[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
THE STATE OF FEDERAL CONTRACTING: OPPORTUNITIES AND CHALLENGES FOR
STRENGTHENING GOVERNMENT PROCUREMENT AND ACQUISITION POLICIES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
ORGANIZATION, AND PROCUREMENT
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
JUNE 16, 2009
__________
Serial No. 111-53
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania DARRELL E. ISSA, California
CAROLYN B. MALONEY, New York DAN BURTON, Indiana
ELIJAH E. CUMMINGS, Maryland JOHN M. McHUGH, New York
DENNIS J. KUCINICH, Ohio JOHN L. MICA, Florida
JOHN F. TIERNEY, Massachusetts MARK E. SOUDER, Indiana
WM. LACY CLAY, Missouri TODD RUSSELL PLATTS, Pennsylvania
DIANE E. WATSON, California JOHN J. DUNCAN, Jr., Tennessee
STEPHEN F. LYNCH, Massachusetts MICHAEL R. TURNER, Ohio
JIM COOPER, Tennessee LYNN A. WESTMORELAND, Georgia
GERALD E. CONNOLLY, Virginia PATRICK T. McHENRY, North Carolina
MIKE QUIGLEY, Illinois BRIAN P. BILBRAY, California
MARCY KAPTUR, Ohio JIM JORDAN, Ohio
ELEANOR HOLMES NORTON, District of JEFF FLAKE, Arizona
Columbia JEFF FORTENBERRY, Nebraska
PATRICK J. KENNEDY, Rhode Island JASON CHAFFETZ, Utah
DANNY K. DAVIS, Illinois AARON SCHOCK, Illinois
CHRIS VAN HOLLEN, Maryland
HENRY CUELLAR, Texas
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
PETER WELCH, Vermont
BILL FOSTER, Illinois
JACKIE SPEIER, California
STEVE DRIEHAUS, Ohio
------ ------
Ron Stroman, Staff Director
Michael McCarthy, Deputy Staff Director
Carla Hultberg, Chief Clerk
Larry Brady, Minority Staff Director
Subcommittee on Government Management, Organization, and Procurement
DIANE E. WATSON, California, Chairman
PAUL E. KANJORSKI, Pennsylvania BRIAN P. BILBRAY, California
JIM COOPER, Tennessee AARON SCHOCK, Illinois
GERALD E. CONNOLLY, Virginia JOHN J. DUNCAN, Jr., Tennessee
HENRY CUELLAR, Texas JEFF FLAKE, Arizona
JACKIE SPEIER, California ------ ------
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
C O N T E N T S
----------
Page
Hearing held on June 16, 2009.................................... 1
Statement of:
Assad, Shay, Director, Defense Procurement and Acquisition
Policy, U.S. Department of Defense; and David A. Drabkin,
Acting Chief Acquisition Officer, General Services
Administration............................................. 16
Assad, Shay.............................................. 16
Drabkin, David A......................................... 32
Gormley, William, chairman, Coalition for Government
Procurement; Philip Bond, president, TechAmerica; John
McNerney, general counsel, Mechanical Contractors
Association of America; Karen L. Manos, Chair-elect,
Procurement Planing Committee, National Defense Industry
Association; Kara M. Sacilotto, partner, Wiley Rein, LLP;
Marcia G. Madsen, partner, Mayer Brown, LLP; and Scott
Amey, general counsel, Project on Government Oversight..... 66
Amey, Scott.............................................. 135
Bond, Philip............................................. 77
Gormley, William......................................... 66
McNerney, John........................................... 86
Madsen, Marcia G......................................... 123
Manos, Karen L........................................... 102
Sacilotto, Kara M........................................ 109
Letters, statements, etc., submitted for the record by:
Amey, Scott, general counsel, Project on Government
Oversight, prepared statement of........................... 136
Assad, Shay, Director, Defense Procurement and Acquisition
Policy, U.S. Department of Defense, prepared statement of.. 19
Bilbray, Hon. Brian P., a Representative in Congress from the
State of California, prepared statement of................. 5
Bond, Philip, president, TechAmerica, prepared statement of.. 79
Connolly, Hon. Gerald E., a Representative in Congress from
the State of Virginia, prepared statement of............... 8
Drabkin, David A., Acting Chief Acquisition Officer, General
Services Administration, prepared statement of............. 34
Gormley, William, chairman, Coalition for Government
Procurement, prepared statement of......................... 68
Madsen, Marcia G., partner, Mayer Brown, LLP, prepared
statement of............................................... 125
Manos, Karen L., Chair-elect, Procurement Planing Committee,
National Defense Industry Association, prepared statement
of......................................................... 104
McNerney, John, general counsel, Mechanical Contractors
Association of America, prepared statement of.............. 88
Quigley, Hon. Mike, a Representative in Congress from the
State of Illinois, prepared statement of................... 13
Sacilotto, Kara M., partner, Wiley Rein, LLP, prepared
statement of............................................... 111
THE STATE OF FEDERAL CONTRACTING: OPPORTUNITIES AND CHALLENGES FOR
STRENGTHENING GOVERNMENT PROCUREMENT AND ACQUISITION POLICIES
----------
TUESDAY, JUNE 16, 2009
House of Representatives,
Subcommittee on Government Management,
Organization, and Procurement,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:10 a.m., in
room 2154, Rayburn House Office Building, Hon. Diane E. Watson
(chairwoman of the subcommittee) presiding.
Present: Representatives Watson, Connolly, Cuellar,
Quigley, Bilbray, and Duncan.
Staff present: Bert Hammond, staff director; Valerie Van
Buren, clerk; Adam Bordes and Deborah Mack, professional staff;
Dan Blankenburg, minority director of outreach and senior
advisor; Adam Fromm, minority chief clerk and Member liaison;
Stephen Castor, minority senior counsel; and Ashley Callen,
minority counsel.
Ms. Watson. The Subcommittee on Government Management,
Organization, and Procurement of the Committee on Oversight and
Government Reform will now come to order.
Today's hearing will examine our current laws and
regulations governing agency procurement and acquisition
practices and review plans for implementing new requirements
contained in recently enacted legislation.
The subcommittee will also seek additional information from
administration witnesses about his priorities and objectives
for improving governmentwide procurement and acquisition
policies.
If there are opening statements, written statements and
other materials, without objection, the Chair and ranking
minority member will have 5 minutes to make opening statements
followed by opening statements not to exceed 3 minutes by any
Member who seeks recognition.
Without objection, Members and witnesses may have 5
legislative days to submit a written statement or extraneous
materials for the record.
I want to welcome today's witnesses and open the hearing on
what is the subcommittee's first attempt of this Congress to
strategically examine the state of Federal procurement
throughout our civilian and military agencies. And our
distinguished witnesses from both panels will be giving
testimony. We look forward to their testimony.
Before we begin, however, I regret to inform my colleagues
that the Office of Management and Budget, despite my continued
efforts to persuade them otherwise, have declined to provide us
a witness this morning.
At the beginning of this Congress, I was looking forward to
having a new administration, because refusal to testify before
this committee became all too commonplace with this
administration's predecessor. President Obama, to his credit,
has made it clear that he understands the value and the
necessity for strong oversight and government programs. And I
will give him a little credit; I do think they are waiting for
their chief administrator. But, still, I think they needed to
send somebody.
So today's hearing is a broadbased discussion on just
beginning to open up the process of Federal procurement,
something that cost our government over half a trillion dollars
annually. I believe not having OMB at the table this morning
makes our duty to perform diligent oversight on these topics
all the more difficult. I strongly encourage the White House to
become engaged with our committee on these matters so we can
have a more constructive and cohesive relationship moving
forward.
The Federal Government is the largest global purchaser of
goods and services, spending $517 billion last year alone.
This amount is more than double of what was spent on
contracting at the beginning of this decade, with a significant
portion dedicated to our increased needs in the areas of
homeland and national security.
At the same time, our government's shrinking acquisition
work force has fewer hands on deck to manage the escalating
number of contracts that are awarded annually.
These factors have contributed greatly to a less
competitive contracting process with little oversight, which
results in explosive cost and uneven incomes for both civilian
and military programs or outcomes.
According to the GAO, our government's procurement and
acquisition deficits, deficiencies, are considered to be a
high-risk management challenge across multiple agencies.
At DOD alone, GAO recently reported approximately $296
billion in cost overruns of 95 major weapons systems under
development. Other significant contracting deficiencies at our
agencies include the excessive awarding of contracts to
contractors that have been disbarred, suspended, or have been
performing poorly.
It should be noted that many of these issues were echoed in
other GAO work examining the role of contractors involved with
contingency operations in Iraq and Afghanistan as well as a
recent interim report to Congress from the Commission on
Wartime Contracting.
So today I am hoping our agency witnesses will tell us what
changes are underway to remedy the problems identified by GAO
and those cited in previous congressional oversight
proceedings. In particular, I am interested in hearing how both
our civilian and military agencies are adhering to the new
contracting requirements and changes authorized in the recently
enacted stimulus legislation and Clean Contracting Act.
I also would like to hear how our stakeholder panelists are
meeting the compliance challenges associated with these changes
while striving to improve the quality of services they provide.
Once again, I am sorry that OMB is not with us today so we
could hear their views, but we will have to proceed without
their input. And I will guarantee you that in the very near
future, someone will come in from that agency.
So with that, I thank our panel for joining us today and
look forward to their testimony.
And I would like now to go to the ranking member.
Mr. Bilbray. Thank you, Madam Chair.
Madam Chair, I want to thank you for this hearing, and I
know this goes on procedurally to always thank the Chair for
the hearing, but I think that the more that we find out about
the challenges of accountability in the budget, the more we
realize, especially in our procurement subcommittee, what a
huge task we have before us.
Madam Chair, I think that we will all agree that previous
administrations have been, let's just say, let down by the lack
of oversight, especially the last administration. And, sadly, I
think that there are people on both sides of the aisle and on
both sides of this dais that perceive oversight as an
adversarial relationship.
Sadly, that is the perception, but I would have to say that
oversight should be perceived about as adversarial as a safety
check up when you go to your Virginia or your D.C. DMV. They
require you to check to make sure that the brakes work, that
the windshield wipers are on, that the safety devices are
working.
And to perceive our procedure as adversarial would be just
as much as saying that I resent going in and making sure that
my windshield wipers will work when the rain starts coming
down, that my brakes are not going to fail when I need it in a
panic stop. I think that we have to understand this may be a
bit of a nuisance to everybody who has to play it, but in
reality, it is essential to be able to make the system work.
The Founding Fathers never meant that the executive branch
would operate in isolation; that the oversight of the Congress
was an essential part of the plan. And, sadly, with such an
essential component like OMB, they not only place us in a
situation, missing at this time, they not only place us in a
situation of not being able to fulfill our responsibilities to
work with them, but the fact is they blind us. This is almost
like the windshield wipers have gone out today because they
don't have a critical component here, and so we will have a
blind spot. And hopefully by working with the administration,
we can take care of that blind spot and get them to participate
in this.
So I would just like to say that I think that the Chair has
approached this in an appropriate manner. We are here to make
sure or to do all we can too avoid the problems of the past, to
learn from the failures of the previous administration, and to
help this administration get over those humps and address the
challenges of the future.
And we are part of the team, but we have to have the team
working together. We need all of us in the huddle, and right
now, we have a major, let's just call it a running back, that
is missing in this huddle, and hopefully we can get that
running back out from wherever he or she is and back in this
huddle.
