| Share in savings contracting (SIS) continues to generate controversy
in the federal procurement ecosystem. New SIS policies from the
Civilian Agency Acquisition Council (CAAC) and Defense Acquisition
Regulations Council (DARC) are expected to appear momentarily in
the Federal Register, and are meant to mitigate risks that have
received increasing criticism from former and current procurement
officials.
Since July 2003, SIS has been promoted by the Office of Federal
Procurement Policy. Its report, "Performance-Based Service
Acquisition: Contracting for the Future," calls for increased
use of SIS and targeted application on 40 percent of eligible service
actions over $25,000. Per the AcqNet.gov web site, the goals and
benefits of SIS remain:
- Increased likelihood of meeting mission
needs
- Focus on intended results, not process
- Better value and enhanced performance
- Less performance risk to the government
- No detailed specification or process descriptions
needed
- Contractor flexibility in proposing a
solution
- Better competition: not just contractors,
but solutions
- Contractor buy-in and shared interests
- Shared incentives permit innovation and
cost effectiveness
- Less likelihood of a successful protest
- Surveillance: less frequent, more meaningful
- Results documented for GPRA reporting
- Variety of solutions from which to choose.
But some mid-course corrections are needed. Unless clear financial
baselines exist before entering into a SIS contract, federal agencies
will be unable to measure the value of the agreement; the agency’s
financial house needs to be in order before it can take full or
relatively risk-free advantage of SIS. Financial projections that
include baseline costs, expected outcomes, and contingency plans
in case the contractor does not deliver on the anticipated savings
need to be included. On the contractor’s side, the ability
to demonstrate past performance in SIS agreements and the financial
resources to operate at or below cost while waiting for SIS benefits
must be considered too.
Critics of SIS continue to point out that the linkage between
agency savings and the SIS contracting vehicle is unclear and
may not exist. When savings accrue to an agency and a contractor,
those benefits do not necessarily happen because SIS was used
to procure the product or service; they can and actually should
be an outcome of using the product or service itself. In other
words, critics claim there is no real value-add to SIS contracts,
and more traditional procurement vehicles would actually produce
lower cost solutions.
Federal employee unions, too, are unhappy with SIS because internal
government organizations are less able to compete with contractors
on performance-based opportunities. Without the ability to make
investments and operate at or below cost while the SIS engagement
matures, government service organizations performing, for example,
IT maintenance and enhancement of software cannot participate
in SIS procurements—whereas they are often a viable alternative
to outside vendors in non-SIS situations. Concerns about the A-76
implications of SIS also raise questions among federal employee
advocates and may need to be addressed at some future point.
The House Committee on Government Reform remains dedicated to
the SIS concept and continues to promote its use. Rep. Tom Davis,
chairman of the Committee, wants to extend SIS to all contracts
under the Acquisition System Improvement Act (ASIA). The long-awaited
SIS policies from the CAAC and DARC should help alleviate some
of the concerns about SIS and open the door for the broader application
of this contracting technique. |
