The Public Policy/The Ten Percent Solution
Baldwin, Fred D.
THE PUBLIC POLICY by Fred D. Baldwin The Ten Percent Solution An investigation of the General Services Administration, the agency which buys things for the federal government, reportedly shows...
...Could this notion of competitively conducted research (not just competitively awarded research) improve the productivity of social research contractors...
...He would not always be successful, of course...
...For the class of studies variously called "program evaluation," "applied social research," or "policy analysis," increasing contractor productivity poses a special problem...
...A few deadlines may be slipped, but no one cares greatly...
...This procedure would draw smaller firms into the competition, including those incapable of mounting large-scale data collection efforts but blessed with a few staff members capable of thinking productively about the implications of existing data...
...In due course, however, a decision is made...
...Missiles either hit their targets or they do not, but in education,' economic development, and energy conservation the bitter arguments are about what the targets should be...
...In addition, a large study, like a large organization, absorbs much of the participants' energies on internal support functions...
...Once a decision has been made to bid, proposal-writers work frantically to submit a proposal within the announced deadline, the last deadline anyone associated with the project will take to be absolutely unbreakable...
...Bidders would submit proposals in response to an RFP, a panel would judge those proposals, and a contractor would be selected...
...On any given policy issue, no one knows for sure just how much a sharp, well-focused, efficiently performed piece of analysis should cost...
...It is not a matter of speeding up the output of reports, nor, God knows, of increasing their number...
...He expected the Navy to realize at least one of three possible benefits...
...His bargain-basement team bypassed the problem of getting better performance from missiles guided by radar in their noses...
...It is rare in any case...
...However, merely keeping the main contractor awake would be something...
...Second, it assumes that what that way is and who can find it are determinable in advance from the review of a proposal...
...Granted, having two contractors work on the same problem will sometimes be dupli-cative and confusing...
...They may cost anywhere from $50,000 to $500,000 each, and more expensive ones are fairly common...
...Second, for many weapons systems he knew that it is possible to get perhaps 90 percent of the contractually-stipulated level of performance for about ten percent of the cost of a system meeting those standards completely...
...The agency signs a contract with a research organization...
...This language is the work of a committee...
...The most important thing to remember about the government procurement process is that it stimulates a great deal of open competition in the business of getting government work, but none whatsoever in the business of getting government work done...
...Its initial stages would proceed exactly as any other competitive procurement...
...Many bidders on the original RFP might have no interest in a much smaller contract...
...Maybe so, maybe not, but consider how it might be tried out in practice...
...Like most committees, this one resolves its internal differences by leaving everyone's suggestions in, not by choosing among them...
...From a contractor's point of view, a small contract can mean as much work as a large one, particu-larly if it requires the firm's best talent to make a good showing...
...I believe, however, that size is relevant and that the government would generally obtain better results from smaller contracts, at least where anything purporting to examine policy choices is concerned...
...THE PUBLIC POLICY by Fred D. Baldwin The Ten Percent Solution An investigation of the General Services Administration, the agency which buys things for the federal government, reportedly shows that taxpayers have overpaid by about $100 million on items from computers to scratch pads...
...At worst, it contributes to it...
...Obviously, ten percent of the best bid in a competitive procurement process should be grossly inadequate for a job...
...However, the small contractor, unable to afford brute-force solutions to his design problems, would be required to think very hard about the purpose and intended use of the requested weapons system...
...No one, however, thought of writing a short report immediately and giving back the rest of the money...
...Producing a product at the top of an existing line of development is expensive...
...They are big and full of carefully presented numbers...
...Those who lobby for larger research budgets in the social sciences will object that work in their particular fields is already so stingily funded that commissioning parallel work at a ten percent level would be frivolous...
...They will see no reason to expect a small pile of trash to be more beautiful than a large one, especially if the former merely adds to the latter...
...Most, however, go to some length to say why the proposed study will be unlike every other study...
...Thousands of studies are sponsored each year by the Departments of Health, Education and Welfare, Housing and Urban Development, and Labor, as well as by a host of smaller agencies...
...Those who make federal regulations assume that the competitive process will result in the selection of the best-qualified contractor for a specified job, at least the best one within an acceptable price range...
...He was particularly eager to work on a new air-to-air missile system, already the subject of massive contracts...
...Bureaucrats seldom "sign" their work, but they vie for authority to "sign off" on the work of others...
...The RFP is sent to consulting firms, think tanks, and universities...
...This third kind of payoff would always be a long shot...
...Some panelists profess astonishment that so many bidders completely misunderstood what the RFP asked for...
...Cynics (the same ones heard earlier) will object that size is irrelevant...
