NATIONAL
ACADEMY OF
PUBLIC ADMINISTRATION
for
the United States Congress and the Departments of Agriculture and the Interior
CONTAINING WILDLAND FIRE
COSTS:
IMPROVING EQUIPMENT AND
SERVICES ACQUISITION
PANEL
Frank Fairbanks, Chair
Allan V. Burman
Gail Christopher
Patrick J. Kelly
Lyle Laverty
Keith Mulrooney
Paul Posner
Charles Wise
Carl W. Stenberg, III, Chair of the Board
Howard Messner, President
Cora Prifold Beebe, Vice Chair
Frank A. Fairbanks, Secretary
Sylvester Murray, Treasurer
Project Staff
J. William Gadsby, Director, Management Studies
Bruce
D. McDowell, Project Director
Charles V. Hulick, Senior Consultant
W. Patrick Nobles, Senior Consultant
Martha
S. Ditmeyer, Project Associate
The views expressed in this
document are those of the Panel.
They do not necessarily
reflect the views of the Academy as an institution.
National Academy of Public Administration
1100 New York Avenue, N.W.
Suite 1090 East
Washington, DC 20005
First published September 2003.
Printed in the United States of America
ISBN 1-57744-099-4
Academy Project Number: 1951-004
For many years, firefighting units of the five main federal land management agencies have pooled their needs for and jointly purchased the equipment, supplies, and services required to suppress major wildfires. These agencies are the Agriculture Department’s Forest Service and the Interior Department’s Bureau of Indian Affairs, Bureau of Land Management, Fish and Wildlife Service, and National Park Service. Many of these resources are stored at central and regional locations, dispatched to fires when they are needed, and then returned to storage sites afterward for refurbishment and future use.
This “cache” system has served the nation well in the past, but it needs to be refined and supplemented by other methods of supply to serve current needs more efficiently. One of the biggest recent changes is that increasing amounts of resources used to fight fires are contracted out or leased. In addition, resources for other newer aspects of the wildland fire program are being added to contract acquisition schedules. The expanded National Fire Plan program no longer consists of just suppression activities. Prescribed fire, forest thinning, and burned land rehabilitation/restoration are becoming bigger parts of the overall enterprise, and much of this work needs special resources. New technologies also increase the scope of acquisitions needed.
Increasingly, the acquisition program must answer whether the resources needed are most advantageously supplied in-house or through outsourcing, and what types of contract provisions would be most cost effective. These questions must be answered through appropriate method-of-supply analyses. Although some other federal agencies have used such analyses to save significant amounts of money, the land management agencies have seldom followed that lead.
In this report, the Academy’s Wildfire Panel recommends that the federal land management agencies use method-of-supply analyses to help them make better acquisition decisions in the future. The Panel estimates that the agencies could save on the order of ten percent or more using this practice.
The Academy is pleased to present this
report to the Congress, the Forest Service, and the Department of the
Interior. It thanks the federal
agencies for their funding of this study and their cooperation in preparing
it. The Academy Panel directing this
study and the project staff are to be commended for their outstanding job in
developing the cost-saving strategies recommended. We believe these recommendations are practical, effective, and
consistent with the President’s Management Agenda.
Howard M. Messner
President
CHAPTER 2: SYSTEMATIC ANALYSIS AND
CHAPTER 3: CURRENT STRUCTURES AND STRATEGIES....................................... 17
CHAPTER 4: DEMONSTRATION OF THE
APPENDICES
TABLES
Wildland fire-related acquisition management programs of the five federal land management agencies[1] are big business. For example, Forest Service wildfire preparedness and suppression contracting costs reached almost $800 million in FY 2002. Even at a lower level, these costs significantly affect other land management programs and their funding. Thus, searching for and taking advantage of methods to achieve cost containment of escalating wildland fire acquisition programs take on added value. That is the basic premise of this Academy report.
Contracting plays a critical and increasingly important role in both wildfire suppression and mitigation. This report describes opportunities to enhance and further professionalize the agencies’ approach to fire management acquisition and thereby achieve cost savings.
