Needed Procurement Changes

Our final comments have to do with the procurement of government – supported RD&D projects. We have made a case for research in the national laboratories, joint development, and industry-led demon­strations. There are good technical and policy reasons for these recom­mendations, but to be successful we need to minimize what government does worst—R&D procurement. This is a problem that is endemic to all gove^rnment programs, but the solar heat technologies program is a prime example of how devastatingly inefficient the federal procurement process was. The solar heat technologies program was implemented to a very large degree through small contracts to individuals, small businesses, not- for-profit organizations, universities, and some large companies. During the first five years of the program, there were hundreds of contracts, most of them with values of less than $100,000. From our perspective as pro­gram managers, and more recently as contractors, we know how frus­trating the procurement process is to all parties. Procedures intended to protect the taxpayers’ interests and to assure the gove^rnment gets full value for its dollars often have just the opposite effect. There are three major problems with the federal procurement system as applied by DOE in the solar energy program: (1) it is too slow, (2) it is too cumbersome for small contracts, and (3) contracts are administered by offices that have no responsibility for, and little interest in, the outcome of the contract or the program it supports.

All gove^rnment agencies operate on a one-year budget cycle. In theory, each agency receives its budget allocation on or before the beginning of the fiscal year (now October 1), and must have spent or committed those funds by September 30 of the following year. In fact, it is often several months into the fiscal year before agencies or offices within agencies know their budgets and receive the authority to spend them. This problem is compounded by the fact that procurement times (the time between pro­curement announcement and contract award) are rarely less than 6 months and frequently 12 to 18 months. This situation puts managers in a totally untenable position. They must plan programs to achieve certain objectives within the budget year, for which they are accountable, but they are unable to implement them by the expected time. As a result, both managers and contractors are always under unreasonable and unneces­sary time pressures. Managers spend an excessive amount of their time trying to “beat the system” in placing crucial contracts. Bidders are often forced to exaggerate their capabilities, especially schedules, in order to win a contract; as contractors, they may produce less than their best work in order to meet an impossible schedule. Although it makes no sense for the procurement process to take longer than the execution time for an R&D project, this is often the case. R&D is not a commodity that can be shipped whenever the order is received.

The second major problem is the indiscriminate application of contract regulations designed for major gove^rnment contracts to all DOE con­tracts, large and small. Small businesses, or individuals, are often asked to comply with accounting practices designed to keep a large defense con­tractor honest. Conforming to these rules is often an extremely costly burden on small businesses and an unacceptable intrusion on larger ones. For example, the rules on accounting for cost reimbursable contracts are only intended for contracts over $500,000, but DOE field offices applied them to all cost-reimbursable contracts. This is simply an example of applying the strictest rule available to all situations in order to avoid criticism for being too loose with the taxpayers’ money. No one ever cal­culated the additional cost to taxpayers of added contractor and govern­ment overhead, sour contractor relations, and lost resources caused by following these rules.

The first two problems are exacerbated by the third. Procurement offi­cials in government are physically, administratively, and mentally removed from the technical program managers. Even when procurement officers have the authority to apply the rules to the benefit of the pro­grams, or to use more efficient contracts, few will risk potential criticism for the sake of a project or program that is of no direct concern to them. The take-no-risk syndrome, present in all branches of gove^rnment, reaches its pinnacle in procurement offices.

Leave a reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>