...That notice tells potential bidders how to secure a "Request for Proposal," or RFP, which is the government's formal solicitation for bids...
...There are two problems with this reasoning...
...A "ten percent system" might be established under either of two sets of rules...
...Cynics will object that the preceding scenario is too charitable since it portrays the procurement process as merely mindless, not dishonest...
...One recalls the opening lines of Kipling's Departmental Ditties: Who shall doubt the secret hid Under Cheops' pyramid Was that the contractor did Cheops out of several millions ? That Congress will cry out for tighter controls over purchasing and contracting is predictable...
...Neither, however, did the jet aircraft which the missiles would have to shoot down, so "all-weather' ' was actually an egregious example of gold-plating...
...Alternatively, the invitation might be extended at first only to the second-ranked bidder and, if he declined, on down through the list of original proposers...
...Firms would be invited to submit a brief statement of what they felt they could do for that amount...
...What federal RFP writers have learned from Kuhn is to overuse the word "paradigm...
...As a measure of personal involvement, the distinction is similar to that between "kissing" and "kissing off...
...Things were never so clear-cut...
...In short, underfunded to solve the problem as posed by the contract, he would have no choice but to redefine it...
...After the price of the main contract became known, those who had registered would be invited to submit proposals...
...Whether or not this works, it does serve to diminish a sense of personal responsibility for the product...
...Also predictable is that rules designed to prevent kickbacks on office furniture will spill over into other areas, such as federally-sponsored research on Fred D. Baldwin is a consultant on public program management living in Carlisle, Pennsylvania...
...It is instructive to consider an instance when the "duplication of effort" dogma was challenged...
...Upon receipt of an RFP the firms' consultants and analysts spend the next few days trying to guess what the agency issuing it really wants and how much it has to spend...
...Granted, the conceptual breakthrough, the elegant insight that casts a problem in a new light, will be rare...
...It worked, incidentally, under combat conditions, but it did not quite meet the original contract specifications...
...His only hope of getting follow-on work would be to find a simpler and more general solution, the kind that scientists and engineers call "elegant...
...The panel labors conscientiously, but not happily...
...That might happen...
...This was not dishonesty in any simple sense...
...The agency assigns a project monitor to oversee the research, but managers turn their attention to the next RFP and the next year's budget...
...There is, of course, no "right" amount...
...A few work statements are short to the point of being cryptic...
...One time-honored way of combatting corruption is to require so many levels of approval for an action as to make bribery excessively inconvenient...
...Those contracts called for "all-weather" systems, and heat-seeking missiles did not perform well in heavy rain...
...Not that anyone should expect the ten percent strategy, or any other, to provide a miracle cure for fuzzy thinking...
...It sinks into a bureaucratic midden, there to remain until it is unearthed by a contractor commissioned to study the "underutilization" of applied social research...
...At that point the federal agency's contracts office would inform unsuccessful bidders of the agency's intention to issue a second contract to meet the same research objective (though not, obviously, requiring the same methodology or level of effort) for a fixed price, exactly ten percent of the just-awarded contract...
...At best, an emphasis on preventing dishonesty distracts attention from the problem...
...One may make quite a number of concessions to critics, however, and still be persuaded that the ten percent approach is worth a try...
...The successful contractor spends a few months discovering what parts of his proposal made no sense and perhaps getting revisions of his contract...
...When a federal agency decides to sponsor a piece of research, it inserts a short paragraph in the Commerce Business Daily, which is the federal equivalent of the "Wanted to Buy" columns in a newspaper's classified section...
...First, it assumes that there is a "best" way to do creative work...
...The tendency to ask for an extra margin of performance with little regard to cost is common enough to have a name-gold-plating-and gold-plating comes high...
...Much of what is called policy research comes with a built-in irrelevance factor because neither the problems nor the bureaucrats who are the nominal audience for the studies will wait for the studies' completion...
...The agencies paying for them treat them like styrofoam coffee cups, better shred than read...
...It became for many years the mainstay of the Navy's air-to-air arsenal and was grudgingly adopted by the Air Force because it was cheap and it worked...
...And so it would be, given the assumptions of RFP-writers...
...Call the first set the semi-closed model and the second the open model...
...Preferably upon releasing the initial RFP, but later if necessary, the agency would announce its' intention to award a ten percent contract and invite bidders to express interest in that option whether or not they chose to bid on the main project...
...The final report, of course, seldom addresses any policy need felt by the manager who at last receives it...
...This doubtless occurs, and, as with most kinds of illegal activity, there are no reliable statistics...
...I recall a study in which I had some part where the conclusion came into sight fairly early...
...Yet many of them are produced only to be promptly discarded...
