To keep up with IT, feds need larger acquisition force

When members of President Obama's team moved into the White House, they were greeted by outdated computers and a failing e-mail system. What has kept the center of the free world behind the times in terms of technology? Some blame inefficiencies in the procurement process.

Mayer Brown partner Marcia Madsen and counsel Roger Waldron see investing in the federal work force as key to improving the process and thereby getting innovative solutions adopted more quickly. During the Bush administration, Waldron, a former General Services Administration procurement executive and acting director of acquisition policy, and Madsen, who focuses on government contracts and litigation, both served on the Acquisition Advisory Panel, which interviewed members of the private sector about their acquisition process and issued a report [PDF] of recommendations for the federal government. They recently spoke with NationalJournal.com's Theresa Poulson about the challenges of creating effective acquisition policies.

Edited excerpts follow. Visit the archives page for previous Insider Interviews.

NJ: What about the acquisition process makes the federal government slow to adopt new information technology?

Madsen: One of the things that the private sector really does well when it buys IT is that those companies define their requirements. They put a lot of resources at figuring out exactly what it is that they need to buy. We call it requirements definition.

The government, in the IT space, historically and currently, does not do a good job at that. They have trouble figuring out and specifying in terms of -- not writing a spec, but saying, "This is what I want this system to do."

It just was very interesting to us that the private sector devotes resources to that part of the procurement process on the front end, and they get very good results for it; and the government doesn't devote enough resources to that part of it, and they get not good results when they buy IT.

Waldron: There's all this focus on the process and having contracts in place, and, quite frankly, the government has plenty of IT contracts. There's a whole host of multiple-award IT contracts that agencies can place orders off of. There's the GSA Schedules program. Agencies have their own multiple-award contracts. There is not a lack of access to information technology.

[The problem] does go back, and it focuses on the agencies and the federal government, figuring out exactly what it wants its systems to do, and being able to clearly articulate that to the contractors. And that enhances competition; that provides improvements in the technology and improvements in the service.

I worked for the government for about 20 years, and particularly in the last 10 to 12 years, there's been so much focus on "the process," first in terms of trying to streamline it. ... And then in the last few years looking at whether that acquisition process works well or not. And during that whole time, there's been a downsizing in the acquisition work force, but also in the people who are able to articulate the requirement and what needs to be done. Without that -- you can have all the contracts that you want, you can have access to all kinds of technology, but if you can't intelligently articulate what you want and then intelligently manage the implementation of it, you're going to get the systems that the government typically ends up getting.

Madsen: Six-year-old PCs.

NJ: What led to the downsizing in the work force?

Madsen: Mid-'90s, a decision by the Clinton administration that they didn't need all those people. The DOD acquisition work force itself went down 50 percent between 1996 and 2000.

Waldron: There was this thought that you could streamline the process and do it with less people. And what people didn't recognize was that what the government was buying was becoming more complex, both in terms of IT and in terms of services. And so it was actually becoming more challenging in articulating what you wanted to buy.

NJ: Was the demand for different kinds of information technology also increasing?

Madsen: It's the demand for technology, but more than hardware, really. It's the demand for -- using a broad word here -- "services." In other words, people who can configure networks, people who can identify what the software needs are, people who can manage contracts for network implementation -- the government is sorely lacking in that resource. And that's where requirements definition really comes into the picture.

When you're the buyer of information technology, you have to be very sophisticated in your knowledge of what's available in the marketplace, how you put it together and what your particular organization needs in terms of what function that information technology is supposed to perform. And it's particularly that last piece that the government doesn't do a good job with.

NJ: Do you think that having a chief technology officer in the White House, or some other centralized position overseeing IT procurement, would improve the process?

Madsen: [There is a] position at OMB which was really responsible -- in the Bush administration it was Karen Evans. There was a lot of focus, particularly in the late '90s, on having a -- not a consolidated, but really a comprehensive picture inside the government at OMB in terms of who was buying technology, what they were buying. I think there was a perception that the government wasn't getting enough bang for its technology buck. There were too many people sort of buying the same things to do the same things.

Waldron: In the last four years in particular in the Bush administration, there was a management focus, and it was called strategic sourcing. And it wasn't just IT, but it was IT in part, where there was this effort, as Marcia said, to try to figure out how much the government was buying of various -- whether it's overnight express mail services or software -- trying to get a handle on how much the government was buying and then trying to implement more effective or efficient methods for acquiring those services or products.

I think that effort's a positive development, but it goes back again to what is the requirement, and articulating requirements. And the government, in terms of those type of cross-agency purchases that could be made and leveraged -- the agencies and the government have a difficult time essentially getting the data necessary to figure out what they can strategically source or not.

I think there've been some successes and moves in the right direction, like the GSA and DOD sort of co-manage a smart-buy program, which is for acquisition software.... But that, again, goes back to the requirement, and what it is and how you articulate it.

NJ: There has been much criticism of the automated procurement systems, contract bundling and online auctions. Some argue that they are unfair to small business.

Madsen: The small-business community is very critical of the bundling in particular.

Waldron: There's a whole regulatory framework that deals with bundling of contracts. And the idea is that requirements that are consolidated are bundled together. Does that inhibit opportunities for small businesses? The economic logic of it, again, is the larger the requirement, the larger companies potentially have greater resources, greater price flexibility, potentially -- those types of things -- to be able to compete effectively. It makes it more difficult if you consolidate a requirement -- a small business may be excellent at doing one piece of the requirement, and that's their focus and their business model, but if you take that piece and consolidate it with several other pieces, that small business may not have an opportunity to be a prime contractor. ...

Madsen:The tension is, of course, at least the perception that if the government can buy larger volumes, it can get a better price.

NJ: There's been a demand for making contracts more transparent. In the stimulus package, there's a provision that requires the summaries of contracts to be posted on Recovery.gov. But there is some desire for a more detailed listing of the contract information. Would making that information available online offer any value to increasing efficiency of procurement?

Madsen: I don't know what "transparent" means -- it means a lot of different things to a lot of different people. To the companies who provide innovative solutions, there's probably concern that intellectual property will be exposed to competitors -- that's always a concern. On the other hand, under current law, an awarded contract is available under the Freedom of Information Act. There may be some things redacted from it -- very specific information about the technical solution, how it's put together, perhaps unit prices of components. But the total contract price, what the contract's for -- that's all supposed to be released under the Freedom of Information Act today. So really what they're talking about with the stimulus package is just taking that information that would be in a 500-page document and doing a summary of it.

For instance, if you look online today, if you look at Treasury's Web site, you'll see their TARP contracts. Most of them, at least the ones I've looked at, are for services, so they're professional services, for example.... You'll see the bottom-line price for the award, but you won't see the hourly rates, for example. For IT vendors, depending on what they're selling, what labor mix they use to develop their system or their software is usually very confidential because it's very competitive. So whether they need three senior software engineers and one junior software engineer, or whatever -- how they put that mix together, that's sensitive. And then, you know, how they put the technology together, what software they develop, what software they buy, what kinds of licensing terms they get -- those are all very sensitive pieces of information. But the public doesn't need to know those kinds of things to know what the system is supposed to do and how much the government's going to pay for it.