Prepared Remarks of U.S. CAO Anne Rung, Acquisition Excellence 2016

Editor's Note: The following prepared remarks were originally delivered by U.S. Chief Acquisition Officer Anne Rung at ACT-IAC's Acquisition Excellence 2016 Conference on March 22, 2016. U.S. CAO Rung spoke about the Administration's continued efforts to simplify the Federal acquisition marketplace to keep pace with the incredible opportunities provided by technology and the shift across Government towards category management.

It’s an honor to be back speaking in front of my colleagues and friends at this conference.

This event, and ACT-IAC in particular, embodies partnership and collaboration – between technology and acquisition leaders, between government and private sector – who come here to think, be challenged, exchange ideas, and equally important, recognize really outstanding work. We don’t do enough of that.

I want to thank the acquisition excellence program chairs - Mary Davie and Jim Williams.

A special thanks to our ACT president, Margie Graves, who I am delighted is now the new Acting Deputy Federal CIO.

And of course – thanks to IAC President Ted Davies and ACT-IAC Executive Director Ken Allen. I can’t thank you enough for your partnership during my tenure as Administrator.

A year ago I spoke at the conference about the need to simplify a very complex ecosystem: the federal marketplace.

Just recently, ACT-IAC released a report on cybersecurity that talked about how the cybersecurity ecosystem is growing more complex and turbulent every day.

Technology is driving change so rapidly that only a few years ago no one was talking about cyber warfare, code and open source, data reuse rights, agile development, or even apps.  We certainly weren’t thinking about these issues in the context of acquisitions.  I just watched a video of an incredibly human robot – her eyes looked at you, her facial expressions were incredibly human. This robot can have a conversation with you, and her brain further develops as she learns something new from each person she speaks with. And during this whole video, I kept thinking “I’m still using a government-issued Blackberry.”

Tom Linton, Chief Procurement & Supply Chain Officer for Flex, an electronics manufacturing services company, talks eloquently about our rapidly changing world in the context of acquisitions: faster product cycles, more disruptive products, innovation on the rise, regionalization, the internet of things, more complex high-risk supply chains.

He describes how powerful technology forces are changing business – information is free and real time, mobile devices are available anywhere, anytime for anyone, cloud has minimal cost, massive power, and unlimited scale, and we now have online channels that allow for immediate access and global reach.

The President recently attended South by Southwest, where he talked about the power of convening and catalyzing the private sector to be part of the civic community, so together we can find ways to make Government work better through technology.

And we also need to catalyze partnerships within Government – between bureaus, agencies, communities like it, and acquisitions – to solve our technology challenges.

The question that we must ask ourselves is: have we simplified our own Federal acquisition marketplace to keep pace with the incredible opportunities provided by technology? Because fixing technology means fixing, in large part, IT acquisitions. Are we fast enough and nimble enough to adjust?

I would concede that the answer is that we are not yet there – but we’re planting the seeds and seeing positive signs of growth.

We have had successes in the past few years that each of you helped make happen, and we should acknowledge those successes:

• Competition rates are up;
• One-bid rates are down;
• We’ve hit our small business goal three years in a row and met our woman-owned small business goal for the first time this year;
• We’re spending less;
• GAO removed interagency contracting from the high risk list; and
• The quantity and quality of contractor past performance assessments has improved.

But more remains to be done, particularly to improve IT acquisitions.

A year ago I spoke at this conference about a roadmap built around three core elements:  (1) buying as one through category management, (2) driving innovation, and (3) building stronger vendor relationships.  We began many of our efforts in IT acquisitions, with the goal to scale it across all areas of acquisitions.

Thanks to a lot of hard work from everyone in this room and others, we’re beginning to see these principles being applied.

A year ago we launched category management (CM) government-wide.

Last March I spoke about how we had just established the Category Management Leadership Council. The Council had divided the Federal marketplace into ten common categories, and GSA had created an alpha version of the acquisition gateway, an online tool for sharing important contracting information that supports our CM effort.

Since I spoke here last year, we’ve already realized nearly $2 billion, to-date, in annual savings as a result of category management. Let me repeat: that’s $2 billion in savings by adopting smarter, more strategic buy practices across Government.

We’ve taken over 25 actions to drive category management across Government. Let me highlight four of those actions.

First, thanks to the great work of GSA, the gateway has developed into a more mature site. In fact, it has hit 6,500 users towards our goal of 10,000 member users by the end of this year.

Much of this is from a good old-fashioned marketing campaign led by Laura Stanton, who has a gateway roadshow that she’s taken to many conferences and meetings. As a matter of fact, there was an interactive demo here this morning – I hope you caught it.

