Page 42 - FCW, Nov/Dec 2017

Acquisition
A well-functioning organization is one in which and practice that people
Performance vs. compliance: The fundamental question
Every organization has goals and constraints. An organi- zation’s goals are what it is trying to accomplish, while its constraints are the ethical and legal restrictions on what the organization may do to accomplish those goals. If you are Microsoft, your goals are to produce products customers want to buy and to make a pro t. Your constraints include restrictions such as not destroying the environment while producing your product, paying your taxes and refraining from kidnapping your competitors.
In the procurement system, the government’s goal is to obtain best-value products and services for agency missions and taxpayers. Constraints include integrity (e.g., not taking bribes) and impartiality when working with contractors. For contractors, those constraints center on honesty in dealing with agency customers.
A focus on goals directs us to maximizing the occurrence of good things, while a focus on constraints stresses minimizing the occurrence of bad things. In the context of government procurement, a constraints focus translates into an empha- sis on avoiding waste, fraud and abuse, while a goals focus tends to emphasize innovative acquisition methods, with the view that new ways of doing things can produce major performance upsides even though they create a downside risk of failure.
To put the idea into language familiar to federal of cials and their contractors, constraints direct our attention to compliance, and goals direct our attention to performance. Constraints favor a legal mentality, and goals favor a man- agement mentality.
So which should be more important to an organization — goals or constraints?
Constraints re ect important ethical ideals. Furthermore, when levels of corruption and cronyism in a procurement system are high, companies will be hesitant to bid for gov- ernment contracts. That reduces the system’s performance, especially because high-quality businesses will be the most hesitant to bid. More broadly, rampant corruption and cro- nyism can be devastating for the overall performance of
an economy because potential entrepreneurs might invest energy into getting favors from government rather than run- ning legitimate businesses.
However, two points should be noted about organizations that focus on constraints. The rst is that an individual or organization concerned only about constraints will seldom be seen as successful. The second is that if satisfying con- straints consumes too much time and energy, individuals are unlikely to do so because they won’t have enough resources.
A well-functioning organization is one in which constraints are so baked into culture and practice that people don’t need to think about them. Most people would chuckle at my earlier mention that one of Microsoft’s constraints is not to kidnap its competitors because such behavior would never be part of the company’s business plan.
A good way to think about the role of constraints in a well-functioning organization is to say that the organization should maximize attainment of its goals while respecting its constraints.
1990s: Moving to a performance culture
In the past 25 years, the emphasis on constraints has given way to a performance culture in government, and procure- ment debates are now typically framed in the language of performance rather than of compliance. Most of that change took place during the 1990s.
The change was of cially proclaimed in new language under Part 1 of the Federal Acquisition Regulation, speci - cally the “Statement of guiding principles for the Federal Acquisition System” adopted in 1995. The reinventing govern- ment report called for replacing the entire FAR with a series of guiding principles modeled on Australia’s revamped pro- curement regulations, which were only 93 pages long. What happened instead was that the voluminous FAR remained, and the statement of guiding principles was added.
Two elements of the 1995 additions are particularly note- worthy. The rst re ected the new view of the role of goals and constraints. “The vision for the federal acquisition sys- tem is to deliver on a timely basis the best-value product or service to the customer, while maintaining the public’s trust
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