Good afternoon everyone.
Secretary Shinseki and I are both Veterans. We have a clear mission and share a deep desire to serve our fellow Veterans, delivering benefits and services to the men and women who so richly deserve them. It is a complex process.
There are more than 23 million American Veterans; of those, nearly eight million are enrolled in VA’s healthcare system. Last year alone, over five million Veteran-patients walked through our doors. Annually, nearly four million Veterans and survivors receive VA compensation and pension benefits. And in final tribute, each year approximately 100,000 Veterans and family members are laid to rest in one of our 128 national cemeteries.
President Obama’s 2010 budget request for VA is nearly $113 billion -- that’s up 15 percent from our 2009 resource level -- and the largest percentage increase for VA requested by a president in over 30 years.
The President has charged the Secretary to transform VA into a high-performing 21st century organization. Many of the improvements, initiatives, and innovations we undertake will involve acquisition. Already 30 percent of what we do is outsourced. So my challenge as Deputy Secretary is to know exactly where that money is going and ensure that we are getting full value for those dollars on behalf of our Veterans and ultimately for the American taxpayer.
In your agencies, you and your leaders face similar challenges: how can you best manage acquisitions to meet your mission?
This is a time of great change: new challenges, new demands from taxpayers, new technologies, and new leadership.
So this afternoon, I’d like to talk about the challenges of acquisitions common to all agencies, then I’d like to further share my thoughts about the challenges we are facing at VA. Finally, I’d like to end by providing some tangible advice that might help advance your careers as acquisition professionals.
The first challenge for government-wide acquisition is, of course, the people factor. There are simply too few people with proper training in acquisitions to help agencies meet their mission.
Since 2000, annual spending on government contracts has increased by 149 percent; at the same time the number of federal contract specialists has increased only nine percent. Government is not only struggling to hire mid-level professionals, but entry-level hiring is tough, too, because, in all honesty, government has not traditionally been a very attractive employer, nor are students aware particularly of the acquisition field as an option. Compounding these problems, the federal hiring practices are too difficult when compared to the private sector. Many of those who have been in government for a while are eligible to retire. In fact, a quarter of procurement professionals at GS-13, 14, and 15 are eligible to retire now.
Because many federal agencies are understaffed, employees have difficulty keeping up with their workload. They don’t have time for training. Even when agencies do invest in training, their best and brightest often take the training and leave for better jobs at other agencies. Supervisors, many of whom are overworked themselves often have little time to mentor junior staff. Leadership at some agencies -- many of whom are products of the system I have just described -- themselves lack understanding of acquisitions and are less able to train and mentor their employees. All of these factors can contribute to a toxic work environment.
When you have such an environment, people leave, word spreads about what it’s like to work there, recruitment becomes even more difficult. It’s a negative spiral.
The second challenge is one of structure. In 2003, Congress passed the Services Acquisition Reform Act, which established the Chief Acquisition Officer in civilian agencies. However, most CAO’s hold their positions collaterally with other major responsibilities. Yet the federal government spends $500 billion annually to acquire services and goods. This outlay calls for a skilled CAO who can devote full-time attention to the assignment and who has direct access to agency leadership.
The third challenge is one of process. Government programs have become much more complex in recent years. We’ve gone from buying simple supplies and services to acquiring complex services and systems, with an emphasis on managing the performance of highly visible, high-dollar contracts for mission results. Too often the contracting process is not set up with meaningful performance measures for getting the right results to meet the agency’s mission, or to measure customer satisfaction once the project is complete. And, as Verizon’s CEO, Ivan Seidenberg has said, "Customer satisfaction is the most important thing." Let me say that again, "the most important thing."
Many of us in government are guilty of writing solicitations that are so poorly constructed that private industry has trouble figuring out what the government is trying to accomplish. Many agencies report that they are doing performance-based acquisition when all they are really doing is mis-labeling a specification and then administering the contract for compliance rather than managing for performance and results. This actually diminishes trust with the private sector.
In all of these challenges -- people, structure, and process -- we need a much more comprehensive approach. If agencies hope to improve the value of acquisitions, then they must invest in all three areas.
