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Why Federal Contracting Should Be More Like Made-From-Scratch vs. Store-Bought Cookies

Integrity Management Consulting and GovLoop are proud to present a 12-part series called “Conscientious Contracting: A Thoughtful Approach to Acquisition and Program Management,” that aims to address common challenges and achieve new efficiencies in government procurement.  Integrity Matters will bring you occasional posts written by GovLoop’s Andrew Krzmarzick, featuring the expertise of Integrity subject matter experts.

Cookie imageIt’s probably been a long time since you’ve made fresh-from-scratch cookies. Everything these days is designed for convenience – pre-packaged, pre-made dough that you pop in the oven for a few minutes and – voila! – you have warm, delicious cookies. But we all know that those are nowhere near as good as the ones grandma used to make.

When comparing cookies to contracting, most agencies would likely admit that their process is more pre-packaged than scratch and more cookie cutter than creative.

Recently, I spoke with John Coombs, former Assistant to the Deputy Assistant Secretary of the Army for Procurement and now an Integrity Fellow. In our interview, I got the impression that agencies ought to think about the acquisition process more in terms of made-from-scratch cookies where you can mix a lot of different ingredients together versus sticking with options that are akin to easy-to-make, store-bought brands.

Below are three recipes you might not have tried recently, but that are worth considering:

1) ID/IQ Contracts: “Use ID/IQ contracts whenever possible,” said Coombs. “Check to see if there are existing ID/IQs available, including strategic sourcing opportunities, and if not, establish an ID/IQ using your current requirement as the first task order to satisfy the minimum guarantee. Then you don’t have to go through a full up competition every time after that in order to place new contracts for the same items or services.” ID/IQs give agencies the flexibility to support multiple customers and multiple requirements using fewer human resources and with shorter procurement lead time. The key here, says Coombs, is to “ensure your scope is broad enough to cover multiple requirements and multiple agencies.”

2) Hybrid Contracts: You’re never stuck with having to use just one contracting recipe. For instance, Coombs recommends that agencies consider hybrid contracts. “Break your requirement into core and surge,” explains Coombs. “For your core, have a fixed price contract and for the surge use time and materials – that’s a hybrid.” Coombs admits that hybrid contracts are harder to put together, “but they will give you so much more flexibility and control over the requirement and the changes after it’s awarded.”

3) Incentive-Based Contracts: If you’re looking to transfer the risk and potentially save the government some money in an acquisition, you might want to bake incentive fees into the procurement. “Incentives for effective management and cost control” that are tied to a profit potential for contractors can lead to significant savings for government. For instance, an agency with a procurement for $1 million may incentivize the contractor by saying the government will split 50/50 any amount that falls under that threshold upon contract completion. If it comes in at $900,000, the contractor gets $50K back in their pocket and the government saves the same amount on the acquisition.

One caveat for this approach Coombs noted is that, “award fees have to be based on concrete measurable goals, such as ‘deliver product 180 days after award’ or ‘personnel on station within 30 days of contract award or delivery of a comprehensive management plan’.”  Award fees should be based on exceeding acceptable quality levels and are best used with performance-based contracting.

These are just three examples, but Coombs suggests that contracting professionals should re-visit FAR, Part 16 and think more creatively about the ways in which they combine the ingredients they find there in order to achieve efficiencies and increase the probability of achieving desired outcomes. There are many difference contract types that can be mixed to form custom recipes for the requirements at hand, increase flexibility, help realize DoD Better Buying Power objectives, or support Federal strategic sourcing initiatives.

For me, that means seeing the FAR more like a cookbook – and the best bakers are able to learn over time how to combine a variety of ingredients, adjust the temperature based on risk and requirements, and ultimately come up with a better batch of contracts than when they stick with a simple, quick-bake brand of procurement.

How have you effectively used more sophisticated recipes to bake a better contract?

Is it unfair to compare “time and materials” or “firm fixed price” to “store-bought brands” or does the analogy hold true as more cookie cutter than creative?