An Organized Approach to Improving Federal Procurement and Acquisition Practices

Published by the Government Accountability Office on 1977-09-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)



An Organized
IImproving Fe

During the past decade, Federal procurement
and acquisition   practices have been under
extensive review:

      --Numerous     congressional      hearings.

      --Studies     by   Commi<6ons            and   other

      --Continuing   overview         by the    Office   of
        Federal Procurement          Policy.

Basic new directions        in policies are beginning
to take        shape.    A new       Government-wide
modern      statutory    foundation     is under active
consideration       by the Congress.

In this report          GAO        urges, as have some
others, establishment          of a continuing    research
program       to create        better    Federal  procure-
ment     practices      and to design and test the
best ways to carry out new policies. Specific
uses of such research              are discussed,  current
Federal     activities      are summarized,        and an
organized       approach        to a Government-wide
program     is illustrated.

PSAD-77-128                                                   SEPTEMBER 30, 1977
                      COMPTROLLER     GENERAL     OF THE   UNll-ED   STATES
                                    WASNINWVN.     OS.   ZODU


To the President of the Senate and the
Speaker of the House of Representatives
       This report      recommends the use of a continuing                 research
program    to create      better   Federal       procurement    practices      and
design and test       the best ways to carry              out new policies.         It
summarizes    current      Federal    activities        in this area and illus-
trates    an organized       approach    to a Government-wide           program.
       We made our review pursuant    to the Budget                           and Account-
ing   Act, 1921 (31 U.S.C.   53) , and the Accounting                           and Audit-
ing   Act of 1950 (31 U.S.C.    67).
        We are sending     copies of this report        to the Director,
Office    of Management and Budget , and to the heads of the
various    departments     and agencies      who rely   on nrocurement
and acquisition        to accomplish    their   primary   missions.

                                                 Comptroller   General
                                                 of the United   States

                                           AND ACQUISITION PRACTlCES

       Large Government         agencies--such         as Defense,
       Energy,     Transportation,        Space, General        Serv-
       ices--depend       on systems,      PiOdUCtS,      and serv-
       ices obtained        from private       enterprise     to do
       their    job.    These activities          cost about
       $70 billion      a year and involve           abou. 60,000
       Federalworkers.             (See p. 1.)
       Over the past 30 years,       procurement        has ex-
       panded and become more complex.             Efforts   to
       solve problems    have resulted       in a complex
       patchwork   of laws, methods,       regulations,      pro-
       cedures,  and administrative        requirements.
       Not all of the old problems         have been solved
       and new ones continue       to arise.       (See pp. 9,
       10, and 29.)
       This entire      body of procurement         and     acquisi-
       tion y*olicies      has been examined and            reexam-
       ined by the Congress,          the executive         branch,
       and various      study groups.      New basic          direc-
       tions    in policy,    including    legislation,            are
       beginning    to take shape.        (See pp.        i, 11,
       and 29.)
       After    years of supporting    reform,   the Con-
       gress will     want to see substantial      improve-
       ment in Federal     procurement    and acquisition
       practices.      (See pp. 29 and 30.)
       Both the House Government         Operations        Commit-
       tee and the Commission       on Governm?nt          Procure-
       ment recommended a continuing          program of re-
       search     to make Federal   procurement         practices
       work better     and to design and test           the bc.st
       ways to carry      out new policies:       i.e.,     using a
       scientific     approach   to improving       Federal       pro-
       curement.      (See pp. 2 and 3.)
       Currently,   there are no procurement     research
       programs   in some agencies.    In others    there
       are a few relatively    new ones.     (See pp. 2
       to 7.)

                                       i                            PSAD-77-128


Civilian  agencies    generally    are reluctant      to
undertake   procurement    research.     Within    some
quarters  of the Department       of Defense,    pro-
curement  research    has been going on for about
6 years.    Even so, the general      condition     is
one of insufficient      momentum.     (See pp. 5
and 8.)
Some agencies        expect      the newly emerging         Fed-
eral Procurement         Institute          to carry   this bur-
den.     The Institute         is only now being estab-
1 ished,    however,     and will        take some time to
become operationally             effective.         Even then it
will    not perform      research        roles    for the indi--
vidual     agencies.       (See pp. 3 and 8.)
GAO’s overall       recommendation       to the Office        of
Management and Budget is that a strong                  pro-
gram for procurement          and acquisition        research
be established        on a Government-wide         basis.
Various    uses of such research           are discussed
and a framework        for organizing       and operating
a program     is illustrated,       setting    forth:
--Definitions     of the procurement    research
   function,   narrow and broad,     and urging              use
   of the latter.      (See pp. 13 and 14.)
--Basic    prerequisites           for   operating    the   pro-
   gram.     (See p. 15.)
--Roles   of participants:        i.e.,     Federal     agen-
   ties,  the Federal      Procurement       Institute,
   and the Office      of Federal       Procurement      Pol-
   icy.   (See p. 16.)
--Considerations         in screening       research   needs,
   selecting     projects,     conducting       the research
   itself,     and evaluating      results.        (See pp. 17
   t0    25.j
The Office      of Management and Budget shares
GAO’s concern         that not enough attention          has
been devoted        to research     of procurement       pol-
icies    and practices.          It said thz summary of
current    activity       and the organized      approach
outlined    in this       report   will   be useful    in
promoting     a Government-wide         research    program.
(See app. VI, p. 48.)

                                                                                 -- -
        DIGEST                                                                     i

           1       PURPOSE OF REPORT

           2       CURRENT POSTURE
                       Bistorical       evolution
                       Overall      Federal     posture
!                            Civilian      agencies
                             Defense     activities
                                    Air Force

               3   WHY RESEARCH                                                    9
                       Identifying         and solving     problems               10
                       Responding        to policy     changes                    11
                       Achieving       innovative      improvements               12
                       Evaluating        experiences,      interchanging
                          ideas                                                   12
                       Contributing          to education         and training    12
               4   AN ORGANIZED APPROACH                                          13
                       The research       turf                                    13
                       Basic prerequisites                                        15
                       Executive      branch roles                                16
                       Operatins      considerations                              17
                            Identifying         and screening     research
                                needs                                             18
                            Independent         research                          19
                            Choosing      research       projects                 20
                            Conducting        the research                        22
                            Evaluating        and using research
                                results                                           24
i   .                ATTENTION                                                    29
                       Recommendation  to the Director,                   OMB     30
/                      OHB comments                                               30
               I   Department      of Defense         Directive                   31
          II       “Toward More and Better    Procurement                 Rc-
                      search” by Herbert   Roback                                 39
                                                                                               i   ’
                                                                                               j   .

APPENDIX                                                                            Pize
      III       Libraries        and data        banks                               42

        IV      Research        guides                                               43
            V   Some expert            views                                         44

        VI      Letter    dated         July   12, 1977, from the
                   Administrator,            Off ice of Federal                            .   :
                   Procurement           Policy                                      48        L

2-1             Federal        Research        Posture                                4
2-2             Department          of Defense       Research          Posture        6

3-l             Potential        Research        Projects        for    New Major
                  System        Policies                                             11
4-l             Basic       Research       Prerequisites                             15
4-2             Executive  Branch Roles                  in Government-wide
                  Research  Programs                                                 16
4-3             Framework        for     Procurement        and Acquisition
                   Research                                                          17
4-4             Sources        of Research         Candidates                        18
4-5             Identifying,            Sc-reening       Needs                       19

4-6             Choosing        Research        Projects                             21
4-7             Conducting          The Research                                     23
4-8             Evaluating,            Using    Research     Results                 24
4-9             Improving   Agency Procurement   and Acquisi-
                  tion Practices    Through Research:    An
                  Organized   Approach                                               27
DOD     Department      of Defense
        Department      of Transportation
ERDA    Energy     Research and Development           Administration
PPI     Federal     Procurement        Institute
GAO     General     Accounting       Office
GSA     General     Services       Administration
i?ASA   National     Aeronautics        and Space Administration
OFPP    Office     of Federal       Procurement     ?olicy
OMB     Office     of Management and Budget

                                     CRAPTER 1
                               PURPOSE OF REPORT
        Federal      spending       to accmire      systems,     goods,    and services
now exceeds $70 billion                a year and involves           about 60,000
Federal      employees.          Executive     agencies--such         as the Depart-
ment of Defense          (DGD) , Energy Research             and Development        Ad-
ministration         (ERDA), Department          of Transportation            (DOT), Na-
tional     Aeronautics        and Space Administration               (NASA), and
General      Services     Administration          (GSA)--rely        on acguisition
and procurement          activities         to accomplish      their    primary
missions.         For example,         the costs of acuuirins            new major
systems      under Federal          contracts    are estimate3         at $452 b:l-
lion    (Tivilian      $203, and defense            $244) and their        lifetime
operating       costs may run several             times more. I/

        During     the past few years,           the entire     Federal    body of
procurement        and acguisition        policies      has been examined at
great     length e This examination              included     a study by the con-
gressional        Com-.lission     on Government       Procurement,      an executive
branch evaluation            of its report , continuing           overview   by the
Office      of Federal       Procurement     Policy     (OFPP), and numerous
congressional         hearings.       Basic policy        and Drocedural      redircc-
t iol&; are now taking           shape and a new Government-wide             modern
statutory       foundation       is under active        consideration      in the
        This report  is a followup     to a Procurement      Commission
and congressional      committee   recommendation      that   a continuing
program of research      be used to improve       Federal   procurement
practices    and design   and test procedures       for new policies.

