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THE STATE OF FEDERAL CONTRACTING:

OPPORTUNITIES AND CHALLENGES FOR

STRENGTHENING GOVERNMENT PROCUREMENT

AND ACQUISITION POLICIES

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

ORGANIZATION, AND PROCUREMENT

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

FIRST SESSION

JUNE 16, 2009

Serial No. 111–53

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

EDOLPHUS TOWNS, New York, Chairman

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

MARCY KAPTUR, Ohio

ELEANOR HOLMES NORTON, District of

Columbia

PATRICK J. KENNEDY, Rhode Island

DANNY K. DAVIS, Illinois

CHRIS VAN HOLLEN, Maryland

HENRY CUELLAR, Texas

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

PETER WELCH, Vermont

BILL FOSTER, Illinois

JACKIE SPEIER, California

STEVE DRIEHAUS, Ohio

——— ———

DARRELL E. ISSA, California

DAN BURTON, Indiana

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

TODD RUSSELL PLATTS, Pennsylvania

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

BRIAN P. BILBRAY, California

JIM JORDAN, Ohio

JEFF FLAKE, Arizona

JEFF FORTENBERRY, Nebraska

JASON CHAFFETZ, Utah

AARON SCHOCK, Illinois

RON STROMAN, Staff Director

MICHAEL MCCARTHY, Deputy Staff Director

CARLA HULTBERG, Chief Clerk

LARRY BRADY, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, ORGANIZATION, AND PROCUREMENT

DIANE E. WATSON, California, Chairman

PAUL E. KANJORSKI, Pennsylvania

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

HENRY CUELLAR, Texas

JACKIE SPEIER, California

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

BRIAN P. BILBRAY, California

AARON SCHOCK, Illinois

JOHN J. DUNCAN, JR., Tennessee

JEFF FLAKE, Arizona

——— ———

(III)

C O N T E N T S

Page

Hearing held on June 16, 2009 ............................................................................... 1

Statement of:

Assad, Shay, Director, Defense Procurement and Acquisition Policy, U.S.

Department of Defense; and David A. Drabkin, Acting Chief Acquisition Officer, General Services Administration ........................................... 16

Assad, Shay ................................................................................................ 16

Drabkin, David A. ..................................................................................... 32

Gormley, William, chairman, Coalition for Government Procurement;

Philip Bond, president, TechAmerica; John McNerney, general counsel,

Mechanical Contractors Association of America; Karen L. Manos,

Chair-elect, Procurement Planing Committee, National Defense Industry Association; Kara M. Sacilotto, partner, Wiley Rein, LLP; Marcia

G. Madsen, partner, Mayer Brown, LLP; and Scott Amey, general

counsel, Project on Government Oversight ................................................. 66

Amey, Scott ................................................................................................ 135

Bond, Philip ............................................................................................... 77

Gormley, William ...................................................................................... 66

McNerney, John ........................................................................................ 86

Madsen, Marcia G. .................................................................................... 123

Manos, Karen L. ........................................................................................ 102

Sacilotto, Kara M. ..................................................................................... 109

Letters, statements, etc., submitted for the record by:

Amey, Scott, general counsel, Project on Government Oversight, prepared

statement of ................................................................................................... 136

Assad, Shay, Director, Defense Procurement and Acquisition Policy, U.S.

Department of Defense, prepared statement of ......................................... 19

Bilbray, Hon. Brian P., a Representative in Congress from the State

of California, prepared statement of ........................................................... 5

Bond, Philip, president, TechAmerica, prepared statement of ..................... 79

Connolly, Hon. Gerald E., a Representative in Congress from the State

of Virginia, prepared statement of .............................................................. 8

Drabkin, David A., Acting Chief Acquisition Officer, General Services

Administration, prepared statement of ....................................................... 34

Gormley, William, chairman, Coalition for Government Procurement, prepared statement of ........................................................................................ 68

Madsen, Marcia G., partner, Mayer Brown, LLP, prepared statement

of ..................................................................................................................... 125

Manos, Karen L., Chair-elect, Procurement Planing Committee, National

Defense Industry Association, prepared statement of ............................... 104

McNerney, John, general counsel, Mechanical Contractors Association

of America, prepared statement of .............................................................. 88

Quigley, Hon. Mike, a Representative in Congress from the State of

Illinois, prepared statement of ..................................................................... 13

Sacilotto, Kara M., partner, Wiley Rein, LLP, prepared statement of ........ 111

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THE STATE OF FEDERAL CONTRACTING: OPPORTUNITIES AND CHALLENGES FOR

STRENGTHENING GOVERNMENT PROCUREMENT AND ACQUISITION POLICIES

TUESDAY, JUNE 16, 2009

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

ORGANIZATION, AND PROCUREMENT,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 9:10 a.m., in room

2154, Rayburn House Office Building, Hon. Diane E. Watson

(chairwoman of the subcommittee) presiding.

Present: Representatives Watson, Connolly, Cuellar, Quigley,

Bilbray, and Duncan.

Staff present: Bert Hammond, staff director; Valerie Van Buren,

clerk; Adam Bordes and Deborah Mack, professional staff; Dan

Blankenburg, minority director of outreach and senior advisor;

Adam Fromm, minority chief clerk and Member liaison; Stephen

Castor, minority senior counsel; and Ashley Callen, minority counsel.

Ms. WATSON. The Subcommittee on Government Management,

Organization, and Procurement of the Committee on Oversight and

Government Reform will now come to order.

Today’s hearing will examine our current laws and regulations

governing agency procurement and acquisition practices and review

plans for implementing new requirements contained in recently enacted legislation.

The subcommittee will also seek additional information from administration witnesses about his priorities and objectives for improving governmentwide procurement and acquisition policies.

If there are opening statements, written statements and other

materials, without objection, the Chair and ranking minority member will have 5 minutes to make opening statements followed by

opening statements not to exceed 3 minutes by any Member who

seeks recognition.

Without objection, Members and witnesses may have 5 legislative days to submit a written statement or extraneous materials for

the record.

I want to welcome today’s witnesses and open the hearing on

what is the subcommittee’s first attempt of this Congress to strategically examine the state of Federal procurement throughout our

civilian and military agencies. And our distinguished witnesses

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from both panels will be giving testimony. We look forward to their

testimony.

Before we begin, however, I regret to inform my colleagues that

the Office of Management and Budget, despite my continued efforts

to persuade them otherwise, have declined to provide us a witness

this morning.

At the beginning of this Congress, I was looking forward to having a new administration, because refusal to testify before this

committee became all too commonplace with this administration’s

predecessor. President Obama, to his credit, has made it clear that

he understands the value and the necessity for strong oversight

and government programs. And I will give him a little credit; I do

think they are waiting for their chief administrator. But, still, I

think they needed to send somebody.

So today’s hearing is a broadbased discussion on just beginning

to open up the process of Federal procurement, something that cost

our government over half a trillion dollars annually. I believe not

having OMB at the table this morning makes our duty to perform

diligent oversight on these topics all the more difficult. I strongly

encourage the White House to become engaged with our committee

on these matters so we can have a more constructive and cohesive

relationship moving forward.

The Federal Government is the largest global purchaser of goods

and services, spending $517 billion last year alone.

This amount is more than double of what was spent on contracting at the beginning of this decade, with a significant portion dedicated to our increased needs in the areas of homeland and national

security.

At the same time, our government’s shrinking acquisition work

force has fewer hands on deck to manage the escalating number of

contracts that are awarded annually.

These factors have contributed greatly to a less competitive contracting process with little oversight, which results in explosive

cost and uneven incomes for both civilian and military programs or

outcomes.

According to the GAO, our government’s procurement and acquisition deficits, deficiencies, are considered to be a high-risk management challenge across multiple agencies.

At DOD alone, GAO recently reported approximately $296 billion

in cost overruns of 95 major weapons systems under development.

Other significant contracting deficiencies at our agencies include

the excessive awarding of contracts to contractors that have been

disbarred, suspended, or have been performing poorly.

It should be noted that many of these issues were echoed in

other GAO work examining the role of contractors involved with

contingency operations in Iraq and Afghanistan as well as a recent

interim report to Congress from the Commission on Wartime Contracting.

So today I am hoping our agency witnesses will tell us what

changes are underway to remedy the problems identified by GAO

and those cited in previous congressional oversight proceedings. In

particular, I am interested in hearing how both our civilian and

military agencies are adhering to the new contracting requirements

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and changes authorized in the recently enacted stimulus legislation

and Clean Contracting Act.

I also would like to hear how our stakeholder panelists are meeting the compliance challenges associated with these changes while

striving to improve the quality of services they provide.

Once again, I am sorry that OMB is not with us today so we

could hear their views, but we will have to proceed without their

input. And I will guarantee you that in the very near future, someone will come in from that agency.

So with that, I thank our panel for joining us today and look forward to their testimony.

And I would like now to go to the ranking member.

Mr. BILBRAY. Thank you, Madam Chair.

Madam Chair, I want to thank you for this hearing, and I know

this goes on procedurally to always thank the Chair for the hearing, but I think that the more that we find out about the challenges of accountability in the budget, the more we realize, especially in our procurement subcommittee, what a huge task we have

before us.

Madam Chair, I think that we will all agree that previous administrations have been, let’s just say, let down by the lack of oversight, especially the last administration. And, sadly, I think that

there are people on both sides of the aisle and on both sides of this

dais that perceive oversight as an adversarial relationship.

Sadly, that is the perception, but I would have to say that oversight should be perceived about as adversarial as a safety check up

when you go to your Virginia or your D.C. DMV. They require you

to check to make sure that the brakes work, that the windshield

wipers are on, that the safety devices are working.

And to perceive our procedure as adversarial would be just as

much as saying that I resent going in and making sure that my

windshield wipers will work when the rain starts coming down,

that my brakes are not going to fail when I need it in a panic stop.

I think that we have to understand this may be a bit of a nuisance

to everybody who has to play it, but in reality, it is essential to be

able to make the system work.

The Founding Fathers never meant that the executive branch

would operate in isolation; that the oversight of the Congress was

an essential part of the plan. And, sadly, with such an essential

component like OMB, they not only place us in a situation, missing

at this time, they not only place us in a situation of not being able

to fulfill our responsibilities to work with them, but the fact is they

blind us. This is almost like the windshield wipers have gone out

today because they don’t have a critical component here, and so we

will have a blind spot. And hopefully by working with the administration, we can take care of that blind spot and get them to participate in this.

So I would just like to say that I think that the Chair has approached this in an appropriate manner. We are here to make sure

or to do all we can too avoid the problems of the past, to learn from

the failures of the previous administration, and to help this administration get over those humps and address the challenges of the

future.

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And we are part of the team, but we have to have the team

working together. We need all of us in the huddle, and right now,

we have a major, let’s just call it a running back, that is missing

in this huddle, and hopefully we can get that running back out

from wherever he or she is and back in this huddle.

So, Madam Chair, I will ask that my written opening statement

be introduced into the record and just state that I hope that in the

future, we have the whole team huddling up to address this challenge.

[The prepared statement of Hon. Brian P. Bilbray follows:]

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Ms. WATSON. Thank you, and I now yield to Mr. Connolly of Virginia.

Mr. CONNOLLY. I want to thank you, Chairwoman Watson, for

holding this subcommittee hearing and for your ongoing efforts to

address the need of acquisition reform in particular.

