Experts Tackle Acquisition Woes

December 2008
By Maryann Lawlor
E-mail About the Author

The new Marine One, the presidential helicopter, is one example of how the government adds military specifications to commercial products, causing cost overruns. It is estimated that the cost of the fleet of 28 helicopters has nearly doubled from the original contract amount.
Procurement environment calls for more personnel, training and options.

Heads shake and tongues wag whenever a conversation turns to the topic of the government acquisition process. From agencies that do not know exactly what they want—or do not know how to explain it—to contractors who deliver what they think an agency needs rather than what it asks for, the general consensus is that the system is in serious need of repair. Experts in the acquisition field also agree on some of the key changes that need to occur to put government acquisition back on the right track. Among the top priorities are additional training for the work force, a revamp of requirements approaches and adoption of a logical method for leveraging commercial products.

Some of the most valuable insights—and possible solutions—about how to use lessons learned from the past to move into the future come from two former government officials who dealt with acquisition issues on a daily basis. One of these experts is the Honorable Jacques S. Gansler. Before he became a professor—the Roger C. Liptiz Chair, the director of the Center for Public Policy and Private Enterprise and the director of the Sloan Biotechnology Industry Center, School of Public Policy at the University of Maryland, College Park, Maryland—Gansler was hip-deep in the acquisition process as the U.S. Defense Department’s undersecretary of defense for acquisition, technology and logistics. And considering that 75 percent of government acquisition occurs in the Defense Department, it is safe to say that Gansler waded into a great deal of the issues the department continues to face today.

Gansler’s experience in the government acquisition world did not end when he left public service for academia. Last year, Secretary of the Army Pete Geren asked him to head a commission to conduct an independent study of the U.S. Army’s acquisition and program management in expeditionary operations and offer recommendations for improvement. Gansler told SIGNAL that the review, now known as the Gansler Commission report, can be viewed as a snapshot of some of the acquisition issues that plague the federal government.

“What we [the commissioners] point out in the report is that, as a result of the end of the Cold War, the budget dropped—plummeted actually. In the case of defense, it went down by     $100 billion, and most of that was procurement. So the decision was made that rather than taking people out of tank commands or fighter planes, they’d take them all out of acquisition,” Gansler explains. For example, in 1990, the Army had five general officers with contracting backgrounds; today, the recent standup of the provisional Expeditionary Contracting Command brings the first general with a contracting acquisition background into the procurement world since 1990.

The same condition exists in the Defense Contract Management Agency (DCMA), he adds. In the past, the agency had four general officers and 25,000 staff members; today, the DCMA has no general officers and only 10,000 personnel. “If you don’t have smart buyers, you don’t make great decisions in the acquisition area, and this is not just in the Army,” Gansler says. “But the problem is that if you want to fix the system, the place you start is with the people who are running it, and I think that’s where I would start. The people who are there are very dedicated and hard-working, but they’re basically undervalued. They don’t get adequate training; they don’t get the promotion potential.”

This situation is likely to grow worse during the next several years. Data reveals that 20,000 people in the acquisition work force are now eligible to retire. To make matters worse, more baby boomers are reaching retirement age, so over the next five years, an additional 18,000 will be retirement eligible. “I’ve seen numbers—they’re huge. And it’s even in industry by the way, not just in the government,” Gansler says.

Because of plummeting budgets during the post-Cold-War period, government agencies did not fill many open positions. As a result, there are few acquisition professionals in middle management today. Gansler believes this is creating two problems. First, many who are eligible to retire will decide to continue to work but do not possess the modern skills required to operate in today’s procurement environment. Second, those who choose to retire will take their knowledge and experience with them. “The worst part is we haven’t been hiring. Now we’ve got to start quickly to bring these people in, and we’ve got to make government service more attractive in order to do that. That’s a big challenge right now,” he says.

This situation is not unique to the Defense Department, Gansler adds. “The reason I’m using that as an example is that it’s the 800-pound gorilla,” he states.

Diann McCoy is another expert who knows about the challenges facing government acquisition personnel from the inside out. Until summer 2008, McCoy was one of the handlers in charge of part of that 800-pound gorilla. As the component acquisition executive at the Defense Information Systems Agency (DISA), Arlington, Virginia, McCoy led the DISA sector that provides program management oversight and guidance to ensure that regulatory and statutory requirements are fulfilled for all DISA acquisitions. Today, McCoy is experiencing life on the other side of the acquisition coin as the account executive, Defense Department sector, Acquisition Solutions Incorporated, Arlington.