...Before conducting a survey, or cranking up a computer program, they would be forced to ask an under-asked question: "If we get new data, what will we do with it...
...Thomas S. Kuhn in The Structure of Scientific Revolutions explains why establishment researchers are unlikely to achieve intellectual breakthroughs...
...social problems and evaluation of federal programs...
...At that point, everyone relaxes...
...The argument for competition is not that it is tidy, but that it stimulates efficiency and creativity...
...It is fashionable, especially among contractors, to imply that contracts are frequently "wired" to preselected bidders...
...There were meetings to attend, field projects to plan, and questionnaires to design...
...The Navy would be prepared to shift resources from one contractor to another if the first one bogged down...
...If there is one thing consulting firms and research groups avoid, it is committing the time of their stars to small and relatively unprofitable projects...
...The real problem is how to increase contractor productivity...
...Granted, the problems are hard...
...One reason is the shortness of the government's own attention span...
...However, those who know how the present system of government-sponsored social program research works are entitled to suspect that ten percent of the going rate may be pretty close...
...The third potential benefit involved a paradox...
...And if you have already made the best deal you know how to make, why pay a second time for the same thing...
...The result of this and other simplifications was the Sidewinder...
...As things now stand, an economist can infer from the supply of over-written, under-thought studies that there is an immense demand for them...
...Despite orders not to waste money on duplicatory work, he used what discretionary funds he had and shaved a little here and there off other projects...
...Besides, it might be a bit awkward, having just explained why a job would require $250,000, to offer to do it for $25,000...
...What if there were no takers...
...Years ago, the head of one of the Navy's weapons development laboratories recognized that he got better work out of private contractors if he could assign some of his own staff to work on the same problems covered by contracts...
...Grant all those points and it remains true that relegating competition to the bidding stage of research, because of a professed horror of "duplication of effort," distorts contractors' incentives to perform efficiently and to the point...
...Something is needed to create a market for shorter, clearer ones...
...Perhaps harder...
...Neither assumption works well in practice...
...The RFP explains what the sponsoring agency hopes to get for its trouble, and our money...
...First, the very existence of a parallel effort to a major contract, even if that effort amounted to no more than ten percent of the dollars, would tend to keep the main contractor on his toes...
...The contractor either shifts the focus of the research to please the new monitor or continues to address each concern of a long-defunct committee-at least as long as the meter can be kept running...
...old hands remark that it always happens...
...They are now scarcely illuminated by a system which encourages research firms to spend their best talent on their bids, not on their performance...
...Instead, they turned to infrared-sensitive (heat-seeking) devices, which were both cheaper and more accurate...
...The reason is that the last increment of performance normally requires new and untested designs, such as advances in the art of electronic wizardry...
...In the case of the air-to-air missile, the lab director's judgment paid off...
...Physically, the RFP is a thick husk of legal conditions containing a kernel of text called the work statement...
...If the project is a long one, meaning more than a year, the government is likely to change project monitors...
...That will be unfortunate, though not for the reasons that may occur to academics seeking federal grants...
...Federal procurement regulations are already written as if the central problem for government contracting were corruption (just as Civil Service rules assume that the central problem in public personnel management is political influence...
...At best, this assumption is dubious...
...The semi-closed model would be the easiest to administer...
...I shall cling to my illusions, believing that the more important problem lies elsewhere...
...Although the conclusion was in sight, no one had time to focus on it because there was other work to be done, or what seemed like work at the time...
...The mechanics of the procurement process are at least partially responsible for this outcome...
...They are about education, unemployment, crime, poverty, and so forth...
...Gold-plating, in the form of over-elaborate designs, will be as hard to combat in social research programs as in the military...
...The open model would address the no-takers problem at the price of some extra work for the agency's selection panel...
...While this system is tolerable for physical items for which firm quality standards can be specified in advance, a closer look at the process shows that it is unsatisfactory for social research...
...The agency that issued the RFP receives the proposals and gives them to an evaluation panel, normally the same people who wrote the RFP work statement...
...The procurement process is based on the unexamined and unfortunate notion that while competition may be, a good thing, something called "duplication of effort'' is to be avoided at all costs...
...These organizations may either be on special mailing lists, or may request particular RFPs directly...
...Senator Proxmire awards his "Golden Fleece" to a few silly-sounding projects, but the real fleecing occurs through interminable studies of important issues when no one has any reason to focus the work...
...The language is suitably pretentious, bristling with words like "relevance," "systems," "time of the essence,'' and "policy.'' No RFP ever began: "It may seem a small point, but your government thought it would be nice to know...
Vol. 12 • March 1979 • No. 3