So, Madam Chair, I will ask that my written opening
statement be introduced into the record and just state that I
hope that in the future, we have the whole team huddling up to
address this challenge.
[The prepared statement of Hon. Brian P. Bilbray follows:]
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Ms. Watson. Thank you, and I now yield to Mr. Connolly of
Virginia.
Mr. Connolly. I want to thank you, Chairwoman Watson, for
holding this subcommittee hearing and for your ongoing efforts
to address the need of acquisition reform in particular.
We have made some progress in raising awareness of the
challenges and opportunities we face. I have noticed more
references to the pending Federal brain drain recently whereby
one-third of the Federal work force will be eligible for
retirement by 2012 and nearly half within the decade.
There also seems to be more awareness about the lack of
growth in acquisition personnel during the previous
administration, even as the value of contracts doubled.
These are all positive signs, that is to say the
recognition of the problem, because at the heart of all the
challenges and opportunities of acquisition policy is our
personnel.
I am personally gratified that there's a growing
recognition of the challenge which may represent the single
greatest opportunity for this subcommittee, Madam Chairwoman,
to have a substantial positive impact on Federal policy. With a
sufficient number of highly skilled properly compensated staff,
we can address our most pressing contracting issues, the
caliber and quantity of our personnel matters, more than the
volume of regulations within which we will have contractors
operate.
Properly compensated acquisition personnel with good
benefits have less of an incentive to leave the government and
go work in the private sector side of contracting. This
addresses both the need to increase our work force and avoids
conflicts of interest that can arise with a revolving door
between government and the private sector.
A strong salary and benefit package can both attract and
retain the highly skilled personnel whose acumen will be
necessary to manage increasingly large, complex contracts. This
committee has been making progress on this part with the
Federal Retirement Reform Act. Though the Senate has not taken
up these reforms yet, we have made significant progress in the
House.
The Paid Parental Leave Act is also an important part of
our comprehensive effort to improve compensation packages with
which to recruit and retain Federal workers. One area we have
not yet addressed legislatively is telework. I hope this
committee, Madam Chairwoman, will have a hearing and mark up
H.R. 1722, the Telework Improvement Act. Today's employees
demand those kinds of benefits, and they will help us in both
recruitment and retention.
There are procedural reforms we also need to make, and I
know we will get into those. But I do believe, Madam
Chairwoman, that this hearing will be very helpful as we
examine the challenges we are facing in the Federal work force,
particularly those in acquisition and management of large
complex contracts.
I thank the Chair.
[The prepared statement of Hon. Gerald E. Connolly
follows:]
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Ms. Watson. Thank you.
I now yield to Mr. Duncan of Tennessee.
Mr. Duncan. Well, thank you very much, Madam Chairwoman,
and thank you for calling this very important hearing.
I regret that some other previously scheduled meetings are
not going to allow me to be here for much of it, but I do want
to express some concerns that I have, and hopefully maybe the
witnesses will later address some of these.
I remember last year when we had the hearing on steroids
and had Roger Clemens, the famous baseball player, and this
room was packed with reporters and the cameras. And the next
week we had a hearing, another hearing, on reforming the
Federal contracting process, much more important, and no
reporters and no cameras. And that's sort of the way this is in
our celebrity age that we live in. Although I do think that our
steroid hearings did some good in calling to the attention of
young athletes and their families to the dangers of steroids,
but this is a very, very important topic.
And the concern I have was touched on by the gentleman from
Virginia just now when he talked about the revolving door
between the government and the government contractors. We see
that most clearly in the Defense Department. I remember 4 or 5
years ago reading an article in the International Herald
Tribune about the revolving door at the Pentagon and how that
all the big Defense contractors and small Defense contractors
hire all the retired admirals and generals.
And then as a result of that, we saw about a year ago, when
the GAO came out with a report and said that the Defense
Department have had $295 billion in cost overruns on just their
72 largest weapons systems.
That should have just shocked and horrified people,
especially anybody that considers themselves to be a fiscal
conservative, because they have almost a $295 billion cost
overrun on just their 72 largest contracts and didn't count all
the cost overruns that might have been present in the thousands
of other large-, medium-, and small-sized contracts.
But it seems to me, when you look deeply into any Federal
contract, it's always some sort of sweetheart insider-type
deal, because--not only the Pentagon--but almost all the
government contractors hire former Federal employees, former
high-ranking Federal employees. And then they go back to the
Department's agencies for which they worked, and they get these
lucrative sometimes, just ridiculously exorbitant contracts,
and that shouldn't be going on.
It's gone on, I guess, for almost forever, and I suppose we
can't stop it, but I wish there was something we could do to
stop all these sweetheart insider transactions that are found
in almost every Federal contract.
Thank you.
Ms. Watson. Mr. Quigley of Illinois.
Mr. Quigley. Thank you, Madam Chairwoman.
Is it appropriate to ask you if OMB has given you a reason
for not appearing?
Ms. Watson. They have said that they don't have a director.
And we suggested that someone come over, and they pretty much
said they were told not to send anyone.
Mr. Quigley. They pretty much said what?
Ms. Watson. That they were told not to send anyone. So we
will be following it. There will be somebody here next time.
Mr. Quigley. And I guess just to respond, if they don't
feel that they can be here because they don't have a director,
I hope they can act appropriately otherwise and things don't
stop functioning.
But, again, I thank you for your efforts here and just
simply would ask that my written remarks be given to the
record.
[The prepared statement of Hon. Mike Quigley follows:]
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Ms. Watson. Without objection.
Mr. Cuellar.
Mr. Cuellar. Thank you, Madam Chair.
Again, thank you for holding this important meeting.
I also am disappointed that they couldn't send somebody. I
know they could have sent somebody. I am sure they have a
higher upper that could have come here, to at least be up here
and give limited testimony.
I strongly disagree when an agency does that, when the
legislators are calling for oversight, and they don't even have
the courtesy at sending somebody at least to provide some
limited information. I hope that when that arises in the
future, we could huddle up a little bit before and talk about
some steps we could take to make sure it doesn't happen again.
I am sure they are going to send somebody next time, but
there's always somebody they can send, even if it's in a
limited testimony.
Ms. Watson. Well noted, Mr. Cuellar.
Mr. Cuellar. Thank you.
Madam Chairman, this is an important hearing because I
think, as the Members have said, this procurement has become
very complex, has become very costly.
When you look at the services part of it, there's always
the question, what is government supposed to be doing? What is
the private sector? Who is doing what? I think it's about,
what, 60 percent of the procurement might be in services. So
there's a lot of questions.
But one of the things that we certainly would like to see
is what SARA, the Acquisition Advisory Board, and I think GAO
have also come up with significant policy recommendations, and
I am one of those who, I don't like to see reports, but if
there are some good recommendations, I hope that we could
implement, help implement some of those recommendations.
Because I know the GAO and the other folks do a lot of
work. Some of those recommendations might not work, but I know
a lot of them are good recommendations. And I hope we can have
a followup on some recommendations on that.
But otherwise, Madam Chair, I appreciate all the work that
you are doing.
Ms. Watson. I just want to explain to the Members and the
audience, this is a beginning of a series of hearings on
competitiveness, procurements, etc. It is a broad span through
all the agencies and departments of the government.
This is just the beginning, but we do hope to gather enough
information where we can make recommendations to the full
committee to set up a policy, standards by which each
department must following. And I can't emphasize enough, this
is just the beginning of a series of hearings. We will notify
you in plenty of time when we have our next hearing, and I do
appreciate the Members that are here.
If there are no additional opening statements, and I see no
other Members from either side, the subcommittee will now
receive testimony from the witnesses before us today.
We will now turn to our first panel, and it is the policy
of the Committee on Oversight and Government Reform to swear in
all witnesses before they testify, and I would like to ask you
both to please stand and raise your right hands.
[Witnesses sworn.]
Ms. Watson. Let the record reflect that the witnesses
answered in the affirmative. Thank you.
I will now introduce our panel.
Mr. Shay Assad is the Acting Deputy Undersecretary of
Defense for Acquisition and Technology at the Department of
Defense. There he is responsible for all acquisition and
procurement policy matters, including acquisition and
procurement strategies for all major weapons systems programs,
major automative information systems programs and services
acquisitions.
Welcome.
Mr. David Drabkin is the Acting Chief Acquisition Officer
at the General Services Administration. He is responsible for
developing and reviewing acquisition policies, procedures and
related training for the GSA and Federal acquisition
professionals through the Federal Acquisition Institute,
Civilian Acquisition Advisory Committee, Federal acquisition
regulation and GAO's acquisition materiel and training
programs.
I ask that each of the witnesses now give a brief summary
of your testimony and to keep this summary under 5 minutes in
duration if possible.
Your complete written statement will be included in the
hearing record.
So, Mr. Assad, please proceed.
STATEMENTS OF SHAY ASSAD, DIRECTOR, DEFENSE PROCUREMENT AND
ACQUISITION POLICY, U.S. DEPARTMENT OF DEFENSE; AND DAVID A.
DRABKIN, ACTING CHIEF ACQUISITION OFFICER, GENERAL SERVICES
ADMINISTRATION
STATEMENT OF SHAY ASSAD
Mr. Assad. Thank you, Madam Chairwoman.
Madam Chairwoman, Ranking Member Bilbray and members of the
subcommittee, my name is Shay Assad. I am the Director of
Defense Procurement, and I also serve as the Acting Deputy
Undersecretary of Defense for Acquisition and Technology. Thank
you very much for providing me the opportunity to participate
in this hearing today.
In January 2007, I testified before the Readiness and
Management Support Subcommittee of the Senate Armed Services
Committee. At that hearing, I was asked to comment on the then
recently completed work on the SARA panel or Acquisition
Advisory Panel, authorized by Section 1423 of the Service
Acquisition Reform Act of 2003. At that time, I testified that
I agreed with most of the panel's recommendations and that we
would busy addressing the recommendations of their report.
Today's hearing provides an excellent opportunity to
provide an account of where we are with respect to the panel's
recommendations and how we will move forward in light of the
present circumstances. In fact, the Congress is taking up many
of the panel's recommendations adopted into law via the
National Defense Authorization Act of 2008 and 2009. The
panel's thoughtful report continues to provide a framework for
improvement and to inform ongoing initiatives related to
commercial practices, performance-based acquisition, small
business utilization, the acquisition work force and the role
of support contractors and the use of Federal procurement data.
On April 6, 2009, the Secretary of Defense announced his
intention to significantly improve the capability and capacity
of the Defense acquisition work force by increasing the size of
the work force by 20,000 employees through fiscal year 2015.
This will restore the organic acquisition work force to its
approximate 1998 levels of 147,000 people and address
longstanding shortfalls in the Defense acquisition work force.
It is the first significant growth since the military buildup
in the 1980's and the downsizing that occurred during the
1990's.
The Secretary's initiative is the overarching human capital
strategy to revitalize the acquisition work force. The
Department's growth strategy directly supports the President's
March 4, 2009, memorandum's objective to ensure that the
acquisition work force has the capacity and the ability to
develop, manage and oversee acquisitions appropriately.
The Defense acquisition work force is critical for
improving acquisition outcomes for the Nation's $1.6 trillion
investment in major weapons systems. The objective is
straightforward, to ensure DOD has the right acquisition
capability and capacity to produce the best value for the
American taxpayer and for the soldiers, sailors, airmen and
Marines who depend on weapons and products and services that we
buy.
In addition, as you all know, the Department is
aggressively pursuing major reforms to our acquisition system.