Calling on her DISA experience, McCoy says that one problem that needs to be resolved involves the requirements process. She believes the federal government should examine how it determines its requirements, how it articulates them and then how it expects those requirements to be     satisfied.

Several options are available, McCoy notes. Requirements can be stated as a set of objectives, specifications or outcomes. “I believe in the information technology arena, it’s better to state your requirements based upon your expected outcomes versus doing any type of detailed specifications. That’s one of the areas that is a challenge in the acquisition process,” she states.

In this performance-based model, an organization describes to contractors what it is trying to accomplish with a product or service. Then, the company can determine how best to achieve that outcome. “In a lot of cases, the government can get better value if it’s able to express the requirements from an outcome basis. You’ll find that contractors will be more willing to give innovative ideas,” McCoy maintains.

The Pentagon renovation project, which involved some information technology as well as building contractors, is an example of the results from an outcome-based approach. This major effort was completed within cost and ahead of schedule, she points out.

Col. Al Moseley, USAF (Ret.) (l), professor of program management, Defense Acquisition University, discusses the attributes of good leaders with employees of Hanscom Air Force Base, Massachusetts. In addition to sharing his ideas, Col. Moseley split the class into five teams that analyzed a leadership-problem scenario and determined a solution or decision.
However, creating a requirements process that is solely based on outcomes is not always an easy task. Contractors would still have to figure out what the customer is looking for in terms of the outcome. “I don’t have a lot of experience yet, but I have observed that perhaps what is written in the document is not really what the customer is looking for, so trying to figure that out is interesting,” McCoy says.

The idea of moving to a performance-based acquisition system also would require government agencies to re-evaluate their definition of best value, she adds. Many decisions are made based on cost; however, concentrating on the bottom line often can lead to higher costs. “If it’s not a good product, and it requires a lot of rework, then you really haven’t achieved the best solution,” she says.

One reason an outcome-based requirement process is beneficial is that it addresses the changes that have occurred in doing business with the government over the past several years. “The current acquisition process—and this is specifically more Defense Department—was developed from the idea that the government is going to have to create what it needs because it’s not available in industry. So a lot of the process is designed around creating something from scratch,” McCoy explains. “What we find is that many of the things the government is producing or using are based upon leveraging commercial technology. That’s a different kind of risk paradigm.”

It is important that industry understand the timing and other aspects of the decision-making process. Contractors often don’t understand an agency’s contracting process, including who makes the decision to go to the next phase of a project and how they arrive at that decision, she adds.

A better understanding of this process would help government program managers as well. They would have a better grasp of what truly constitutes success: success in documentation and success in achieving the expectations of a particular stakeholder, McCoy notes.

This evaluation of success in a way other than cost is one of Gansler’s concerns as well. Because of the rapid advancements in technology, commercial products began to look more attractive, he says. However, the government did not change its practices to buy commercial products to take advantage of them. Instead, when government agencies purchase commercial products, they often add their own specifications, which lead to cost overruns.

The presidential helicopter is one good example of this process, Gansler says. Although this was supposed to be an off-the-shelf item, the government’s requirements called for improvements such as a bulletproof fuel tank and thousands of pounds of additional communications equipment. The U.S. Navy’s littoral combat ship is another example. The requirement called for it to sustain Sea-State 8 conditions even though these conditions are not likely to occur in the areas the craft was projected to operate.

Government procurement of commercial products also is fraught with other barriers. Laws that require the government to purchase products made in the United States preclude agencies from buying some of the best technologies on the market. “We didn’t know how to buy these commercial systems efficiently and effectively even though their technology promised us attractive things and even though they were available worldwide so our adversaries are using them. Look at what’s happening in Iraq. They’re using cell phones. Our acquisition process hasn’t adjusted to be able to take advantage of not only commercial but also global technology. We have all kinds of rules against globalization,” Gansler says.

McCoy and Gansler agree that the challenges in the government acquisition construct result not only out of a decrease in the number of acquisition professionals but also in the need for additional and new types of training. Gansler says it is imperative that today’s procurers be trained to purchase equipment and services in a new environment.

