> Litigating contractor claims on behalf of the IV. BROADENING THE MANAGEMENT CHOICE Description of Alternative Mechanisms The three mechanisms described in this section are intended to represent the broadest possible range of options for introducing alternatives to ANC for construction and contract management. At one end of the range, ANC would be the government entity responsible for performing inherently governmental construction and contract management functions and for contracting out the functions that are not inherently governmental. At the other end, the functions currently provided by the Baltimore District would stay within the Corps of Engineers, but ANC could choose among multiple Corps districts for performance of the desired work. Alternative 1: Providing Direct Access ANC could contract with a private architect/engineer or construction management firm to perform selected construction and contract management services. For example, the private contractor could provide planning, estimating, and other engineering or technical support services. A list of services which the Government could contract out to private sector firms is included in Appendix A. A private contractor could not be permitted to perform inherently Governmental functions (also listed in Appendix A), such as selecting Architect/Engineers, negotiating and awarding architect/engineer contracts on behalf of the Government, soliciting and evaluating construction bids, or awarding construction contracts. It is Executive Branch policy to ensure that Government action is taken as a result of informed, independent judgments made by Government officials who are ultimately accountable to the President. In pursuit of this objective, inherently Governmental functions have been identified and the use of service contracts for their performance is prohibited. This is intended to provide the appropriate degree of management oversight and to ensure that the final agency actions reflect the independent conclusions of agency officials and not those of contractors who may have interests that are not in concert with the public interest. Before ANC could contract with the private sector for any services that are not inherently governmental, ANC would have to develop the capability to perform these functions in-house or otherwise rely on another Government agency with contracting authority and oversight capabilities. Alternative 2: Improving Access to Under this option, ANC could give oversight responsibilities for design and construction contracts to⚫ Federal public agencies other than the Corps of Engineers. Under existing law, each military construction project-- this includes projects at Arlington National Cemetery-- entered into by the United States must be carried out under the direction and supervision of the Secretary of the Army (acting through the Chief of Engineers) or the Secretary of the Navy (acting through the Commander of the Naval Facilities Engineering Command (NAVFAC)), or such other government agency as the Secretary of Defense approves. 10 U.S.C. § 2851. To use another Federal agency, other than the Corps or NAVFAC, ANC would have to receive a waiver from the Secretary of Defense to use an agency or agencies it perceives has some special expertise in construction management, with the project involved, or with cemetery type projects in general. See If such a waiver were granted, ANC would negotiate with the approved agency to carry out intermediate steps presently performed by the Army Corps of Engineers. That agency could further contract out some of those functions to the private sector. As with ANC's current arrangement with the Baltimore District, these services would also be performed on a reimbursable basis. Cost accountability, management expectations, and quality control would be specifically addressed in an MOU. The selected agency would have to follow the same set of contracting and acquisition rules-- those specified in the Federal Acquisition Regulations (FAR)-- as the Baltimore District. Alternative 3: Introduction of Choice Within the Army Corps of Engineers Under this option, the Corps of Engineers, the Office of the Assistant Secretary of the Army (Civil Works), and ANC would work together to expand ANC's range of choice within the Corps. ANC would have an opportunity to choose other Corps districts, and not rely solely on the Baltimore District, to perform project and contract management oversight responsibilities for design and construction. It is possible, for example, that ANC could tap into the capabilities of other Corps districts with special expertise in historic building and structure preservation and conservation or other special abilities associated with a given project. ANC would identify selected projects and negotiate with other districts to carry out the functions presently conducted by the Baltimore District. After negotiation, an MOU would be signed regarding cost accountability, management expectations, and quality control. This approach is currently available to the Air Force for up to 15% of the Air Force's annual program, and is documented in Corps policy guidance entitled, "Customer Choice (CC) and Customer Voice (CV) Air Force Military Construction (MILCON). Evaluation: Choosing Among Alternatives The suggested alternatives provided in this report should be evaluated in terms of their ability to eliminate, or at least reduce, the need to reprogram amounts in the ANC appropriations. Regardless of which alternative is chosen, there are a number of considerations that must be taken into account before any of the alternatives may succeed. An essential consideration is that management