Highlights of a GAO Forum: Federal Acquisition Challenges and	 
Opportunities in the 21st Century (06-OCT-06, GAO-07-45SP).	 
                                                                 
Acquisition of products and services from contractors consumes	 
about a quarter of discretionary spending governmentwide and is a
key function in many federal agencies. In fiscal year 2005 alone,
federal government contracting involved over $388 billion. The	 
work of the government is increasingly being performed by	 
contractors, including in emergency and large-scale logistics	 
operations such as hurricane response and recovery and the war in
Iraq. Many agencies rely extensively on contractors to carry out 
their basic missions. The magnitude of the government's spending 
and dependence on contractors make it imperative that this	 
function be performed as efficiently and effectively as possible.
Yet, acquisition issues are heavily represented on GAO's list of 
government high-risk areas. In the 21st century, the government  
needs to reexamine and evaluate its strategic and tactical	 
approaches to acquisition. To identify and discuss the key issues
confronting the federal acquisition community, the Comptroller	 
General hosted a forum in July 2006 that brought together	 
acquisition experts from inside and outside the government.	 
Participants shared their insights on challenges and		 
opportunities for improving federal acquisition in an environment
of increasing reliance on contractors and severe fiscal 	 
constraint.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-45SP					        
    ACCNO:   A61927						        
  TITLE:     Highlights of a GAO Forum: Federal Acquisition Challenges
and Opportunities in the 21st Century				 
     DATE:   10/06/2006 
  SUBJECT:   Accountability					 
	     Federal procurement				 
	     Federal procurement policy 			 
	     Procurement planning				 
	     Procurement practices				 
	     Risk management					 
	     Strategic planning 				 

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GAO-07-45SP

     

     * Introduction from the Comptroller General of the United Stat
     * Background
     * Determining Who Should Perform the Business of Government in
     * Ensuring the Federal Workforce Has the Capacity and Capabili
          * Addressing Acquisition Workforce Capacity
          * Recruiting and Retaining New Talent
     * Managing for Results and Accountability in a Contractor-Depe
          * Up-front Planning of Requirements
          * Coping with Inefficient Governmental Processes
     * Identifying Best Practices and Innovative Approaches
     * Creating a Culture for Sharing Knowledge and Improving Feder
          * Moderator
          * Participants
     * Challenges
     * Opportunities
     * GAO's Mission
     * Obtaining Copies of GAO Reports and Testimony
          * Order by Mail or Phone
     * To Report Fraud, Waste, and Abuse in Federal Programs
     * Congressional Relations
     * Public Affairs

Special Publication

United States Government Accountability Office

GAO

October 2006

HIGHLIGHTS OF A GAO FORUM

Federal Acquisition Challenges and Opportunities in the 21st Century

GAO-07-45SP

Contents

Letter 1

Introduction from the Comptroller General of the United States 1
Background 4
Section 1 Key Acquisition Challenges Facing Government as Reliance on
Contractors Increases 8
Determining Who Should Perform the Business of Government in a Constantly
Changing Environment 8
Ensuring the Federal Workforce Has the Capacity and Capability to Manage
Contracts Effectively 10
Managing for Results and Accountability in a Contractor-Dependent
Environment 15
Section 2 Opportunities for Improving Federal Acquisition in the 21st
Century 19
Identifying Best Practices and Innovative Approaches 19
Creating a Culture for Sharing Knowledge and Improving Federal Acquisition
23
Appendix I Forum Participants 25
Appendix II Forum Agenda 27
Appendix III Questions Provided in Advance to Forum Participants 28
Related GAO Products 31

Figure

Figure 1: Federal Acquisition Spending and Workforce Trends, 2000-2004 5

Abbreviations

COR contracting officer representative DAU Defense Acquisition University
DLA Defense Logistics Agency DOD Department of Defense DHS Department of
Homeland Security FAIR Federal Activities Inventory Reform GSA General
Services Administration LOGCAP Logistics Civil Augmentation Program MSPB
Merit Systems Protection Board NASA National Aeronautics and Space
Administration OFPP Office of Federal Procurement Policy OMB Office of
Management and Budget

This is a work of the U.S. government and is not subject to copyright
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separately.

United States Government Accountability Office

Washington, DC 20548

         Introduction from the Comptroller General of the United States

Near-term and long-term deficits strain federal agencies' resources
because of current deficits and the nation's large and growing fiscal
imbalance. Addressing this imbalance constitutes a major transformational
challenge in the 21st century. Yet, in many cases, the government is still
conducting business in ways that are based on conditions and priorities
that existed decades ago, using approaches that are not well suited to
addressing the challenges of our time. To address these 21st century
challenges, a fundamental reexamination, reprioritization, and
reengineering of the base of federal spending and tax programs is
needed-covering discretionary and mandatory programs as well as the
revenue side of the budget. Near-term and long-term deficits strain
federal agencies' resources because of current deficits and the nation's
large and growing fiscal imbalance. Addressing this imbalance constitutes
a major transformational challenge in the 21st century. Yet, in many
cases, the government is still conducting business in ways that are based
on conditions and priorities that existed decades ago, using approaches
that are not well suited to addressing the challenges of our time. To
address these 21st century challenges, a fundamental reexamination,
reprioritization, and reengineering of the base of federal spending and
tax programs is needed-covering discretionary and mandatory programs as
well as the revenue side of the budget.

Part of this reexamination includes a focus on various cross-cutting
issues of governance, such as the federal government's approach to
acquiring the goods and services necessary to implement agency missions.
Acquisition of goods and services from contractors consumes over
one-fourth of discretionary spending governmentwide and is a key function
in many federal agencies. In 2005, federal agencies spent over $388
billion on such contracts. The work of the government is increasingly
being performed by contractors, including in emergency and large-scale
recovery and logistics operations such as the Katrina disaster and the war
in Iraq. Many agencies, including the Department of Energy, the Centers
for Medicare and Medicaid Services, and the National Aeronautics and Space
Administration (NASA), rely extensively on contractors to carry out their
basic missions. In any consideration of how to improve the government's
approach to acquisition, attention should be given to what is working,
what is not working, and the causes for either outcome. Part of this
reexamination includes a focus on various cross-cutting issues of
governance, such as the federal government's approach to acquiring the
goods and services necessary to implement agency missions. Acquisition of
goods and services from contractors consumes over one-fourth of
discretionary spending governmentwide and is a key function in many
federal agencies. In 2005, federal agencies spent over $388 billion on
such contracts. The work of the government is increasingly being performed
by contractors, including in emergency and large-scale recovery and
logistics operations such as the Katrina disaster and the war in Iraq.
Many agencies, including the Department of Energy, the Centers for
Medicare and Medicaid Services, and the National Aeronautics and Space
Administration (NASA), rely extensively on contractors to carry out their
basic missions. In any consideration of how to improve the government's
approach to acquisition, attention should be given to what is working,
what is not working, and the causes for either outcome.

To retain public confidence in the government's stewardship over taxpayer
dollars, federal managers need to strengthen their ability to obtain
reasonable prices, monitor contractors, and ensure high-quality
performance and the timely delivery of goods and services. Federal
managers must also strike the right balance between developing
collaborative relationships and avoiding conflicts of interest. Further,
government agencies can benefit from transforming and finding new ways of
doing business that minimize acquisition costs while maintaining and even
improving mission results through the performance of contractors. New
models and processes may be needed to continuously examine what work
should be conducted by contractors and what work should be retained within
the federal government. To retain public confidence in the government's
stewardship over taxpayer dollars, federal managers need to strengthen
their ability to obtain reasonable prices, monitor contractors, and ensure
high-quality performance and the timely delivery of goods and services.
Federal managers must also strike the right balance between developing
collaborative relationships and avoiding conflicts of interest. Further,
government agencies can benefit from transforming and finding new ways of
doing business that minimize acquisition costs while maintaining and even
improving mission results through the performance of contractors. New
models and processes may be needed to continuously examine what work
should be conducted by contractors and what work should be retained within
the federal government.

