WHITEPAPER PAPER WHITE Improving Accountability With Better Contractor Oversight COTS solution delivers accuracy, visibility, productivity.
With over 98 percent of defense leaders utilizing contracted personnel in 2014, the DOD should have the ability to have a complete view of the projects personnel are involved in. 3 MANAGING AND OVERSEEING THE CONTRACTOR WORKFORCE As the nation s largest employer, the Department of Defense (DOD) accounted for more than 60 percent of federal contracts awarded in 2015, with contracts totaling more than $275 billion. 1 The majority of these funds are spent on services, making contractor oversight a critical issue for the agency. 2 DOD s civilian and contractor personnel perform a wide variety of duties and responsibilities, including mission-essential combat support functions such as logistics support and maintenance. In order to operate effectively and efficiently, the department must have access to relevant, auditable, and proactive data, regardless of whether a contract is based on Labor Hour or Firm Fixed Price (FFP) contracts. Only with this information can the DOD meet mandates to track performance to the contract, provide auditable oversight, account for contractor personnel numbers and activity, and deliver near-real-time reporting of contract personnel resource expenditures. Currently, the DOD is unable to provide reliable, consistent, and integrated personnel data for the millions of contractors working for its agencies. Contractor data is delivered through numerous processes of self-reporting, methods that are inherently unreliable, and worse, does not stand up to audits. Since self-reported time can be biased, errorfilled, and even altered, it s a process that s ripe for fraud, waste, and abuse. Even more important, it prevents agencies from obtaining a holistic view of the performance and efficiency of the defense workforce. Situational awareness of the problem The Government Accountability Office (GAO) requires the DOD to determine the appropriate workforce mix that will allow it to perform the missions of the department. In May 2013, the GAO indicated that the DOD had not taken a holistic approach to managing its workforce requirements. 4 Critical challenges facing the DOD include having inadequate policies, procedures, and technology in place to account for its contractor workforce. As a result, agency managers are unable to: Account for their contractor workforce Track actual contractor efforts on projects, activities, and tasks Validate the actual time spent on activities Authenticate the direct cost associated with DOD account codes Assess actual workforce performance against requirements Identify potential deobligations for more efficient spending Track contract burn rate to determine when the rate is above or below expected levels Automate workflows to facilitate oversight and efficiencies Determine the true size and actual cost of managing the contractor workforce Quantify the efficiency, effectiveness, and return on investment (ROI) of the contractor workforce Stand up to audit 5 2
The GAO includes DOD contract management on its High Risk List and calls for leadership and better decision making to ensure that programs and investments are based on plans with measurable goals, clear objectives, validated requirements, prioritized resource needs, and performance measures to gauge progress. 6 Describing its efforts to improve efficiency and productivity, the Department of the Navy said, Because contractor services constitute a significant component of Defense spending, greater emphasis is being placed on how the Department plans, manages, and oversees contractor services acquisitions. 7 Finding a better contractor oversight solution When it comes to contractor oversight, the current scenario facing a contractor officer s representative (COR) can be compared to driving a car that lacks instrumentation. With no speedometer, fuel gauge, or temperature reading, it s impossible to evaluate the performance of the vehicle. The driver has no idea how fast the car is going, whether the engine is overheating, or if the car is running out of gas. For CORs trying to measure contract performance, this lack of visibility, command, and control limits their effectiveness. The lack of accountability and auditable information can be overwhelming to DOD personnel responsible for overseeing contractor operations. To ensure fiscal and performance accountability, the DOD must implement effective internal mechanisms to manage and oversee its contractor workforce. Requiring contractor employees to use a commercial off-the-shelf (COTS) workforce management solution will deliver near-real-time data on contractor time and attendance, scheduling, and leave, as well as cost activity analytics, to enable managers to periodically assess actual contractor workforce size, performance, and requirements. A COTS solution helps agencies determine whether contractor work does or does not qualify as an inherently governmental responsibility. And the solution provides complete audit trails for every contractor work interaction and transaction to help eliminate fraud, waste, abuse, and favoritism. While some argue that FFP contracts alleviate the potential need for tighter contract management, they do not allow the COR to evaluate the quality of the workforce, performance against contract service level criteria, and financial management of the contract, or provide defensible audit information. Only a proven COTS solution can meet these challenges and empower the COR with an automated toolset to identify issues and take proactive action on the many contracts being managed. Reliable, auditable data capture A recent study found that 70 percent of leaders in DOD agencies track only some aspects of contract personnel activity, and that this information varies and often does not include critical aspects like cost per employee, budgets, or strategic objectives. 8 Forty-one percent rely solely on information reported by contracted businesses. 9 In this environment, it becomes extremely difficult for managers to get an accurate picture of contractor use. 3
