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“Partnered Government”: The Whole can be Greater than the Sum of the Parts*

“Partnered Government”: The Whole can be Greater than the Sum of the Parts*. NCMA Conference July 9-10, 2009. Professor Jacques S. Gansler Roger C. Lipitz Chair Center for Public Policy and Private Enterprise School of Public Policy University of Maryland.

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“Partnered Government”: The Whole can be Greater than the Sum of the Parts*

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  1. “Partnered Government”: The Whole can be Greater than the Sum of the Parts* NCMA Conference July 9-10, 2009 Professor Jacques S. Gansler Roger C. Lipitz Chair Center for Public Policy and Private Enterprise School of Public Policy University of Maryland *This research was partially sponsored by The CGI Initiative for Collaborative Government

  2. Changes Driving Security Transformation Holistic View of Security – World-wide terrorism; pandemics; weapons proliferation; rogue nuclear states; energy dependence; insurgencies; environment; mass migration; regional conflicts; transnational threats; resource access (i.e., water, critical materials) New Missions –Homeland defense; missile defense; counterinsurgency; stability and reconstruction; civilian cybersecurity; non-kinetic situational influence of operations Unpredictability –Requiring agility, rapid responsiveness, broad-based capability Defense Budget Changes –From Equipment to Personnel, O&M and Homeland Security; frequent changes cloud spending outlook and planning Technological Changes –Info. tech, biotech, nano-tech, robotics, high-energy lasers, etc. - -and every warfighter and platform a “node” in a system-of-systems Warfighting Changes –Net-centric Warfare; Asymmetric warfare (bio, cyber, IEDs); Systems-of-Systems; Joint and coalition operations; evolving doctrine requiring frontline decision-making Intelligence Changes –Integrated data; open-sources; Language and culture understanding; real-time intel flow between soldier/sensors and command structure Industrial Changes –Horizontal & vertical integration; commercial high-tech advances; open networked innovation; off-shore manufacturing Globalization – Technology and industry are globalized; geo-politics and scope of threats requires security coalitions; DoD no longer the leader in all military technologies; global financial markets enable borderless investing Isolationist/Protectionist Moves –“Buy-American”; Berry Amendment; ITAR, export controls; restrictions on foreign scholars, students, and S&T workers China –Future adversary, Economic Competitor, or Global “Partner” Domestic Economics –Health care; demographics; budget and tradedeficit Government Workforce –Aging; wrong skill mix; rules vs. judgment; “managers” vs. “doers”; difficult to attract and retain top people Industry Workforce – Aging, eroded systems engineering skills; difficult to attract and retain top S&T people Recent Congressional Reaction to “Scandals” –Druyun, Cunningham, Abramoff, etc. NCMA Conference

  3. Causes of Increased Partnering Government reduction and undervaluing of Acquisition workforce (broadly defined) Government fiscal trend (Social Security, Medicare, supplementals, and (now) stimulants) An aging (and retiring) workforce Increasing importance of I.T. and increasing complexity of equipment and systems. Increasing importance of knowledge in effective operation of most organizations Private sector and A-76 demonstrated gains in performance and flexibility from competitive sourcing. NCMA Conference July 9-10, 2009 3

  4. Reduced DOD Acquisition Workforce NCMA Conference

  5. Acquisition Workforce – Across the Federal Government – is a critical concern • Aging workforce (across the government) - and few younger hires • DoD, especially, has an acquisition workforce problem: • Greatly reduced senior officers and SESs - In 1990 the Army had 5 General Officers with Contract background; in 2007 had 0. - In 1995, the Air Force had 40 General Officers in Acquisition, today 24; and 87 SESs and today 49 - DCMA (25,000 down to 10,000; 4 General Officers to 0) • Introduces “opportunities” for “waste, fraud and abuse” (90 fraud cases under review from war zone; examples of poor acquisition process results, e.g. Tanker, President Helicopter, etc.) • Government acquisition workforce issues must be addressed: both Obama and Congress agree (but it will take time) NCMA Conference July 9-10, 2009 5

  6. Build Up 1986 6% GWOT Gulf War 1991 4.5% Increasing Budgetary Pressure (before the financial crisis) Source: Budget Of The United States Government, Historical Tables, FY 2009 NCMA Conference

