Red Tape Must be Cut to Let Pentagon Buy from Amazon
Read the full article on The Hill here or below. Should the federal government be allowed to shop online like the rest of us? The answer must seem obvious to the average American, who already benefits from easy access to hundreds of thousands of products on the internet, all at competitive prices and with doorstep delivery. Many federal employees are likely to agree — especially when their mission-critical supplies are slowed by acquisition red tape. Now, Congress is examining whether the government should be allowed to utilize commercial online marketplaces, as part of the ongoing House and Senate conference on the National Defense Authorization Act (NDAA). Unfortunately, conferees will find that decades of federal acquisition policies have created such a tangled thicket of rules and regulations that a number of difficult tradeoffs stand in the way of a seemingly-simple idea to save government time and money. How much money? The Government Accountability Office (GAO) estimates that in fiscal year 2015 government contracting obligations totaled at least $438 billion — a whopping 12 percent of the entire federal budget, or more than $1,300 for every American. Fedbizops.gov shows where many of those federal dollars go, listing over 30,000 current contracting opportunities. Many request merchandise that is widely available online: office supplies, medical equipment, fire-fighting gear…even the services of one ordained Catholic priest. In theory, using commercial online marketplaces, as suggested by the House’s version of the NDAA, should streamline the government’s ability to purchase these types of items, providing the same benefits retail consumers enjoy. The marketplaces should facilitate effective price competition. They should allow the government to better leverage the power of free markets — taking advantage of commercial practices, terms and conditions. With the resultant metrics and analysis, the federal government should be able to track quality, pricing, spending patterns and user experience data. That information could dramatically improve transparency — for government and taxpayers. Other duplicative contract vehicles, such as GSA Schedules, NASA SEWP, Army CHESS or FedMall, could then be trimmed or eliminated, further reducing government overhead. The House report on the bill even suggests online marketplaces will “obviate many of the time consuming government-unique procurement processes.” But unless those unique federal procurement rules are also reviewed and reformed to better align with today’s commercial practices, many of the expected benefits will be lost. For example, to prevent waste, fraud and abuse, federal regulations deliberately slow purchases as contract sizes grow. This seems like common sense. Greater care should be taken for the largest purchases. But then, many agency-level contracting offices set additional reviews, slowing the process further. Originally intended to serve as maximums, in practice these thresholds often become published guidelines. For example, one office in the Department of Defense schedules 12 days to make a purchase up to $3,500 and 67 days for goods between $25,000 and $150,000. For purchases over $500,000, there is a 25-step approval process which runs 147 days — just shy of five months. As a result, untold hours are consumed by paperwork, while warfighters and other essential staff wait endlessly for necessary supplies. A better balance must be found. Today, the federal government is like a timber company that only uses old-fashioned axes and requires employees to spend two hours a day sharpening them. Before distributing chainsaws, or moving to online purchasing, management would be wise to rewrite its rules. Of course, many regulations may be worth preserving in the eyes of Congress. The Berry Amendment, for example, requires the Pentagon give preference to domestically-produced goods in certain categories. Other regulations ensure products are not counterfeit, or made by human traffickers or with the help of child labor. Today, federal employees who buy through the government-operated GSA Schedules know that merchandise listed there complies with those rules. But where will the regulatory burden reside in online marketplaces operated by commercial enterprises? While online marketplaces should increase transparency for both government and taxpayers, the system must not reveal sensitive national security information to hostile nations. Online marketplaces are an opportunity to improve speed, increase efficiency and deliver cost-savings, but only if paired with an appropriate, overarching reform program and a thoughtful, well-coordinated management component that together address and modernize procurement rules. If Congress is going to upgrade to chainsaws, let’s makes sure we also trim the thicket of unnecessary acquisition red tape. Scott Caldwell is the co-founder of Washington Business Dynamics (WBD), which provides management consulting services to clients. Brian Kreidler is a director at WBD. Together, they have over 30 years of federal acquisition, contract management and project management experience, including as consultants to the Department of Defense.