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Federal Diary Live
With Stephen Barr
Washington Post Staff Writer
Wednesday, May 23, 2001; Noon EDT
President Bush's budget calls for "flattening the federal hierarchy" and
contracting out more federal work. How should federal employees view these
proposals?
Stephen Barr, who writes the Federal Diary column for The Post, takes
the Diary online at noon Wednesday with his guest, Stan Z. Soloway,
president of the Professional Services Council, to discuss how Bush
proposals could change the government.
Soloway assumed the presidency of the Professional Services Council in
January. Prior to joining the council, he served nearly three years as the
deputy undersecretary of defense for acquisition reform and as director of
the Defense Reform Initiative at the Pentagon. Before his Defense
Department tenure, Soloway was a public policy and public affairs
consultant for nearly 20 years.
The Professional Services Council, based in Arlington, Va., is a
national trade association representing federal contractors. Member
companies provide expertise in areas such as defense, space, environment,
energy, education, health and international development to virtually every
agency of the federal government.
The transcript follows.
Editor's Note: Washingtonpost.com moderators retain editorial control
over Live Online discussions and choose the most relevant questions for guests
and hosts; guests and hosts can decline to answer questions.
Stephen Barr:
Thanks to all of you who are taking time to join us today, and my thanks to Stan Soloway, a former Defense Department official and president of the Professional Services Council, for taking time from his busy schedule to field questions.
I'd like to start by asking you what you think President Bush's agenda means for federal employees. The Bush budget calls for "flattening the federal hierarchy" and contracting out more federal work. How do you think federal employees should view these proposals.
Stan Z. Soloway: Clearly the President has established increased COMPETITION as a goal for his administration and there is every good reason to think that will continue. I have long believed that such competition is good for the nation, the taxpayer and the government. But when we tie the issue of outsourcing and competition to the issue of "flattening the hierarchy", or government downsizing, I think it is a mistake. The size of government, in my view, is not really related to whether government outsources or competes its functions; that is really related to how best to perform the missions of government; the issue of what those missions should be is really seperate. Frankly, when I think of government, I think of it like a company thinks of itself--that is in terms of both its organic and support workforce, working in partnership to achieve a common goal...indeed, companies that provide support to the government certainly see themselves as partners with the government. We need to build that sense of common purpose rather than allow this debate to continue in the "we versus they" or "good versus evil" tone that today dominates
Finally...keep in mind that in many ways, outsourcing repesents an OPPORTUNITY for the federal workforce. They are a true asset and many, often most, go to work for the contractor often, as GAO has recently noted, for better wages and benefits and with more opportunities for professional development. So I am hoping that we can get away from stoking the fires of fear and focus instead on facts and opportunities.
Arlington, Va.:
Stan, thanks for coming online today. What's wrong with establishing greater accountability in contracting, including reporting and oversight systems that track the true cost of contracting out government services?
Stan Z. Soloway: Actually, contracts are subject to tremendous oversight and accountability. When the GAO or others say we dont know precisely how much money is being saved through outsourcing, they are talking in terms of global numebrs, aggregated figures that give the total picture. and it is true that the government simply does not have the systems or accounting capabilites today to provide that. BUT, where the rubber meets the road, at the activity level, the government knows precisely what its contracts are costing; the contracts run through the activity's budget, and offer full visibility.
Unfortunately, when work is performed in house, again because the government does not have adequate or appropriate accounting processes and has a totally disaggregated budgeting process in which many managers dont even know what their real costs are, there is no such accountability. So, ironically, the truth is the issue of accountability is a far greater problem wth internal operations than it is with contracted activities, as recently documented in a comprehensive and independent study by the Center for Naval Analyses.
Washington, D.C.:
Why is the services industry opposed to the TRAC Act introduced by Representative Wynn?
