Kelman: Perfecting performance

When I came to work for the government about a decade ago, the Air Force was experiencing a big problem with a large information technology hardware contract called Desktop II. The vendor had apparently underbid on the contract, expecting to make money on upgrading hardware. But that wasn't happening, and the vendor was losing money. So company officials decided to stop delivering the equipment Air Force customers were ordering under the contract.

The most amazing thing about this story is that company officials believed they could behave this way and still have any prospect of doing future business with the Air Force.

That was then.

I thought of this as I read a recent article in Federal Computer Week ["Hitting the Ground Running: Vendors Ready for US-VISIT Contract Award from Day One," May 3] about the U.S. Visitor and Immigrant Status Indicator Technology (US-VISIT) contract at the Homeland Security Department.

The article focuses on how three vendors bidding on the contract had already begun spending money — which two of the three will not recuperate — on developing a solution for the first phase of the program even before the contract is awarded.

The reason they did this is that US-VISIT will have tight deadlines, and officials at each company believe that if they are to meet the deadlines, they need to get started now. One said that advance preparation — though not to the extent in US-VISIT — is standard practice in large bids.

This is now. Quite a turnaround in vendor attitude.

The most important change in the government/vendor environment for IT during the past decade has been the increased vendor commitment to performance and customer satisfaction.

Some changes in the past decade include government's use of past performance in source selection, the reduction of procedure-mania, the availability of streamlined vehicles such as General Services Administration schedules that allow agencies to change vendors quickly when one is performing badly and the decline of the bid-protest culture of winning business by litigation rather than customer satisfaction. Vendors have started focusing on what they always should have: delivering good performance.

We see this change mirrored in government. Think about what has occurred with central oversight of IT projects. A decade ago, it involved GSA's delegation of procurement authority process. Now, it involves Office of Management and Budget officials reviewing business cases to make sure the acquisition makes good sense and checking for performance metrics to judge project success.

It's important to remember this history because the focus on performance is being threatened. And this would be a tragedy. The performance culture needs further development and nurturing. Too many big IT projects still fail. We have a long way to go on performance-based contracting. It must not, as it once was, be relegated to an afterthought.

Kelman is a professor of public management at Harvard University's Kennedy School and former administrator of the Office of Federal Procurement Policy. He can be reached at steve_kelman@harvard.edu.