Falling short of the paperless standard

The Defense Department's program to create a standard contract system has been rapped in a new Inspector General report that cited a survey in which almost two-thirds of sampled users said the system has helped little in meeting the DOD's goal of paperless contracting.

More than 60 percent of users surveyed for the Standard Procurement System said they preferred using a different system, according to the March 13 draft IG report. And just over half of the respondents said their productivity had not increased since SPS Version 4.1 came out.

In a response to the report, DOD procurement director Deidre Lee said the IG failed to show if user dissatisfaction resulted from the fact that software features, training and operational guidance don't work well with SPS. User dissatisfaction may also reflect users' reticence to change their business processes or some other cause.

However, Lee agreed with some of the report's criticism and that the Defense Contract Management Agency (DCMA), which manages SPS, is working to improve the system.

The program "will give us better and more accurate data" and help DOD pay contractors on time, Lee said. SPS also will help DOD produce auditable financial statements in accord with the Chief Financial Officers Act of 1990, she said.

After spending $200 million, DOD has almost completed deploying SPS for installation-level contracting officers, with nearly 21,000 system users at 846 sites, said Gary Thurston, the DOD SPS program manager at DCMA.

DCMA plans to roll out SPS to more than 12,000 contracting officers who will use it for contract management. By 2003, DOD plans to implement SPS to inventory control points and for major weapons systems purchases, Thurston said.

American Management Systems Inc., Fairfax, Va., won the $326 million SPS contract in 1997 and helped DOD replace 76 contracting programs. The company and DOD have joined to produce a Microsoft Corp. Windows-based system that is based on AMS' Procurement Desktop product.

But the IG report said SPS is flawed, in part, because DCMA insisted on using Procurement Desktop as a basic platform even though the product only met 45 percent of DOD's requirements.

The estimated costs for SPS software and support services have shot up to $433.5 million, and estimated life cycle costs for SPS from fiscal 1995 to 2005 are $3.7 billion, according to the IG. SPS should provide DOD with $1.4 billion via increased productivity and reduced costs, according to the report, which was requested by Rep. Jim Nussle (R-Iowa), House Budget Committee chairman.

SPS received an initial boost when former DOD comptroller John Hamre called for the armed services to automate their contracting operations by Jan. 1, 2000. Despite Hamre's rise to deputy Defense secretary, the military missed that deadline.

An official from the Navy's largest systems command said that determining an organization's requirements is tricky. "Sometimes, we can't figure out our own requirements," said Kurt Huff, Naval Sea Systems Command's deputy commander of contracts.

The IG report said that the paperless contracting aspect of SPS was not introduced into the system until its mission need statement came out in April 1998 in response to the DOD paperless contracting initiative.

Although SPS is used to record everything from initial postings for vendors through contract awards, many users are also printing out contracts to comply with auditing reviews. "You tend to want to have the paper and spread it out on your desk to look at," Huff said.

Huff recently had to do such a review in response to a General Accounting Office protest filed by a vendor. "We print them out on a just-needed basis," he said.

Contracting officers at Air Force Materiel Command are also maintaining paper contract files, said Edith Ryan, head of contracting systems for the command at Wright-Patterson Air Force Base, Ohio. But she said Materiel Command contracting officers are "happy with the system" and don't want to revert to their former procurement software.

Electronic archiving capabilities will come with SPS in fiscal 2002, said Lt. Jane Alexander, a Navy spokeswoman in Washington, D.C. "Until this is implemented, along with DOD digital signature policy, a paper contract file with original signatures is maintained by the contract officer."