A small investment by the Congress should enable the departments of Agriculture and the Interior to establish an analytical function in the wildland fire acquisition management with the objective of identifying and implementing cost-containment opportunities. The Academy estimates that this investment would be approximately one million dollars, and the potential savings could be on the order of 10 percent of each contract’s annual business volume. Since start-up time will be required to establish analysis staffs and begin the analytical process, it is neither reasonable nor practical to expect significant savings the first year. However, as projects are developed and implemented, representing a range of savings based on each contract’s annual business volume, an overall goal of 10 per cent is reasonable over the first five years.
The goal of achieving substantial dollar savings is laudable. However, there is a potential concern. Once savings targets are established, attention and pressure mount to achieve them, and in changing established methods of supply, there may be pressure to sacrifice non-price features such as safety, timeliness, boosting local economies, and performance to obtain a cheaper price. Care must be taken to emphasize that, while dollar savings are desirable, they should not be achieved at the cost of other important factors.
Current contracting approaches meet the operational needs of the wildland fire program, but they have not been analyzed to determine if less costly methods are available. Why? Not from a lack of desire or inefficiency, but from a lack of capacity.
Higher workloads facing smaller acquisition management staffs complicate the situation. In recent years, government restructuring efforts and reduced budgets have significantly limited the number of procurement personnel in the land management agencies. For example, Interior’s acquisition staff declined from 1,360 in FY 1993 to 1,082 in FY 2002, or approximately 20 percent. Forest Service acquisition personnel declined from 894 in 1992 to 611 in April 2003, almost a 32 percent decrease. The remaining staff focuses on meeting operational requirements for issuing and administering contracts, leaving little or no time for analysis of acquisition methods that could yield both short-term and long-term savings. Chapter 1 of this report lays the groundwork for the Academy Panel’s view that a small investment by the Congress would enable the departments to establish an analytical capacity to conduct method of supply studies leading to contract cost savings. Chapter 1 also points out the conflicting pressures confronting acquisition management staff. Chapters 2 and 3 provide additional information about potential benefits of method of supply analysis.
In Chapter 2, the relationship between systematic analysis and acquisition management is described. Federal acquisition responsibilities have broadened to consider overall agency needs, identify alternative ways to meet those needs, and devise the best approach to obtain needed goods and services. Method of supply analysis provides one of the most useful tools for helping to decide what should be contracted for and what kind of contracts should be used to achieve the most advantageous combination of program performance and cost containment.
Several federal agencies successfully use such analysis to help them contain costs. For example, the General Services Administration applied a total cost model to identify potential cost savings available through differing methods of supply. It found that a switch from local purchase one-at-a-time buying to a multiple award schedule where similar items are grouped together could yield a cost saving of up to 25 percent. A Department of Veterans Affairs staff study demonstrated that using prime vendors and national contracts, rather than an internal depot system and open multiple awards contracts, reduced inventory costs by $90 million. A Department of Agriculture Forest Service study of helicopter needs and costs identified potential for a 10 percent savings in helicopter costs for wildland fire suppression. The Panel concludes in Chapter 2 that the broad array of existing wildland fire contracts (national, regional, and local), the national cache system, and other activities offer abundant opportunities for method of supply studies that could more than pay for themselves.
Chapter 3 summarizes how the land management agencies’ acquisition management programs are organized, how their cultures and missions affect these operations, and how the lack of a capacity for method of supply analysis limits their potentials for cost savings. Each agency has a strong culture of independence, and each delegates program management authority to the regional or field units. This backdrop makes it difficult to achieve the interagency cooperation needed to conduct method of supply analyses that could have greater payoffs when individual actions and common items are consolidated. However, some experiences of the agencies show that they can achieve benefits from cooperation. Examples identified in this study include a Bureau of Land Management (BLM) acquisition redesign effort, the “Service First” activities of the Forest Service and BLM, National Fire Plan collaboration in the Pacific Northwest, and the joint approach to aircraft safety and acquisition of the DOI Office of Aircraft Services.
The BLM acquisition redesign effort found that savings of up to 50 percent could be achieved by purchasing such items as narrow band radios (that many land units were buying on their own) through centrally negotiated indefinite quantity/indefinite delivery contracts. ID/IQ contracts essentially pre-qualify vendors to supply specific products or services to authorized buyers who need only execute a simple purchase order within the terms of the overall contract. The prospects of large aggregate purchases, plus the streamlined process, hold costs down.
