Neal Fox | Contracting in perspective: Seaport'Can it stay afloat?
The Navy has embraced its Seaport contracting vehicle on a scale seldom seen in single-agency multiple-award contracting. It was among the early multiyear, multibillion-dollar contract vehicles that now seems to be all the rage since the GSA missteps of the past couple years. As the Defense Department began looking internally to satisfy their contracting needs, Seaport grew by leaps and bounds to meet the increased demand from Navy customers abandoning the GSA ship. There is something to be said for being in the right place at the right time. The fact that DOD is leading the current departure from GSA is especially troublesome to the concept of centralized procurement, given that DOD has accounted for more than half of GSA business over the years.
Seaport is an enormous single-agency contract vehicle, with 675 vendors and an online Web site that boasts cradle-to-grave services management. From the beginning, the Navy took some unique approaches with this vehicle that made it useful to customers. They set up a zone approach that has helped small businesses compete in local areas, while enabling large companies to compete worldwide. This has helped customers achieve small-business goals by using local vendors with proven track records.
Another unique approach was to ban time-and-materials task orders, an unusual move given that Seaport focuses on higher-risk services that might not easily fit into fixed-price task orders, and most small businesses are not certified to accept cost-reimbursable contracts. The program was also an early adopter of online ordering of professional services, showing before many others that online ordering was not limited to products.
The history of Seaport began with innovation and agility in meeting customer needs. But one needs to ask, can that continue and are they going in the right direction?
Time will tell, but the answer likely lies in the history of attempts to continually expand what works well until it loses what made it successful in the first place. Such is the nature of things, to believe that if something works on a small scale, then expansion can only bring greater success. Seaport began well, but has since plunged headlong into the 'more is better' sea lane that has doomed its predecessors in other agencies.
Consider the nature of what makes a large governmentwide or agencywide contract work well. A primary tenet is that a large contract vehicle must differentiate to be successful. In its early days, Seaport did exactly that. They took 21 high-quality vendors, put the Seaport stamp of approval on them, and covered only as much territory as they could handle using a small and highly dedicated staff. They kept their ordering procedures simple, and provided an excellent online capability.
Now Seaport has expanded to 675 vendors of varying levels of quality, and the Navy will be unable to resist further expansion. In fact, in February 2006 another open season began for adding new vendors, which will likely result in adding several hundred additional vendors this year. At some point customers must start asking themselves why they should not use the GSA Schedules, where there is true regulatory relief from burdensome contracting procedures, an important service that Seaport cannot provide. Add the Fair Opportunity requirement that all vendors within a designated category have the right to bid on each requirement, and the vehicle becomes burdened and sluggish. Seaport has already reached this high-water mark.
Seaport now tries to cover a broad gamut of services on a global scale, and has grown so large that it has attained a level where it has come onto the radar screen of regulators, meaning that additional oversight is inevitable. That oversight is the dubious reward for success and growth. As long as they were content to remain in their niche and stay small, they did not attract attention from regulators.
But things are changing, as Seaport begins to walk and quack like a GWAC, they are just now entering a league where size begets scrutiny, and scrutiny begets more scrutiny. That is another law we can discuss sometime.
Part of that additional oversight will focus on the scope of the task orders, to ensure they do not venture beyond professional services into full-blown IT services orders. Seaport focuses on engineering services; and it has only a very small amount of IT scope, since anything within the scope of the NMCI contract is prohibited on Seaport. Navy customers defecting from GSA require many IT services and want IT services included in their task orders. Since most IT services are out of scope for Seaport, this is a shipwreck waiting to happen. Recall that GSA's foibles began with the scope issue, and Seaport will encounter this rocky shore unless they take swift action. The dilemma is that taking action admits a problem, and also requires ordering restrictions that customers will not appreciate.
Now that Seaport has taken the 'y'all come' approach to adding vendors, there is no way to tell prospective new vendors they cannot play. More and more vendors will be added, which is already sowing the seeds of decline at current levels. The best vendors are beginning to see the vehicle as too diluted, and will cease to bring new business to it, since the probability of winning business will grow smaller and smaller. Furthermore, the Seaport program office has lost the ability to monitor so many vendors, which was one of the important factors that made it different when it was small. Customers look at the sea of vendors and wonder whether they will be able to select a good one from the teeming masses. All in all, vendor overpopulation kills any contract vehicle.
One of the most grandiose goals of Seaport, to help the Navy buy services like a corporation, has not panned out. Indeed, most corporations have turned to outsourcing their procurement, which is probably not what the Navy meant. And Navy customers, already starting to dislike the more complicated ordering procedures, will begin to question what differentiates Seaport from GSA Schedules, especially since the Navy lacks the special authorities given to GSA to implement governmentwide contracts. Oddly, this will likely lead to a Navy return to GSA over time as the pendulum swings back to whence it came.
Seaport has already passed the point of no return, having released the vendor overpopulation genie from the bottle. It may continue to exist for some time, but has already reached the high-water mark of its success, and will eventually go the way of its predecessors that succumbed to the siren song of continual expansion, as it loses its way among the rocks and shoals of nondifferentiation.
Neal Fox is the former assistant commissioner for commercial acquisition at GSA, and is now principal of Neal Fox Consulting (nealfoxconsulting.com). He is a graduate of the Naval War College. He can be reached at [email protected]
Neil Fox is the former assistant commissioner for commercial acquisition at GSA's Federal Supply Service, and is now principal at Neal Fox Consulting.