Acquisition workforce challenge--motivation for government vs. industry employment.

The federal government does not have the manpower or resources to staff and execute major multi-million dollar, multi-year, complex systems and services programs. Because of this shortfall, the government contracts with qualified prime and subcontractors to augment the government workforce and provide the quality systems engineering, analysis, and systems implementation services to successfully support the nation's warfighters. This effectively places the federal government and its commercial contractors in the unenviable position of competing for acquisition and contracting talent.

The composition of the acquisition workforce is defined in Office of Federal Procurement Policy (OFPP) Policy Letter 05-01, Developing and Managing the Acquisition Workforce (Office of Management and Budget, 2005). The focus of this research article is on General Schedule (GS) 1102-series contracting professionals and their industry counterparts. The essential commonalities for motivating government (Department of Defense and civilian agency) and industry (commercial) contracting and acquisition professionals are identified in this research. Likewise, the major differences in the motivation of government contracting and commercial contracting professional employment are also examined. This research addresses both the commonalities and the differences in a number of critical areas:

* Professional development

* Promotions and advancement

* Pay Incentives

* Stability of employment

* Influence in the organization

* Retention of Personnel

INITIAL RESEARCH FINDINGS

MAJOR ISSUES: THE ACQUISITION WORKFORCE

The federal government and its commercial contractors compete for acquisition and contracting talent that is increasingly in short supply. Cutbacks in the acquisition workforce during the 1990s and the aging of the general civil service population who remained have created worldwide demand for those employees skilled in the acquisition and contracting disciplines. What employee incentives can government and its contractors offer this finite, skilled workforce to retain them in federal and defense industry employment? This research will examine who they are, what their jobs entail, and what motivates them to continue in their chosen career fields.

WHO IS THE ACQUISITION WORKFORCE?

An important question that is critical in addressing the needs and motivations of the acquisition workforce is who is the acquisition workforce? With the OFPP Policy Letter 05-01 and the Department of Defense (DoD) Acquisition, Technology and Logistics (AT&L) Human Capital Strategic Plan 2007, v. 3.0, the acquisition workforce is defined, particularly within DoD AT&L, as those professional personnel who work in the acquisition process in the following seven out of 13 career fields which make up 87 percent of the AT&L workforce: "Systems Planning, Research, Development, and Engineering (SPRDE); Contracting; Program Management (PM); Life Cycle Logistics; Production Quality and Manufacturing (PQM); Business, Cost Estimating, and Financial Management (BCEFM); and Test and Evaluation (T&E)" (DoD AT&L, 2007). In fact, the 2006 Department of Defense Acquisition, Technology and Logistics Workforce numbered 128,242 personnel (DoD AT&L Human Capital Strategic Plan, 2007). The focus of this research article is on contracting professionals. Specifically this applies to GS-1102 contracting specialists in the government and their industry counterparts.

ASSESSMENT OF GOVERNMENT CONTRACTING WORKFORCE

WHO ARE THE GOVERNMENT ACQUISITION PERSONNEL?

In fiscal year 1991, the government employed 31,436 GS-1102 contracting specialists managing $150 billion in contracts. In 2007, the number of government-employed GS-1102 contracting specialists dropped to 28,434 while the value of the government contracts they managed jumped to $450 billion (Federal Acquisition Institute Workforce Report, 2007). The magnitude in contract dollars can and will fluctuate by government agency as priorities change, particularly in light of the nation's recent transition to a new political administration. In aggregate, however, the magnitude of government contract spending is expected to continue at the high levels reported in 2007. This will continue to put pressure on both the government acquisition and contracting workforce and the commercial (industry) contracting and acquisition workforce to effectively manage the $450 billion contracts and programs portfolio.

ASSESSMENT OF INDUSTRY CONTRACTING WORKFORCE

WHO ARE THE COMMERCIAL CONTRACTING PERSONNEL?

