The Pit and the Pendulum: From Hyper-oversight to Pragmatic Conservatism Neal J. Couture, CPCM Executive Director National Contract Management Association

The Acquisition Workforce Has Changed Years of downsizing (1990’s) Human capital strategies have not kept up with evolving demand Different set of expectations, e.g. business advisor Evolving gap in replacing the retiring professionals Inadequate investment in training “Cavalry” coming – Sect 852 –Hiring problems –Growing pains and budget realities 2

The Nature of What Government Buys Has Changed Offloading simple transactions Larger, more encompassing services Complex IT, communications, and weapons systems Accelerated fielding to serve the War Fighter Emphasis on logistical support amid workforce experience and Title 10 issues 3

The Working Conditions Have Changed Compelling urgency –Everything is accelerated in fight against terrorism –Inadequate size to meet workload demands Doing business in the battle space –Deployment of personnel leaves home force shorthanded Constant threat of oversight and second-guessing decisions Continuous Congressional “Help” President Obama’s concerns emerging –Lack of competition –Diminishing organic acquisition workforce High media attention 4

The Acquisition Rules Have Changed Years of acquisition reform (1990’s) Commercial items and complex services Larger task orders with less transparency Organization conflicts of interests Interagency contracting More outsourcing (competitive sourcing) Expanded socio-economic programs Buy American and Buy America 5

The Supply Base Has Changed Industrial base consolidation Partnerships and teaming Global competition has increased Strategic sourcing More eBusiness More competition at 2nd and 3rd tier Increased OCI challenges 6

This All Adds Up To Risk! There is more work, it is more complex, and it must be acquired faster than ever. Workforce downsizing, expert class retiring, while expectations and oversight increases. Rules are more flexible, actions are less transparent. 7

Top Issues 1.Acquisition workforce remains top priority. 2.Oversight expanded. 3.In-sourcing is in. Outsourcing is out. 4.Competition. 5.Fixed price preference. 6.DCAA effectiveness. 7.USAF Air Tanker Acquisition. 8.Federal – industry relations deteriorate. 9.Overall spending increases + shortage of money + health care reform agenda = Something’s gotta give

Obama memorandum of March 4, 2009 The Memorandum emphasizes five areas of focus in government contracting that need particular attention: (i) competition; (ii) contract type; (iii) oversight; (iv) inherently governmental activities; and (v) the acquisition workforce.

Workforce Remains Top Priority DoD to hire 20,000 acquisition professionals by 2015! –Transition 11,000 contractor support positions –Hire 9,000 new professionals, all levels –2,500 contract overseers at the Defense Contract Management Agency, –800 pricing and cost estimating specialists, –250 attorneys, and –600 auditors at the Defense Contract Audit Agency Smart Contracting Caucus: bipartisan panel. Recovery Act Transparency and Accountability Board concerns. Agency human capital plans. “Coast Guard seeks to hire more contract managers”, GovExec.com, May 11, “Air Force fast tracks hiring for acquisition jobs”, GovExec.com, April 17, “Army increases ranks of contracting personnel, but gaps remain”, GovExec.com, March 26, 2009.

Oversight Expanded Government Accountability Office: more than 1,000 reports/testimony since 2003 on contracting/acquisition. Daniel Gordon, GAO deputy general counsel to be nominated as OFPP Administrator. Recovery Act Contract Reporting Requirements Panel on Contracting Integrity Defense Science Board House Subcommittee on Government Management, Organization and Procurement House Armed Services Committee Panel on Defense Acquisition Reform Senate Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight Commission on Wartime Contracting GSA’s Multiple Award Schedules (MAS) Advisory Panel Smart Contracting Caucus

Obama Policy on Outsourcing President Obama’s memo on contracting reform (March 4, 2009) directs the Office of Management and Budget (OMB) to issue guidance to clarify "when governmental outsourcing for services is and is not appropriate." Need to clarify the definition of "inherently governmental“. Conflict between desire to bring certain activities back in-house and the massive amount of contracting that will occur under the economic stimulus plan. DoD memo May 28, 2009 “In-sourcing Contracted Services- Implementation Guidance”.

