I have been actively preparing an article addressing the
optimizing of outsourcing efforts, targeted for the audience of “Industrial
Management,” the professional journal of the Society of Engineering Management
Systems. In this preparation effort, I
noted that the basic logic applied through management engineering provided
valuable perspectives for the ongoing effort to rewrite the base operations
contract that provides facility and logistic support at
The following analysis with recommendation was provided to
the Installation Commander at
The original contract was prepared using a process that both hampered the development of a decent contract document, and almost assured that it would be awarded to someone who had underbid it. The current contract is based on cost-plus logic, where the Government assumes almost all performance risk, and the contractor has little incentive in the contract to perform efficiently.
This contract was let under the A-76 cost-comparison process. The contractor was unable to perform all the work necessary for proper operation of the facility and logistic areas of the Installation with the resources that were bid. Leadership was unable to increase the dollars in the contract to heal performance problems caused by restricted resources without providing competing businesses a valid basis for protesting the original award. The result was substantial non-performance of Installation mission, even though the contract was being fulfilled within its terms.
The challenge is in preparation for a much-improved contract. Rewrite efforts have begun, with some of the same process restrictions that lead to developing the original contract document. The selection of the Installation Commander to receive the analysis was obvious, as this involves a change in central vision on delivery of product to customers. The recommended process is oriented to gaining desired results, both in the contract itself and in its later operation. This is very different than the prior effort that was based on maximizing administrative control over the resources as they generated the contract.
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I am the developer
of management engineering, the first consistent application of the principles
of industrial engineering to the art and science of gaining performance through
organizations. This emerging specialty has an important application on
The First Rule of Management Engineering: Management is an essential; you cannot improve management by replacing it with something else.
The Army approach to contracting-out functions has been openly deficient through lack of management. In short, contract provisions are not a competent substitute for direct management. In the present application, there is no one who you can hold personally accountable for both control over resources and for gaining results through the contractor. Neither can your contractual authority over the contractor's project manager be a reasonable substitute a manager who is directly responsible to you for performing your mission.
Rule 2: A contract is just one among many methods of performance.
Having a contract does not remove the need for direct management over performance. The first act for bringing this under control is to assign performance responsibility to a specific subordinate, promising this person that they will have sufficient resources to assure that performance.
In specific, limiting available resources to the dollars that are placed on the contract is not intelligent management. It puts the welfare of the contract before the welfare of your organization. The manager who has responsibility should have additional resources to gain performance during variations from contract, for either modifying or going around the contract as is necessary to assure your desired end result.
Rule 3: The contracting officer is technical support for the working manager. The manager is the one who has responsibility for results, the technician only accepts responsibility for his or her own work.
technical-support person in charge invites abandonment of management. The
one who has responsibility for performance needs to be in charge, with
technical-support answering to his or her assigned performance needs.
Action should begin by giving the appropriate manager a performance responsibility for the "next contract" so that the preparation of the document can be managed as a precursor to assuring its eventual viability and effect. This cannot be intelligently entrusted to anyone who lacks personal responsibility for the eventual performance results.
To guide your decisions:
Cost: It will require a personal effort to make the assignment and see to its effect. There is an additional investment in the direction of a fairly senior manager who will assume responsibility for performance.
Benefit: You will be back in charge of the
efforts that gain performances on