L/GAO Report,       “Financial   Status        of   Major   Acquisitions,”
   (PSAD-77-62,      Jan. 1977).
                                                    CHAPTER 2
                                                 CURRENT POSTURE
            Today a program of organized           research   into Federal
    procurement       and acquisition    practices      dces not exist        on a
    Government-wide        basis or within       an executive     department.      The
    present     pattern    of research   efforts      by executive      agencies   is
    mixed,    ranging    from no program to a few efforts             in DOD. A/
            In      late
                  the       1960s an idea took hold within           DOD that re-
    search,   systematically       applied,     could be used to improve oro-
    curement    practices.       In 1969, in response        to continued    prob-
    lems with cost overrcns,          Secretary     of Defense Clark Clifford
    proposed    a nProcurer.!ent     Research    Laboratory*      as a mechanism
    for developing       and testing     new procurement       ideas and applying
    lessons   learned.
              The House Ccmmittee on Government   Operations     endorsed
    the     idea and said the DOD research   ??boratory     should
             --develop,           test,     and innovate        procurerent         methods   on a
                systematic           basis:
             --coordinate              sffurts      within    the   agency;
             --test       the     effect       of major      new policies        and procedures
                 on Government              activities       and industry        before  their
                 issuance;          and
             --provide         a consulting     and training               capability     to ex-
                ploit       significant     developments.             2/
          In the early    197Os, the Commission   on Governmlnt     Pro-
    curement   looked  into the matter  on a Government-wide      basis.
    It found that srme agencies     did not favor   internal    agency

    L/The     House Appropriations           Committee      recently      noted weak-
       nesses     in DOD efforts,         including      inadequate       planning,       du-
       plication,       lack of data to demonstrate               study costs        And ben-        .
       efits,     research     reporting       breakdowns,       and little      utiliza-
       tion of results.           “Logistics       Manaqement       Studies     within
       the Department        of Defense,”         a stun;     conducted      by the Sur-
       veys and Investigations              Staff   of the House Appropriations
       Committee,       Mar.   1973.
    z/House       Report         No.     91-1715,     “Policy Changes          in Weapon System
       Procurement,             ti Dx.      1370,    pp. 33 and 34.

.                                                       2
rS&Wdl:            fn some cases becswe         of the tgency’s  low volume of
procurement,          and in other  cases       because the agency felt   that
          --ad hoc nanagernent   studies,            in     lieu of formal     research
             progrr,rts, are more Fffective               in salving   their     prob-
          --an agency       program  would impose an undue burden on ?ts
             resources      and cculd result   in research dupl,ication;
          --a     joint  interagency     or Government-wide     approach   is
                more economical      an3 realistic  for meetirlg    agency re-
                search needs.
        The Procurement      Commission       recommended establishment       of
a Federal     Procurement     Institute       (FL‘:) with Government-wide
coordination      of research       as one of its operating        functions.    L/
It did not exclude        the idea that executive         agencis,     could
usefully     de researcn     on their       own, and it sdpport&d      *he con-
cept of a DOD research          laboratory.

       The Administrator,        OFPP, created     FPI in ,:uly 1976.      He
chairs     FPI's policy     board with representatives        from 16 asen-
ties   and departments.         DODI as Executive     Agent,    will  run F21.
Under the preseat         FPI action   ?lan,   2 of the initial      16 pro-
fessionals      will  be assigned    to the research      area.
        FPI’s role,       ken operational           , Will be tcJ coordinate
existing      procurement        research     efforts;       disseminate       findings:
and identify,         promote , and conduct            long-range       and independ-
ent research        having a high impact on Government-wide                       procure-
ment issues and prob?.ems.                Dot all of this          research      would be
transferable        to eed executive            agency due to differences                in
organization,         operation,       and mission.          A;so,    individual
agencies      have unique procurement               problems      which can best be
solved by their          own research       efforts.

f/Report           of the   Commission   on Government          Procurement,      D2c.
   1972,         p. 52.

                                            3    .
           . ,yure   2-T summarizes   the current     posture   of research
    within     ficc: major executive    agencies    which collectively
    account      Eo: !nost of the Federal    spending    in procurement     and

                                                                    -                                                  -GSA        DOT
    ReIiance           an     procurement/                     Almost          EsseatiaLly       109 budget   V;t;,m          Consider-
    acquisition               to carry       out               totally           complete                                      able re-
    missions                                                                     reliuacr                                      1 iance
    Pcocutawnt/acquisitfon                                         $46.9             $1.2    .      53.2           $1.7          $1.0
    exp-,-nditutes              PY 1976       (bil-
    Proqram          for      procurement/                     Partial                               No                No          NO
    acquisition               research
    Research           expenCfture8                            S834,OOO              none           tkme           None          None
    FY 1976

    Nuaber        of    research      projects                      132               I              .                 I             .

    started          past    3 Eircol      years
                                                                                      I              .                 .            h
    Number        of       projects       completed                 124

    llumbec of projects                   planned                    53               .              I                 .            .
    for PY 1977

    Wmber of researchers                          full-
    Sources          of     research:
             In-house          centers
             Informal           ad hoc channels

    Source:            Agency         responses           to our

.                                                                                4
-m               agencies
       As shown in figure              2-1, none of the civilian       agencies
have a regular    research             program.  Both ERDA and DOT use ad
hoc approaches    to solve             immediate problems    or select     pro-
curement   and acquisition              methods.   The following    views were
expressed : .
           --ERDA deferred      judgment  on the matte?    to its newly
              appointed   acquisition    executive    who will   be respon-
              sible   for research    to more effectively      implement
              agency policy.
           --NASA feels         that any research           program  should be a
              joint    effort      participated      in     and supported    by OFPP
              and FPI.        Independent       agency      action,  it said,   would
              fractionalize         and duplicate         efforts.
           --GSA has established      an office     to respond  to major
              system policy   in OMB Circular       A-109.   When progress
              is well underway,    GSA will     examine the possibility
              of establishing    a research     program.
           --DOT believes        CFPP should coordinate           acuuisition     re-
              search to avoid duplication            of effort       and wasteful
              expenditure      of scarce     resources.         DOT would partic-
              ipate    in interagency      research     efforts      to the ex-
              tent permitted       by available      resources.
Defense        activities
        Before   a recent     reorganization,          the focal      point     for re-
search efforts       in the military          departments       was a Procurement
Coordination      Council     reporting        to the Office       of the Assist-
ant Secretary      of Defense,        Installations        and Logistics.           The
Council     had quarterly       meetinqs       with military      department        re-
searchers      and conducted      annual research          symposiums         to ex-
change ideas on current           or proposed        research      project;.        ‘Jn-
der the new organization,             the specific        assigrlmont       of procure-
ment research      responsibility          had not yet been decided               as of
August 1977. ;/

&/Under     the new organization      , procurement   policy   responsibil-
   ity shifts     to the Office     of the Director    of Defense Re-
   search and Engineer ing . The Director           is also to be the
   agency’s    Acquisition     Executive    under OMB Circular     A-109.

.   ,

                Figure 2-2 shows the posture bf research in the
        itrdividusl   military departments and the Defense Logistics

                                                             FIGURE        2-2

                                        DEPARTHEN’”       QP DEFENSE           RESEARCH         POSTURE

                                                             Army              Air      Force       Navy          &             &

        expenditures          PY ;916             (bil-
        lions)                                              $10.5                    $15.1        $15.4          $5.9          $46.9

        Program       for      procurement/
        acquisition            research                          Yes                  Yes             Ye3         No            Yes

        Research          expenditures
        PY 1576                                            S400,,000           $167,000          $267,000       None       5834,000

        Numbec     of research               proj-
        ects   started     past             3 fis-
        cal  years                                               66                   56              10          I             132

        Number      of projects              com-
        pleted      during    past           3 fis-
        cal    years                                             66                   54                   4      .             124

        Number  of projects                  planned
        for  PY 1977                                             18                   30                   5      .               53

        Number        of researchers
        full-time/part-time                     (aver-
        age I                                                 15/16                  6/150        . g/l0          n            31/166

        Sources       of      research:
               In-house          centers                          X                     X             x           ”                    X
               Contracts                                                                X             X           .                    X
               Schools                                              X                   X             I           (I                   X
               Informal          ad hoc        chan-
               nels                                                                     x                         .                    X

        @ombination                of     full-time        and    part-time.

        Source:           DOD.      The data          on the number             of research        projects      should       be
                          used cautiously               as each military              department        uses different            cri-
                          teria      in determining            what      they      count as research.               In some
                          cases,       they     include       agency        staff      studies     or a student          thesis.
                          In other        cases,        they    include         research       by military       school        fac-
                          ulty     members        or by full-time               researchers.          The numbers          of re-
                          search       projects         shown could           not    be verified        by Defense         Logis-
                          tics     Studies        Information          Exchange         due tti breakdowns            in agency
                          reporting         on research.             This       breakdown       wds also     noted       in a
                          study     conducted          by the House Appropriations                      Committee’s          Sur-
                          veys     and Investigations                Staff.

             In 1970 the Army, the first              military      service      to take
    this     step,    established      a Procurement         Research      Off ice -at the
    Army Logistics          Management Center,          Fort Lee, Va.           The Office
    has an average .ctaff            of 18 researchers         and does not contract
    out any research.             It develops       and tests      improved      procure-
    ment techniques,           and provides      consultation         on emerging       pro-
    curement       problems,      and graduate       studies     related      to procure-
    ment.       The staff      has primarily        a procurement        background       but
    includes       a few with other        disciplines,        such as economists,
    statisticians,          industrial     engineers,        and operations         research
             Air    Form-i
I            The sir  Force research          counterpart,         the Business       Re-
    search   Management Center,             was established          in 1973.      Policy
    guidance    comes     from an advisory          board,     chaired     by the Direc-
    tor of Procurement           Policy,     Headquarters,         USAF.      In lieu of
    oonduc ting    actual      research,      the professional          staff    acts as a
    catalyst    or research         broker    of projects        to be undertaken         by
    others.     The center        also solicits       agency sponsors           who can
    use the research         results      to provide       resources      and data.       The
    research    is performed         by
             --joint    teams from the             Air       Force   Academy    and Contract
                 Management Division,
             --graduate       school        faculty/students,
             --operating        elements        of major        commands,      and
             --private       contractors.