Recognizing that decision makers can benefit from a better understanding
of the challenges and opportunities confronting the federal acquisition
community, GAO convened a forum on July 18, 2006. The forum provided a
venue for bringing together knowledgeable and recognized government
management and acquisition experts from the private and public sectors and
academia to share insights on the critical challenges and opportunities
for improving government performance in an environment of increasing
reliance on contractors and severe fiscal constraint. Participants
included current and former government executives and acquisition leaders,
procurement law and public administration experts, and government
contractor representatives and consultants from industry. (See app. I for
a list of forum participants and app. II for the forum's agenda.)

Our approach was to engage in a rich and substantive discussion, on a
nonattribution basis, to obtain a range of views on key issues in federal
acquisition today. (See app. III for the list of questions provided in
advance to forum participants to help provoke thought on issues to bring
forward for discussion.) The forum neither sought nor achieved consensus
on the issues discussed.

This report highlights the discussion among forum participants, as well as
their subsequent comments on a draft of this report. The highlights
summarized in this report do not necessarily represent the views of any
individual participant or the organizations that these participants
represent, including GAO. The report leads with a brief background on the
information presented by GAO to initiate the forum. Section 1 summarizes
the discussion on the key challenges the government must address in order
to operate effectively within an environment of extensive and increasing
reliance on contractors. Section 2 highlights opportunities for improving
federal acquisition in the 21st century through more strategic,
results-oriented, world-class, and ethical business processes and
capabilities.

I would like to thank all of the participants for taking the time to share
their knowledge, insights, and perspectives. We will use the knowledge
gained from the forum in our work for Congress and the country. I look
forward to working with the forum's participants on federal acquisition
and other important issues of mutual interest and concern in the future.
For more information about this report, please contact Katherine Schinasi,
Managing Director, Acquisition and Sourcing Management, at 202-512-4841 or
[email protected] . Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this report.
This report was prepared under the direction of Bill Woods, Director,
Acquisition and Sourcing Management. GAO staff who made key contributions
to organizing the forum and to this report were Carolyn Kirby, Assistant
Director; Matthew Ebert; Rosa Johnson; and Bob Swierczek.

David M. Walker Comptroller General of the United States

October 6, 2006

                                   Background

Comptroller General Walker provided opening comments that focused on the
current fiscal and federal acquisition environments and the reasons for
convening the forum. In essence, the impetus for GAO holding this forum is
that the federal government cannot continue its current way of conducting
business. The federal government finds itself on a burning platform for a
variety of reasons, including

           o  a large and persistent budget deficit making ever scarcer the
           dollars available for discretionary spending;
           o  rising public expectations for government results and enhanced
           responsiveness;
           o  contentious, complex, and rapidly evolving national problems,
           such as the global war on terrorism, homeland security, and a
           myriad of domestic issues; and
           o  a number of high-risk management areas in the government that
           have been present for many years.

These realities make a clear case for change. Accordingly, the federal
government has a responsibility to reexamine its current policies and
practices and then to develop and implement innovative approaches to
conducting the business of government.1 One area that is in need of
reexamination is federal acquisition.

In responding to national events following the September 11, 2001,
terrorist attacks on the United States, there is no doubt that the impact
on the federal acquisition community has been significant and the
government's response has been to rely on more contractors for support and
solutions. Since 2001, federal acquisition spending has increased over 65
percent to $388 billion in fiscal year 2005. As illustrated in figure 1,
as federal procurement spending generally, and spending on services in
particular, has increased, the acquisition workforce remained at
essentially the same level. Many have raised concerns that the increased
workload has stretched this workforce to its limit.

1 These issues are highlighted in greater detail in GAO, 21st Century
Challenges: Reexamining the Base of the Federal Government, GAO-05-325SP
(Washington, D.C.: Feb. 16, 2005).

Figure 1: Federal Acquisition Spending and Workforce Trends, 2000-2004

There continue to be a number of other challenges associated with today's
federal acquisition environment. One key challenge is generating positive
acquisition results on time and within budget, a responsibility shared by
contractors and agencies. Another is for agency leaders and decision
makers to exercise greater fiscal discipline by distinguishing between
what all too often seems to be desired wants instead of true
mission-critical needs. There is the growing complexity of contracting for
technically complex and sophisticated services, which presents even
greater challenges in terms of setting appropriate requirements and
effectively monitoring contractor performance.

In an attempt to improve federal acquisition, Congress has enacted a
series of legislative reforms over the last decade, ranging from the
Federal Acquisition Streamlining Act of 19942 to the Services Acquisition
Reform Act of 2003.3 While these acts were intended to streamline,
simplify, and expedite acquisition processes; achieve economies and
efficiencies; and leverage the government's buying power, there clearly
remains room for further improvement, as demonstrated by many of the GAO
high risk designations.

GAO's list of government high-risk areas includes contract management at
the departments of Defense and Energy and at NASA, meaning that hundreds
of billions of taxpayer dollars are vulnerable to waste and misuse. 4 For
the Department of Defense (DOD) and other major federal agencies,
significant investments in contractor-reliant operations are also at high
risk, ranging from information system modernization projects to Medicare
and Medicaid administration to housing assistance programs. GAO has also
identified interagency contracting as posing several risks because of the
rapid growth of dollars involved combined with the limited expertise at
some of the agencies using these contracts and recent problems related to
their management.

2 Pub. L. No. 103-355 (1994). The Federal Acquisition Streamlining Act of
1994 authorized, among other things, federal agencies to enter into
multiple award, task- and delivery-order contracts for services and
products. These contracts provide agencies with a great deal of
flexibility in buying goods or services while minimizing the burden on
government contracting personnel to negotiate and administer contracts.

3 Pub. L. No. 108-136, Title XIV (2003). The Services Acquisition Reform
Act of 2003 provides agencies an array of tools to improve the acquisition
of services in four major areas-acquisition workforce and training,
business acquisition practices, commercial item acquisitions, and other
procurement flexibilities.

4 GAO, High-Risk Series: An Update, GAO-05-207 (Washington, D.C.: Jan.
2005).

To reduce risk, the federal government needs to meet long-range challenges
by not assuming that any entitlement, other mandatory spending,
discretionary spending, or tax policy is off-limits. In the area of
acquisition, improvements can be achieved through identifying, sharing,
and implementing best practices. This will not only save money, but
increase the competence of the government and the likelihood that agencies
will achieve their mission goals and objectives. Further, it will improve
service to the American public and will strengthen public confidence and
trust in the performance and accountability of our national government.

Section 1: Key Acquisition Challenges Facing Government
as Reliance on Contractors Increases

Forum participants offered a range of insights, views, examples, and
concerns that framed three broad challenges. These were (1) determining
who should perform the business of government in a constantly changing
environment, (2) ensuring the federal workforce has the capacity and
capability to manage contractors effectively, and (3) managing for results
and accountability in a contractor-dependent environment. Highlights of
this session's discussion are summarized below.

Determining Who Should Perform the Business of Government in a Constantly
                              Changing Environment

In addressing who should do the government's business in a constantly
changing environment, participants engaged in a wide-ranging discussion of
the challenges associated with determining the appropriate role of
contractors and identifying functions that should or should not be
contracted out. They also debated the value and limitations of the formal
competitive sourcing process. Others contrasted the high-level attention
given and rigorous approach taken in private sector organizations to
identify their core versus noncore functions.

Several participants felt the federal government is on the wrong track in
maintaining a prescriptive list for guiding sourcing decisions, arguing,
for example, that the entire process is flawed in defining what federal
functions are inherently governmental and must never be contracted out.5
Developing a list of such functions is problematic, they said, because any
definition of functions will change as technology and the marketplace
evolve, every job description becomes a source of concern, and the
situation leads to confusion about roles and responsibilities between the
contractors and the government. Agencies should instead focus on
determining the right mix of government-performed and contractor-performed
work in particular settings, said another participant.

Some participants pointed out, however, that classifying federal jobs as
either inherently governmental or commercial activities is not a bad idea.
Every year agencies must review and classify their positions as part of
their Federal Activities Inventory Reform Act of 1998 (FAIR Act)
inventories, a practice they said offers sufficient flexibility.6 At the
agency level, developing lists of inherently governmental and commercial
jobs forces agencies to think more strategically about contracting out
their work, said another. In developing the lists, it might be easier and
more appropriate for agencies to determine what should not be contracted
out and develop guiding principles or values to determine which positions
could be contracted out, another participant observed.

