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Federal Contracting: Senior Leaders Should Use Leading Companies' Key Practices to Improve Performance

GAO-21-491 Published: Jul 27, 2021. Publicly Released: Jul 27, 2021.
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Fast Facts

The government buys a huge range of products and services, from military aircraft to common office supplies. We looked at how 7 leading companies manage procurement, and whether the federal government follows similar practices.

We found that successful companies:

  1. link performance metrics to broader strategic goals
  2. work with those using the products and services to develop these metrics
  3. use outcome-oriented metrics, like timeliness and quality

The agencies we looked at didn't consistently use the second and third practices. We recommended that the agencies use them to improve their operations.

 

pen and contract

 

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Highlights

What GAO Found

Each year, federal agencies spend over $500 billion to buy a wide variety of products and services, ranging from cutting-edge military aircraft to common office supplies. Given the amount of federal funds spent and the missions these contracts support, it is critical that agencies' procurement leaders manage their organizations effectively. However, GAO found procurement leaders at six of the federal government's largest agencies did not consistently use key practices that leading companies use to improve the performance of their procurement organizations (see figure).

Procurement Leaders at the Federal Agencies GAO Reviewed Did Not Consistently Use Leading Companies' Key Practices to Improve Performance

Procurement Leaders at the Federal Agencies GAO Reviewed Did Not Consistently Use Leading Companies' Key Practices to Improve Performance

Note: GAO's assessment of procurement leaders' collaboration when developing performance metrics reflects the extent to which they collaborated with end users.

Link performance metrics to strategic goals. Procurement leaders at all the agencies in GAO's review linked their performance metrics to their agencies' strategic goals. These leaders stated that doing so helps ensure acquisition personnel are focused on the right things to support their agency's mission. These statements are consistent with statements from procurement leaders at leading companies.

Collaborate with internal stakeholders, particularly end users, when developing performance metrics. When they were developing performance metrics, procurement leaders at all six of the agencies in GAO's review collaborated with other members of the procurement community. However, only the procurement leaders at the National Aeronautics and Space Administration (NASA) collaborated with end users, such as technical experts from installation centers. One procurement leader said he did not collaborate with end users when he developed performance metrics because too much end user influence could lead to suboptimal results, but leaders do not have to cede control when they collaborate with end users. End users can help procurement leaders increase the usefulness and use of performance information in program management and policy, and corporate procurement leaders told GAO that collaboration with end users during the development and implementation of performance metrics increases coordination and improves performance at the strategic level.

Use outcome-oriented performance metrics to manage procurement organizations. GAO found the leaders at all six of the agencies reviewed rely primarily on process-oriented metrics (such as small business utilization rates) when managing their procurement organizations. These leaders cited various reasons for not implementing metrics that are more outcome-oriented. For example, two leaders stated they did not use outcome-oriented performance metrics because of unreliable data. Three of the leaders, however, are working to improve data that can facilitate outcome-oriented assessments.

Additionally, procurement leaders at most of the agencies GAO reviewed have ongoing or planned efforts to use performance metrics to measure at least one of the four procurement outcomes identified as important by corporate procurement leaders. These outcomes include (1) cost savings/avoidance, (2) timeliness of deliveries, (3) quality of deliverables, and (4) end-user satisfaction. For example, the Air Force's senior procurement leader has used a cost savings/avoidance metric to manage the Air Force's procurement organizations, and as of March 2021, the Air Force leader had identified $2.38 billion in cost savings and avoidance. Additionally, the Army's senior procurement leader told GAO that she began to pursue outcome-oriented metrics in late 2020, after GAO provided her an interim assessment comparing Army practices to private sector practices.

GAO has previously reported that using a balanced set of performance measures, including both process- and outcome-oriented measures—and obtaining complete and reliable performance information—can help federal agencies identify improvement opportunities, set priorities, and allocate resources.

Why GAO Did This Study

Federal agencies face significant, long-standing procurement challenges that increase the risk of waste and mismanagement.

