From a recent practitioner: More of what’s ahead for federal acquisition in 2024

Acquisition is an eternal function to keep the government running. It is also constantly changing. The Federal Drive with Tom Temin next guest knows the ins and outs, having just left the General Services Administration as commissioner of its Federal Acquisition Service. For what buyers and sellers can expect in the year ahead, we hear from Sonny Hashmi.

Interview Transcript: 

Tom Temin And I guess it’s a little early to talk about your plans, but you’re not retiring into the sunset, are you?

Sonny Hashmi No, I am not. I’m actually very excited that I will continue to serve the federal government. But from the private sector, I am looking forward to my new role, which I’ll be sharing more news on in the next few days. But also it’s going to be an opportunity for me to continue to work with government agencies to help with their digital modernization. So I’m very excited about the next chapter and I’m also very proud of the work we’ve done over the last three years at the Federal Acquisition Service.

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Tom Temin Yeah, GSA is certainly not the GSA of our fathers and grandfathers in terms of the contracting opportunities that offers and maybe you’re biased, but review what you think are some of the strengths that it brings towards headed into 2024.

Sonny Hashmi Yeah, absolutely. So first of all, I do want to take this moment to recognize the incredible work that the whole team at the Federal Acquisition Service does day in and day out. We’re about 4500 strong, globally located. And every one of the leaders that I’ve worked with and have admired and partnered with are just incredible leaders. They are doing incredible work every day. And all the great successes that we’ve had over the last three years is 100% attributable to the work that they’ve done. Obviously, I can’t speak to the plans moving forward. I don’t want to speak for the agency now that I have departed my role. However, I can say that there’s incredible plans underway to continue to deliver more value to our citizens, to our customers, to create a much more equitable, inviting, successful marketplace for suppliers and to continue to make it easy for people who do business with the government. We’ve made significant strides over the last year. I think we recently saw an article that we crossed $100 billion a year market share threshold, which was somewhat unheard of just even a few years ago, but it’s all due to an unknown. But I’d talk about that number, it really translates into the value that we add for our customers. It’s a testament to the products and services we build and the service we provide. What I will say is that you’re right. Acquisition is not, I think some people, when they think about acquisition, they think about this paper based process and bureaucrats sitting and signing documents and pushing paper. It can’t be further from the truth. Acquisition is the primary way where the government gets access to the products and services that it needs to deliver on the mission, and it’s data driven process. 100% of acquisition, the heart of the smart modern acquisition is data. And we’ve done significant work over the last few years to get our data position strong. Ultimately, if the government has insights into what is being bought, where it’s coming from, who’s producing it, what the carbon impact is, what the competitive pricing are. If you have this metadata and your access to it, you can make much smarter and sound decisions around how you go to the market, how you position yourself, how you acquire the service products you need. And so that’s going to be the name of the game. In fact, the new OMB memo, recently OMB memo should say, the better contracting initiative really underlines that point in a very succinct way.

Tom Temin Well, let me ask you this. GSA, of course, has some very large and successful government wide acquisition contracting vehicles, so do several other agencies. Are there too many, do you think?

Sonny Hashmi Yeah, So that’s a great question, Tom. We asked a question of ourselves almost every day. Ultimately, it doesn’t really benefit anyone if we have a lot of duplicative contract vehicles. In fact, it adds burden to the marketplace, to vendors and suppliers, and it adds so much more complexity to acquisition officials when they’re thinking about where to go and get their services from. However, there’s a certain amount of competition that is good that does allow agencies to continue to focus on innovation, continue to focus on delivering the right products, service mix. So it’s a question that I would defer to OMB ultimately of BP decides which contract vehicles are authorized for government wide use and which ones are not. As you know, certain agencies have the ability to create and manage government wide contract vehicles. I do think that in the case of, for example, IT services. I think it’s incumbent upon all of us to have a deep look around what is the right mix and what are the differentiations between these contract vehicles? Because historically there’s been valuable competition in the space of example products where you can create competition through highly specialized pools of like products and categories. But I do think that each one of these vehicles is becoming more and more expanded and they’re starting to overlap a lot. And so ultimately, you see the same suppliers show up in multiple contract vehicles. And I’m not sure what the taxpayer value is of having multiple ways to access the same product service. So while I can’t speak to the specifics, of course ultimately relies on BP to continue to look into this area. But I do think a new new assessment is probably timely now.

Tom Temin And just a real quick question. When GSA is operating its [Governmentwide Acquisition Contracts (GWACS)], do they talk to [National Institutes of Health (NIH)] and to the [Solutions for Enterprise-Wide Procurement (SEWP)] people at NASA? And do you ever compare notes? Because I mean, it is one government.