We have made some progress in raising awareness of the challenges and opportunities we face. I have noticed more references to

the pending Federal brain drain recently whereby one-third of the

Federal work force will be eligible for retirement by 2012 and nearly half within the decade.

There also seems to be more awareness about the lack of growth

in acquisition personnel during the previous administration, even

as the value of contracts doubled.

These are all positive signs, that is to say the recognition of the

problem, because at the heart of all the challenges and opportunities of acquisition policy is our personnel.

I am personally gratified that there’s a growing recognition of the

challenge which may represent the single greatest opportunity for

this subcommittee, Madam Chairwoman, to have a substantial

positive impact on Federal policy. With a sufficient number of highly skilled properly compensated staff, we can address our most

pressing contracting issues, the caliber and quantity of our personnel matters, more than the volume of regulations within which we

will have contractors operate.

Properly compensated acquisition personnel with good benefits

have less of an incentive to leave the government and go work in

the private sector side of contracting. This addresses both the need

to increase our work force and avoids conflicts of interest that can

arise with a revolving door between government and the private

sector.

A strong salary and benefit package can both attract and retain

the highly skilled personnel whose acumen will be necessary to

manage increasingly large, complex contracts. This committee has

been making progress on this part with the Federal Retirement Reform Act. Though the Senate has not taken up these reforms yet,

we have made significant progress in the House.

The Paid Parental Leave Act is also an important part of our

comprehensive effort to improve compensation packages with which

to recruit and retain Federal workers. One area we have not yet

addressed legislatively is telework. I hope this committee, Madam

Chairwoman, will have a hearing and mark up H.R. 1722, the

Telework Improvement Act. Today’s employees demand those kinds

of benefits, and they will help us in both recruitment and retention.

There are procedural reforms we also need to make, and I know

we will get into those. But I do believe, Madam Chairwoman, that

this hearing will be very helpful as we examine the challenges we

are facing in the Federal work force, particularly those in acquisition and management of large complex contracts.

I thank the Chair.

[The prepared statement of Hon. Gerald E. Connolly follows:]

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Ms. WATSON. Thank you.

I now yield to Mr. Duncan of Tennessee.

Mr. DUNCAN. Well, thank you very much, Madam Chairwoman,

and thank you for calling this very important hearing.

I regret that some other previously scheduled meetings are not

going to allow me to be here for much of it, but I do want to express some concerns that I have, and hopefully maybe the witnesses will later address some of these.

I remember last year when we had the hearing on steroids and

had Roger Clemens, the famous baseball player, and this room was

packed with reporters and the cameras. And the next week we had

a hearing, another hearing, on reforming the Federal contracting

process, much more important, and no reporters and no cameras.

And that’s sort of the way this is in our celebrity age that we live

in. Although I do think that our steroid hearings did some good in

calling to the attention of young athletes and their families to the

dangers of steroids, but this is a very, very important topic.

And the concern I have was touched on by the gentleman from

Virginia just now when he talked about the revolving door between

the government and the government contractors. We see that most

clearly in the Defense Department. I remember 4 or 5 years ago

reading an article in the International Herald Tribune about the

revolving door at the Pentagon and how that all the big Defense

contractors and small Defense contractors hire all the retired admirals and generals.

And then as a result of that, we saw about a year ago, when the

GAO came out with a report and said that the Defense Department

have had $295 billion in cost overruns on just their 72 largest

weapons systems.

That should have just shocked and horrified people, especially

anybody that considers themselves to be a fiscal conservative, because they have almost a $295 billion cost overrun on just their 72

largest contracts and didn’t count all the cost overruns that might

have been present in the thousands of other large-, medium-, and

small-sized contracts.

But it seems to me, when you look deeply into any Federal contract, it’s always some sort of sweetheart insider-type deal, because—not only the Pentagon—but almost all the government contractors hire former Federal employees, former high-ranking Federal employees. And then they go back to the Department’s agencies for which they worked, and they get these lucrative sometimes,

just ridiculously exorbitant contracts, and that shouldn’t be going

on.

It’s gone on, I guess, for almost forever, and I suppose we can’t

stop it, but I wish there was something we could do to stop all

these sweetheart insider transactions that are found in almost

every Federal contract.

Thank you.

Ms. WATSON. Mr. Quigley of Illinois.

Mr. QUIGLEY. Thank you, Madam Chairwoman.

Is it appropriate to ask you if OMB has given you a reason for

not appearing?

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Ms. WATSON. They have said that they don’t have a director. And

we suggested that someone come over, and they pretty much said

they were told not to send anyone.

Mr. QUIGLEY. They pretty much said what?

Ms. WATSON. That they were told not to send anyone. So we will

be following it. There will be somebody here next time.

Mr. QUIGLEY. And I guess just to respond, if they don’t feel that

they can be here because they don’t have a director, I hope they

can act appropriately otherwise and things don’t stop functioning.

But, again, I thank you for your efforts here and just simply

would ask that my written remarks be given to the record.

[The prepared statement of Hon. Mike Quigley follows:]

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Ms. WATSON. Without objection.

Mr. Cuellar.

Mr. CUELLAR. Thank you, Madam Chair.

Again, thank you for holding this important meeting.

I also am disappointed that they couldn’t send somebody. I know

they could have sent somebody. I am sure they have a higher upper

that could have come here, to at least be up here and give limited

testimony.

I strongly disagree when an agency does that, when the legislators are calling for oversight, and they don’t even have the courtesy

at sending somebody at least to provide some limited information.

I hope that when that arises in the future, we could huddle up a

little bit before and talk about some steps we could take to make

sure it doesn’t happen again. I am sure they are going to send

somebody next time, but there’s always somebody they can send,

even if it’s in a limited testimony.

Ms. WATSON. Well noted, Mr. Cuellar.

Mr. CUELLAR. Thank you.

Madam Chairman, this is an important hearing because I think,

as the Members have said, this procurement has become very complex, has become very costly.

When you look at the services part of it, there’s always the question, what is government supposed to be doing? What is the private

sector? Who is doing what? I think it’s about, what, 60 percent of

the procurement might be in services. So there’s a lot of questions.

But one of the things that we certainly would like to see is what

SARA, the Acquisition Advisory Board, and I think GAO have also

come up with significant policy recommendations, and I am one of

those who, I don’t like to see reports, but if there are some good

recommendations, I hope that we could implement, help implement

some of those recommendations.

Because I know the GAO and the other folks do a lot of work.

Some of those recommendations might not work, but I know a lot

of them are good recommendations. And I hope we can have a followup on some recommendations on that.

But otherwise, Madam Chair, I appreciate all the work that you

are doing.

Ms. WATSON. I just want to explain to the Members and the audience, this is a beginning of a series of hearings on competitiveness, procurements, etc. It is a broad span through all the agencies

and departments of the government.

This is just the beginning, but we do hope to gather enough information where we can make recommendations to the full committee to set up a policy, standards by which each department must

following. And I can’t emphasize enough, this is just the beginning

of a series of hearings. We will notify you in plenty of time when

we have our next hearing, and I do appreciate the Members that

are here.

If there are no additional opening statements, and I see no other

Members from either side, the subcommittee will now receive testimony from the witnesses before us today.

We will now turn to our first panel, and it is the policy of the

Committee on Oversight and Government Reform to swear in all

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witnesses before they testify, and I would like to ask you both to

please stand and raise your right hands.

[Witnesses sworn.]

Ms. WATSON. Let the record reflect that the witnesses answered

in the affirmative. Thank you.

I will now introduce our panel.

Mr. Shay Assad is the Acting Deputy Undersecretary of Defense

for Acquisition and Technology at the Department of Defense.

There he is responsible for all acquisition and procurement policy

matters, including acquisition and procurement strategies for all

major weapons systems programs, major automative information

systems programs and services acquisitions.

Welcome.

Mr. David Drabkin is the Acting Chief Acquisition Officer at the

General Services Administration. He is responsible for developing

and reviewing acquisition policies, procedures and related training

for the GSA and Federal acquisition professionals through the Federal Acquisition Institute, Civilian Acquisition Advisory Committee,

Federal acquisition regulation and GAO’s acquisition materiel and

training programs.

I ask that each of the witnesses now give a brief summary of

your testimony and to keep this summary under 5 minutes in duration if possible.

Your complete written statement will be included in the hearing

record.

So, Mr. Assad, please proceed.

STATEMENTS OF SHAY ASSAD, DIRECTOR, DEFENSE PROCUREMENT AND ACQUISITION POLICY, U.S. DEPARTMENT

OF DEFENSE; AND DAVID A. DRABKIN, ACTING CHIEF ACQUISITION OFFICER, GENERAL SERVICES ADMINISTRATION

STATEMENT OF SHAY ASSAD

Mr. ASSAD. Thank you, Madam Chairwoman.

Madam Chairwoman, Ranking Member Bilbray and members of

the subcommittee, my name is Shay Assad. I am the Director of

Defense Procurement, and I also serve as the Acting Deputy Undersecretary of Defense for Acquisition and Technology. Thank you

very much for providing me the opportunity to participate in this

hearing today.

In January 2007, I testified before the Readiness and Management Support Subcommittee of the Senate Armed Services Committee. At that hearing, I was asked to comment on the then recently completed work on the SARA panel or Acquisition Advisory

Panel, authorized by Section 1423 of the Service Acquisition Reform Act of 2003. At that time, I testified that I agreed with most

of the panel’s recommendations and that we would busy addressing

the recommendations of their report.

Today’s hearing provides an excellent opportunity to provide an

account of where we are with respect to the panel’s recommendations and how we will move forward in light of the present circumstances. In fact, the Congress is taking up many of the panel’s

recommendations adopted into law via the National Defense Authorization Act of 2008 and 2009. The panel’s thoughtful report

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continues to provide a framework for improvement and to inform

ongoing initiatives related to commercial practices, performancebased acquisition, small business utilization, the acquisition work

force and the role of support contractors and the use of Federal procurement data.

On April 6, 2009, the Secretary of Defense announced his intention to significantly improve the capability and capacity of the Defense acquisition work force by increasing the size of the work force

by 20,000 employees through fiscal year 2015. This will restore the

organic acquisition work force to its approximate 1998 levels of

147,000 people and address longstanding shortfalls in the Defense

acquisition work force. It is the first significant growth since the

military buildup in the 1980’s and the downsizing that occurred

during the 1990’s.

The Secretary’s initiative is the overarching human capital strategy to revitalize the acquisition work force. The Department’s

growth strategy directly supports the President’s March 4, 2009,

memorandum’s objective to ensure that the acquisition work force

has the capacity and the ability to develop, manage and oversee acquisitions appropriately.

The Defense acquisition work force is critical for improving ac- quisition outcomes for the Nation’s $1.6 trillion investment in

major weapons systems. The objective is straightforward, to ensure

DOD has the right acquisition capability and capacity to produce

the best value for the American taxpayer and for the soldiers, sailors, airmen and Marines who depend on weapons and products and

services that we buy.

In addition, as you all know, the Department is aggressively pursuing major reforms to our acquisition system. These efforts have

been given a high priority by President Obama and Secretary

Gates and have recently been complemented by the strong bipartisan commitment to reform registered by Congress via the Weapons

Systems Acquisition Reform Act. Let me take a moment to mention

some of the reforms that both the Secretary and Deputy Secretary

Lynn have articulated: First, to improve the discipline of the acquisition process. Each major program will be subject to a mandatory

process entry point, the Materiel Development Decision prior to

Milestone A. This will ensure that programs are based upon approved requirements and a rigorous assessments of alternatives.

