FAA Administrator's Speech to the National Contract Management Association (December 1995)

In all the FAA reform measures that the Administration or Congress have proposed in the last year, there has been one common thread: procurement reform.

Both ends of Pennsylvania Avenue have been telling us it's time we found ways to get technology into the field more quickly and efficiently.

Just as important, there is every indication that they are willing to give us the tools we need to make that happen.

Today, we have a once-in-a-lifetime opportunity to simplify the acquisition process. We intend to take full advantage of it to give you an FAA that delivers its products and services faster, better and in partnership with our suppliers.

It's true, as some have suggested, that excessively restrictive procurement regulations are not our only problem. But they have been a major problem.

The existing system makes it very difficult for FAA to respond adequately to technological advances. It's also a challenge to keep pace with the changing needs of industry and our own changing needs.

Under the existing system, contractors often expend a lot of time, money and effort in the proposal process -- a process geared to defend against protests.

Still, the system works better than it used to.

When I became the FAA Administrator almost two-and-a-half years ago, my top priority was putting our acquisitions back on schedule and bringing costs under control.

Since then, we have changed many things about our acquisition process -- as much, in fact, as the law allowed.

We recruited Dr. George Donohue, a highly respected aerospace engineer from the RAND corporation, to head our new Office of Research and Acquisitions. Now, FAA R&D and our major acquisitions are integrated in a single, fully accountable office.

The FAA also took advantage of Administration streamlining initiatives. We lead the government in testing simplified, more effective procurement techniques, and we have added a few of our own innovations as well.

For example, we used videotaped oral proposals on a recent $300 million air traffic systems development technical support contract. Both the draft and final RFPs were issued electronically on the Internet.

The result was that we were able to award the contract in less than six months. That compares to the 14 months it took the FAA in the early 1990s to complete action on a contract of this size.

One of the offerors said they spent only half the bid and proposal expense they have budgeted for the program.

Our pilot program under the Federal Acquisition Streamlining Act also was successful. FAA's acquisition of commercial digital voice recorders was free from much of the usual government red tape.

As a consequence, we were able to evaluate products the way a private business would -- and we did not get a single protest.

The results were dramatic. We were able to make the award in seven months, rather than the typical 12 months, and operational systems are being delivered in less than a year.

Here, too, the cost savings to industry were extraordinary.

The winning bidder said they spent $200,000 competing for the contract, only about 10 percent of what they previously expended for a similar government acquisition.

In another major initiative, we have worked closely with industry over the last two years to reduce the cost and time for competitive procurements. FAA officials regularly meet with trade associations that represent many of its major suppliers.

We share information, actively solicit comments and hold open discussions with respective vendors until an RFP is put on the street.

Lately, we also have used input from industry to modify our requirements. This let us reduce costs, buy commercial products and revise business arrangements in upcoming competitions.

All of these efforts represent good, small, first steps.

But we have gone as far as we can under the existing system. To meet the challenges of aviation in the 21st century, we need wholesale, Congressionally mandate changes in the way FAA does procurements.

Only true acquisitions reform will reduce the cost of doing business for ourselves and others.

Only true acquisitions reform will let the FAA operate more like a business, so we can deliver technology to market quickly and at costs users can afford.

And only true acquisition reform will let us move away from a system where almost every major procurement draws protests.

During the recent budget negotiations, just about everyone agreed that FAA needed relief from procurement, personnel and financing restrictions.

The President and Secretary Pena made it a priority from the beginning of the Clinton Administration. Congress developed its own proposals, most notably the bill introduced by Senators McCain, Ford and Hollings, and Representative Bob Clement in the House.

Legislative action on FAA reform is still in progress. Meanwhile, we have obtained some relief in the FY96 Transportation Appropriations bill that the President signed November 16.

The measure directs the FAA to create and implement a new procurement system by April 1 of next year. The Appropriations bill also says that several specific laws no longer apply to the FAA.

I want tell you -- as much as I can right now - how we plan to take advantage of the freedoms we've been granted.

Under the bill, the FAA is exempt from the Competition in Contracting Act. We plan to implement a system that allows a shorter lead time for procurement, better advance planning and fewer protests.

The FAA has been granted relief from the provisions of the Small Business Act. Our new procurement system will have better flexibility to use the contract vehicle that best meets both our needs and those of small business.

At the same time, we remain committed to increasing our opportunities to do business with disadvantaged firms. These companies broaden our horizons and give us new and different ways to serve the aviation community.

Under the FY96 Appropriation, the Brooks Act no longer applies. The General Services Administration will be out of the procurement loop on computers, air traffic and navigation systems.

This is going to help FAA make the best use of our procurement and program resources. The system we're developing will eliminate burdensome, duplicative paperwork, and cut back on the levels of oversight.

We've also been given relief from the Federal Acquisition Regulation. Instead of volumes of highly prescriptive regulations, we plan to have our new system offer concise guidance more closely tailored to our unique needs.

All these changes are beneficial. As we develop our new procurement management policies, we will look to professionals such as yourselves for innovative ideas that will work for all of us.

As I said a moment ago, FAA reform legislation is still making its way through Congress. We believe the McCain-Ford-Hollings bill does the best job of addressing all three of FAA's pressing needs for reform: procurement, personnel and financing.

The final bill could change, of course. But in general, here's what the McCain bill would do.

The bill keeps the FAA within DOT. The FAA Administrator would exercise authority over acquisitions and personnel -- except for appointment of political appointees.

Three months after the bill is enacted, a management advisory council must be established to advise the FAA on management, policy, spending and regulatory matters.

Like the FY96 appropriation, the McCain bill would waive the most critical procurement-related laws.

It also gives the FAA broad authority to develop new, innovative acquisition management systems. Once we have designed those systems and sent the plan to Congress, we would have 30 days to implement them.

Senator McCain's proposal sets up an early warning system on F&E acquisitions. The FAA would have to consider terminating a program if it has a 10 percent cost or schedule growth, or fails to meet 90 percent of goals.

These provisions would force us to plan smarter. They would make sure contractors bid to perform, not bid just to win.

Lastly, the McCain bill provides comprehensive financing reform that the FAA needs to plan and carry out long-term strategies and programs.

We would be assured of financing that will let us make critical improvement essential to the safety and efficiency of US aviation.

We all agree the system needs improvement. Whatever the final shape of acquisitions reform, I want to offer to you a couple of assurances.

The FAA will not develop policies in a vacuum. We will solicit your ideas and fully consider them. That's the only way the system will work to everyone's advantage.

The FAA is working a lot smarter today than 2 1/2 years ago. The new authority we would have in the '96 appropriation and the McCain bill will let us focus on meeting users' needs, not on the lengthy procurement process itself.

In the next few months, we can together create an acquisition model for the rest of government.

With your help and input, the FAA will become even more responsive, highly accountable and extremely effective.

That is what we must be...that is what we must do ... to continue as the world's leader in aviation safety and efficiency .

Thank you.