged to be one of the biggest, if not the single biggest, factor in poor procurement outcomes.
I am interested in hearing about experiences using no-year money, revolving funds, and multi-year appropriations, and how that affected the requirements definition and procurement outcomes.
Also, looking for ideas about how the federal government could address the problems I describe above through changes to the laws or regulations governing the period of availability of federal funds. Many thanks.
July 17, 2009 at 11:47 pm #76033
Peter G. TuttleParticipant
So, Emile, where did you land after your stint on the Hill. Feel free to contact me off-line. Pete
August 3, 2009 at 3:10 pm #76031
I am just catching up with the Acquisition 2.0 group postings and ran across your posting re: the relationship between the federal funding processes and their impacts on the acquisition processes. I agree fully with your observations re: the timing of when program managers actually receive funding and the immediate push into overdrive to get the funds obligated. Actually program managers often do not have more than one quarter to obligate one-year money. CFO’s monitor the obligations and expenses to look for those programs that are taking too long, and in most agencies, the CFO’s gather up as much unobligated funding as they can around the middle of the 3rd quarter. They re-distribute it to programs that can obligate it quickly, and they use if for contingency projects and who knows what else. CFO’s do not want to end the year having underexecuted their Operations budgets.
In addition, the one revolving fund that used to be set up to accomodate multi year IT projects was the IT Fund which served as the operating support funding mechanism for the Federal Technology Service at GSA. The IT Fund and it’s multi year features were eliminated as part of the creation of the Federal Acquisition Service and the establishment o fthe General Acquisition Fund. GSA leadership at the time made a U turn and took the agency backward in its ability to work with agencies to sensibly apply their funds to major acquisition projects that were clearly going to take several years to complete. By the time GSA went through the process of returning unexpended funds to the customer agencies (who then had no choice but to report the unspent funds to Treasury and zero it out of their accounts), agencies made up their minds to use and obligate funding to their own agency revolving funds and MACs so that they could control the fate of their funds more directly.
Changes to the legislative language that established the General Acquisition Fund could re-open some flexibility that would allow agencies to use GSA IT contract vehicles more effectively with their multi-year funds. Use of GSA IT contracts has great potential to lead to lower prices (thru leveraging of government-wide buying power), and savings through the ability to re-deploy their own acquisition workforce to focus on core mission acquisitions. Mary Davie and several of her senior staff can fill you in on details re: the changes that were made to the revolving funds at GSA.
August 4, 2009 at 12:31 am #76029
Thanks for your response Cheryl!
I am pretty familiar with the changes that were made to the revolving funds at GSA, and I understand why those changes were made. I also am fairly certain that, notwithstanding the merits, the idea of loosening the revolving fund rules (or setting up a new fund) at GSA probably wouldn’t get too much traction on the Hill. Or elsewhere. For example, look at all the rules, reporting requirements and oversight attention incorporated into the ARRA. In my opinion, the leaders of our government are not providing the sort of forward thinking and flexibility the procurement system needs.
But the GSA-DoD expired funds *debacle* is a symptom; tightening the rules up (or loosening them) doesn’t really treat what I see as the ailment — the spend-it-or-lose-it reality created by the budget process.
August 4, 2009 at 1:51 pm #76027
Ref requirement definition – I think part of the problem is that people are so busy trying to do more with less, that they don’t begin a “real” requirements definition process until they know they are going to have funding to spend on it. After all, why “waste” time doing a detailed requirements definition or even drafting a SOW/SOW if you’re never going to get the money. A good white paper or powerpoint may garner the support you need and takes less time. Then the money comes through in January (or later) and they are scrambling to put something together that someone could actually bid on, get through all the procurement process hoops (to include getting all the formal approvals on their documents), evaluating the responses and making an award by 30 September. Any wonder why 4th quarter is usually so nuts?
Three possible solutions – in order from least likely to most likely
1) Make one-year appropriations good for 1 calendar year from date the appropriations bill is signed
2) End the traditional August recess for Congress unless every agency has a signed appropriations bill for the next FY
3) Convince the program managers to invest the time and effort to do the requirements definition and gain many of the approvals (on a subject to the availability of funds basis) before funds are released so that documents can be finalized and procurements turned earlier in the year.
September 8, 2009 at 1:11 pm #76025
In providing some opinions to your question(s) I suspect some biographical bona fides/detail might be helpful: I am…Level 4 COTR; Level 3 CO (DAU) warrant eligibility; currently a Project Manager (PMP certified)/Business Manager of a Working Capital Fund enterprise (overseeing the enterprise’s COTR and Finance teams). Worked in industry to 2006 (no prior Govt experience); employed by Federal Govt 2006 on.