            Before      1975 faculty      and graduate       students    of the Naval
    Postgraduate          School in Monterey,        Calif.,     carried   on a small
    research      effort.       In 1976 the Navy estab'?;hed             a new effort.
    It is managed by the Office              of Naval Fe l.Arch through           a
    council     consisting        of procurement      and acquisition       people from
    several     naval commands,         the Office      of the Chief of Naval
    Operations,         and the Naval Postgraduate            School.     The council
    seeks out ways to improve major                system     procurement     management
    through     research.         To help support       the new effort,       the Navy,
    in early      1977, established         a Cente;      for Acquisition       Research
    at the Naval Postgraduate              School.
                     *               *                   *             *             *

             A new DOD Directive        A/ has been issued encouraging                   the
    military     services     to improve       their      acquisition         and business
    management prz tices          through      research         and to concentrate         on
    “fundamental       causzs rather       than immediate            effects,”       (See
    app. I, p. 31,:         The directive          reflects       to some extent       pas:
    DOD prs;urement        research     practices.            It also adopts some of
    the thoughts       in this report.           It includes,          for example,      a
    research     guide similar       to the one presented                in chapter    4 for
    organizing      and operating       a research          program      (compare fig.      4-9,
    p. 27, and app. I, p- 37).

           Civilian     agencies      aztz generally    reluctant       to undertake
    procurement      research,       even research     peculiar      to their     own spe-
    cial   needs.      Within     DOD, procurement      research       has been going
    on ir. some quarters          for about 6 years.         Bui there      is a gen-
    e;al appearance        of insufficient        momentum to achieve          the nec-
    essary    research     capabilities       for current      research     needs and
    the even larger        future     needs.     A congressional        observer    noted
    (see app. II,       p. 39):
                 “* l * Viewed from a distance,                  these efforts    seem
                 tentative       and diffuse,         as if DOD were convinced
                 as a matter        of policy       that more and better       pro-
                 curement      research       is needed but were not certain
                 how to carry         through.        Each military    service    seems
                 to be separately            pondering     what is embraced in
                 procurement        research,       how it should be organized
                 and conducted,           the appropriate        level of funding,
                 tnti clientele         to be served,       and the means of dis-
                 seminating       research      data.”
          Some agencies      are expecting      the emerging      FPI to carry
    the burden of Federal         procurement     research.     This is pre-
    mature as PPI is just being established                and may take years
    to become fJlly      operational.       Even then,      it cannot perform
    the research    roles    of the individual        agencies.

    &/Procurement            Research     Directive       4105.68,   June   1977.

.                                                     8
                                             CHAPTER 3
                                           WHY RESEARCH
         'I* * * a rather      widespread      conviction      [exists)
         that much is amiss in Government               procurement
         * l * it is plausible,          indeed persuasivel          to argue
         that procurement       research     is a good investment
         promising      large dividends      in money savings          and
         more efficient       and effective       performance.
         “The dilemma * * * is that until                    considerable         re-
         sources     are devoted          to procurement        research,       and
         the efforts          are sufficiently        well-organized,           the
         results     will       be spotty      and meager; but without
         substantial          results     it is difficult         to get the
         desired     allocation          and organization         of resources.
         In this circumstance               we have to fall         back on
         America's        faith      that research      does bring       useful
         results."       A/
        Research    into procurement         and acquisition     practices
entails    critical     investigation        and experimentation        aimed at
gaining     new insights      into current      processes,     making new dis-
coveries,      and devising       and testing    new methods and proce-

        This kind of fundamental       research    is not within    the
scope    of busy operating     people or attainable        by ad hoc com-
mittees.     The Procurement      Commission    noted that too often
past attempts     have addressed     symptomatic     problems    on an
individual    piecemeal    basis,   and:
         "Patchwork    corrective       action    has become counterpro-
         ductive,   leading      to more regulations       to -amend reg-
         ulations,    more people to check people,           more proce-
         dures to correct        procedures,      and more organizations
         to correct    organization        prcblems."
         A more organized               approach       using   proven   research        methods
should     help agencies              to
         --identify          and solve       ongoing       problems,
         --put        into   effect       new policy       changes,
         --innovate          procedural        improvements,

L/Herbert         Roback,   "Toward More and Better     Procurement  Re-
   search,*         Defense Management Journal,     July 1975, included
   as app.        II.
                         .                         9

     --evaluate     fz:*I-,eriences     and interchange         ideas
          Government-wide,          and
      -contribute        to education       and training.
       Research     can be used to sort out symptoms from under-
lying   pr-oblems and design corrective            measures.    In the past,
agency attention        has focused     on regulating      the back end of
the procurement        process  where the symptoms of problems         even-
tually    surfaced.       The underlying     problems    were found,  how-
ever,   at the front       end. I/
       Research   would first      identify      and validate        underlying
problems    and then search out alternative               solutions      for man-
agement review.        Such solutions        would stress       more what needs
to be accomplished       rather    than attempt         to tell     people how to
do it.     Some areas where underlying             problems     need to be iden-
tified   and solutions      explored      include:
      --Increasing       quality        of the work force.        Ways could be
          sought through        research      to increase     the latitude        for
          decisionmaking        and career      development      of procurement
          and acquisition         officials.        The desired     outcome     would
          be to substitute         good business        judgment     for reliance
          on multiple     layers        of supervision,      extensive      regula-
          tions,   and the overburdened             disputes    machinery.
      --Simplifying,            unifying       regulations.          Research could be
         used to find out how this could be best accomplished.
         Should regulations               be confined         to just     basic require-
         ments?         What are the kinds of matters                   that   should or
         should not receive               regulatory        treatment?        What size
         should       the regulations            be (hundreds        vs. thousands      of
         pages) to permit             people to comprehend              them and to
          keep abreast          of changes?          Should regulations          be func-
          t ion al, that is, tailored                to small      purchases,      commer-
         cial     products,        or major systems?              How should they be
         written        to be readily          understood        and to permit      using
          identical         language      for all agencies?             Should they be
         oriented         to expected        results      or should       they include
         means      to achieve         results?        Should they be written
          in layman or legal              terms?

       --Increasing        product performance,   reducing  cost growth.                      *
           Research     could be used to identify     in new products    and                       ,
         systems,       the causes  of undue complexity    and low                                !I
L/Report  of the Commission            on Government         Procurement,        vol.    2,
   pp. 69 to 70 and 166 to            167.


              reliability,    and the           causes    of major    unanticipated
              cost increases.
            Some new congressional            and executive      policy    direction
    may reguire        research     to design     and explore     procedures        to meet
    their    objectives       and to test       such procedures       under operating
    conditions.          The Congress      is considering      legislation        that
    would make fundamental            revisions      in the statutory        foundation
    Government-wide.            (See Senate bill        S. 1264.)       OFPP has re-
    cently     established       new executive      branch policies        for major
    systems     and commercial        products.      l/   These policies         are caus-
    ing a fundamental           change in how aGencies         conduct     their      inter-
    nal operations         and how they do business           with industry.
             For example,       historically,          the functions       of (1) determin-
    ing the kind of new major system and its basic design                              and (2)
    procuring      it,   were isolated            from each other       in the agency.          The
    first     and most important             function      escaped the rigor         and chsl-
    lenge of competition.               Under the new OMB Circular,                the two
    functions      work together           in response        to an agency statement          of
    mission     need.     Alternative           designs     to meet the need are then
    explored     competitively.              Figure     3-l identifies       potential
    research     projects       that might be useful              in putting     the new
    circular     into operation.
                                       FIGURE 3-l
                           NEW MAJOR SYSTEM POLICIES
                conducting       analyses       of agency missions          and de-
                veloping      statements        of missions  needs.
                Inccrporating    mission     needs,         program goals,     and
                agency operating     constraints            in a request   for
                Contracting       on a short-term,           renewable      basis     to
                explore     alternative    design         candidates.
                Managing competitive       contracts  and narrowing
                down alternative     desiqn candidates    for con-
                tinued  funding.
                Evaluating       alternatives          and choosing       the preferred
                solutions      for   entry      into    full-scale       development.
    &/OMB Circular  A-109,  “Major    System Acquisitions,”                       April    1976;
       and OFPP Memorandum to selected        agency heads,                   “Procurement
       and Supply of Commercial    Products,”      tiay 1976.

            Long-range     innovative      improvements    can be accomplished
    through     research     which advances knowledge.           The techniques
    and insights       eventually     gained should help to solve basic
    agency problems        and minimize       the need for continuous       congres-
    sional    oversight,      outside    studies,    and statutory     commissions.
          A research     program can gather            and evaluate     actual  ersperi-
    ences on specific         programs   so that lessons         learned    may be
    documented   for futxe          use.    Collectively,      research     can provide
    a means for agencies          and their      components    to interchange      ideas
    and research     results.
           A scattering      of procurement       or system acquisition       courses
    are offered      in colleges     or universities,       but text material
    available     for either     degree or nondegree        programs    is very lim-       .
    iteo.     As one university       professor       said during  our review:
           “Research p conducted          on a continuing       basis * * *
           could greatly      enhance our understanding             of the proc-
           esses and their        effects    * * * lead to more effec-
           tive policy    development        and to a broader         public
           recognition     of the impacts        and benefits       of sound
           procurement     policies       and practices      * * * jthere     is]
           a need for a more conceptually               sound perception      of
           procurement     and for the development            of a literature
           reflecting    that conception.”

                                          L..   .

                              CHAPTER 4
                      AN ORGANIZED APPROACH
       We surveyed the management of various research activities
and held.discussions     with experts in the field.   From the
survey, we developed a model framework to explore (I) an
organized approach to procurement and acquisition      research in
the Federal Government and (2) operating     approaches to getting
the most benefits    from the research work.    This chapter dis-
cusses the framework.
       The term "procurement"     has been used by the Congress,
the Commission, and OFPP in a broad sense to cover the en-
tire spectrum of acquisition       activities,      starting  with de-
fining   an agency's need and ending with disposal           of whatever
is obtained to fill     that need.      It has also been defined by
these same sources to include all purchases by Federal agen-
cies that range from standard commercial supplies and serv-
ices to the most complex national           systems, such as defense
weapons, transportation      systems like the Washington Metro,
nuclear energy plants,      and space systems.
        On the other hand, operating      agencies have defined the
procurement operating      function    much more narrowly.    Tradi-
tionally,     the agency procurement process begins with prep-
aration    of a purchase request      for a particular   item and
ends with delivery      of that item.     A major agency recently
stated the problem this way:
      "* * * there is no clear definition         of the procure-
      ment operation.        Does the procurement function     limit
      itself    to the rather narrow confines of the contrac-
      tual instrument       or does it encompass the acquisi-
      tion process?       Are Source Selection,    Advance Procure-
      ment Planning and Life Cycle Cost computations           part
      of the procurement function        or are they part of the
      acquisition     process and thus in a separate functional
      area? * * l the procurement curriculum           contains no
      mandatory courses at any level outside the technical
      field of contracting.         * * * Has the * * * procure-
      ment function      [been  defined]  too narrowly? lJ

&/April  22, 1977, Memorandum from the Office of the Assist-
  ant Secretary of Defense, Installations    and Logistics,  to
  members of the Commission on Government Procurement recom-
  mendation A-18 subcommittee.