A-76 provisions in the 2010 Defense Authorization Act. Suspend new studies for three years. Requires studies be completed in no more than 18 months. Allows representatives of federal employee unions to file protests over bids to contract out jobs. Rep. Jim Langevin, D-R.I., chief sponsor of the legislation, said competitions “have not been proven to save the taxpayer enough money to justify the enormous strain they put on government offices and personnel.”

OFPP Implementation Letter (July 29, 2009) Cut spending on existing contracts by 3.5% in 2010 and 2011 –End programs that no longer meet program needs –Negotiate more favorable prices and terms & conditions –More use of strategic sourcing –Better contract management –Re-engineering ineffective business processes

DCAA Effectiveness Widespread DCAA Audit Problems Leave Billions of Taxpayer Dollars Vulnerable to Fraud, Waste, Abuse, and Mismanagement (GAO T, October 15, 2009) “GAO found substantial evidence of widespread audit quality problems at DCAA. In the face of this evidence, DOD, Congress, and American taxpayers lack reasonable assurance that billions of dollars in federal contract payments are being appropriately scrutinized for fraud, waste, abuse, and mismanagement. “

Why the KC-X Tanker Modernization Program Matters to Me One of largest acquisitions in U.S. history. Two false-starts: Congressional intervention in lease strategy, dispute of NG contract award upheld. Landmark ethics failure. Acquisition has become a political decision vs. business decision. Highest levels of Congressional, media, and public interest. No matter who wins, decision will be protested. Performance of acquisition workforce will be judged on outcome of this procurement.

Federal – industry relations deteriorate The number of protests increased 18.6 percent from 1,318 in 2007 to 1,563 in Protests of task orders >$10 million. The USAF Tanker procurement brought relations to a new low. Extreme oversight, hypercritical Congress, public concern. Overruns and delays blamed on contractors. Assumption of wrong-doing. Stated objectives to use fewer contractors. Insourcing.

Defense spending, deficits increasing Revamping U.S. health care is one of Obama’s major initiatives. HOWEVER: Administration cites rising costs for health care are the “core driver” of the government’s deficits. Objective is to be “deficit neutral”. Budget deficit forecast record $1.8 trillion in 2009 and $1.26 trillion in Recession reduces tax collections and forces higher government spending on measures to stabilize the economy. PAYGO means that Congress must either reduce other spending or increase revenue to cover the cost of any new spending. In theory it keeps the budget balanced as any new program is offset one way or another. Defense spending grows: 95 largest defense acquisition programs are an average of two years behind schedule and have exceeded their original budgets by a total of almost $300 billion. The U.S. ($607 billion in the last year) accounts for 42 percent of global defense spending. Result? The amount of money in the discretionary side of the budget for non-defense programs will shrink - this means acquisition spending.

Summary: What’s all this mean to you? 1.Demand for your talents far exceeds the supply: more jobs, promotions, developmental opportunities. 2.Opportunities may be in different areas than before: Government vs. industry. 3.Federal 1102 employees will be getting help soon. Maybe. 4.Pressure will not abate anytime soon: oversight and attention will continue for foreseeable future. 5.Competition to win contracts will increase as discretionary spending shrinks. Competitive procedures, protests. 6.A-76 is dead as a management strategy.

Strategic Objective 1 Develop the Next Generation of Contract Management Professionals Introduce undergraduate students and institutions to the CM profession and involve them in NCMA. Increase the preparedness for candidates entering the CM workforce. Accelerate the development of new professionals. Increase research and writing opportunities for new professionals.

Strategic Objective 2 Increase Professional Advocacy Improve perception of the contract management profession. Increase recognition of NCMA. Increase membership participation in advocacy activities.

Strategic Objective 3 Reach More People in the Federal Contracting Community Expand the number of programs to serve the federal community. Increase communication and involvement of the senior executive cadre within the profession. Utilize education partners, advertisers and corporate sponsors to reach new people in the federal community. Increase use of social media. Collaborate with acquisition-related associations.

Strategic Objective 4 Develop Professional Standards Baseline existing professional standards for government and industry organizations; benchmark standards and processes of other professions. Reach consensus among stakeholders (chapters, BOA, BOD, academia) on Generally Accepted Contract Management Practices (GACMP). Align professional standards and certification processes.