To reduce technical risk, we will refine program requirements

and inform our cost estimates. Our practice will be to conduct competitive prototyping and complete Preliminary Design Reviews before we enter into Milestone B, engineering management and development.

We will employ independent technical reviews to certify the majority of program technologies before we will permit a program to

progress to the costly phases of development.

And, finally, we will complete independent cost estimates at each

decision point in the acquisition process to ensure programs are

adequately funded and to reduce the risk of costs spiraling out of

control.

To align profitability with performance, we have taken up several

initiatives: Contract fee structures will be tied to contractor performance. We will eliminate the use ofunpriced contractual actions

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whenever possible, and we will assure that the use of multiyear

contracts is limited to circumstances when real substantial savings

are accrued to the taxpayer.

To prevent programs from ballooning in cost and stretching its

schedule, we will use more fixed price development contracts. We

will also institute new mechanisms to prevent endless requirements creep, in which the desire for an ever-elusive perfect system

can result in no system being delivered at all.

Of course, none of these reforms will work unless we are prepared to reform or cancel weapons programs that are not on track

to provide our warfighters what they need when they need it at a

fair and reasonable price to our taxpayers. Those hard decisions

are reflected in the proposed budget for next year.

In summary, the Department is determined to improve the effectiveness of our overall acquisition system. As Secretary Gates and

Deputy Secretary Lynn have mentioned, being tough-minded on acquisition reform is part of being serious about a strong Defense.

Every dollar we save through acquisition reform is another dollar

we can devote to the capabilities of our troops—our troops need

today and tomorrow. This is what the taxpayers expect and what

our warfighters deserve.

Thank you, Madam Chairwoman.

[The prepared statement of Mr. Assad follows:]

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Ms. WATSON. Thank you.

Mr. Drabkin.

STATEMENT OF DAVID A. DRABKIN

Mr. DRABKIN. Thank you, Madam Chairwoman and Ranking

Member Bilbray and members of the subcommittee, since you have

placed my statement in the record, I would like to address three

issues in the 5 minutes that you have allotted me that I think

merit your attention as they do mine every day.

Those three issues deal with our acquisition work force; the tools

available to that acquisition work force; and then three separate

policy considerations that ought to guide everything we do in Federal acquisition.

As far as GSA’s acquisition work force, I am pleased to report to

the committee that we are working on a succession plan that will

help us address exactly how many people we need to do the work

that we are given each year and to make sure that we recruit and

retain those people through the life of a standard Federal career.

Currently, we suffer from a deficit in the competencies in skills

in certain year groups. This is a principal result of the fact that

during the 1990’s, we chose not to hire people as part of our attempt to reduce the size of the government work force.

I am not criticizing that decision, but the result of that decision

is, now, as we look for people between their 10th and 20th year of

service, we don’t have very many. And as we look at folks in between their 20th and 30th year of service, we are facing the possibility of almost 50 percent of our work force retiring by the year

2012. The only thing that has kept our retirements down, I believe,

is the current state of the economy.

Our work force is the key way we get jobs done. I mean, when

you talk about oversight, when you talk about writing good contracts, when you talk about getting best value for the taxpayer, it’s

not done by a machine. It’s not done by a policy. It’s done by an

individual who is trained and equipped to sit down at the table, not

only negotiate a contract that represents the best value to the government but then who has the time and ability to manage that contract to a successful conclusion.

Today, most of our contracting officers are measured on how

many contracts they award. And as soon as they award one, they

have to move on to awarding the next and don’t have the time they

would like to devote to making sure that the effort they put into

negotiating a good contract results in a good result to the taxpayer

when the contract is concluded.

We expect to complete our succession plan sometime by the end

of this fiscal year in accordance with the direction Congress has

given all Federal agencies to address succession planning.

The second issue I think we need to talk about is tools. Despite

the fact that this is an IT-rich environment, despite the fact that

we buy IT for everybody else, the acquisition community lacks the

kind of IT tools it needs to leverage the existing work force and to

help them avoid making simple mistakes.

In a hearing I testified in before the full committee not terribly

long ago on EPLS, the question was, why did you award contracts

to individuals who were on the EPLS about 30 times over 5 years?

33

And the answer was, somebody made a mistake. But had they had

the proper tool in place, the opportunity to make that mistake, to

check automatically the EPLS, would have been reduced; not impossible that the mistake would have occurred, but it would have

reduced it.

And so we are looking in GSA at adopting and acquiring a tool

which may be a single solution or a system of systems that will

allow us to automate the entire process, thus leveraging the work

force we have and ensuring that mistakes that can be avoided by

use of a transparent tool will be avoided.

Finally, the issue of policy is important to look at. The President

has done something, I think, quite unusual. In the last several

months, the first several months of his presidency, he has talked

about acquisition a number of times, including issuing on March

4th a guidance document to the Federal Government on acquisition. And in that document, he talked about two key principles:

competition and transparency. These are not new principles. These

are not principles that we weren’t aware of and didn’t work with

before, but it’s essential that we understand competition in today’s

changing environment and that we spend our efforts and time

making competition a reality.

And by the way, Madam Chairman, in your opening statement,

you said that competition had been reduced. Actually, as a percentage of the whole, our statistics show that competition has not been

reduced. It’s about the same it was and has been over the last decade.

But because of the size of the dollars we are spending, the gross

number of dollars that have been awarded in an other than full

and open competition have increased. But the percentage of dollars

has stayed relatively the same.

Transparency is important. I would simply mention to the committee, even though my time is up, that the United States is the

most transparent acquisition system in the world. I just recently

concluded a meeting with my colleagues from Taiwan, Korea, Italy

and Canada, and they are amazed at the amount of information we

provide the taxpayers and the citizens on government procurement.

You can literally find out every contract we award any time of the

day or night.

And, finally, integrity, which goes to Mr. Bilbray’s comment

about oversight. We would like to do more oversight. But, unfortunately, as a result of a decision made many years ago, all of our

internal auditors, which public companies have under SarbanesOxley, have been taken away and made part of the IG’s Office. So

as a manager, I have no internal audit function to assist me in providing oversight on a regular basis as any good manager would.

I can certainly talk for much longer, but I appreciate the committee’s indulgence in my exceeding my allotted time.

Thank you, ma’am.

[The prepared statement of Mr. Drabkin follows:]

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Ms. WATSON. Thank you to both of the witnesses.

You have given us a lot of food for thought. And our Members

this morning will be raising the questions that will extend your

time.

We are very concerned about the oversight. And so what we are

trying to do here is take a cursory look. And so I will raise some

questions; I think both of you have probably answered them, but

in a format, so we can really hear the changes and the recommendations that you make stated as a result of your statements.

I am just going to just go through them again.

Because in response to President Obama’s March 2009 memo on

directives for agencies to report back on improving the FAR and

agency-specific supplements, what types, and you have mentioned

some, but let’s get in the format, of recommendations or changes

are your agencies making? And would you repeat, Mr. Assad, I did

hear several?

Mr. ASSAD. Yes, Madam Chair, specifically, some of the things

that we are doing these days, it was mentioned by one of the Members that we’re spending a tremendous amount of money on acquisition for Armed Services. We now spend more money on services

within the Department than we do on major weapons systems, and

last year, it exceeded $200 billion.

And what we are now doing is we have implemented a series of

things called Independent Management Reviews where every procurement over $1 billion is given significant oversight, not only

prior to the award of the contract but during the performance of

that contract. Congress mandated that we do that in the NDAA

2008, and we have now got that in place.

But we have expanded on Congress’s intent to not just be—services contracts over $1 billion, but, in fact, every contract, irrespective of what it’s for, goes through an Independent Management Review. And so we look at it before we issue the RFP while the evaluation is going on to ensure that we have, in fact, a proper evaluation. And then, last, once the contract or the decision for award is

made, that, in itself, is examined.

And then every year we review that contract to see if, in fact, the

taxpayers are getting what they paid for. That process was put into

play about 7 months ago. We have reviewed over 40 programs to

date and are in the process of reviewing them. This is an ongoing

thing. It requires the participation of senior executive service and/

or general officers and flag officers to participate in these reviews

whenever we can. It includes contracts managers, engineers, program managers, auditors, as well as the General Counsel’s Office.

And the whole idea here is to ensure that we are, in fact, utilizing best practices across the Department and, second, that we are

adhering to the regulations as we proceed with these procurements

so that we can ensure that the taxpayers, that they are getting a

fair deal, and the warfighters are getting what they need.

Ms. WATSON. Is this information going to be up online?

Mr. ASSAD. We are working right now with OMB to discuss how

we could, in fact, put parts of this information online.

Many of these procurements are competitive in a source-selection

nature. So there are certain aspects of it that we can’t put online,

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but certainly the results of it and the general findings, we are in

the process of doing that right now.

Ms. WATSON. I think we were asleep at the switch in the last administration, and the oversight wasn’t what it should have been.

The public is very leery. And so they are talking about the debt we

are in and the next generation to come and those yet unborn and

so on.

I think we have to, in some way, try to weed out that information that might be classified and really put the information where

people, the taxpayers, can see what we are doing.

It takes money in these conflicts. And to protect our military and

to win, it’s costly. Everyone has to sacrifice, but we have to give

them a reason for feeling they have to sacrifice.

Mr. Drabkin.

Mr. DRABKIN. In GSA, we have instituted a procurement management review process. Actually, we instituted that process over

5 years ago now.

And in that process, we visit all of our major contracting facilities once a year. We randomly select contracts. We review those

contracts, and we provide feedback to our colleagues on the quality

of the contract file, the contracting—the acquisition plan and their

management of that contract.

In addition, just recently, beginning last September, we added

the A–123 reviews, which is OMB circular, which primarily used

to focus just on the financial side, and now we have added an additional layer of review. We have added individuals to our team to

do those kinds of reviews.

In addition to the reviews themselves, we bring in colleagues

from other offices so that they can bring their experience to the review process and share their experience with their colleagues and

so that they can also take lessons learned home to their own offices, things that they learned that were being done differently or

uniquely somewhere else.

The result of this process, we believe, will be validated quite

shortly, when the DOD-IG completes its review of GSA next year.

We believe that——

Ms. WATSON. Speak right into the mic, please.

Mr. DRABKIN. We believe that review—I think someone turned

down the sound so it wouldn’t get the feedback. We believe that review will validate the fact that not only have we have been getting

it right, but we continue to get it right every day.

Ms. WATSON. My time is up, but I have one more question, and

I will just give myself an additional minute.

And are any specific changes addressing the use of multi-award

schedules going to be included in your submissions? And both of

you, I would like you to respond.

Mr. ASSAD. Madam Chair, we are moving forward to a reduced

number of multiple-award contracts that we have. These can be

terrific tools for our people to use.

But one of the things that we want to make sure of is that they

are, in fact, promoting competition and that they are not used as

a mechanism simply to obligate funds. And so we are looking very

hard at the practices that we are using to ensure that we provide

fair opportunity. We are specifically looking at where we have

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small businesses who have been awarded multiple-award contracts

and who are capable of doing the work, that work is properly set

aside for small businesses to compete on.

And so what you will see is a number of actions being taken by

the Department to improve our competitive posture.

Last year we have actually set a record within the Department

in terms of most dollars and the largest single percentage that we

have ever competed. Having said that, it’s not anywhere near

enough, and we know that we need to improve.

And one of the areas that we can in fact improve upon, is in

award of delivery and task orders under multiple-award contracts.