     How broadly    procurement     is defined                      is    critical         because
among other  things    it determines
      --the     nature     and extent           of   needed        research,
      --the      kinds of knowledge              and data      collected             and stored
          in   the research  base,                                                                                   .   j
      --the     types of disciplines                 and depth           of    needed      re-
          searcher    skills,
      --the     scope     and range        of    research          topics,        and
      --the    organizational             clients        who may need or use re-
          search results.
        Construing   procurement    too narrowly  has had adverse       ef-
fects,    such as when contracting       methods and procedures       were
singled    out in the 1960s to remedy past ills.           The Commission
found that these ills        were rooted   in much earlier    actions     or
inactions      when defining    what to procure.  I/
         For the purpose  of this    report    end the framework    that
follows,     the terms "procurement"        and “acquisition”    are used
interchangably      to comprehend
      --defining         a need;
      --budgeting         and financing;
      --soliciting          and exploring            alternative              solutions:
      --conducting          test     demonstrations;
      --choosing         what      to procure;
      --selecting         source&;
      --conducting          price       and cost      analyses;
      --contract         negotiation,           award,      and administration:                     and
      --operational             tise and disposal.

&/Report  of the Commission                on Government              Procurement,               vol.     II,
   pp. 166 to 167.


In making procurement        decisions,      cost implications      would
include    all agency mission       operating     and disposal     costs
associated     with lifetime     use of the particular         product    or
aafvdce    chosen to meet a given need.
        For any research        program           to operate effectively,              there
are   certoain   basic prerequisites                that must be present.                They
are   identified      in figure     4-l.

                                           FIGURE 4-1
                               BASIC   RESEARCH PREREQUISITES
       --People         :         A cadre of professionals            with    a mix of
       --Data          base:      An i.?formation       base--bibliographies,
                                  abstracts,      studies,     reports,       and
                                  directories,       plus a clearinghouse
                                  for identifying         and sharing       research
       --Access         :          Free access to research           users    and pro-
                                   curement  practitioners.
          cation:                  A system     for developing      and refining
                                   problems     requiring    research.
          supper t :               Willing     sponsorship  from top         and
                                   operating     management levels.

        The basio prerequisites           shown in figure        5-l are large11
self-explanatory.          Information      data banks are already           in the
Federal     Government     supporting      various     technical     and manage-
rial    study efforts,       such as procurement          and acquisition.
(See app. III.,         p. 42.)     Also,    to assist     procurement     re-
searchers       in getting    data,    DOD has published         two guides.                        ‘
(See app. IV, p. 43.)

                                                 15                                             i
            Figure 4-2                             mtlines                           potential                           roles                 of          executive                            branch
    participants     in                            ;s Fbilerar                        research                           program                       and the                         rationale
    for each role.

                                                                                                   PICUPP.         4-2

                                           PXECmIVc                 BDIRCH          ROLCS   IN         COVeRIIRCHT-HIDe                      RESzmx               Pffmm8

    OFPP                       Government-wide     lesder-                                   OFPF           opecstee              under         e     ststutocy           mandste.     One  of
                              ,rhip  and coordhmtion                                             its      colee          I6     ‘pronoting                sad        conducting    resverch    IO
                                                                                             procuresscnt                     polklea,                regu2ation6,                    proceduree,                 snd
                                                                                             Lome:                   OPPP,           acting           in concert               with         the     new          WI,
                                                                                             repceeents                   *     lcgicsl             foe41 point                 for        Governmenc-
                                                                                             vidt           re6earch.

    PPI                       Cr~lourage,               Initidte,             and            FPI is guided         by a multlngwcy                                         policy           board         chaired
                              eveluete             long-range                inno-           by OFPD end opereted             by en                               Ezocutlve                Agent         (DOD).
                              v&Live         reaearch               Governsent-              On0 Of it.6     ta6kJ     16 to:
                              wide                                                                 *Promote,         monitor.    and                               ronduct              rertsrch            to
                                                                                                           develop              buJineP6              method      and               sanegcment
                                                                                                           teChnique6                 that          will     ad,%nce                the      stste-of-
                                                                                                           the-art              in        procurement.

    wency      Acqul-         Overrll          rosponeibilfty                                The    Acquleitfon                      executive             is aesfgned               d pivotal
    sitlon     t%ecu-         for       re6eSrCh         vlthin              en              agency      policy                  end      nonltocfng             role      in cSch         aqcncy
    tive                      individual                agency                                   for      51ajOc        6yt3teta6         by ORB Circular                  A-109.          flc is
                                                                                             ezpscted                to     coordinete               agency-ulde             responses             to
                                                                                             procurement                    and      acquIs?tlon               problem6            and   policy
                                                                                             Change6               and,       therefore,               f6    in en ~xcellsnt                  pOeI-
                                                                                             tfon       to         judge         rc6cdrch            medo        end    prlorltles              aa
                                                                                             Il.0    the           rO6Ult6.

    Agency     operat-        Client6          Of       rS6eSrCh            SCtiV-           Agency          operating           elements          would          be the         prlncipel
    Lng Clemmts               rty     a:     ,ny        *gency          level                btneficirrles                 of re6eerCh             end      would’         help       activate
                                                                                             r66e6CCh           projects.             For      exasple,             fmxd         wfth        prub-
                                                                                             lem6        or with          major new policy                  or       )rocsdurel               fnl-
                                                                                             thtlves,             manager6           OK the        agcn-,           optreting              elesmts                          0
                                                                                             could         turn      to    their       research           actlviry              Kor     support.

    wency    Re-              entity          unaqinq/coaductinq                             The     Agency        Research          Mtlvlty             is                   the      entity      u6ed    to
    rerch    hctiv-           the       rese6r‘r.h                                           Obteln        re6esrch          rcsuite         whether                          done       In-house,
    LtY                                                                                      Undsr      Contract          with       private          firms,                          by    a COEblncd
                                                                                             in-house          6nd    contrrctual             effort,                          or      through      qr+nte
                                                                                             to    unlversitisa.

               Some of these roles      are beginning     to evolve,       such as
      the first     tk>--0FPP   and FPI.      Other roles      have not yet been
      developed,      such as the acquisition       executive      role of oversee-
      ing needs and prior!      ‘:ies agencywide      and actiny       On rezarch
      results.      Development     of close workinq      relationships         between
      these various       roZes is important;      otherwise,       researchers
      will     find themselves    isolated    from policymakers         and opera-
      tions.             A/

     L/The theme of researcher         isolation     and difficulties   in
        securing    agency sponsorship        was e.y-- ‘ssed at the June 1477
        Procurement     Research Symposium helo in West Point,         N.Y.
             To further  illustrate                    an orqanized              approach         to     research
    four     basic steps are used:
             --Identifying              and screening                rcbsearch       needs.
             --Choosing            research         projects.
             --Conducting             the       research.
             --Evaluating             and using          research         results.
           Figure   4-3 portrays    the basic steps    in a framework
    that will     be gradually   expanded tc show how they work and
    fit  in with the executive        branch roles  previously   3iscus+;ed.

                                                  FIGURE 4-3

                      FRAMEWORK       FOR PROCUREMENT            AND ACOUISlTtON         RESEARCH

                          lDmJ?FYlNQ.                CHOOSING              CONDUCTlNG             EVAl.UATRG.    ‘fSkG
                       SCREENlht    NFEDS       RESEARCH PROJECTS         THE RESEARCH            RESEAnCH    REXLTS
B-w                                                                                           -

     OxRATlNQ     I                         I                         I

I                                                 RESEARCUPATA8ANK

Identifying      and screening         research      needs      pi
         The first     basic step of identifying         and screening
research     needs and setting         priorities    is, perhaps,        the most
crucial     one.     It starts     with a systematic      identification         of
procurement        and acquisition       research needs and alternative
research     candidates      to meet those needs.         Illustrations        of           .   i
criteria     required      to help screen and set priorities               on such
needs are
       --chronic      problem     areas,
       --major    policy     changes,
       --agencywide        impazts,     and
       --high    dollars     or public      interest.
         Examples of research          candidates      falling.       under the first
two criteria       are discussed         in the previous          chapter.     (See PP~
10 and 11. ) Research             candidates     need not be limited           to those
identified      within      an agency but may come from outside                  sources.
Two primary       sources      for identifying       research         needs are OFPP
and FPI.       Being aware of critical            policy       issues and problems
with broad interagency             or congressional          implications,       they
can initiate       collaborative         Government-wide          studies.     Figure
4-4 identifies         various     sources     of research        needs
                                                                    .      and candi-
date projects.

                                    FIGURE 4-4

               Primary                                        Other

      OFPP/FPI                                    Universities
      Research     activities                     Private       research
      Agency top managcmen t                         institutes
      Agency operating           elements         Government         schools/
      Agency user elements                           faculty/students
      The Congress                                Private       individuals/con-
      U.S. GAO                                       tractors
      Industry     associations                   Professional          journals
      Professional         societies              Other media

        The researchers         themselves     are another          source    of re-
search     candidates.        Through    their    literature         searches,     in-
formation      exchange      programs,     and contacts         with operations,
they become aware of opportunity                breakthroughs           and new areas
with promising         prospects     for innovative          research.        A univer-
sity    professor      confirmed     what others        said during        the review:

         ‘A researcher      may well    perceive    of needs for re-
         search     which are not yet recognized         as problems or
         subjects      for change.     The product    of such effort
         could    form the basis     for new policy      or it could sim-
         ply enhance the literature           of the field,”

         The first     research            step           just       described       is   portrayed   in
figure      4-5.

