The Cohen Amendment Impacts Government IT Acquisitions
Information Technology Management Reform Act - 1996
by Elaine Fedchak, DACS Analyst

New rules concerning Government acquisitions of Information Technology (IT) took effect on 8 August 1996. The new legislation is the Information Technology Management Reform Act (ITMRA), which is also known as the Cohen Act, or Cohen Amendment, after its sponsor, former Maine Senator and now Secretary of Defense, William Cohen. The amendment is included as Division E of the National Defense Authorization Act for Fiscal Year 1996. Despite being part of a defense authorization bill, the amend-ment applies to all federal executive agencies, both military and civil.

Provisions of the Amendment

The first provision of the amendment repeals the Brooks Act, which governed acquisition of Information Technology by federal executive agencies since 1965.

Other major provisions of the Cohen Act specify:

Decentralization.

Procurement authority has been moved from the General Services Agency (GSA) to individual agencies, with oversight responsibility transferred to the Office of Management of the Budget (OMB). Agencies are to pursue their own Information Technology purchases, rather than submitting requests to GSA or obtaining a Delegation of Procurement Authority (DPA) from GSA for particular acquisitions. Under the Brooks Act, GSA coordinated all purchase, lease and maintenance contracts for IT. Now, the overall control is with the OMB. The OMB Director's role can be compared to that of a corporation's Chief Financial Officer who is responsible for capital planning and investment control.

CIOs.

The ITMRA requires that each agency appoint a Chief Information Officer (CIO), to bear responsibility for that agency's IT procurements. This is another concept borrowed from the private sector. The functions of an agency CIO are to monitor the agency's performance on IT programs, to advise the agency head on ongoing programs, and to assess the capabilities of the agency's IT personnel. The CIOs report financial and performance data to the OMB Director, and are responsible for ensuring its accuracy.

Management practices.

Among the management practices specified in the ITMRA are cost-benefit analyses, return on investment, risk assessments and minimization, performance-based and results-based management. Successful tools and processes from the private sector are referenced in the amendment. Agencies are required to benchmark their performance against comparable commercial processes.

Modular contracting.

This provision of the ITMRA calls for large IT purchases to be made in successive acquisitions of interoperable increments.

Specific time guidelines for this are in the amended Federal Acquisitions Regulations (FAR). For example, contracts must be awarded within 180 days of the solicitation date and deliveries must be completed within 18 months. These time constraints will necessarily limit the size and complexity of the procurement increments.

Pilots.

The bill defines two pilot procurement programs to be conducted by the Office of Federal Procurement Policy. The first is a limited program called "share-in-savings", whereby the successful vendor gets to keep a portion of the money the Government saves by implementing the vendor's solution. The second type of pilot program will be more common. It is described as "solutions-based contracting"; and includes 12 specific contract process requirements, such as the use of simple solicitations and proposals, oral presentations by offerors, and a trial performance period before the final contract award.

Bid Protest.

One provision of the bill (Section 5501) changes the way bids can be protested, by abolishing the GSA Board of Contract Appeals (GSBCA). Protesters now must go to the General Accounting Office (GAO), the US Court of Federal Appeals, or a US District Court. This change is intended to alleviate a perceived clogging of the system by unsuccessful offerors who file protests "as a matter of course" and therefore slow down the contract award process.

Exceptions

Just as with the Brooks Act, exception to the regulations is made for DoD procurements related to National Security Systems (NSS). These are known as "Nunn-Warner Exempted Federal Information Processing (FIP) Resource Acquisitions". Their exemption does not mean that those procurements are free from oversight, but rather that the control over those programs will be accomplished differently, due to the sensitivity (i.e., classified or controlled access) of the information contained in NSS solicitations, proposals and contracts. New policy regarding acquisition oversight of these systems in light of the ITMRA is being developed by DoD; an interim version took effect also on 8 August 1996.

Intent of the Reforms

The genesis of this act is within the Reinventing Government Initiatives. The intent is to move away from a process orientation and toward performance based management. The technology environment that the Brooks Act provisions addressed has evolved so far, from mainframes and custom software to assembling systems from commercial off-the-shelf components, that many of the safeguards and issues built into the process are no longer necessary or relevant.

Specific improvements expected from the ITMRA include:

Expectations spelled out in the amendment are that these reforms will annually result in both a 5% decrease in IT costs and a 5% increase in efficiency. Agency accountability is to be achieved by giving the procurement oversight function to the same organization that sets their budgets. Thus, the OMB will review the performance results reported by each agency's CIO, and incorporate that assessment in its IT budget - setting process for the agencies.

The intent of designating a CIO is to invest a cognizant person with both the visibility and authority required to manage IT acquisitions within the mission goals of each agency. Many see the success or failure of the ITMRA as dependent on the quality of the people selected for the CIO positions (and whether or not their agencies actually give them the time, power, etc. they need to be effective).

Federal CIOs are required to develop business cases to support their IT investment requests. The CIOs need to have measurable results, too. The business case is evaluated in getting funding. The results, including adherence to schedules, are evaluated in decisions to keep the funding.The CIO's job includes advising their agency heads as to whether programs should be continued, modified, or terminated. That advice is to be based on business management principles, which require performance data.

The ITMRA should reduce the time required to purchase new systems. Before, the procurement process could take two years from when a project was proposed until an agency actually bought the equipment. In an environment where the technology development cycle is shrinking, long procurement lead times were seen as keeping the Government behind the curve, even to the point of finding their IT purchases to be obsolete by the time they were completed. Although the goals of the process embodied in the Brooks Act to ensure fairness, discourage corruption and prevent the selection of vendors based on political favor are still valid, the process was too slow to be effective in technology acquisition. The Cohen Act is intended to find a compromise between speeding up acquisitions and giving up on impartiality.

Reactions and Responses

A Federal CIO Council, created by Executive Order, has been formed to provide interagency guidance. The council is composed of CIOs from each agency, headed by the CIO from GSA. The council provides a forum for refining the duties of the CIO position and for sharing best practices and information among agencies.

The GSA is preparing changes to the Federal Acquisition Regulations (FAR) to reflect the ITMRA. Other service and agency-specific regulations and instructions are being developed or modified to give guidance, and define procedures for compliance with the ITMRA within their own mission statements.

Agencies have created the required CIO positions, and many have developed WWW sites specifically for their CIO function and its support organizations. The Navy, for example, is assigning a CIO for each military department in each echelon, down to the base level. The Navy CIOs will interact to form a virtual organization within the existing Department of Navy structure.

Relationship to other IT/Acquisition Initiatives

The ITMRA is one of several acquisition reform initiatives currently underway. Others include:

Further Information

DoD Related Web Sites

Information on ITMRA (ITMRA)
Text for the FARA (FARA)

The DACS WWW site http://www.dacs.dtic.mil
has an ITMRA subtopic in the Plans, Policies and Standards Topic Area, which contains links to the sites listed here and to a bibliography of ITMRA-related articles.

The Office of IT Policy at GSA has an extensive WWW site at http://www.itpolicy.gsa.gov/ that covers acquisition issues and information from their perspective.

Military Service CIO pages include:

The ITMRA will be the topic of the closing general session at this year's Software Technology Conference (STC'97), to be held on 1, May in Salt Lake City, Utah.

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