5 Since 1955, the executive branch has encouraged federal agencies to
obtain commercially available services from the private sector when the
agency determines that it is cost-effective. In 1966, the Bureau of the
Budget formalized this administrative policy in its Circular A-76.
Additionally, the Office of Management and Budget (OMB) requires agencies
to identify activities that are inherently governmental, as well as
commercial positions that are exempt from A-76 competitive sourcing
processes because of legislative prohibitions, agency restructuring, or
other reasons.

A divide existed among participants over the value and limitations of
competitive sourcing under Circular A-76 processes. On the one hand, some
participants claimed federal competitive sourcing practices have a
positive impact on government, because in most cases the process makes
government employees think about ways to do business more efficiently. For
example, one participant cited an example in which agency employees
attempted to improve the quality of their work at lower costs, but
management ignored them until the competitive sourcing process forced
management to think more strategically about reorganizing for greater
efficiency.

On the other hand, one participant cited inherent difficulties in
competitive sourcing practices. The participant pointed out that many
government blue collar jobs could be done by contractors, but federal
employee unions have prevented the jobs from being contracted out because
of concerns about the economic impact on their members. In contrast, for
many white collar professional and managerial jobs that are not likely
candidates for outsourcing, the government often is forced to contract out
for those services because it may not offer competitive salaries.

Other participants noted that the extent of contracting out of government
services because of competitive sourcing may be exaggerated. One
participated noted that the A-76 program is intended to make the
government more effective, not downsize the government workforce or steer
business toward the private sector. "Half of the government workforce is
performing work determined to be inherently governmental and another
fourth is performing commercial work that will not be outsourced for
policy reasons. Thus, three-fourths of the workforce is not competed," the
participant said. "That is the very reason the outsourcing issue should
not get so much attention," argued another participant, explaining that
"the debate over A-76 and competitive sourcing is a huge distraction in
tackling federal acquisition challenges and is irrelevant at the macro
level across agencies. Competitive sourcing represents less than 2 percent
of service contracting governmentwide in terms of numbers of sourcing
decisions and contract dollar value." One participant commented that the
massive growth of service contracts over the last decade has come from new
agency requirements, not from competitive sourcing under the A-76 program.
He added that the government would be better off figuring out how to
manage those contracts instead of the A-76 program.

6 As required by the FAIR Act, Pub. L. No. 105-270 (1998), agencies
develop inventories of their commercial activities. Only activities
classified as commercial and not otherwise exempt are potentially subject
to competition under Circular A-76 processes.

Finally, participants pointed to private sector outsourcing efforts as a
model for changing the federal approach. Many corporate organizations
carefully deliberate up-front and at the highest levels of management
about what core functions they need to retain and noncore functions they
should buy and the skill sets needed to process the acquisition of such
noncore functions, said participants. Some participants indicated that
while the government is unlikely to be able to follow the private sector's
processes completely, there are aspects it should adopt, such as up-front
identification of requirements, determining needed residual skill sets,
and ensuring oversight of performance under the contract once it is put in
place.

    Ensuring the Federal Workforce Has the Capacity and Capability to Manage
                             Contracts Effectively

Ensuring the federal workforce has the capacity and capability to manage
contractor-reliant operations effectively is a critical challenge,
according to participants. Agency leaders have not recognized or elevated
the importance of the acquisition profession within their organizations,
and a strategic approach has not been taken across government or within
agencies to focus on workforce challenges, such as creating a positive
image essential to successfully recruit and retain a new generation of
talented acquisition professionals.

Addressing Acquisition Workforce Capacity

Many participants noted that to assess the appropriate size and skill sets
needed, one needs to have a working knowledge of the government's current
acquisition workforce. Agency managers do not clearly understand what
constitutes the acquisition workforce, a fact that itself presents a major
human capital challenge for the agencies and policy makers. One
participant said that the government should define the acquisition
workforce as including any managers and employees involved in the
acquisition process, such as a contracting officer representative (COR),7
program manager, legal adviser, or contracting officer. Another
participant agreed and stated that often CORs are not included in the
definition of acquisition workforce and contended that the profile of this
position needs to be elevated. It will be hard to change how people think
about what constitutes the acquisition workforce, the participant
acknowledged.

One participant-citing a recent Inspector General report that highlighted
the two competing methodologies used for counting the acquisition
workforce-contended that it was a counting problem.8 According to the
participant, empirical studies about organizations' procurement functions
have found a direct correlation between the number of staff assigned to
that function and its effectiveness. Further, many agency procurement
staff have been given waivers to the various qualification requirements
contained in the Clinger-Cohen Act of 1996 and the Defense Acquisition
Workforce Improvement Act; thus the government needs data about the
quantity and validity of waivers granted.9 One participant also commented
that the plethora of qualification waivers such as granted under the
Clinger-Cohen Act of 1996 is particularly troubling given the extent to
which the procurement function has evolved from the administrative support
role of the past to today's valuable business adviser role.

While there was not agreement on the appropriate size of the acquisition
workforce, it was evident that participants agreed that employees who are
more skilled need to be added to the acquisition workforce. Several
highlighted the need for more skilled acquisition employees because of the
new environment in which there is a heavy reliance on contractors to
perform functions previously performed by the government. Several
participants highlighted that the size and skill sets of the acquisition
workforce should be derived agency by agency and done so comprehensively.
For example, one participant said it does not matter how many people are
performing a function until the government defines the roles and
responsibilities associated with that agency's mission and respective
acquisition workforce. The participant continued by saying, "You can have
two times or five times the number of people, but if you have not defined
what they are supposed to do, then size alone does not get it done.
Clarity of purpose is key." Another participant said the size of the
workforce needed depends on the nature of the work, processes, and
technical ability.

7 CORs are the individuals from program and mission offices appointed to
provide the technical expertise necessary to convey the requirements of
the government, oversee the work of the contractor, and ensure that
deliverables meet requirements. The U.S. Merit Systems Protection Board
(MSPB) recently reported findings and recommendations based on a survey of
CORs from several agencies. See MSPB, Contracting Officer Representatives:
Managing the Government's Technical Experts to Achieve Positive Contract
Outcomes (Washington, D.C.: December 2005).

8 Office of the Inspector General, DOD, Human Capital: Report on the DOD
Acquisition Workforce Count, D-2006-073 (Washington, D.C: April 17, 2006).

9 The Clinger-Cohen Act of 1996, Pub. L. No. 104-106, Divs. D & E (1996),
and the Defense Acquisition Workforce Improvement Act, Pub. L. No.
101-510, Title XII (1990), among other things, provided specific guidance
and requirements to civilian agencies and DOD to establish acquisition
workforce requirements.

One participant stated that government agencies need to determine whether
their acquisition workforce will use a transactional or strategic
approach. There may be instances where both approaches are helpful to an
agency, but essentially the two approaches to acquisition management
demand different skills. The participant said that agencies need to
determine whether to manage acquisition either as a strategic supply
management function or as a transactional, tactical, administrative
support function, and then shape staffing and salary requirements
accordingly.

One participant noted that when the United States Postal Service decided
to adopt commercial best practices for a strategic, enterprise supply
management approach, it completely overhauled and upgraded the skill sets
in its acquisition workforce. The participant said to upgrade the
workforce, the Postal Service surveyed the workforce's existing skills,
benchmarked them against the private sector, and conducted a competency
assessment. The supply management organization then went through a
difficult reduction in force, followed by an intense effort to hire new
talent under dramatically revamped competencies and skill sets. According
to the participant, today's Postal Service acquisition workforce feels
highly valued and rewarded in terms of making a difference in the
organization.

