Procurement Reform

Most Americans have known for years that government procurement is a mess. But to get a full appreciation, it helps to work here. Before the reinventing government reforms launched in 1993, the typical federal worker was not trusted to buy so much as a $4 stapler for the office. Only trained procurement specialists were allowed to buy things -- only a trained specialist could understand the rules -- and they would make the buy only if a worker came to them with the forms properly filled out and signed by several bosses up the line -- and even then, only if they thought you deserved whatever was requested.

Buying anything associated with a computer was even worse. Federal workers told us about having to get a dozen signatures, and then waiting a year or more to get a simple PC. When it arrived, it was already obsolete, and it cost more than the new, higher-powered models at Circuit City. To cap off their frustration, federal employees would read in the papers along with the rest of America, that "the procurement system," which did not trust them to buy anything, had gone out and paid $400 for a hammer.

The government's procurement system was enough of a challenge that we decided to double-team it. We got long-time critic of procurement and former Harvard professor of management, Steve Kelman, to lead some government-wide changes, and brought Colleen Preston in from a Congressional staff to lead reform at the Defense Department. Rather than try to explain all the ins and outs of the regulatory changes backed by the National Performance Review -- changes that the Administration has made on its own authority, and changes we have persuaded Congress to enact into law -- let's look at some results.

First, results that benefit the entire government and, of course, the taxpayers who foot the bill:

June 7, l996

For many years, Jockey International, Inc. declined to bid on government
business. We took this position because the solicitations asked us to manufacture
a T-shirt to unique government specifications. The solicitations also asked us to
provide sensitive pricing data so the government could determine a fair price ......

When we saw the latest solicitation for T-shirts we were excited. The government
was asking for our standard product, style 9711, without all the headaches of a
custom design. Moreover, our current catalog price was the basis to negotiate a fair
price. It is with great pleasure that we were able to accept the T-shirt award .....

The T-shirt will be made in the USA. The production is at our Belzoni,
Mississippi plant, an economically depressed area. This plant was closed in 1993,
but reopened in 1995 on a temporary basis. With a pick up in business and the
award of this military contract we now have 175 employees at this facility .......

Peter J. Hannes
President, Special Markets Division
Jockey International, Inc.

Of course, the savings are not all just from socks and undershirts -- the biggest savings come from changes in buying big-ticket items. When the Pentagon and Congress agreed to a multi-year purchase and the elimination of detailed military specifications, manufacturers could use more standard commercial parts. As a result, the price tag on the contract for their new C-17 cargo plane went down by more than $2.7 billion. Similarly, they saved $2.9 billion on smart munitions, and over $100 million on the Fire Support Combat Arms Tactical Trainer. (7) NASA is doing the same kind of thing and making the same kind of savings onspace gear.

In addition to some very important legislative changes, the procurement system only needed a little trust (that workers like Tommy Roland won't steal us blind), some common sense (that Jockey can make decent T-shirts without government instructions), and some shrewd bargaining (just try to find long distance rates as low as 2¢ a minute). That is the heart of the procurement reforms that the National Performance Review recommended in 1993 and that became the basis for three major legislative changes that have been signed by the President: the Federal Acquisition Streamlining Act of 1994, the Federal Acquisition Reform Act of 1996, and the Information Technology Management Reform Act of 1996. President Clinton has gone even further by issuing a variety of directives that enhance and speed the legislative reforms.(8) Trust, common sense, and shrewd bargaining might not sound like a revolutionary formula to fix government procurement. But added all together, our procurement reforms are expected to save $12.3 billion over five years.(9) Pretty good, huh?

By the way, we are not just buying smarter, we are selling smarter, too. The government actually used to give away the incredibly valuable rights to broadcast on certain frequencies. This included radio, TV, cell phones -- you get the picture. Now, the Federal Communications Commission auctions them to the highest bidder. So far, we have taken in $20.3 billion. (10)

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