Sonny Hashmi Absolutely. We do all the time. In fact, as you know, Laura Stanton, who runs the GSA affairs, is ITC organization is the governmentwide category manager for technology products and services. And Laura does an amazing job to develop that coalition and continuously work very closely with NITAAC or NIH with NASA, but even [Defense of Defense (DoD)] and [Defense Logistics Agency (DLA)] to make sure that we are at least aligned in how we’re going to market. The world of acquisition, and especially the world of the marketplace we’re living within is changing very fast. New products and capabilities are coming to market like AI and machine learning, and we also have new risks that are emerging. So supply chain risk management and elimination becomes a very important discipline. We also have global events that are causing disruptions to the supply chain. So preparing for things like global pandemics and natural disasters and making sure that we have resiliency in the supply chain because all these things cannot be done agency by agency. We have to share this data with each other. The GSA, we have built a very sophisticated supply chain risk management program, as an example, where we see insights deep into the supply chain on risks that exist at the product like level or even at the company level. And we proactively share that information with the interagency groups, the DoD, with DHS, with DOJ, and of course, NASA, so that they can cleanse their supply chain and identify those risks in their marketplaces as well. Ultimately, we want to make sure that what each agency has slightly different, but adjacent responsibilities. To me, it’s important to kind of think about the user’s perspective and user in this case being a buying agency or a supplier. And if we are creating duplication that adds burden to those users, then I think it’s time to reevaluate. But yeah, communication certainly happens, collaboration happens. There’s a lot of good alignment. In fact, NASA in many cases uses a lot of the work that we do on the schedules program to build upon when they issue contracts under SEWP. So I’m not too worried about the lack of collaboration, but I am worried about or I continue to question what is the right mix. I would say two of what is the right balance in this environment.

Tom Temin We’re speaking with Sonny Hashmi. He recently left government as commissioner of the Federal Acquisition Service at the General Services Administration. Another question about the supply base. What’s your sense of the strength of the industrial base that serves the government? Because in the case of defense, they’ve got some real issues that people don’t want to be in that market. People are leaving that market, and it’s a crucial time for defense. What about the civilian side of government?

Sonny Hashmi There’s two or three meta challenges of pursuing. These trends have been kind of underway for the last ten years or more at this point. One of the troubling trends that we noticed and we are all tracking is that there is a gradual reduction in the number of small businesses and the supplier base for the government writ large. We’ve seen this atrophying effect over and over again over the last ten years. And there’s many factors that could be attributed to why that is happening. But the focus, of course, over the last two years, as long as I’ve been there, has been to continue to reverse that trend. And I’m actually very proud to share that just this last year, about 47% of the dollars that were spent as vehicles went to small businesses, which is an unprecedented number. So I’m very proud of the work that we’ve done, particularly new vehicles, about 50% of the vendors that got on board were first timers to the federal marketplace, which is a great number. So we’re proud of the work that we’ve done. However, there’s a meta trend going on, and what I would say is that it’s a combination of a lot of M&A activity that’s happened over the last few years in the marketplace that have accelerated the graduation of certain small companies into large companies. Secondly, the requirement to be part of the federal marketplace continues to also grow hire. Part of that is based on the cybersecurity environment that building in. So a company that historically didn’t have to comply with certain mandates like the 800-171 compliance or DFAR compliance and things like that now have a very significant barrier to entry. And when you start thinking about additional requirements like [Federal Risk and Authorization Management Program (FedRAMP)] and [Cybersecurity Maturity Model Certification (CMMC)], at some point companies start to question whether the market access is worthwhile or is there enough business on the other side for the investment that needs to be made?

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Tom Temin Yeah, that’s something I wanted to ask you about too. The constant layering on of requirements for federal contractors, whether it’s in so-called diversity and equity or carbon or, as you mentioned, cybersecurity, getting more stringent. Labor practices it comes from a couple of different agencies that oversee this. Is it just getting to be to the point where people say, who needs this?

Sonny Hashmi I certainly think that is a real risk. And in fact, it’s not the first time we’re looking at it. We’ve been  thinking internally and talking about it for many years now. All these additional requirements come from a good place. The government wants to drive the right kind of behaviors through our acquisition policy, and those behaviors are driven by different quarters. However, they’re all intended for the right reasons. We obviously want to serve the environment and save address climate change. We want to make sure the small businesses have a fair shot, and we want to create jobs. We want to support labor agreements that support labor unions. All those things are intended to create more jobs in communities where they’re needed. However, when you layer all of them together, the overall cumulative effect can be fairly burdensome. Now we go through the federal rule making process that doesn’t allow for recalculation of additional burden that gets added whenever we pass policy. And so we do take that into account very, very closely. However, I do think that still also happens in a case by case basis. So you may have one rule that goes through, and the additional burden is determined to be manageable. But then in addition, the next rule comes in, in the next rule comes in. And I don’t think we’ve done a full scope of what the total cumulative effect is. So I do think that especially for small businesses, it can pose a fairly big challenge as an example. There’s been conversations around collecting scope two and scope three emissions data from different companies depending on their size. Now, that’s not an easy exercise to go through. If you’re a company that even if you’re a large company going through a scope three emissions auditing and calculation is a fairly lengthy process and a fairly burdensome process. So I do think that while the intentions are good, the government needs to constantly think about lowering that burden because it’s working against the goal that we have of diversifying the marketplace. And ultimately, if you don’t have diversity to be in that marketplace, we don’t have enough competition and then leads to the counterintuitive outcomes of having fewer players, lower competition, higher prices, lot fewer options. So this is a moment where I think it’s going to be the challenge of the next decade, is how do you actually balance out the need for diversification of the marketplace against the need for driving social policy agenda item through acquisitions?