                                           AGURE 4 - 5

                                                  SCftEEIolNG NEEDS              I



                      I              RESEARCH OATA BANK


                                       l              ’

                                                  t              l
        Choosing      research      projects
                 The second basic step--choosing                 research     projects--
        involves     doing preliminary           research      to exgdore      the most
        promising      candidates,      soliciting         operating      agency view-
        points,     and obtaining       approvals        of the agency’s         acquisitidn
        executive      for agencywide        research       projects      which deal
        with universal        problems     or policy        applications.          The research
        activity     would do preliminary             work and, as previously              in-
        dicated,      have discretionary           resources       for conducting        inde-
        pendent     research.                                                     . .
                 For new research          projects,       close involvement             and sup-
        port     is needed from affected               operating       elements.         For this
        purpose,        agency off ices of primary              interest       could be
        identified.            These offices        would typically          have the greatest
        stake or interest            in the research           outcome.        The off ice of
        primary       interest      would help the researcher                 achieve     access to
        people and data and bridge                  the gap between operational                ele-
        ments and the research               activity.         This kind of liaison            sup-
        ports      researchers       and, at the same time,               enables      them to
        keep in touch with the operational                       implications        of their     on-
        going research.             Later,    the supFJrt         would be present           to help
        generate        changes in agency policies,                 procedures,        and behavior

                                                     20                                                     i
.   *

                                                                                                        c   ’
                                                                                                                -   t

        ___ _      - _-
       The criteria     used for setting     need priorities       and
screening    candidates     in the first    basic step would again be
used here to guide the final         choice   of projects    to be re-
searched.      The second basic step is graphically          illustrated
in figure    4-6.



                                 RESEARCH DATA BANK

Conducking    the   research
       The third    step is conductLlg              the   research.   A few basic       I

considerations      are highlighted.

                                               21                                   i

         Interdisciplinary          research      teams with multiple         talents,
disciplines,          and backgrounds        are Important      to accomplishing
complex projects.             Such teams might include            individuals        from
the research          community     as well ah from operating             elements
with a mix of technical               and manaqement disciplines.               This ar-
rangement        tends to “beef up” res: arch teams since it permits
them tc interact           continuously,        draw upon various         needed skills,
and take an integrated              view 02 the total       process.         The end
result      is a quicker        and better      research   product      as well as a
greater       possibility       that the agency will         act on it.
       Validating      research    results     is essential        to avoiding
improper     conclusions       and seeing that what is proposed                is work-
able.     Research products,         for example,       need to be subjected
to realistic       judgments     of the Federal       procurement        and acguisi-
tion community,        including     peer reviews       within     the research        com-
munity    backed up by such approaches            as Government-wide             research
symposia     or conferences.         FPI, by virtue        of its broad charter,
would be in a unique position              to establish        research     standards
and oversee       a Government/university         peer review         system for
procurement       and acquisition       research    products.
        Implications     of research      results  need to be identified
in terms understandable           to operating    managers.     If the impli-
cations     are not clearly       conveyed by the researcher,        worth-
while research       products     may be lost without       the opportunity
of being tested       or applied.       Agency managers need to under-
stand,    for example:
       --Impacts       of   research   recommendations                on agency    mission
           effectiveness        and cost.
       --Risks     and benefits       of    taking    cr       not    taking   action.
       --Matters       transcending        the   immediate           issue.

         Developing     suqgested        implementing      procedures      helps to
discipline        the research       effortsr       and when tiwd           with the
capabilftfes         and limitations          of-an   agency’s    operational    en-
vironment       in mind, will        help the research         product     gain ac-
       Figure  4-7 fs      a graphic    illustration        of   the   third   basic
step   of conducting       the research.


                                    ---+.- 23

Evaluating      and using       research                results
        Portrayed     in figure    4-8 are several      considerations       in
evaluating      and using research        results--the      fourth   basic
step--that      are generally      accepted      as an integral     part of
any research       program    to realize     its full   potential.       They
       --pilot      testing     proposed     actions,
       --examining         agency-wide     aspects,
       --disseminating          research     results,
       --monitoring         selected     applications,                   and
       --assessing         improvements.

                                            FIGUBE 4 - I)

                                                     EVALUATWG, USliMO
                                        I            RISEARCH RESUiTS

                        ACQUlSfflON              i
                        EXECUTIVE               y&¶-L


                                                    NDEPEWDENT RESEARC

                       I        i     RESEARCH DATA BAMK~            1

        Procurement       research,     like     any research,     is a
calculated       risk   with failures        to be expected.         All problems
are not solvable.            Some results        not immediately       usable     can
provide     partial     solutions     or serve as building           blocks     for
future     solutions.        Recent findings        of the Rouse Appropr ia-
tions    Committee      show, however,         that evaluating       and using
research      results     has been one of the weakest            aspects      of re-
search studies.         L/
                  0          *                l           *              *

       Figure   4-9 portrays      the interaction     of the four basic
steps with each other,        the research       data bank, and the roles
of executive     brane:h participants.          Some outside     views we
obtained     on proccrement     research    and on this model for
organizing     and operating      a Government-wide       program,    can be
found in appendix       V, page 44.

L/The Committee         found:    (1)    studies    currently      underway     and
   completed  are       not reported       to the   data bank
                                                            as required,
    (2) recommended     actions   based on research      are questionable,
    and (3) cost and benefits        of actions    taken on research        work
    are not ident if iable.     “Logistics      Management Studies       within         ’
    The Department    of Defense,”      a study conducted     by the Sur-
    veys and Investigations       Staff    of the House Appropriations
    Committee,   Mar. 1977.


    ,                                                                      ---

                                                                            ;    8 COOROINATE       INTEA.AOENC
        0 CATALYST   FOR NEW   INlflAllVCS                                  )      \  RESEARCN      EFFORTS

                          -SCREEN                       ALTERNATIVE               CQ#FIRM     MEDSIPRlORITIES
                                                 RESEARCtl    CdWOlOAfEb
                                                                                  IDENTIFY   OFFICE(S)   OF
                                             0 SET PRlORIlI
                                                                                     PRIUARY    INTEREST

                                                                                  a SJ#?ORT      LITERATLIRE      SEL
                    OCONDUCT      RESEARCH    FOR
                                                                              .       COWSlDER   GOVT.WIDE       USE
                         INTER-AGENCY     NEEDS
                                                                         ‘\                                                                                           I

                                                                                                       l \0     CONSIDER        AGENCY-WIDE     USE
                                                                         t                               ,


@               i
    PROJECTS    1
                                                                                       VALUATE    RESEARCH       -PERFORM                 ORlENTATlON
                                                                                                                           OMONITOR       APPLICATlOrlS
                                                                                                                           0 ASSESS     IMPROVEMENTS

                                                                                                                                             -3                   ’
n                   OCONOUCT          RESEARCH                           ,        0 PARTICIPATE   IN                        0   “PIME TUNING-    RESEARCH
                I   OVALIDATE         RESULTS                            I             PILOT TESTS                                  AS NECESSARY
                    0    IDENTIFY     MANAGEMENT       IMPLICATIONS      3
                    0 DEVELOP.   PLAN       IMPLEMENTING
                I        PROCEWRES

IT                       RESEARCH

                        OSUPPORT      FtESEARCH     ASREOUESTED                                                                                                                  I

t DATA BANK             0 INTEGRATE      REPORT     INTO   DATA   BANX            l   OISSEMINATIONOF                                 @FOLLOW    ON SUPPORT
                        0 DISSEMINATE      REPORT                                        RESEARCH     RESULTS                              AS NECESSARY

                                                                                                                                                                          -- i
    - -..   -.-

                                       CHAPTER 5
        Over the past several          decades a vast network        of laws,
directives,       regulations,      layers   of implementing      procedures,
and supervision          have been accumulating       in the procurement
and acquisition          field.   In retrospect,      the net benefits
have been both elusive          and disappointing,       and often     counter-
productive.         It is now generally       conceded   that P’edersl agency
reliance       on ad hoc management fixes,         new regulations,       and
other     limited     solutions   has not done’ the job. L/
         In recent       years the Congress           has taken-a       ser&      of ini-
tiatives      to helg executive             agencies     deal more effectively
with their       procurement          and acquisition        problems.        It first
created     a major commission              with strong      executive      branch par-=
ticipation.          Later      it established        a focal    point--OFPP--for
executive       policy      leadership.         Finally,     the Congress       has under
consideration          legislation        that would consolidate            and restruc-
ture the entire           body of procurement-related               laws and build        a
new modern statutory               foundation      for the future.
       The desired      outccmes       of these       combined       legislative        and
executive   jnitiatives       are      to:
       --Refocus      and intensify      agency management attention     on
          the early      formative    stages of new procurement      and
          acquisition       programs,    with particular  emphasis on mis-
          sion needs and exploring           alternative solutions.
       --Seek    greater   Federal    agency reliance    on the private
          sector    for the acquisition      of systens,   goods and serv-
          ices,    while stressing     maximum use of competition,
          innovation,     and new technology.
       --Sustain  competitive           challenge       at   least      through      a crit-
          ical demonstration           phase.
       --Rely   on commercial product      specifications       and supply
          systems that have gained public          acceptance     in lieu
          of using Government  specifications           and supply   systems.
       --Cut  down and simplify             Federal     regulations,           red   tape,
          and paperwork.

lJFor     further   discussion     of problems with past management
   fixes,      see Report    of the Commission  on Government  Procure-
   ment, vol.      2, pp. 69, 70, 166, 167, and 172.

       Successfully     csrrying       otit these policy      redirections,
while   also correcting        chfonic     procurement     and acquisition
problems,    is a major chsllenge.             Also,   the Congress,        after
years of SuppOftiilg       f@fofm , will       want to see substantial
iq~f ovement in Yotefal         gsfocufement      and acquisition        prac-

RECOHMENDWTIOW To dKE DIRECTOR,                  am

       We recommmend that       a program     for procurement       and acguf-
sition    research  be established       within    the Pederal      Government.
As part of this     pfogfm#      those agencies       dependent     on procure-
ment and acquisition        processes    to carry out their         primary
responsibilities       shouPd sstablfsh       a continuing      research
effort     in order  tot

          --Correct  and refine  procedures     on a continuous                 basis
         -- and cope with procurement      pcoblems  peculiar              to    their
             agency operations  as they arise.
         --Design    the best ways of           giving      effect   to new Govern-
            ment procurement/acquisition                 policies    and expose them
            to operational     testing.

