Will Gates' Pentagon Acquisition Efficiency Initiatives Address the Costs and Benefits of Collaboration and Transparency?

Tweet

By Dennis D. McDonald, Ph.D.

According to the FederalTimes.com report 5 teams to tackle Gates call to improve efficiency, five Pentagon teams will focus on identification of Pentagon cost savings based on affordability, incentives, contract terms, metrics, and service contracts. More detail was provided by Elaine Wilson of American Forces Press Service on Sept. 14, 2010 on the DoD’s own web site.

I wonder what these teams will recommend — if anything — concerning collaboration and transparency in the Federal acquisition processes? My own research into opportunities for using collaborative methods and social media to improve Federal acquisitions has had mixed findings. Examples like the BetterBuy Project and increasing use of group involvement, where aspects of the acquisition and procurement process are made more open and collaborative, are still met by much skepticism despite strong supporting arguments.

As a longtime Federal and private sector contractor, it has always seemed obvious to me that the better you understand the client’s requirements, the better chance you have at winning the contract — and the better opportunity the client has of getting what’s needed in return. Contracting policies and processes that throw barriers in the way of understanding the client’s requirements have always seemed to me to favor the incumbent and those with “inside knowledge.” As a result I tend to approach increased collaboration and transparency in Government contracting with a positive mindset.

Not everyone agrees with this. I’ve found that reasons for this skepticism about collaboration and transparency range from plain old fear of change (“That’s not how we’ve ever done things around here!”) to serious concern over the costs involved in making sensitive technical or proprietary information more accessible; just read the pros and cons associated with making some contract details public.

There will definitely be costs involved in making portions of contracts easily available while retaining necessary confidentiality. The question should be, of course, whether the increased benefits of collaboration and transparency outweigh the costs. That’s where the need for objective data about contracting and collaboration is needed.

Hopefully the Gates effort referenced above will shine more light on using collaborative and information sharing techniques as an element in improving efficiency by addressing fundamental questions like these:

• Does transparency — making information more accessible to interested parties including the public — make contracting more efficient?
• Does collaboration — working together to accomplish a common objective, even if it means crossing traditional organizational or functional boundaries — generate better ideas?
• Does information-sharing — making it easier to find needed information, thereby avoiding the need to re-invent the wheel — reduce procurement duration?

The Gates effort is already using “crowdsourcing” by “…asking all DoD military and civilian employees to submit their ideas to save money, avoid cost, reduce cycle time and increase the agility of the Department.” Perhaps some of these new ideas will focus on objectively analyzing the costs and benefits of transparency and collaboration.

Copyright (c) 2010 by Dennis D. McDonald. Contact Dennis in Alexandria Virginia at ddmcd@yahoo.com.

Comments

[T.Scheer]

The federal procurement system is completely broken, not superficially but structurally and intrinsically broken. It’s a system that is designed in such a way that it can only decay over time and it has done exactly that. It’s a model of incompetence, inefficiency, distrust, and outright corruption. Poor collaboration is such a minor issue it is hardly worth mentioning; a Red Herring at best. To whatever extent poor collaboration genuinely impedes efficiency it’s just a symptom of a fundamentally flawed and broken bureaucracy more than a causal factor. Addressing collaboration isn’t even akin to putting a coat of paint on a decaying barn; it’s more like hauling a single gallon of paint to a large barn that is engulfed in flames. It’s completely the wrong remedy at completely the wrong time.

Transparency is a different problem, but the bureaucracy needs transparency of results, not of process or progress.

The problem isn’t a communication breakdown between the people issuing requirements and those implementing them. In most cases that communication is satisfactory. The problem is that most requirements issued on federal contracts are complete birdcage liner written by people who are either totally unqualified to design a product or produced by a process/workflow that is biased toward the most verbose form of mediocrity (i.e. reams of underwhelming requirements).

The phase-gate workflow obliterates innovation rather than incentivizing it.
Another problem is the contractors who furnish engineering and development services, they transact against LOE (hours), not innovation, creativity, or productivity. The LOE model disincentives high productivity and disruptive innovation.

