Hot Topics The State of Play The Future

Hot Topics!!! The State of Play? The Future? Professor Steven L. Schooner

Public Procurement: The Only Constant is CHANGE • Of Cycles, Waves, or Pendulum • On-going evolution, everchanging – Priorities – Needs – Capacity – Markets

Best (and Worst) of Times • Massive post-2000 Federal Procurement Spending Binge – No expected reversal (in short-term) – Should prove recession proof • Recession may help acquisition workforce retention and recruitment • Workforce – The lost generation – Wrong skill set • Scandals • Protectionism • No Relief in Sight

• Globalization – Multinational markets – Multinational firms • Harmonization of international procurement norms – WTO GPA, EU, OECD – UN-UNCITRAL Model Law – World Bank, Regional Development Banks • Outsourcing!!!!

Outsourcing and Privatization: Bipartisan Trend “The era of big government is over. ” “Too much government crowds out…the private economy. ”

Privatizing The Military?

Is the Government “Too Dependent” Upon Contractors? • That’s Irrelevant – Too many mandates, too few government employees – Pressure to suppress government headcount – Outsourced governance (and the blended workforce) is the reality, and here to stay….

Outsourcing Makes Sense • • • Maintain focus on mission - specialization Surge capacity Flexibility Innovation, access to technical expertise Continue to meet agency missions with inadequate personnel, abilities, and resources • “Attractive”to Program Managers – No troop/personnel caps – Customer Service “ethic” – Civil Service frustration

Penny-Wise, Pound Foolish? • Marginal cost saving (in a vacuum) is not the only metric • Best value – Paying more for: – Higher quality goods/services – Quicker delivery/response time – Unlimited surge capacity – Flexibility – changing personnel, products, approaches

Outsourcing Has Limits • Inherently Government Functions – Right idea – Poor decision-making rubric • Blended Workforce evolved more quickly than: – Best management practices – Ethics rules (e. g. , organizational conflicts) • Contractors Need to Be Managed

Blackwater Personnel are: • • Profiteers Mercenaries Cowboys The Military Commander’s Worst Nightmare • A Political/Foreign Relations Accident Waiting to Happen • An Essential Element in the U. S. Military and Diplomatic Presence in Iraq • Patriots • Public Servants • Best Private Security Money Can Buy • The Future?

Battlefield Contracting in Iraq: “Unprecedented” Reliance Upon Contractors? • 160, 000 -180, 000 contractors • 1: 1 ratio - contractors to troops • Multi-billion dollar industry

4, 500+ “Total” Fatalities? What About the 1, 120+ Contractors? 25% of allied fatalities in 2007

Big Picture: Simple Story • Statutory Cuts: 1989 -2000 workforce reductions Post-9/11: huge procurement spending growth

Federal Procurement Spending Since 2000 (in Billions)

Cumulative Growth in Federal Procurement Dramatically Outpaces Inflation

Investing in the Acquisition Workforce • Total Headcount –New Hires –Pending Losses • Training and Experience –New Hires –Existing Workforce

Acquisition Workforce Worst-Case Scenario? ? ? • Denial remains prevalent • Retirement bubble ready to burst (but, a recession may help) • Insufficient: – leadership for massive hiring/training initiative; – numbers of qualified individuals interested in working for the government (but, a recession may help); – time/resources for the existing workforce to gain sufficient training/experience

Restoring the Acquisition Workforce? For the foreseeable future, Congress cannot spend “too much” on: • intern programs, • Salary • workforce • performance training incentives • sabbaticals (for • recruitment higher bonuses • retention bonuses education)

Current Acquisition Workforce Wrong Skill Set? 1984 (CICA-FAR Era) • Supply • Formal Advertised/Sealed Bid • Firm Fixed Price • Government-specification • Awarded by PCO • Managed by DCAS (DCMC, DCMA) Today • Services – Employee augmentation – Personal Services • ID/IQ, Inter-agency vehicle • Cost-Reimbursement, T&M • Limited Competition • Unclear responsibility for post-award contract management

Current Acquisition Workforce Opportunities, Attractions? • • • Civil Service (for better or for worse) Career ladder out of secretarial pool Long-term, stable, safe career Fixed retirement program Inadequate incentive structure – 1990’s – failed incentive initiative

Recruiting the Future Acquisition Workforce • Gen X, Gen Y…. – “most praised generation” – Universities and Helicopter Parenting – Show me the money! • Civil Service Bureaucracy – Impenetrable, Slow, not user friendly • Job Mobility • 401(k), TSP (What, me worry? ) • What is, why work in “procurement”?

Gansler Commission: A Plea For Responsible Outsourcing? Contract management is the essential post-award contracting function to ensure mission accomplishment, and it is an important control over fraud, waste, and abuse; . . . With not enough ACOs, PCOs could do this - but they are too busy and therefore it is not being done….

Gansler Commission: A Plea For Responsible Outsourcing? • Increase – Army military and civilian contracting personnel - 1, 400+, apx 25 percent of the total – DOD post-award contract management personnel (to fill DCMA billets for Army support) - nearly 600 • Extrapolate across Government [8, 00010, 000? ] – Army ~ 15 -25 percent of federal procurement $ – Army better staffed than other agencies

Scope of the Challenge: Recruiting the Future Acquisition Workforce: Back-of-the-napkin assumption: – 8, 000 -10, 000 professional needed An Analogy: US Department of Justice < 8, 200 Attorneys, including: – General Legal Activities (all) – U. S. Attorneys (all 50 States) – Antitrust Division – Trustees

Can NCMA Play a Leadership Role?

Good Luck! • Questions? • Comments? • Suggestions? • Ideas?