Traditional training prepares acquisition professionals how to buy a tank, for example, by walking them through the request for proposals and contract award process. When they find themselves in combat operations, however, many procurement officers find themselves learning on the job. “You’re over there and the general says, ‘I want a tent city tomorrow, and by the way, I want to see the troops with three meals a day.’ What are you going to say? You ask the general, ‘Do you want steak or hamburger?’ How do you write this requirement? Can you just use one of the existing contracts? These are all things they haven’t been trained to do. They’ve been trained to buy a tank. Well, they have to be trained for expeditionary operations. They should do exercises in a wartime environment, not just exercises to buy a tank,” Gansler says.

McCoy has a similar idea about what is required to improve training of the acquisition work force. She has high praise for the acquisition professionals who are currently doing “a yeoman’s job” with the kinds of tools and approaches they are given. However, she believes that the government must do a better job in training, improving their skills and giving them what she calls “fast-learning opportunities.” In addition to classroom instruction, McCoy recommends that acquisition professionals have the opportunity to attend workshops or be given real-world projects as practice. They could even be coupled with an experienced acquisition professional to work on a project and learn firsthand what is involved in completing a particular task.

“The other way to create a fast-learning environment is through implementing knowledge-management/knowledge-capture approaches. You build a set of tools and a set of artifacts that relate to experience that other people have had. You capture that and share it with the new generation or newer employees to help them learn as they work,” McCoy says. This type of environment also provides an opportunity for experimentation, perhaps with different programs, so the students can translate what they have learned in a classroom into a practical application, she adds.

Gansler also has suggestions about how to improve training. He says that acquisition personnel first need to understand the process from both the industry and the government sides. “They need to be able to figure out how incentives matter, how even profit is important as an incentive. They need to understand how competition is of such great value as an incentive. They have tended to think of competition as a one-time thing. You hold an initial auction; then from that point on, the costs go up instead of going down. If you maintain the competition, then you gain the benefits of continuous competition versus one-time competition. That’s the difference between the commercial world and the military world. They would understand how cost is an engineering challenge and not an accounting challenge,” he says. “How to buy commercial products for the government is something they’ve really got to learn how to do. We’ve got lots of examples of where we haven’t done it well.”

Providing additional training does pose challenges, Gansler admits. In general, organizations do not have enough staff members to pick up the slack when someone is away for training; consequently, managers may view training as a burden. “So as a result, your boss doesn’t want you to go to school. It’s a negative thing that you’re out of there and he/she now has to worry about how to get your job done while you’re in school,” he says. “But if you’d assume that people are going to be in training, you’d overstaff so you could always have people in training.”

Gansler believes several important steps have been taken that address the variety of challenges the government faces in the acquisition realm. He says Secretary Geren has moved ahead on several initiatives for the Army, and John J. Young Jr., undersecretary of defense for acquisition, technology and logistics, also has instituted some solid ideas, including a competitive prototyping model and an emphasis on funding research.

“But there’s still a lot more that can be done, and I think there’s a hesitation to take major additional steps with only a couple of months left in the administration. But view it in a positive way and say this is an opportunity for the next administration. These are the things that they have to start to do. They’ve got to do unmanned systems instead of manned systems because they’re cheaper and faster, and fewer lives are lost. They’ve got to use commercial off-the-shelf and learn how to do it. They’ve got to bring in these senior acquisition people, maybe from industry, some of them—create special positions—and promote some general officers so you get the word out that it’s a good career path, not a bad one,” Gansler states.

Web Resources
Office of the Undersecretary of Defense for Acquisition, Technology and Logistics:
DISA Component Acquisition Executive Office:

Training the 21st Century Acquisition Work Force

Initiatives already are in the works that address procurement challenges. John J. Young Jr., undersecretary of defense for acquisition, technology and logistics, has established specific strategic objectives, one of which is to create a future acquisition work force. To ensure that this goal is met, the Defense Acquisition University (DAU) has spent more than a year examining the data quality regarding the work force and then analyzing it.

Garry Shafovaloff is the special assistant to Frank J. Anderson Jr., DAU president and director of Human Capital Initiatives, a program underway through Young’s office. Shafovaloff explains that a report released in January 2007 outlined the issues the government faces concerning the acquisition work force. “It basically said that we’re understaffed and overworked, and that we need to rebuild it. Out of that came new pieces of legislation—most of which were directed at the U.S. Defense Department—that told us to assess our gaps and rebuild our work force,” Shafovaloff says. At one point, the number of department personnel involved in acquisition was 179,000; today it is somewhere between 126,000 and 128,000.