These efforts have been given a high priority by President
Obama and Secretary Gates and have recently been complemented
by the strong bipartisan commitment to reform registered by
Congress via the Weapons Systems Acquisition Reform Act. Let me
take a moment to mention some of the reforms that both the
Secretary and Deputy Secretary Lynn have articulated: First, to
improve the discipline of the acquisition process. Each major
program will be subject to a mandatory process entry point, the
Materiel Development Decision prior to Milestone A. This will
ensure that programs are based upon approved requirements and a
rigorous assessments of alternatives.
To reduce technical risk, we will refine program
requirements and inform our cost estimates. Our practice will
be to conduct competitive prototyping and complete Preliminary
Design Reviews before we enter into Milestone B, engineering
management and development.
We will employ independent technical reviews to certify the
majority of program technologies before we will permit a
program to progress to the costly phases of development.
And, finally, we will complete independent cost estimates
at each decision point in the acquisition process to ensure
programs are adequately funded and to reduce the risk of costs
spiraling out of control.
To align profitability with performance, we have taken up
several initiatives: Contract fee structures will be tied to
contractor performance. We will eliminate the use ofunpriced
contractual actions whenever possible, and we will assure that
the use of multiyear contracts is limited to circumstances when
real substantial savings are accrued to the taxpayer.
To prevent programs from ballooning in cost and stretching
its schedule, we will use more fixed price development
contracts. We will also institute new mechanisms to prevent
endless requirements creep, in which the desire for an ever-
elusive perfect system can result in no system being delivered
at all.
Of course, none of these reforms will work unless we are
prepared to reform or cancel weapons programs that are not on
track to provide our warfighters what they need when they need
it at a fair and reasonable price to our taxpayers. Those hard
decisions are reflected in the proposed budget for next year.
In summary, the Department is determined to improve the
effectiveness of our overall acquisition system. As Secretary
Gates and Deputy Secretary Lynn have mentioned, being tough-
minded on acquisition reform is part of being serious about a
strong Defense.
Every dollar we save through acquisition reform is another
dollar we can devote to the capabilities of our troops--our
troops need today and tomorrow. This is what the taxpayers
expect and what our warfighters deserve.
Thank you, Madam Chairwoman.
[The prepared statement of Mr. Assad follows:]
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Ms. Watson. Thank you.
Mr. Drabkin.
STATEMENT OF DAVID A. DRABKIN
Mr. Drabkin. Thank you, Madam Chairwoman and Ranking Member
Bilbray and members of the subcommittee, since you have placed
my statement in the record, I would like to address three
issues in the 5 minutes that you have allotted me that I think
merit your attention as they do mine every day.
Those three issues deal with our acquisition work force;
the tools available to that acquisition work force; and then
three separate policy considerations that ought to guide
everything we do in Federal acquisition.
As far as GSA's acquisition work force, I am pleased to
report to the committee that we are working on a succession
plan that will help us address exactly how many people we need
to do the work that we are given each year and to make sure
that we recruit and retain those people through the life of a
standard Federal career.
Currently, we suffer from a deficit in the competencies in
skills in certain year groups. This is a principal result of
the fact that during the 1990's, we chose not to hire people as
part of our attempt to reduce the size of the government work
force.
I am not criticizing that decision, but the result of that
decision is, now, as we look for people between their 10th and
20th year of service, we don't have very many. And as we look
at folks in between their 20th and 30th year of service, we are
facing the possibility of almost 50 percent of our work force
retiring by the year 2012. The only thing that has kept our
retirements down, I believe, is the current state of the
economy.
Our work force is the key way we get jobs done. I mean,
when you talk about oversight, when you talk about writing good
contracts, when you talk about getting best value for the
taxpayer, it's not done by a machine. It's not done by a
policy. It's done by an individual who is trained and equipped
to sit down at the table, not only negotiate a contract that
represents the best value to the government but then who has
the time and ability to manage that contract to a successful
conclusion.
Today, most of our contracting officers are measured on how
many contracts they award. And as soon as they award one, they
have to move on to awarding the next and don't have the time
they would like to devote to making sure that the effort they
put into negotiating a good contract results in a good result
to the taxpayer when the contract is concluded.
We expect to complete our succession plan sometime by the
end of this fiscal year in accordance with the direction
Congress has given all Federal agencies to address succession
planning.
The second issue I think we need to talk about is tools.
Despite the fact that this is an IT-rich environment, despite
the fact that we buy IT for everybody else, the acquisition
community lacks the kind of IT tools it needs to leverage the
existing work force and to help them avoid making simple
mistakes.
In a hearing I testified in before the full committee not
terribly long ago on EPLS, the question was, why did you award
contracts to individuals who were on the EPLS about 30 times
over 5 years? And the answer was, somebody made a mistake. But
had they had the proper tool in place, the opportunity to make
that mistake, to check automatically the EPLS, would have been
reduced; not impossible that the mistake would have occurred,
but it would have reduced it.
And so we are looking in GSA at adopting and acquiring a
tool which may be a single solution or a system of systems that
will allow us to automate the entire process, thus leveraging
the work force we have and ensuring that mistakes that can be
avoided by use of a transparent tool will be avoided.
Finally, the issue of policy is important to look at. The
President has done something, I think, quite unusual. In the
last several months, the first several months of his
presidency, he has talked about acquisition a number of times,
including issuing on March 4th a guidance document to the
Federal Government on acquisition. And in that document, he
talked about two key principles: competition and transparency.
These are not new principles. These are not principles that we
weren't aware of and didn't work with before, but it's
essential that we understand competition in today's changing
environment and that we spend our efforts and time making
competition a reality.
And by the way, Madam Chairman, in your opening statement,
you said that competition had been reduced. Actually, as a
percentage of the whole, our statistics show that competition
has not been reduced. It's about the same it was and has been
over the last decade.
But because of the size of the dollars we are spending, the
gross number of dollars that have been awarded in an other than
full and open competition have increased. But the percentage of
dollars has stayed relatively the same.
Transparency is important. I would simply mention to the
committee, even though my time is up, that the United States is
the most transparent acquisition system in the world. I just
recently concluded a meeting with my colleagues from Taiwan,
Korea, Italy and Canada, and they are amazed at the amount of
information we provide the taxpayers and the citizens on
government procurement. You can literally find out every
contract we award any time of the day or night.
And, finally, integrity, which goes to Mr. Bilbray's
comment about oversight. We would like to do more oversight.
But, unfortunately, as a result of a decision made many years
ago, all of our internal auditors, which public companies have
under Sarbanes-Oxley, have been taken away and made part of the
IG's Office. So as a manager, I have no internal audit function
to assist me in providing oversight on a regular basis as any
good manager would.
I can certainly talk for much longer, but I appreciate the
committee's indulgence in my exceeding my allotted time.
Thank you, ma'am.
[The prepared statement of Mr. Drabkin follows:]
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Ms. Watson. Thank you to both of the witnesses.
You have given us a lot of food for thought. And our
Members this morning will be raising the questions that will
extend your time.
We are very concerned about the oversight. And so what we
are trying to do here is take a cursory look. And so I will
raise some questions; I think both of you have probably
answered them, but in a format, so we can really hear the
changes and the recommendations that you make stated as a
result of your statements. I am just going to just go through
them again.
Because in response to President Obama's March 2009 memo on
directives for agencies to report back on improving the FAR and
agency-specific supplements, what types, and you have mentioned
some, but let's get in the format, of recommendations or
changes are your agencies making? And would you repeat, Mr.
Assad, I did hear several?
Mr. Assad. Yes, Madam Chair, specifically, some of the
things that we are doing these days, it was mentioned by one of
the Members that we're spending a tremendous amount of money on
acquisition for Armed Services. We now spend more money on
services within the Department than we do on major weapons
systems, and last year, it exceeded $200 billion.
And what we are now doing is we have implemented a series
of things called Independent Management Reviews where every
procurement over $1 billion is given significant oversight, not
only prior to the award of the contract but during the
performance of that contract. Congress mandated that we do that
in the NDAA 2008, and we have now got that in place.
But we have expanded on Congress's intent to not just be--
services contracts over $1 billion, but, in fact, every
contract, irrespective of what it's for, goes through an
Independent Management Review. And so we look at it before we
issue the RFP while the evaluation is going on to ensure that
we have, in fact, a proper evaluation. And then, last, once the
contract or the decision for award is made, that, in itself, is
examined.
And then every year we review that contract to see if, in
fact, the taxpayers are getting what they paid for. That
process was put into play about 7 months ago. We have reviewed
over 40 programs to date and are in the process of reviewing
them. This is an ongoing thing. It requires the participation
of senior executive service and/or general officers and flag
officers to participate in these reviews whenever we can. It
includes contracts managers, engineers, program managers,
auditors, as well as the General Counsel's Office.
And the whole idea here is to ensure that we are, in fact,
utilizing best practices across the Department and, second,
that we are adhering to the regulations as we proceed with
these procurements so that we can ensure that the taxpayers,
that they are getting a fair deal, and the warfighters are
getting what they need.
Ms. Watson. Is this information going to be up online?
Mr. Assad. We are working right now with OMB to discuss how
we could, in fact, put parts of this information online.
Many of these procurements are competitive in a source-
selection nature. So there are certain aspects of it that we
can't put online, but certainly the results of it and the
general findings, we are in the process of doing that right
now.
Ms. Watson. I think we were asleep at the switch in the
last administration, and the oversight wasn't what it should
have been. The public is very leery. And so they are talking
about the debt we are in and the next generation to come and
those yet unborn and so on.
I think we have to, in some way, try to weed out that
information that might be classified and really put the
information where people, the taxpayers, can see what we are
doing.
It takes money in these conflicts. And to protect our
military and to win, it's costly. Everyone has to sacrifice,
but we have to give them a reason for feeling they have to
sacrifice.
Mr. Drabkin.
Mr. Drabkin. In GSA, we have instituted a procurement
management review process. Actually, we instituted that process
over 5 years ago now.
And in that process, we visit all of our major contracting
facilities once a year. We randomly select contracts. We review
those contracts, and we provide feedback to our colleagues on
the quality of the contract file, the contracting--the
acquisition plan and their management of that contract.
In addition, just recently, beginning last September, we
added the A-123 reviews, which is OMB circular, which primarily
used to focus just on the financial side, and now we have added
an additional layer of review. We have added individuals to our
team to do those kinds of reviews.
In addition to the reviews themselves, we bring in
colleagues from other offices so that they can bring their
experience to the review process and share their experience
with their colleagues and so that they can also take lessons
learned home to their own offices, things that they learned
that were being done differently or uniquely somewhere else.
The result of this process, we believe, will be validated
quite shortly, when the DOD-IG completes its review of GSA next
year.
We believe that----
Ms. Watson. Speak right into the mic, please.
Mr. Drabkin. We believe that review--I think someone turned
down the sound so it wouldn't get the feedback. We believe that
review will validate the fact that not only have we have been
getting it right, but we continue to get it right every day.
Ms. Watson. My time is up, but I have one more question,
and I will just give myself an additional minute.
And are any specific changes addressing the use of multi-
award schedules going to be included in your submissions? And
both of you, I would like you to respond.
Mr. Assad. Madam Chair, we are moving forward to a reduced
number of multiple-award contracts that we have. These can be
terrific tools for our people to use.