In fiscal year 2007, an estimated 50,000 industry contracting professionals were considered counterparts to their government process partners. The commercial contracting personnel included two main categories--Sellers and Procurement. Sellers included:

* Managerial contracting personnel (directors, managers of contracting organizations)

* Nonsupervisory contracting managers equivalent to nonsupervisory government contracting officers

* Contracting administrators of all levels

Commercial procurement included:

* Managerial subcontracting personnel (directors, managers of contracting organizations)

* Nonsupervisory subcontracting managers equivalent to nonsupervisory government contracting officers

* Subcontracting administrators of all levels

COMMERCIAL PROCUREMENT PROFESSIONALS

Prime contractors in particular have significant organizations to handle the full life cycle of acquisition for negotiating and managing a plethora of subcontractors. Major prime contractors have multiple tiers of subcontractors. Prime contractors have the full responsibility for the performance of their multiple tiers of subcontractors. To successfully manage the performance of a prime contractor's multiple tiers of subcon tractors, prime contractors have significant subcontract management organizations to perform the full life cycle of subcontract acquisition, including contract negotiation and post-award contract management.

* Managerial subcontracting personnel (directors, managers of contracting organizations)

* Nonsupervisory subcontracting managers equivalent to nonsupervisory government contracting officers

* Subcontracting administrators of all levels

ASSESSMENT OF MOTIVATIONAL FACTORS COMMON TO THE CONTRACTING WORKFORCE

Essential commonalities for motivating government (Department of Defense and civilian agency) and industry (commercial) contracting and acquisition professionals are focused in a number of critical areas:

* Professional development

* Promotions and advancement

* Pay Incentives

* Stability of employment

* Influence in the organization

* Retention

This research discusses specific differences motivating the government contracting workforce versus the commercial contracting workforce in each of these areas.

MOTIVATING GOVERNMENT-INDUSTRY CONTRACTING WORKFORCE--PROFESSIONAL DEVELOPMENT

Contracting is a very dynamic profession. Continuing legislative and statutory initiatives demand that acquisition and contracting professionals retain currency. The transition to a new administration will provide even more significant changes in the acquisition legislative and regulatory framework. Significant new oversight of government contractors and major government systems programs can be expected with the new administration. This stems in part from the significant cost and schedule overruns and performance issues from a number of major Department of Defense (DoD) weapons systems and civilian agency "system of systems" programs and information technology systems programs.

Currency in the contracting field goes beyond certification. It also encompasses day-to-day contracting operations and problem-solving skills needed by leaders and contracting officers. Contracting and acquisition professionals in both government and industry must have the commitment, support, and sponsorship from management--on a consistent basis--for contracting and acquisition professional training. Managers in the contacting profession need to "walk the walk" and not just "talk the talk." Consider: When have you as a contracting professional heard, "We do not have the money in the budget," or "Don't you think this is not a good time for training or professional development given your involvement in this critical, major enterprise services acquisition?" When is there ever a good time for training and professional development? Contracting professionals will always be critical leaders and core team members in fast-track, complex, systems and services acquisitions.

So what motivates contracting professionals from both government and industry in professional development?

** Motivation: Management support for professional development--budget and time

* Paid professional development on a regular basis

* Paid time off for professional development

** Sources for Professional Development

* National Contract Management Association (NCMA) conferences, seminars, and chapter professional development events

* Defense Acquisition University (DAU) courses

* Federal Acquisition Institute (FAI)-provided courses

* Commercial acquisition and contracting course providers

Commercial organizations in the government contracting community may generally allocate an annual amount of up to $2,500 per year for professional development as part of their benefits package.

By government mandate, DoD must provide regular professional development for acquisition personnel that meets Defense Acquisition Workforce Improvement Act (DAWIA) and Federal Acquisition Certification (FAC) requirements. The Federal Acquisition Institute (FAI) facilitates career development and strategic human capital management in support of a federal acquisition workforce including Federal Acquisition Certitication in Contracting (FAC-C) and continued professional development. The payment for this type of professional development comes from the government agency budget and the FAI training fund.

PROMOTIONS AND ADVANCEMENT

Promotions and advancement represent a clear commonality in motivation for both government and commercial contracting and acquisition professionals. Wise entrepreneurs, government, and business executives recognize the value of their human capital. In any organization, employees are the greatest asset. Managers should value their human capital--including contracting, acquisition, and program professionals--and compensate them at a level commensurate with their efforts. In other words, do not be cheap. From the government perspective, offer compensation incentives and--in the case of Base Realignment and Closure-affected employees-moving and transportation incentives to the professional staff, including contracting specialists, team leaders and senior contracting officers, and administrative staff. Ensure the professional and administrative staff feel appreciated and recognize them as valuable members of the organization. From a commercial contracting perspective, offer promotion and compensation incentives to supervisory contracting managers, supervisory subcontracting managers, contracting and subcontracting managers, contracting administrators, and subcontracting administrators of all levels.