In addition to analysis, the DAU has been working on several initiatives, and Shafovaloff says Congress has been helpful in this regard. Section 851 of the fiscal year 2008 Defense Authorization Act required the Defense Department to include a strategy for the acquisition work force in its human capital plan; Section 852 established an acquisition work force development fund.

The first year of funding, approximately $254 million, is being implemented this year, Shafovaloff relates. “We are fully implementing the fund management processes. It’s an internal fund; it’s not appropriated monies. It’s monies that are collected from within the department from existing funding,” he explains.

As a result of the acquisition work force data analysis, which was scheduled to be sent to Congress in November, the DAU divided issues into three main categories: training and development; recruiting and hiring; and retention and recognition. Initiatives in these areas are in the process of being approved by senior-level Defense Department officials. Some key efforts include increasing the number of interns hired, boosting training capacity, using retention incentives, increasing leadership training and rotating personnel in developmental assignments.

By far, the biggest push is to hire more people, particularly interns, Shafovaloff says. The primary concern is the number of current employees who are eligible to retire now or will be eligible for retirement during the next five years. The goal of increasing the number of interns is to beef up the ground-level employee work force now so that in three years, when experienced employees move into executive positions, this group will be prepared to move into the mid level. “That’s a strategy that is deliberate and part of this effort that we’re doing with the 852 fund,” he states.

Under Section 852, the plan is to hire an additional 3,000 interns over the next few years. “I’d say that we are basically tripling our intern program overall,” Shafovaloff says.

Organizations must submit proposals to be considered for the additional funding. The fund is not intended to be the personnel account. It is intended to be used as an adjunct fund to target improvements for the work force. “We want the services to do their long-term planning and not just become reliant on this fund permanently,” he states.

Improving training is another DAU goal. To this end, the university has created the Performance Learning Model, which recognizes that people do not acquire a skill simply by attending a course. During the past five years, the DAU has begun integrating the tools that personnel use to learn and do their jobs. Online courses have been established. More than 200 one-hour online modules about specific topics have been created so acquisition personnel can enter the Continuous Learning Center and quickly browse topics.

In addition, DAU instructors not only teach in classrooms but also work with acquisition personnel in the field, offering advice and solutions to problems. This system ensures that instructors remain current in the acquisition field and provides fresh instruction material, Shafovaloff explains.

Pulling this variety of training tools together is the job of John T. Shannon, executive director of the Learning Capabilities Integration Center (LCIC), DAU. Last year, DAU graduated 35,000 students in its “brick-and-mortar courses,” Shannon says, and more than 100,000 online. “What we’ve tried to do with training is to exploit the Web as best we can to get information out to the work force on a twenty-four/seven basis,” he maintains. Easy access to learning modules also helps acquisition professionals meet their requirement to complete 40 hours of training each year or 80 hours of training in two years, he adds.

The DAU also offers instruction through the Acquisition Knowledge Support System (AKSS), an online resource that is populated with a number of instructions, directives and guidance materials. One example of material available at the AKSS is the Federal Acquisition Regulation document. Shannon explains that the goal now is to minimize the number of clicks it takes to find specific information.

“What we’re trying to do is exploit technology and keep ourselves current with what the work force has. So, right now we’re developing what we’re calling ACQuipedia. It’s patterned after a wiki but it’s all acquisition terms, and that is in the works as we speak,” Shannon shares.

“Also, we are the only corporate university that is on iTunes. If you look at iTunes University, you’ll find DAU right next to Stanford, Harvard and all the rest of them. We’re there. What we’re trying to do is get ourselves where our new work force looks and make information available. We’re developing podcasts. We’ve done what Mr. Young calls a living library where we interview people in short snippets —five or six minutes—then make a podcast out of it and go hang it someplace,” he adds.

Shannon says the DAU refers to its curriculum as “learning assets.” The LCIC’s goals are to develop the right material based on the competencies Defense Department leaders identify as important; get that information out to as many places as possible; then keep the material current. “We centrally manage the curriculum, then we decentralize the way we deliver it,” he states.

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