GSA also opened up part of the gateway to the public, after hearing from industry that you wanted a chance to not only view a lot of this information, but provide feedback and information to the site.

Second, and a hugely important element of this effort, we recently announced a team of dedicated senior government executives to oversee our ten categories, which represent more than $270 billion a year in spending. These category CEOs include Tiffany Hixson from GSA, who is leading our professional services category, and Kim Luke, who we recruited from the private sector, to manage the IT category.

These are incredibly important roles in category management. They must identify the business needs of an agency, beyond reducing costs – they must know what truly matters to an agency and their customers.  They must know what the external market looks like, industry dynamics, and the future state. Their strategic plans must clearly lay out what we should do and not do – contracts, supply management, demand management.

Our category managers are already hard at work conducting spend analysis, market research, and financial and supply chain risk analysis. They are using this information to develop strategic plans specific to their categories with clear metrics and outcomes.

Third, we’ve been moving forward on driving greater efficiencies in the $10 billion spent each year on PCs, software and mobile devices.

We awarded two government-wide software agreements in December 2015 for application development services and geospatial software licensing;

U.S. CIO Tony Scott and I issued our first category management memo on workstations, requiring agencies to move to three existing government-wide contracts, standardize configurations, and be smarter about refresh cycles. We will monitor our progress after the 4th quarter spend.

Since we released that memo, we’ve seen some prices for PCs drop by 50%.  Let me repeat: we’ve seen some prices for PCs drop by as much as 50%. We issued our second category management policy on software earlier this year for public comment calling for similar actions to move us to existing government-wide agreements and gain greater visibility into our inventory. A mobile policy is next.

Finally, a real bright spot in this effort has been identifying and recognizing good category management practices already underway. The U.S. Air Force launched an impressive category management effort around it commodities to drive greater savings.  They began with a significant data analytics effort, identifying over $500 million in savings opportunities through strategies like moving people towards their mandatory contracts, using existing inventory rather than buying new, and standardizing refresh cycles.

I’m seeing and feeling the shift across government towards category management. People are talking about category management more, every major Federal acquisition conference now has a category management track (there’s a session on category management here after lunch), businesses are hiring category management consultants, and data analytic companies are organizing around our ten categories. The shift is happening.

But we’re in this for the long-term. We’ve learned from the UK and companies like Johnson & Johnson that this is a multi-year effort and there will be lessons learned along the way and we’ll make adjustments.

The future state of category management requires stronger specialization of our workforce – a contracting workforce, a team dedicated to category management, and a team dedicated to business engagement.

It requires a strong supplier relationship management program within each category. Every mature CM effort in the private sector and in the UK government has an SRM initiative that works with companies across our enterprise and creates tiers of companies based on spend, mission criticalness, or other factors, with scorecards and clear outcomes.

On the innovation front, a year ago I talked about the need to strengthen the core capacity of the acquisition workforce to use innovation strategies that deliver real results.

Equally important, I said we must be more effective at building capacity to make sure it is taking hold. To put it another way, if we want to develop a digital capability and an agile mindset within agencies, we must ensure that everyone understands the new approach and the many benefits to the agency.

I hear about the challenges in this space from my industry partners. Some companies do not trust the Federal Government and see far more downside than upside in working with us.

One contractor association doesn’t like it when we say “we’re the world’s largest buyer.” I was confused at first – because factually it’s correct. But others will say that the commercial market may dwarf any business the Federal Government, including DOD, can provide.

If our goal is to reach non-traditional suppliers, and especially fast-moving technology companies, streamlined commercial-like acquisition policies will be essential. We created the TechFar to show that our regulations contain most of the needed authorities, but they are seldom used.

We know our workforce is not adequately trained in the use of fast-track, flexible policies. Some agencies still require six months to process a simplified acquisition. Moreover, our workforce can be risk-adverse, particularly with anything perceived to be innovative.

In fact, our FY15 FEVS data showed that while 91% of Federal contracting professionals actively look for ways to do their job better, only 37% feel that creativity and innovation are rewarded.

So it starts with creating new specialized teams focused on learning innovative approaches to buying it and then ensuring that they have support and visibility from the top, including OMB.

Joanie Newhart, the head of workforce training at OFPP, and Traci Walker, a contracting officer with the office of the CIO’s U.S. Digital Service, have shepherded the creation of the Government’s first certified team of digital IT Acquisition specialists.

We kicked off our first class last November – a class of 30 contracting professionals, almost all with some it contracting experience. The main focus of the training is how to contract for agile development for IT, and more generally how to manage digital service contracts and how to manage change.

In addition to traditional classroom material, the course comes with a portal that contains simulations, readings, visual and audio media, role playing exercises, and virtual forums and discussion boards.

