We await the details of yet one more round of procurement reform, but it isn't starting well at the OMB

In procurement reform, we’ve all been awaiting decades to see progress, but this time, they’re at least going to have a process. According to the memorandum that the White House released this morning, the Office of Management and Budget (OMB) will be issuing a lot of “government-wide guidance”:

By July 1, 2009... government-wide guidance to assist agencies in reviewing, and creating processes for ongoing review of, existing contracts in order to identify contracts that are wasteful, inefficient, or not otherwise likely to meet the agency’s needs.

By September 30, 2009, government-wide guidance to:

1. Govern the appropriate use and oversight of sole-source and other types of noncompetitive contracts and to maximize the use of full and open competition and other competitive procurement processes;
2. Govern the appropriate use and oversight of all contract types, in full consideration of the agency’s needs, and to minimize risk and maximize the value of government contracts generally;
3. Assist agencies in reviewing the capacity and ability of the Federal acquisition workforce to develop, manage, and oversee acquisitions appropriately; and
4. Clarify when governmental outsourcing for services is and is not appropriate.

On 1 July, OMB could start by pointing at the so-called Troubled Assets Relief Program (TARP), the GM-Chrysler bailout, and the so-called stimulus package. But it won’t, so let’s move on to the rest of the list. It’s a mixed bag, generally increasing in value from top to bottom:

1. Any supply chain management consultant or procurement manager can tell you that there are appropriate times for noncompetitive contracts. Determining when they’re appropriate, however, does pointedly not included maximizing the use of “full and open” competition, a term that seems only in wide usage in the US federal government.
2. Guidance on the appropriate use of different types of contracts sounds nice, but this is stuff that’s taught to every program manager already. That they don’t all remember what they’ve learned may not be remedied by another memo from the OMB. What’s more, it’s not often possible to simultaneously minimize risk and maximize value. Some risk is needed to maximize, ex ante, the value of any project.
3. Reviewing the “capacity and ability” of the acquisition workforce is probably overdue, though hopefully the review will not recommend simply adding staff. Contracting arrangements like that governing the Future Combat System indicate that there are some fundamental misunderstandings about agency costs and contract incentives amongst the current crop of managers.
4. Clarification about when to outsource could truly be helpful. At a Houlihan Lokey conference in December, Jacques Gansler, a professor of management at the University of Maryland, and a former US Under Secretary of Defense for Acquisition, Technology, and Logistics, told a scary story about an Army base commander who was trying to find civil servants to mow the lawns. Apparently, he had been told that this outsourcing thing had gotten out of hand—and had completely missed the point.

Making a separate point, I recommend Jacques’ latest article, “Trade War”, in the March issue of Foreign Policy. As I have been arguing for some time, and as Jacques eloquently puts it

        The United States must face the fact that it no longer has a monopoly on the world's best military technology. America's path toward future stability involves cooperating with allies and taking advantage of the best they have to offer, not cutting itself off and watching as its military superiority slips away.

Booyah, Jacques. Now, if the OMB, the CRS, the GAO, and any other three-letter organizations could encourage the federal congress to replace the Buy American 51 percent rule with something well-considered, the Pentagon might actually find a useful tool for industrial strategy. But I’m not holding my breath for that one either.