SALARY AND COMPENSATION

Salary and compensation for both government and commercial contracting and acquisition professionals are dependent on a number of critical factors:

* Years of experience

* Position Type

* Education

* Certifications

The NCMA Contracts Professional Salary Survey (2007) provides significant insight into salary and compensation motivation for both government and commercial contracting professionals.

* The average salary for contracting professionals is $85,000 per year.

* Thirty percent of contracting professionals are above the average salary and earn into the $100,000+ category.

* Certifications do matter from a compensation and position perspective. Executive and managerial-level contracting professionals are more apt to have Certified Professional Contracts Manager (CPCM) credentials at 23 percent and 16 percent respectively.

Other certifications that matter in terms of position and compensation include DAWIA Level III (15 percent), CPCM (11 percent), DAWIA Level II (9 percent), Certified Federal Contracts Manager (CFCM) (5 percent), DAWIA Level I (5 percent), and Certified Purchasing Manager (CPM) or Accredited Purchasing Practitioner (APP) (4 percent).

MOTIVATIONAL FACTORS ANALYSIS

SALARY AND COMPENSATION SPECIFIC TO GOVERNMENT CONTRACTING PROFESSIONALS

Traditionally, the preponderance of 1102 series contracting professionals is in the government GS personnel system. The pay table showing salary and compensation within the GS pay grades is by incremental (1-year, 2-year, and 3-year) step increases. All GS government employees are also granted an annual, across-the-board percentage increase. Both the amounts of the per-grade step increases and the annual percentage increase (essentially inflation- and cost-of-living-based) are the result of extensive negotiations between the President, the head of the Executive Branch of the Federal Government, and the Legislative Branch of the Congress.

Today, government employees work under a proliferation of personnel systems outside of the traditional GS system. An example is the DoD's National Security Personnel System (NSPS). The NSPS provides for pay bands and pools of money as merit incentives for 1102-series professionals. Although NSPS is a good concept, it needs to be applied appropriately and practically to motivate and retain government contracting acquisition professionals.

GOVERNMENT CONTRACTING PROFESSIONALS' PROMOTION AND ADVANCEMENT

Promotion and advancement avenues specific to government professionals include nonsupervisory GS-14 and GS-15 positions in the 1102 contracting series. The percentage of GS-14 nonsupervisory 1102-series positions is much larger than the percentage of GS-15 nonsupervisory 1102-series positions.

Retaining a reasonable number of GS-14 and GS-15 nonsupervisory contracting operations, policy, and oversight positions provides an avenue for promotion and advancement for government contracting professionals who prefer to remain "technical specialists" in their field or who do not like, or have an interest in, supervising other contracting professionals and administrative personnel.

In the commercial sector, promotions to positions equivalent to the GS-14 and GS-15 levels in government are much more focused on supervisory management positions. An exception to this is the contracting manager, which in some major government defense contractors such as Raytheon, is a high-level, nonsupervisory professional generally equivalent to a nonsupervisory government contracting officer at the GS-14 level.

DoD GOVERNMENT CONTRACTING PROFESSIONALS--SPECIFIC

Of major impact specific to DoD government contracting professionals is the Base Realignment and Closure (BRAC). The BRAC commissions are formed with an eye toward membership from independent high-level experts to provide sound, unbiased recommendations. The commission provides its results in the form of a Report to the President of the United States recommending DoD base closures and realignments. These recommendations potentially impact a significant number of active military and DoD civilian personnel. The current commission delivered its final report to the president on September 8, 2005, listing its recommendations for revamping the U.S. military's infrastructure and force structure.