The National Fire Plan collaboration in the Pacific Northwest (covered in more detail in Chapter Four) shows the time savings available by using common statements of work across agencies for large indefinite quantity/indefinite delivery contracts, as well as opportunities for opening the contracts to state and local agencies and using state resources under cooperative agreements. Suggested criteria for using cooperative agreements are also included in Chapter Four.
The Panel commends these cost-effective efforts, and recommends that a national analysis group evaluate them to determine their application in other situations. This group would provide new analytical skills not usually possessed by acquisition personnel.
Chapter 4 summarizes eight potential methods of supply studies identified in the early phases of the research for this report, and focuses on the joint efforts of the land management agencies to contract for implementing new activities introduced by the National Fire Plan in the Pacific Northwest. This chapter is based on research that included:
· interviews with more than 50 people in 7 states and the District of Columbia who represent the federal land management agencies and their wildland fire programs and the acquisition management functions of each; with fuels mitigation vendors; state natural resources officials; and other federal agencies
· a questionnaire sent to approximately 50 fuels reduction vendors in the Pacific Northwest
· review of government reports, policies, manuals, and other relevant documents
· review of relevant literature on acquisition topics
The Panel’s review of this new National Fire Plan contracting experience confirmed the value of the collective approach to acquisition.
The Panel concluded that while much positive activity is occurring in the agencies’ acquisition programs, room remains for improvement. Specifically, the Panel found:
· Cost savings. Use of method of supply analytical techniques by others has produced savings in the acquisition process.
· Method of supply analysis strategy. The current acquisition management program for the wildland fire community lacks an overall strategy that assesses when, how or whether to move items from one method of supply to another.
· Method of supply capacity. A permanent analytical staff committed to supporting acquisition management is essential to saving money, promoting collaboration, and improving the overall acquisition process.
· Method of supply study candidates. Eight identified demonstration projects should provide the basis for further analysis to achieve significant cost savings.
· Interagency partnership. The “Service First” integration of Forest Service and BLM staffs in the Pacific Northwest greatly facilitates joint acquisition activities.
· Costs and benefits of the shared indefinite delivery/indefinite quantity (ID/IQ) contract approach. While there are some concerns about the shared ID/IQ approach, users agree it provides a less expensive and faster way to issue a task order compared to going through the entire contract process for every job.
· ID/IQ approach for new or small suppliers. While the ID/IQ approach offers users the benefits of lower process costs and gives suppliers a wider market potential, it does not meet the needs of the new and developing supplier.
To improve the overall effectiveness of the wildland fire-related acquisition programs,
the Panel makes the following recommendations:
To the Congress:
·
Congress should appropriate sufficient additional
funds to establish and maintain a continuing capability to conduct acquisition
analysis supporting wildland fire-related contracting.
To the Wildland Fire Leadership Council:
· Provide the overall interagency policy, management, and direction for improving the collective acquisition program. Work with Congress, OMB, and the agencies to provide the resources required to achieve the goals contained in this report.
· Ensure that, once established, the Forest Service and DOI method-of-supply analysis staffs meet jointly to (1) agree on general program management procedures, (2) define the composition and skills of review teams, (3) establish commodity or service area leads, and (4) refine evaluation criteria.
· Direct the agencies to pursue the method of supply study opportunities identified in this report, consistent with available resources.
·
Direct the analysis staffs to adopt a minimum
five-year savings goal of 10 percent based on the annual business volume of
each contract. Consider the lessons learned from the cooperative approach
successes in the Pacific Northwest contracting to implement new NFP activities,
and determine their viability in other parts of the country.
·
Require all regions and units of the land management
agencies to improve their internet/web sites for NFP contract actions.
The basic themes of this report are:
· Method of supply analysis supports a sound acquisition management program, and improved cost containment.
· The capacity to conduct method of supply studies is currently lacking in the land management agencies.
· The partnership experience of agencies in the Pacific Northwest is a model for other areas to consider.
· Competing pressures may limit the savings otherwise available through contracting decisions.
The Panel understands that the land management agencies face a multitude of competing priorities, and therefore believes that the Wildland Fire Leadership Council has a critical role to play in helping to ensure that the overall acquisition management strategy gives continuing attention to cost containment and implementation of the Panel’s recommendations.
The federal land management agencies purchase everything from aircraft to zippers and contract