Tuesday, March 15, 2022

This article was originally published in the March 2022 edition of the Contract Management Magazine.

In 2008, The IBM Center for The Business of Government published a short report by former Office of Federal Procurement Policy (OFPP) Administrator Allan Burman called, “Post-Award Contract Management: Who’s Minding the Store?”

It drew attention to how the procurement system devotes a great deal of energy and regulatory language to requirements development and source selection. At the same time, the system gives little attention (including vague regulatory language in FAR Part 42) to managing contracts after award, even though it is post-award where the contracting rubber meets the performance road.

Before the procurement streamlining changes of the 1990s, source selection was complicated, grueling and time-consuming, and people were known to collapse with exhaustion after award. When I promoted streamlining changes as OFPP administrator in the 1990s, I frequently stated that a major purpose was to free up resources that could be redirected from source selection to post-award management.

But sadly, simplification of source selection, including the expansion of task-order contracting, does not seem to have remedied the problem. Burman’s lament still applies today as resources saved on source selection went instead to dealing with the contracting workforce cutbacks of that era, and a cultural change emphasizing post-award issues never really occurred.

Resources and Post-Award Management

Burman had one recommendation about resources: “See that resources are provided to ensure that adequate levels of staff with the appropriate skills are in place to see that contractors are producing the business results sought.” And he had one recommendation about what activities should be part of post-award management: “See that performance measures are included and assessed in any contracted action.”

There are two challenges. One is getting attention and resources allocated to post-award management in the first place. The other challenge is making sure those doing post-award management undertake activities that will improve performance.

The first challenge is more for civilian agencies than for the Department of Defense (DoD), particularly for weapons systems. The DoD has an entire organization—the Defense Contract Management Agency (DCMA) with close to 10,000 employees—to watch the store.

DCMA has employees who work in defense plants or in field offices. They examine contractor inspection/quality control systems and conduct eyes-on product inspections, witness production as it occurs, and then inspect end items (both first-article inspection and some inspection of ongoing production) as well as product testing.

DCMA employees actually fly aircraft submitted by a contractor to the government and certify the planes’ flightworthiness. DCMA has people who know how to inspect products down to their welds. DCMA also supports contracting officers’ price negotiations, analyzing contractor-provided cost and price data, and suggesting negotiating strategies. In addition, DCMA negotiates overhead rates and forward pricing agreements with the contractor on behalf of the government. These various functions apply both to initial contract awards and to contract modifications.

In civilian agencies, contract management is assigned to contracting officer’s representatives (CORs, FAR 1.604) and is often largely considered an “other duties as assigned” afterthought.

In terms of resources allocated, DoD is probably somewhat worse off than this simple description implies, while civilian agencies are probably somewhat better off. DCMA lost half its headcount during the 1990s, dropping from approximately 23,000 to 12,000 personnel.

The end of the cold war dramatically reduced new weapon systems, which along with simplification of small purchases and government credit card use, significantly reduced the need for contract management services.

Though reduced workload demands were important in the cutbacks, another view was that oversight of contractors was too intensive and intrusive. The 1993 reinventing government report described these employees as being involved in “overcontrol and micromanagement.”

Doing Less With Less

With fewer personnel, DCMA started doing less with less. From inspecting close to everything when there were 23,000 people, DCMA started ruthlessly prioritizing the work it performed focusing on inspecting only production deemed high risk because of the inherent nature of what was being produced and/or because of a problematic contractor track record.

During the 1990s, DCMA lost much of its capacity for analyzing proposed prices using cost data and often simply accepted prices proposed by contractors. When the cutbacks took place, a new policy called “total systems performance responsibility” was introduced. It put most requirements development and contract oversight in the hands of contractors.

Under this effort, contract management done by contractor replaced much of the government’s effort. This origin seems to be a mixture of dealing with a reduced labor force and a philosophy that industry should be able to “do its thing.” The effort was abandoned after the high-profile failure of the Future Combat System and several failed satellite launches in the early 2000s. These were blamed on the government’s delegation of too much authority to contractors with minimal government management.

DCMA continued to lose employees through 2008, until it was down to 8,000. The decline continued despite defense spending doubling because of the Iraq war and the growth of services contracting, which is contract management-intensive. House Armed Services Committee Chair Duncan Hunter also criticized the Defense Department for having had too many “shoppers.”

Since 2008, the DCMA workforce has increased by approximately 20%. One senior DoD official who made use of the added employees was Frank Kendall, the DoD chief acquisition official starting in 2012 (and currently secretary of the Air Force). He assigned people to work on “should-cost” analyses for weapons programs and on negotiating prices for production contracts for new weapons system. (See sidebar on this page for the definition of a “should cost” analysis.)

The Government Accountability Office (GAO) agrees these efforts slowed cost increases. GAO guidance now requires major weapons programs to do should-cost analyses. In recent years, DCMA has tried not only to rebuild its traditional pricing capabilities but also to create a new capability that analyzes proposed prices for commercial items using information about a company’s commercial marketplace sales.

Some Room for Optimism

Since Burman’s report, what I have learned about the degree of commitment by civilian agencies to contract management has made me moderately more optimistic. There are somewhat more resources devoted to post-award management than I had originally suspected.

