Addressing the Shortage of Contract Specialists: Too Little, Too Late for Success?

1. Addressing the Shortage of Contract Specialists:Too Little, Too Late for Success? Andrew C. Obermeyer, Fellow, CPCM Presented at the Cape Canaveral Chapter Winter Education Conference March 3, 2011

2. What is TRICARE A health care plan using military health care as the main delivery system Augmented by a civilian network of providers and facilities Serving our uniformed services, activated National Guard and Reserve, retired military, and their families worldwide TMA Overview http://www.tricare.mil/tma/ams/default.aspx

3. TMA Overview, Cont. • Mission: • To provide optimal health services in support of our nation’s military mission — anytime, anywhere • Vision: • The provider of premier care for our warriors and their families • An integrated team ready to go in harm’s way to meet our nation’s challenges at home or abroad • A leader in health education, training, research, and technology • A bridge to peace through humanitarian support • A nationally recognized leader in prevention and health promotion http://www.tricare.mil/tma/ams/default.aspx

4. TMA Overview, Cont. • 9.6 million beneficiaries • 3.7 million TRICARE Prime enrollees Direct care system • 1.6 million TRICARE Prime enrollees Contractor networks • Remainder • • TRICARE Standard/Extra • • TRICARE for Life • • TRICARE Reserve Select • Military Treatment Facilities (MTFs) • 59 Hospitals & Medical Centers • 364 Health Clinics • Over 380,000 network providers • Over 60,000 retail pharmacies http://www.tricare.mil/tma/ams/default.aspx

5. Behavioral HealthOutpatient VisitsPer Year TMA Overview, Cont. “A week in the life of TRICARE” • 2.5 million prescriptions • 923,000 direct care • 1.39 million retail pharmacies • 202,000 home delivery • 179,300 behavioral health outpatient services • 46,100 direct care • 133,200 purchased care • 21,800 inpatient admissions • 5,000 direct care • 16,800 purchased care • 1.6 million outpatient visits • 737,000 direct care • 876,400 purchased care • 2,300 births • 1,000 direct care • 1,300 purchased care • 3.5 million claims processed • 12.6 million electronic health record messages http://www.tricare.mil/tma/ams/default.aspx

6. Experience of Care Population Health Readiness Per Capita Cost The Goal - Quadruple Aim • Readiness • Pre- and Post-deployment • Family Health • Behavioral Health • Professional Competency/Currency • Quality OutcomesHealthy service members, families, and retirees • A Positive Patient ExperiencePatient and Family centered Care, Access, Satisfaction • CostResponsibly Managed http://www.tricare.mil/tma/ams/default.aspx

7. Defense Health Program Understanding Cost Drivers • Private Sector Care contracts breakdown: • Domestic Health Care/Claims $10.8B • Overseas $0.3B • Pharmacy $2.0B • Dental $0.1B • Other (including Quality and $1.4BFraud, waste & abuse) • Cost Drivers • New users • Utilization • Expanded benefit • Medical inflation • Special populations • Pharmacy FY10 Defense Health Program Budget (Operations and Maintenance) $5.8B 21% $14.6B 54% $6.9B 25% Data Source: Defense Health Program FY10 Appropriation. Excludes all costs associated with the Medicare Eligible Retiree Health Care Fund – e.g., $3.8B TRICARE Senior Pharmacy http://www.tricare.mil/tma/ams/default.aspx

8. AM&S Organization Acting Chief Functional Officer Mr. Michael Fischetti Office of Small Business Programs Chief of Staff Acquisition Efficiencies Manager Acquisition Information Systems Manager Property Manager Acquisition Career Management Contract Operations Division -Aurora Acquisition Policy and Compliance Division/Competition Advocate Contract Operations Division – Falls Church Acquisition Oversight and Management/Deputy CAE Acquisition Management Office A Branch Acquisition Management Office B Branch Contract Policy and Pricing Branch Information Systems Branch HQ Support Branch Staff in Aurora, CO

