Former Pentagon official wants to end use-it-or-lose-it spend policy
NASHVILLE, Tenn. – Former Pentagon policy chief Michele Flournoy says the Pentagon should instill a more cost-conscious culture by taking away the incentive for program managers to hurry up and spend at end of the fiscal year.
“Today's system essentially penalizes anyone who does not spend every last dime of their budget by the end of the fiscal year,” Flournoy told attendees at the National Contract Management Association conference here on Monday.
Flournoy, who served as undersecretary of Defense for policy from 2009 to 2012, said managers know that if they don’t spend their remaining budgets, then Congress is likely to cut program spending the following year, which, she added, "is not exactly a recipe for promotion."
“It’s a use-it-or-lose-it kind of situation,” she said.
A better system, Flournoy said, would be to reward program managers who meet milestones while saving tax dollars. Those managers could receive accelerated promotions and awards, she said.
“This would be one very important step to create a more cost-conscious culture within the department.”
Flournoy also said DOD needs to be more aggressive in adopting cost savings techniques that work in the private sector, such as spend analysis, strategic sourcing and reverse auctions across the department.
She was encouraged that Defense Secretary Chuck Hagel has identified cutting overhead spending as a priority, though she said Congress needs to give the department greater flexibility in enacting a host of reforms that could save money without hollowing out military forces.
She said she saw the overhead problem first-hand overseeing about 1,000 employees as the Pentagon's top policy official.
“My judgment was that I didn’t actually need that many to pursue the mission that we had,” she said. But Flournoy said she lacked the authorities to “streamline and reshape.”
Sequester may undo gains in building contracting workforce
NASHVILLE, Tenn. — The sequester could undermine the steady progress the Army has made in rebuilding its once-outgunned acquisition workforce, a top military contracting official said Wednesday.
“Quite frankly, quite abruptly, we look like we are going to stop that growth and are likely to reverse most of that growth that we had in the past seven or eight years,” Michael Hutchinson, deputy to the contracting general at Army Contracting Command, said in a panel discussion here at the National Contract Management Association conference.
“The fear is ... it’s going to drive out all of our experienced people.”
Hutchinson said about 20 percent of the Army’s contracting workforce could easily retire within a day, but officials also worry about retaining all of the newly recruited thousands of younger contracting officers who have rebuilt the acquisition workforce after it was downsized during the 1990s.
After three years of pay freezes, furloughs this year and the prospect of more furloughs next year, Hutchinson said there could be a point where new contracting officers just decide to leave the job altogether.
“We have a really motivated workforce, I’m really proud of our workforce,” Hutchinson said. “They’re good people.”
But, he added, soon enough, people could grow tired of the tightening budget situation and leave.
So far, that hasn’t happened among the ranks of contracting officers, but the Army has lost interns to private industry, he said.
Hutchinson also said retention incentives designed to keep contracting officers around are “likely to go out the window.”
The need for a beefed-up Pentagon contracting workforce has been well documented over the years. In a report last year, for instance, the Government Accountability Office noted that the Pentagon had obligated about $375 billion in fiscal 2011, while the congressional watchdog and others have documented “shortcomings in DOD’s strategic and acquisition planning, contract administration and oversight, and acquisition workforce.”
Official: Rotate contracting officers with private sector
NASHVILLE, Tenn. – Joseph Jordan, the White House’s top contracting policy chief, floated the idea Tuesday of having contracting professionals rotate between government and the private sector.
“Is there a way where we can have people kind of bounce back and forth ... between industry and agencies?” Jordan said in remarks here at the National Contract Management Association conference.
“There are all sorts of issues, I know,” said Jordan, who is the administrator for the Office of Federal Procurement Policy. “But I refuse to say this is off the table.”
The Obama administration has placed tight rules clamping down on the so-called revolving door between government and special interests among political appointees, though Jordan’s remarks were aimed an audience of career workforce professionals.
His comments came amid a broader discussion about the challenges of retaining and recruiting contracting officers across government.
Jordan said 40 percent of the federal contracting workforce is eligible for retirement in the next five years, while a third of the workforce has five or fewer years experience.
Jordan said a sign of a healthy workforce is one where people feel they’ve got a myriad career options.
In a wide-ranging speech, Jordan also discussed efforts to root out fraud and abuse in contracting, including one little-known, cheap but effective tool used by the Small Business Administration, where Jordan was associate administrator before taking the White House procurement job.
SBA’s HUBZone program gives contractors an edge in competing for work if they’re based in certain economically distressed neighborhoods. Much of the fraud in the program involves companies setting up phantom addresses to qualify for the program while actually working elsewhere.
