Reform Information Technology Procurement

Reform Information Technology Procurement

Background

The Brooks Act authorizes and directs the Administrator, General
Services Administration (GSA), to coordinate and provide for the
economic and efficient purchase, lease, and maintenance of automated
data processing (ADP) equipment by federal agencies.1 The Act was passed
in 1965 at the start of the era of large mainframe computers, when ADP
was a new and highly specialized product controlled by a few large
companies. The Act originally covered only contracts for ADP hardware.
Amendments to the Act in 1986 broadened its coverage to include
contracts for ADP software and support services. The Act was also
expanded to cover any contracts that included an ADP component, except
for certain contracts of the Department of Defense and contracts for
telecommunications systems and services. The term "information resources
management" refers to the management of agency information activities
and resources, including the use of ADP and telecommunications hardware,
software, and services. The term "information technology" (IT) used in
this report is the contemporary term describing ADP and
telecommunications hardware, software, and services.

The Act authorizes GSA to delegate to other federal agencies its
authority to procure IT. GSA normally delegates such procurement
authority up to a total of $2.5 million for individual acquisitions of
IT equipment and services. GSA sometimes makes exceptions based upon
reviews of an agency's management of IT systems; exceptional delegations
of up to $17.5 million have been made. Agency procurement requests above
these levels are reviewed by GSA. GSA reviews about 700 agency requests
per year.

GSA establishes governmentwide policy for the acquisition, management,
and use of IT through the Federal Information Resources Management
Regulation (FIRMR). The FIRMR requires agencies to analyze their IT
requirements, identify possible alternatives, and justify all IT
procurements over $50,000.2 Though the regulation states that the amount
of justification and documentation should be commensurate with the cost
of the IT item being acquired, agencies have overinterpreted the
regulation to require significant amounts of paperwork to justify even
simple acquisitions.

Need for Change

IT procurements in the federal government take too long. A sample of
major IT procurements in one agency showed that the government
acquisition lead time was 49 months for these procurements as compared
to an estimated 13 months for similar procurements in the private
sector.3

As a result, IT resources that are being bought to support critical
federal program delivery do not satisfy current business requirements
because by the time the IT items are delivered they are outofdate. They
also cost too much for the value received.

Rapid and effective acquisition of IT resources is a vital ingredient of
the effort to reinvent government. A recent Harvard study states,
"Transformational change is being unleashed in organizational
performance and service through use of IT resources." However, it
further states that "agencies must typically work through procurement
procedures that are widely felt to be costly, slow, and excessively
detailed. Procurement is seen as a barrier to strategic IT use."4 These
concerns are echoed in a second report representing a survey of senior
federal IT management officials. The report notes that many of these
officials feel that the "delays are so long, in fact, that they end up
acquiring outofdate products."5 Finally, the National Performance Review
Accompanying Report Reengineering Through Information Technology
emphasizes the importance of obtaining stateoftheart IT resources in a
timely and costeffective manner and states, "Information technology
provides the means to remove the barriers of distance, time, and
physical location. It is key to a system of government wherein customers
have timely and simplified access to federal, state, and local
government services via easytouse information technology systems.
Information technology is a strategic tool to integrate activities and
remove duplication of effort among government agencies."6

Challenges confronting managers. The following seven major challenges
confront federal managers as they attempt to acquire and integrate IT
into the work environment.

     1.   The computer industry is in the middle of a transition from
one that is characterized by highly specialized and unique (proprietary)
products to an industry that will someday have products that are almost
completely commercialized and interchangeable. The government's
practices and policies must be altered to take advantage of this trend
but also recognize that it is not yet complete. Although it is moving
rapidly, the industry still exhibits significant unique characteristics.

     2.   According to reports issued by such organizations as the
General Accounting Office (GAO), GSA, and the Inspectors General (IGs)
of certain agencies, the government has major problems acquiring complex
IT products and services.7 These include failure by agencies to clearly
define their requirements, failure to reengineer existing systems for
rational and efficient processes before beginning automation, inadequate
leadership on IT procurements by agency management, inadequate linkage
of IT strategies to agency strategic plans, and other management
failures. GSA, GAO, and private organizations agree that techniques of
good management must be part of sound plans to manage IT procurements.
These include mobilizing the right team, clearly defining requirements,
tying IT procurement strategy to overall agency strategy, providing
strong senior management support, and automating systems only when they
have been reengineered for maximum efficiency.

     3.   The law and the Federal Information Resources Management
Regulation (FIRMR) fail to recognize that many IT resources are
"commodities"commercial products and services massproduced and offered
for sale, lease, or license on the open market. System conversion,
obsolescence management, interoperability, process reengineering,
security, and other IT issues important in large procurements need not
be emphasized for small IT procurements. Many of the smaller dollar
acquisitions are for commodities readily available in the marketplace.
The laws and regulations underlying IT acquisitions do not currently
differentiate between acquisition of commodity and noncommodity items or
products.

