Wary of the Watchdog
Civilian agencies are striving to buy more creatively while staying within procurement rules.
The scandal and criminal prosecution surrounding former Air Force executive Darleen Druyun's repeated favoring of Boeing Co. in large acquisitions brought ethics to the top of buyers' agendas in 2004. Though the misdeeds occurred within the Defense Department, what happens in the Pentagon should be of great concern to civilian procurement officials, Deidre Lee, the Pentagon's former director of procurement and acquisition policy, noted in a June speech at a federal acquisition conference in Washington.
"We need to be vigilant," says A. Jo Baylor, the Housing and Urban Development Department's chief procurement officer. Nonetheless, the predominant view is that the Air Force mess shouldn't prompt rule tightening. Rather, chief acquisition officers appear to believe the best way to prevent corruption is to remain focused on ethics training and other safeguards already in place.
Even in the ethics spotlight, civilian agencies tested fresh buying approaches as they awarded $99 billion in contracts in 2004. At the State Department, where there's been a tendency to judge contracts by the speed of the award rather than the quality of the deals, officials are intent on "reintroducing quality into the equation," says Corey Rindner, the department's procurement executive.
Rindner is seeking ways to enhance accountability for time-and-materials contracts-agreements where contractors base their fees on how long a project takes and what supplies are needed. The department might ask companies under such contracts to assume more risk by allowing a portion of their hourly rate to be set aside in an award pool until they meet certain performance criteria.
The Interior Department is testing new ground on performance-based contracts. The National Park Service, one of the department's eight bureaus, recently crafted an award-term contract to plan, design and manufacture signs, says Debra Sonderman, the department's director of acquisition and property management. Award-term deals allow agencies to reward exceptional contractor performance by extending contracts.
Civilian agencies also are experimenting with strategic sourcing, a new Office of Management and Budget initiative requiring them to analyze buying patterns so they can negotiate better deals on bulk items such as office supplies. OMB is requiring agencies to identify three commodities they could purchase using strategic sourcing.
Even the Homeland Security Department, which is short-staffed in its procurement offices, is breaking ground. DHS recently awarded a strategic sourcing deal worth up to $60 million over five years to DHL, an express shipping company. Greg Rothwell, the department's procurement chief, says he sees Homeland Security as the strategic sourcing pioneer. "We've got a great success story," he says.
Four DHS commodities councils analyzed spending patterns and saved a total of $14.1 million in fiscal 2004. "The savings have resulted from DHS negotiating lower rates with suppliers and leveraging resources across the department," the Government Accountability Office said in a March report (GAO-05-179).
Nevertheless, strategic sourcing requirements might not be as easy to meet governmentwide. HUD, for instance, hopes the administration will allow commercial services to count as a commodity. Baylor says, "Each agency has to tailor its strategy to what it buys."