Stan Z. Soloway: Our opposition to the TRAC Act is simply explained. The bill is not really about accountability, for the reasons I explained in my previous answer. It IS about killing competition and outsourcing, which would be a disaster for the government. The GAO and just about every other independent body that has looked at the issue has concluded UNEQUIVOCALLY (to use GAO's words) that outsourcing saves money...so why would anyone want to throw the baby out with the bath water? And why does an act supposedly geared to accountability totally ignore the accountability issues, which are far greater, with internal performance? Bottom line it is just a bad piece of legislation.
Silver Spring, Md.:
Mr. Soloway, Aren't you and your colleagues in the government contracting industry being disingenuous by pretending to participate in the GAO "Commercial Activities Panel," while at the same time lobbying the administration to contract out some 400,000 jobs regardless of the panel's ultimate recommendations?
Stan Z. Soloway: The Comptroller General made it very clear to all panelists that he rightly expects us to work very hard to engage in constructive dialogue and seek common ground...and, like, I would assume, my colleagues on the panel, are committed to doing so. In the meantime, the world moves forward and no one is sitting idly by...there is nothing disingenuous about our views, which are long held and well known, regarding competition and outsourcing any more than there is anything disingenuous about others on the panel pushing with everything they have to stop all outsourcing....in fact, I would suggest the answer to your question might better be posed as: why do we have a TRAC Act on the table at the very time Congress has instructed the GAO panel to look at the very issues associated with the bill?
Baltimore, Md. :
What is the advantage of contracting out? Does it save the government money? It would seem to me from what I've heard from my friends who work for the government, the contractors don't work as hard because they are often not under immediate supervision? What are your thoughts?
Stan Z. Soloway: The best way to answer your question is to look at the data and facts available...from the General Accounting Office, OMB, the Center for Naval Analyses and other independent bodies...and those facts are very consistent: outsourcing saves money by leveraging the benefits of competition and a competitive market environmet. Moreover, as is now the routine in the commercial sector, outsourcing enables the government to achieve those benefits while also enabling the government to focus on its core missions and requirements. So the answer is, as I said before, an unequivocal "yes", outsourcing does save money...the proof is in the facts.
Vienna, Va.:
Mr. Soloway, would you please provide some examples of government activities that would be improved either in quality or in cost by having them contracted out?
Stan Z. Soloway: That is a good question. In simple terms, it seems to me that if a function is not inherently governmental, a term that has a legal definition and was used to help develop the FAIR Act inventory, it should at least be looked at. That said, everyone also agrees that there are core requirements that the government must meet internally to enable it to both execute its varied missions and interface effectively with its private sector partners. But beyond that, I dont really see any reason to not subject other functions to competition...in some cases that competition might be public-private (as in A76), in others, given the dynamics of the human capital marketplace, where the government is already having and will continue to have significant difficulties recruiting and retaining much needed skills, those competitions might well be held solely in the private sector.
Washington, D.C.:
Why have the procurement reforms of the 1990s not made more of a difference? We still have too many contractors who don't save taxpayer money, and too many contracting officers that don't understand the marketplace. When is something going to change?
Stan Z. Soloway: The procurement reforms of the 90s have actually made an enormous difference. They have given government professionals greater latitude, opened lines of important communication between buyers and sellers, focused the procurement process more on performance than simply on cost, and opened the door to a whole array of commercial companies that previously could not and would not do busines with the government.
At the same time it is clear that in some areas progress has not been as rapid as we would have hoped. In the area of procuring services, for example, too little emphasis and focus has been placed on the acquisition workforce dealing in that business area yet it is a business area that is growing increasingly complex. I, during my tenure at DoD, and the Professional Services Council for many years, have long believed that the government needs to make a significantly greater investment in people...in providing its acquisition workforce with the kinds of education, training and tools necessary to perform their jobs. In the area of services acquisitions, that investment has, by and large, not been forthcoming, which is why yesterday we proposed to Congress that a portion of the administrative fees collected by agencies through their governmentwide agency contracts or purchases off the GSA schedules be dedicated to a Federal Acquisition Workforce Training Fund...to ensure the proper investment in the people who are being asked to do more with less and to do more in an increasingy complex and very dynamic business environment.
