Market Research: The Collateral Damage of Conference Restrictions
When it comes to making purchases, most customers shop online or in a big box store, where they can visit a single location and figure out all of the options along the price and value spectrum at once.
The time and money saved makes this convenience seem almost essential. It’s why every neighborhood in America has a supermarket but few still have a butcher or baker. Most consumers prefer shopping venues that make it easy to do market research. These environments present multiple products that compete for our purchase by trying to provide the greatest value at the lowest cost.
Unsurprisingly, the same proves true for government purchasing. In an October report, the Government Accountability Office (GAO) explained that market research improves competition outcomes the more thorough the market research, the better the outcomes. To quote GAO, “market research on the higher dollar value contracts generally involved more communication with industry and these contracts were more often awarded on a competitive basis.”
More market research means more discussions with industry, which means more competition, which means lower costs and greater value. Prodding requirements writers in government to talk to industry early and often can mean huge program savings.
And not only does market research yield good outcomes, it’s the law. Section 3306 of Title 41 of U.S. Code requires market research as a preliminary activity for any acquisition, a requirement reinforced by provisions related to commercial item preference in Section 2377 of Title 10 and Section 3307 of Title 41.
With good substantive reasons to do market research along with a legal mandate, one might assume that market research is on the rise — but that is not the case. According to the Office of Federal Procurement Policy (OFPP), “The Federal Acquisition Regulation (FAR) authorizes a broad range of opportunities for vendor communication, but agencies often do not take full advantage of these existing flexibilities.”
This statement was made in OFPP’s 2011 “Mythbusting” memo intended to address the federal workforce’s misconceptions about vendor engagement. Finding the problem unresolved by its first memo, OFPP published a second memo, the very first recommendation of which was better and more thorough collaboration with vendors at conferences.
OFPP issued that second memo in May 2012, a scant few months before the Department of Veterans Affairs conference scandal broke followed by the General Services Administration scandal in September. Suddenly, all conferences, no matter their value, became radioactive for federal employees. While the VA and GSA scandals involved conferences organized by government employees for government employees, the non-involvement of industry did not shield market research conferences, scientific conferences or medical research conferences from the same harsh scrutiny. Every conference was fair game for interrogation. Government employees got the message: Just say, “No.”
The conference scandals caused further limitations on the already-limited market research environment that the Mythbusting memos sought to address. For his part, in February 2014, Frank Kendall, under secretary of defense for acquisition, technology and logistics, published a memo encouraging government employees to attend conferences necessary for the performance of their duties, which in his view constituted “technical symposia and conferences that enhance communication between DoD acquisition professionals and their industry counterparts.” His effort was an admirable attempt to build a dam between key government communities whose conference attendance actually saves taxpayer money and the political pressure that assumes all conferences are wasteful boondoggles.
That political pressure has produced several draft pieces of legislation and enacted legal restrictions in both of the last two spending bills mandating significant levels of conference attendance reporting. In addition, some departments and agencies have mandated additional specific reporting.
The weight of oversight and reporting has certainly had an impact. A February 2015 article in the Washington Post demonstrated how the new limitations and reporting have actually cost money in some cases by forcing government employees to do job tasks piecemeal — such as market research — which they used to perform all at once in a single venue that now unfortunately bears the scarlet “C.”
Those new costs do not include the additional bureaucracy created to support the new reporting requirements, which means preparing and filing new paperwork at every level in the chain of command and full-time employees hired to create conference policy and staff specific conference requests for final approval.
Those employees themselves then face scrutiny from inspectors generally tasked to find flaws in their tracking and reporting systems. At some point the medicine becomes worse than the disease.
Meanwhile, human nature kicks in. If personnel are scrutinized and criticized when they try to do a good job, but are ignored and left alone when they do not, all but the most determined will eventually respond to our incentives and take the path of least resistance.
The Washington Post reports that the government claimed about $3 billion in savings since the conference restrictions took effect, though it is unclear how those figures were tabulated, whether they include the additional costs of oversight, and what percentage may simply be attributable to travel freezes that occurred because of sequestration.
Even taking the $3 billion figure at face value, it is 0.2 percent of the Pentagon’s major defense acquisition program costs of $1.5 trillion, according to GAO’s last selected acquisition report. That figure does not account for non-major programs, which in the most recent Pentagon budget constituted 57 percent of equipment and service spending. The point is — even if better market research saves just one percent of major program life-cycle costs, it would be five times the total savings the government claims from conference restrictions, and an order of magnitude more savings when one accounts for all defense programs.
So, before clamping down further on conference activities with another round of legislative or policy freezes, Congress should take stock of the impacts of its current policy and be a little bit choosier about which conferences it wants federal employees to avoid and which conferences it wants them to attend.
All conferences do not offer the same value. Some are almost essential to the proper, cost- and time-efficient, and effective performance of federal duties. These meetings do not feature magicians or fortune tellers. They are one-stop shops featuring industry participants looking to demonstrate new and innovative capabilities to the government. They should also feature government employees hunting for cutting-edge technology at a bargain price.
Topics: Business Trends, Procurement