The new training itself mimics the principles of agile software design. In traditional training – as in traditional waterfall development – the curriculum is all developed in advance, before the first class, and then rolled out in the course of the training program. For this effort, the later modules were developed "on the fly" based on what had happened in the course earlier on and based on feedback from participants.

Our first class graduates next month, and will start applying their practices to IT acquisitions at their agencies. We’re moving forward with our second class later this year for a total of 60 newly trained digital it acquisition specialists by the end of 2016.

We also need to create a pathway for our innovators to experiment. A few weeks ago, I called for each CFO agency to create an acquisition innovation lab, or a similar mechanism, to encourage testing of innovative ideas and support the adoption of new ways of doing business.

Agencies will appoint advocates, who will participate in a council where they will discuss their challenges, exchange best practices with government and industry experts, and be empowered to encourage testing of new ideas at their agencies.

Agencies will be encouraged to participate in a pilot in which six to seven forward-thinking agencies will construct their labs with support from the U.S. Digital Service and GSA’s 18F. Funding was approved for 18F to provide coaching for integrated lab teams of program, technical, and legal experts. Experience from these priority acquisitions will be recorded in case studies.

There are labs already underway – including the HHS Buyers club, and an innovation lab at DHS under the leadership of Soraya Correa, their senior procurement executive.

Standing up acquisition labs and advocates won’t, by itself, drive innovation; but the more signals our agency leaders give to the workforce that creativity matters, the more opportunities we offer them to become meaningfully engaged in process improvement, and the more we recognize and share their contributions, the better positioned we will be to produce even better results for taxpayers.

Finally, the President’s 2017 Budget has called for the creation of an IT Modernization Fund. The fund is a $3.1 billion proposal that will transform how the Federal Government manages cybersecurity by enabling the retirement, replacement, and modernization of antiquated legacy IT, which is difficult to secure and expensive to maintain.

The fund also calls for the formation of a new position – the Federal Chief Information Security Officer – to help drive needed changes across government.

Finally, last year I said that early, frequent, and constructive engagement with industry leads to better outcomes.

Since that time, we’ve partnered with ACT-IAC on a series of events called “Lifting the Curtain” to shed light on how both industry and government view Federal procurement.

We’ve held a session on industry bid/no-bid decisions (which I attended), one on market research versus market intelligence, and one here at this conference on technical evaluation committees.

In addition to lifting the curtain, we’re also providing more formal channels for industry to provide us with more meaningful feedback on Federal acquisition performance.

Since last March, OFPP launched Acquisition 360, the Government’s first-ever transaction-based survey tool that collects comprehensive data across government from vendors, program, and contracting offices on specific IT acquisitions.

To date, OFPP has collected data from 1,100 contractors who competed for complex IT acquisitions, representing 5% of all agency IT acquisitions awarded this fiscal year.

By the end of 2016, our goal is to gather data from all IT acquisitions over $500,000, which represents 40 percent, or $20 billion, of all IT acquisitions.  Based on this year’s response rate, we anticipate 6,500 vendors will provide us with their insight. That insight will inform our policy-making and actions moving forward.

Our preliminary set of data highlights areas where the Government needs to improve, including the quality of post-award debriefings.

In response to this and feedback we received from industry through other channels, we have started to move forward on ways to improve debriefings.  At FAI.gov, we have posted a mock debriefing webinar and also debriefing training using avatars that the army developed and shared with us.  We have focused on debriefing best practices at our front line forum and also at the Chief Acquisition Officers Council, which I chair. Finally, we are going to create the next generation of mythbusters – on debriefings.

Let me conclude where I started – talking about the power of catalyzing the private sector and government professionals to use technology to make Government work better.

A recent report from the Department of Education reminded me that we need to think of our community of problem solvers even more broadly – beyond technologists and acquisition specialists.

And a recent study on workforce skills by the National Center for Education Statistics found that U.S. adults scored dead last among developed countries for digital problem solving. Digital problem-solving included simple tasks like sorting emails into pre-existing folders and managing requests to reserve a meeting room.

Not only does this underscore that we need to design government’s custom-facing tools with the end user in mind, but we need to make our community of problem solvers as broad as possible.

The great news is that we have faced challenges and threats that have required acquisition and technology excellence – from stopping the spread of Ebola to fighting wars. And despite reductions in agency budgets, government shutdowns, and threats to our nation, our acquisition and IT workforce – and our industry partners – have shown that we can successfully deliver important services to citizens around the world. 

I’m incredibly optimistic that we will similarly rise to the challenges and opportunities that technology presents – no doubt, through the talent and great partnerships in this room.

Thank you.

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