Of DoD's 33 major closure recommendations, the commission recommended that seven bases be realigned rather than closed, and rejected five recommendations outright. In addition, the commission recommended closing rather than realigning another installation, for a total of 22 major closures. The President chose to approve the BRAC 2005 Commission's report, and sent the report to Congress for legislative review on September 15, 2005. Congress accepted the commission's report in its entirety within the required 45-day period. Subsequently, the recommendations of the BRAC 2005 Commission became law on November 8, 2005. Within this law are a number of timetable requirements for the DoD. The DoD had until September 15, 2007, to begin the process of closing and realigning the installations called for in the BRAC 2005 Commission's report. The process must be completed by September 15, 2011.

POSITIVE IMPACTS

Organizational change due to BRAC may bring positive promotion and advancement opportunities (Dobriansky, 2007). These positive opportunities are:

Promotion opportunities. The BRAC process creates opportunities for those professional contracting and acquisition employees at various levels who do choose to relocate with their agencies or organizations. These opportunities include promotion potential and advancement. Ensure that team leaders and other leadership professionals have real advancement opportunities. The loyalty gained from promoting deserving employees may far outweigh the additional compensation and incentive costs.

Compensation and other monetary awards-retention and motivation. Professional and administrative employees are motivated in a number of ways. Substantive salary increases and other monetary rewards are important motivating factors. Substantive compensation increases and other monetary awards can be powerful motivating factors toward retaining professional and administrative staff. In the case of an organization relocating under BRAC, the use of retention bonuses for DoD acquisition and contracting professionals as an incentive to stay with their current organization, should be authorized and implemented. A combination of a substantive salary increase and substantive monetary awards can be a powerful motivator toward retaining professionals. Again, the loyalty gained may far outweigh the additional compensation and incentive costs.

COMMERCIAL CONTRACTING PROFESSIONALS' PROMOTION AND ADVANCEMENT

In commercial organizations--for example a particularly large government contractor such as Lockheed Martin--an established career progression is in place. Typically, the types of progression are:

* Director of Contracts

* Manager of Contracts

* Contracts Manager

* Contract Administrator III

* Contract Administrator II

* Contract Administrator I

The commercial career progression for nonsupervisory contracting personnel from Contract Administrator I through Contracts Manager essentially involves higher levels of pay, responsibility for more complex contracts and programs, and, in theory, more latitude for decision making. Unlike their government contracting professional counterparts, beyond Contracts Manager only a small percentage of nonsupervisory promotion opportunities exists. Most promotional opportunities in industry within the government contracting community are within the supervisory management ranks. Not every contracting professional has the skills, personality, and fortitude for becoming a successful supervisor of contracting professionals. Many contracting professionals with excellent technical skills have been promoted into the supervisory management ranks, but have been less than stellar as leaders.

COMPENSATION DIFFERENCES--INDUSTRY VS. GOVERNMENT CONTRACTING PROFESSIONALS

A key difference in compensation that motivates commercial contracting professionals but is unavailable to their government counterparts is the bonus for meeting division business goals. The commercial (industry) business goals are normally defined in terms of:

* Meeting and exceeding profitability goals

* Existing business retention

* New business capture

Profitability goals are normally set by the division vice president on a negotiated basis with the division president. Profitability goals are normally expressed in terms of better than 15-20 percent on fixed price program contracts. Profitability goals for cost plus, labor-hour, time and material, and other hybrid contract types will normally be less given the lesser risk exposure on the commercial contractors from using these contract types.

Commercial employees in a government contractor's division will share in a compensation pool for that division if the division's profitability goals are met or exceeded. How much each commercial contracting professional will get from the bonus compensation pool will be dependent upon a number of factors:

* Level of the contracting professional's position

* Level within the grade of the position (i.e., close to the mid-point or close to the top of the pay scale)

* Perceived contribution to exceeding profitability goals

This can be a disincentive for commercial contracting professionals. Government contractors have given larger bonuses to their program office personnel for meeting or achieving profitability goals due to the perception of a larger value-added by the program office versus the "regulatory" or "administrative" function of their contracting professionals.

Generally those commercial contracting professionals are above the mid-point in the salary range for their positions and close to the high end of the salary range for their positions.

STABILITY FOR CONTRACTING PROFESSIONALS: GOVERNMENT VS. COMMERCIAL

Traditionally, the world of the government contracting professional has been the more stable and secure world. Not so today--the environment in the government has changed. With the dramatic government downsizing--50 percent of the 1102 series starting in the 1990s--the supposedly secure government position does not exist anymore. In fact, the government and the commercial sector may be at parity when it comes to stability and security of employment for contracting professionals.

