Hot Topics!!!

The State of Play?The Future?

Professor Steven L. Schooner

Public Procurement:The Only Constant is CHANGE

• Of Cycles, Waves, or Pendulum

• On-going evolution, ever-changing–Priorities

–Needs

–Capacity

–Markets

Best (and Worst) of Times• Massive post-2000 Federal Procurement

Spending Binge– No expected reversal (in short-term)– Should prove recession proof

• Recession may help acquisition workforce retention and recruitment

• Workforce– The lost generation– Wrong skill set

• Scandals• Protectionism• No Relief in Sight

• Globalization– Multinational markets– Multinational firms

• Harmonization of international procurement norms– WTO GPA, EU, OECD– UN-UNCITRAL Model Law– World Bank, Regional Development Banks

• Outsourcing!!!!

Outsourcing and Privatization: Bipartisan Trend

“The era of big government is over.”

“Too much government crowds out…the private economy.”

Privatizing The Military?

Is the Government “Too Dependent” Upon Contractors?

• That’s Irrelevant– Too many mandates, too few

government employees

– Pressure to suppress government headcount

– Outsourced governance (and the blended workforce) is the reality, and here to stay….

Outsourcing Makes Sense• Maintain focus on mission - specialization• Surge capacity• Flexibility• Innovation, access to technical expertise• Continue to meet agency missions with inadequate

personnel, abilities, and resources• “Attractive”to Program Managers

– No troop/personnel caps– Customer Service “ethic”– Civil Service frustration

Penny-Wise, Pound Foolish?• Marginal cost saving (in a vacuum)

is not the only metric

• Best value – Paying more for:–Higher quality goods/services

–Quicker delivery/response time

–Unlimited surge capacity

–Flexibility – changing personnel, products, approaches

Outsourcing Has Limits• Inherently Government Functions

– Right idea– Poor decision-making rubric

• Blended Workforce evolved more quickly than:– Best management practices– Ethics rules (e.g., organizational conflicts)

• Contractors Need to Be Managed

Blackwater Personnel are:• Profiteers

• Mercenaries

• Cowboys

• The Military Commander’s Worst Nightmare

• A Political/Foreign Relations Accident Waiting to Happen

• An Essential Element in the U.S. Military and Diplomatic Presence in Iraq

• Patriots• Public Servants• Best Private Security

Money Can Buy

• The Future?

Battlefield Contracting in Iraq:“Unprecedented” Reliance

Upon Contractors?

• 160,000-180,000 contractors

• 1:1 ratio - contractors to troops

• Multi-billion dollar industry

4,500+ “Total” Fatalities?What About the 1,120+ Contractors?

25% of allied fatalities in 2007

Big Picture: Simple Story

• Statutory Cuts: 1989-2000 workforce reductions

Post-9/11: huge procurement spending growth

Defense AcquisitionWorkforce & Procurement Spending

(reflective of government-wide experience)

0

50100

150200

250

300350

400450

500

1990 1999 2004 2006

Fiscal Year (FY)

Acquisition Workforce(In hundreds ofthousands, PackardCommissionMethodology)

DoD ProcurementSpending (in billions ofdollars)

$100

$150

$200

$250

$300

$350

$400

$450

2000 2001 2002 2003 2004 2005 2006 2007

Federal Procurement Spending Since 2000 (in Billions)

Cumulative Growth in Federal Procurement Dramatically Outpaces Inflation

0%

20%

40%

60%

80%

100%

2001 2002 2003 2004 2005 2006

Federal Procurement Consumer Price Index

Investing in theAcquisition Workforce

• Total Headcount–New Hires

–Pending Losses

• Training and Experience–New Hires

–Existing Workforce

Acquisition WorkforceWorst-Case Scenario???

• Denial remains prevalent • Retirement bubble ready to burst (but,

a recession may help)• Insufficient:

– leadership for massive hiring/training initiative;– numbers of qualified individuals interested in

working for the government (but, a recession may help);

– time/resources for the existing workforce to gain sufficient training/experience

Restoring the Acquisition Workforce?

For the foreseeable future, Congress cannot spend “too much” on:

• Salary• performance

incentives• recruitment

bonuses• retention bonuses

• intern programs,• workforce

training• sabbaticals (for

higher education)

Current Acquisition Workforce

Wrong Skill Set?1984 (CICA-FAR Era)• Supply• Formal

Advertised/Sealed Bid

• Firm Fixed Price• Government-specific

specification• Awarded by PCO• Managed by DCAS

(DCMC, DCMA)

Today• Services

– Employee augmentation– Personal Services

• ID/IQ, Inter-agency vehicle• Cost-Reimbursement,

T&M• Limited Competition• Unclear responsibility for

post-award contract management

Current Acquisition WorkforceOpportunities, Attractions?

• Civil Service (for better or for worse)• Career ladder out of secretarial pool• Long-term, stable, safe career• Fixed retirement program• Inadequate incentive structure

– 1990’s – failed incentive initiative

Recruiting the FutureAcquisition Workforce

• Gen X, Gen Y….– “most praised generation”– Universities and Helicopter Parenting– Show me the money!

• Civil Service Bureaucracy– Impenetrable, Slow, not user friendly

• Job Mobility• 401(k), TSP (What, me worry?)

• What is, why work in “procurement”?

Gansler Commission: A Plea For Responsible Outsourcing?

Contract management is the essential post-award contracting function to ensure mission accomplishment, and it is an important control over fraud, waste, and abuse;... With not enough ACOs, PCOs could do this - but they are too busy and therefore it is not being done….

Gansler Commission: A Plea For Responsible Outsourcing?

• Increase– Army military and civilian contracting

personnel - 1,400+, apx 25 percent of the total– DOD post-award contract management

personnel (to fill DCMA billets for Army support) - nearly 600

• Extrapolate across Government [8,000-10,000?]– Army ~ 15-25 percent of federal procurement $– Army better staffed than other agencies

Scope of the Challenge: Recruiting the Future Acquisition Workforce:

Back-of-the-napkin assumption:– 8,000-10,000 professional needed

An Analogy: US Department of Justice

< 8,200 Attorneys, including:–General Legal Activities (all)–U.S. Attorneys (all 50 States)–Antitrust Division–Trustees

dDwyMTQ

Can NCMA Play a Leadership Role?

Good Luck!

• Questions?

• Comments?

• Suggestions?

• Ideas?