Kelman: Procurement ? a quiet crisis

There's a quiet crisis in procurement.

It doesn't involve lurid headlines about Halliburton, interrogators hired through information technology contracts or one-bid orders from the General Services Administration's schedule contracts — some of which may be problems but may not necessarily be problems with the procurement system. But these shouldn't be the only issues that procurement officials address.

The quiet crisis involves two statistics. One is the dollar value of government procurement. After remaining stable through the 1990s at about $200 billion a year, government buying has increased during the past four years by about one-third, mostly because of increased defense and homeland security spending. The second statistic is the number of people working on awarding and managing contracts. It was more than 30,000 in 2000. The number is slightly smaller today.

This doesn't add up. More often, contracting is becoming a core competency of government, as government officials increasingly rely on contractors to help them achieve agency missions.

Smart contract management — and its first cousin, the program management of contracts — is essential if contracting is to deliver value to agencies. That means, for example, asking for performance-based contracting or market research to learn about commercial best practices; writing contracts with incentives or pricing structures; and administering signed contracts by monitoring performance, managing interactions among agency experts, customers and contractors, and making sure government money is spent properly.

During the 1990s, government officials significantly downsized the procurement workforce. Some would argue this went too far. But at least that downsizing was associated with a business process re-engineering strategy for meeting government contracting needs with fewer bodies.

At best, we entered this decade, in terms of contracting manpower, running lean and mean; at worst, the government had already downsized too far. But nobody in a politically responsible position has come forward to say you can't increase contracting by one-third and expect the same workforce to do t he job well. Furthermore, procurement officials have worked without a re-engineering strategy while contracting workloads have increased because of A-76 studies, decrees prohibiting the bundling of several smaller projects into one big contract and new controls to deal with abuse problems.

The increased strain on the workforce increases the chances of contracting errors, making the system perform worse and creating demands for more controls that add burdens to the workforce. Increased workload pressures made it more difficult for people to find time to work on innovative approaches, further reducing the ability of the system to produce good results and ensuring a results-oriented rather than control-oriented approach.

We are in a vicious cycle, and somebody's got to take this on before it gets worse.

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.