Fortunately, some of these challenges are addressed in the White House’s March 4th contracting memo. The memo largely focuses on the process issues and additional work needs to be done to identify the full set of challenges and opportunities faced by the acquisition community. My view is that there needs to also be a focus on the two other areas I addressed earlier: people and structure. I think we should all be encouraged that we have a President who understands that the acquisition community is dealing with these challenges and is prepared to help.
Now that I have spoken about the challenges faced by the acquisition community government-wide, I’d like to shift my focus to talk about some of the challenges and opportunities for us at VA.
We are facing many of the same challenges as the rest of government. We have a 26 percent vacancy rate for procurement officers. The average age of our procurement officers is 50. And, as I mentioned, a quarter of our procurement officers at GS-12 and above are eligible to retire now. Our CAO is not part of the top tier of agency leadership and our contracting processes need to become much more strategic and customer focused.
Nonetheless we are committed to change and are already working hard at it. When Secretary Shinseki came on board he laid out three principles that will guide how we lead change at VA. We are committed to apply people centric, results-focused, and future-oriented principles in our plans to transform VA.
At VA, ‘people’ means our Veterans and our VA employees. In order to provide timely benefits and services to our veterans, we will invest in our people -- through training and by providing incentives and opportunities for growth.
Second, results-oriented. Within VA, our health care, benefits, and cemetery business units function largely independently of one another. Instead of functioning as an integrated whole, VA acts more like a holding company. Our three administrations are connected in name only; we want to change that --going forward we will aim to have a much more coordinated, integrated, and centralized approach to doing business -- a corporate approach. This way our hope is that we will be able to deliver disparate services within VA in a more convenient and satisfying way for veterans.
Third, forward-looking. We will be attuned to evolving needs and seek out opportunities for delivering the best services with available resources. We are building a health care and delivery system for future decades.
As I said at the outset, many of these improvements are going to require acquisitions so I’d like to share a little bit with you about what we are doing to improve our acquisitions operation.
First -- the people factor. Just last fall we established the Veterans Affairs Acquisition Academy in Frederick, Maryland to train and certify our VA acquisition team. We are the first civilian agency to have such an academy. We hope that our certification programs will become the gold standard of government acquisition certification.
We are using that comprehensive approach I talked about earlier. Acquisition reform at VA is part of a larger strategy to improve all of our management infrastructure. We are adopting a new strategy designed to align VA acquisition capability with mission outcomes. We will apply an enterprise spend management approach to gain insight into what we are spending and why. This corporate information will help us treat our acquisitions as a portfolio of choices measured against consistent criteria of value, equity, and access. Moreover, we will rebuild our program management capabilities to deal with large scale projects. And we will synchronize our IT, HR, and our financial management capabilities to improve our culture of performance.
Our employees at the academy are not only getting the proper certification to do their jobs, they have courses in team building, leadership, customer service, communication, and more.
The academy has four schools: the Acquisition Internship, Contracting, Program Management, and Acquisition Corps Development.
Interns come for a three year residency, which includes formal instruction, skill-building activities, leadership training, and job rotation. Our three other schools are geared for existing VA employees to attend for shorter one to two week-long training sessions.
The response has been tremendous. Our current class of 30 interns comes from 13 states across the country and for next year we have had 15 times as many applicants as we have allocated slots for our program. They are an enthusiastic group. As part of their training, we require each of them to write a personal statement that will guide how they conduct themselves as leaders in the acquisition profession. Let me share a few with you:
We are proud of our academy and so it would seem, is OMB. Next week the academy will be awarded OMB’s 2009 acquisition excellence award for its efforts related to the acquisition workforce. I regard part of my job as Chief Operating Officer to make sure we build a system worthy of their aspiration.
Next we’re tackling our structural issues. In order to get better results for our Veterans, we are going to establish a new Office of the Assistant Secretary for Acquisition, Logistics, and Construction to centralize, coordinate, synchronize, and provide oversight of the more than 14 billion dollars VA spends each year on products, services, and construction. This new position will go to an experienced acquisition official with a proven track record of getting results. He or she will have a seat at VA’s leadership table and will ensure we invest in the hiring, training, and development of our acquisitions and construction staff.