One SBA strategy to root out that fraud cost the price of a stamp. SBA sent letters to companies telling them to send back a notarized letter indicating that they’re eligible for the program.
SBA lawyers had said it didn’t matter legally whether the letter was notarized or not insofar as proving a company was making a false certification, but some contractors were leery about that and just dropped out of the program instead.
“If they signed it fraudulently that’s just as bad as if they got it notarized,” Jordan said. “But we realized there’s a behavioral thing about going down to your local bank or insurance agent and asking them to get involved in their malfeasance. And so we got a bunch of people sending a letter back saying, ‘Heh, you know what, I just realized I’m not really eligible.’ ”
Google, Apple see DoD as gateway for more corporate business
Apple, Google and other mobile suppliers want to know how they can build smartphones and tablets to meet Defense Department security standards.
They aren’t driven by the promise of big federal business, which pales in comparison to their overall market share, but rather an opportunity to expand business into other security-conscious sectors.
“If they can get to our level of security, then they can market out to the corporate world for health, banking, financial ... and you’re starting to see that,” said Greg Youst, mobility lead for the Defense Information Systems Agency. He spoke Wednesday at a cybersecurity event hosted by the technology group Meritalk.
“The drivers for these devices ... is the commercial market,” Youst said. “We’re a drop in the bucket.”
But “the market is listening to us,” he said. “Industry is coming to us.”
Youst said he was contacted by Google about three months ago and given a week to create a wish list of DoD’s mobile security needs, and he has had similar discussions with Apple about security.
“I went nuts,” he said of the Google conversation. He worked with the military services to develop a wish list, which included security requirements for verifying a user’s identity before the person can access a device.
Google is slowly incorporating security features developed by the National Security Agency into its Android operating system, he said, adding that DISA will review Google’s newly unveiled Android operating system to see which security enhancements that DoD requested were included.
Samsung was in talks with DoD for more than a year and received guidelines for developing its Android Knox smartphone, which DoD approved for department use in May, he said. Samsung markets the phone as an answer to “the mobile security needs of enterprise IT without invading the privacy of its employees,” according to its website.
BlackBerry, whose largest federal customer is DoD, “already knows this answer, [and] they have been doing [business] for years with us,” he said, pointing to the company’s subsequent success in the corporate world.
In May, DoD also approved government-issued iPhones and iPads using Apple’s iOS 6 operating system for department use.
“Everyone is trying to figure out how can I get to the larger market, and to get to the larger market I’ve got to have something that they all want,” Youst said. “What they all want is the capability of management and security.”
Count of data centers grows - again
In 2011, the Obama administration estimated the government had about 3,100 data centers. A June recount yielded more than 6,000. Now that number has grown again — to 7,145, according to figures released Thursday by lawmakers and confirmed by the Government Accountability Office at a hearing.
Rep. John Mica, R-Fla., chairman of the House subcommittee on government operations, criticized the Office of Management and Budget for the underestimate and for slow progress toward the goal of consolidating and closing centers.
“If they keep it up at this pace they have begun, it looks like it’s almost impossible to achieve that goal,” Mica said.
He said the administration needs to be more transparent about its data center consolidation efforts and to have a clear accounting of savings and closure metrics.
David Powner, director of information technology management issues at GAO, said he thinks the latest count is accurate but couldn’t guarantee there wouldn’t be changes in the number.
“I wouldn’t put money on it,” Powner said. “There are some fundamental questions about whether the government really knows what it has.”
But he said because of the nearly doubling of total data centers the overall possible savings has also doubled — from about $3 billion before to about $6 billion now.
Federal CIO Steven VanRoekel, who also testified at the hearing, said agencies have closed 484 data centers since 2010 . He also announced savings of $1.37 billion in data center and information technology program savings since launching the IT program data tracking tool PortfolioStat in March 2012.
He added that agencies plan 855 more data center closures by October and have identified $2.5 billion more in potential savings.
“We have made significant progress over the last year but there is still work to be done,” VanRoekel said.
He said the number of data centers has grown because of changes in the counting methodology and because agencies discovered more data centers that had previously been unaccounted for.
More important than the overall number of data centers, Van Roekel said, is the money saved and efficiencies gained by utilizing the remaining centers at a higher rate than before. Savings include energy consumption, facility maintenance cost and operational efficiencies.
Rep. Gerry Connolly, D-Va., called on the administration and agencies to better identify savings and efficiencies.
“We seem to be falling behind,” he said.