The government contracting industry has in the last 10 years undergone an unprecedented wave of mergers, acquisitions, and consolidations. The top five government contractors--Lockheed Martin Corporation, Northrop Grumman Corporation, Boeing Corporation, Raytheon Corporation, and General Dynamics--receive a combined 50 percent of the discretionary procurement dollars from the federal government, particularly the DoD. Winning large contracts is critical to sustaining the infrastructure, including the contracting departments of these large government contractors. In fact, the government grants no guarantee that the top five government contractors will be able to maintain their contracting professional base. A current example is Boeing Corporation, which is facing worldwide competition from large international government contracting conglomerates, such as London-based BAE Systems. Boeing Corporation's contracting professionals may be facing layoffs, reductions-in-force, and early retirements with Boeing's existing government contract base. However, this may be more of a unique situation given the highly publicized and highly political U.S. Air Force Tanker Acquisition program in 1995. For the most part, the contracting professionals of the other top major government defense contractors may enjoy as much or more security than their government contracting counterparts, with more flexibility and less hierarchical snobbery than can be found in some federal agencies.

INFLUENCE IN THE ORGANIZATION

GOVERNMENT

Contracting organizations in government today have an increasingly significant influence in their respective agencies. Warranted contracting officers have express authority to commit the government to contracts with commercial organizations. Well-publicized cost and schedule overruns, along with performance problems have led to the cancellations of major government programs and contracts, including DoD weapons systems and federal enterprise financial and information technology systems implementation. The Government Accountability Office (GAO) high-risk list currently contains 16 major government acquisition programs from various government agencies, including the Department of Energy and the Department of Defense. This has amplified not only the need for more government acquisition personnel, but has gained federal acquisition personnel more extensive influence within the organization and with the programs they manage.

COMMERCIAL

Large prime contractors such as Lockheed Martin, Northrop Grumman, General Dynamics, and Raytheon will generally have their contracts management groups reporting at a high level to a division vice president in an operational division environment. These companies will also have strong corporate contracting departments aligned to a very high headquarters executive management reporting level. This type of structure provides contracting professionals within these commercial companies with the opportunities to exercise significant business decision making and discretion vis-a-vis their program office counterparts.

This is not an industry-wide state of affairs. In many companies--some of them rather large government contractors--the contracting management function reports as a subordinate organization through legal departments, finance departments, and even commercial product companies that sell to the government through the sales or marketing departments. This type of subordinate reporting structure is more prevalent among smaller companies.

Reporting as a subordinate function through finance or legal does not provide opportunities for contracting professionals to exercise the business discretion and influence with the program office counterparts within their organization. Even more importantly, with this type of subordinate organization structure, commercial contracting professionals have limited authority in dealing with their government counterparts. Commercial contracting professionals within these subordinate organizational structures may not, and in many cases do not, have the authority to negotiate with the government contracting officer. This type of subordinate organizational placement does not motivate commercial contracting professionals.

RETENTION

This is a much talked about issue, with a retirement bow wave predicted for the acquisition workforce in government by 2017. The table shown here displays statistics concerning the 1102-series government contracting specialists (FAI Workforce Report, 2007):

Declining retention rates due to retirement in the near term is an issue. The flagging economy and the huge drop in the stock market where a large percentage of people have seen the value of their retirement assets drop significantly will probably delay a substantive percentage of retirements. However, a potential 54 percent retirement rate for 1102-series government contracting specialists in 2017 is a projected tsunami.

A critical issue is the retention of key institutional and program knowledge as the government contracting workforce retires. A number of solutions, used in combination and individually, present themselves. These solutions can be classified under the heading of knowledge management.