GAO was asked to review key procurement practices in the private sector and assess whether federal agencies could adopt them. This report examines key practices that leading companies use to improve the performance of their procurement organizations, and the extent to which procurement leaders at selected federal agencies use those practices.

GAO interviewed senior procurement leaders at seven leading companies, and experts from four professional associations and five academic institutions. GAO selected these individuals based on literature reviews and conversations with knowledgeable officials. GAO compared key practices they identified to those used at six federal agencies selected based on the dollar value and number of their procurement actions, among other factors. GAO analyzed documentation on each agency's procurement management practices, and interviewed the agencies' senior procurement leaders.

The federal government does not have generally accepted definitions for outcome-oriented and process-oriented metrics. For the purposes of this report, GAO defined outcome-oriented metrics as those metrics that measure the results of organizations' procurement activities. GAO defined process-oriented metrics as those metrics that measure the type or level of procurement activities conducted.

Recommendations

GAO is making a total of 11 recommendations to the six agencies reviewed. Specifically, GAO recommends that they (a) collaborate with end users to develop performance metrics, and (b) use a balanced set of performance metrics to manage their procurement organizations, including outcome-oriented metrics for (1) cost savings/avoidance, (2) timeliness of deliveries, (3) quality of deliverables, and (4) end-user satisfaction.