And you will be seeing a number of policy statements coming out

as well as policy guidance and information of the DFARS with regard to improving competitive opportunities in multiple-award contracts.

Ms. WATSON. Mr. Drabkin.

Mr. DRABKIN. Madam Chairwoman, I would first like to make a

distinction between schedules, which is a program run by the administrator of GSA, and multiple-award IDIQ contracts, which we

all have authority to run.

GSA’s Schedules Program has always required competition. Our

customers’ compliance with that rule has, on occasion, been a little

spotty.

As you probably are aware, almost 5 years ago, we developed a

program called e-Buy, an electronic method, so that all Members,

all contractors holding a schedule can be selected.

DOD, in fact, is required to use e-Buy when they use our Schedules Program and the number of bids or quotes that they have received has increased to an average of between three and six per

competition, but they solicit from all scheduled holders.

On IDIQ contracts, there’s always been a requirement for fair opportunity. It’s a question of administration of that requirement

that has been put in issue.

But I think the real issue is what Shay touched on, Madam

Chairman, and that is also what we addressed, I served as a member of the SARA panel, and later, you will hear from our chairperson, Marcia Madsen, is that we probably have way too many

IDIQ contracts in the government.

It costs us money to award those contracts and administer them.

It costs industry money to compete for them, and I am not sure it

contributes to competition or better pricing over all.

In the last Congress, there was a direction to OMB to better

manage the number of IDIQ contracts governmentwide. And I believe once a new administrator is appointed in OMB and OFTP,

that process will begin, and we will see some success in reducing

the overall number of IDIQ contracts.

Ms. WATSON. Thank you.

I will now yield to our ranking member. I will give you an extra

minute, Mr. Bilbray.

Mr. BILBRAY. No problem, Madam Chair. I think your question

was quite appropriate and served the entire process and this committee.

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Mr. Drabkin, I appreciate you pointing out—I think when we get

into this, we’ve got to look at our successes. And we are the most

transparent system in the world.

We just forget that, outside of Mexico, we are the only place

where we don’t follow the British Godforsaken parliamentary system, to where winner takes all, and the administration is nothing

but an arm of the lower house. So I think as Americans, we always

talk about other countries and think they are in our system. We

have a very unique system, and it works.

And that’s why this relationship between the executive branch

and the legislative branch and the process of oversight is so important and needs to be not just cooperated with but embraced.

I guess, gentlemen, what I first want to talk about is, we really

are in crisis on this issue. And what I worry about in crisis, when

you look at how much of the budget cannot be accounted for in so

many ways at a time that we are now are looking at almost another trillion dollars that we don’t know how we are going to account for, there is this crisis.

And the problem with crisis is we always talk about tactical

issues during crisis, and we ignore the opportunity to really now

kind of learn from our mistakes and our challenges and look at the

strategic. And I would like to sort of back off a second and take

a look at the strategic.

The question over at DOD, we have interns that come in and

participate in a training program basically, don’t we?

Mr. ASSAD. Yes, sir.

Mr. BILBRAY. What percentage of those interns do we actually

end up hiring after they have gone through the intern system?

Mr. ASSAD. We actually do very well in terms of hiring the interns. The real question is, can we retain them? And I would say

that it’s not unusual in our intern programs to see turnover of 30

to 40 percent.

Now, the question is, where are they going? Well, to some degree,

they go to my brothers and sisters in the rest of the Federal Government. And while we hate to lose them in the Department of Defense, that, in and of itself, is not a bad thing. But, in fact, we do

lose a number of them to industry, because we happen to have the

finest training system in the world in terms of training people in

acquisition and procuring at the Defense Acquisition University.

It’s without peer.

And so folks know that when they get somebody, especially an

intern, through our training program, that they have been well

trained.

And so what we are doing is that we are taking a number of

steps, and to a certain degree, Mr. Congressman, this is all about

leadership. It’s—we are getting our leaders actively engaged in ensuring that they communicate with the work force on an ongoing

basis in terms of their value—and I think the Secretary and Deputy Secretary have stood tall and basically said we are going to

make a significant change in the size and capacity of our work

force, and that has gone a tremendous way in terms of almost overnight of significantly improving the morale of the work force, because they see help on the way.

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Mr. BILBRAY. So we basically absorb all our interns, and then it’s

just this revolving door?

Mr. ASSAD. Yes.

Mr. BILBRAY. Then they end up getting a better offer either in

another department or outside?

Mr. ASSAD. Yes, I would say about 30 to 35 percent do that, yes,

sir. We retain about two-thirds.

Mr. BILBRAY. Thirty to 35 percent come in—what percentage

never get a job, do you think?

Mr. ASSAD. A very small number. You know, we do—there are

some folks who either they decide this isn’t for me, or we decide

they are just never going to hack it. But that’s a very small percentage.

Mr. BILBRAY. Yes, I will say this—I know the gentleman from

Fairfax County may get concerned about this, but it’s too bad we

don’t have the type of contractual arrangement with our civilian

employees that we have with our military, basically saying, if we

are going to spend this much time training you as a Naval aviator,

we expect you to sign on for this long. And, you know, that kind

of arrangement somewhere down the line, may be a radical concept

now, but I think as we get in these challenges, we should be looking a lot.

I guess the issue comes down to retention though, too, as a lot

of the institutional mindset. I think this administration ran a campaign that really should be setting the example of maybe how this

administration should be looking at the modification of the Federal

bureaucracy, and that is this administration captured young people

and captured the potential for not only the young people but the

technology that they are so comfortable with.

And I guess the issue there of retaining more of these young

bright stars is, how we can change our internal operation, you

know, section by section, to not only allow these young stars to use

their new tools that they have but to embrace it and be brave

enough? I know all of us here that are on the front row here may

be less than comfortable with the technology and approaches that

the people will find behind you or behind us, you know, not only

are comfortable with but embrace and integrate into their day-today life.

And my question to you is, how can we modify the system to be

more open to the junior Members who are coming up with their

mindset and their new savvy and direct them to be the next generation of oversight?

Mr. ASSAD. Mr. Congressman, we are making a number of

changes in that regard, and, frankly, it’s not just the younger or

those less experienced or those more comfortable in the information

technology age; the fact of the matter is we need to do a much better job within the Department and across Federal Government in

sharing information and knowledge about the business deals that

we have. How do we do business with different contractors?

It is not unusual to have certain products being bought from the

organizations within the Army, Navy, and Air Force and having

never had them talk to one other about doing business with the

very same company that sells to all three. So what we are doing

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is we are about to make a remarkable change in how we collect and

disseminate especially business information.

DCMA is going to become the cost-analysis center for us and so

that our young employees will be able to log on, immediately go in

a Web-based tool into that DCMA data base, get the information

they need quickly and then be able to process that so that they can

understand what are the terms of the business deal that they are

getting.

The fact of the matter is that we are—we are not as capable as

a number of organizations in terms of being able to share that information, but we are getting there. And I think you will see a significant change over the next couple of years, especially in the way

we share business deal information.

Mr. BILBRAY. Well, Mr. Drabkin, my biggest concern is that there

are a number of us that are in a position to make decisions, and

almost as if—you know, I grew up along the border. And the one

thing I have learned very quickly is, no matter how much you learn

a language; it’s not the same as growing up with it. You think certain ways.

And I think our generation, if I may expand the relationship, will

always have a blind spot that we need to do translation to understand what these kids are up to with their technology and their approach, only because they grew up with it. This is their primary

way of thinking.

How do we figure out how to tap into that? It’s almost like man’s

first experiment with fire or with nuclear power; we may, you

know—first of all, it intimidates us to some degree, and we may

not understand it, but, boy, the potential is huge. How are us old

guys able to develop a system and then actually embrace these kids

and their technology while still directing it, even though we may

not speak the language as our primary source?

Mr. DRABKIN. Actually, I am very lucky to be at GSA, because

at GSA, we have a culture that has adopted and continues to adopt

the changes in the IT world and in the way we approach our business.

We are able to attract folks right out of college. We use collaborative tools. We are into cloud computing. We are on the edge. Our

people have the most current and up-to-date electronic devices and

access to them. We have a process.

Because of the problem of the hiring in the 1990’s, we are advancing people now that would never be advanced at this stage in

their career. We don’t have a choice. We have to have people to do

the work. And so somebody who has between 5 and 10 years experience is now getting a chance to do things that they never would

have gotten a chance to do if we had had a complete cadre of people with that kind of experience.

It kind of reminds of me of what the Army was like when I came

in, in 1978, at the end of the Vietnam War. As a young captain

who never tried a case in my life, I showed up and was made the

chief of military justice. I mean, those kinds of opportunities exist

today, and we are able to take advantage of those and leverage

those in GSA.

We are a much smaller agency than DOD, but I think you will

find if you talk to any of our young people who come in the intern

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program that we have, that they will tell you that GSA is taking

advantage and knows how to talk to them. They are using the social Web sites and the social, and all of these other tools, not only

to attract people to come and work with us but to keep them interested while they are working with us. I would like to point out——

Ms. WATSON. Mr. Bilbray, will you yield?

Mr. BILBRAY. Yes.

Ms. WATSON. You said in your opening statement that one of the

problems you suffered from was the lack of being able to hire welltrained, well-skilled, well-educated people.

Do we see within your budget the opportunity to bring on the

people with the skill sets that are needed? And I am listening very

carefully because I know there has been much debate in our House

about our budget deficit and endangering the future lives and so

on.

Mr. Bilbray brings a very thoughtful point, and that is, we are

in a culture of technology and use the example of President Barack

Obama; he used technology to its highest level, and that’s how he

surprised a Nation and won.

There’s a lot of talent up there, out there. Are we going to be

able to capture that? Will you have the budget? Will you be able

to bring on the kinds of people that you know can advance the

agency?

Mr. DRABKIN. Well, first of all, in our career field, in the acquisition career field, there are very few people in the private sector

who we can hire and put to work immediately because of the very

nature of government procurement, all of our rules, all of our processes, which are unique.

We don’t find them in the private sector. Even the county of

Fairfax doesn’t have the same level—I used to be a resident of the

county—doesn’t have the same level of regulation and process that

we provide the Federal Government.

So when we hire somebody, typically we have to train them, and

that training process takes somewhere between 11⁄2 to 2 years before we can even put them out on their own to begin doing the kind

of work that we do.

Ms. WATSON. Are we in that process?

Mr. DRABKIN. We are in the process of hiring them. In GSA, and

we are different from other agencies, because, as you know, Congress appropriates very little—no money for the operation of our

Federal Acquisition Service and very little money for the operation

of our Public Building Service. We earn, through revenue, through

sales to other agencies, the money we then use to reinvest in our

work force and our tools.

We, in GSA, have the flexibility to acquire more people. If you

talk to my colleagues in the other civilian agencies, I think you

would hear a different story. They require an appropriated budget

in order to increase the number of FTE, full-time equivalents, they

need in the acquisition work force.

But I am not sure that the question is really increase the acquisition work force so much—well, I am sure you have to increase the

acquisition work force. I don’t know that the answer is that we

have to increase the work force as a whole, and I can’t speak for

other people, but I certainly think we ought to have a business

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process that looks at, where are the competencies and skills that

we need to have in-house to do our work? And those people we

should hire. And where are the competencies and skills that we can

buy from the private sector to get our work done and are not essential to the government’s performance of its mission? And those we

can buy.