Other participants echoed that different skill sets are needed in today's
new acquisition environment, many participants stressed, although those
will vary from workforce to workforce. One might consider, for example, a
workforce that focuses on acquiring complex services such as information
technology and telecommunications, contrasted with another that focuses on
the challenging and highly specialized acquisition of weapon systems.
Another participant stated that the workforce should not focus solely on
acquisition or contracting expertise, but on programmatic experience and
expertise to help make better acquisition decisions. Finally, one
participant questioned whether the Office of Management and Budget's (OMB)
Office of Federal Procurement Policy (OFPP), the organization responsible
for implementation of key acquisition reforms, has enough staff to
accomplish its tall order of leading change in this area.10

Recruiting and Retaining New Talent

Many participants emphasized the importance of recruiting skilled
acquisition workers and the associated challenges in today's environment.
The federal government's negative image was identified as a major cause of
recruitment distress, derived from unclear terminology in job
descriptions, the lack of value placed on the acquisition workforce by
agency leadership, and the negative reports in the press.

One participant highlighted bureaucracy as creating a key image problem
for federal efforts to recruit skilled young acquisition workers. Citing
results from a recent survey of college students by the Partnership for
Public Service,11 the notion that there is too much bureaucracy hampering
employees working in the government is the number one reason young people
do not seek federal jobs. "We're not emphasizing that work in government
offers many management tracks as well as many career paths that involve
technically skilled and focused jobs," said the participant.

Another participant stated that the government advertises jobs using
descriptors such as "procurement"-when young prospective hires have no
idea what "procurement" means-rather than using more understandable
terminology such as "purchasing." Another participant echoed these
remarks, saying that the difference of terminology between the private
sector and the government sector is dampening interest of college
graduates in government careers. "Until the government changes its
terminology, it will have difficulties recruiting personnel for
acquisition functions," said the participant. Further, terms such as
"acquisition," "contracting," and "procurement" are misnomers for what the
government is actually doing. Such terms have typically been interpreted
by recruits as low-level functions for buying supplies, goods, and
equipment rather than as higher-level management positions to engage
service providers.

10 One participant pointed out that the congressionally authorized
Acquisition Advisory Panel has reviewed qualitative and quantitative
issues regarding the federal acquisition workforce. On its Web site at
http://acquisition.gov/comp/aap/prd.html , the panel has published
findings and provisional recommendations addressing many of the workforce
capacity and capability issues raised by the GAO forum participants.

11 Partnership for Public Service, Back to School: Rethinking Federal
Recruitment on College Campuses, PPS-06-01 (Washington, D.C.: May 2006).

Another participant highlighted the need for the federal government to
raise the profile, importance, and skills involved in the hiring and
assignment of CORs responsible for providing technical expertise and
oversight of contractors. Many of the people serving as CORs were hired by
the government as scientists, logisticians and engineers, but are now
being asked to manage contractors, explained the participant. Too often
CORs do not see this role and responsibility as the job they were hired to
do, instead viewing it as a collateral duty or even worse. "It is not as
valued inside their organizations, and thus not seen as a desirable role
for federal managers to take on. Government has not put a premium on this
job," stressed the participant.

Other participants agreed that procurement officials have a different
image in the federal government versus the private sector. According to
one participant, in the past, many jobs at companies involved in
purchasing and procurement were not seen as being for important or
high-valued employees but rather for lower-level administrative and back
office support personnel. Unlike the government, however, many companies
have recognized the bottom-line importance of the acquisition function,
essentially transforming and adopting a supply management focus and
putting in those positions top managers and highly paid professional
staff. The private sector treats procurement of services as essential to
company success, and thus considers those responsible for that procurement
as occupying very strategic, high-value positions in the company.

Harshly critical oversight and bad press have also had an undesirable
effect, said many participants. One asked why a young person would go into
contracting, given how the government's contracting function is portrayed
in the press. The participant said that publicity, created in part by the
"gotcha" approach of some in the auditing community, turns off potential
new hires and hurts the existing workforce, causing federal employee
attrition. It would help if the inspectors generals and the auditors toned
down their criticism of federal contracting employees, said the
participant. Another participant said that auditors exacerbate the problem
with their reporting of past problems. "There needs to be a more balanced
approach to show where the acquisition community performs well," the
participant said, "with positive recognition of federal acquisition
management to encourage high-quality people to apply and stay at work in
the federal government." "While the federal government can't compete in
hiring with the private sector based on salary, it can compete well based
on offering a public service career that makes a difference," said another
participant.

Retention is as important as recruiting, said a participant, and must
involve well-thought-out career paths. While some new hires are looking
for short-term gains and quick advancement, incentives in the government
tend to be based on long-term results. In comparison to those in the
private sector, government program managers in long-term programs
typically rotate every 2 years and frequently do not have time to develop
expertise before the end of the tour. The participant suggested that the
government develop a new cadre of experienced people who are motivated to
have long careers in the federal government.

Several participants mentioned that the way to retain staff is to provide
a market-based compensation plan for acquisition workers, recognizing that
in the long run, the government may need fewer people, but people with
market-based knowledge, skills, and salaries. To motivate employees in a
performance management system, the government needs to figure out how to
become more skills-oriented and competitive in compensation, said another
participant. "To be sure, there are challenges associated with developing
such a system," one participant noted. "Unfortunately, there are no
current benchmarks-baseline data-on job responsibility and pay scales
across the government to support well-supported judgments on how to revamp
pay or position descriptions in the acquisition workforce," said the
participant, who also warned against too heavily focusing on incentives
for employees. Monetary incentives for government employees quickly become
regarded as entitlements by the workforce, whether or not they are earned.

 Managing for Results and Accountability in a Contractor-Dependent Environment

Increasing reliance on contractors to conduct the business of government
involves many challenges for the government. These include the early
identification of realistic requirements and desired outcomes,
accountability for achieving results while contending with the sometimes
burdensome governmental acquisition processes, persistent budget
pressures, and the recognition that contractor accountability in large
part depends on clear direction set by government.

Up-front Planning of Requirements

Many participants said strategic planning for contracting outcomes and
measurable results was a critical element in managing a multisector
workforce of government employees and contractors. "In the absence of such
a focus," said one participant, "there is not enough clarity for the
government employees and contractors about what the government is trying
to achieve." "Federal employees are unable to articulate what they are
accountable for achieving because their evaluations are not tied to
achievements," the participant added. Further, the participant stated that
when OMB began evaluating the performance of federal programs in 2001, it
found that the agencies could not explain what half of the programs were
intended to achieve.12 Another agreed, stressing that the government as a
whole lacks outcome-based indicators of performance and focuses on process
and spending and not on desired outcomes. "Following processes by dotting
the i's and crossing the t's to avoid risk does not guarantee that the
desired result will be achieved," said the participant.

The early identification of requirements for an acquisition was
highlighted by many participants as another challenge facing the
government. One participant said that clarity of purpose is never obtained
when the government acquires a product or service and does not adequately
define up-front what it wants. According to another participant, there is
a fundamental mismatch among government wants, needs, affordability, and
sustainability. Further, if requirements keep changing throughout the life
of an acquisition, huge problems persist. Another participant agreed and
stated that with enough time and money, the government can do anything,
but that does not mean it should. Metrics and milestones are critical for
establishing a disciplined approach to acquisition, said a participant.

In addition, many participants felt that before contractors can be held
accountable for delivering results, federal managers must be accountable
and transparent in the acquisition process. For example, one participant
contended that long-term thinking is important, but the government also
needs to be tactical and driven to accountability and consequences for not
performing on individual acquisitions. He said quarterly or monthly
reviews can help create that accountability. Another participant agreed by
saying that the government needs to hold individuals accountable for
results.

12 According to OMB, the Program Assessment Rating Tool was developed to
assess and improve program performance so that the federal government can
achieve better results. Such a review helps identify a program's strengths
and weaknesses to inform funding and management decisions aimed at making
the program more effective.