Writing good requirements is a workflow that, in my opinion, is 1:1 with a good Product Design workflow. Product Design isn’t about communicating more efficiently with the people having “inside knowledge”. What does seeem to work is ethnography up-front followed by creative agitation that leads into extensive model-building and idea selection. Idea selection feeds into an idea refinement workflow that eventually runs in parallel with fabrication. If schedules are set so there is “not quite enough time” and curve-jumping results are demanded, with consequences for failing to jump the curve, then communication and collaboration become self-optimized in the resulting workflow.

If we wanted to fix federal acquisition we’d get rid of the entire open competition bid and proposal process as it is today. It only gives the appearance of being fair and open, the process is anything but fair – and it has considerable bureaucratic overhead. No industry that is accountable for the money it spends would do it this way. Consider how you hire an advertising agency. The agency model revolves around “the pitch”, which is a special variation of B&P that actually works.

“The pitch” is not a proposal in any sense that would be comparable to federal contracts. The pitch is all about creativity and innovation, with the goal being to display fundamental “pick me” differentiators and unique ideas. Sometimes a competition will pay a “pitch fee”, sometimes not. While far from perfect, it’s a vastly superior process compared to what we see in federal procurement today. Implementing that would be far more transformative than jamming yet another collaboration thing into the mix.

[Dennis D. McDonald]

Thad-

One of the benefits I'd look for from better communication and transparency is a closer relationship between the producer and user communities. By "closer relationship" I mean fewer intermediate steps and side-steps. This should -- hopefully -- translate into fewer delays and fewer mis-steps and misunderstandings.

By reducing the noise in the system I'd hypothesize that re-work and re-communication costs are reduced which hopefully leads to higher quality. But as you suggest just adding collaboration and transparency to the existing system without underlying changes may not have any significant positive effects.

I'd counter with two additional hypotheses:

First, it may not be possible to add collaboration and transparency to the existing system without having potentially profound impacts if what is being disrupted is some of the secrecy and siloing that have led to the current difficulties. In other words, it may not be safe to assume that adding collaboration and transparency will only reinforce current problems.

Second, if you look at the overall size and complexity of multi-year weapons system procurements (check out the "Integrated Life Cycle Chart" [ https://ilc.dau.mil/download_pdf.aspx ] to see what I mean) a saving in time of just a few percentage points at key points could lead to a substantial overall saving in time and money.

But these are just hypotheses so I'm interested in finding actual data to prove or disprove them.

Thank you for your comment!

- Dennis

[W. Dyer]

Thad I understand your feelings of deep seated mistrust - the system deserves that and the founding fathers made some mention that they didn't want things to happen too quickly. The idea i'd like to bring to the table is that the problem that you denote is simply a symptom of the far deeper difficulty that is inherent with the way that the house does its appropriations business. With a two year drop dead and a one year timeline it is impossible for them to think in any longer terms. The senate has the luxury of six years to do its damage but thank goodness it doesn't have the funding to worry about. The two year house appropriations is there to stop the possibiility of corruption on the part of the house. Keeping the house members in for more than two years gives them too much time to learn how to develop means of mischef. The presidency's four year period allows the direction to be set but the senate has the larger term to support or shut down the direction. We are not going to fix the executive or the legislative processes. There is too much that goes right with the hurdles laid out by the founders. The changes you seek that would incentivise might be fraught with unintended consequences - red herring?.... maybe? Further.... speed when added to a bad process just gets you more garbage at a breakneck pace. We really don't want that either re: can't read the 2800 page bill that was input yesterday at 1600hrs. What can we do to help? Reduce the 69 documents in the process to 10. Make it mandatory that an organization take a maximum of 30 days to sign off on each document. Testing for interoperability - if it can't be done in 60 days - it's not ready and goes back to the drawing board. That would run the timing down to 36 months - not the leap you are looking for but a damn site closer to the 18 month technology turn we're living with now. What do you think?

[Dennis D. McDonald]

Walt-

I would also look for ways to remove unnecessary redundancy across the different steps.

- Dennis

[T.Scheer]

Thanks for the thoughtful response. I completely favor limits on the terms served in Congresses and the Senate, but that’s not where I was suggesting the need for fundamental reform. We could make a huge improvement by addressing the bureaucracy.

Most of today’s federal acquisition regulations grew out of a small number of misunderstood abuse cases, such as $400 hammers. In the name of protecting the tax payer they installed a paralyzing system of regulations that resulted in a power grab by the bureaucracy and its allies. A few highly publicized issues (even if they weren’t really true) were all it took to justify creating a gigantic pachinko machine that every acquisition must fall through. Now we are stuck with a paralyzed system that is corrupt from head to toe and produces almost no innovation or efficiency. It’s awful.