         --Evaluate      their    experiences,    achieve     innovative     im-
            proveme*ats,      develop    training  materials,       and partici-
            pate in research         of a Government-wide        nature.

       OWE?shares   the concern that not enough attention       has
been devoted     in the past tc research  of procurement    problems.
It said the summary of cur rent research      activity   and the
organized   approach   outlined in the report    wit1 be useful     in
promoting a Government-wide     pro5fani.   (See app. VI, p. 48.)


APPENDIX I                                                                                          APPENCLX I

                                                                                June    22, 3917
                                                                             NUk.USR      4105.68


             BUBJBCT           Procurement       Re8urch
             Referencea:        (a)    Armed Servicea       Prccuremrat      Regulatlon
                                (b)    DOD Inatructloa        5150.!3,     “Defense    Logistics
                                         Studies     Infometioa        Exchange (DLSIE).”
                                         Juj    13 1972
                                (c)    DOD Mrtctfvc       5010.22.      “The Hmagement        and
                                         Conduc: of Studies          and Analyses,”
                                         November 22, 1976

             A.   ?vRFosE

                     Thhfo Directive     preacrfbea   procedures          to be followed        In
             initiating,       conducting,      and admfahtering           elments       for   procure-
             ment research.

             8.   APPLICABILITY        AVD SCOPE
                  The provf~fona    of this Directive      apply to the Office    of
             the Secretary     cf Defcase,   the Military     Departments.  and the
             Defense Agencies     (hereafter    referred   to as “DOD Components”)
             whose prxurment       mission   involves    a need for procurement

             C.   DEFINIfIONS

                   1. A Procurement            &search      Element
                                                                  --     is a functional        or
             academic organlzatlon             whose principal         function      ia to collect.
             review,      digest,     analyze,      appraise,      or sumarlze         data or infor-
             matlo      related      to the procurement-acquisition                process for the
             purpose of developing             new manageaent         concepts     and/or     more
             effcceive       bw:nrzae     methods fcr ecquiring             systems materrel         or
             L)cF’xes       or iwroviag        the DoD procurement           practices.        Procure-
             mat Research El-te                  arc primarily        coccerned     with the accu-
             uzulation      and analpam        of knowledge        for input to DoD Component
             staff    elements      whose functions         are primarily        concerned      with
             ldmtifplng         and solving       policy    and operational          problems.       The
             Component policy          staffs     determlne      the practicality          an:
             desirability         of using     the output      of the Procurement           Research

                                                     31                                                          .4
c       APPENDIX I                                                                                                APPENDIX I


                   2.    Procuresent        Research       involves      proceee      accivitiee       vhicb    cwer
            functions        throughout      the procuressme            process,      from development          of
            need to      dieposel,       when thoee actions             impact     on the dec1sion-wkin.g
            procese      of vhst - hav - uheu a aolicitetion                       ie issued,       the policies
            and procedures           used,   and the managmt                of the contract.             These
            activitfee         mny include,       but are not limited              to, advance        procurem!M
            planning,        contracting       raethode,       isprwcnmea          in day-to=&ay         btmissse
            operations,         cost end pricing           techntquco,        performnce         mmaux~tr
            source      selection,       product      (qmllty)        fsmureme        epplicationer         pmduc-
            tion a~?thode or contract               requirexfante.

            0.        POLICY

                  It is Departmmt            of Defereee policy      to          engage in        procurment
            research    to hprwe            practices   in obtaining              supplies,         services,         sod
            Def enae 6yetes3.

            E.        PB                RESMa        CODRDINAmG          COUNCIL       (PgCC)

                      The PRCC shell       provide     research       guidance        and ewmre           a   coordinuted

                  1.  The Council       is cmzpoeed of a eeoior           procuresmt       policy    mmber
            from each DOD Component          and may, upon the determination               of the
            Deputy   Assfetant     secretary      of Defeme       (Procurement)r      include     ee
            members, representatives         fro6    those Secretary        of Dcfeose     charcemd
            l choole  which have a procuress&             research     t&salon.

                  2.   The Council     ie chaired  by the                Director       for     Contract         Mtistra-
             tion   end Support,   Office    of the &pap                  &sefstant           Secretary         of Defenec

                    3.   The Couucil will    function       ae the DoD eteeting                      group       in
             l ccordxnce    with DOD Directive        5010.22    (reference   fc)).

                   4.      The Council    may request         DOD &mponent   reeearch  elment8                         to
             perform       research    on aatters   of       concern  to DoD top moegement.

            P.        BESFONSXBILITIES

                      1.   The Heads      of DoD Wenta

                       a.    Axe encouraged         to develop       an orgauisational          capabilitp       to
            pezfona    procurement:       research      by establishing        a Procurement        Research
            Element    or by designated          existing     eteff     elemente    whose prisarp          mission
            ia to conduct        remcsrch     to hprwe        that    Cozponent's      acquisition-business
            management      practices,       and

                           b.   Sbrll     be reapooeible        for    the    pr~gramiag.            budgeting,

    c                                                           32
.           t
                APPENDIX I                                                                                                                  APPENDIX I

                                                                                                                                Jucc    22.         1972

                      fmdSsg,        and other         reloted       support              for   their        respective     research

                            2.      Ibe    Procuresent           Iteeearcb     El-ts                    shall:

                                 a. Develop research       program.8 designed      to match a rcsesrch
                      need w%th an existing       research    cepabilitg,   either    In-house  or through
                      sn ootside    organization.

                                    b.     Zcmege or monitor               performan            ce of eecb reeearcb              project.

                            3.      The Roaroa          Research          Prom=             ahaIl         be d&l@ed       to:

                                   a.   Identify     and document     thoee procesees         or proceduree     that
                      require      research      to dwelop   a nev or inproved         technique      of procurmt
                      or any phase of the acquieftion              cycle or to apply m improved burineee
                      method to procumt               abenegemnt.       Procurement      Research vi11 cooelet
                      of a balance between loog-range               and aid-range      fmproveaenta        end be
                      cooceatrated        oa fundmental      cauaea     rather   than    iawdiate       effect  to
                      differentiate         research    from nomal      staff  studies.

                                  b.   Continuously       assess the current       atatua   of, and maintain      a
                      profile     of,  ecooosic     or bueinese      Bethoda reeearch     being    perforwd    in
                      and alt of Gove-at.               In eddftiun,       the Procurment       Reseercb Elacnts
                      will aafatain       the lieieon      required     with industry.    the acadeaic      comaa-
                      nlty,     and the other Military         Deportnrenta    to eooftor     and collect
                      infonnattion     on uethod8     research.

                                    c.     Reviev    and temt the             products                  of procurement      research          for
                      practkslity             of implementation.

                                 d.  Assist     in the development      of implemntation      plans for nev
                      conceLpts.    As part of this impleeentetion.           the Procurement     Research
                      Elesents    may prepare     directive   or training    material    needed to tuple-
                      merit research    reaulta.

                            4.      The Procurement              Research       Elements                 may:

                               a.  Either   singly  or jointly perform  research,                                         as requested               by
                       the PRCC, on matters    of concern to DOD top management.

                                    b.     Serve      as the      focal      potnts within      the DOD Component8 for
                       the dissemination      of procurement                 research      infomatfon      and data.   This
                       includes    the disseninetlon      of            research     findlngs       to other Covermwnt
                      activities,          industry       associations,          and the academic       community.

                      E. ?he        PrOCUrtZi%entbseerch    Elements shall     conduct    8 DOD Procurreent
                      Research       Smpodum    annually  under   the auspices      of the Deputy   ilssfntant
                      Secretary       of Defense (Procurement)      and invite    the presentation



        -                                                             0               *


         APPENDIX I                                                                     APPENDfX 1

             of .?e%earch p%per%, to share the research with DOD procuraDentjacqui%itiun
             perrmnel  and with the academic and industrial  comcunitie%.

                             a. Arrangesente for hosting    this   annual research   emporium
             ahalf        rotate ammg the PRCC ner&ere.
                            b.  The bmic purpoee of thin     eympoaiwn shall   be to ensure an
             exchange        of research infowaeion.

                            c. The PRCC will determiue the program fomat cm3 rev&v              the
             oubjecte        of reeearch to be presented at the symposium.

             c.      PRoCEDUaEs

                     1.The PRCC %lm.ll meet at the call of the Qmimae, but not lea%
             often   thmn quarterly.    The Council shall review the DoD Cmpoeenesr
              current and future ruearch      program. provide the uece%%apg guidance,
              and maintain con%t%nt liaison with the DOD Procureueut lle%e.+rcb
              Elements a% well a% the Federal Procuremmt Institute      @PI).    The
             'Ciaairman, PRCC. may direct the dieeribution    of any Defeuse procurement
              research report(%),    a% required.
                   2.6 Normally, reoearch should be conducted IQ a syetemtic   uaunei.
             Euclo%ure 1 provide% a oystemtic     approach to the procuresent researct.
             process.     Enclosure 1 may be u%ed by DoD Ccmpoeents a% a guide in their
             iraplenmting    docmeute.   .
                      An annual eumnary of the procurment      research effort%, with             a
             quarterly  updating, %hall be published.    This 8muaax-y shall include              the
             research performed by DOD Procurement    Research    Elements     and other
             research effort% identified   in the Defense Logistics        Informrio%
             Exchange  (DLSIE) a% procuremeot research.                                                 d

                            8.   Report8:

                          (1) Submit report% shoving studies, planned and in process,
             of procurement research and eub~~it revisions to these repottn of each
             significant  change.
                                 (2)    Submit copies of each study completed, as developed by
             the Procur-t              Re%earch Element, aud approved by the DOD Co%poaeut.

                      b. All procurement research projects shall be regietered with
             the Defehae Logi%tic% Studies 1~5~ naatiou Exchange (DLSIE) to %%surc
             it% availability  to all interested parties.  Registration shall be in

APPENDIX I                                                                                      APPENDIX I

                                                              .                            Jurle 22, 77

    accord      with        tbe prow&ares       mat   forth       in DOD Instruction      5154.19
    .ireference            (b)) .