But one of the things that we want to make sure of is that
they are, in fact, promoting competition and that they are not
used as a mechanism simply to obligate funds. And so we are
looking very hard at the practices that we are using to ensure
that we provide fair opportunity. We are specifically looking
at where we have small businesses who have been awarded
multiple-award contracts and who are capable of doing the work,
that work is properly set aside for small businesses to compete
on.
And so what you will see is a number of actions being taken
by the Department to improve our competitive posture.
Last year we have actually set a record within the
Department in terms of most dollars and the largest single
percentage that we have ever competed. Having said that, it's
not anywhere near enough, and we know that we need to improve.
And one of the areas that we can in fact improve upon, is
in award of delivery and task orders under multiple-award
contracts. And you will be seeing a number of policy statements
coming out as well as policy guidance and information of the
DFARS with regard to improving competitive opportunities in
multiple-award contracts.
Ms. Watson. Mr. Drabkin.
Mr. Drabkin. Madam Chairwoman, I would first like to make a
distinction between schedules, which is a program run by the
administrator of GSA, and multiple-award IDIQ contracts, which
we all have authority to run.
GSA's Schedules Program has always required competition.
Our customers' compliance with that rule has, on occasion, been
a little spotty.
As you probably are aware, almost 5 years ago, we developed
a program called e-Buy, an electronic method, so that all
Members, all contractors holding a schedule can be selected.
DOD, in fact, is required to use e-Buy when they use our
Schedules Program and the number of bids or quotes that they
have received has increased to an average of between three and
six per competition, but they solicit from all scheduled
holders.
On IDIQ contracts, there's always been a requirement for
fair opportunity. It's a question of administration of that
requirement that has been put in issue.
But I think the real issue is what Shay touched on, Madam
Chairman, and that is also what we addressed, I served as a
member of the SARA panel, and later, you will hear from our
chairperson, Marcia Madsen, is that we probably have way too
many IDIQ contracts in the government.
It costs us money to award those contracts and administer
them. It costs industry money to compete for them, and I am not
sure it contributes to competition or better pricing over all.
In the last Congress, there was a direction to OMB to
better manage the number of IDIQ contracts governmentwide. And
I believe once a new administrator is appointed in OMB and
OFTP, that process will begin, and we will see some success in
reducing the overall number of IDIQ contracts.
Ms. Watson. Thank you.
I will now yield to our ranking member. I will give you an
extra minute, Mr. Bilbray.
Mr. Bilbray. No problem, Madam Chair. I think your question
was quite appropriate and served the entire process and this
committee.
Mr. Drabkin, I appreciate you pointing out--I think when we
get into this, we've got to look at our successes. And we are
the most transparent system in the world.
We just forget that, outside of Mexico, we are the only
place where we don't follow the British Godforsaken
parliamentary system, to where winner takes all, and the
administration is nothing but an arm of the lower house. So I
think as Americans, we always talk about other countries and
think they are in our system. We have a very unique system, and
it works.
And that's why this relationship between the executive
branch and the legislative branch and the process of oversight
is so important and needs to be not just cooperated with but
embraced.
I guess, gentlemen, what I first want to talk about is, we
really are in crisis on this issue. And what I worry about in
crisis, when you look at how much of the budget cannot be
accounted for in so many ways at a time that we are now are
looking at almost another trillion dollars that we don't know
how we are going to account for, there is this crisis.
And the problem with crisis is we always talk about
tactical issues during crisis, and we ignore the opportunity to
really now kind of learn from our mistakes and our challenges
and look at the strategic. And I would like to sort of back off
a second and take a look at the strategic.
The question over at DOD, we have interns that come in and
participate in a training program basically, don't we?
Mr. Assad. Yes, sir.
Mr. Bilbray. What percentage of those interns do we
actually end up hiring after they have gone through the intern
system?
Mr. Assad. We actually do very well in terms of hiring the
interns. The real question is, can we retain them? And I would
say that it's not unusual in our intern programs to see
turnover of 30 to 40 percent.
Now, the question is, where are they going? Well, to some
degree, they go to my brothers and sisters in the rest of the
Federal Government. And while we hate to lose them in the
Department of Defense, that, in and of itself, is not a bad
thing. But, in fact, we do lose a number of them to industry,
because we happen to have the finest training system in the
world in terms of training people in acquisition and procuring
at the Defense Acquisition University. It's without peer.
And so folks know that when they get somebody, especially
an intern, through our training program, that they have been
well trained.
And so what we are doing is that we are taking a number of
steps, and to a certain degree, Mr. Congressman, this is all
about leadership. It's--we are getting our leaders actively
engaged in ensuring that they communicate with the work force
on an ongoing basis in terms of their value--and I think the
Secretary and Deputy Secretary have stood tall and basically
said we are going to make a significant change in the size and
capacity of our work force, and that has gone a tremendous way
in terms of almost overnight of significantly improving the
morale of the work force, because they see help on the way.
Mr. Bilbray. So we basically absorb all our interns, and
then it's just this revolving door?
Mr. Assad. Yes.
Mr. Bilbray. Then they end up getting a better offer either
in another department or outside?
Mr. Assad. Yes, I would say about 30 to 35 percent do that,
yes, sir. We retain about two-thirds.
Mr. Bilbray. Thirty to 35 percent come in--what percentage
never get a job, do you think?
Mr. Assad. A very small number. You know, we do--there are
some folks who either they decide this isn't for me, or we
decide they are just never going to hack it. But that's a very
small percentage.
Mr. Bilbray. Yes, I will say this--I know the gentleman
from Fairfax County may get concerned about this, but it's too
bad we don't have the type of contractual arrangement with our
civilian employees that we have with our military, basically
saying, if we are going to spend this much time training you as
a Naval aviator, we expect you to sign on for this long. And,
you know, that kind of arrangement somewhere down the line, may
be a radical concept now, but I think as we get in these
challenges, we should be looking a lot.
I guess the issue comes down to retention though, too, as a
lot of the institutional mindset. I think this administration
ran a campaign that really should be setting the example of
maybe how this administration should be looking at the
modification of the Federal bureaucracy, and that is this
administration captured young people and captured the potential
for not only the young people but the technology that they are
so comfortable with.
And I guess the issue there of retaining more of these
young bright stars is, how we can change our internal
operation, you know, section by section, to not only allow
these young stars to use their new tools that they have but to
embrace it and be brave enough? I know all of us here that are
on the front row here may be less than comfortable with the
technology and approaches that the people will find behind you
or behind us, you know, not only are comfortable with but
embrace and integrate into their day-to-day life.
And my question to you is, how can we modify the system to
be more open to the junior Members who are coming up with their
mindset and their new savvy and direct them to be the next
generation of oversight?
Mr. Assad. Mr. Congressman, we are making a number of
changes in that regard, and, frankly, it's not just the younger
or those less experienced or those more comfortable in the
information technology age; the fact of the matter is we need
to do a much better job within the Department and across
Federal Government in sharing information and knowledge about
the business deals that we have. How do we do business with
different contractors?
It is not unusual to have certain products being bought
from the organizations within the Army, Navy, and Air Force and
having never had them talk to one other about doing business
with the very same company that sells to all three. So what we
are doing is we are about to make a remarkable change in how we
collect and disseminate especially business information.
DCMA is going to become the cost-analysis center for us and
so that our young employees will be able to log on, immediately
go in a Web-based tool into that DCMA data base, get the
information they need quickly and then be able to process that
so that they can understand what are the terms of the business
deal that they are getting.
The fact of the matter is that we are--we are not as
capable as a number of organizations in terms of being able to
share that information, but we are getting there. And I think
you will see a significant change over the next couple of
years, especially in the way we share business deal
information.
Mr. Bilbray. Well, Mr. Drabkin, my biggest concern is that
there are a number of us that are in a position to make
decisions, and almost as if--you know, I grew up along the
border. And the one thing I have learned very quickly is, no
matter how much you learn a language; it's not the same as
growing up with it. You think certain ways.
And I think our generation, if I may expand the
relationship, will always have a blind spot that we need to do
translation to understand what these kids are up to with their
technology and their approach, only because they grew up with
it. This is their primary way of thinking.
How do we figure out how to tap into that? It's almost like
man's first experiment with fire or with nuclear power; we may,
you know--first of all, it intimidates us to some degree, and
we may not understand it, but, boy, the potential is huge. How
are us old guys able to develop a system and then actually
embrace these kids and their technology while still directing
it, even though we may not speak the language as our primary
source?
Mr. Drabkin. Actually, I am very lucky to be at GSA,
because at GSA, we have a culture that has adopted and
continues to adopt the changes in the IT world and in the way
we approach our business.
We are able to attract folks right out of college. We use
collaborative tools. We are into cloud computing. We are on the
edge. Our people have the most current and up-to-date
electronic devices and access to them. We have a process.
Because of the problem of the hiring in the 1990's, we are
advancing people now that would never be advanced at this stage
in their career. We don't have a choice. We have to have people
to do the work. And so somebody who has between 5 and 10 years
experience is now getting a chance to do things that they never
would have gotten a chance to do if we had had a complete cadre
of people with that kind of experience.
It kind of reminds of me of what the Army was like when I
came in, in 1978, at the end of the Vietnam War. As a young
captain who never tried a case in my life, I showed up and was
made the chief of military justice. I mean, those kinds of
opportunities exist today, and we are able to take advantage of
those and leverage those in GSA.
We are a much smaller agency than DOD, but I think you will
find if you talk to any of our young people who come in the
intern program that we have, that they will tell you that GSA
is taking advantage and knows how to talk to them. They are
using the social Web sites and the social, and all of these
other tools, not only to attract people to come and work with
us but to keep them interested while they are working with us.
I would like to point out----
Ms. Watson. Mr. Bilbray, will you yield?
Mr. Bilbray. Yes.
Ms. Watson. You said in your opening statement that one of
the problems you suffered from was the lack of being able to
hire well-trained, well-skilled, well-educated people.
Do we see within your budget the opportunity to bring on
the people with the skill sets that are needed? And I am
listening very carefully because I know there has been much
debate in our House about our budget deficit and endangering
the future lives and so on.
Mr. Bilbray brings a very thoughtful point, and that is, we
are in a culture of technology and use the example of President
Barack Obama; he used technology to its highest level, and
that's how he surprised a Nation and won.
There's a lot of talent up there, out there. Are we going
to be able to capture that? Will you have the budget? Will you
be able to bring on the kinds of people that you know can
advance the agency?
Mr. Drabkin. Well, first of all, in our career field, in
the acquisition career field, there are very few people in the
private sector who we can hire and put to work immediately
because of the very nature of government procurement, all of
our rules, all of our processes, which are unique.
We don't find them in the private sector. Even the county
of Fairfax doesn't have the same level--I used to be a resident
of the county--doesn't have the same level of regulation and
process that we provide the Federal Government.
So when we hire somebody, typically we have to train them,
and that training process takes somewhere between 1\1/2\ to 2
years before we can even put them out on their own to begin
doing the kind of work that we do.
Ms. Watson. Are we in that process?
Mr. Drabkin. We are in the process of hiring them. In GSA,
and we are different from other agencies, because, as you know,
Congress appropriates very little--no money for the operation
of our Federal Acquisition Service and very little money for
the operation of our Public Building Service. We earn, through
revenue, through sales to other agencies, the money we then use
to reinvest in our work force and our tools.
We, in GSA, have the flexibility to acquire more people. If
you talk to my colleagues in the other civilian agencies, I
think you would hear a different story. They require an
appropriated budget in order to increase the number of FTE,
full-time equivalents, they need in the acquisition work force.
