Breakout Session # 1102 Dr. Joseph A. Pegnato, Principal, The MITRE Corporation Dr. Bradley Schoener, Principal, The MI

2. Acquisition Workforce:A Human Capital Crisis Breakout Session # 1102 Dr. Joseph A. Pegnato, Principal, The MITRE Corporation Dr. Bradley Schoener, Principal, The MITRE Corporation Scott Webb, Principal, The MITRE Corporation April 23, 2007 1:40-2:40 The authors’ affiliation with The MITRE Corporation is provided for identification purposes only, and is not intended to convey or imply MITRE's concurrence with, or support for, the positions, opinions or viewpoints expressed by the authors.

3. Topics Understanding the Challenges Procurement Reforms Range of Options Outlook for the Federal Government A Descriptive Presentation on Issues Affecting the Acquisition Workforce

4. Recent Trends in Federal Acquisition • Work of Government is increasingly being performed by contractors • “Contractor Nation” is term used by Tom Shoop of Government Executive magazine • Government oversight responsibilities are increasing • Contract spending is increasing • More services are being purchased • Number of acquisition personnel have decreased

5. Federal Acquisition Reforms • History of Federal Acquisition is the history of reform • Reforms attacked Civil War profiteering • Recent Reforms • FASA • Clinger Cohen • SARA • Competitive Sourcing • Many others

6. U.S. Government Outsourcing Policy: Current Version is Competitive Sourcing • Established in 1955 • Policy suggests that the Government should rely on private sector for services • The rationale – the private sector should be more efficient than the public sector • Office of Management and Budget Circular A-76 provides guidance • Current Policy of Competitive Sourcing

7. Reality of Outsourcing • Not always more efficient nor more effective • GAO & IG’s have documented extensive contract management performance problems • “Reliance on contracting out has not so much solved problems of efficiency in American government as aggravated them.” • (Donald F. Kettl, Sharing Power: Public Governance and Private Markets)

8. 377.5 B 68,145 Government Acquisition Employees 59,477 58,161 Government Acquisition Employees 2006 • Federal Acquisition Institute, Report on the Federal Acquisition Workforce (April, 2005) • US House of Representatives Report “Dollars, Not Sense” (June, 2006); FAI July, 2006) Workforce Declining in Face of Larger and More Complex Contracts 305 Billion Dollars in Government Contract Dollars Obligated • Federal Procurement Data Center Annual Reports (FY 92-03) 200 Billion Dollars in Government Contract Dollars Obligated 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

9. State of DOD Acquisition Workforce • “We’ve got a crisis within DOD in terms of our people,” • Shay Assad, Director of Defense Procurement and Acquisition Policy, in describing the current state of the defense acquisition workforce (Federal Contracts Report, June 20, 2006) • Concerned that a large segment of the acquisition workforce is ready to walk out the door • Workforce may have been stretched as far as possible • Stopped short of saying that there are not enough people to do the job • Called for improved training of DOD acquisition personnel to change the way business is conducted

10. Downsizing of the 1990’s DOD workforce cut in half (’90-’03) Workload increased 12% Increasing number of the acquisition workforce reaching retirement age Contractor Workforce from ’99 to ’05 Increased from 4.4M to 7.6M: a 78% increase (Light, 2006) A Downsized Workforce

11. Very little recruiting and hiring done in the ’90s An in-coming workforce would have been educated and trained on modern technology Opportunity, to gain first-hand experience of the rapidly changing profession, lost Next Generation of Workers

12. Another Workforce Challenge: Increased Demands for Accountability • Government Performance and Results Act/ Government Management Reform Act • OMB Exhibit E-300 • Revised format 2006 • Earned Value Management • EVM added to the FAR 2006 • Performance-based Contracting • Continuous oversight by GAO and IGs • Framework for Assessing the Acquisition Function at Federal Agencies

13. Acquisition of More Complex Systems • Acquisition Complexity has Increased • 15 years ago 33% of acquisition were services; today 65% are services • Greater commercial contracting • Performance-based contracts • Use of past performance • Best value