    H.   EF’RXTPWE DATE AND IW-ATIOM                                  ’

         T&s Directfoe    &la effective    immediately.  Pomard                         two copies of
    implewnting   imtructionr        to the Director of Defense                        Research and
    Engfraeerfng within 90 days.

    Encloeurc          -    i
       Chart     of. Procur-t               Research Proceee


                     I   I

                                                                         APPENDIX   I






     I                              COPIIICTCI‘OT   IErr


         .ULI-naa       1
         .--mmum            I   I
                            1   I                                        *
     I                      I   I                          mr a&--0LII


                                                                                        .- ;

APPENDIX II                                                                        APPENDIX IX

       any people in the ecientific community         that much is amie.8 in Government procure-
 believe that research, like virtue, ia ita own       ment. With a Federal procurement bill of at
 reward. Procurement research is not quite            lea& $66 billion a year. it is plausible, indeed
 that e--&d. Harried adminietratore and im-           persuasive. to argue that procure ment research
 pat:      CongreeemeI: want to see results-          is P good investment promieing large dividenda
 practical applications that will improve the         in money savings end more e5icient and effec-
 procurement procese. The dilemma, of course,         tive performance.
 ie that until considerable rBourcee are devoted         The Department of Defense (DOD) snd its
 to procurement research, and the efforte are         military eervicee. 88 this ierue of the Befenae
 sufficiently weilsrgsnized. the results will be      Management    JCWYZU~ m&es     clear,   are   wry
 spotty and meager; but without subetantial           much interested in procurement reeeerch and
 resulk it is difTicult to get rhe desired allaca-    sponeor a vsriety of activities in the procure-
 tion and organization of resources. In this          ment field. Viewed from a dietan-, these ef-
 circumstance we have tc fall back on America’s       forte seem tentative and diffuse, aa if DOD
 faith that research doe-ebring useful resulta.       were convinced a8 a matter of policy that more
 There is aleo a rather widespread conviction         and better procurement research ie neededbut
                                                      were not certain how to carry t.hrc.:gh. Each
                                                      military service eeemeto be separately ponder-
                                                      ing what is embraced in procurement re&arrch,
                                                      how it should be organized and conducted, the
                                                      appropriate Ievel of funding, the clientele to
                                                      be served. and the meana of dieeeminating
                                                      reeearch data. In a developing field a varietp

 4                                                                                            July 1975


                                   l       ’
APPENDIX       II                                                                                    APPE?r’PTY             ’ T

                                                         The military services, in turn, could amcen-
                                                         trate advantageously on l-esearcll~dis-
                                                         tinctive to their eervicee; for example. the
                                                         NairJI on chip acquisition. This ie not to sug-
                                                         gefat that procuremeui research be wercen-
                                                         t&i24 or tied in hard and fast relationships
                                                         Components within tbe Depertment of Mm
                                                         or throughout the Government could be as-
                                                         signed procurement research reapmudbilitiea
                                                         refbxting available reeourw ape&l cap&li-
                                                         tiea, demonstrable ac8ievement.eand the Ii&
                                                         Civilian contracting organitatione i&m could
                                                         be utilized.
                                                            The important t&se immediatdy ahead are
                                                         to give mherence and direction to a many-
                                                         sided research effort by providing central
                                                         focus, identifying relevant and promieing RTJ-
                                                         search are8% eelecting priority projet@ pre-
  of ideas and concepts ie welcome, but the time         venting unneceebary duplicatione, developing
  hoa come for de&done pointing toward better            an adequate data beee, maintaining dir&o&s
  ~rgatdzation,   clearer direction, more vipribility,   of research performera and users, establishing
  firmer eupport&n ehort, a etronger inetitu-            channeie of elective communicetion, and en-
  tiOd          for procurement research                 suring continued funding support.

     As such the Department of Defense ehould               Procurement re8eerch projec& properly de-
  conaider dwting off and exemining anew its             signed and executed, will be responeive to the
  pkm-fallen     yeateryeer by the wayeide+to            needa of the procurement community. !&any
  eetablieh B Procurement Research L&oratory.            of these needs are felt or Seen, while others
  Firet propoeed pub!icly in lZ69 by Clark Clif-         are yet to be identified. Quick-fix research
  ford, then Secretary of Defense, creation of           tasks hsve their place, but more important and
  @ucbF l&orator3 wae strongly endorsed by               enduring will be the research eflorta which                                      l
  the Rouee committee on Government Opera-               go to root caueeeand seek basic refonna An
  tions 1 Bnd encompaeeedin a recommendation             important consequenceof such research, par-
  of the Commitior: on Government Proeure-               ticularly regarding major weapon systems. is
  ment to eatsblieh a Fede-1 Procurement Insti-          to prijvide berer vieibility and understanding
  tute, whkb woukl, among other things, “con-
  duct and spons,~r res~ch in procurement                    ’ “Polyp    Chanter     in Weapm Syrtem Pmcx-i.”
  poke and procedure.” * Aleo noteworthy UJthe           Howe Report tt-1716,           December to, 1970. pp. M-i%.
  Congreeeional mandeW to the OfRceof Federal                ‘Report     of the CommIttee cm Government               Prmm-
                                                         menf       US. Govmmcnt Printing               O&e.    WaLingian.
  Procurement Policy, written into the enabling          D.C. ~010~. Vof. t. p. 66. December 167.6. Atailabfe              from
  I,&elstion, that research in procurement policy        tke SupetiLrndcRt            cf Dcumwn ti, IJS. Gownmeat
  be performed and promate&* A portion of the            Printing      G&c:     ode+ no. 5L5CCOOZ. prier $6.60.
  agency’s funde is to be made available for euch            sScctim     S(d)4 of Public Law RS-400, optmmd                  An-
                                                         gwt 80. IOIL. 88 Stoat. 798. 798.
 Purposea.                                                   ‘Public LOP OJ-UKI (acetim           11) a&ho&cd      $2 million
   The Office of Federal Procurement Poliw ie            fez the firrt jkal        year 01 OFPP apcra&im          (tets),      of
 concerned with procurement policy (presum-              which not ROTC than 6tSO.006 W. to be owilabla                       fm
 abiy ae diatinguisherl from operational) re-            procurenunt        polvy rercarek.      In it4 firat inewumi          of
 eeerch and with Government-wide applications.           fundi*g      for pmt of a fkai         year, tko OFPP remaiwd
 The Department of Defense, through the                  S660,OOtX Premnably           a prqwrtmtalr      rhare wcill be de-
                                                         voted to reararch.
 mechanism of a Procurement Research Labora-                ‘Sa      9-b    Rota of OFPP:          Unify and Ccmdtnnlr,”
 tory, could well direct ita attention to procure-       by Hugh E. Wilt, Defenw Ysnagement                  Journal,     Jaw-
 ment problems with Defenee-wide applicationa            oty IP75. p. $6.

                                                                                                                                    7-f       ,
APPENDIX      11                                                                   APPENDIX        II

  of the procurement proccaa aa a whole, 80
  “front end” decisions sre made with more in-             Once in a while 1 come across a “lesson
  telligent realization of their impact on cost,        learn& report on the procurement of a major
  schedule and performance all along the way            system or component; it makes me wonder why
  to the “hack end.” The long road from require-        more such reports are not prepared and more
  men& determination to mainte~nce in the               widely diwminated in the procurement com-
  field should hsve more of the pitfalIs removed.       munity. In the interest of more inteljiqent and
      Innovative procurement research will have         sophisticated procurement a vast amoilnt of
  to teat and challenge conventional wisdom and        Wful information could be distilled from the
  preconeelved concepta. Incentive conbcting,          experlenca and records of project managepa
  for eXample, seams to h firmly fixed in th8 de-       It is exasperating to XX?avoidable errora con-
  fense prctcurement firmament, and yet there          stantly repeated, an i:’ procurement practition-
  am analytical reporta end commoneenee or             ers, like those who do not read history. are
  intuitlive judgments which question the efllcsrcy    condemned to repezt the miatnkee of the pat.
  of the incentive arrangements. Can procure-          Cn the simplest p!one, I can envisage a check-
  ment research throw more light on this diWicult       liet of caveats available to the project manager
  rubject? I suggest it can, although the design       or contracting officer which will at least
  of the research project may be difllcuit and its     sharpen his awareness of pitfalls and h;lp
  execution arduous. III any case, procurement         him to avoid them. This kind of information
  IWSW& should be a constant prod against              also should serve to reduce or eliminate rote
  complacency and comfortabia acceptanceof the         use of procurement concepta or methods which
  familiar way as the right way.                       may not be suited to the particular situation
      To challenge conventional wisdom is not              Research in procurement is not the kind of
  lIcen8e to run ail ovee tbe procureme2at lot         research which produces breakthroughs, quan-
  researching the biarre, the esoteric, or the         tum jumps or magic formuIae; it deals with
  trivial, or simply to satisfy one’s intellectual     prosaic problems of Government as buyer and
  curiosity. Such exercim best cBn be left to          user of neededgoods and services. Nonetheless,
   those who are working without Federal funde.        ita potential is great in helping to devise ways
   Procurement research will draw upon varied          and meaM of doing a better job, which means
   intellectual disciplines, particularly the knowl-   getting more for the do!!ar or getting what is
  edge 8nd techniques of the social sciencea,but       required for less dollars. Even mare important,
   it must be itself disciplined to improve the        it means helping to inspire public confidence
   procurement process. tinsequently, it is im-        in the ability of Government to conduct its
   portant to develop and perfect analytical tech-     business in an honest, prudent and businesslike
   niques which validate research aseumptions          way. Procurement research is not iti own re-
   and to carefully evaluate the quality of tha        ward, but it ia a rewarding effort. It deservea
   research output,                                    sustained high-level attention and support. 0

                                                                                             My   1975         ,

APPENDIX III                                                        APPENDIX 111

                         LIBRARIES     AND DATA BANKS

1.    xhe Commission   on Government  Procurement     Libr;a               is
      maintained   by GSA for all executive    agencies
2.    The Army Library    in the        Pentagon maintains      sin extensive            +
      collection  of procurement           literature    and rererence     works,
      including  an information          retrieval    system.