And those are the kinds of decisions that I know are difficult; I

know that this committee and others will be discussing. I realize

they also have issues relevant to political party platforms.

I am a career civil servant. I don’t get in those discussions. What

I am concerned about is making sure that we have enough people

to manage the $556 billion worth of contracts that we awarded last

year.

By the way, in 1991, we had 33,700 of 1102s in the whole Federal Government. And an 1102 is a contract specialist; it’s a person

we hire and train to award contracts.

Last year, we had 28,700 of 1102s. In 1990, we awarded $150 bil- lion worth of contracts. Last year, we awarded $556 billion worth

of contracts. Do the math.

Mr. BILBRAY. Mr. Drabkin, in other words, what happened was,

we did—and all of us who were participating, except for the gentleman from Fairfax—that reduction during the 1990’s, and then

we hit the crisis of 9/11, and all at once, we saw a huge ratcheting

up of contracting.

The question I really get to is that we are approaching—you

know, we are in a crisis mode now, and there’s opportunity, obviously, in the crisis. Just as the military during tough times, traditionally, as always, had the ability to cherry pick for that level of

employee and the training and the different entry level. We actually are in a unique situation like now, at least indications coming

from out of the universities, is that you now have people, especially

in IT, that normally would not be available for government service

now are looking to government service for that stability. That

never was considered for a long time.

You know, going back to, I guess, 1979, I guess is the closest

time we have seen, and even then it may not be. So right now, the

word is, as these kids are coming out in June, they are looking to

work for Washington. They are looking to work for government

right now. And now is the opportunity for us to do the cherry picking and be very aggressive at grabbing these kids while we can and

get them into the system, and hopefully, we will be able to lock

them into a career before the economy starts recovering, and they

start seeing opportunities other places.

Ms. WATSON. Yes. I am going to go to our next Member, Mr.

Connolly, and then if you want to respond to Mr. Bilbray’s comment, you can do it, along with answering his questions.

Mr. CONNOLLY. I thank the Chairlady.

I want to thank my colleague, my friend from California, I am

so glad he began by asking about the internship program, because

it’s a concern I have based on testimony we have heard in previous

hearings before the subcommittee and the full committee.

And I am going to be introducing some legislation, and I would

welcome sharing that in draft form with my colleagues to see if it

is of interest to them that would try to systematize an internship

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program and look at reporting in terms of outcome so we have a

better handle on that and certain elements, mentoring rotation,

evaluation, streamlining, so it may make it easier if you are an intern, it’s easier to get into the Federal service as we move out to

the future.

So I would welcome sharing that draft legislation with my colleagues to get their reaction. But I do think we have to do something to encourage model programs of internship. Because we have

heard both the good and the bad about internship programs. It

seems to me that if somebody wants to be an intern with the Federal Government, they ought to be leave highly motivated to want

to continue to serve in the Federal service.

There may be lots of reasons why one elects not to, but I would

hope one of those reasons is never because it was a negative experience. And we have heard stories where, in some agencies, that is,

unfortunately, the case.

Let me go back to acquisition, because, I think, Mr. Drabkin, you

were giving some great numbers there. And I think clearly what

you showed was that while the value of large acquisition contracts

were going up, the number of qualified contract officers to the Federal Government were going on. And so, when you, as you said, do

the math, we actually saw a significant loss of skill sets in the Federal Government in just sheer numbers.

But even if you go behind those numbers, what I am concerned

about, having watched it from the other side, is that it’s not just

the actual number; it’s also the skill set. We increasingly face a

challenge in the Federal Government of, do we have the requisite

skill set to manage very large, complex technological contracts that

are multiyear; that’s No. 1, and I would like you to address that.

Second, what about internal processes? I mean, we talk about

cost overruns. But frankly, sometimes, we, the Federal Government, we are responsible for those cost overruns because we

change, in effect, the scope of the original work.

I can think of one contract I am familiar with where over the life

of a 2 or 3-year contract, this particular contractor had 14 Federal

project managers, contract managers, each of whom, formally or informally, had his or her own view of the scope or what could or

should be added. And by the end of the contract, it looked a lot different, unfortunately, than what originally was agreed to. And the

contractor was in a tough spot in trying to deal with the client.

And so is the rotational system we have within the Federal Government part of the problem? Can it, should it be changed?

Mr. ASSAD. Let me first talk to the work force itself, Mr. Congressman.

We went through, and I know some of the other Federal agencies

have done some competency modeling, but we have gone through

and done some of the most comprehensive competency modeling of

the contracting work force, frankly, not only in the Federal Government but across industry. We had approximately 18,000 employees

participate voluntarily in a competency modeling that examined

their competencies in a very detailed and specific way. So we understand not only by every particular organization, but across each

Department, Army, Navy, Air Force, as well as the other defense

63

agencies, what our capability gaps are, and we understand what it

is we have to do about it.

In terms of our growth and our work force, we are specifically

going to hire about 5,300 contracting officers, 2,500 defense contract management agency personnel, 700 auditors, 800 pricing people, 300 procurement and acquisition lawyers. So we understand

very well what our capability gaps are and we are very focused on

improving those.

With regard to the competency modeling itself, I think that is a

tool that everybody needs to use. I know GSA has—Dave and his

team have a very good system that they use over at GSA. But we

really do need to institute that across the Department in a very

significant way so we can understand our capabilities across the

work force.

In terms of rotations, rotations can be a positive thing because

you get a specific degree of experience across a wide variety of resources. Having said that, one of the things that we are doing now

is, we are requiring our program managers to sign term agreements to say that they are going to stay on for a specific period of

time because, as you know, given your past experience, when you

have major weapons systems, it is not unusual for that to take 7,

8, 9 years from initiation to absolute fielding; and you might have

two or three major program managers participating in a program

along the way. And sometimes a program manager inherits decisions that weren’t his to make. So we are looking very seriously at

that, about extending the terms of our program managers, especially on our major programs.

I think that with our term agreements, our program managers

will go a long way to do that.

Mr. DRABKIN. Let me begin with one of the last things you talked

about, but is one of the most important things for any acquisition,

and that is the requirement.

I believe you are absolutely correct that in many cases when you

look at why a contract changed over time or why a program

changed over time, you will find that at least in part it was attributable to requirements creep, we call it. The requirements started

out as being an automobile, and before you finish it is a jet aircraft.

And by the way, if you start out to buy an automobile, you are

going to get a lousy jet aircraft when you are done. But our community, the acquisition community, does not control the requirements

side of the house. We respond to it.

The second most important thing is what we do once we get that

requirement, and that is the acquisition planning process, which

has been codified and institutionalized for many, many years, but

which still today, because of lack of time, because of lack of people,

and because of a lack of management direction or interest, the acquisition planning process in many cases across the government

gets left out.

But it is during that process where you look at the requirements

again, you make sure you redefine the requirements, you do your

best to make sure that it is nailed down and all of the changes you

can anticipate are taken care of and then how you decide to satisfy

those requirements through the acquisition process, including justifying what kind of contract you are going to write based upon the

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nature of those requirements, or how you are going to define the

competition because all requirements don’t compete equally in the

marketplace.

When you get to rotational assignments, I do agree that there is

a problem with the fact that we have both contracting officers and

project managers who, during the course of their careers, change

jobs. At GSA, we don’t have the ability to direct someone not to go

somewhere else. We can avoid internal management reassignments, but if they get an opportunity to work for another Department, if they decide that they have had enough and don’t want to

work for the Federal Government anymore, we have no ability to

keep them in one place, although we are looking at ways to retain

them, things that we can do to incentivize them to stay in one

place and complete a project until its very end, although some of

our projects are quite long. Not as long as in the Department of Defense, but when you are building a major courthouse, you don’t do

it in 12 months, and making sure that you hold the team together

to get that courthouse done—and GSA builds a lot of courthouses—

is something that we are looking at.

Finally, the level of competency and difficulty has changed in

what we buy. It is different than what most State and local governments do in terms of buying.

In the Federal Government, we decided back in the 1990’s we

would buy best value, we would stop buying low price. It was Secretary Perry, who was then the Secretary of Defense, who came to

this body and reported to this body that it was costing the Department of Defense a fortune to buy low price, because you would buy

something that was the lowest price, and it would wear out sooner

than something else, and you would have to go out and rebuy it,

and there were costs associated with all of that. In addition, we

were buying from companies that weren’t performing well.

And so we went to best value. Best value requires a level of competency and skill which is different than picking the low price.

Mr. CONNOLLY. And judgment.

Mr. DRABKIN. That is part of the competency and skill. And the

ability not only to figure out what best value is, but then because

of our system and because of our requirements of transparency, to

be able to describe what that best value is so that my grandmother

in northwest Alabama will understand what ‘‘best value’’ means.

And believe me, that is hard to do.

That requirement has changed, and it has made it more difficult

for our work force.

I would like to address a couple of other things that Mr. Bilbray

said. First of all, we don’t need people to come to Washington. They

can work from other places. One of the great things about GSA is,

we can hire people from all over the country, and they can work

for us from wherever they are.

We are looking at those kinds of opportunities because once this

economic situation resolves itself, coming to Washington——

Mr. CONNOLLY. Reclaiming my time, Madam Chair, because I

have to be on the floor shortly.

Forgive me, Mr. Drabkin, but I know Mr. Bilbray will have another opportunity.

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I take your points about rotation. There is a positive aspect to

that, keeping somebody fresh and wanting new challenges. You

don’t want someone to get stale, and certainly once in a while you

want a fresh look at a contract. No question about that.

But on the other hand, if you have not an 8 or 10 or 12-year

project, but you have a 2 or 3-year project that has a clear beginning and a clear end with, I hope, a clear mission, clear objectives,

there is something not only satisfying but desirable, it seems for

me, for somebody to take that on as his or her project and see it

through to its end. It is incumbent, it seems to me, on Federal

managers to create an environment and a system of incentives that

allows for that.

I think both of you would agree that if you are looking at a 3

or 4-year contract with 14 project managers, that is a recipe for

discontinuity and, frankly, dysfunctionality, in outcomes.

Mr. ASSAD. I agree with you, Mr. Congressman, and that is a

function, in most cases, of capacity and people. That is why of those

20,000 folks we are increasing, approximately 10,000 will be program managers, systems engineers, logistics managers, because we

realize that not only do we have to increase the capability of that

particular side of the work force, but there has to be a steadying

capacity to deal with our programs.

Ms. WATSON. I want to conclude the testimony for this panel. I

thank you very, very much. We will be back with you. I think that

your statements have given us a lot of food for thought. I do have

followup questions, but we will get them to you in writing.

Thank you so much for your testimony, and you are excused.

Mr. CONNOLLY. We are just sad that Mr. Drabkin apparently is

no longer with Fairfax County.

Mr. DRABKIN. I am now Ms. Norton’s constituent.

Ms. WATSON. I now invite our second panel of witnesses to come

forward. It is the policy of the Committee on Oversight and Government Reform that we swear in all witnesses before they testify.

I would like all of you to stand and raise your right hands.

[Witnesses sworn.]

Ms. WATSON. Let the record show that the witnesses answered

in the affirmative.

I will now take a moment to introduce our distinguished panelists. First, we have Mr. William Gormley, who serves as the chairman of the Coalition for Government Procurement and as president

and chief executive officer of the Washington Management Group.

Prior to his current post, he served as the Assistant Commissioner

for the Office of Acquisition, Federal Supply Service at the General

Services Administration.

