Eye on Policy

President Donald Trump may appear inconsistent on various policies, but on certain domains the administration has demonstrated remarkable single mindedness. Among them, paring down contracting to what it deems essential to operation of the government. And, ensuring the government is getting what officials consider fair prices, especially for services.

The latest manifestation involved McKinsey and Company, BCG (Boston Consulting Group), AlixPartners, Ernst & Young, FTI Consulting and Alvarez & Marsal. The Wall Street Journal reported the companies got a letter from the GSA’s Josh Gruenbaum, commissioner of the Federal Acquisition Service. He asked them to review their contracts and look for savings, if not outright cancellations.

By now the pattern has become familiar. Earlier the administration made similar demands of the biggest services and consulting contractors, such as Deloitte, Booz Allen and Accenture. And not just pure services vendors. It included hybrid hardware/software/services vendors such as Dell and CDW.

For sure, the government is looking for lower prices for what it’s buying. It’s been telling contractors to try and make substantial cuts. The 7% reduction figure has come up. The implication here is simple: Find ways to remove cost from projects and from internal operations.

As noted last month, the GSA’s OneGov initiative seeks to sign up contractors to governmentwide deals for commonly needed products. The latest example came just days ago, with AI vendor Elastic signed up for a contract with 27% to 60%—albeit with smaller discounts for FedRAMP-certified secure services.

Keep in mind that the administration is driving at more than price reductions. To make an analogy, the administration is looking at regulations across the board, seeking to trim agency activities back to statutory requirements. It wants to cut away “nice-to-have” regulations or those it deems as taking agencies into deep state territory.

The same instinct applies to contracts. The administration seeks, after discounts, what it calls “outcome-based” contracts. It wants deliverables not as products but as measurable results in terms of mission. This rules out the idea of paying for things like management consulting or staff development.

Don’t take it as a revival of the share-in-savings concept, either. As one executive commented at a panel I moderated the other night, share-in savings never caught on much beyond energy usage contracts because future cost avoidances don’t always amount to real reductions. Plus, they’re difficult to measure in the first place.

Lower costs through governmentwide agreements, more commercial and more outcome-driven contracts: These are defining characteristics of current policy. They back to up requirements, which the administration recognizes through its new version of Part 11 of the Federal Acquisition Regulation. Requirements are to be designed to promote maximum competition and encourage commercial products, including at the subcontract level. (As aside, the revisions to FAR Part 10, covering market research, also will color the development of requirements.)

A Few Weird Things Persist

Alongside of the emphasis on commercial, low cost, and outcomes based, the administration pursues policies that seem counter to efficiency.

A recent case in point: a Homeland Security Department directive requiring the office of the secretary to sign off on all acquisitions—get this—above $100,000. As Federal News Network reported, that’s down from a threshold of $25 million and will theoretically push more than 5,000 contract items through Kristi Noem’s office. Staff there must have something better to do.

This policy is of a piece with the ongoing clampdown on use of federal credit cards for small purchases, also an inexplicable measure to anyone who knows how efficient this system has been for decades.

Also of Note:

The final policy-spending package was big. Beautiful? That’s more subjective. Some people find manatees beautiful. One important provision would return to corporations an immediate tax deduction for certain research and development expenses. That’s good news for technology advancement in things like quantum, in which the government has a stake in several respects.

Keep an eye on the more arcane but more crucial bill called the Speed Act, that has bipartisan support on the House Armed Services Committee. It would fundamentally reform procurement in the Defense Department, implementing some of the recommendations of the Planning, Programming, Budgeting and Execution (PPBE) Commission. It seeks to bring more companies into the shrinking defense industrial base. It would elevate the responsibilities of program executive officers and clear away some of the brush that’s grown up around defense procurement.