How Will U.S. Government Procurement Processes Handle the Stimulus Spending Surge?

By Dennis D. McDonald

The Obama Administration has made it official: spending Federal stimulus money is being scrutinized and reported on very carefully and in great detail. This is called “oversight.”

The organizational and publishing infrastructure for doing this are evolving rapidly. At the Federal level the public web portal is Recovery.org. Experienced no-nonsense Federal management is being put in place. To see an example of how one state — Oklahoma — is developing its own reporting platform, click here. To see how Kansas is handling it, click here. Others are listed here.

Before all the spending can happen, though, the money must first be distributed. That means that Federal acquisitions and procurement processes and systems are being tasked with managing a significant surge in throughput.

How are they responding? As reported in Can Government Procurement Be Streamlined By Using Collaboration Technologies and Social Media? efforts to improve Federal procurement processes were ongoing long before the current financial crisis, with academic institutions, industry groups, and government officials all expressing interest in a variety of improvements ranging from better collaboration and knowledge sharing to improved processes, systems, and governance.

I heard some of these topics discussed Tuesday in a webinar hosted  by Raj Sharma, CEO, Censeo Consulting Group, and Dr. Allan V. Burman, President, Jefferson Solutions. Sharma co-authored From Theory to Reality: Operational/Acquisition Planning and Coordination Required for Realizing the Goals of the Economic Stimulus. Burman developed Six Practical Steps to Improve Contracting. Both reports address systemic issues associated with Federal government procurement. Both suggest, among other things, that improved collaboration and knowledge sharing among procurement and program officials are needed to improve how the process operates.

About 40 people participated in the webinar. Most of the talking was done by members of the Federal procurement community. They provided practical insight into handling the stimulus surge. My notes include the following:

• Issuing fixed price contracts transfers risks to the contractor but you must assume that bidders are provided enough information on which to base their fixed price quotes.
• Issuing money for well-defined construction projects is easier than issuing money for more complex projects where some steps are unknown or must be defined as part of the award (e.g., systems development, legal services, etc.)
• Some organizations such as the military can move a great deal of money using pre-existing contracting vehicles — and by requiring staff to work overtime.
• Just throwing more staff at a process may not always be possible, nor is working overtime a simple solution for processing awards that are orders of magnitude greater than is the case currently.
• Adding contractors to manage increased contracting requirements is not always feasible given opposition of some managers to contracting out the contracting process.
• Some existing contracting processes such as “omnibus” contracting agreements may not easily provide the ability to target the money at specific local small businesses; this will impact both award distribution and reporting.
• Purchasing work “off a predefined schedule” may not provide required impacts since it may be difficult to say when the work is actually performed.
• Congressional approval may be required for local government agencies to use existing Federal processes such as GSA schedule purchasing.
• Significant delays can occur in putting together a team to manage a procurement but it is a coordinated team approach to complex procurements that is needed for effective oversight.
• Concerted process re-engineering and process-improvement can make procurement operations much more lean and streamlined; this needs careful planning and management to be done effectively.
• Might it be possible to transfer procurement staff from one agency to another to aid in unequal demands caused by stimulus spending?
• Some areas of spending (e.g., broadband, energy grid) are “uncharted waters” and will require careful planning and coordination.
• What should be the roles of the private sector (e.g., like the two companies whose executives sponsored this webinar) and nonprofits (e.g., National Academy of Public Administration) be in supporting the procurement process?

Having seen how public organizations operate, and being a strong believer in using appropriate technology to enhance and streamline collaboration and a variety of business processes, I am reminded of the classic slogan of the software developer:

“Do you want it cheap, fast, or done well? You can have two of the three.”

One impediment to collaboration and knowledge sharing is not the lack of appropriate technology, but a lack of management, team, and individual leadership that encourages, requires, and rewards collaboration and sharing.

But corporate culture won’t change overnight. Money that needs to go out now will go out via the procurement, contracting and grants mechanisms that already exist. That means a lot of midnight oil is being burned now by dedicated Federal employees as stimulus dollars are distributed. It’s debatable whether now would be the time to make abrupt and (for some) wrenching changes in existing processes such as some of the changes proposed in the two reports mentioned above.

Based on what I heard in the webinar today, I am concerned about the ability we have now to provide the reporting on expenditure impacts that Recovery.org is tasked to provide. For example, are existing purchasing mechanisms configured currently to provide the location-specific details of what happens when money is spent locally? How will that level of geo-detail flow back up the chain?

I’m sure congressional representatives, even those opposed to the current stimulus plan, will want to know what is happening to the dollars that flow into their districts. How this “impact reporting” is accomplished might be one promising area that would benefit from collaboration and a sharing of “best practices” via off-the-shelf mechanisms such as collaboration technologies and online professional networks. (As an example of how quickly a professional network can establish itself through a viral growth process, look at how fast GovLoop took off.)

Copyright (c) 2009 by Dennis D. McDonald