In 2010, GAO issued a report on the use of performance metrics in management support task orders. It found that 60 of the 64 orders included performance metrics for quality, and 54 included metrics for cost and schedule performance. The report criticized the fact that 40 of the 60 task orders used subjective quality metrics such as customer satisfaction and number of complaints. Including subjective measures is a decent first step.

The report also noted that contract management personnel frequently made proactive phone calls to inquire about satisfaction with the contractor’s work. Furthermore, about one-third of the task orders had objective quality metrics. However, a 2011 GAO report criticized the Department of Homeland Security for insufficient use of independent verification and validation (IV&V) processes (or contracts) to examine and assess whether government requirements are being met.

The Value of CORs

I worry almost as much about the extent to which CORs are doing the right things as how many there are. A meeting several years ago under the auspices of The IBM Center for The Business of Government I brought together some outstanding CORs with senior procurement executives.

An important message from that meeting was that a central part of a COR’s job responsibilities should be to informally poke around to uncover issues and problems. “CORs should work with program managers and contracting officers (COs) to get out of the office and into conversations with teams and colleagues,” a report about the meeting said. “Much can be learned from front-line touches. CORs should reach out to project managers and do regular ‘drop-by’ visits for informal status checks. The report also said, “Reducing time spent on low value-added or resource-intensive paperwork activities can free COR time for more important efforts.”

Noting the many reports that contractors are required to submit to the government, the report recommended, “CORs should remove contractor reports that add no value in order to focus on those actions that matter to delivering outcomes. Often the COR, when working with the CO, has discretion to modify or remove reporting requirements that lack value-add.” The authors also pointed out that even “‘minimal’ steps to standardize invoicing would save lots of COR time.”

Shortly before the pandemic in 2020, and sponsored by The IBM Center for The Business of Government, I interviewed several General Services Administration (GSA) contracting officers’ representatives working on major IT contracts. It turned out that GSA has employees in its Federal Acquisition Service whose full-time job is to be a COR. The two most common COR tasks the interviewees discussed were holding monthly status report briefings updating activities and dealing with the financial elements of paying contractors and tracking contract spend (“burn” rates and color of money).

One interviewee stated, “The funding piece is very challenging because in a year I’m receiving about 160 funding documents for this order. There is a lot of paperwork and a lot of tracking.” Several interviewees spoke favorably regarding the impact of award fees on incentivizing good performance. 

Most of those who I interviewed gave quite straightforward and prosaic descriptions of what they did as CORs; there were no traces of innovation or creativity in how they did their jobs. None mentioned “poking around” proactively to see if there were problems. None spoke of looking for ways to eliminate unnecessary reports. A few did use “performance” to describe what they were trying to help task orders achieve. One interviewee said he looked at “how satisfied the customer was with the contractor’s performance.” Another said he was “getting constant customer feedback on how things are going.”

When asked what performance measures they used to evaluate how well a task order was working, some cited service level agreements (SLAs) but most referred to various timeliness and completeness metrics. A few noted status reviews with contractors included discussion of how well the task order targets were being met and how to improve if there were shortcomings.

I suggest status updates should routinely include a discussion of work performance metrics and action steps to be taken to improve performance such as the best practices for agency meetings on organizational performance metrics outside the contracting context. The interviewees were split about whether the government had sufficient in-house technical skills to manage contracts. At least at GSA, each task order had one (and generally more) “technical point of contact” to look at the work. This is good news, especially in light of the view that “nobody’s minding the store.” But a number of interviewees said government technical staff often were not in a position to evaluate contractors’ advanced technical work. Some suggested that more often government should contract for the technical oversight skills it lacks, perhaps through IV&V contracts.

Three Ways to Improve

I have three suggestions for the new Office of Federal Procurement Policy (OFPP) administrator on how best to increase the attention the government gives post-award contract management.

The first is a symbolic change. Retire the old expression “contracting officer’s representative” from FAR 1.604. It reeks of bureaucracy and shows indifference to performance. Replace it with something more active such as “contract performance manager.”

The second suggestion is for the new OFPP administrator to establish what I suggest be called a Contract Performance Manager Forum with civil servants nominated by cabinet agencies and DoD components. The forum should meet periodically to raise the visibility of post-award management by giving CORs access to the White House and making the COR leadership role more important. The forum should serve as a venue for CORs to discuss and make recommendations for post-award management best practices.

A third idea is for OFPP to organize a post-award management experiment. I suggest 10 newly awarded contracts be selected, perhaps in IT and professional services. Five would be chosen for expanded contract management attention by doubling the number of CORs and/or Administrative Contracting Officers (ACOs) assigned to work on the contract compared with the number planned prior to the experiment. The other five contracts (the control group) would proceed as planned and without further intervention. At the end of one, two and five years, performance would be compared to see if there were any differences between the two groups. We should also track the post-award management techniques. I recognize that small sample sizes make it very hard to get fine-grained about the impact of different techniques. However, I would eagerly await the results. They will tell us whether we should be assigning more personnel to post-award management, and maybe which post-award techniques make a difference.

We need a pivot to post-award in our contracting system. Hopefully the specific suggestions here will provide a basis for such a pivot.

Steve Kelman is the Weatherhead Professor of Public Management at the Harvard University John F. Kennedy School of Government