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Name:	MrHodja -	Reply
Subject:	The Latest "Good News"
Date:	3/4/2009 3:54:14 PM

Another victim of the Obama assault: Cost Plus Contracts.

While there may be abuses of cost-plus contracts, those abuses occur mostly when the Government customers allow them to happen by simply not paying attention to what their contractor is doing and charging, or by throwing money at the contracts with no real idea as to how it might be used. We in the contracting world are not perfect, and I am sure there have been bad actors, but the broad brush applied to cost plus contracts is deceitful.

I work for a Defense Contractor, and do my work on an Indefinite Quantity/Indefinite Delivery, cost plus fixed fee contract with the Navy. The umbrella contract was awarded with a set time limit and a set ceiling, and as individual tasks arise we negotiate a Delivery Order for each task with our Government customers. As with the umbrella contract, the DO has a ceiling and the only thing we get paid for is the hours we work, the materials we buy, and the other direct costs such as travel and per diem - with the DO ceiling being the most we can be paid without compelling reason to increase that ceiling.

The work I do is in the area known as Information Assurance - computer security and network security in plain terms - and there are so many variables in what we do that writing a set of specifications that could be responsibly bid against as firm fixed price is nearly impossible. Problem is when we bid a delivery order we don't know what we don't know - and under the present system if the job turns out to be bigger than we and the Government rep thought -and we both agree - we can negotiate an increase in the DO ceiling. And, if it turns out to be less of a job that we thought, the rest of the DO ceiling is not charged and that money is available for the Government to use on other tasks.

So what will probably happen if we are forced into fixed price contracts is that the process of getting on contract will be significantly longer than it is now (a lot more definition of exactly what is required, when, and how - things that are very difficult to determine in our business), and I will have to build in a significant amount of management reserve to guard against the unknowns. So the process will end up costing the Government more and take longer to get anything done. Exactly counter to the impression the Big O wants to leave with the American public.

If I were to be building refrigerators it would be different - easy to spec and much easier to price and control costs. But, in the IA world, very little is known about a job when one first starts it, and to be frank the Government customer often doesn't know exactly what the job will entail either, just that it needs to get started. Many times our original DO is a best guess as to cost, and the real cost doesn't emerge until later in the task.

One other thing -- Obama wants to pull back a lot of what we do and have "Govvies" do it instead. More big overnment. I can tell you, and my Government customers will tell you as well, that doing so will increase cost and decrease quality and timeliness. Contractors do it faster and often better than the Government.

When I went through my Air Force Basic Communications Officer course in 1967 one of my first civilian instructors informed us of the Civil Service Rocket - saying that it won't work because you can't fire it. Now I know that statement will probably get the Hound to howling, and I have known many fine, hard working Govvies over the years. But I have also seen many, many examples of laziness, ignorance, inefficiency and sick, sick organizations. In the contractor world laziness, inefficiency, and non-productiveness is rewarded with a pink slip, not a continuing paycheck.

Now that my break is over I must get back to, as Obama would have you believe, $crewing the public.

Nasreddin Hodja

Name:	Mack -	Reply
Subject:	The Latest "Good News"
Date:	3/4/2009 5:31:36 PM

This sounds like another knee-jerk fiscal plan developed by a "staff" than either has no experience in purchasing or doesn't care whether it works or not. No "Pink Slip" envolved. Just Hurry.
People are suspicious of Guvment Spending Policy that brought us $200 Toilet Seats/$500 Hammers and Travel Junkets to Barbados for the Senator and his staff. Compared to what is happening now, we were better off with the Gold Plated Hammers.

Name:	Talullahhound -	Reply
Subject:	The Latest "Good News"
Date:	3/4/2009 6:08:20 PM

It would be unfortunate to have to force task oriented contracts into firm fixed price. You acurately point out that it will take longer and likely raise the cost on some contracts. However, it may force the government to better define their requirements before putting it on contract and I foresee a lot of pre-contract meetings between government and contractors prior to putting the effort on a formal contract. I have found that this process, although time consuming, tends to have decent results.
This seems to be a cyclic idea about using more firm fixed price contracts -- which I believe is still the government "preferred" method of contracting. No one much likes it because it doesn't afford much flexibilities for efforts like you describe, but works well for purchasing widgets. I can remember clearly previous efforts to use more fixed price contracts.