Tom Temin We are speaking with Sonny Hashmi. He recently left government as commissioner of the Federal Acquisition Service at the General Services Administration. The contracting and acquisition workforce itself, the 1102’s in particular, but the whole panoply of people that actually get involved in getting things into the government. What kind of training will they need? What are the skills needed in this year and beyond you feel will need some development or education and training?

Sonny Hashmi Yeah, and that’s another very good point, because on the one hand, the sophistication and the skills that workforce needs to have to balance out these sophisticated decision points is increasing constantly. 1102 that has to make a decision around following made in America regulations or evaluating carbon impact of a particular procurement decision. These are highly specialized knowledge areas that require constant training and upskilling. At the same time, we are seeing an atrophying of 1102’s in the workforce. It’s getting harder and harder to recruit 1102’s. There are fewer and fewer of them in the marketplace, and the need is been higher than ever before. Now, a GSA, we took a very bold step to completely rethink how we recruit and train and retain 1102’s, who’s coming forward. And I’m very excited about some of the work that going to be coming in FY 24, which basically lowers the barrier for entry for people to become part of the lone two workforce, but then will take on the responsibility over a two year period to give them the training that’s needed, but also give them on the job hands on experience and then create basically a career path for them all the way through their careers. So that really look at the longitudinal investment in an individual’s career and build them into this. And in fact, instead of giving them all the training upfront, basically have a basic level of certification but then have highly specialized kind of modules that they can invest in. So if you want to grow into cloud, you can be specialize in cloud. If you want to grow into sustainability, you can have specialization in sustainability. However, that is just one part of the problem. The other side is that the data that we are now seeing and the volume of that data, no human can process all of that data. We are seeing, for example, GSA contract modifications that may have ten or 20,000 line items. No human is going to go through ten or 20,000 line items to make sure that each one of those lines of compliant is secure meets all the checks and balances. In fact, for every one of those product changes, we go through about 42 different checks from cybersecurity, supply chain sustainability, all these kind of different angles. And so we have been relying heavily, more and more heavily on automation and technology to solve that problem, including the application of artificial intelligence through a lot of analysis, through a lot of collection and management of data and getting it in the hands of the people. The vision that we’ve been trying to achieve and largely we are there, is that the acquisition official actually gets a report from the computer saying of these 20,000 line items, these four require further analysis because they potentially have some risk, they potentially don’t have the right certifications, etc.. And so that person can apply their knowledge and their experience on a subset of problem areas that actually require human intervention. And so that is going to be the new challenge. That is going to be the new opportunity. That’s why I keep going back to this is a data problem. If you can manage, collect, align, harmonize and use that data, then you can apply machine learning and machine expertise to it in combination of human expertise to really drive the right outcomes.

Tom Temin And you have to have, I guess, a risk management approach even to that because God forbid you miss something, and you end up giving up the contract to someone who didn’t comply with the latest subparagraph of some regulation. It’s not the end of the world. Just say, Hey, get compliant.

Sonny Hashmi Yeah, how do we find it? How do we continuously monitor for it? How do we have a path to goodness? Because many companies don’t not comply malicious reasons. There’s a lot of complexity. And sometimes, like I said, mistakes get made. So you need to have a path for a company to correct that issue and get back into good standings. And then, of course, there are going to be instances of fraud or areas where we need to take adverse action. And how do we get ahead of that? Certainly that’s going to be the goal. And like I said, we have about like in FAS, we manage about 74 million products in our marketplace. So if you can imagine 74 million products each with its metadata around where it was manufactured, what the carbon impact is,  it’s all cells that are there authorized to sell it, where it gets from, where it gets stored, does it connect to the network, All these different metadata elements for each one of these elements products need to be managed, because all of those data points then help decide whether this product is safe for a particular application or not. So it’s a daunting challenge. And so I don’t minimize the complexity of it. I wrote an article in the NCMA magazine a couple of years ago where I call it the challenge of the decade, and it truly is. And how do we manage our supply chain with all of these kind of priorities that we’re trying to apply in to our acquisition landscape? And ultimately, it becomes a massive data automation and intelligence challenge.

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