What Business Are We In? Affiliation Credentials Learning Information Networking Advocacy

Affiliation “Recognizing professionals as valued members of the CM community.” Membership: 19,000 members. –65% industry, 30% federal employees, 5% academia –All federal agencies, 2000 companies. –Regular, Associate, Retired, Students, Organizational Chapters: 147 chapters across U.S. and internationally. Communities of Practice: virtual connections. Awards and Honors: professional and volunteer. Corporate members and Education partners.

Credentials “Demonstrating professional mastery.” Certified Professional Contract Manager (CPCM) Certified Federal Contract Manager (CFCM) Certified Commercial Contract Manager (CCCM) Affiliated Credential Programs Certified Schedules Contract Manager (CSCM)

Learning “Developing the professional knowledge, skills and abilities to succeed.” Chapter workshops and meetings: More than 750 chapter events worldwide. Audio-seminars: 24 sessions annually. More than 750 sites and 2,000 participants total. National Education Seminars: 50 sessions annually. More than 1,800 attendees. CMLDP: accelerated leadership training for new CM professionals. E-courses: 5 titles. Certificate in Business Ethics. National education conferences: Government Contract Management and Aerospace and Defense Contract Management conferences serve more than 1,000 attendees. Education Partners: more than 20 institutions with hundreds of continuing education, undergraduate, and graduate programs.

Information “Providing the information needed to perform effectively.” Contract Management: 84 pg, 4-color, monthly magazine to members and subscribers. Journal of Contract Management: peer reviewed, research journal, annual. MacFarlan Research program. Books: 100 Worst Mistakes in Government Contracting. Standards: “Salary Survey 2008”; “Position Standards for the CM Profession”; “Organizational Placement of the CM Functions”; “Contract Management Body of Knowledge 3.0”. Website: CM news, articles database, e-newsletters, presentations, CM Jobs Advertisers, Exhibitors: products and services.

Networking “Connecting members to the people, organizations, tools and services that matter to them.” National Education Conferences Chapter meetings. Leadership training. CM Jobs online board. Job Fairs: July and November. Communities of Practice (CoPs): online forums, content focused programs. Social media: Facebook, LinkedIn, Twitter Advertisers and Exhibitors: products and services to help your organization manage the CM function.

Advocacy “Doing together what we cannot do individually.” Representing the community and the practice. Informational emphasis vs. legislative agenda. –Provide information on legislation and regulation to members. –Obtain feedback and share with appropriate bodies. –Position papers on important issues: informational only. University Relations Committee. Advocacy Committee. –OGE letter. –SOCO letter. NCMA does not lobby.

World Congress 2010 July 18–21, 2010 Ft. Lauderdale, Florida Participate in the largest gathering of contract management professionals (affiliation). Presentations and panel discussions by leaders in the federal acquisition and business community (information). Attend more than 100 breakout sessions by subject matter experts, and post-conference seminars (learn). Meet peers, potential employers, experts and service providers (networking). Prepare for exams, take exams, and become certified on site. Obtain CPEs for certification qualification or recertification (credentials). Participate in advocacy….

Strategic relationships International Business Development Consortium (IBDC) National Council of Public Procurement and Contracting (NCPPC) Defense Acquisition University (DAU) Federal Acquisition Institute (FAI)

NCMA – The First 50 Years >150,000 people have joined as members. >50,000 people have volunteered. 148 chapters. >100,000 people attended NES (since 1986). >35,000 people attended national conferences (since 1961). 400,000 Journals delivered (since 1966). 540,000 copies of CM Magazine delivered (since 1977). ~8,000 people have been certified (since 1976). >6,000 people have taken e-courses (since 1998). >75,000 audio-seminar participants (since 2004). 1 st radio program October

What you can do? Lead by your actions. Stay informed on the issues. Have opinions, and engage in the discussion. Participate in continuous learning. Demonstrate your competency by getting certified. Be a “chief courage officer” Resist cynicism and skepticism. Participate in your NCMA chapter. 34 Engage in your profession!

Contact Me! Neal J. Couture, CPCM Executive Director National Contract Management Association Beaumeade Circle, Suite 125 Ashburn, VA (fax) (cell)