"While planning strategically by identifying outcomes and defining
requirements up-front is a challenge for the government, the private
sector has been able to accomplish it," said one participant. According to
the participant, before seeking offers from prospective suppliers, leading
private sector companies first define their requirements through careful
planning and obtaining the buy-in of senior corporate leaders. The
participant noted that companies' procurement executives place
considerable emphasis on the benefits of extensive up-front internal
consultation and analysis with the company's business and operational
stakeholders in deciding what requirements are to be contracted. As a
general rule, they also seek healthy competition in the supplier market in
order to promote finding the best solution from vendors. Leading
commercial companies are willing to make this kind of investment in the
acquisition process in order to arrive at the best outcomes. "It all
starts by knowing what you want, but the federal procurement process
creates disconnects and shortcuts that discourage effective management
practices," said the participant.

Coping with Inefficient Governmental Processes

Many participants agreed that there are aspects of the federal acquisition
process that could be streamlined. One claimed that part of the strategic
planning process should identify and use practices that result in
effective acquisition outcomes, such as timeliness. Another participant
recapped the criticisms of federal acquisition management raised by forum
participants-such as lengthy acquisition cycle times and duplicative
processes-and contrasted the government's acquisition performance with
private sector's supply management and procurement excellence.

The participant noted that private sector companies have a clear focus on
strategically managing their supplier bases for competitive advantage.
Public policy, however, shapes federal procurement and acquisition
processes to promote sometimes conflicting objectives that undermine
strategic procurement and supply management effectiveness, such as
unbundling large contract requirements to support small businesses. He
commented that these public policy requirements impose costs such as
longer cycle times, the need for more people, more administrative process,
and a less clear focus on business objectives than in the private sector.

Another participant added that there are simply too many layers of
bureaucracy in the acquisition process and not enough focus on results.
There is also a need to look at using technology or electronic procurement
and commerce tools to streamline and automate acquisition business
processes, which in turn will also influence the types of skills the
acquisition workforce will need in the future.

Finally, several participants highlighted the budget process and pressures
as a challenge in federal acquisition. Often, Congress does not complete
the budget on time and uses continuing resolutions to fund government
activities, said one participant. This leads to poor outcomes, management
inefficiencies, and wasted taxpayer dollars. For example, agencies are
unable to finalize or renew contracts in a timely manner. The federal
budget is fundamental to management, the participant noted. Companies do
not manage their finances this way and neither should the government.
Further, another participant noted that managers do not want to save money
in the contracting process because Congress will cut the agency's future
budget. The chronically late federal budget and appropriations process
promotes the pervasive "spend the budget" mentality, actually creating
incentives for waste and inefficiency in contract management. Another
participant noted there is also an impact on the contractor when a budget
is not in place, such as spending money negotiating "bridge contracts,"
which increase the contractors' costs.

Section 2: Opportunities for Improving Federal Acquisition in
the 21st Century

Participants offered up a range of examples, ideas, and viewpoints that
identified opportunities for improving federal acquisition. There was
general agreement that improvement could be achieved through (1)
identifying best practices and innovative approaches from the private
sector, state, local, and federal governments, as well as from foreign
governments, and (2) creating a culture for sharing knowledge and
improving acquisition practices. Highlights of this discussion are
summarized below.

              Identifying Best Practices and Innovative Approaches

Participants pointed to using best practices as a way to improve federal
acquisition by adopting more strategic, results-oriented, and ethical
business processes and capabilities. Participants suggested that the
federal government incorporate, when appropriate, the many best practices
of the commercial sector as well as from federal, state, local and foreign
governments. Participants also cited examples where the federal government
has had success in using contracting approaches that are working well.

One participant stated that opportunities for improving federal
acquisition can come from using commercial best practices. "The government
has adopted some commercial best practices at various points, but there
are opportunities to learn about more. Most commercial best practices are
permissible under current federal acquisition laws." The participant
explained that commercial entities take a corporate approach to managing
acquisition of services and invest a great deal in planning and clearly
defining the requirements for a prospective contract. They are willing to
invest in the time and effort up-front to do this right, even if it takes
6 months. According to the participant, one potential strategy for
improving federal acquisition is to conduct periodic surveys of the
private sector's best practices. "This would be far better than the
current approach of defining commercial practice in law and regulation,
because current federal law and regulation may not accurately reflect
evolving commercial practices for acquisition," said the participant.

To improve the quality of service and acquisition management, participants
pointed to a number of initiatives where the government created innovative
contracting approaches that led to a successful outcome. In each of these
examples, participants explained that government personnel were encouraged
not only to follow federal acquisition regulations, but also to think of
ways to increase the value that the government gets out of it contracts.
Each of the examples was performed without the benefit of special
legislation and was the result of initiative and good management:

           o  The United States Postal Service, facing a dire financial
           position, made a decision to adopt commercial best practices for
           supply management. The Postal Service has come a long way with its
           supply management transformation, but that change process was a
           long-term effort and is still a work in progress.

           o  The Department of Homeland Security's (DHS) strategic sourcing
           of pistols was highlighted as a success. 13 By applying strategic
           sourcing methods modeled after commercial best practices, DHS was
           able to leverage its buying power in the procurement of weapons,
           reducing its decentralized purchasing of over 50 types of pistols
           from a large number of suppliers to a standardized choice of three
           to four types of pistols, under contracts with a few large and
           small businesses.

           o  The Defense Logistics Agency (DLA) in Philadelphia created
           agreements with one retail food corporation and its uniform
           supplier to stop production of employee uniforms and produce and
           supply DLA with military uniforms in case of a surge in DLA
           requirements.

           o  DOD created agreements with the General Services Administration
           (GSA) and commercial airlines to ensure the airlines will provide
           military airlift capacity during a national emergency.14

           o  Before soliciting a new contract for veterans' home loan
           mortgage services, the Department of Veterans Affairs found that
           its current process for paying its contractor did not reflect
           commercial best practices, and contributed to higher government
           costs. As a result, the department offered an incentive to spur
           higher loan repayment performance, paying the new mortgage
           services contractor based on the percentage of veterans' home loan
           repayments, saving millions of dollars.

           o  The Army's Communications Electronics Command, which buys night
           vision equipment for the military, made arrangements for its
           suppliers to buy back older and technically obsolete versions of
           night vision equipment from the Army's inventory because they
           realized that the suppliers would be able to get a better price on
           the commercial market.

           o  The Naval Sea Systems Command established an electronic
           marketplace under its Seaport initiative that uses a Web-based
           acquisition process which vastly expedites the competitive award
           of its contracts. The Seaport tool has greatly shortened the
           command's average time frame for awards, saving proposal and
           evaluation costs for both contractors and Navy officials. For
           example, a $150 million task order award, typically taking 6 to 12
           months to be awarded, took 90 days under Seaport; another $32
           million financial management contract was solicited and awarded in
           30 days.

           o  The Army's Logistics Civil Augmentation program (LOGCAP) uses
           private contractors to provide logistics support in war and in
           other contingencies. One participant noted that in Iraq and
           elsewhere, LOGCAP currently provides critical services to the
           military more efficiently than if the services were to do the work
           themselves.15

13 Strategic sourcing is the collaborative and structured process of
analyzing an organization's spending by standardized categories of goods
and services (i.e., commodities) and using the information to develop
strategies to reduce all costs associated with purchasing a given
commodity and also to improve mission delivery.

14 Under the Civil Reserve Air Fleet program, U.S. commercial air carriers
commit under contract with DOD to put aircraft into use during
emergencies. The airlines receive no compensation for their participation
in the reserve fleet unless they are activated, but they are given an
incentive to participate by being made eligible to bid for DOD's peacetime
airlift business. Only carriers that participate in the Civil Reserve Air
Fleet program can bid in peacetime airlift business. Another incentive is
the airlines' participation in GSA's City Pairs program, which provides
discounted air passenger transportation services to federal government
travelers.