In total, the agencies concurred with seven of the recommendations, and did not concur with four. Three of the agencies concurred with the recommendation to collaborate with end users to develop performance metrics; two did not. Four of the agencies concurred with the recommendation to use a balanced set of performance metrics to manage their procurement organizations, including outcome-oriented metrics; two did not. GAO continues to believe that all of the recommendations are warranted, as discussed in the report.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Air Force The Secretary of the Air Force should ensure the Deputy Assistant Secretary of the Air Force (Contracting) collaborates with end users to develop performance metrics for procurement organizations. (Recommendation 1)
Open
The Air Force concurred with this recommendation. In June 2023, the Air Force's Acquisition Contracting Directorate communicated that it continues to work to develop performance metrics. It plans to evaluate the proposed metrics and collaborate with acquisition partners to integrate the metrics into mission focus areas. The Air Force estimated it would complete this effort by March 2024. This action has the potential to address the recommendation if the review teams include end users.
Department of the Army The Secretary of the Army should ensure the Deputy Assistant Secretary of the Army (Procurement) collaborates with end users to develop performance metrics for procurement organizations. (Recommendation 2)
Open
The Army concurred with this recommendation. In January 2022, the Army communicated the Deputy Assistant Secretary of the Army (Procurement) was working with contracting organizations and end users, such as base commanders, to establish the Services Senior Leader Dashboard, which would track metrics for service acquisitions. In July 2023, the Army provided documentation demonstrating the dashboard is operational and reports contact data by categories, such as contract value, contract type, and contracting organization. However, the Army did not provide documentation of end-user collaboration, or how it utilizes the dashboard data to develop outcome-performance metrics. The Army's efforts have the potential to address the recommendation and we are continuing to track the Army's progress in these areas.
Department of the Navy The Secretary of the Navy should ensure the Deputy Assistant Secretary of the Navy (Procurement) collaborates with end users to develop performance metrics for procurement organizations. (Recommendation 3)
Open
The Navy did not concur with this recommendation. However, in January 2022, the Navy communicated that it was developing tools, such as dashboards, that would provide the Deputy Assistant Secretary of the Navy (Procurement) greater visibility and real-time access to existing metrics and data, and an ability to create new metrics as needed. In July 2023, DOD provided an update and communicated that the Navy is targeting an enterprise solution that would provide standardized metrics across the department by fiscal year 2024 and would complete this effort by fiscal year 2025. The Navy could address this recommendation by collaborating with end users when considering the need to create new metrics. We will continue to track the Navy's progress in this area.
Department of Homeland Security The Secretary of Homeland Security should ensure the DHS Chief Procurement Officer collaborates with end users to develop performance metrics for procurement organizations. (Recommendation 4)
Open
DHS did not concur with this recommendation. However, in January 2022, DHS also stated the office of the Chief Procurement Officer would consider whether end-user feedback would enhance its performance metrics in a meaningful way. As of August 2023, DHS has not provided an update on this effort.
Department of Veterans Affairs The Secretary of Veterans Affairs should ensure the VA Senior Procurement Executive (SPE) collaborates with end users to develop performance metrics for procurement organizations. (Recommendation 5)
Closed – Implemented
VA agreed with this recommendation. Senior Procurement Executive (SPE) officials provided evidence demonstrating that in 2021 and 2022 they engaged with end users to identify outcome-oriented metrics for the SPE and VA's procurement organization. In particular, the VA solicited feedback from end users in the development of an internal customer satisfaction survey.
Department of the Air Force
Priority Rec.
The Secretary of the Air Force should ensure the Deputy Assistant Secretary of the Air Force (Contracting) uses a balanced set of performance metrics to manage the department's procurement organizations, including outcome-oriented metrics to measure (a) timeliness of deliveries, (b) quality of deliverables, and (c) end-user satisfaction. (Recommendation 6)
Open
The Air Force disagreed with this recommendation. However, in January 2022, the Department of Defense (DOD) communicated that the Air Force had established teams to review existing contracting metrics and develop new contracting metrics. In June 2023, the Department of Defense (DOD) communicated that the Air Force was continuing to develop new contracting metrics that are outcome-oriented and responsive to mission partner needs. The Air Force estimated it would complete this effort by March 2024. This action has the potential to address the recommendation if the new contracting metrics assess (a) timeliness of deliveries, (b) quality of deliverables, and (c) end- user satisfaction.
Department of the Army
Priority Rec.
The Secretary of the Army should ensure the Deputy Assistant Secretary of the Army (Procurement) uses a balanced set of performance metrics to manage the department's procurement organizations, including outcome-oriented metrics to measure (a) cost savings/avoidance, (b) timeliness of deliveries, (c) quality of deliverables, and (d) end-user satisfaction. (Recommendation 7)
Open
The Army concurred with this recommendation. In January 2022, the Department of Defense communicated that the Deputy Assistant Secretary of the Army (Procurement) was establishing metrics for cost, schedule, and performance outcomes, with a focus on customer service. In January 2023, DOD provided a status update on the Army's ongoing efforts to establish these metrics, which have the potential to address the recommendation, and stated it was aiming to implement the metrics by the third quarter of fiscal year 2023. In June 2023, the Army communicated that current Contractor Performance Reporting System data could provide metrics on end-user satisfaction and timeliness and quality of deliverables but did not provide specific examples. Further, the Army was still determining how to measure cost savings and avoidance. The Army's efforts have the potential to address the recommendation and we are continuing to track the Army's progress in these areas.