But I am not sure that the question is really increase the
acquisition work force so much--well, I am sure you have to
increase the acquisition work force. I don't know that the
answer is that we have to increase the work force as a whole,
and I can't speak for other people, but I certainly think we
ought to have a business process that looks at, where are the
competencies and skills that we need to have in-house to do our
work? And those people we should hire. And where are the
competencies and skills that we can buy from the private sector
to get our work done and are not essential to the government's
performance of its mission? And those we can buy.
And those are the kinds of decisions that I know are
difficult; I know that this committee and others will be
discussing. I realize they also have issues relevant to
political party platforms.
I am a career civil servant. I don't get in those
discussions. What I am concerned about is making sure that we
have enough people to manage the $556 billion worth of
contracts that we awarded last year.
By the way, in 1991, we had 33,700 of 1102s in the whole
Federal Government. And an 1102 is a contract specialist; it's
a person we hire and train to award contracts.
Last year, we had 28,700 of 1102s. In 1990, we awarded $150
billion worth of contracts. Last year, we awarded $556 billion
worth of contracts. Do the math.
Mr. Bilbray. Mr. Drabkin, in other words, what happened
was, we did--and all of us who were participating, except for
the gentleman from Fairfax--that reduction during the 1990's,
and then we hit the crisis of 9/11, and all at once, we saw a
huge ratcheting up of contracting.
The question I really get to is that we are approaching--
you know, we are in a crisis mode now, and there's opportunity,
obviously, in the crisis. Just as the military during tough
times, traditionally, as always, had the ability to cherry pick
for that level of employee and the training and the different
entry level. We actually are in a unique situation like now, at
least indications coming from out of the universities, is that
you now have people, especially in IT, that normally would not
be available for government service now are looking to
government service for that stability. That never was
considered for a long time.
You know, going back to, I guess, 1979, I guess is the
closest time we have seen, and even then it may not be. So
right now, the word is, as these kids are coming out in June,
they are looking to work for Washington. They are looking to
work for government right now. And now is the opportunity for
us to do the cherry picking and be very aggressive at grabbing
these kids while we can and get them into the system, and
hopefully, we will be able to lock them into a career before
the economy starts recovering, and they start seeing
opportunities other places.
Ms. Watson. Yes. I am going to go to our next Member, Mr.
Connolly, and then if you want to respond to Mr. Bilbray's
comment, you can do it, along with answering his questions.
Mr. Connolly. I thank the Chairlady.
I want to thank my colleague, my friend from California, I
am so glad he began by asking about the internship program,
because it's a concern I have based on testimony we have heard
in previous hearings before the subcommittee and the full
committee.
And I am going to be introducing some legislation, and I
would welcome sharing that in draft form with my colleagues to
see if it is of interest to them that would try to systematize
an internship program and look at reporting in terms of outcome
so we have a better handle on that and certain elements,
mentoring rotation, evaluation, streamlining, so it may make it
easier if you are an intern, it's easier to get into the
Federal service as we move out to the future.
So I would welcome sharing that draft legislation with my
colleagues to get their reaction. But I do think we have to do
something to encourage model programs of internship. Because we
have heard both the good and the bad about internship programs.
It seems to me that if somebody wants to be an intern with the
Federal Government, they ought to be leave highly motivated to
want to continue to serve in the Federal service.
There may be lots of reasons why one elects not to, but I
would hope one of those reasons is never because it was a
negative experience. And we have heard stories where, in some
agencies, that is, unfortunately, the case.
Let me go back to acquisition, because, I think, Mr.
Drabkin, you were giving some great numbers there. And I think
clearly what you showed was that while the value of large
acquisition contracts were going up, the number of qualified
contract officers to the Federal Government were going on. And
so, when you, as you said, do the math, we actually saw a
significant loss of skill sets in the Federal Government in
just sheer numbers.
But even if you go behind those numbers, what I am
concerned about, having watched it from the other side, is that
it's not just the actual number; it's also the skill set. We
increasingly face a challenge in the Federal Government of, do
we have the requisite skill set to manage very large, complex
technological contracts that are multiyear; that's No. 1, and I
would like you to address that.
Second, what about internal processes? I mean, we talk
about cost overruns. But frankly, sometimes, we, the Federal
Government, we are responsible for those cost overruns because
we change, in effect, the scope of the original work.
I can think of one contract I am familiar with where over
the life of a 2 or 3-year contract, this particular contractor
had 14 Federal project managers, contract managers, each of
whom, formally or informally, had his or her own view of the
scope or what could or should be added. And by the end of the
contract, it looked a lot different, unfortunately, than what
originally was agreed to. And the contractor was in a tough
spot in trying to deal with the client. And so is the
rotational system we have within the Federal Government part of
the problem? Can it, should it be changed?
Mr. Assad. Let me first talk to the work force itself, Mr.
Congressman.
We went through, and I know some of the other Federal
agencies have done some competency modeling, but we have gone
through and done some of the most comprehensive competency
modeling of the contracting work force, frankly, not only in
the Federal Government but across industry. We had
approximately 18,000 employees participate voluntarily in a
competency modeling that examined their competencies in a very
detailed and specific way. So we understand not only by every
particular organization, but across each Department, Army,
Navy, Air Force, as well as the other defense agencies, what
our capability gaps are, and we understand what it is we have
to do about it.
In terms of our growth and our work force, we are
specifically going to hire about 5,300 contracting officers,
2,500 defense contract management agency personnel, 700
auditors, 800 pricing people, 300 procurement and acquisition
lawyers. So we understand very well what our capability gaps
are and we are very focused on improving those.
With regard to the competency modeling itself, I think that
is a tool that everybody needs to use. I know GSA has--Dave and
his team have a very good system that they use over at GSA. But
we really do need to institute that across the Department in a
very significant way so we can understand our capabilities
across the work force.
In terms of rotations, rotations can be a positive thing
because you get a specific degree of experience across a wide
variety of resources. Having said that, one of the things that
we are doing now is, we are requiring our program managers to
sign term agreements to say that they are going to stay on for
a specific period of time because, as you know, given your past
experience, when you have major weapons systems, it is not
unusual for that to take 7, 8, 9 years from initiation to
absolute fielding; and you might have two or three major
program managers participating in a program along the way. And
sometimes a program manager inherits decisions that weren't his
to make. So we are looking very seriously at that, about
extending the terms of our program managers, especially on our
major programs.
I think that with our term agreements, our program managers
will go a long way to do that.
Mr. Drabkin. Let me begin with one of the last things you
talked about, but is one of the most important things for any
acquisition, and that is the requirement.
I believe you are absolutely correct that in many cases
when you look at why a contract changed over time or why a
program changed over time, you will find that at least in part
it was attributable to requirements creep, we call it. The
requirements started out as being an automobile, and before you
finish it is a jet aircraft.
And by the way, if you start out to buy an automobile, you
are going to get a lousy jet aircraft when you are done. But
our community, the acquisition community, does not control the
requirements side of the house. We respond to it.
The second most important thing is what we do once we get
that requirement, and that is the acquisition planning process,
which has been codified and institutionalized for many, many
years, but which still today, because of lack of time, because
of lack of people, and because of a lack of management
direction or interest, the acquisition planning process in many
cases across the government gets left out.
But it is during that process where you look at the
requirements again, you make sure you redefine the
requirements, you do your best to make sure that it is nailed
down and all of the changes you can anticipate are taken care
of and then how you decide to satisfy those requirements
through the acquisition process, including justifying what kind
of contract you are going to write based upon the nature of
those requirements, or how you are going to define the
competition because all requirements don't compete equally in
the marketplace.
When you get to rotational assignments, I do agree that
there is a problem with the fact that we have both contracting
officers and project managers who, during the course of their
careers, change jobs. At GSA, we don't have the ability to
direct someone not to go somewhere else. We can avoid internal
management reassignments, but if they get an opportunity to
work for another Department, if they decide that they have had
enough and don't want to work for the Federal Government
anymore, we have no ability to keep them in one place, although
we are looking at ways to retain them, things that we can do to
incentivize them to stay in one place and complete a project
until its very end, although some of our projects are quite
long. Not as long as in the Department of Defense, but when you
are building a major courthouse, you don't do it in 12 months,
and making sure that you hold the team together to get that
courthouse done--and GSA builds a lot of courthouses--is
something that we are looking at.
Finally, the level of competency and difficulty has changed
in what we buy. It is different than what most State and local
governments do in terms of buying.
In the Federal Government, we decided back in the 1990's we
would buy best value, we would stop buying low price. It was
Secretary Perry, who was then the Secretary of Defense, who
came to this body and reported to this body that it was costing
the Department of Defense a fortune to buy low price, because
you would buy something that was the lowest price, and it would
wear out sooner than something else, and you would have to go
out and rebuy it, and there were costs associated with all of
that. In addition, we were buying from companies that weren't
performing well.
And so we went to best value. Best value requires a level
of competency and skill which is different than picking the low
price.
Mr. Connolly. And judgment.
Mr. Drabkin. That is part of the competency and skill. And
the ability not only to figure out what best value is, but then
because of our system and because of our requirements of
transparency, to be able to describe what that best value is so
that my grandmother in northwest Alabama will understand what
``best value'' means. And believe me, that is hard to do.
That requirement has changed, and it has made it more
difficult for our work force.
I would like to address a couple of other things that Mr.
Bilbray said. First of all, we don't need people to come to
Washington. They can work from other places. One of the great
things about GSA is, we can hire people from all over the
country, and they can work for us from wherever they are.
We are looking at those kinds of opportunities because once
this economic situation resolves itself, coming to Washington--
--
Mr. Connolly. Reclaiming my time, Madam Chair, because I
have to be on the floor shortly.
Forgive me, Mr. Drabkin, but I know Mr. Bilbray will have
another opportunity.
I take your points about rotation. There is a positive
aspect to that, keeping somebody fresh and wanting new
challenges. You don't want someone to get stale, and certainly
once in a while you want a fresh look at a contract. No
question about that.
But on the other hand, if you have not an 8 or 10 or 12-
year project, but you have a 2 or 3-year project that has a
clear beginning and a clear end with, I hope, a clear mission,
clear objectives, there is something not only satisfying but
desirable, it seems for me, for somebody to take that on as his
or her project and see it through to its end. It is incumbent,
it seems to me, on Federal managers to create an environment
and a system of incentives that allows for that.
I think both of you would agree that if you are looking at
a 3 or 4-year contract with 14 project managers, that is a
recipe for discontinuity and, frankly, dysfunctionality, in
outcomes.
Mr. Assad. I agree with you, Mr. Congressman, and that is a
function, in most cases, of capacity and people. That is why of
those 20,000 folks we are increasing, approximately 10,000 will
be program managers, systems engineers, logistics managers,
because we realize that not only do we have to increase the
capability of that particular side of the work force, but there
has to be a steadying capacity to deal with our programs.
Ms. Watson. I want to conclude the testimony for this
panel. I thank you very, very much. We will be back with you. I
think that your statements have given us a lot of food for
thought. I do have followup questions, but we will get them to
you in writing.
Thank you so much for your testimony, and you are excused.
Mr. Connolly. We are just sad that Mr. Drabkin apparently
is no longer with Fairfax County.
Mr. Drabkin. I am now Ms. Norton's constituent.
Ms. Watson. I now invite our second panel of witnesses to
come forward. It is the policy of the Committee on Oversight
and Government Reform that we swear in all witnesses before
they testify. I would like all of you to stand and raise your
right hands.
[Witnesses sworn.]