I believe there is only a loose relationship between FY and requirements. Having consulted to law firms, telecoms, etc until 2006 I found the requirements and acceptance criteria typically as loose or poorly defined as for government. Or maybe more accurately, defined only in near-term goals. As the effort continues, and as personnel participation evolves and changes, the requirements equally evolve and change. I equate the requirements process as like a group of 10 friends shopping for a SuperBowl party having arrived at the store with a list but invariably while walking the aisles some (many) of the group will find something else or different to buy, jumping off list/off requirements. No different an experience in development efforts.
Regards no-year funding, it really has (or should have) little impact on the appropriations side. Although my enterprise has no restrictions on funding use (we still have some “2003” funding floating around), our customers do not gain no-year benefit simply by placing it with us. We need to account for that funding usage no different than if it was appropriated. My enterprise gains significant benefits from the no-year, being able to move priorities without wrapping our efforts to the prior/current year debate, but this does not help in developing better requirements.
My own theory looks more to the contracting efforts and ability to easily revise terms, conditions, criteria, etc. without exploding the budget from change request cost redetermination. Not to jump onto bandwagon, but were contracting able to implement Agile approaches to a typical base plus four year contract agreement I believe greater success might be achieved on efforts irrespective of appropriations. I’m very quick to follow that implementing such strategies requires agencies make investments in contract, program and project management personnel regards training, retention and administration support (e.g. audit). I believe much of the community is enthusiastic for a more nimble (agile, even) contract mechanism but is not as professionally developed or supported to be successful in the endeavor.
September 13, 2009 at 12:22 am #76023
My experience with expenditure of fiscal year-end funds is that it leads to a great deal of corruption. I’ve seen agencies do everything in their power to spend year-end money frivolously on items/services (e.g. 2-week trips to Europe, new laptops, digital cameras) that are clearly not a genuine Govt “need” (a critical requirement in federal acquisition appropriations and acquisition laws). On the contractor side of the house, I’ve actually had Govt. Contracting Officers ask my firm to submit invoices for FUTURE/PROJECTED (next fiscal year) billing hours so that the agency can expend them in this fiscal year. (Of course, we refused to put our company at risk of commiting criminal fraud just to help out the Govt.) The entire crux is to ensure the year-end funds are SPENT (as opposed to meeting mission-related goals) so that absolutely no, or very little, of the appropriated funds would ever have to be returned to the General Fund which is seen by most, if not all agencies, as a ‘kiss of death’. There is this mentality by Govt. leaders that returning funds to Congress is the equivalent of giving back their own personal money. Who of us wants to give Congress our money? Furthermore, and more importantly, there is this perception that returning any funds to Congress will automatically result in a reduced budget for the follow-on year to reflect the lesser expenditure of the current year. Why does an agency need a $500K budget this upcoming FY if they only spent $400K last year? Since I’m never worked in the appropriations side of the house, I can’t attest to whether this perception is real or not. But I would certainly be interested in discussing this with Congress to see if a resolution is possible.
I myself was glad to see the abuse in spending inter-agency funds, under the Economy Act, highlighted in audit reports the past few years. I was always concerned by the last-minute year-end rush of agencies exercising reimbursable agreements with other agencies, such as GSA, in an attempt to ‘obligate’ any left-over funds remaining at the end of the fiscal year. GAO’s audit revealed what we all suspected which was that oft times these reimbursable inter-agency funds, that had been appropriated by Congress for that particular fiscal year, were not getting awarded by the “servicing agency” until the follow-on fiscal year or, in some cases, even later into future fiscal years. Contracting Officers as a rule are not trained in appropriations law. We typically always relied on our federal Budget partners to oversee Interagency Agreements to ensure compliance with fiscal year appropriation laws. I can’t help but think the Government could be better served if it helped provide appropriations training to Contracting Officers, esp. as it applies to executing interagency agreements.
I personally have not experienced requirements definition suffering more because of the crunch to spend year-end funds, Emile. My experience has been that requirements definition has suffered THROUGHOUT the year primarily because there is a lack of resources, in particular those who possess the competence/knowledge and capacity to write well-defined specifications. In fact, I’m seeing a substantial increase in contracting for consultants to assist the Government to write well-defined specs which, in the the ‘good old days’, was considered an inherently Governmental function. Although I have real heartburn about contracting out this work from a taxpayer perspective, I have to commend the Government for at least acknowledging its weakness in this area and seeking the help it desperately needs to ensure specs are well-defined such that the ultimate federal acquisition goal of conducting a robust level-playing-field competition can be achieved.
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