The very real benefits of understanding the human aspects of business process management (BPM)

CDR Roger Lord, SC, USN, Program Officer (Curriculum Officer) for the Graduate School of Business and Public Policy, Naval Postgraduate School in Monterey, CA, presented findings at a recent conference from his research into public- and private-sector use of past performance information (PPI) in source selection. The goals of his research were the identification of industry best practices that could be implemented in the public sector and improving the government’s use of PPI as a tool in the acquisition process.

In the course of his research, CDR Lord found that there were more similarities than differences in public- and private-sector acquisitions. However, his research did uncover two fundamental differences in $1 million dollar-plus acquisition systems: right versus privilege to bid; and, use of full and open competition.

Right Versus Privilege to Bid

Under the Federal Acquisition Regulation (FAR), it is the right of every vendor that has not been suspended or debarred in accordance with FAR Part 9—Contractor Qualifications to submit a bid or proposal for equal consideration, regardless of performance history. Thus, FAR mandates the right of virtually any vendor to bid on government contracts.

By contrast, the private sector, guided by the Uniform Commercial Code (UCC), is not mandated to seek the same kind of full and open competition. In fact, it is a common practice for companies in the private sector to maintain a list of preferred providers. Private sector acquisition leaders, therefore, create a de facto privilege to bid by encouraging competition only among a pre-determined group of providers.

Additionally, in the public sector, bidders who are not selected to receive contracts have the right to protest, and that protest has real bite: a GAO protest can delay a contract award or freeze contract performance. And, according to research, vendors are increasingly taking advantage of that right. Between 1997 and June 2000, as the chart below indicates, past performance protests as a percentage of total protests increased by 263% and past performance protests as a percentage of sustained protests increased by 200%.

Source: Snider, K. and Walkner, M. (2001). Best Practices and Protests: Toward Effective Use of Past Performance as a Criterion in Source Selections. Journal of Public Procurement, 1(1), 100.

In the private sector, bidders who do not win awards do not have the same opportunity for appeal. Appeals that do take place—through calls to Senators or Congressional Representatives—while taken seriously, are not as disruptive as a GAO protest can be in the public sector.

Full and Open Competition

Government acquisition, CDR Lord argues, is driven by socioeconomic goals first and a need to acquire supplies, services, products, etc. in a timely fashion and at the right price second. The government is burdened with the need to prove whether or not competition exists, or to demonstrate why it is in the government’s best interest not to allow full and open competition in an acquisition. By contrast, in the private sector, no such burden exists. Once a requirement and funding are identified, bids are requested from a pre-approved list of vendors.

This difference can have a real negative impact on procurement action lead time (PALT). According to CDR Lord’s research, a typical requirement in the public sector can realistically reach a 210-day PALT and include seven steps. In the private sector, the PALT for the exact same requirement could be as few as 75 days due to the elimination of several steps, as outlined below.

Conclusions and Recommendations

CDR Lord draws several conclusions and recommendations from his research.