Fight the urge to sole source task orders

The growth of multiple-award task-order contracting for services - opened up by the Federal Acquisition Streamlining Act (FASA) in 1994 and by the growth of the General Services Administration services schedule - is an important advance for government information technology customers. Indeed, doubters should try to imagine how the government would have coped with the Year 2000 problem prior to this reform.

But task-order contracting continues to be problematic - such as using these vehicles for de facto sole-source awards - as illustrated by a report released this month by the Defense Department inspector general concluding that DOD awards the majority of task orders through a sole source and did not give some vendors a fair opportunity to compete [FCW, April 19].

FASA created, in my view, an ideal situation for the government and for vendors. It enabled the government to conduct a full-blown competition to select a relatively limited number of outstanding vendors as contract holders. (Note that the law did not envision that everybody who sought a contract got one.)

With the underlying contract in place, the government then could organize very streamlined and rapid commercial-style competitions for individual task orders. While the old order placed speed and competition in conflict, this new arrangement allowed speedy and competitive awards.

Unfortunately, some vendors, following the slogan, "Eat what you kill," came up with the idea that they should not be subject even to streamlined, commercial competition. Some government folks, apparently unsatisfied with reducing cycle times from a year to a few weeks, wanted to reduce award time another week by making de facto sole-source awards of various sorts.

Recently, I had a conversation with Tom Hutchinson, a program manager at the Center for Health Plans and Providers at the Health Care Financing Administration, about an experience that taught him the value of competition under task-order contracts.

In the summer of 1997, Congress gave HCFA a large number of new responsibilities and a very short time frame to accomplish them. Hutchinson's job required him to hire a contractor to help with some analytic tasks, including work involving analysis of data regarding health maintenance organizations.

Hutchinson had somebody in mind for the job - a former HCFA colleague who had, while at the agency, done work similar to what HCFA needed and was now at a consulting firm. "I knew exactly who I wanted to do the work," Hutchinson recalled. "I didn't have time to teach somebody. I didn't have time to compete."

A persistent contracting officer, Mary Jones, told Hutchinson he could not just conduct a sole-source contract without a reason, and, in this case, a number of firms were capable of doing a good job. She told him about a HCFA multiple-award contract vehicle for financial analysis and auditing services that had five companies on it, including the company for whom Hutchinson's colleague worked. Reluctantly, Hutchinson agreed.

What happened? HCFA issued information on the requirement to the five firms on the contract over the World Wide Web. They asked the firms to present to HCFA the next day any questions to help with a bid/no bid decision. Three of the five firms indicated that they wanted to bid. They were given a week to prepare oral presentations.

What Hutchinson learned at the oral presentations surprised him. One of the three did not really understand the requirement well enough and could easily be eliminated. But more interesting was the comparison between the firm where the former HCFA employee worked and the third bidder. The third bidder stated in its proposal that it had an information database available from the company's commercial business that they would use to analyze the problem HCFA wanted to give them. The database gave this firm a better way to help the agency. The third firm also was less expensive than the firm where the former HCFA employee worked.

Source selection after the oral presentations took 20 minutes. The firm Hutchinson otherwise would never even have considered won the work. Hutchinson said the task order has been completed and the firm did a fine job - and at a lower cost.

Hutchinson liked the oral presentation format. "When you read a proposal, you think you understand what they're saying, but sometimes you don't really," he said. "With the oral presentation, we picked up right away that one contractor didn't get it. In a written proposal, all the buzzwords would have been there. Going through reams of paper, I'm not sure you would have picked up there was a problem."

Hutchinson also noted, "Having to compete the requirement made me think through the statement of work more carefully so bidders could understand our requirement. The result was that I planned the effort better than I would have, which proved to be a valuable exercise."

Jones notes that this situation is only one of several she personally has participated in in which the customer initially had a contractor in mind, only to find through streamlined commercial competition that there was a better-value solution somewhere else. "He sticks out in my mind because he had been the most resistant to what I had said about competing the task order," she said.

With the streamlined competitions possible in a procurement reform world, competition should never be seen by government IT folks as some sort of cod-liver oil you are forced to swallow. Instead, it should be seen for what it is: the way the free market obtains better value for the customer.

--Kelman was the administrator of the Office of Federal Procurement Policy from 1993 to 1997. He is now Weatherhead Professor of Public Management at Harvard's Kennedy School of Government.