The Homeland Security Department’s Procurement Innovation Lab (PIL) is tackling one of those hidden problems of federal acquisition — the need to close out low-risk, low-dollar contracts.
Too often these contracts are forgotten or under prioritized, and a backlog builds up. At DHS, for example, its backlog grew to more than 350,000, and 92 percent of the contracts had been completed more than a year ago.
Soraya Correa, the chief procurement officer at DHS, said the PIL took an innovation risk and re-engineered the business processes for contract closeout.
Correa said the PIL developed new quick closeout procedures in a simplified manner. DHS released a Federal Register notice in early October alerting contractors of its plans and the requirement to submit all outstanding invoices by Dec. 2.
“I’m talking about contracts that are typically small dollar value, generally firm fixed price, no activity over the last 12-to-24 months, final goods and services have been delivered so we know they are probably ready for close out,” Correa said in an exclusive interview with Federal News Radio. “What we are doing is a streamlined approach trying to close them in one fell swoop.”
Correa said the PIL brought together a team of experts, from the CFO’s office to contracting to auditors to industry, to develop these new processes.
“Once the contract is completed, we make sure the final invoice has been received and has been paid. We identify if there are any leftover funds on the contract or any action that has to be taken. We confirm with the parties involved, the program office, the contractor and the contracting officer that there are no further actions, and then we do a modification to close out the file and retire that contract file,” she said. “These steps can be a little bit tedious because sometimes you have to go out and do some research. You may have to research in the financial systems. You may have to research with the program office, and even sometimes the vendors have to do research.”
Correa is quick to point out that this “backlog” is based on how DHS, or for that matter any agency, prioritizes its contract closeout efforts. She said the agency, like most others, mainly focuses on high-dollar, more complex and higher risk contracts.
“These types of low-risk contracts will fall into the backlog because we’re dedicating our resources to the more important actions that impact the agency’s financial resources, our audits and other processes that are much more critical to the agency,” she said. “This was one of those things that I said can we come up with a better way, more efficient and effective way of doing this, working in conjunction with the finance office, so we can get through this process and make sure that we clear the backlog of items that are out there and, more importantly, rededicate our resources to the actions that are of more critical importance to use at the agency. Whether it’s closing out the higher risk contracts or actually awarding new actions.”
To re-engineer the business processes, DHS first created a cross-functional team of policy, finance, general counsel, contracting and industry and then had to identify the low-risk contracts.
“It’s about coordinating, good communications and making sure that all the people that could be involved and are looking at the process understand what we are doing and that we have agreement that we’ve covered all the appropriate steps,” Correa said. “It sounds a lot harder than what it really was. We were already experiencing the importance and complexity of close-outs because of our work on the audits. We had already teamed with the CFO’s office in response to the financial audits to close any open orders out there that could impact our audit capabilities. We’ve had great success on our audits and have had clean audit opinions.”
She added the agency’s inspector general and the Government Accountability Office approved DHS’ approach, and recognized the importance of being proactive in solving a potential problem.
Correa said DHS received 114 proposals for this small business set-aside procurement focused on agile development methodologies.
“Everything we’ve done on FLASH has been very different from what we’ve done in the past. Start with our industry day where our communications were more of a discussion where we provided the ability to do speed teaming or speed dating, but also an opportunity for vendors to meet with government officials and ask questions,” she said. “We also had experts in various business areas like small business, digital services and others so industry could come up to speed on what we were doing in those areas. It was a very interactive day that focused a little more on the business processes around bidding as opposed to focusing on the requirements that would be contained in the solicitation.”
DHS evaluated contractors based on a technical challenge where the bidders had to present to the agency how they would go through an agile development process. Correa said the bidders then had 4-to-6 hours to actually complete and then did a presentation.
Along with FLASH, the PIL has experimented on other procurements using group debriefings as well as a technical demonstration where DHS gave bidders code with errors in it and asked the vendors to tell them what was wrong.
“We are trying to do a lot of different things in the PIL,” Correa said. “The other things we are doing with the PIL is educational. We host webinars on a biweekly basis and invite the folks who have done the experiments through the PIL to educate our acquisition community on the process, what the lessons learned were, what they would do differently perhaps and how to work through some of these processes. The most important part of the PIL is proliferating the learning, getting the message out there that you can do it too.”
Correa said a few hundred employees routinely tune in to the webinars, which last 90-to-120 minutes. The PIL also invites senior leaders to offer introductory remarks to offer opinion or insights into the current effort.
“We are certifying our folks who participate in the PIL as innovators. WE also have educational sessions where we talk about the TechFAR handbook and the Digital Services Playbook and other materials out there to help people understand different ways of doing things,” she said.