An information technology (IT)-based knowledge management solution can capture specific components of a retiring government contracting officer's body of knowledge on specific, critical, complex, government performance-based services acquisition or weapons systems acquisitions. However, an IT-based knowledge management solution can not apply that knowledge to new government contracting officers who are taking on the new responsibility for those programs. A new transitional approach may be effectively used, whereby the retiring government contracting officers then come back on a part-time basis for a period of up to a year to work with the new government contracting officers on critical, complex, performance-based services or weapons systems acquisitions. This approach, used in conjunction with the IT-based knowledge management system, will enable a smooth transition and application of critical institutional and programmatic (contractual) knowledge transfer from the retiring government contracting officers to the new government contracting officers. This two-pronged solution may effectively mitigate damage to complex, long-term government programs and the contracts supporting those programs in light of the projected retirements of a significant number of 1102-series contracting personnel.

AREAS FOR FURTHER ANALYSIS

Much data and information exists concerning the government acquisition workforce--particularly the 1102-series government contracting specialist. However, in the data collection, research, and analysis for this article, significantly less information was readily available concerning the government's commercial (defense contracting) counterparts. The government defense contracting community represents a large and very significant shadow workforce in the government acquisition arena. Further analysis and research of this shadow workforce as to its size, position makeup, skills, experience, compensation, and motivation would be worthwhile.

CONCLUSIONS

An essential level of commonalities exists, with specific differences, for motivating government (Department of Defense and civilian agency) and industry (commercial) contracting professionals' employment.

The commonalities, with specific differences, are focused in a number of critical areas

* Professional development

* Promotions and advancement

* Pay Incentives

* Stability of employment

* Influence in the organization

* Retention of Personnel

Most government and commercial contracting professionals are motivated by employer-paid regular professional development and advancement. Some do not want supervisory management responsibilities, but rather want to be high-level technical specialists in contracting and acquisition. Compensation and incentives are very critical motivators for both government and commercial contracting personnel. The perception of enhanced stability of employment appears to be more of a motivation for government contracting professionals.

Influence in the organization appears to be more of a motivation for government contracting professionals, while retention of contracting personnel is more of a motivational issue for government contracting personnel and less of a motivational issue with commercial contracting personnel.

The government acquisition workforce, including 1102-series contracting specialists, was decimated in the 1990s through a number of congressional initiatives. According to a 2005 GAO report on government acquisition trends, the acquisition workforce went from 75,000 in 1997 to 68,000 in 2001, while the number of contracting transactions, contracts, and dollar values managed trebled. Accordingly, continued advancement of those initiatives and incentives that increase employee retention and motivate both government and commercial contracting professionals is critical.

REFERENCES

Dobriansky, J. (2007, August). The Department of Defense Base Realignment and Closure: The impact on your organization. Contract Management. Retrieved January 12, 2009, from http://www.ncmahq.org/files/Articles/45F27_CM0807_F05_p42.pdf

Department of Defense Acquisition, Technology and Logistics. (2007). Human capital strategic plan (v 3.0). Washington, DC: Author.

Federal Acquisition Institute. (2007, May). Annual report on the federal acquisition workforce fiscal year 2006. Washington, DC: Author.

Government Accountability Office. (2005). Government acquisition trends 2005. Washington, DC: Author.

Office of Management and Budget (OMB). (2005, April 15). Developing and managing the acquisition workforce. Office of Federal Procurement Policy (OFPP) Policy Letter 05-01. Washington, DC: Authors.

National Contract Management Association (NCMA). (2007). 2007 NCMA salary survey. Ashburn, VA: Author.

Mr. John Dobriansky, CPCM, MBA, NCMA, is a trained acquisition and contracting professional, with supervisory experience in government contracting operations and policy within federal agencies and the Department of Defense. His expertise also encompasses the application of Lean Six Sigma. He is currently the vice president for operations for the National Contract Management Agency (NCMA) Washington, DC, Chapter, and also holds the title of NCMA Fellow. Mr Dobriansky is a Certified Professional Contracts Manager and holds an MBA and MS from The George Washington University and Marymount University, respectively.

(E-mail address: [e-mail])

TABLE. RETENTION STATISTICS--FEDERAL ACQUISITION INSTITUTE
WORKFORCE REPORT 2007

Total Series 1102 Government Contracting Specialists   28,434
DoD                                                    19,119
Civilian Agencies                                       9,315
Average Grade                                           11.68
Average Age                                             46.46
Percent Female                                          60%
Percent Eligible to Retire-FY 2007                      14%
Percent Eligible to Retire-2017                         54%