Participants also highlighted the value of looking to state, local, and
international procurement communities for best practices. Several
participants pointed to foreign examples that could serve as models for
the federal competitive sourcing process, highlighting Australia, Britain,
and the European Union, in particular. According to participants:

           o  Australia and Britain have advanced far beyond what the U.S.
           government is doing in procurement innovations. The United States
           should pursue more innovation in the outsourcing of work currently
           being performed by government employees, drawing on international
           public management approaches. These two countries have taken more
           thoughtful approaches to outsourcing government activities and are
           trying to manage by being very deliberative in studying what
           should and can be effectively outsourced.

           o  Britain's management of public-private partnerships is an
           example of an opportunity for improving acquisitions of key
           services by the United States. It took the British government over
           10 years to build a good model for public-private partnerships
           between agencies and private contractors. Its 1990 reforms
           successfully began a private financing initiative that removed
           bureaucracy and increased speed in acquisition by developing
           models for risk sharing.

           o  Another model from Britain is its creation of a partnerships
           office as part of a broader effort to improve its public-private
           partnerships capacity. This government office helps agencies
           become smarter purchasers of services by standardizing contracts,
           providing help desk support, highlighting best practices, and
           rotating employees in and out of agencies for temporary
           assistance.

           o  There may be value in looking at the European Union's
           intergovernmental effort to develop a more unified and open market
           system of public procurement. The European Union developed minimum
           standardized requirements across a range of products and services
           and requires that member governments use these standards when
           contracting.

15 Under the LOGCAP program, the Army uses private sector contractors to
provide a range of support to U.S. forces, including laundry and bath,
food service, sanitation, billeting, maintenance, and power generation. As
of January 2005, LOGCAP has involved more than $15 billion in estimated
work by contractors.

One participant noted that the Defense Acquisition University (DAU)
participates in forums with allied countries, including Britain, Germany,
and Australia, to share best practices. DAU describes other countries'
acquisition systems on its Web site, and a report is compiled and updated
continually to maintain accuracy of this knowledge-sharing database. DAU
also worked closely with the Australian government to help it establish a
government managers training certification effort for construction program
management that includes contracting elements.

In examining foreign procurement models, several participants noted
differences in foreign political and acquisition processes should be taken
into consideration as approaches are considered. One participant explained
that some foreign governments, such as those of New Zealand, Australia,
and Britain, are less relevant because they have very different political
structures and bureaucracies. Other participants agreed that their
practices may be beneficial, but one must always keep such political
considerations in mind.

On the other hand, while several participants conceded that there is value
in looking overseas for best practice models, they noted that other
countries are actually looking to American government as a model for their
acquisition management approach. The participant explained that our system
places emphasis on best value, which is different from other international
procurement systems. Further, another participant said, "the federal
procurement system in the U.S. looks better and better once one starts
looking closely at other systems."

Creating a Culture for Sharing Knowledge and Improving Federal Acquisition

In sharing knowledge about improving federal acquisition, participants
provided insights and examples as to why it is so important to create an
organizational culture that will support ongoing improvement in
acquisition practices in the 21st century.

In order to create and implement innovative acquisition policies as well
as to run an effective organization, well-trained, effective leaders are
needed throughout an organization, according to several participants. "The
government needs to raise the talent bar of agency management staff," said
one participant. Several participants pointed to ways the government could
improve its leadership and cited several worthy initiatives. "If the
government wants to promote certain behaviors," the participant added, "it
needs to stress their importance." The annual Service to America awards
jointly sponsored by media and public affairs organizations, which
recognize federal employees and managers for their truly heroic and
laudable efforts on the job, is one worthwhile program that could be
expanded into the acquisition arena.

Another initiative could be the introduction of the chief management or
operating officer concept, said one participant. Further, other
participants focused on the value of mixing government and private sector
employees through executive exchange programs. According to one
participant, the federal Senior Executive Service was envisioned to be a
cadre of leaders who would rotate through various positions. The
participant also cited DOD's Acquisition Demonstration Project as a
successful program that is no longer in effect. "The government could do a
better job of government and commercial exchanges that would allow the
government to have a blend of new and seasoned workers," agreed another
participant. According to the participant, programs like these could bring
down the barriers that keep government and contractors from partnering and
collaborating, reducing adversarial and distrustful climates.

Other participants stated that senior government officials, such as career
senior executives and political appointees, need to be trained so they can
effectively oversee agencies' acquisition performance. Several
participants cited and others agreed that DAU is a good model for training
military leaders in procurement. Also, one participant highlighted that
the Department of Interior has similarly revamped its training for
executives and political appointees in the procurement area. Agreeing,
another participant highlighted the importance of developing leaders that
have the ability to foster effective supplier relationships. According to
the participant, supplier relationship management is how industry has
learned to unlock additional value through collaboration with suppliers to
achieve innovation and a competitive edge. He said the government needs to
look at the supplier relationship management opportunity as a matter of
joint success between an agency and its suppliers.

In terms of the federal government, one participant stated OFPP is
theoretically the entity that should "lead by example" in sharing
knowledge by identifying best practices. Another participant maintained
that OFPP is in a position to share best practices and does so indirectly
through forums and interagency working groups, such as its Chief
Acquisition Officers Council. According to the participant, OFPP has
established working groups on almost every one of the topics addressed in
the forum. For example, one OFPP Web site, the Acquisition Center of
Excellence for Services, provides examples of performance-based contracts
intending to help agencies write better contracts. 16 In contrast, another
participant questioned whether OFPP had adequate numbers of staff and if
it was equipped with the necessary strategic planning abilities.

Two other ways that best practices are shared that were highlighted
included events such as this GAO forum and bodies of work that assess and
highlight best practices. Several participants suggested that GAO issue
more reports on best practices in this area.

16 See the Web site at http://www.acqnet.gov/comp/ace/index.html

Appendix I: Forum Participants

Moderator

David M. Walker Comptroller General of the United States U.S. Government
Accountability Office

Participants

Frank J. Anderson, Jr. President Defense Acquisition University

Robert A. Burton Associate Administrator Office of Federal Procurement
Policy

Alan Chvotkin Senior Vice President and Counsel Professional Services
Council

William D. Eggers Global Director Deloitte Research-Public Sector

Mark W. Everson Commissioner Internal Revenue Service

James I. Finley Deputy Under Secretary of Defense, Acquisition, Technology
and Logistics Department of Defense

Daniel I. Gordon Deputy General Counsel and Chief Ethics Counselor U.S.
Government Accountability Office

Sallyanne Harper Chief Administrative Officer U.S. Government
Accountability Office

Clay Johnson III Deputy Director for Management Office of Management and
Budget

Ronald T. Kadish Vice President and Partner, Aerospace Marketing Group
Booz-Allen Hamilton, Inc.

Steven Kelman Weatherhead Professor of Public Management Harvard
University's John F. Kennedy School of Government

Deidre A. Lee Deputy Director of Operations Federal Emergency Management
Agency

Harry Q. Lee Corporate Director of Contracts Northrop Grumman Corporation

Bruce Leinster Consultant to IBM

Tom Luedtke Assistant Administrator for Procurement National Aeronautics
and Space Administration

Marcia G. Madsen Partner Mayer, Brown, Rowe, & Maw, LLP

Frank P. Pugliese, Jr. Managing Director, Government Solutions DuPont
Corporation

Katherine Schinasi Managing Director, Acquisition and Sourcing Management
U.S. Government Accountability Office

Steven L. Schooner Associate Professor of Law and Co-Director, Government
Procurement Law Program George Washington University Law School

Keith Strange Associate Partner IBM Business Consulting

G. Martin Wagner Acting Deputy Commissioner, Federal Acquisition Service
U.S. General Services Administration

Bill Woods Director, Acquisition and Sourcing Management U.S. Government
Accountability Office

Appendix II: Forum Agenda

8:30 a.m. Check-in/Continental Breakfast

8:45 a.m. Welcome and Discussion of Current Acquisition Environment David
M. Walker, Comptroller General of the United States

9:15 a.m. Key Challenges in a Contractor-Dependent Acquisition Environment

What are the key challenges the federal government must address in order
to operate effectively within an environment of extensive and increasing
reliance on contractors?

10:00 a.m. Break

10:15 a.m. Continuation of Key Challenges Discussion

11:30 a.m. Break

11:45 a.m. Working Lunch:

Opportunities for Sharing Best Practices and Improving Federal Acquisition
in the 21st Century

How can the federal government adopt more strategic, results-oriented,
world class, and ethical business processes and capabilities in federal
acquisition?

