Vendors will share program gains and losses, ex-IRS official says

ORLANDO, Fla. — As agencies and companies strengthen partnerships on technology projects, the shared responsibility will likely become more explicit in contracts' language, one former top government official said.

Vendors have gained a larger role in managing major projects, and that greater responsibility also means sharing the gains and losses associated with the program, said Charles Rossotti, a senior adviser to the Carlyle Group and former Internal Revenue Service commissioner.

"By getting what we wished for, I believe inevitably that means the company takes on more of the risk of success or failure of the programs, whether it's bargained for in the contract or not," Rossotti said, speaking today at the Information Processing Interagency Conference sponsored by the Government Information Technology Executive Council. "Increasingly, it will be bargained for. That will become more explicit as agencies and companies understand that's a fundamental aspect of the world we're living in."

Rossotti said there will also be an increase in fixed-price, incentive-based contracts as industry becomes more of a responsible managing partner with agencies. That would mark a departure from having discrete, individual tasks performed by a company, while agencies carry most of the accountability burden.

In the past 10 years, companies and government have increasingly embraced the concept of partnerships, Rossotti said.

"If executed well, it can be very beneficial to the taxpayer, the government, as well as the industry," he said.

Although the process presents challenges for both sides, it can work, Rossotti said.

"It's fundamentally a good path," he said. "There has been a lot of progress in both government and industry in making things work better."