Ms. Watson. Let the record show that the witnesses answered
in the affirmative.
I will now take a moment to introduce our distinguished
panelists. First, we have Mr. William Gormley, who serves as
the chairman of the Coalition for Government Procurement and as
president and chief executive officer of the Washington
Management Group. Prior to his current post, he served as the
Assistant Commissioner for the Office of Acquisition, Federal
Supply Service at the General Services Administration.
Next, we have Mr. Philip Bond, the president of
TechAmerica. Mr. Bond is also president of the World
Information Technology and Services Alliance, a network of
industry associates and associations representing seven high
tech trade groups around the world. Previously, Mr. Bond served
as the Under Secretary of the U.S. Department of Commerce for
Technology. And from 2002 and 2003, he served concurrently as
chief of staff to Commerce Secretary Donald Evans.
Mr. John McNerney serves as the general counsel for the
Mechanical Contractors Association of America. There, he works
on numerous labor-management relations issues, along with
issues associated with the legislative advocacy public
procurement and a variety of other public and private
contracting policy issues.
Ms. Karen L. Manos is the Chair-elect of the Procurement
Planning Committee of the National Defense Industry Association
and is a partner with the law firm of Gibson, Dunn & Crutcher,
LLP, where she is co-Chair of the firm's Government and
Commercial Contracts Practice Group.
Next, Ms. Kara M. Sacilotto is a partner with the law firm
Wiley Rein, LLP, and there she focuses on litigation matters
relating to government contracts and has represented government
contract clients in both protest claims litigation, prime
contractor disputes, and trade secret misappropriation
litigation.
Ms. Marcia Madsen is a partner of the law firm Mayer Brown,
LLP. There she focuses on multiple issues associated with
government contracts and litigation. She also served as the
Chair of the Acquisition Advisory Panel authorized under the
Service Acquisition Reform Act of 2003, which provided 89
specific reforms to Federal procurement laws and regulations.
Finally, Mr. Scott Amey is the general counsel for the
Project on Government Oversight. There he directs POGO's
contract oversight investigations, including reviews of Federal
spending on goods and services, the responsibility of top
Federal contractors, and conflicts of interest and ethics
concerns that have led to questionable contract awards.
I will ask that each one of the witnesses just give a very,
very brief introduction of yourself and what you do; and we are
going to cut the time. I am hoping that other Members will
come, but we want to finish by 11 a.m., so we are going to go
very quickly.
Mr. Gormley, please proceed.
STATEMENTS OF WILLIAM GORMLEY, CHAIRMAN, COALITION FOR
GOVERNMENT PROCUREMENT; PHILIP BOND, PRESIDENT, TECHAMERICA;
JOHN McNERNEY, GENERAL COUNSEL, MECHANICAL CONTRACTORS
ASSOCIATION OF AMERICA; KAREN L. MANOS, CHAIR-ELECT,
PROCUREMENT PLANING COMMITTEE, NATIONAL DEFENSE INDUSTRY
ASSOCIATION; KARA M. SACILOTTO, PARTNER, WILEY REIN, LLP;
MARCIA G. MADSEN, PARTNER, MAYER BROWN, LLP; AND SCOTT AMEY,
GENERAL COUNSEL, PROJECT ON GOVERNMENT OVERSIGHT
STATEMENT OF WILLIAM GORMLEY
Mr. Gormley. Thank you, Madam Chairman, Ranking Member
Bilbray, and members of the committee.
After listening to the dialog you had with Mr. Drabkin and
Mr. Assad, I am one of those rare birds; I actually spent 30
years in government acquisitions. Maybe we can talk about what
it takes to stay in during the course, or as we have more time
today. I hope my experience will be of value to the committee.
The Coalition for Government Procurement members represent
the commercial sector of services and supplies, and they
interact with the Federal Government. I had prepared 5-minute
remarks, but I will honor the request to shorten that and come
back to it as we have time.
[The prepared statement of Mr. Gormley follows:]
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STATEMENT OF PHILIP BOND
Mr. Bond. Madam Chairman and Ranking Member Bilbray, that
is a very difficult to follow; it was very brief.
It is a pleasure to be here, and congratulations on
launching what I think is a vitally important series of
hearings. On behalf of the technology industry, I will try to
summarize quickly and give you our view.
I think one is that we understand and appreciate the fact
that this Congress and this administration ``get'' technology.
All you have to do is look at the stimulus bill to see that.
We are concerned that we don't, in the name of reform, have
some unintended consequences that will end up chasing away
small, medium or even large companies from the government
marketplace, and thereby, undermine competition, innovation and
small business contracts. Unfortunately, there are some
proposals that may have that impact.
The stimulus dollars do come with strings and reporting
requirements. They apply the rules even to commercial, off-the-
shelf contract items, which we think is perhaps
counterproductive.
Contractors will be required to report on subcontracts,
which may chase away some subcontractors. They require public
disclosure of information which goes beyond Freedom of
Information Act or other requirements. And they grant GAO the
authority to interview individual employees without, as far as
we can see, any rules around the rights of those individual
employees. So all this makes companies stop, pause and rethink
whether they want to be in this marketplace.
And, obviously, we embrace competition. I represent 1,500
companies, hundreds of which sell to the government, and so we
certainly embrace competition.
The President's memorandum on contracting also has some
rhetoric that sometimes raises eyebrows in our community.
However, it targets and identifies very laudable things,
including eliminating wasteful and inefficient contracts. It
shows a clear preference for fixed-price contracts.
They also talk about the appropriate times for government
to outsource services. The industry embraces that. We would
benefit from a clear definition of when to outsource and some
clarity around the fixed-price contracts versus others.
However, we do believe that sometimes national security or the
ability for a national industrial base in some critical area
may call for some flexibility in contracting and not always
fixed price.
We do believe the administration is right to look at these,
and we just ask that they do so with an eye toward flexibility
in the name of national security and industrial base issues.
And we hope that Congress will let the administration move
along this path a little bit before changing the rules.
I want to rattle off a few others very quickly. On the in
sourcing issues, fundamentally we believe in a blended work
force that is going to take advantage of the skill sets in
government, the best of the public sector with the best of the
private sector.
The work force that Mr. Connolly and Mr. Bilbray raised,
there are too few professionals with too little experience
writing contracts that are very big and complex. With billions
coming in recovery funds, that problem potentially is going to
get a whole lot worse.
Transparency has been referenced, especially the great
examples that were shown by the Obama Campaign for President.
We certainly embrace that, and we think that, for example, OPM
has to write some rules that will tell employees what they can
and cannot use in terms of some of the new social networking
capabilities.
We want to make sure that as we pursue transparency, we
don't require companies to file information that would unfairly
give advantage to their competitors overseas, or would go
beyond the Freedom of Information Act.
In conclusion, the committee has launched an important
series of hearings. The goals the administration has laid out
for participatory democracy, greater access, openness,
transparency, all of those will demand modernization; and we
hope that the committee will consider ways to reform the
policies, remove barriers, and encourage more innovation.
We remain confident that together, the best of the public
sector and the best of the private sector, that we can meet the
mission for both the government and the taxpayers. Thank you.
Ms. Watson. Thank you.
[The prepared statement of Mr. Bond follows:]
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Ms. Watson. Mr. McNerney, you may proceed.
STATEMENT OF JOHN McNERNEY
Mr. McNerney. Good morning, Madam Chairwoman. I am pleased
to be here. I am representing here today five construction
trade associations: the Mechanical Contractors Association; the
Sheet Metal and Air Conditioning Contractors' National
Association; The Association of Union Constructors; the
International Council of Employers of Bricklayers and Allied
Craftworkers; and the Finishing Contractors Association.
Madam Chairwoman, our committees have come up with 10
construction procurement recommendations that respond in one
way or another to the various aspects of the discussion today;
and in the interest of time, I am going to rattle them off by
name.
Our No. 1 priority is, we think that the committee--even
though this is a fiscal committee matter, this committee, we
would respectfully submit, should take cognizance of this new 3
percent withholding tax which is going to affect public
contracts in 2012. But the agencies are going to have to start
spending their procurement resources to gear up for this
probably next fiscal year.
DOD has estimated it will cost their procurement budget $17
billion over 5 years to change their payment programming
systems personnel and to add the financing costs in their
contracts for that measure. So we would ask respectfully that
the committee take cognizance of that and see what impact it
might have on the procurement agencies overall.
If tax delinquency is a problem for public contractors,
then we think the rapid deployment of the contractor legal
compliance data base is a better way to keep tax delinquents
out of the procurement programs.
We would also submit that because this raises payment
issues, if the tax goes into effect, extending the Federal
Prompt Payment law to federally assisted contracts would become
all the more important. If there is going to be added
withholding, we certainly want to ensure that the payment of
the amounts of the invoices due is given more rapidly.
We also would submit that the regulators are going to have
to be very careful that the 3 percent withholding tax doesn't
go down the contracting chain to subcontractors. IRS agrees
with that, but we think that the regs will have to be
verycareful.
Some of our other procurement reforms, we think you should
look at bid listing on low-bid, direct Federal construction
contracts. We have heard a lot of talk here today about
negotiated selection and other aspects of the contractor
selection procedure. We think that a close look at the trends
in procurement methods probably warrants now reconsideration of
the idea that prime contractors ought to list their major
subcontractors on low-bid awards. We think that you would
improve both the level and quality of competition in the
Federal market if you did that.
We are supporters of the Obama administration's initiative
on allowing consideration by agencies, both direct Federal and
federally assisted, of the use of project labor agreements on
major construction projects. There is a lot of flexibility in
that order. Even now, OMB and DOL are considering ways to shape
that, and we would urge this committee to take some cognizance
of that and see if you can help the agency find ways to use the
benefits.
We represent union signatory specialty contractors. We have
an interest in project labor agreements and we also know that
they work very well and the taxpayers are well served by them
when they are used.
Finally, back to the low bid, we would like this committee
to consider enacting again, proposing again to outlaw Internet
reverse auction for construction procurement. That was a bad
idea when it was proposed. The U.S. Army Corps of Engineers
roundly condemned it, and we would hope Congress would enact
the Corps' recommendation and legislate against it in Federal
procurement. Some agencies still do it.
Finally, we would like you to consider and protect,
especially, the construction industry. The Federal Government
over the next 20 years is going to make all of its facilities
and building stock net zero energy, carbon neutral over 20
years. That is going to require a tremendous amount of building
operations, maintenance, commissioning energy service
contracting, energy auditing; and we would like to suggest that
we protect that and continue to outsource that and not bring
that work that is not inherently governmental back in-house in
an in-sourcing review.
Thank you, Madam Chairwoman, and that concludes my remarks.
Ms. Watson. Thank you.
[The prepared statement of Mr. McNerney follows:]
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Ms. Watson. Ms. Manos, you may proceed.
STATEMENT OF KAREN L. MANOS
Ms. Manos. Madam Chair and members of the subcommittee,
thank you very much for the opportunity to appear before you.
And I applaud your efforts in launching this important series
of hearings.
I am here both in my personal capacity and representing the
National Defense Industry Association. I have been practicing
in this area for 28 years, since I graduated from the Air Force
Academy, and I hope I offer a balanced perspective.
I spent 14 years in the Air Force as a contract negotiator
and then a judge advocate, and for the last 14 years have
represented mostly major defense contractors. My entire
professional life has been spent in the area of government
contracting, and I have a deep and abiding and personal and
professional interest in it.