1:00 p.m. Adjourn

Appendix III: Questions Provided in Advance to Forum Participants

Challenges

Proposed questions to address include the following:

           o  What are the forces that have led the federal government to
           increasingly rely on contractors to perform certain functions? Are
           we locked into reacting to these forces? Are new criteria needed
           to better decide on a periodic basis what functions to turn over
           to the private sector and what to retain in-house to maintain
           expertise and direct responsibility? When the federal government
           chooses to outsource core functions, how does it consider
           contingency planning?

           o  How can we help federal managers recognize that involving
           "partners" (even profit-motivated contractors) to produce
           government services places more-not less-responsibility on them?
           o  How can the government clarify and make more transparent to the
           public the roles and shared responsibilities of federal employees
           and private contractors?
           o  If officials must be accountable to taxpayers for the basic
           work of government, what changes are needed in terms of
           transparency and accountability for work performed or assisted by
           contractors?
           o  How can the government balance the benefits and risks
           associated with increased reliance on the private sector as a
           provider of goods and services?
           o  Where there are examples of government reliance on contractors,
           what are the key benefits realized (efficiencies, savings,
           quality) and lessons to be learned from such examples? Are there
           lessons to be learned from agencies such as IRS and DOD-which are
           in the process of outsourcing tax debt collection and military
           mail delivery-on the deliberative process for addressing the risks
           and benefits of subjecting long-held governmental functions to
           contractor competition and performance?
           o  Where problems have been identified, are the causes well
           understood? Do corrections need to be made in laws and regulations
           or in policies and practices?
           o  What are the workforce skills and abilities needed for agency
           acquisition and program managers to produce "public value" results
           or outcomes in programs that rely on the performance of
           contractors? How and when should tasks and functions be adjusted
           when skills are not present?
           o  What tools and strategies are available to help agency managers
           gain awareness and be proactive regarding potential or actual
           organizational conflicts among contractors? What are the steps
           necessary in the acquisition process to prevent or mitigate
           personal and organizational conflicts of interest?
           o  What is the proper role of government regarding subcontracts
           and subcontractor management, and are further efforts needed to
           minimize pass-throughs and layering?

Opportunities

Proposed questions to address include the following:

           o  What is the potential for wider adoption of proven commercial
           best practices for acquisition management?
           o  As agencies deliberate business case decisions to acquire goods
           and services, is there adequate focus on needs versus wants?
           o  Of the strategic sourcing plans adopted by agencies, what are
           the options for organizational and business process changes to
           help institutionalize enterprisewide collaboration in buying
           processes, in terms of governance structure, goals and objectives,
           and performance measures?
           o  Are there examples of effective performance-based services
           contract1 work statements that describe desired outcomes in
           measurable terms as well as the method of assessing contractor
           performance against standards?
           o  Are new contract implementation strategies or agency
           organizational functions needed to effectively manage
           performance-based service contracts, particularly for more complex
           services?
           o  When are performance-based contracts not appropriate?
           o  How are financial and nonfinancial incentives being used to
           reward contractors for performance and results? In what ways do
           these measures ensure that performance-based incentive contracts
           are used to reward results rather than just effort?
           o  How will we know that progress is being made by agencies in
           making more cost-effective and strategic use of other agencies'
           contracts?
           o  Have the benefits of interagency and fee-for-service
           contracting among and between government agencies been realized?
           o  Should the government continue to do business with contractors
           who are delinquent on their federal taxes? Are suspension and
           debarment procedures effective?
           o  Is a more level playing field needed for contractor
           payments-should contractors owe the government interest on
           overpayments when the government now has to pay interest on late
           payments?
           o  Is there interest in establishing and promoting acquisition and
           managerial executive exchanges between the government and the
           private sector to gain and share expertise, knowledge, and
           experiences between sectors as a way to improve the acquisition
           function?

1 Performance-based acquisition means an acquisition structured around the
results to be achieved as opposed to the manner by which the work is to be
performed. Performance-based contracts for services must include a
performance work statement that describes the desired outcomes in
measurable terms as well as the method of assessing contractor performance
against standards.

Related GAO Products

The following is a selected listing of recent GAO products relevant to the
issues covered in the forum.

DOD Acquisitions: Contracting for Better Outcomes. GAO-06-800T .
Washington, D.C.: September 7, 2006.

Nuclear Cleanup of Rocky Flats: DOE Can Use Lessons Learned to Improve
Oversight of Other Sites' Cleanup Activities. GAO-06-352 . Washington,
D.C.: July 10, 2006.

Contract Management: DOD Vulnerabilities to Contracting Fraud, Waste, and
Abuse. GAO-06-838R . Washington, D.C.: July 7, 2006.

Medicare Part D: Prescription Drug Plan Sponsor Call Center Responses Were
Prompt, but Not Consistently Accurate and Complete. GAO-06-710 .
Washington, D.C.: June 30, 2006.

Defense Management: Attention Is Needed to Improve Oversight of DLA Prime
Vendor Program. GAO-06-739R . Washington, D.C.: June 19, 2006.

Homeland Security: Contract Management and Oversight for Visitor and
Immigrant Status Program Need to Be Strengthened. GAO-06-404 . Washington,
D.C.: June 9, 2006.

2010 Census: Census Bureau Generally Follows Selected Leading Acquisition
Planning Practices, but Continued Management Attention Is Needed to Help
Ensure Success. GAO-06-277 . Washington, D.C.: May 18, 2006.

Coast Guard: Changes in Deepwater Acquisition Plan Appear Sound, and
Program Management Has Improved, but Continued Monitoring Is Warranted.
GAO-06-546 . Washington, D.C.: April 28, 2006.

Contract Management: Increased Use of Alaska Native Corporations' Special
8(a) Provisions Calls for Tailored Oversight. GAO-06-399 . Washington,
D.C.: April 27, 2006.

Hurricane Katrina: Planning for and Management of Federal Disaster
Recovery Contracts. GAO-06-622T . Washington, D.C.: April 10, 2006.

Contract Security Guards: Army's Guard Program Requires Greater Oversight
and Reassessment of Acquisition Approach. GAO-06-284 . Washington, D.C.:
April 3, 2006.

Defense Acquisitions: Assessments of Selected Major Weapon Programs.
GAO-06-391 . Washington, D.C.: March 31, 2006.

Homeland Security: Successes and Challenges in DHS's Efforts to Create an
Effective Acquisition Organization. GAO-05-179 . Washington, D.C.: March
29, 2005.

GAO's High-Risk Program. GAO-06-497T . Washington, D.C.: March 15, 2006.

Federal Bureau of Investigation: Weak Controls over Trilogy Project Led to
Payment of Questionable Contractor Costs and Missing Assets. GAO-06-306 .
Washington, D.C.: February 28, 2006.

Media Contracts: Activities and Financial Obligations for Seven Federal
Departments. GAO-06-305 . Washington, D.C.: January 13, 2006.

NASA: Implementing a Knowledge-Based Acquisition Framework Could Lead to
Better Investment Decisions and Project Outcomes. GAO-06-218 . Washington,
D.C.: December 21, 2005.

Defense Acquisitions: DOD Has Paid Billions in Award and Incentive Fees
Regardless of Acquisition Outcomes. GAO-06-66 . Washington, D.C.: December
19, 2005.

U.S. Postal Service: Purchasing Changes Seem Promising, but Ombudsman
Revisions and Continued Oversight Are Needed. GAO-06-190 . Washington,
D.C.: December 15, 2005.

Defense Management: DOD Needs to Demonstrate That Performance-Based
Logistics Contracts Are Achieving Expected Benefits. GAO-05-966 .
Washington, D.C.: September 9, 2005.

Framework for Assessing the Acquisition Function at Federal Agencies.
GAO-05-218G . Washington, D.C.: September 1, 2005.

Medicare Contracting Reform: CMS's Plan Has Gaps and Its Anticipated
Savings Are Uncertain. GAO-05-873 . Washington, D.C.: August 17, 2005.

Interagency Contracting: Franchise Funds Provide Convenience, but Value to
DOD is Not Demonstrated. GAO-05-456 . Washington, D.C.: July 29, 2005.