  7. Workforce Demographics Source: AT&L Human Capital Strategic Plan V3.0 2007 NCMA Conference

  8. In the case of military-- “tooth to tail ratio” NCMA Conference

  9. Areas of Visible Impact of Increased Partnering Program Offices Intelligence Contractors in the war zone Personnel Security NCMA Conference July 9-10, 2009 9

  10. Acquisition-Related Functions As Report By 66 Selected Program Offices a Program offices reported additional administrative and other staff that we excluded from this table, as they would not be considered part of the acquisition workforce Source: GAO-09-342 March 2009 NCMA Conference

  11. Contractor support to the Warfighter As of 2008, approximately 260,000 contractor personnel were working in the Iraq and Afghanistan theaters** Sources: * Grier, Peter. Record number of US contractors in Iraq, Christian Science Monitor, August 18, 2008 **Assad, Shay, Director, Defense Procurement and Acquisition, April 2, 2009 NCMA Conference

  12. The Issue Gaining the benefits of “Partnered Government” (i.e. potentially higher performance, greater flexibility, and lower costs) without the risks (i.e. potential organizational and personal conflict-of-interest, or the private sector performing inherently-governmental functions) Current “initiatives” by both Executive and Legislative Branches in this area are of growing concern (e.g. regarding: “insourcing,” elimination of competitive sourcing, excessive COI “interpretation,” “industry bashing,” and the erroneous belief that government is always cheaper). NCMA Conference July 9-10, 2009 12

  13. Competitive Sourcing • A-76 Competitions • Outsourcing • Privatization • Public/Private Partnerships Doer Manager of Doers What is the proper role for the government in this environment? • Provide services to the citizens in accordance with the constitution • Evolve its role as citizen needs change (i.e. terrorism) and as commerce evolves • Respect the synergism of commerce and government • Manage commercial providers where possible; do the function only when required • A shift from “the provider of goods and services” to the “manager of the provider of goods and services” • Government does only those functions which are “inherently governmental;” or which it can do most efficiently and effectively. Government is always the responsible party NCMA Conference

  14. Results From Market-Based Government • The results from market-based sourcing over the last 30 years have been impressive • Competition creates incentives for higher performance at lower costs (vs. public or private monopolies) • Additionally, senior government managers now have far greater control • They can use the competitive market to reward or replace, based on measured performance and costs (vs. their lack of control—or visibility—in the presence of a government monopoly) NCMA Conference

  15. Results of A-76 DoD Cost Comparisons:1978 - 1994 Defense Reform Initiative Report, Nov 1997 NCMA Conference

  16. Results of A-76 Cost Comparison: FY 1997 - 2001 • DoD completed 314 cost comparison A-76 studies • 36,987 positions competed • Reduced number of positions by 35% to 24,136 • 40% of competitions (49% of positions) won by private sector Source: DoD CAMIS Data NCMA Conference

  17. Case 1 2 3 4 5 6 RAND Study of Realized Results (Six Cases) • The expected savings ranged from 41 to 59 percent for contractor wins, and from 34 to 59 percent for in-house wins. • RAND found that the contract savings were sustained over time. • No cost data was kept for the in-house wins, so direct comparisons could not be made. However, the final headcounts were comparable to the MEO’s bid (authorizations are a pretty good proxy for personnel costs). NCMA Conference

  18. CNA Study of Long-Run Costs of Competitive Sourcing Long run Costs and Performance Effects of Competitive Sourcing CNA, February 2001 • Weighted Averages • Expected Savings (as bid by winner – government or private) 35% • Observed Savings (realized results, including scope & quantity changes) 24% • Effective Savings (realized results on same scope & quantity) 34% NCMA Conference

  19. Effects on Employees Analysis of almost 1200 DoD “studies” (competitions) demonstrates that only a small percentage of federal employees are involuntarily separated as a result of competitive sourcing. (Gansler & Lucyshyn, IBM Center for the Business of Government Report, Competitive sourcing: What Happens to Civilian Employees, Oct. 2004) Note: Percentages may not check because round off NCMA Conference

  20. Logistics Results: Improving, but not World-Class DOD FY2006 DOD FY2004 International – World-Class Domestic – World-Class 1991 Gulf War Number of Orders Filled 16 Days 21 Days 1-2 days 2-4 days 49 Days Order to Receipt Time (days) NCMA Conference