Next, we have Mr. Philip Bond, the president of TechAmerica.

Mr. Bond is also president of the World Information Technology

and Services Alliance, a network of industry associates and associations representing seven high tech trade groups around the world.

Previously, Mr. Bond served as the Under Secretary of the U.S. Department of Commerce for Technology. And from 2002 and 2003,

he served concurrently as chief of staff to Commerce Secretary

Donald Evans.

Mr. John McNerney serves as the general counsel for the Mechanical Contractors Association of America. There, he works on

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numerous labor-management relations issues, along with issues associated with the legislative advocacy public procurement and a variety of other public and private contracting policy issues.

Ms. Karen L. Manos is the Chair-elect of the Procurement Planning Committee of the National Defense Industry Association and

is a partner with the law firm of Gibson, Dunn & Crutcher, LLP,

where she is co-Chair of the firm’s Government and Commercial

Contracts Practice Group.

Next, Ms. Kara M. Sacilotto is a partner with the law firm Wiley

Rein, LLP, and there she focuses on litigation matters relating to

government contracts and has represented government contract clients in both protest claims litigation, prime contractor disputes,

and trade secret misappropriation litigation.

Ms. Marcia Madsen is a partner of the law firm Mayer Brown,

LLP. There she focuses on multiple issues associated with government contracts and litigation. She also served as the Chair of the

Acquisition Advisory Panel authorized under the Service Acquisition Reform Act of 2003, which provided 89 specific reforms to Federal procurement laws and regulations.

Finally, Mr. Scott Amey is the general counsel for the Project on

Government Oversight. There he directs POGO’s contract oversight

investigations, including reviews of Federal spending on goods and

services, the responsibility of top Federal contractors, and conflicts

of interest and ethics concerns that have led to questionable contract awards.

I will ask that each one of the witnesses just give a very, very

brief introduction of yourself and what you do; and we are going

to cut the time. I am hoping that other Members will come, but we

want to finish by 11 a.m., so we are going to go very quickly.

Mr. Gormley, please proceed.

STATEMENTS OF WILLIAM GORMLEY, CHAIRMAN, COALITION

FOR GOVERNMENT PROCUREMENT; PHILIP BOND, PRESIDENT, TECHAMERICA; JOHN McNERNEY, GENERAL COUNSEL, MECHANICAL CONTRACTORS ASSOCIATION OF AMERICA; KAREN L. MANOS, CHAIR-ELECT, PROCUREMENT

PLANING COMMITTEE, NATIONAL DEFENSE INDUSTRY ASSOCIATION; KARA M. SACILOTTO, PARTNER, WILEY REIN,

LLP; MARCIA G. MADSEN, PARTNER, MAYER BROWN, LLP;

AND SCOTT AMEY, GENERAL COUNSEL, PROJECT ON GOVERNMENT OVERSIGHT

STATEMENT OF WILLIAM GORMLEY

Mr. GORMLEY. Thank you, Madam Chairman, Ranking Member

Bilbray, and members of the committee.

After listening to the dialog you had with Mr. Drabkin and Mr.

Assad, I am one of those rare birds; I actually spent 30 years in

government acquisitions. Maybe we can talk about what it takes to

stay in during the course, or as we have more time today. I hope

my experience will be of value to the committee.

The Coalition for Government Procurement members represent

the commercial sector of services and supplies, and they interact

with the Federal Government. I had prepared 5-minute remarks,

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but I will honor the request to shorten that and come back to it

as we have time.

[The prepared statement of Mr. Gormley follows:]

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STATEMENT OF PHILIP BOND

Mr. BOND. Madam Chairman and Ranking Member Bilbray, that

is a very difficult to follow; it was very brief.

It is a pleasure to be here, and congratulations on launching

what I think is a vitally important series of hearings. On behalf of

the technology industry, I will try to summarize quickly and give

you our view.

I think one is that we understand and appreciate the fact that

this Congress and this administration ‘‘get’’ technology. All you

have to do is look at the stimulus bill to see that.

We are concerned that we don’t, in the name of reform, have

some unintended consequences that will end up chasing away

small, medium or even large companies from the government marketplace, and thereby, undermine competition, innovation and

small business contracts. Unfortunately, there are some proposals

that may have that impact.

The stimulus dollars do come with strings and reporting requirements. They apply the rules even to commercial, off-the-shelf contract items, which we think is perhaps counterproductive.

Contractors will be required to report on subcontracts, which

may chase away some subcontractors. They require public disclosure of information which goes beyond Freedom of Information Act

or other requirements. And they grant GAO the authority to interview individual employees without, as far as we can see, any rules

around the rights of those individual employees. So all this makes

companies stop, pause and rethink whether they want to be in this

marketplace.

And, obviously, we embrace competition. I represent 1,500 companies, hundreds of which sell to the government, and so we certainly embrace competition.

The President’s memorandum on contracting also has some rhetoric that sometimes raises eyebrows in our community. However,

it targets and identifies very laudable things, including eliminating

wasteful and inefficient contracts. It shows a clear preference for

fixed-price contracts.

They also talk about the appropriate times for government to

outsource services. The industry embraces that. We would benefit

from a clear definition of when to outsource and some clarity

around the fixed-price contracts versus others. However, we do believe that sometimes national security or the ability for a national

industrial base in some critical area may call for some flexibility

in contracting and not always fixed price.

We do believe the administration is right to look at these, and

we just ask that they do so with an eye toward flexibility in the

name of national security and industrial base issues. And we hope

that Congress will let the administration move along this path a

little bit before changing the rules.

I want to rattle off a few others very quickly. On the in sourcing

issues, fundamentally we believe in a blended work force that is

going to take advantage of the skill sets in government, the best

of the public sector with the best of the private sector.

The work force that Mr. Connolly and Mr. Bilbray raised, there

are too few professionals with too little experience writing contracts

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that are very big and complex. With billions coming in recovery

funds, that problem potentially is going to get a whole lot worse.

Transparency has been referenced, especially the great examples

that were shown by the Obama Campaign for President. We certainly embrace that, and we think that, for example, OPM has to

write some rules that will tell employees what they can and cannot

use in terms of some of the new social networking capabilities.

We want to make sure that as we pursue transparency, we don’t

require companies to file information that would unfairly give advantage to their competitors overseas, or would go beyond the Freedom of Information Act.

In conclusion, the committee has launched an important series of

hearings. The goals the administration has laid out for

participatory democracy, greater access, openness, transparency, all

of those will demand modernization; and we hope that the committee will consider ways to reform the policies, remove barriers, and

encourage more innovation.

We remain confident that together, the best of the public sector

and the best of the private sector, that we can meet the mission

for both the government and the taxpayers. Thank you.

Ms. WATSON. Thank you.

[The prepared statement of Mr. Bond follows:]

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Ms. WATSON. Mr. McNerney, you may proceed.

STATEMENT OF JOHN McNERNEY

Mr. MCNERNEY. Good morning, Madam Chairwoman. I am

pleased to be here. I am representing here today five construction

trade associations: the Mechanical Contractors Association; the

Sheet Metal and Air Conditioning Contractors’ National Association; The Association of Union Constructors; the International

Council of Employers of Bricklayers and Allied Craftworkers; and

the Finishing Contractors Association.

Madam Chairwoman, our committees have come up with 10 construction procurement recommendations that respond in one way

or another to the various aspects of the discussion today; and in

the interest of time, I am going to rattle them off by name.

Our No. 1 priority is, we think that the committee—even though

this is a fiscal committee matter, this committee, we would respectfully submit, should take cognizance of this new 3 percent withholding tax which is going to affect public contracts in 2012. But

the agencies are going to have to start spending their procurement

resources to gear up for this probably next fiscal year.

DOD has estimated it will cost their procurement budget $17 billion over 5 years to change their payment programming systems

personnel and to add the financing costs in their contracts for that

measure. So we would ask respectfully that the committee take

cognizance of that and see what impact it might have on the procurement agencies overall.

If tax delinquency is a problem for public contractors, then we

think the rapid deployment of the contractor legal compliance data

base is a better way to keep tax delinquents out of the procurement

programs.

We would also submit that because this raises payment issues,

if the tax goes into effect, extending the Federal Prompt Payment

law to federally assisted contracts would become all the more important. If there is going to be added withholding, we certainly

want to ensure that the payment of the amounts of the invoices

due is given more rapidly.

We also would submit that the regulators are going to have to

be very careful that the 3 percent withholding tax doesn’t go down

the contracting chain to subcontractors. IRS agrees with that, but

we think that the regs will have to be verycareful.

Some of our other procurement reforms, we think you should

look at bid listing on low-bid, direct Federal construction contracts.

We have heard a lot of talk here today about negotiated selection

and other aspects of the contractor selection procedure. We think

that a close look at the trends in procurement methods probably

warrants now reconsideration of the idea that prime contractors

ought to list their major subcontractors on low-bid awards. We

think that you would improve both the level and quality of competition in the Federal market if you did that.

We are supporters of the Obama administration’s initiative on allowing consideration by agencies, both direct Federal and federally

assisted, of the use of project labor agreements on major construction projects. There is a lot of flexibility in that order. Even now,

OMB and DOL are considering ways to shape that, and we would

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urge this committee to take some cognizance of that and see if you

can help the agency find ways to use the benefits.

We represent union signatory specialty contractors. We have an

interest in project labor agreements and we also know that they

work very well and the taxpayers are well served by them when

they are used.

Finally, back to the low bid, we would like this committee to consider enacting again, proposing again to outlaw Internet reverse

auction for construction procurement. That was a bad idea when it

was proposed. The U.S. Army Corps of Engineers roundly condemned it, and we would hope Congress would enact the Corps’

recommendation and legislate against it in Federal procurement.

Some agencies still do it.

Finally, we would like you to consider and protect, especially, the

construction industry. The Federal Government over the next 20

years is going to make all of its facilities and building stock net

zero energy, carbon neutral over 20 years. That is going to require

a tremendous amount of building operations, maintenance, commissioning energy service contracting, energy auditing; and we would

like to suggest that we protect that and continue to outsource that

and not bring that work that is not inherently governmental back

in-house in an in-sourcing review.

Thank you, Madam Chairwoman, and that concludes my remarks.

Ms. WATSON. Thank you.

[The prepared statement of Mr. McNerney follows:]

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Ms. WATSON. Ms. Manos, you may proceed.

STATEMENT OF KAREN L. MANOS

Ms. MANOS. Madam Chair and members of the subcommittee,

thank you very much for the opportunity to appear before you. And

I applaud your efforts in launching this important series of hearings.

I am here both in my personal capacity and representing the National Defense Industry Association. I have been practicing in this

area for 28 years, since I graduated from the Air Force Academy,

and I hope I offer a balanced perspective.

I spent 14 years in the Air Force as a contract negotiator and

then a judge advocate, and for the last 14 years have represented

mostly major defense contractors. My entire professional life has

been spent in the area of government contracting, and I have a

deep and abiding and personal and professional interest in it.

I think if we step back, though, and look at what we have done,

beginning with the Reagan administration and then picking up

greater steam during the Clinton administration, there was this bipartisan effort to kind of unwind Federal procurement and get rid

of what had grown up over the years. It was like barnacles, and

it just made it very expensive to do anything.

Unfortunately, as a part of the quid pro quo for doing that, we

also cut the acquisition work force dramatically. In hindsight, I

think that was a mistake, but I am concerned that Congress, by

reacting to things, may layer on additional layers of statutes and

regulations that just add to the burdens that we had in the past.

