Kelman: The not-so-obvious lesson

If you don’t read the New York Times regularly, you may have missed a recent major investigative report on problems with an Army contract to provide ammunition to Afghanistan’s  army. The Times story, headlined “Supplier Under Scrutiny on Arms for Afghans,” was enormous — 4,430 words that started on the front page and occupied an entire inside page. The story concerned a small contractor that had won a major contract to supply the ammunition, and lots of what it delivered was inferior or nonfunctional, often coming from expired Eastern European stashes. The message was that the government had been ripped off by this unscrupulous firm, part of a general theme of waste, fraud and abuse in contracting. I am sure the lesson virtually all readers got is that we need more controls over contracting officials and unscrupulous contractors to prevent such fraud.Unlike when it buys for itself, the story states, when the Army buys for a third party, it does not establish specifications in the contract. Rather, the Army leaves that to the customer, in this case, the Afghan army. And “the customer…did not set age or testing requirements,” so the contractor could provide inferior product without violating the contract. The government has now suspended the contractor for a violation not of quality standards but of a provision against sourcing ammunition in China. My reading of the story is completely different from the impression the writer was trying to create. What seems to have happened is that Army contracting officials followed the rules, but they didn’t show good business judgment.They followed the rules: When the United States is procuring on behalf of a third party, the third party, not the United States, establishes specs for what it wants.They showed poor business judgment: That normally is a sensible rule, but in the case of Afghanistan’s army, it didn’t make sense because the Afghans don’t necessarily know how to establish specs for such a contract. Contracting officials should have realized that the rule didn’t make sense here, and they needed to take more responsibility for specs than the rule required.The story reminded me of something I observed when entering government in 1993. Most agencies were then buying commercial software in shrink-wrapped packages rather than getting more economical site licenses. Here also, nobody was violating any rules. The contracts were competed, and government probably got the lowest prices anywhere for shrink-wrapped software. But government was following poor business practice. What we tried to do during 1990s procurement reforms was encourage contracting folks to realize their job consisted of more than following rules. My lesson from the munitions story is different from the one the Times suggests. The solution is not more controls.  more of a sense that contracting officials should be business advisers. ()