I think if we step back, though, and look at what we have
done, beginning with the Reagan administration and then picking
up greater steam during the Clinton administration, there was
this bipartisan effort to kind of unwind Federal procurement
and get rid of what had grown up over the years. It was like
barnacles, and it just made it very expensive to do anything.
Unfortunately, as a part of the quid pro quo for doing
that, we also cut the acquisition work force dramatically. In
hindsight, I think that was a mistake, but I am concerned that
Congress, by reacting to things, may layer on additional layers
of statutes and regulations that just add to the burdens that
we had in the past.
If you think back to President Clinton's signing statement
when he signed the Federal Acquisition Streamlining Act, he
mentioned the fact that during Desert Storm we couldn't buy the
Motorola two-way radios that we needed for our troops and we
had to turn to the Japanese to buy them for us and to give them
to us.
We wrap ourselves up into knots, and there is a cost in
doing that. I am concerned that if you don't have that
perspective and just react to the crisis of the day or the
scandal of the day, and we just add these layers, it is really
misguided oversight.
What I have highlighted in my written testimony are three
areas where I think there are sort of intractable problems,
from my perspective.
The first is the Defense Contract Audit Agency, which I
think has completely lost its path. It has lost its
understanding of what Congress directed it to do, the statutes
it is directed to do, and it is focusing on areas that really
just bollix up the procurement system with no good end. It is
adding cost, but it is not really bringing value to the
taxpayer.
The second is the acquisition work force, which is a huge
problem. In the acquisition work force, you need to have
trained, motivated contracting officers in order to make the
acquisition process work. Unfortunately, we have lost that
balance and lost the training. They are not motivated, and they
are certainly not appreciated. And now with the Defense
Contract Audit Agency, we have them intimidating them.
And then the final area is the contracts disputes process,
which was intended by Congress, with the enactment of the
Contract Disputes Act, to be a quick, effective way of
resolving disputes; and it has turned out not to be that at
all. It is a very laborious, time-consuming process that is not
good for contractors.
Those are three areas where I think Congress could do some
good to weigh in and to try to resolve things.
Thank you for the opportunity to appear.
Ms. Watson. Thank you.
[The prepared statement of Ms. Manos follows:]
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Ms. Watson. Ms. Sacilotto, you may proceed.
STATEMENT OF KARA M. SACILOTTO
Ms. Sacilotto. Thank you very much for this opportunity to
present my testimony here today.
As you mentioned Chairwoman Watson, I am an attorney in
private practice, but I am also an Adjunct Professor of
Government Contracts Law at George Mason University School of
Law.
My written testimony details my view, and in the interest
of keeping it short, I will try to just cover the highlights.
This morning we heard from Mr. Drabkin and from Ranking
Member Bilbray that our procurement system is already a model
for many other countries. It is an open procurement system.
There are certainly regulatory controls in place today that are
effective tools for regulating our procurement community.
So as this subcommittee continues on with its efforts to
investigate ways of strengthening our procurement system, one
option is to consider whether--instead of additional
regulation, whether what we need is a renewed focus on
execution of existing regulations and oversight mechanisms that
are in place and whether our existing regulatory system can
respond to the policy challenges that are being identified
today.
Two that come to mind are cost reimbursement contracting
and sole source contracting that were mentioned in President
Obama's memorandum on government contracting. Today, we have an
existing regulatory scheme in place that councils when to use
cost reimbursement contracts and fixed price contracts. There
is a place for both in our procurement system, and one size
does not fit all.
Likewise, there are also tools in our existing Federal
regulation system for promoting full and open competition and
requiring justification when full and open competition is not
used, and also addressing those exigent circumstances that the
President identified in his memorandum when full and open
competition might not be what serves the interest of the
government best.
So one recommendation is to focus our attention on better
execution of our existing regulations, which is entirely
consistent with the testimony we heard today about increasing
our acquisition work force so that we can better apply our
regulations, better define requirements, and therefore exercise
oversight in that manner.
My second recommendation is simply, if additional
regulation is recommended, that we do so in a coordinated
fashion so we maintain, to the extent possible and practical,
uniformity in our regulatory system and not proceed down
various different paths or continually, by death of a thousand
cuts, add to the regulatory system. Coordinated, regulation,
uniformity are hallmarks that scholars recognize of a strong
procurement system.
Last, my final point is somewhat related to my first in
that as this committee goes through and tries to gather
information about what is effective for strengthening our
procurement system, one of the data points that will be very
valuable is experience under the recently enacted regulatory
and legislative reform initiatives.
Many of those initiatives have just been passed into law.
Some of them have only recently been put into regulation; some
have not yet been put into regulation. None of them has the
kind of track record that we can see whether or not they have
been effective and the cost and benefits have worked out
positively.
So as Congress and this subcommittee thinks about ways to
improve our system, it should wait and let the efforts it has
already initiated, see if they bear fruit before determining if
additional regulation is required.
Thank you very much.
Ms. Watson. Thank you.
[The prepared statement of Ms. Sacilotto follows:]
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Ms. Watson. Ms. Madsen.
STATEMENT OF MARCIA G. MADSEN
Ms. Madsen. Madam Chairwoman and Congressman Bilbray, I
appreciate the opportunity to be here today to update you on
the progress of implementing the recommendations of the
Acquisition Advisory Panel. It is terrific to be on this side
of the effort, I might add.
The panel's objective, as it was described in our report,
was to provide meaningful improvements to the acquisition
system that would allow agencies to obtain the benefit of
commercial practices to better achieve their mission, and with
recognition that a balance is necessary to achieve transparency
and accountability necessary for the expenditure of public
funds.
The panel's report was focused on giving the government and
its acquisition work force improved capability to make wise
decisions about expenditure of the taxpayers' money.
Many of the panel's recommendations have now been adopted
in legislation and regulations, about 37, depending on how you
count the bits and pieces. And I should note that the panel
attempted to provide recommendations that could principally be
implemented through regulation, although Congress has picked up
a number of those and put them in legislation as well.
I just want to talk about a couple of key areas and maybe a
couple of gaps.
The panel really put an emphasis on the importance of
competition. There was some discussion earlier with Mr. Drabkin
about whether the Federal Government actually is doing less
competition than it was. I agree with him, based on the
research we did, that the percentage of competition has been
relatively consistent.
However, the panel looked at what best commercial practice
was for competition and determined that the government's
competitive practices didn't really measure up. We didn't have
any good data on orders under large IDIQ multiple work
contracts, and about a third of the contracts awarded of the
data we did have were awarded noncompetitively. The private
sector does much better, particularly in services and IT
procurements than that.
We still don't today have good data on the amount of
competition that is actually used in awarding orders under task
and delivery order contracts. That is something that needs to
be corrected very soon.
Our panel expressed very strong views on the need for
greater emphasis on requirements development and acquisition
planning. I still believe that is a gap. You see this thread in
the Presidential memorandum and in the discussion of cost
reimbursement contracting about, maybe, restrictions on cost
reimbursement contracting.
But in order to make the system work to reduce costs,
whether you are using cost-plus contracts or whether to make it
possible to use more fixed price contracts, the bottom of that
is requirements development; and it is what the private sector
spends their money on, and it is what the government needs to
do a better job on.
We made some suggestions about putting teeth in the
requirements process, and those suggestions have not been
picked up yet. And I would be happy to talk to the committee
more about them. As I said, a number of our suggestions have
been enacted, and they are in my testimony and I won't go
through them.
Something else we proposed was much better management of
interagency contracts. Section 865 of the NDAA picks up on
that.
With respect to the work force, again we recognize that
there was a significant mismatch between the demands on the
work force and the skills and competencies of the work force. I
was struck--I was looking at the same Executive order I think
Ms. Manos was looking at, the implementation of FASSA, just
last week, and I was struck by the President's emphasis in
that--President Clinton's emphasis in that memo of cutting
275,000 Federal jobs.
And obviously there is recovery here that needs to take
place with respect to the work force. It is not just numbers,
and I won't go through them, but if you look in the panel's
report, one of the things you will see--and I think this is a
gap--is, we recommended a consistent definition of the Federal
work force and a consistent measurement and also a single data
base for the Federal acquisition work force, so we can tell
what the Federal acquisition work force is. There are at least
three different counts that are used today and they produce
widely varying numbers.
It is not only numbers, it is a definition. It is also
getting the skills and competencies correct, as Mr. Assad
testified.
I would be happy to respond regarding blended work force
issues. The panel was the first to point out some of the
complications associated there.
And I would like to make one final observation to the
committee. As I said, our panel was focused on giving the
government the tools to do a better job and make wise
decisions. But there appears to have been developing in the
last 2 years what may be piling on to enact sort of the latest
investigative provisions, and many of these are overlapping.
They are burdensome, and they really intrude on the ability of
the government to manage its business.
I would like to encourage the subcommittee to undertake a
review of these provisions and to assess where there is
duplication and what the collective burden is that these
provisions impose on the work force. Do we really need three
new whistle-blower provisions that do the same thing?
Should contractors who make a mandatory disclosure under
the mandatory disclosure also be subject to a Qui Tam suit for
making that disclosure? There is a lot of overlap here, and I
think it would be worth looking at whether you needed to check
that and make some rationalization.
Ms. Watson. Just keep in mind this is work in progress. We
have all of your written statements, and we will look at your
recommendations in a very sincere way.
[The prepared statement of Ms. Madsen follows:]
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Ms. Watson. Mr. Amey, you may proceed.
STATEMENT OF SCOTT AMEY
Mr. Amey. Thank you for inviting me to testify, and I hope
to meet your deadline here.
I am the general counsel of the Project on Government
Oversight [POGO]. Throughout its 28-year history, POGO has
worked to remedy waste, fraud and abuse in government spending
in order to achieve a more effective, accountable, open and
ethical Federal Government. POGO has a keen interest in
government contracting matters, and I am pleased to share my
abbreviated thoughts with you this morning.
Many contracting experts and government officials have
blamed the inadequate size and training of the acquisition work
force for today's contracting problems. The work force
reductions are a major problem, but we believe additional
problems deserve equal attention. These problems are inadequate
competition, deficient accountability, lack of transparency,
and risky contracting vehicles, including some which have been
mentioned today: sole source contracts, commercial item
contracts, cost-reimbursement contracts, and time-and-
materials, labor-hour contracts.
I want to provide you with one example that kind of hits
all four of those subject areas. In my full testimony, I
provide 22 recommendations that we think can be implemented to
help improve the contracting process, but this is a 2006 IG
report from the Department of Defense on a commercial contract
for noncompetitive spare parts. It was a $860 million contract,
and this is just the abbreviated results section.
The Air Force negotiating team used questionable
promotional item determination that exempted the contractor--
and I won't name them because I don't want to call them out on
this; it is an internal problem--but from the requirement of
submitting cost or pricing data on an $860 million commercial
item contract for noncompetitive spare parts used by the
Department's weapons system. As a result, the Air Force
negotiating team classified basically all contractors'
noncompetitive spare parts as exempt items.
It goes on to conclude that contractor refused to negotiate
catalog prices for commercial items based on price analysis of
previous cost-based prices, refused to provide DLA contracting
officers with uncertified cost or pricing data for commercial
catalog items, and terminated government access to the
contractors' cost history system.
When Ranking Member Bilbray in his opening remarks used the
term ``adversarial system,'' I think it goes past what goes on
necessarily between offices within the Federal Government, but
this is also a problem with the government. The government
doesn't have the tools necessary to get fair and reasonable
prices in certain circumstances.
Thank you again for allowing me to testify. I will be more
than happy to work with the subcommittee and the full committee
as we proceed.