  21. Material Availability Logistics Response Time NavyProgram Pre-PBL Post-PBL Pre-PBL Post-PBL H-60 Avionics APU Performance Based Logistics Availability and Response Time F-14 LANTIRN 73% 90% 56.9 Days 5 Days 71% 85% 52.7 Days 8 Days 2 Days CONUS7 Days OCONUS 65% 98% 42.6 Days F/A-18 Stores Mgmt System (SMS) 2 Days CONUS4 Days OCONUS 70% 85% 28.9 Days Tires 65% 90% 35 Days 6.5 Days NCMA Conference

  22. Continued Definitional Problem Inherently Governmental Warfighting Budgeting Policy Making Acquisition Decisions Law Enforcement Management of Critical Functions Etc. Non-Inherently Governmental Wrench Turning Grass Cutting Truck Driving Analysis Translating Potato Peeling Support to inherently-governmental Etc. NCMA Conference July 9-10, 2009 22

  23. Growing Concerns Belief that contracting for private sector skills and expertise is inefficient, and in some cases wasteful. Assumption that government managers lose an element of control over their workforce. Organizational and Individual Conflicts of Interest Performing “Inherently Governmental” functions However: • When government has partnered (in a competitive environment) with the private sector firms for “non-inherently governmental” work, they have demonstrated significant cost and performance benefits. • Rolling back contractor use ignores the demographic, budgetary, and performance realities of why contractors are increasingly employed in the first place NCMA Conference July 9-10, 2009 23

  24. Thought Leadership Forum The University of Maryland’s Center for Public Policy and Private Enterprise hosted a Thought Leadership Forum, on April 1-3 2009. We brought together 21 senior government officials, business leaders (from a range of federal government organizations and private sector firms of various functions and sizes) and academics. The purpose of the Forum was to examine the challenges to effective partnering, and to develop recommendations. NCMA Conference July 9-10, 2009 24

  25. Recommendations • Leadership: Senior Leaderinvolvement is necessary to overcome political and cultural resistance. • Change the Culture and Make Effective Partnering a Top Management Priority • Develop an Effective Governance Structure for Partnered Government • Provide Consistent Leadership for Partnered Programs • Build an Agile, Multi-Sector Workforce NCMA Conference

  26. Recommendations (cont) • Overcome Barriers: Communications and trust are critical. • Develop and maintain communications to build trust • Develop appropriate metrics and incentives for both the public and private sector organizations • Identify the appropriate Contract Type and details NCMA Conference

  27. Recommendations (cont) • Avoid Conflicts of Interest: Conflict of Interestcan undermine public confidence in individuals, private firms, and the government. • Develop new approaches, and provide guidance, to Eliminate Organizational Conflicts of Interest • Develop a consistent policy for contractors for personal conflict of interest, and then require the selected contractor to enforce the policy. NCMA Conference

  28. Recommendations (cont) • Enhance Competition: Competition improves innovation, cost, and performance. • Ensure Competitiveness at the Prime Level and Sub-Tier Levels • Reduce Barriers-to-Entry • Expand the Use of non-Traditional Contracting Authorities • Expand the use of competitive dual-sources • Enforce policies to limit use of government-unique standards, specifications and certifications • Keep “systems open”– eliminate proprietary architectures and interfaces • Use Available (proven) Technology • Where Appropriate, Reduce the Government Monopoly NCMA Conference

  29. Recommendations (cont) • Human Capital: Agencies must attract the best workers through better hiring processes. • OPM should Improve the Hiring Process • OMB Should Identify Inherently-Governmental Functions • Identify “critical positions” that need to be performed by government personnel • Develop the Required Human Capital • Expand use of Web 2.0/virtual, interactive technologies to recruit and attract the next generation workforce. • Greatly expand education and training (regarding partnering) NCMA Conference

  30. “It ought to be remembered there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders among those who may not do well under the new.” Machiavelli A forthcoming report on “Partnered Government,” by The Honorable Jacques Gansler, Ph.D. and Mr. William Lucyshyn of the Center for Public Policy and Private Enterprise at the University of Maryland, will offer practical recommendations for tackling escalating program complexity amid growing budget pressure. To sign up for a copy of “Partnered Government” please visit: www.collaborativegov.com NCMA Conference

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