take the position that cost increases above original estimates are not to be viewed as the norm and therefore should not be routinely accepted. Accordingly, management initiatives must be pursued to ensure that expenditures for projects stay within the appropriated amounts. As conditions change and more is known about a project, management must not yield to the "inevitability" of increased cost estimates. Another consideration that must be taken into account is the implementation process, that is, the length of time between the original concept or recognition of a need and the awarding of a construction contract. Clearly, one management objective should be to establish procedures which reduce, to an absolute minimum, the time required for project implementation. A complete evaluation must also include an assessment of the changes that should be made to ANC's current budget process to ensure maximum effectiveness. Under the current process, the original amounts requested in some cases were based on limited information and therefore lacked a sufficiently detailed scope of work. Regardless of which mechanism is selected for construction and contract management, the problems arising from an inadequately defined project scope may still exist. For example, construction at ANC requires consultation with numerous regulatory agencies, including the National Capital Planning Commission, the Commission of Fine Arts, the Virginia State Historic Preservation Office, the District of Columbia Historic Preservation Office, and the Advisory Council for Historic Preservation. Whenever possible, the concerns of these agencies should be known in advance of a budget request, as their input may affect design criteria and cost. In evaluating the alternatives and choosing among them, it is important to consider the extent to which private sector attributes can be carried over to the government sector; the fact that there are certain inherently governmental functions that must remain within the government; and the long run benefits versus the short run benefits. Although there are clear differences between construction and contract management requirements between the private sector and the Federal government, there are important attributes of private sector business practices which can be helpful in any broad evaluation of current government practices. These include, first, the existence of a readily available, well-defined performance measure-profits-- which provides management with a powerful tool to direct needed change; second, more easily assignable accountability in the private sector because employee performance can, in many cases, be directly linked to financial performance; and, third, competition among firms which gives customers a broad range of choices and imposes a market discipline on firms which, in turn, makes cost and schedule control imperative. All of these attributes, performance measurement, accountability, and competition, are important considerations in evaluating the alternative mechanisms presented in this section. While the mechanisms differ in the choice of government agencies involved and in the extent that the private sector is involved, choosing any of the three would nonetheless introduce greater choice, which in itself would greater discipline and accountability on those seeking and obtaining the right to perform management functions for ANC. Additionally, all of the alternatives must be structured to accommodate the need for the Federal Government to retain certain functions. There must be some Federal agency or organization with the appropriate personnel who can provide these services. In fact, use of the private sector to out to the private sector creates additional Federal oversight responsibilities. The outcome of such a contracting out could be the creation of an additional layer of management in comparison to the present system. Finally, the long run benefits that might be derived from a new approach must also be weighed against the short run (transitional) costs. If, for example, ANC is to have direct access to private management firms, it must be given contract authority and hire the necessary contract personnel. While it is clear that all of these factors must be considered, making it difficult to judge the relative merits of the alternatives described above, it is equally clear that action is necessary to avoid repeating past mistakes. The actions described in Sections V and VI represent an incremental approach. The Army's goal has been to make choices based on what can realistically be accomplished in a short time period, and to use the outcomes from these actions to evaluate progress in solving the cost and schedule problems that are of primary concern to both the Committee and the Army. Basis of the FY 1995 Experiment All of the alternatives described in this section would broaden the range of choice available to the Superintendent of ANC. For Fiscal Year 1995, we have chosen to pursue an experiment based on alternative three. The decision to undertake a construction and contract management experiment focused on intra-corps competition--was based upon three main considerations, as follows: ANC does not currently have the construction management or contracting capabilities to manage the projects available for the experiment; An experiment involving Engineer Districts could be directed by the Office of the Assistant Secretary of the Army (Civil Works) without approval of any other Department of Defense element; and Other Corps of Engineers customers, specifically the U. S. Air Force, have expressed support for a similar program in which they are offered intraCorps choice. |