If you think back to President Clinton’s signing statement when

he signed the Federal Acquisition Streamlining Act, he mentioned

the fact that during Desert Storm we couldn’t buy the Motorola

two-way radios that we needed for our troops and we had to turn

to the Japanese to buy them for us and to give them to us.

We wrap ourselves up into knots, and there is a cost in doing

that. I am concerned that if you don’t have that perspective and

just react to the crisis of the day or the scandal of the day, and

we just add these layers, it is really misguided oversight.

What I have highlighted in my written testimony are three areas

where I think there are sort of intractable problems, from my perspective.

The first is the Defense Contract Audit Agency, which I think

has completely lost its path. It has lost its understanding of what

Congress directed it to do, the statutes it is directed to do, and it

is focusing on areas that really just bollix up the procurement system with no good end. It is adding cost, but it is not really bringing

value to the taxpayer.

The second is the acquisition work force, which is a huge problem. In the acquisition work force, you need to have trained, motivated contracting officers in order to make the acquisition process

work. Unfortunately, we have lost that balance and lost the training. They are not motivated, and they are certainly not appreciated. And now with the Defense Contract Audit Agency, we have

them intimidating them.

And then the final area is the contracts disputes process, which

was intended by Congress, with the enactment of the Contract DisVerDate 11-MAY-2000 15:38 Jul 14, 2010 Jkt 000000 PO 00000 Frm 00106 Fmt 6633 Sfmt 6633 U:\DOCS\57126.TXT KATIE PsN: KATIE
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putes Act, to be a quick, effective way of resolving disputes; and it

has turned out not to be that at all. It is a very laborious, timeconsuming process that is not good for contractors.

Those are three areas where I think Congress could do some

good to weigh in and to try to resolve things.

Thank you for the opportunity to appear.

Ms. WATSON. Thank you.

[The prepared statement of Ms. Manos follows:]

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Ms. WATSON. Ms. Sacilotto, you may proceed.

STATEMENT OF KARA M. SACILOTTO

Ms. SACILOTTO. Thank you very much for this opportunity to

present my testimony here today.

As you mentioned Chairwoman Watson, I am an attorney in private practice, but I am also an Adjunct Professor of Government

Contracts Law at George Mason University School of Law.

My written testimony details my view, and in the interest of

keeping it short, I will try to just cover the highlights.

This morning we heard from Mr. Drabkin and from Ranking

Member Bilbray that our procurement system is already a model

for many other countries. It is an open procurement system. There

are certainly regulatory controls in place today that are effective

tools for regulating our procurement community.

So as this subcommittee continues on with its efforts to investigate ways of strengthening our procurement system, one option is

to consider whether—instead of additional regulation, whether

what we need is a renewed focus on execution of existing regulations and oversight mechanisms that are in place and whether our

existing regulatory system can respond to the policy challenges

that are being identified today.

Two that come to mind are cost reimbursement contracting and

sole source contracting that were mentioned in President Obama’s

memorandum on government contracting. Today, we have an existing regulatory scheme in place that councils when to use cost reimbursement contracts and fixed price contracts. There is a place for

both in our procurement system, and one size does not fit all.

Likewise, there are also tools in our existing Federal regulation

system for promoting full and open competition and requiring justification when full and open competition is not used, and also addressing those exigent circumstances that the President identified

in his memorandum when full and open competition might not be

what serves the interest of the government best.

So one recommendation is to focus our attention on better execution of our existing regulations, which is entirely consistent with

the testimony we heard today about increasing our acquisition

work force so that we can better apply our regulations, better define requirements, and therefore exercise oversight in that manner.

My second recommendation is simply, if additional regulation is

recommended, that we do so in a coordinated fashion so we maintain, to the extent possible and practical, uniformity in our regulatory system and not proceed down various different paths or continually, by death of a thousand cuts, add to the regulatory system.

Coordinated, regulation, uniformity are hallmarks that scholars

recognize of a strong procurement system.

Last, my final point is somewhat related to my first in that as

this committee goes through and tries to gather information about

what is effective for strengthening our procurement system, one of

the data points that will be very valuable is experience under the

recently enacted regulatory and legislative reform initiatives.

Many of those initiatives have just been passed into law. Some

of them have only recently been put into regulation; some have not

yet been put into regulation. None of them has the kind of track

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record that we can see whether or not they have been effective and

the cost and benefits have worked out positively.

So as Congress and this subcommittee thinks about ways to improve our system, it should wait and let the efforts it has already

initiated, see if they bear fruit before determining if additional regulation is required.

Thank you very much.

Ms. WATSON. Thank you.

[The prepared statement of Ms. Sacilotto follows:]

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Ms. WATSON. Ms. Madsen.

STATEMENT OF MARCIA G. MADSEN

Ms. MADSEN. Madam Chairwoman and Congressman Bilbray, I

appreciate the opportunity to be here today to update you on the

progress of implementing the recommendations of the Acquisition

Advisory Panel. It is terrific to be on this side of the effort, I might

add.

The panel’s objective, as it was described in our report, was to

provide meaningful improvements to the acquisition system that

would allow agencies to obtain the benefit of commercial practices

to better achieve their mission, and with recognition that a balance

is necessary to achieve transparency and accountability necessary

for the expenditure of public funds.

The panel’s report was focused on giving the government and its

acquisition work force improved capability to make wise decisions

about expenditure of the taxpayers’ money.

Many of the panel’s recommendations have now been adopted in

legislation and regulations, about 37, depending on how you count

the bits and pieces. And I should note that the panel attempted to

provide recommendations that could principally be implemented

through regulation, although Congress has picked up a number of

those and put them in legislation as well.

I just want to talk about a couple of key areas and maybe a couple of gaps.

The panel really put an emphasis on the importance of competition. There was some discussion earlier with Mr. Drabkin about

whether the Federal Government actually is doing less competition

than it was. I agree with him, based on the research we did, that

the percentage of competition has been relatively consistent.

However, the panel looked at what best commercial practice was

for competition and determined that the government’s competitive

practices didn’t really measure up. We didn’t have any good data

on orders under large IDIQ multiple work contracts, and about a

third of the contracts awarded of the data we did have were awarded noncompetitively. The private sector does much better, particularly in services and IT procurements than that.

We still don’t today have good data on the amount of competition

that is actually used in awarding orders under task and delivery

order contracts. That is something that needs to be corrected very

soon.

Our panel expressed very strong views on the need for greater

emphasis on requirements development and acquisition planning. I

still believe that is a gap. You see this thread in the Presidential

memorandum and in the discussion of cost reimbursement contracting about, maybe, restrictions on cost reimbursement contracting.

But in order to make the system work to reduce costs, whether

you are using cost-plus contracts or whether to make it possible to

use more fixed price contracts, the bottom of that is requirements

development; and it is what the private sector spends their money

on, and it is what the government needs to do a better job on.

We made some suggestions about putting teeth in the requirements process, and those suggestions have not been picked up yet.

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And I would be happy to talk to the committee more about them.

As I said, a number of our suggestions have been enacted, and they

are in my testimony and I won’t go through them.

Something else we proposed was much better management of

interagency contracts. Section 865 of the NDAA picks up on that.

With respect to the work force, again we recognize that there

was a significant mismatch between the demands on the work force

and the skills and competencies of the work force. I was struck—

I was looking at the same Executive order I think Ms. Manos was

looking at, the implementation of FASSA, just last week, and I was

struck by the President’s emphasis in that—President Clinton’s

emphasis in that memo of cutting 275,000 Federal jobs.

And obviously there is recovery here that needs to take place

with respect to the work force. It is not just numbers, and I won’t

go through them, but if you look in the panel’s report, one of the

things you will see—and I think this is a gap—is, we recommended

a consistent definition of the Federal work force and a consistent

measurement and also a single data base for the Federal acquisition work force, so we can tell what the Federal acquisition work

force is. There are at least three different counts that are used

today and they produce widely varying numbers.

It is not only numbers, it is a definition. It is also getting the

skills and competencies correct, as Mr. Assad testified.

I would be happy to respond regarding blended work force issues.

The panel was the first to point out some of the complications associated there.

And I would like to make one final observation to the committee.

As I said, our panel was focused on giving the government the tools

to do a better job and make wise decisions. But there appears to

have been developing in the last 2 years what may be piling on to

enact sort of the latest investigative provisions, and many of these

are overlapping. They are burdensome, and they really intrude on

the ability of the government to manage its business.

I would like to encourage the subcommittee to undertake a review of these provisions and to assess where there is duplication

and what the collective burden is that these provisions impose on

the work force. Do we really need three new whistle-blower provisions that do the same thing?

Should contractors who make a mandatory disclosure under the

mandatory disclosure also be subject to a Qui Tam suit for making

that disclosure? There is a lot of overlap here, and I think it would

be worth looking at whether you needed to check that and make

some rationalization.

Ms. WATSON. Just keep in mind this is work in progress. We

have all of your written statements, and we will look at your recommendations in a very sincere way.

[The prepared statement of Ms. Madsen follows:]

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Ms. WATSON. Mr. Amey, you may proceed.

STATEMENT OF SCOTT AMEY

Mr. AMEY. Thank you for inviting me to testify, and I hope to

meet your deadline here.

I am the general counsel of the Project on Government Oversight

[POGO]. Throughout its 28-year history, POGO has worked to remedy waste, fraud and abuse in government spending in order to

achieve a more effective, accountable, open and ethical Federal

Government. POGO has a keen interest in government contracting

matters, and I am pleased to share my abbreviated thoughts with

you this morning.

Many contracting experts and government officials have blamed

the inadequate size and training of the acquisition work force for

today’s contracting problems. The work force reductions are a

major problem, but we believe additional problems deserve equal

attention. These problems are inadequate competition, deficient accountability, lack of transparency, and risky contracting vehicles,

including some which have been mentioned today: sole source contracts, commercial item contracts, cost-reimbursement contracts,

and time-and-materials, labor-hour contracts.

I want to provide you with one example that kind of hits all four

of those subject areas. In my full testimony, I provide 22 recommendations that we think can be implemented to help improve

the contracting process, but this is a 2006 IG report from the Department of Defense on a commercial contract for noncompetitive

spare parts. It was a $860 million contract, and this is just the abbreviated results section.

The Air Force negotiating team used questionable promotional

item determination that exempted the contractor—and I won’t

name them because I don’t want to call them out on this; it is an

internal problem—but from the requirement of submitting cost or

pricing data on an $860 million commercial item contract for noncompetitive spare parts used by the Department’s weapons system.

As a result, the Air Force negotiating team classified basically all

contractors’ noncompetitive spare parts as exempt items.

It goes on to conclude that contractor refused to negotiate catalog

prices for commercial items based on price analysis of previous

cost-based prices, refused to provide DLA contracting officers with

uncertified cost or pricing data for commercial catalog items, and

terminated government access to the contractors’ cost history system.

When Ranking Member Bilbray in his opening remarks used the

term ‘‘adversarial system,’’ I think it goes past what goes on necessarily between offices within the Federal Government, but this is

also a problem with the government. The government doesn’t have

the tools necessary to get fair and reasonable prices in certain circumstances.

Thank you again for allowing me to testify. I will be more than

happy to work with the subcommittee and the full committee as we

proceed.

[The prepared statement of Mr. Amey follows:]

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Ms. WATSON. I want to thank you all of you for your testimony.

We will move to the question period.

I will start it off and then recognize our ranking member, Mr.

