[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]




 
  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



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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                   EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania      DARRELL E. ISSA, California
CAROLYN B. MALONEY, New York         DAN BURTON, Indiana
ELIJAH E. CUMMINGS, Maryland         JOHN M. McHUGH, New York
DENNIS J. KUCINICH, Ohio             JOHN L. MICA, Florida
JOHN F. TIERNEY, Massachusetts       MARK E. SOUDER, Indiana
WM. LACY CLAY, Missouri              TODD RUSSELL PLATTS, Pennsylvania
DIANE E. WATSON, California          JOHN J. DUNCAN, Jr., Tennessee
STEPHEN F. LYNCH, Massachusetts      MICHAEL R. TURNER, Ohio
JIM COOPER, Tennessee                LYNN A. WESTMORELAND, Georgia
GERALD E. CONNOLLY, Virginia         PATRICK T. McHENRY, North Carolina
MIKE QUIGLEY, Illinois               BRIAN P. BILBRAY, California
MARCY KAPTUR, Ohio                   JIM JORDAN, Ohio
ELEANOR HOLMES NORTON, District of   JEFF FLAKE, Arizona
    Columbia                         JEFF FORTENBERRY, Nebraska
PATRICK J. KENNEDY, Rhode Island     JASON CHAFFETZ, Utah
DANNY K. DAVIS, Illinois             AARON SCHOCK, 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
------ ------

                      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      BRIAN P. BILBRAY, California
JIM COOPER, Tennessee                AARON SCHOCK, Illinois
GERALD E. CONNOLLY, Virginia         JOHN J. DUNCAN, Jr., Tennessee
HENRY CUELLAR, Texas                 JEFF FLAKE, Arizona
JACKIE SPEIER, California            ------ ------
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut


                            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


  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 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 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.
    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:]

    [GRAPHIC] [TIFF OMITTED] T7126.001
    
    [GRAPHIC] [TIFF OMITTED] T7126.002
    
    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:]

[GRAPHIC] [TIFF OMITTED] T7126.003

[GRAPHIC] [TIFF OMITTED] T7126.004

[GRAPHIC] [TIFF OMITTED] T7126.005

    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?
    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:]
    [GRAPHIC] [TIFF OMITTED] T7126.006
    
    [GRAPHIC] [TIFF OMITTED] T7126.007
    
    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 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 continues to provide a framework for 
improvement and to inform ongoing initiatives related to 
commercial practices, performance-based 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 acquisition 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 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? 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 Sarbanes-Oxley, 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, 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 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.
    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.
    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-to-day 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 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 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 well-trained, 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 1\1/2\ 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 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 
billion 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 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 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 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.
    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 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, 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 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 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 Disputes 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, time-consuming 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 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. 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 three-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.
    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?
    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.
    But one disincentive that you have right now is kind of the 
use-it-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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