Our Office of Construction and Facilities Management is a subset of our acquisition office at VA. As an agency we own or lease 159 million square feet of property. This office has also completely altered its acquisition strategy in 2009 with a very proactive approach to private industry. This involves engaging construction contractors early in the design process. The benefits to VA are significant: receiving contractor value engineering and construction feedback early while the design is still malleable affords more cost savings and faster delivery. All of our designs aim for high levels of environmental sustainability, at a minimum of LEED Silver, as defined by the U.S. Green Building Council.
In addition to investing in people and structure, we are also investing in process. We have contract review boards in place to review each contract valued at $5 million or greater. We are centralizing our IT operations to provide specialized acquisition support at a single technology acquisition center. We are starting to implement customer satisfaction surveys. As part of our desire to establish a stronger partnership with industry, we will kick off an industry day in July.
All of this takes work and we have a long way to go. Our services and our facilities are far from perfect, but we are working hard to change that and transform VA into an agency that values the workforce and meet the needs of Veterans.
I am sure many of you are working to change things in your own agencies. I understand that many of your agencies have not seen the same budget increases as we have and maybe can’t invest in training in the same way. Each day brings unique challenges and it can be hard to figure out a way forward. So as I close, let me share some tips with you that might help you take some initial steps.
Challenge yourselves to use acquisitions to help achieve your agency’s mission -- be results-oriented and customer-centric; be a team player. Collaborate with counterparts in your agency and with other agencies, think big picture, ask questions and take it easy as someone brings a new idea forward. Ask your colleagues what questions need to be answered to make their ideas, "investment grade."
Instead of thinking of the FAR as a list of rules to be followed, think of the Guiding Principles as ways to enable you to better support the mission of your agency. For example, contract specialists and contracting officers should get away from being prescriptive to being focused on results and using business judgment to leverage the knowledge and expertise in industry that will allow them to craft innovative solutions that meet agency mission needs.
Next, I’d like to offer advice for our leaders of today -- those of you who are SES. Fight for resources for your people. Think of how you can be part of the C suite; how you can gain a seat at same table as the CEO, the COO, the CIO, and the CFO. There is no easy access; you have to earn your way in. To be invited into the C suite, you have to demonstrate your value -- think of how you can best serve agency leaders, solve problems, bring solutions, and meet their pressing needs. Pick a tough challenge and show how you can solve it.
And to our leaders of tomorrow -- the acquisition workforce -- look for ways to develop your skills and help change the culture where you work.
Finally, consider how you can partner with the private sector, rather than viewing contractors as your adversary. It is much better to communicate with them understand their issues and concerns even as you assert government’s right to get good value.
I knew someone who spent 30 years in the federal government and rose to be the chief procurement officer at a cabinet agency. When he retired and entered the private sector I’ll never forget what he told me, "If only I had known!" He said if only he had known how poorly requirements, objectives, and RFPs are written, and how hard private industry worked to meet their clients’ needs, he would have treated them differently during his federal career.
The fact is that the American public is accustomed to, and expects, the service levels delivered by today’s consumer-obsessed corporations in a mobile, digital, and virtual age. No longer can VA, or government in general, engage in anything remotely akin to ‘bureaucracy as usual’ in its operations. I think every acquisition professional should try to spend some time in the private sector to get the view from the other side. Maybe you can even prepare a proposal on one of your own RFPs before you send it out - - in other words, have your colleagues "red-team" RFPs by trying to respond to them before you send them out.
In the end, it’s important to remember the work we do every day isn’t about us. It’s not about our agency leaders or even about our President. It’s about our mission and it’s about the American people and doing what’s best for them.
The road will not always be easy, but President Kennedy had it right when he said, "What you have chosen to do for your country, by devoting your life to its service, is the greatest contribution that any man could make." Thank you for your service and thank you for your time this afternoon.