14. Complexity of Acquisition – Many Things to Consider … Acquisition Approach Program Management Approach Acquisition Oversight Exit Criteria Contract Types Cost Schedule for Contract Award Quality Assurance Surveillance Plan Milestone Decision Points Program Structure Contract Management Source Selection Plan Budget / Funding Earned Value Acquisition Phases Test & Evaluation Performance Measurement Security Period of Performance Award Fee Plan Mission/Business Needs Product/Service Description Integrated Master Schedule/Plan Risk Management Logistics Business Strategy Systems Engineering Integration with Other Programs

15. Overpriced contracts Lack of attention to contract management Excessive reliance on contractors because of lack of in-house capacity Catalysts to Reforms

16. Do Procurement Reforms Offset Workforce Decline? • Credit cards streamlined micro-purchases, but added oversight and complexity • GWACS and task order contracts reduced cycle time, but added oversight • DOD Inspector General (IG) states that reforms are inadequate to offset workforce reductions • The IG is concerned about workforce’s ability to handle formidable workload

17. Reforms Have Reduced Government Control • As reliance on contractors increases, investment in government acquisition staff skills decreases • Situation is further complicated if the government does not oversee its contractors • Policy making to policy implementation complicated by contractors, resulting in policy makers having less control

18. Impact of Reforms on Mission • GAO: “It is becoming increasingly clear agencies are at risk of not having enough of the right people with the right skills to manage service procurements.” • Current administration’s outsourcing emphasis may place even more stress on government acquisition workforce

19. Services Acquisition Reform Act (SARA) Panel Findings (Draft Dec 2006) • “The Federal Government does not have the capacity in its current acquisition workforce necessary to meet the demands that have been placed on it.” (p. 5-26) • During the 1990s • There were substantial reductions in the acquisition workforce • Hiring of new acquisition professionals virtually ceased

20. Services Acquisition Reform Act of 2003 (SARA) Panel Findings • “Demands on the Federal acquisition workforce have grown substantially.” (p. 5-15) • Dollar volume of obligations have increased 60% in last five years • Pronounced shift from acquisition of goods to services • Complexity of procurement increased by: • Greater use of best value procedures • Greater reliance on past performance evaluations • Increased use of performance-based contracts • Focus on acquisition of commercial goods and services

21. Require Human Capital Planning for the Acquisition Workforce Recruiting Retention Competitive compensation What Can Be Done? A Range of Options

22. Promote acquisition intern programs Promote mentoring programs Training: New skills are needed Acquisition officials need to be business partners Contractor oversight is now a more important skill What Can Be Done? A Range of Options

23. Change relationship between agency management and government contracting from “rules constraints” to business partner What Can Be Done? A Range of Options

24. Appropriate use of fee for service contracting activities Treasury’s FedSource Interior’s GovWorks GSA’s FTS What Can Be Done? A Range of Options

25. What Can Be Done? Greater Use of Technology & Tools • SEI CMMI - Acquisition Module • Quality frameworks from the Acquirer’s (Government) Perspective • Integrated document generation & management systems • E-commerce • Streamline work processes • Reduce labor-intensive activities • Capture and reuse knowledge

26. What Can Be Done? 2006 DOD Authorization Bill • Bill directed Defense Secretary to develop a human resources strategic plan to improve management of acquisition workforce • Bill also required DOD to increase acquisition workforce by 5 percent a year in 2006, 2007 and 2008

27. The challenges confronting the government acquisition workforce stem from the convergence of three forces: increasing numbers of workers reaching retirement age, political objectives to shrink the size of government, and the need to acquire an increasing number of increasingly complex systems. Shortfall in capacity has led to heightened cost, schedule, and technical performance risk. Conclusion

28. Increasing the efficiency and effectiveness of the overburdened government acquisition workforce may be the factor that differentiates between success and failure. That workforce must do a better job of structuring and awarding complex contracts and managing an increasingly outsourced workload. Conclusion

29. Session 1102 Dr. Joseph A. Pegnato, 703.983.3059, jpegnato@mitre.org Dr. Bradley Schoener, 703.983.1284, bschoener@mitre.org Scott Webb, 703.983.8955, swebb@mitre.org The MITRE Corporation 7515 Colshire Drive McLean, VA 22102 Questions?