Topic 3: Federal Contracting and Acquisition

Over the past two decades, a series of trends have resulted in a chorus of voices in Congress, the media and the public concluding that the current federal contracting system is broken. Between 1989 and 2000, Congress mandated deep cuts in the Defense acquisition workforce. During the 1990s, the federal government shifted its contracting approach from one focused on buying supplies to one buying services, using new flexible contracting vehicles. Beginning in 2000, federal contracting increased from $220 billion to over $530 billion in 2008, with no increase in contracting staff. Finally, the focus on awarding this increased number contracts resulted in less focus on managing the contractual relationships. This led to unethical actors exploiting the system.

Progress to Date. The Obama Administration issued a series of directives focusing on defense acquisition, an examination of the use of outsourcing of government work, the use of cost-reimbursement contracts, and insufficient competition. It set a goal of cutting $40 billion in contracts. It also increased investment in the contracting workforce, starting with Defense.

Key Challenges. Five significant challenges must be addressed if the Administration wants different outcomes from the federal acquisition system:

• Restore and stabilize the acquisition workforce. Start with attracting the right talent and ensuring they are trained and have the resources to do their jobs.
• Achieve responsible outsourcing by deciding which tasks the government should do internally and which tasks could be outsourced in ways that can be appropriately managed by the government.
• Focus on best-value outcomes in the context of cost and the use of the contracting system to achieve various social goals.
• Neutralize the “toxic” environment in ways that balance between concerns about integrity and corruption, and purchasing efficiency.
• Undertake major system acquisition reforms that include metrics for success, mitigating the uncertainties created by the appropriations process, and use incentives and disincentives for performance.

Research Questions Based on Forum Discussions. Following are highlights of some of the research questions developed:

• What types of skills and training will be needed to manage complex products and services?
• How should government train, integrate, and allocate tens of thousands of new acquisition professionals?
• How significant are the transaction costs associated with Administration commitments to transparency, and who will bear those costs?
• To what extent, and in which areas, should reliance on contractors be reduced or increased?
• How can government develop and define better metrics on acquisition outcomes?

(Note: the background discussion paper for this topic was prepared by Steven Schooner, George Washington University)