2012 is fast approaching, and with it comes big changes in the Federal IT industry. WashingtonExec is giving local executives the opportunity to share their thoughts on where they see the government contracting industry headed. Leaders of the industry were asked a series of predictions questions focused on challenging issues such as cloud computing, healthcare IT, defense and so forth.
Jack Gansler, Professor and Roger C. Lipitz Chair in Public Policy and Private Enterprise at the University of Maryland’s School of Public Policy, provided WashingtonExec with his insight regarding government contracting trends in 2012.
Jack Gansler: Two-thousand and twelve will be a critical year for government contracting—especially in the national security domain. As the budget declines, but costs for personnel (e.g. health care) and for goods and services continue to increase—to meet the growing demands (from pirates and terrorists, to regional conflicts that draw us in, to cyber-attacks on our military and civilian infrastructures, on up to nuclear deterrence against a growing number of nuclear-capable potential adversaries), the obvious need is for “smart buying,” i.e. effectively and efficiently acquiring the needed goods and services. Four interrelated areas are involved—and all require significant changes: 
1) what is bought, 2) how it is bought, 3) who does the buying, and 4) from whom goods and services are acquired.
The fear is that we will not recognize the needed changes in each area—which are required in order to achieve higher performance and greater flexibility/responsiveness, but at significantly lower costs. Already, the current government procurement reactions are in the wrong direction. For example, erroneously thinking that the contract award should be based on “technically acceptable, lowest bid;” could be applicable to hi-tech, differentiated goods and services. Would you buy your defense lawyer or your heart surgeon based on a degree and the lowest hourly rate? This approach yields neither high-performance results nor lowest total costs—but some agencies are already moving in this direction! Similarly, in spite of the overwhelming data on the performance and cost benefits of sustained competition—some agencies think they can reduce costs by “managing” a single source. Both of these examples come from the mistaken emphasis on saving money “this year”—while ignoring the proven, historic data on “smart buying.”
Leadership, from the agencies, the White House, and the Congress, will be required to resist such tendencies in the coming years of budget shrinkages. The commercial world has shown it can be done (e.g. each year computers get higher and higher performance at lower and lower costs). Clearly, this will be a challenge—but the government has no choice but to achieve the needed changes in all four acquisition areas. The nation’s future security depends on it; and the men and women in our Armed Forces deserve it.