Keeping up with the latest technology and allowing a contractor to explore technology options can promote creativity and innovation and bring cost savings to firm fixed priced contracts.
Confidence and Opportunity
How much efficiency do you think a vendor would identify if truly incentivized to find the most productive approach to performance? With repetitive services, a fresh perspective and the opportunity to increase a project profit margin will spark the creativity of a true business person. The key is for the government customer to the have tools to measure performance—creating confidence—and for the vendor to have the freedom to make changes—creating opportunity.
A perfect example of both saving and making money is the firm fixed priced (FFP) contracts for commercial services. The services are generally repetitive in nature and have been through several cycles of contracting. The customer has a thorough understanding of what services the vendor should be providing.
Change Is Hard
The first step is agreeing that change is hard (really hard!) and that it affects everyone involved. The past few years have created a bidding environment that is unpredictable and competitive. As the owner of a small business, I have studied the market, trying to find the best way to establish new government customers while maintaining a reasonable margin. No easy task!
While recently bidding a FFP contract with a new customer, I was semi-confident that, given the workload data, we could estimate a realistic level of effort and create a highly competitive bid. We studied the work and the local job market to determine a competitive price. We had no idea how much the current staff were being paid, and we did not have a firm understanding of the current contract price. Despite all the variables and several big unknowns, we won the bid.
The next step was hiring staff. I expect the administrative support and other staff to have a high administrative skill level, so we test our applicants. In this case we learned that approximately 50 percent of the incumbent staff did not meet the established minimum skill level. Because we know there is an abundance of qualified candidates available on the market, we were able to quickly locate qualified alternates.
The other 50 percent of the current staff were qualified, but several expected a salary that far exceeded the market value. Several declined the job offers, and we replaced these highly regarded staff with equally or more highly qualified staff. All were new to the customer.
As we transitioned the new staff, we examined the jobs so that we could provide proper training. We learned that we could de-mystify the most complicated tasks—and save money—by
- studying how a job was done
- questioning why it is done a particular way
- considering alternate paths to completion.
This is where the technology comes in. Much of the reason "wage creep" had occurred was that no one had looked at the tasks to determine if the task was really that hard and if the best tools were being used to complete it. Was the task so complex and difficult that it justified paying twice the market value?
We found that the tasks were very simple. As an early Excel user, I have watched the products improve and have kept my skills sharp. In essence, I know what the technology can do. That was not the case here.
We soon discovered that the highly regarded, overpaid, contract support staff had not been trained to use the latest versions of the software. Both agency and contractor staff had current software, but used multiple complicated steps to execute simple tasks. It had become easier to create a "Band-Aid" to make the software work rather than learn the most efficient way for the software to do the job.
To the casual observer—and perhaps to the contracting officer—the tasks looked complex and difficult; in reality the tasks were simple, repetitive, and easily completed using the tools available in Excel.
Although we were confident in our analysis, we needed to gain the public manager's support in the process. Quantifying the change is the best way to validate the change and create confidence. In the case above, we were able to reduce a task by two working days. Although this may not sound like a lot, the task was one step in a process, and staff were able to begin the next step earlier, with the positive impact repeating and accumulating throughout the process.
Along with appropriate compensation is training. It's not enough to simply identify the problem; we also must adequately train the staff in the necessary skillset. Training will help keep staff technologically current and able to perform their work more effectively. Training also demonstrates an agency or company's investment in their employees and the customer's continuity of mission.
Technology for Productivity
Technology also can be an excellent tool to improve productivity. At MIRACORP, we have created digital checklists as a tool to understand new projects, using the contract requirements to track and report on daily activity. Giving these reports to each staff person boosts productivity and accountability, yet only takes a few minutes to complete. The forms are submitted electronically and the data is accessed through a commercial off the shelf (COTS) tool.
The daily activity report serves as a reminder to employees about what they are expected to perform, and is a means for MIRACORP to measure performance. The data also can be the basis for a monthly report or other contract deliverables. It provides insight into peaks in workload, which helps both agency and contract managers better understand what is or is not being performed. This can provide better contract oversight, and as we have found, enable managers to redirect project resources.
Using project tracking software also has enabled us to save the customer money. We are able to analyze the contract work mid-project, and reclassify tasks as the contract experiences attrition. We passed on this cost savings to the customer.
Opportunity for Innovation
A contractor new to an agency or department may not have the institutional history or insight to identify opportunity for improvement during the bid process. However, allowing a contractor to work within the parameters of the FFP contract will promote creativity and innovation, resulting in cost saving opportunities that will benefit all parties.