     4.   The federal acquisition process is so timeconsuming that it
fails to keep pace with technology. The federal acquisition cycle is
estimated to be more than three times longer than that of private
industry. While comprehensive lead time data is not collected, studies
by Treasury, the General Services Administration, and Harvard University
and incidental reports indicate that this is due to lengthy agency
reviews with unnecessary rules and procedures, excessive documentation
of transactions to forestall protests before the GSBCA, time added by
GSA review of large agency procurement requests, and the existence of
FIRMR provisions that duplicate agencies' normal IT acquisition planning
procedures.8

     5.   Some IT procurements involve benefits that transcend the
mission of a single agency, such as volume discounts from large
purchases, learning the lessons and best practices of other agencies,
and understanding common technology issues underlying multiprogram
activities (e.g., "onestop shopping" efforts to provide services across
agency lines). Agency acquisition planning must include outreach to, and
teamwork with, other agencies where an acquisition produces such
benefits.

     6.   The party responsible and accountable for good management of
agency programs, including IT acquisitions, should be identified clearly
and unambiguously.

     7.   Although computer products and services have taken on many
characteristics of a commodityi.e., many suppliers, highly competitive
pricing, similar features, etc.they also have unique characteristics
that make them quite different from TVs, VCRs, calculators, or
refrigerators, to name a few other products currently classified as
commodities. Their primary differentiating characteristics are:

	-- continued rapid advance of technology and continuous lower
	production costs, and therefore continuously lower prices
	decreasing 20 to 40 percent per year; and

	-- rapidly changing technology affecting form, fit, and
	function, which yields much higher performance for much lower
	costs.

GSA strives to meet these challenges through innovative training
programs, an aggressive triennial review program of agency IT management
capabilities, sponsorship of various forums, and cooperation with
concerned agencies. However, the problems continue. There is reason to
doubt that any central management agency, no matter how excellent, can
solve problems that are essentially institutional problems.

Information technology evolution is so rapid that a continuous influx of
talent and stateoftheart knowledge is necessary if any central
management organization is to handle the role GSA currently plays. Given
scarce resources and the limitations in pay and personnel management
practices inherent in the federal government, it is unlikely that such a
central management organization could amass and continually replenish
the talent required to guide agency procurements.


Cross References to Other NPR Accompanying Reports

Reinventing Support Services, SUP04: Streamline and Improve Contracting
Strategies for the Multiple Award Schedule Program.

Reengineering Through Information Technology, IT01: Provide Clear,
Strong Leadership to Integrate Information Technology into the Business
of Government, and IT11: Improve Methods of Information Technology
Acquisition.

Endnotes

1. Section 111 of the Federal Property and Administrative Services Act
(Title 40 U.S.C. 541 et seq.)

2. Sections 20120.1 and 20120.2 of the Federal Information Resources
Management Regulation (41 CFR 20120.1 and 20120.2)

3. U.S. Department of the Treasury, Internal Revenue Service, Management
Review of the Contracts and Acquisition Division (Washington, D.C.,
1990).

4. John F. Kennedy School of Government, Information Technology and
Government Procurement: Strategic Issues for the Information Age
(Cambridge, MA: Harvard University, 1992).

5. See Key Issues in Federal Information Technology (Arlington, VA:
Information Technology Association of America, 1992).

6. See National Performance Review Accompanying Report, Reengineering
Through Information Technology (Washington, D.C.:  U.S. Government
Printing Office (GPO), September 1993).

7. See John F. Kennedy School of Government; General Services
Administration, Critical Success Factors for Systems Modernization: A
Primer for Senior Managers in Government (Washington, D.C., undated);
U.S. General Accounting Office, Meeting the Government's Technology
Challenge, IMTEC9023 (Washington, D.C.: U.S. General Accounting Office
[GAO], 1990); U.S. General Accounting Office, ADP Procurements: GSA
Needs to Improve its Review Process to Enhance its ADP Oversight,
IMTEC927 (Washington, D.C.: GAO, 1991); U.S. General Accounting Office,
Perceived Barriers to Effective Information Resources Management:
Results of GAO Panel Discussions, IMTEC9267 (Washington, D.C.:  GAO,
1992); and President's Council on Management Improvements, Managing the
Risk and Uncertainty of Technological Change (Washington, D.C., 1990).

8. General Services Administration, Go for 12 Program: A Report on
Testing of Parallel Review Concepts in the Acquisition Process
(Washington, D.C., 1987), and see John F. Kennedy School of Government.