[The prepared statement of Mr. Amey follows:]
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Ms. Watson. I want to thank you all of you for your
testimony. We will move to the question period.
I will start it off and then recognize our ranking member,
Mr. Bilbray.
In response to the comments offered from our first panel,
are there particular issues discussed that you believe deserve
specific emphasis or added amendments?
Let's start with Mr. Gormley, please.
Mr. Gormley. In regards to resources, resources is the key
here. I listened to Dave Drabkin--and we interface with GSA
through the coalition--and they have a tremendous number of
vacancies there that for some reason the personnel process
takes quite a long time to bring folks into government.
Three weeks ago I had the opportunity to go and visit the
VA Acquisition Academy up in Frederick, Maryland--the VA stood
up a VA Acquisition Academy; it is a 3-year program with about
27 interns in the program--and I thought, I think the committee
would do well by taking a trip up here. It would be a good
opportunity for you all to see some of the excitement in the
acquisition field, and the VA is a leader in that.
Mr. Bond. Yes, I wanted to draw attention to one of the
subcommittee members, and that was Mr. Connolly, who brings a
unique combination of experience as a leader in both government
and at a leading contracting company. And I would hope that the
subcommittee and the committee, indeed all of Congress, would
use him as a valuable sounding board.
Second, Mr. Bilbray hit a key point that bears a lot of
thought, and that is how to attract and retain younger workers,
making sure that they have the modern tools. Government
wrestled for a long time with how to deal with e-mail, can you
communicate with people outside the government? Is it personal?
Is it business? We need the same thing for the social
networking with other 2.0 technologies.
Mr. McNerney. Madam Chairwoman, I was at a construction
user roundtable meeting the other day, and a lot of the big
design, engineering and procurement companies are having a lot
of layoffs these days. And the procurement guy that was there
from the DOD recruited a lot of people for his work force, for
the construction project management program. So there is some
work force availability in training people transferring over to
the government now.
In terms of broader issues, we think some of our
contracting reforms would raise the level of competition and
the type of performers coming into your construction programs,
and we think ultimately that would help the agencies.
Ms. Manos. I would like to suggest that one thing that DOD
could do a much better job of, and they mentioned, for example,
using the Defense Contract Management Agency as their cost
analysis group. I think it would send a much stronger message--
they have currently gone from having a three-star flag officer
or general officer in charge of the Defense Contract Management
Agency to having a civilian; the message that sends to DOD is,
we don't care about this, this is a backwater, it is not where
we are going to put our best and brightest people--is to
restore that so it is a three-star or four-star billet, to show
that you really do care about government contracting.
And the Defense Contract Management Agency is exactly where
we need really bright people to be working.
Ms. Sacilotto. Two aspects of the testimony this morning
struck me: Obviously, the need to augment the acquisition work
force. Whatever tools, whatever regulations you have in place,
you cannot replace people with regulation. That is a key
requirement that definitely needs emphasis.
And then the second was Mr. Drabkin and Mr. Assad both
mentioned the need to adhere rigorously to requirements.
Whether you have a cost reimbursement contract or a fixed-price
contract, getting the requirements development process right is
critical to that. There are efforts under way to ensure that is
done, and those are efforts that should continue.
Ms. Watson. Thank you.
Ms. Madsen. Two things: One, I would like to echo
requirements. I think those of us who have worked in this area
for a long time realize there is a lot of talk about it, but
there is a real skill set that is involved in doing it right;
and it may need some encouragement from the committee and the
subcommittee and some help to the agencies to understand that
is a priority, and they need to put resources, technical
resources, at that issue.
Second, we didn't get a chance to talk about inherently
governmental. There is an effort under way, per section 321 of
the 2009 NDAA in the President's memorandum, to define what is
inherently governmental. If you look at the panel's report, we
were concerned that not be a one-size-fits-all endeavor, but
rather the agencies be allowed to define what is their core
mission and where they need the people, and to make reasonable
discretionary choices about where to contract and where to
bring work in-house.
Thank you.
Ms. Watson. Mr. Amey.
Mr. Amey. I agree with my panelists.
I would also say as far as increasing competition, we
should look at debundling contracts. These multiple services
and multiple goods all compounded into one contract is
problematic. That will not only increase competition but it
will also remove this layer of subcontracting that we are
seeing where we are down to three layers or four layers in the
subcontracting world.
I would also like to see better tools in the acquisition
work force's hands as far as cost or pricing data to make
better pre-award and post-award decisions and also enhancing
USA spending. I know there was some talk with Mr. Drabkin this
morning about data bases that are out there. We are starting to
see Congress create data bases, and POGO was behind one for the
responsibility and performance data base.
But we now have an excluded party's list, we have USA
spending, we need to somehow consolidate those into a one-stop
shop for Federal contracting where you can get all information
for members of the acquisition work force as well as the
public.
Ms. Watson. Thank you.
I would like to yield to our ranking member, Mr. Bilbray.
Mr. Bilbray. Thank you. To sort of reflect your last
comment about the bundling, the nonprofit contracts that were
let in Afghanistan, we found that not only were they bundled,
but then the winner of the bid went back and negotiated with
the competitors that they had beaten for doing the subcontract
work. That is something that we will have to look into.
Mr. Bond, I appreciate you identifying some of the
challenges we have. I remember getting here in 1995, and coming
from local government in California--and we are both
Californians; and we are trying not to flaunt this too much,
especially the state our State is in right now--but I was just
blown out that you couldn't e-mail between congressional
offices at a time when buckets of ice were being delivered to
our offices 50 years after the invention of refrigeration, and
we were burning coal to generate power for this facility.
I mean, in California you go to prison for burning coal.
That was a whole culture shock.
I guess one of the things I want to get identified is some
of these challenges that we arrange in our procedures. The
parts issues is one of those things that sort of hits me.
I ran the trolley system for San Diego, and we had to
negotiate for parts with Siemens Duewag. Now, you have to go to
Siemens Duewag to get parts for Siemens Duewag, at least most
of the time. The challenge we had was, how do you competitively
negotiate with a company that has a monopoly on the parts that
you need to operate.
I guess the innovative way we did in government was that we
ordered so many cars, took a look at the parts, and basically
the sale of the hardware is a loss leader and the parts
department is where these guys make their money. What we ended
up doing was, we figured out we were going to order more cars
than we needed and then asked how much assembly cost, asked
them to deduct the cost of assembly and just send us the cars
unassembled.
Now that is the kind of thing you have to do when you have
a monopoly, but how often is a government bureaucracy able to
do that?
The challenge there, when we talk about things like the
parts, what kind of innovative approaches can we go to when we
look at that, or can we look at the fact when we buy the units
and we go out to a bid--and let me clarify. There was a comment
about local government doesn't have to operate at a certain
level.
All I know is, in California, we are required to take the
lowest responsible bid, and so there is a preference given to
the lowest bidder; but then you disqualify those who are not
responsible bidders and then move up the chain. At least there
is a process you follow, rather than a wish list.
So as we go, these challenges, how do we integrate into our
system--and I guess this is where the new young hotshots pull
up IT information to be able to look at not just the unit
price, but also the life expectancy/maintenance cost because
parts are then included into that life cycle cost. Do we have
the technology and do we have the process to be able to
integrate that in when a bid comes in? Did I get too far out in
left field on this one?
Mr. Gormley. Basically what you are approaching on that
question is life cycle cost. And as one of the panel members
earlier commented, there is an art to this. Regardless of the
age of the contracting officer, someone does need time to
understand the government's needs, what the life cycle is and
needs to understand the industry they are buying from.
So it is not point, click, and buy here. I think the need
to have a growing work force and for Congress to continue to
support the acquisition community, such as today's fantastic
hearing--the government needs this kind of oversight and action
to come out of this committee.
On the other hand, the government has barriers up in OPM to
bring these people in. Your point is life cycle costing. The
government back in the 1980's was very high on life cycle
costing and, in some cases, has gotten away from it, to your
point.
Mr. Bond. I think implicit in your question, too, is
whether or not we have the ability to tap all of these
different data bases and pull them together in an intelligent
way so you can make a decision.
The answer to that is, yes, with a caveat. The Federal
Government is the largest enterprise that we know of in terms
of business function, larger than any private company. And so
the task would be vast if you were going to try to encompass
the entire Federal Government and every aspect of it.
But pulling multiple data bases together into what is
usually called a business intelligence module at the top, so
you can see what is going on and compare roll-up costs and so
forth, that is done in private and public sector settings
today.
Mr. Bilbray. I guess I shouldn't say this, but the fact is,
one of the big determining factors of the success of Toyota
was--has been, at least--the perception that the life cycle
cost of owning this vehicle is much lower than vehicles that
people have been familiar with, basically much lower cost, much
longer life span and everything else. So the initial cost was
not the issue that we had before.
It used to be that imports were cheaper to buy up front,
but not overall. And what happened was, Toyota totally
destroyed that perception, and all of a sudden it became the
deal that here is the car you buy and you drive it until you
are a grandma and pass it on to your grandchildren. That may
not be the reality, but it is the perception that has driven
the success of the Toyota model.
And that is one of those formulas that consumers make all
the time, but does the bureaucracy have the ability to do that?
And do be have the incentive to do it? That is always the tough
part when we talk about the comparison between the private
sector and its inherent efficiency as opposed to the public
sector, is that vested interest in the decisionmaking.
Mr. Bond. If I might, so Toyota in that case has created
real value; and in the government contracting setting, I think
the fact that you can look for the best value is somewhat
corresponding to that concern.
You talked about whether or not we have the incentive, and
I think there the subcommittee might think about some creative
approaches, and we would love to engage with staff and Members
on that.
But one disincentive that you have right now is kind of the
use-it-or-lose-it spending pattern with the annual
appropriations and so forth. There is no real incentive to save
some money on a really high value so you might then use that
for something else. It may be a cross-cutting initiative. For
instance, one idea we suggested is, if you saved some money on
something because you went the extra mile and got the best
value, you can use that saved money. It doesn't die, you can
use it on cross-cutting Federal agency initiatives; or perhaps
it could go into extraordinary compensation for really good
contracting officers.
A really good contracting officer in the private sector, if
they executed a multibillion dollar successful contract would
get a much larger bonus than anybody in the public sector would
realize.
Mr. Bilbray. It is funny you say that, Mr. Bond. My father
passed away when I was a sophomore in high school. He was a
lifer, Mustang, in the Navy, and he always said communism would
never work, eventually it would fail; but his explanation was,
because countries don't have fantails to throw the hams
overboard as you come into port. And that is based on the old
concept that if it was in your inventory when you got into
port, you didn't get that the next time out.
I guess what you really hit on there, that is inherently a
challenge we have in the public sector that we have to figure
out how to address. I appreciate that. I think that is one of
those things that we need to go back and review.
I yield back.
Ms. Watson. Because of time, I want to thank all of the
witnesses. We have your statements, but we are going to mail
out to you a series of questions, and we will try to categorize
them with your background and experience in mind. We would
appreciate the answers back, if you can, within 10 days.
We will be suggesting to the full committee certain policy
changes, and I think the kind of testimony that you have
offered today will be very, very helpful.
So if you will answer, we have a series of questions that
would keep us here until 3 p.m., but we can't do that. I would
appreciate you responding to us within 10 days of receipt of
the questions.
Thank you very much. This panel is relieved, and the
meeting is adjourned.
[Whereupon, at 11:17 a.m., the subcommittee was adjourned.]