Bilbray.

In response to the comments offered from our first panel, are

there particular issues discussed that you believe deserve specific

emphasis or added amendments?

Let’s start with Mr. Gormley, please.

Mr. GORMLEY. In regards to resources, resources is the key here.

I listened to Dave Drabkin—and we interface with GSA through

the coalition—and they have a tremendous number of vacancies

there that for some reason the personnel process takes quite a long

time to bring folks into government.

Three weeks ago I had the opportunity to go and visit the VA Acquisition Academy up in Frederick, Maryland—the VA stood up a

VA Acquisition Academy; it is a 3-year program with about 27 interns in the program—and I thought, I think the committee would

do well by taking a trip up here. It would be a good opportunity

for you all to see some of the excitement in the acquisition field,

and the VA is a leader in that.

Mr. BOND. Yes, I wanted to draw attention to one of the subcommittee members, and that was Mr. Connolly, who brings a

unique combination of experience as a leader in both government

and at a leading contracting company. And I would hope that the

subcommittee and the committee, indeed all of Congress, would use

him as a valuable sounding board.

Second, Mr. Bilbray hit a key point that bears a lot of thought,

and that is how to attract and retain younger workers, making

sure that they have the modern tools. Government wrestled for a

long time with how to deal with e-mail, can you communicate with

people outside the government? Is it personal? Is it business? We

need the same thing for the social networking with other 2.0 technologies.

Mr. MCNERNEY. Madam Chairwoman, I was at a construction

user roundtable meeting the other day, and a lot of the big design,

engineering and procurement companies are having a lot of layoffs

these days. And the procurement guy that was there from the DOD

recruited a lot of people for his work force, for the construction

project management program. So there is some work force availability in training people transferring over to the government now.

In terms of broader issues, we think some of our contracting reforms would raise the level of competition and the type of performers coming into your construction programs, and we think ultimately that would help the agencies.

Ms. MANOS. I would like to suggest that one thing that DOD

could do a much better job of, and they mentioned, for example,

using the Defense Contract Management Agency as their cost analysis group. I think it would send a much stronger message—they

have currently gone from having a three-star flag officer or general

officer in charge of the Defense Contract Management Agency to

having a civilian; the message that sends to DOD is, we don’t care

about this, this is a backwater, it is not where we are going to put

our best and brightest people—is to restore that so it is a threeVerDate 11-MAY-2000 15:38 Jul 14, 2010 Jkt 000000 PO 00000 Frm 00149 Fmt 6633 Sfmt 6633 U:\DOCS\57126.TXT KATIE PsN: KATIE
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star or four-star billet, to show that you really do care about government contracting.

And the Defense Contract Management Agency is exactly where

we need really bright people to be working.

Ms. SACILOTTO. Two aspects of the testimony this morning struck

me: Obviously, the need to augment the acquisition work force.

Whatever tools, whatever regulations you have in place, you cannot

replace people with regulation. That is a key requirement that definitely needs emphasis.

And then the second was Mr. Drabkin and Mr. Assad both mentioned the need to adhere rigorously to requirements. Whether you

have a cost reimbursement contract or a fixed-price contract, getting the requirements development process right is critical to that.

There are efforts under way to ensure that is done, and those are

efforts that should continue.

Ms. WATSON. Thank you.

Ms. MADSEN. Two things: One, I would like to echo requirements. I think those of us who have worked in this area for a long

time realize there is a lot of talk about it, but there is a real skill

set that is involved in doing it right; and it may need some encouragement from the committee and the subcommittee and some help

to the agencies to understand that is a priority, and they need to

put resources, technical resources, at that issue.

Second, we didn’t get a chance to talk about inherently governmental. There is an effort under way, per section 321 of the 2009

NDAA in the President’s memorandum, to define what is inherently governmental. If you look at the panel’s report, we were concerned that not be a one-size-fits-all endeavor, but rather the agencies be allowed to define what is their core mission and where they

need the people, and to make reasonable discretionary choices

about where to contract and where to bring work in-house.

Thank you.

Ms. WATSON. Mr. Amey.

Mr. AMEY. I agree with my panelists.

I would also say as far as increasing competition, we should look

at debundling contracts. These multiple services and multiple

goods all compounded into one contract is problematic. That will

not only increase competition but it will also remove this layer of

subcontracting that we are seeing where we are down to three layers or four layers in the subcontracting world.

I would also like to see better tools in the acquisition work force’s

hands as far as cost or pricing data to make better pre-award and

post-award decisions and also enhancing USA spending. I know

there was some talk with Mr. Drabkin this morning about data

bases that are out there. We are starting to see Congress create

data bases, and POGO was behind one for the responsibility and

performance data base.

But we now have an excluded party’s list, we have USA spending, we need to somehow consolidate those into a one-stop shop for

Federal contracting where you can get all information for members

of the acquisition work force as well as the public.

Ms. WATSON. Thank you.

I would like to yield to our ranking member, Mr. Bilbray.

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Mr. BILBRAY. Thank you. To sort of reflect your last comment

about the bundling, the nonprofit contracts that were let in Afghanistan, we found that not only were they bundled, but then the

winner of the bid went back and negotiated with the competitors

that they had beaten for doing the subcontract work. That is something that we will have to look into.

Mr. Bond, I appreciate you identifying some of the challenges we

have. I remember getting here in 1995, and coming from local government in California—and we are both Californians; and we are

trying not to flaunt this too much, especially the state our State is

in right now—but I was just blown out that you couldn’t e-mail between congressional offices at a time when buckets of ice were

being delivered to our offices 50 years after the invention of refrigeration, and we were burning coal to generate power for this facility.

I mean, in California you go to prison for burning coal. That was

a whole culture shock.

I guess one of the things I want to get identified is some of these

challenges that we arrange in our procedures. The parts issues is

one of those things that sort of hits me.

I ran the trolley system for San Diego, and we had to negotiate

for parts with Siemens Duewag. Now, you have to go to Siemens

Duewag to get parts for Siemens Duewag, at least most of the time.

The challenge we had was, how do you competitively negotiate with

a company that has a monopoly on the parts that you need to operate.

I guess the innovative way we did in government was that we

ordered so many cars, took a look at the parts, and basically the

sale of the hardware is a loss leader and the parts department is

where these guys make their money. What we ended up doing was,

we figured out we were going to order more cars than we needed

and then asked how much assembly cost, asked them to deduct the

cost of assembly and just send us the cars unassembled.

Now that is the kind of thing you have to do when you have a

monopoly, but how often is a government bureaucracy able to do

that?

The challenge there, when we talk about things like the parts,

what kind of innovative approaches can we go to when we look at

that, or can we look at the fact when we buy the units and we go

out to a bid—and let me clarify. There was a comment about local

government doesn’t have to operate at a certain level.

All I know is, in California, we are required to take the lowest

responsible bid, and so there is a preference given to the lowest

bidder; but then you disqualify those who are not responsible bidders and then move up the chain. At least there is a process you

follow, rather than a wish list.

So as we go, these challenges, how do we integrate into our system—and I guess this is where the new young hotshots pull up IT

information to be able to look at not just the unit price, but also

the life expectancy/maintenance cost because parts are then included into that life cycle cost. Do we have the technology and do

we have the process to be able to integrate that in when a bid

comes in? Did I get too far out in left field on this one?

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Mr. GORMLEY. Basically what you are approaching on that question is life cycle cost. And as one of the panel members earlier commented, there is an art to this. Regardless of the age of the contracting officer, someone does need time to understand the government’s needs, what the life cycle is and needs to understand the

industry they are buying from.

So it is not point, click, and buy here. I think the need to have

a growing work force and for Congress to continue to support the

acquisition community, such as today’s fantastic hearing—the government needs this kind of oversight and action to come out of this

committee.

On the other hand, the government has barriers up in OPM to

bring these people in. Your point is life cycle costing. The government back in the 1980’s was very high on life cycle costing and, in

some cases, has gotten away from it, to your point.

Mr. BOND. I think implicit in your question, too, is whether or

not we have the ability to tap all of these different data bases and

pull them together in an intelligent way so you can make a decision.

The answer to that is, yes, with a caveat. The Federal Government is the largest enterprise that we know of in terms of business

function, larger than any private company. And so the task would

be vast if you were going to try to encompass the entire Federal

Government and every aspect of it.

But pulling multiple data bases together into what is usually

called a business intelligence module at the top, so you can see

what is going on and compare roll-up costs and so forth, that is

done in private and public sector settings today.

Mr. BILBRAY. I guess I shouldn’t say this, but the fact is, one of

the big determining factors of the success of Toyota was—has been,

at least—the perception that the life cycle cost of owning this vehicle is much lower than vehicles that people have been familiar

with, basically much lower cost, much longer life span and everything else. So the initial cost was not the issue that we had before.

It used to be that imports were cheaper to buy up front, but not

overall. And what happened was, Toyota totally destroyed that perception, and all of a sudden it became the deal that here is the car

you buy and you drive it until you are a grandma and pass it on

to your grandchildren. That may not be the reality, but it is the

perception that has driven the success of the Toyota model.

And that is one of those formulas that consumers make all the

time, but does the bureaucracy have the ability to do that? And do

be have the incentive to do it? That is always the tough part when

we talk about the comparison between the private sector and its inherent efficiency as opposed to the public sector, is that vested interest in the decisionmaking.

Mr. BOND. If I might, so Toyota in that case has created real

value; and in the government contracting setting, I think the fact

that you can look for the best value is somewhat corresponding to

that concern.

You talked about whether or not we have the incentive, and I

think there the subcommittee might think about some creative approaches, and we would love to engage with staff and Members on

that.

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But one disincentive that you have right now is kind of the useit-or-lose-it spending pattern with the annual appropriations and so

forth. There is no real incentive to save some money on a really

high value so you might then use that for something else. It may

be a cross-cutting initiative. For instance, one idea we suggested is,

if you saved some money on something because you went the extra

mile and got the best value, you can use that saved money. It

doesn’t die, you can use it on cross-cutting Federal agency initiatives; or perhaps it could go into extraordinary compensation for

really good contracting officers.

A really good contracting officer in the private sector, if they executed a multibillion dollar successful contract would get a much

larger bonus than anybody in the public sector would realize.

Mr. BILBRAY. It is funny you say that, Mr. Bond. My father

passed away when I was a sophomore in high school. He was a

lifer, Mustang, in the Navy, and he always said communism would

never work, eventually it would fail; but his explanation was, because countries don’t have fantails to throw the hams overboard as

you come into port. And that is based on the old concept that if it

was in your inventory when you got into port, you didn’t get that

the next time out.

I guess what you really hit on there, that is inherently a challenge we have in the public sector that we have to figure out how

to address. I appreciate that. I think that is one of those things

that we need to go back and review.

I yield back.

Ms. WATSON. Because of time, I want to thank all of the witnesses. We have your statements, but we are going to mail out to

you a series of questions, and we will try to categorize them with

your background and experience in mind. We would appreciate the

answers back, if you can, within 10 days.

We will be suggesting to the full committee certain policy

changes, and I think the kind of testimony that you have offered

today will be very, very helpful.

So if you will answer, we have a series of questions that would

keep us here until 3 p.m., but we can’t do that. I would appreciate

you responding to us within 10 days of receipt of the questions.

Thank you very much. This panel is relieved, and the meeting

is adjourned.

[Whereupon, at 11:17 a.m., the subcommittee was adjourned.]

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