3.    Federal      Depcsitory       Libraries    (39 agency designated       li-             .I
      braries)       receive    and retarn     one copy of all government
      pub1 ica t ions.        These are available         to over 1,ODQ field
      libraries        which requisition       publications      best suited     to
      their     particular      clientele     needs.

4.    The National    Technical       Information     Service     (NTIS) oper-
      ated by the Department          of Commerce, publishes          Wee
      Government    Abstracts     of Techn’i&       ‘RepoFt     by ca-* egoryl
      and brmonthly     Government        Report Announcements        with in-
      dexes by subject,       author,      Government   contractor,       and
      order number:       They also-provide        hard copy or microform
      copies of documents        and custom searches          of the NTIS data
      bank by subject.
5.     The Defense     Documentation       Center  is a repasitory      and
      issue point      for general      reporLs   and technical    studies.
LY.   Phe Defense Logistics       Studies    Information     Exchange           pre-
      pares and prints    abstracts       and custom bibliographies,
      and acts as a repository        and issue point      for-studies             and
      reports  dealing  with logistics         and procurement.


                                                                                             t   J   c
APPENDIX IV                                                                    APPENDIX     IV   _..     L
                                           RESEARCB GUIDES

        In 1975 the Army Procurement                     Research   Office,      acting    as
executive    agent for DQDI published                     two guides     for   researchers:
1.                                                                  --lists        of
                                                                    fit     pubfi-
     cation     resources       maintained    within     the Defense Logistics
     Studies      Information       Exchange.      Et alss lists    research
     resources,        iRCludiRg(     gOvePRmeRtQ1     %nd private     research
     groups,      schools,      and operating      organrzations.

2.   A Guide     to Sources      of       Infarmation         for   Procurement     We-
                                                                                      uding      _-_-.
     graphics,       legislative    materials,      periodicals,    statistical
     data,     lists    of industry   associations,         and many topical

                                                                                                   --. -.


                                      *        l
APPENDIX V                                                                              APPENDIX V
                                      SOME EXPERT VIEWS

        Several    research     experts    who reviewed      preliminary
material      in this    report    expressed     varying   opinions      as to the
nature     of research      and its management.          Their views were con-
sidered      and some are presented          here because of the perspec-
tive    they may add.
       There are two important         fundamental      kir,ds of research.
The first    is research     on the nature        of the procurement         and
systems acquisition       process    itseli,      which would rely largely
on data about and analyses         of past procurements.             The purpose
here would be straightforward,             namely,    to inform    acquisition
executives     about what has worked and what has not,                  so that
they might better      guide their       own policies       and activities.
         The second kind of research                    is evaluative             research         that
attemrts       to assess pfogressr               success,        or failure            of ongoing
activities         (what you called            *experiments”              in your report).
Here we run into what yo:: might call                          the “moving             target
problem.”          This is, when one is involved                        in research           on cur-
rent acquisitions             or procurements             that mz.y involve               millions
of dollars         and for which there must be many ongoing,                                  simul-
taneous management actions,                     (1) it is difficult                 to specify
an analytical          quantitative          basis with whicS out,-omes can be
corn par ed , to ascertain           the true effects                 of changing           the
variables        of the problem:           and (2) when one finds                      that a pro-
curement       is headed in a possibly                  inefficient            direction,         one
cannot      let it go forward            simply       for the sake of the research
experiment,         because of the potentially                      large      amounts of
money that may be inefficiefitfy                      spent.          Therefore,          over the
lifetime       of a procurement,             the evaluative               research        will     in-
teract      with the procurement               and it may be difficult                      at the
end to separate            the contributions             , alrd lessons           emerqing         from
the research,          from the results             of independently                made manage-
ment decisions           that may or may not have been formed by the
research.          Thus, while evaluative                 research          in parallel          with
acquisition         experiments        is extremely             important,           it is likely
not to be able to follow                 strict       analytical,             scientific         prin-
ciples.        A great de&l of forebearance                       is therefore            required
of the research            managers,       the participants                 in the research,
and the recipients              of the results,             in interpreting               and
assessing        the meaning and value of the research                              or its re-
sul ts.
a/Views      of Dr.       Seymour       J.   Deitchman,         Institute         for    Defense

APPENDIX V                                                                    APPENDIX V

       The impression         conveyed      by the GAO model (see fig.                  4-5,
p. 26) and the discussion              in the report        is that a substantial
commitment      of resources        should be devoted           to procurement
research,      and that     it should be largely            directed         research
into questions        surrounding        current     policy     initiatives.          1/
The model recognizes           the subject        of independent           researcfi;      but
the thrust      of the report        is that research           should be rather
fully    coordinated.         Cne great       advantage     to this        is that      the
researcher      should experieilce          easier    access to source             infor-
mation     for projects       coordinated        at the levels          indicated       in
the model.
         There is an o-Zfsetting       problem       with the degree of               in-
tegration      contemplated      by the model,          It would tend to              chan-
nel the researcher's         efforts     into support       of directed             study
efforts.       This is a valuable        capability,       but may tend             to
limit     conceptual     and original      idea formation       as a part             of
the research       programs.    z/
                9              *               *               *              *

        There is no one best way to manage the conduct                           of re-
search.      The environment           in the agency determines               (1) the
organizational,          functional,         and administrative         structure,
(2) the operating           research      management methods           (modus
operandi),        (3) the types of individuals                assigned      to research
and the mix of research              disciplines      titilized,       and (41 the
transient       research      opportunities.

z/We offer   no opinion     as to the size of a resea-rch       program;
   it would vary with importance        of the procurement      process
   to an agency‘s    missions    and with the extent      of problems
   being encountered     ind new policies     being initiated.
z/The model is both top down and bottom up; a research           need
   and candidate     can enter   at any level   and from any source.
   We did clarify      the model to highliaht    availability of dis-
   cretionary     or independent   research   by the tesearch activ-
a/Views     of Dr. Stanley   N. Sherman, The George Washington
   University     School of Government     End Business    Administra-
   tion,    and Lt. Col. Daniel     E. Strayer,  Executive     Director,
   Air Force Business      Research   Management Certer,     respectively.

APPENDIX V                                                                 APPENDIX V

       The GAO model,      which is essentially      a top/dovn       research
approach,    “appears”     to present    a one best way to nanage pro-
curement   research.       This perception     by others,     including
agency top management,         could be damaging to research            in that
the researchers      might find     themselves   locked    in to a rigid
top/down   research     management system which,         in turn,     could
hamper effective       research.    A/
       The model proposed           also appears to be too oriented                  to
assigning      responsibilities          and producing        reports      as the
final   product      at the end of the research               cycle.       Research
is more concerned           with determining         what needs to be done,
doing things,        and getting       results,      rather     than with      issuing
final    reports.       Also,    research       communications        with operating
managers should occur during                all the research          steps.      It is
a continuous        process     of incremental         updates,      and is also a
subtle     mechanism to keep operating               managers      informed,      turned
on, closely       involved      in the ongoing         research      program,     and
ready to provide          the necessary         sponsorship       and support.       2,’
------------- RESULTS a/
       Research     findings      from two recent          studies     of major pro-
curement     procedure      change efforts         support      the conclusion         that
the human elements          of the change adoption             process      dominate
oft at least,       very strongly        influence       the success or failure
of new performance          programs.        Further,      the findings        strongly
suggest     that beliefs       held on three         important      variables       by
people    involved      in change are strongly             associated       with their
acceptance      cir rejection       of the change and thus with the suc-
cess or failure         of the project.          These variables          are:      need,
cost of implementation,             and benefits       of implementation.
           The implications     of the significant       human role in suc-
cess       or fsilure     of new performance     programs   are great.  They

L/Ibid.,         footnote   2, p.    45.
 q/The above comments have considerable                     merit, but research
    work (successes     and failures) needs               to be documented    in
    some fashion    for the future.
 c/Views  of Lt. Col.          Daniel   E. Strayer,  Executive             Director,
    Air Force Business          Research   Management Center.

    APPENDIX V                                                   APPENDIX V

    touch everyone      concerned with new performance programs:          the
    authorizers,     the developers/researchers,    and the users.        The
    following    guidelines    are offered:
         --Insure      that the need for improved performance is under-
             stood and accepted at all levels of the affected         orga-
.            nization.      Charters from top management, a frequent
             initiator     of change. are not necessarily  sufficient
             to guarantee success.
         --To the extent possible,      involve potential     users in de-
            veloping  the new performance program.        This helps
            avoid solving the wrong problem and provides essen-
            tial credibility  regarding     the need for improvement,
            costs of implementation,      and expected gains.
         --Design the performance program to minimize the costs
            of implementation.   Be sure that performance improve-
            ment, not 'technical sophistication is emphasized.
         --Use pilot   tests to establish       credibility,       quantify
            the achievable    benefits    and assess the costs of imple-
            mentation.    This critical     step provides meaningful
            hard facts to counter the detractors             and emphasize t!le
            need for the new program and the high benefits                that
            should accrue in relatior‘      to its cost.        (If the payoffs
            are not significant,       the project   must ask the hard
            questions  and make appropriate        decisions.)
         --Address the implementation          question at the outset     and
            manage it as a tctal       effort.     Use training liberally
            and in advance of need. Be sure that the training
            materials   address the needs, costs, and benerits
            associated    with the new performance program, not just
            the technical     innovations+nvolved.


                                l        ’

                                     *            .

                         EXECUTIVE OFilCE OF THE PRES~JENT
                             OFFICE   OF MANAGEMENT             AND   BUOYED
                                       WASHINGTQN.   OS.    2OS03


  Mr. Victor   L. Lowe
  Director,  General
     Government Division
  General Accounting Office
  Washington, D. C. 20548
  Dear Mr. Lowe:
  This is in response to your letter   of June 10,
  Honorable Bert Lance, forwarding   your drafe
  proving Federal Procurement and Acquisitfqb

   that     have gone on to make our current                           system work.;'