9. Workload Statistics • Health Care Services Contracts • 1535 contractual actions (FY10) • $10.9 billion (FY10) • Major contractors • Healthnet, Inc. • Humana, Inc. • AEA International Holding • Triwest Healthcare Alliance • Express Scripts, Inc. • Wisconsin Physician Services • Meridian Resource • Delta Dental

10. Workload Statistics • IT and Non-Health Care Services Contracts • 1,655 contractual actions (FY10) • $2.3 billion (FY10) • Major contractors • SAIC • Deloitte, LLP • Planned Systems International • Axiom Resource Management • Irving Burton Associates • Veritas Capital • Northrop Grumman

11. A decade to remember… • 9/11 • Wars in Afghanistan and Iraq • Department of Homeland Security • Hurricane Katrina • Financial Meltdown of 2008 • American Recovery and Reinvestment Act • Southern Border crisis

12. September 11, 2001 • 26,608 Federal Contract Specialist • DoD 18,565 • Civilian Agencies 8,043 • 1991 – 31,436 Federal Contract Specialist • 22, 722 at DoD • 8,664 at Civilian Agencies • Appropriate or not? It’s what we had

13. DoD Staffing and Workload • 2001 DoD Workload • 115,679 actions > $100,000 • Total obligations of $144.6B • Minimal post 9/11 impact in last 20 days of FY • 2009 DoD Workload • 211,345 actions > $100,000 • Total obligations of $359.9B • Specialist increase – 1221 to 19,786

14. Civilian Agencies Staffing and Workload • EOY 2008 staffing at 9,921 • An increase of 1,878 or 23% • 56% Increase in spending • From $80B to $138B • FY2000 to FY2008 • Program Impacts • Homeland Security • TSA (originally a poorly managed contract issue??) • Hurricane Katrina

15. Are There Problems? “As we approach the end of the first decade after the turn of the century, concerns about defense acquisition outcomes – cost escalation, reports of improper payments to contractors, appeals filed over source-selection outcomes, schedule delays – pervade the popular press as well as DoD audits and internal reports.” -- “Shining a Spotlight on the Defense Acquisition Workforce – Again,” 2009 RAND National Defense Research Institute Occasional Paper

16. Insufficient Staffing? “This lack of capacity requires the workforce to make trade-offs during the acquisition life cycle that may reduce the chance of successful outcomes” -- Lesley Field, Deputy Administrator, OFPP

17. Three factors • As growth in workload outstrips growth in staffing, quality should be expected to fall • As stress levels increase, retirement eligible workers are more inclined to retire • Training newly hired workers places additional strains on the existing workforce -- Don’t believe me? -- 2,600 new hires in FY2006 resulted in net gain of 350

18. Money Talks • GS5/7 starting salaries • $31,315 to $38,790 • Median salary for new 2010 Bachelor of Business Administration graduates • $45,000 --Do we really want the bottom half of the graduating class?

19. How much is enough? • 2001 in DoD • 18,565 CSs, 115,679 actions greater than $100k • 334 available staff hours per action • 2008 in DoD • 19,786 CSs, 211.345 actions greater than $100k • 195 available staff hours per action --Anyone really believe we’ve achieved a sustained seven percent annual productivity improvement?

20. The Retirement Drain • 2008 – 1,283 GS7 Contract Specialist • If the total number were promoted and replaced each year for the next eight years, it would only generate 10,264 new CSs • That number is 5,000 short of the number of CSs eligibles for retirement in 2018 -- “Adding, say, 10,000 each with one year’s experience is different than adding 500 people with 20 years’ experience” Norm Augustine

21. Solutions • Gansler Commission • Five percent increase at civilian agencies • Secretary Gates April 6, 2009 announced plans to add 9,000 acquisition billets, and insource 11,000 • All are “acquisition workforce” and all are pre-election, pre-”Tea Party” commitments -- “Do more without more” Ashton Carter, April, 2011

22. What can you do? • Press leadership on commitments to hiring and developing interns • Talk up the career field • Talk to high schools and colleges • Engage in your own productivity growth • Participate in NCMA “We do the nation’s business, everyday!”