I'm not sure I agree with you that contractors do everything more efficiently and cheaper than government employees. I've had excellent contractor support and I've had my share of people that I've had to get rid of -- and unfortunately, most of the time they didn't get fired, they just got moved to a different contract to be someone else's headache. The problem is that the government has so many support contractors that it would be next to impossible to get rid of them all and just have government people doing the work. In fact, what would likely happen is that those support contractors would likely just be hired on as government employees. Most of the Defense Support contractors are retired or former military anyway. Both my sister and BIL are support contractors for the Army.

But, there are a lot of horror stories in contracting. Almost every major development and equipment contract let by the Defense Department is fraught with cost overruns, escalating unit prices and way off schedule. Part of this is the government's fault, but a lot of it has to do with poor management in the companies. They count on the fact that the government is not on top of everything they should be, and when the government finally does nail them, then it gets engaged with round and round of "get well plans".

I really don't think contract types in something that the President ought to get involved with because it will lead to a knee jerk reaction (except in the AF where they seem like they pretty much do whatever they feel like, whenever they feel like it). I've seen these efforts before, and the gov't politicos make huge pronouncements and set down a lot of new rules until they find out that they are just unworkable and slowly everything returns to normal.

Of course, you have no way of knowing this, but I had a reputation for being pretty progressive when dealing with contractors. Because ulitmately, at least in Defense, most of the time both contractors and govt are trying to get to the same place for the same reason. I can only think of two instances where I was convinced a contractor was trying to screw the government.

Name:	mbk -	Reply
Subject:	The Latest "Good News"
Date:	3/4/2009 6:54:16 PM

Don't worry Mr. H. There will be exceptions or waivers to this policy also just like No Lobbiest, etc. Just hope you are one of the exceptions or waivers.

Name:	Mack -	Reply
Subject:	Don't Worry Mr. Hodja...
Date:	3/4/2009 7:21:58 PM

the efficiency of the United States Government will overcome all obstacles and find a better way. Right?? Unless you are a US Air Force contractor, I guess.
They always have, right??
Keep your Vaseline close at hand.

Name:	MrHodja -	Reply
Subject:	The Latest "Good News"
Date:	3/4/2009 10:18:46 PM

In my previous uniformed life I was a Program Manager and Program Director, and agree 100% that in most cases poorly written specs were the root of Government-contractor relations. I wish I had a nickel for every time the term "out of scope" was uttered by a contractor, either because the spec was poorly written or the Government tried to get the contractor to do something that was, indeed, a new requirement.

I recently had the opportunity to consult with another Defense contractor on some work they were going to propose to the Italian Government. Their initial strategy was to low-ball the bid, then sock them for a big Engineering Change Proposal. We saw that happen with the task we worked earlier with the Italians (we weren't the original contractor - just had to clean up their mess), and knew the Italians would be very wary of that a low-ball, then ECP approach. We advised the other company to go ahead and include and price everything up front, which they did. The final award has not yet been made but in subsequent conversations with an Italian representative they were keenly interested in whether they would be in for another bad experience like the first. I was pleased to be able to assure them that it wouldn't.

And I must admit that you are right about shifting dead wood around. In large corporations it is often easier to reassign than to fire....we are subject to lawsuits claiming unjust firing and the required paperwork trail is just too formidable to tile at that windmill.

Name:	MrHodja -	Reply
Subject:	The Latest "Good News"
Date:	3/4/2009 10:22:46 PM

Thanks for the words of encouragement - but I am not really concerned. My last child is a senior in college now and once she is of Daddy's payroll I'll probably retire anyway. My 37 year old colleague, though, might be in a tight.

Once the political points have been made and the lunacy of this move is realized the pendulum will start swinging the other way.

Name:	Talullahhound -	Reply
Subject:	The Latest "Good News"
Date:	3/5/2009 4:31:05 PM

Yeah, it's a real "feel good" type of pronouncement that has no basis in reality. "Have you ever heard of a "Yockey waiver"? Basically it says that you can't sell a system internationally that hasn't passed Final USG acceptance tests, unless you get a waiver. Because, while good intentioned, it was really a knee jerk to something that happened with the AF. But, of course, no one had the courage to do away with it after Mr. Yockey left public service, it just continued on as a rubber stamp. Because everyone that works with international business knows that the policy was flawed to start with.

Name:	MrHodja -	Reply
Subject:	The Latest "Good News"
Date:	3/5/2009 4:52:37 PM

I recognize the name (first name Donald) but his "claim to fame" came after I retired from the AF and became a scum sucking, bottom feeding, sleazebag defense contractor!!

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