It’s safe to blame the current state of the government contracting industry on strategic sourcing, says Neal Couture, the director of government procurement law and business programs at the George Washington University Law School.
Having led the National Contract Management Association (NCMA) for 12 years as executive director before coming to GWU, Couture is a bit of a procurement guru.
Using that industry expertise to teach others has always been something that topped his list, he told us in a recent interview.
“I’ve always had an interest in helping people improve their performance in things like that. Working at the association, that was their mission too. It’s all about the people,” Couture said.
He spoke to us about the changing context of federal acquisition, highlighting the implications of the trends and identifying flaws to the system and predictions about future trends.
In recent years, according to Couture, the government has gravitated toward major contract vehicles – governmentwide acquisition contracts (GWACS), GSA schedules and IDIQ type contracts – as workload and time demands pressure procurement officials to recycle contracts to accomplish their work.
So how does strategic sourcing play into this? Couture said agencies tend toward blanket contracts to mask requirements “together into one big demand and to drive prices down and improve the terms” under which the agencies purchase.
“It’s the kind of thing that any company does. The effect is that there are fewer suppliers that are going to be providing goods and services to the government,” Couture said. “So what that means is that if you’re a company and you want to sell to the government, you had better have one of those major vehicles such as the GWACs or the GSA Schedule, or else you’re going to be left out of the business opportunity.”
The shift that has narrowed the chain of suppliers has in turn fostered a culture that is risk-averse and conducive to LPTA procurement methodology – though policy makers have never explicitly encouraged LPTA methodology.
The resulting implications, according to Couture, have put policy makers in a quandary – pitting the need to foster fair and equal competition against a need to balance rational buying process, Couture said.
“A flaw I would identify in the procurement system is a gap between policy and what policy makers expect to happen and what is actually happening in the field,” he said and alluded to the misperceptions surrounding LPTA.
Namely, the misperception is that LPTA is explicitly encouraged among organizations that procure.
Rather, Couture argues, procuring organizations tend toward LPTA because it is seen as lower risk, and the tendency toward the practice is a mere symptom of the current culture of “fear and burden” within the government contracting industry.
“[Each contracting organization] fears that its procurement will be the one that’s protested and the burden is felt in that there has been certainly a larger growth in spending than manpower since 2000,” Couture said. “Those two factors have created a culture within organizations that procure and it basically said ‘take no risks and get your work done quickly,’ and LPTA is seen as a method to do just that.”
Though Couture admonished that there are cases when LPTA is used inappropriately, he said he could identify other cases when LPTA “was used appropriately and worked just fine. As a methodology, there’s nothing wrong with it.”
That strategic sourcing encourages, in the economic sense, agencies to procure under larger contract vehicles is also to blame for the industry perception that bid protests have increased in the past few years.
And while the incidence of bid protests is not actually increasing, Couture said, it feels that way because it’s the larger scale contract vehicles — and their many players — that are being protested.
“In the past, where you have a typical procurement, you have five bidders. If someone protests, five people are affected. Now under the GWAC, if you’ve got 120 possible bidders and someone protests, well you’ve got 120 people affected,” Couture said. “What’s happened is the total number and frequency of bid protests aren’t increasing but the number of people impacted or affected by them, or touched by them, is increasing.”
Despite all of the misperceptions, the U.S. procurement system is still to Couture, the best in the world.
“While there is an ongoing disgruntlement within the Congress having to do with the federal procurement system,” Couture said, “I think at the end of the day, back to 50,000 feet, the United States federal procurement system – filled with foibles and frustrations — continues to be the best in the world, in terms of meeting the needs of the government to operate.”
As for what that holds for the next ten years? Couture said we can expect further consolidation within the industry among the mid-tier firms, but acquisition rules will remain relatively the same.
“Mid-tier companies are going to start merging and being acquired by each other as they attempt to compete for those few seats on these major contracts. I don’t think the large scale aerospace and defense industry is going to consolidate any further,” he said. “I don’t think the federal government is good at shrinking so I don’t see the federal procurement budget shrinking fast at all. And I do not see the rules of the road changing dramatically in the next 10 years, I really don’t. The government moves slowly.”