Department of the Navy
Priority Rec.
The Secretary of the Navy should ensure the Deputy Assistant Secretary of the Navy (Procurement) uses a balanced set of performance metrics to manage the department's procurement organizations, including outcome-oriented metrics to measure (a) cost savings/avoidance, (b) timeliness of deliveries, (c) quality of deliverables, and (d) end-user satisfaction. (Recommendation 8)
Open
The Navy concurred with the recommendation. In January 2022, the Department of Defense (DOD) communicated that the Navy was developing tools, such as dashboards, that would provide the Deputy Assistant Secretary of the Navy (Procurement) greater visibility and real-time access to existing metrics and data, and an ability to create new metrics as needed. In July 2023, DOD provided an update and communicated that the Navy is targeting an enterprise solution that would provide standardized metrics across the department by fiscal year 2024 and would complete this effort by fiscal year 2025.
Department of Homeland Security
Priority Rec.
The Secretary of Homeland Security should ensure the DHS Chief Procurement Officer uses a balanced set of performance metrics to manage the department's procurement organizations, including outcome-oriented metrics to measure (a) cost savings/avoidance, (b) timeliness of deliveries, (c) quality of deliverables, and (d) end-user satisfaction. (Recommendation 9)
Open – Partially Addressed
DHS did not concur with the recommendation, stating that while the department supports the use of outcome-oriented metrics, it disagreed that the specific metrics included in our recommendation necessarily captured the most relevant aspects of procurement organizations' performance. However, DHS also stated the Office of the Chief Procurement Officer (OCPO) would review its current metrics to determine whether they appropriately measure outcomes. We agree DHS could identify additional outcome-oriented metrics that are tailored to its needs. We also continue to believe DHS should address the recommendation by using the four types of metrics we identified because the corporate procurement leaders we interviewed emphasized the importance of using these four types of outcome-oriented metrics. In June 2023, the OCPO provided evidence that that it was using an outcome-oriented metric to measure cost savings/avoidance achieved through category management activities, which are intended to improve how agencies procure common goods and services. DHS officials provided documentation showing that in fiscal year 2022 the department used category management activities for about 80 percent of their common goods and services expenditures ($15 billion of $19.3 billion) and had tracked savings of $463 million. To address the timeliness of deliveries and quality of deliverables metrics, the OCPO noted that in fiscal year 2024 they plan to review marginal and satisfactory data from the Contractor Performance Reporting System. This analysis will then determine what additional steps are needed. To address the end-user satisfaction metric, the OCPO plans to supplement its Acquisition 360 data by adding a requirement related to end-user satisfaction in the fiscal year 2024 Head of Contracting Activity goal letters. In order to fully close this recommendation, DHS will need to provide evidence that it has implemented all the performance metrics to manage the department's procurement organization. Using a balanced set of performance measures, including both process- and outcome-oriented measures can help federal agencies identify improvement opportunities, set priorities, and allocate resources.
National Aeronautics and Space Administration
Priority Rec.
The Administrator of NASA should ensure the NASA SPE uses a balanced set of performance metrics to manage the agency's procurement organizations, including outcome-oriented metrics to measure (a) cost savings/avoidance, (b) timeliness of deliveries, (c) quality of deliverables, and (d) end-user satisfaction. (Recommendation 10)
Open – Partially Addressed
NASA agreed with the recommendation. In February 2022, the NASA Senior Procurement Executive shared plans to implement metrics in the future to measure (a) cost savings/avoidance, (b) timeliness of deliveries, and (c) quality of deliverables. As of February 2023, NASA reported it developed an E-Business Systems Office within the Office of Procurement that is responsible for defining and managing data and creating a Procurement Dashboard, metrics and analytical data tools, among other things. In May 2023, NASA provided evidence that it was using an outcome-oriented metric to measure end-user satisfaction, using among other sources of data, a quarterly assessment of the Office of Procurement by each of the NASA Centers. NASA's OP also provided an update on their efforts to collect data to measure cost savings/avoidance. The OP noted it is approaching a potential costs savings/avoidance metric in multiple ways, such as collecting data on the differences between proposed and actual contract values, and the potential impact of contract type on cost. For the timeliness of deliveries and the quality of deliverables metrics, the OP said it is planning on using the procurement dashboard to assist in tracking and analyzing data from the Contractor Performance Reporting System. In order to fully close this recommendation, NASA will need to provide evidence that it has implemented all the performance metrics to manage the agency's procurement organizations. Using a balanced set of performance measures, including both process- and outcome-oriented measures can help federal agencies identify improvement opportunities, set priorities, and allocate resources.
Department of Veterans Affairs
Priority Rec.
The Secretary of Veterans Affairs should ensure the VA SPE uses a balanced set of performance metrics to manage the department's procurement organizations, including outcome-oriented metrics to measure (a) cost savings/avoidance, (b) timeliness of deliveries, (c) quality of deliverables, and (d) end-user satisfaction. (Recommendation 11)
Open
VA agreed with this recommendation. In July 2023 VA officials provided an update noting that surveys to measure end-user satisfaction were pilot tested in June 2023 and distributed to selected end-users. VA officials noted that the results of the survey are awaiting review. According to officials, the VA has also started to develop metrics for timeliness of deliveries and quality of deliverables, and cost savings/avoidance. The VA's efforts have the potential to address the recommendation and we are continuing to track the VA's progress in these areas.

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