HUD makes performance a priority

For the Department of Housing and Urban Development, performance is king and part of its effort to change the way it does business.

The recent approval of the fiscal 2003 budget allowed a wave of information technology spending, and the latest contract awards reflect a move toward performance-based contracts and contracts geared toward small businesses.

"There is a bigger story here at HUD," said chief technology officer Gloria Parker. "As we continue to improve management practices here, we're moving toward performance-based contracts and also a lot of fixed-price contracting."

HUD is also moving toward reconfiguring contracts to allow more small businesses to compete. Small businesses have been neglected in the federal government for a long time, Parker said, and department officials want to make new space for them, as prime contractors.

"The little guys had a tough time getting in," Parker said. "We're changing that here at HUD."

The department's acquisition management and IT spending have been widely criticized in the past few years. Changes in contracting have been under way for about a year and a half, Parker said. "It is a huge, huge change, but it's a fantastic undertaking by HUD. It's going to save us a lot of money because we're going to get what we want the first time around," she said. "It will be a best practice for other agencies to follow."

The department is converting many contracts to fixed-price contracts and putting them out for bid again. Until new awards can be made, existing contracts have been extended to give HUD the flexibility to reconfigure them, said Ted Stever, director of HUD's administrative support division in the chief procurement officer's office.

Parker said the department benefits from contracting to small businesses because they offer high-level specialized skills and smaller staffs. And their executives can meet directly with department officials.

Small businesses are also more determined to succeed with a contract, Parker said, because their livelihood and business depend on it.

"They know this is their bread and butter. This is the way into the game," she said. "If they fail, it's much more detrimental to them."

Freeing up money in the fiscal 2003 budget accounted for a slew of new contracts, said Ken Bartee, president of McDonald Bradley Inc., a small business and HUD subcontractor. Also, when department officials announced their plans to contract with small businesses, there was a spike in interest that HUD wasn't ready for, he said, causing the department to pause.

"They kind of got overwhelmed by interested parties, and at the time, they weren't interested in changing the procurement process to make that happen," Bartee said. "They had to re-gear a little bit and say, 'OK, how are we going to do this?' "

As HUD's contracting has increased in recent years, weaknesses in contract management remain, and in several instances, the poor management led to unnecessary spending, according to a November 2002 General Accounting Office report.

Chip Mather, co-founder of Acquisition Solutions Inc., said HUD has been trying to move to performance-based contracting for some time. The change is difficult for all agencies, and he commended the transformation.

"This is not some new initiative for them, [but] reaffirming that is admirable," Mather said. "It's really hard to do. The whole government has had a problem with it. It's been mandated since 1991, and we're still saying, 'This is the year.' "

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HUD buys

A few recent contracts for information technology services reflect a shift at the Department of Housing and Urban Development toward small businesses and performance-based contracts. Last month, HUD awarded a five-year, $5 million contract to Planmatics Inc. of Rockville, Md., to support the department's e-government initiatives. Under this performance-based contract, Planmatics, a certified small business, will provide program design and implementation, business needs analysis and business case development. Two contracts totaling $4.1 million were awarded last month to McDonald Bradley Inc. of Herndon, Va., for HUD's Office of Multifamily Housing Assistance Restructuring. One contract, in which McDonald Bradley is the prime contractor, provides technical support and management of help-desk services. However, the contract is on hold because of a protest, said Ted Stever, director of HUD's administrative support division in the chief procurement officer's office. McDonald Bradley is a subcontractor to the second contract, which provides applications development and systems maintenance.