OMB's Zients stakes out acquisition reform plans

The Office of Management and Budget is drawing a line in the sand for how agencies need to improve federal contracting. In fact, they are putting down several of them.

OMB's deputy director for management Jeffrey Zients detailed those goals and explained why this approach and time will be different than previously to lawmakers Wednesday.

"I'm a big believer of putting a stake in the ground and driving results," says Zients during a Senate Homeland Security and Government Affairs Ad hoc Subcommittee on Contracting Oversight hearing. "My basic philosophy is setting goals and driving organizations through them. We will monitor them and, if needed, get corrective action plans in place."

In two memos issued Tuesday, OMB put several stakes in the ground.

The first is for agencies to save $40 billion over the next two years by reviewing work they have contracted out and deciding if it can be done better by bringing in house or recompleting it.

Agencies have until Nov. 2 to submit to OMB plans on how they will do this.

Zients' second stake focuses on whether agencies are using the most appropriate type of contract, reducing the number of cost reimbursement type contracts and using more firm fixed price contracts. OMB wants agencies to reduce by 10 percent the number of cost type contracts by the end of 2010.

"We will track their progress and do a mid-year and end of year review and based on what we learn we will set targets for future reductions," Zients says.

The third area OMB wants agencies to improve is around the acquisition workforce.

Zients says agencies will increase the governmentwide acquisition workforce by at least five percent by 2011.

"Increasing the workforce is only half the equation," Zients says. "We need to build competences as well. We have figured out what they don't have and what skills they need, and the appropriate succession planning. There is a lot of work to be done and we are not where we want to be."

There was one area that neither the memos nor Zients addressed at this hearing. OMB is trying to define what inherently governmental work really means.

Zients told subcommittee members that OMB would release a draft definition by the end of the year.

"It's a complex terrain and we have started to work on inherently governmental through pilots and insourcing guidance we did in the July, but the major work for inherently governmental is ahead of us," he says. "Right now agencies are picking pilots where they believe they are overly reliant on contractors, and hopefully there aren't any areas that where we actually have inherently governmental being done by contractors. If that is the case, they need to be insourced immediately."

Zients says OMB will work with agencies on 20 pilots programs to assess workforce size and skills and evaluate whether they are using contractors for jobs the government could do better and less expensively.

"The assessments could lead to insourcing or to adding resources or hiring more employees," he says. "We will take these insights and apply them to other parts of the agency."

Agencies chose to test out this process in a variety of areas, including technology and acquisition. Zients says about one-third of the pilots will be around IT support services such as help desk.

Subcommittee members offered mixed reviews of OMB's plans.

Sen. Claire McCaskill (D-Mo.) says she was both pleased with OMB's plans, but also concerned that they didn't offer more specifics.

McCaskill says OMB has provided little "concrete guidance for how to achieve necessary reforms" and it doesn't provide a clear way to increase competition, just "guidelines" and "questions" to ask.

"Another serious problem is the lack of accountability," the subcommittee chairwoman says. "OMB has committed to setting a few targets and reviewing agencies' progress toward those targets. But the guidance sets out only a handful of specific dates and deliverables. And even these are vague. OMB has not said how it will review progress for agencies, or what metrics or benchmarks the agency will use."

Sen. Susan Collins (R-Maine) says she was disappointed with OMB's acquisition strategy.

"This is pursuant to law we wrote and the President's memo, but it lacks adequate analysis and substance in my view," Collins says. "It's really boiler plate. It reiterates a list of general human capital planning guidelines and talks about various interagency working groups. I'm tired of studies and working groups. I want to see action. The strategy seems to delegate to each agency what the law requires the Office of Federal Procurement Policy to do."

She adds that if agencies do not solve their workforce issues, the rest of these efforts do not matter.

And Sen. Tom Coburn (R-Okla.) wanted to know more about how OMB plans to train and hire more experience contracting officers. He says he was disappointed in how the Bush administration addressed these issues.

Zients says to meet their goals of saving money and increasing competition requires not only more people, but more experienced people.

"We have a successful internship program to bring people in at the entry level and now we are repeating that for mid-career people," he says. "We need to bring in people with more experience and that will help. It's not the majority of our strategy, but a significant part."

Zients made it clear to lawmakers that these may be OMB's goals, but it's up to the agencies how they meet them.

"The agency will have responsibility of coming up with approaches that solve their individual challenges and produce real results," he says. "OMB will have the responsibility to make sure agencies have the tools and resources they need to break down the barriers that stymied progress for too long. We will review the progress and hold agencies accountable for results."

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On the Web:

Senate Homeland Security and Governmental Affairs Committee - Hearing on OMB's procurement memos

OMB - Acquisition workforce strategy memo (pdf)

OMB - Competition and savings memo (pdf)

FederalNewsRadio - Government agencies join together for the Better Buy Project

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