Energy Savings: Performance Contracts Offer Benefits, but Vigilance Is
Needed to Protect Government Interests. GAO-05-340 . Washington, D.C.:
June 22, 2005.

Financial Management: Thousands of Civilian Agency Contractors Abuse the
Federal Tax System with Little Consequence. GAO-05-637 . Washington, D.C.:
June 16, 2005.

Interagency Contracting: Problems with DOD's and Interior's Orders to
Support Military Operations. GAO-05-201 . Washington, D.C.: April 29,
2005.

Defense Logistics: High-Level DOD Coordination Is Needed to Further
Improve the Management of the Army's LOGCAP Contract. GAO-05-328 .
Washington, D.C.: March 21, 2005.

Contract Management: Opportunities to Improve Surveillance on Department
of Defense Service Contracts. GAO-05-274 . Washington, D.C.: March 17,
2005.

Federal Acquisition: Progress in Implementing the Services Acquisition
Reform Act of 2003. GAO-05-233 . Washington, D.C.: February 28, 2005.

Contract Management: The Air Force Should Improve How It Purchases AWACS
Spare Parts. GAO-05-169 . Washington, D.C.: February 15, 2005.

Contract Management: Opportunities to Improve Pricing of GSA Multiple
Award Schedules Contracts. GAO-05-229 . Washington, D.C.: February 11,
2005.

Best Practices: Using Spend Analysis to Help Agencies Take a More
Strategic Approach to Procurement. GAO-04-870 . Washington, D.C.:
September 16, 2004.

Contract Management: Guidance Needed to Promote Competition for Defense
Task Orders. GAO-04-874 . Washington, D.C.: July 30, 2004.

Military Operations: DOD's Extensive Use of Logistics Support Contracts
Requires Strengthened Oversight. GAO-04-854 . Washington, D.C.: July 19,
2004.

The Chief Operating Officer Concept and its Potential Use as a Strategy to
Improve Management at the Department of Homeland Security. GAO-04-876R .
Washington, D.C.: June 28, 2004.

NASA: Lack of Disciplined Cost-Estimating Processes Hinders Effective
Program Management. GAO-04-642 . Washington, D.C.: May 28, 2004.

Federal Acquisition: Increased Attention to Vehicle Fleets Could Result in
Savings. GAO-04-664 . Washington, D.C.: May 25, 2004.

Tax Debt Collection: IRS Is Addressing Critical Success Factors for
Contracting Out but Will Need to Study the Best Use of Resources.
GAO-04-492 . Washington, D.C.: May 24, 2004.

HUD Single-Family and Multifamily Property Programs: Inadequate Controls
Resulted in Questionable Payments and Potential Fraud. GAO-04-390 .
Washington, D.C.: March 3, 2004.

Defense Management: Continuing Questionable Reliance on Commercial
Contracts to Demilitarize Excess Ammunition When Unused, Environmentally
Friendly Capacity Exists at Government Facilities. GAO-04-427R .
Washington, D.C.: April 2, 2004.

Competitive Sourcing: Greater Emphasis on Increasing Efficiency and
Improving Performance. GAO-04-367 . Washington, D.C.: February 27, 2004.

Financial Management: Some DOD Contractors Abuse the Federal Tax System
with Little Consequence. GAO-04-95 . Washington, D.C.: February 12, 2004.

Contract Management: High-Level Attention Needed to Transform DOD Services
Acquisition. GAO-03-935 . Washington, D.C.: September 10, 2003.

Best Practices: Improved Knowledge of DOD Service Contracts Could Reveal
Significant Savings. GAO-03-661 . Washington, D.C.: June 9, 2003.

Best Practices: Setting Requirements Differently Could Reduce Weapon
Systems' Total Ownership Costs. GAO-03-57 . Washington, D.C.: February 11,
2003.

Acquisition Management: Agencies Can Improve Training on New Initiatives.
GAO-03-281 . Washington, D.C.: January 15, 2003.

Military Readiness: Civil Reserve Air Fleet Can Respond as Planned, but
Incentives May Need Revamping. GAO-03-278 . Washington, D.C.: December 30,
2002.

Acquisition Workforce: Status of Agency Efforts to Address Future Needs.
GAO-03-55 . Washington, D.C.: December 18, 2002.

DOE Contractor Management: Opportunities to Promote Initiatives That Could
Reduce Support-Related Costs. GAO-02-1000 . Washington, D.C.: September
20, 2002.

Acquisition Workforce: Department of Defense's Plans to Address Workforce
Size and Structure Challenges. GAO-02-630 . Washington, D.C.: April 30,
2002.

Best Practices: Taking a Strategic Approach Could Improve DOD's
Acquisition of Services. GAO-02-230 . Washington, D.C.: January 18, 2002.

(120585)

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October 2006

www.gao.gov/cgi-bin/getrpt? GAO-07-45SP .

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Katherine Schinasi at (202)
512-4841 or [email protected].

Highlights of GAO-07-45SP , a GAO forum.

HIGHLIGHTS OF A GAO FORUM

Federal Acquisition Challenges and Opportunities in the 21st Century

Acquisition of products and services from contractors consumes about a
quarter of discretionary spending governmentwide and is a key function in
many federal agencies. In fiscal year 2005 alone, federal government
contracting involved over $388 billion. The work of the government is
increasingly being performed by contractors, including in emergency and
large-scale logistics operations such as hurricane response and recovery
and the war in Iraq. Many agencies rely extensively on contractors to
carry out their basic missions.

The magnitude of the government's spending and dependence on contractors
make it imperative that this function be performed as efficiently and
effectively as possible. Yet, acquisition issues are heavily represented
on GAO's list of government high-risk areas. In the 21st century, the
government needs to reexamine and evaluate its strategic and tactical
approaches to acquisition.

To identify and discuss the key issues confronting the federal acquisition
community, the Comptroller General hosted a forum in July 2006 that
brought together acquisition experts from inside and outside the
government. Participants shared their insights on challenges and
opportunities for improving federal acquisition in an environment of
increasing reliance on contractors and severe fiscal constraint.

Forum participants offered a range of examples, insights, views, and
concerns that framed three broad challenges confronting the federal
acquisition community:

           o  Determining who should perform the business of government in a
           constantly changing environment. Participants engaged in a
           wide-ranging discussion of the appropriate role of contractors,
           the difficulties of identifying what government functions may be
           contracted out, and the formal and informal means by which these
           decisions are made. Several participants contrasted the high-level
           attention given in private sector organizations to identify their
           core versus noncore functions.
           o  Ensuring the federal workforce has the capacity and capability
           to manage contractor operations effectively. Participants
           highlighted that policy makers do not have a clear understanding
           of what constitutes the acquisition workforce. Agency leaders have
           not recognized or elevated the importance of the acquisition
           profession within their organizations. Further, a strategic
           approach has not been taken across government or within agencies
           to focus on workforce challenges, such as creating a positive
           image essential to successfully recruit and retain a new
           generation of talented acquisition professionals.
           o  Managing for results and accountability in a
           contractor-dependent environment. Participants noted the
           importance of early identification of realistic requirements, a
           step that can decrease the government's risk of achieving
           undesirable outcomes. Participants cited the frequent mismatch
           among wants, needs, affordability, and sustainability, as well as
           unrealistic and often changing requirements. Further, participants
           highlighted the challenges when managing amidst burdensome
           governmental acquisition processes and budget pressures. In
           addressing the question of accountability, many participants
           commented that achieving successful outcomes is a shared
           responsibility. In some cases, contractors promise more than they
           can deliver, while in other cases, the government is at least
           partially at fault for not setting clear direction for contractor
           performance.

Participants also discussed opportunities for how the federal government
can adopt more strategic, modern acquisition practices in government:

           o  Identifying best practices and innovative approaches.
           Participants cited acquisition best practices that might be
           implemented more widely throughout all levels of government.
           Examples were provided that included best practices from within
           the federal government, foreign governments, and the commercial
           sector. 
           o  Creating a culture for sharing knowledge and improving federal
           acquisition. Participants provided insights and examples as to why
           it is important for government leaders to create an organizational
           culture that will support ongoing improvement in acquisition
           practices in the 21st century.
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