Beltsville, Md.:
I've been dying to ask someone this question. The Bush administration says it will reduce the number managers in the federal government by tens of thousands during the next few years while increasing the numbers of contractors. So, who is going to manage these new contracts?
Stan Z. Soloway: I think the two issues are really unrelated and should be considered seperately...and I hope the administration realizes that. I cannot speak to the administration's plans with regard to the size and shape of the management corps, but, as with the rest of the workforce, I simply hope that whatever is done is done in a strategic and thoughtful manner, a "needs based" strategy as GAO has recommended, rather than through an arbitrary numbers game.
Washington, D.C.:
In general, do contractor employees get paid more than federal employees? How does their benefit package compare? I've also heard that some agencies are pretty ruthless and demand that contract employees be removed from jobs if they don't like the person's performance. Is that true? And if it is, would you agree that's a huge advantage for the government?
Stan Z. Soloway: Actually, the data is uneven in that it really depends on the positions and other factors. Two things are quite clear however. First, increasingly the government is competing for the same skills that the private sector needs and is not competing particularly well. Second, as you move into job requirements that are increasingly technology-driven, the gap grows even wider. Finally, AFGE and others have long complained about the pay and benefits gap between the federal government and the private sector and I have to assume that their data is sound. Which is one reason I wonder why they, or their members, so oppose outsourcing since the evidence suggests strongly that the workforce can significantly benefit from it.
Arlington, Tex.:
Do you see a continuing need for a healthy civil service?
Stan Z. Soloway: Of course...there can be no question that the civil service workforce is vital to the right functioning of the government. The question is really about, as I said before, defining missions, segregating truly inherently governmental and some core requirements, and then seeking the best means by which to perform the work. And, unfortunately, too often government STRUCTURE and systems inhibit the workforce's ability to identify and access the kinds of solutions that can really enable them to perform at the highest possible level. Given that these solutions are almost all now coming from the private sector, it seems to me that we need a far more positive and robust partnership that works to the benefit of all.
Washington, D.C.:
Thanks for taking questions today. Do federal employees win half of the public-private competitions? Why do contractors try to avoid direct competition with federal workers?
Stan Z. Soloway: HIstorically the government has won about half of such competitions; today, the government is winning slightly more than that. We also see trends that suggest that the larger or more complex the requirement, the more likely the private sector is to win.
But the problems with the process are multi-faceted. For one thing, the government does not have full accounting and thus not all costs are considered in such competitions, although contractors do have to provide full cost information. The issues are too detailed to go into here, but suffice to say that where public-private competitions make sense, our concern as an industry is the fairness of the process. But it is more than simply a fairness issue; too often the environment itself is poisoned by misinformation that creates not a healthy competition but one marked by distrust. Faced with such an environment, many companies choose not to expend their limited bid and proposal dollars.
The companies operate daily in a highly competitive marketplace; their success or failure is determined by how well they can meet and/or exceed the competition. They are not against competition---it is the engine that drives our economy. But they surely try to avoid competitions in which the process or environment does not support a fair competition. And that, by the way, should be a matter of real concern for the government since no one is served when competition is either absent or flawed.
Woodbridge, Va.:
I saw just this week that the Army Contractor Inventory rule, designed to track the size of the Army's contractor work force, had effectively been suspended by Ms. Deidre Lee, the Director of Defense Procurement. The word is that you and other Professional Service Council members sought to have the rule "suspended". How do you respond?
Stan Z. Soloway: We opposed the rule for a couple of reasons, the most obvious being that it was not promulgated according to the rules. But substantively, the rule is also flawed. For one thing, the legislation that drove it clearly stated that the information to be collected must be collected from existing contractor systems; that is, it was not to cause companies to have to put in place yet another system, or systems, for government unique data collection. Unfortunately, the final rule violates that basic precept of the bill and will require companies to do extensive systems development and data gathering.