My point is we need to return to a model of speed and efficiency. I completely disagree that speed added to a bad process gets you more garbage. That’s never been proven, it’s just plain false. In fact, requiring intense productivity is a powerful way to improve quality and cost effectiveness in the wild. Sometimes it is the only way. When projects have “not quite enough time” and “not quite enough money”, they go really fast, and to achieve that they develop efficiencies in quality and performance from the ground up. For this to work there must be severe consequences for failure, which encourages better behavior in hiring and vendor selection by people in upper management positions.

I know from my experience “red shifting” product development that if we take a broken system of people, process, and policy and re-organize around short schedules with intense accountability for results, great things begin to happen. Limited schedules = limited money = limited waste. Moreover, limited schedules = more visible outcomes = more accountability = limited waste. Any applied practitioner of Lean will confirm this.

I’d vastly prefer a few examples of the wrong thing being produced quickly than have 20 year projects spend zillions only to produce a bad implementation of the wrong thing…after tons of “process accountability”. Short intense schedules work best when developing “things” (computer software, vehicles, weapons, etc.). Most things (not all) should be developed using no more than 12 – 15 months.

Remember, it takes Nissan or Toyota no more than a couple of years to design a car. A car!!! However, if any component of that car were designed by a typical government contract, it would probably take longer to finish that component than the entire rest of the car. And, it would be the worst part on the car. We need to fix that…

Here’s what I would do: Move every development project to a “capacity model”. Acquisitions should fund a certain capacity over a fixed period of time. There would be no time-and-materials / LOE funding at all…zero…everything would be based on capacity. Next, we would use fixed-size delivery windows, for example 30-days, 6 months, 9 months, 12 months, 18 months, 26 months, and 36 months. Those become fixed delivery dates where the resulting product must be done and the capacity released. Any project longer than that should require a special waiver that would be hard to obtain without a visit from 60-minutes. Any project that fails to ship on time would be put into a special “bankruptcy” mode, which is to say we don’t shut it down as the first action, but we salvage its assets, change everything, renegotiate contracts, etc. If you can’t escape bankruptcy then it gets canceled - period! But set it up so nobody wins during bankruptcy…

In closing, this also addresses a secondary causal factor which is no youth talent running big government projects. In Hollywood you might see a 26-year old hotshot in charge of a $150M budget. In Silicon Valley the hot kids run billion dollar firms. In DoD, the most brilliant 26 year old is a “junior member of the technical staff” and would never be in charge. This is a huge problem, and party why so much of what is produced stinks. But we can never escape that problem as long as labor category descriptions remain as they are, and to nuke that we need to nuke the entire T&M LOE system.

[James Movich]

This is a very good site. I do believe that transparency is a good thing. I also disagree with Mr. Scheer that the open competition bid and proposal process only gives the "appearance" of being fair and open, "fairness" is always in the eye of the beholder....it normally is not "fair" to the losers, no matter who or how many. part of the human dynamic. i was recently part of a proposal team that WON a major O&M contract overseas... then the managing JV partner was suspended from being awarded any new contracts and so the contract went to the second best contractor; even after they had pulled out of the JV and the other company had submitted to required letter to the KO (by the KO's own instructions to do so) Fair? depends on your point of view i guess.

As a business development professional, i like the fact that i can visit usaspending.gov and see how much company XYZ has in awards and view the size of their contracts and other company specific data. it helps my clients perform a thorough risk analysis and leads then to more informed bid decision. My viewpoint may be colored in part by the fact that I work exclusively within the service delivery industry, and not the hardware world.

The problem with the FAR as you stated is that it is a complex and complicated of difficult material to master. the beauty of the FAR, however is that it is a complex and complicated of difficult material to master. this means there are competitive advantages to be had for those willing to put in the time and effort to learn what can and cannot be done.

Competition has always made us stronger and will continue to do so, which is not to say i disagree with all the points you made. I worked as a Sales Evangelist for a collaborative software manufacturer in 2000 at the time of the "dot com" collapse, and saw firsthand the impact of 19 year olds with no prior experience run multi-million dollar companies to zero.