I should also note that I am not sure that in the end the data collected is really meaningful. Do you think Microsoft really worries about how many people its outsourced software developers or facilities management providers have? No...they focus on overall performance and cost. And in the best performance-based manner, they leave it to those support service providers to determine how many people and what kinds of people are need to achieve the highest level of performance. THAT is where the government needs to go.
Seattle, Wash.:
What is your view of the recently suspended Contractor Responsibility rule? As a former Clinton Administration DOD political appointee, how do you square the Profesisonal Service Council's opposition to his rule, with your former role of supporting the rule?
Stan Z. Soloway: I never supported the so-called Blacklisting Rule. I understand the impetus for it, but felt then and do now that it was poorly conceived and is, to use a term of art, "unexecutable". It places an inordinate burden on contracting officers to make legal determinations for which there are virtually no data sources or other support and it opens the door to all kinds of endless and needless litigation.
I was very much involved in discussions about the rule, partially because I was also involved in dealing with private sector labor issues at DoD. We need to carefully review the plethora of other means to determine responsibility of a contractor and ways in which those means could or should be utilized, rather than adding a new rule that is arbitrary, lacks any guidelines and practical utility, and threatens to effectively debar companies that actually have done nothing significant wrong.
Arlington, Va.:
Many times, contractors seem to break their promises. For example, a Fairfax contractor has not yet delivered the new computer system for the Thrift Savings Plan. Shouldn't agency have broader authority to yank work back in-house if contractors fail to perform?
Stan Z. Soloway: The beauty of outsourcing, in my view, is that it enables a government agency, or a company that is buying support services for itself, to leverage the competitive nature of the marketplace to its own benefit. In the case you cite, I do not know any of the particulars but would suggest that rather than bringing the work back in-house, since the work is clearly not inherently governmental, the agency recompete the work. After all, there is no shortage of IT companies that would love to bring their innovations to bear. That is the competitive reality that drives the market...and our nation's economy.
Baltimore, Md.:
As a follow-up to your answer to my earlier question on whether or not contractors were less productive because they are often not under immediate supervision: You said it saves the government money. But are you losing work productivity and quality? How can you track that?
Stan Z. Soloway: You know, you have hit on the central issue. Anyone can find ways to save money, but are they going to get the performance and quality they need? And that is really one of the key changes wrought by acquisition reform---focusing procurement decisions on a company's past performance, establishing statements of work and requirements that drive toward AND REWARD performance and quality, and more. This is what has come to drive the services industry as a whole and is now becoming the central element in procurement decision making. As the GAO said just yesterday, and I agree wholeheartedly, the strong push throughout the government to performance based services acquisitions is really the key to longterm success. And, what the private sector has found, sometimes the hard way, is that the shift from a prescriptive acquisition culture to a performance based environment not only drives quality and performance but also, in the end, saves significant money...a fact reiterated by OMB studies of cases where the government has taken a performance based approach....lower costs, higher performance..the two are and should be inextricably linked.
With that, Steve tells me I have run out of time...and probably bored you all more than I realize. Thank you for the great questions. These are important issues and need to be discussed in a constructive and productive way, and your questions certainly helped in that regard today.
Thanks for your time and interest.
Stephen Barr:
Stan, thanks for joining us today and sharing the perspective of the Professional Services Council on an important issue that seems certain to be in the news in coming months as the GAO panel takes testimony and prepares a report for Congress. And thanks to all of you who are taking the time to read this transcript. We'll be back at noon next Wednesday, taking questions on federal pay, benefits and other topics of interest to federal employees. Again, thanks for joining us.
washingtonpost.com:
That was our last question today. Thanks to everyone who joined the discussion.
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