A more effective method is to have federal contractor employees use a COTS configured system to track and report their time and activities. Just as a federal civil servant s time is directly attached to specific activities/projects/programs as well as to financial accounts for payroll and accounting purposes, DOD contractor employees time is directly attached to specific CLINS and SLINS as well as financial accounts and specific rate tables. Commands should have the ability to accurately count their contractors and account for work tied to the budget line. 10 The contractor information is secure, electronically stored, date stamped, validated, and certified. Any and all changes to the employee s timecard are automatically cataloged, creating and storing a clear and accurate audit trail. The data points can be compared to any number of metrics for internal financial controls, used for reporting and analytics, and fed into other federal tracking systems such as Earned Value Management, Activity Based Costing, OMB A123, Financial Reporting & Analytics, Cost Accounting (cost per unit of activity), Performance Management, and Budgeting systems. Because all contractor data is captured consistently, thereby reducing errors, inconsistencies, and disputes over whose data represents the system of record, the data can then be used with confidence for reporting and analytics, and can easily be rolled up for advanced tracking across all levels of an agency or department. Visibility into workforce drives better decision making Visibility is another significant challenge in regard to the contract workforce. Thirty-one percent of surveyed defense leaders are unable to say how many contractors they employ; 11 60 percent say they lack objective data on which to base personnel decisions. 12 With a COTS solution, managers can have contractor employee data showing location of work, tasks performed, and their associated cost. They can access accurate data to drive better labor decisions in near-real time in order to control requirements and manage overtime. With this information in hand, the DOD can better understand who is showing up, where, and when, and track project time and labor costs. This increased visibility can also help the DOD comply with government regulations. Fifty-seven percent of defense leaders report that contract personnel are performing inherently governmental functions, a category that is required to be performed by federal government employees only. 13 Having an accurate picture of the contract workforce will allow department and agency managers to ensure the right workers are in the right jobs. Improving productivity with near-real-time information Unfortunately, even FFP contracts experience project delays and cost overruns are not uncommon when working with contracted personnel: 47 percent of defense leaders surveyed report that departments at least sometimes experience project delays related to contractors. 14 A COTS workforce management solution lets agency executives, as well as the OMB and GAO, see how the contractor workforce is performing across the entire agency by examining metrics such as percent under/over budget, percent reporting labor costs, percentage of agency budget going to contractors, and more. Because the analysis occurs in near-real time, decision makers can manage more quickly and effectively respond with the right people, who have the right qualifications, at the right time and the right place. 4
Benefits of accurate, timely workforce data QUESTION How many employees are on leave? Are leave policies being fairly and consistently enforced across the agency? Who is on site at any given time? Which contractors have attendance issues and are not performing in accordance with the contract? Who is working overtime and why? What are the project labor cost burn rates? BENEFIT Reduce unauthorized leave and control overtime. Reduce compliance risks. Ensure workforce meets mission requirements; reduce absenteeism and tardiness. Adherence to Contract Service Level Agreement. Address overtime before it happens to control runaway costs. Near-real-time actual labor visibility allows costs to be monitored for performance or deobligated and repurposed. Kronos Contractor Oversight Solution Kronos for Federal Government provides the DOD with a COTS solution to the pressing needs of contractor oversight. The solution monitors contractor performance; can help save taxpayer funds; prevents fraud, abuse, and waste; and provides an effective tool to more efficiently manage DOD operations. With its proven enterprise solution, Kronos provides a roll-up perspective: first collecting actual information by contractor activity (CLIN/SLIN), and then rolling up individual results/numbers to contract level, program level, and ultimately agency level. The solution provides information pertaining to individual performance and consolidates and displays information across the enterprise, so that management can spot trends and performance anomalies and proactively respond to them. Agencywide views of labor cost data allow management to understand project burn rates for possible deobligation or reprioritizing of funds. The Kronos solution enhances and supplements existing systems such as SLDCADA and ecmra by enabling near-real -time proactive operational response, enterprise visibility, accountability, auditability, and analytics for effective decision making as opposed to an after action report. 5
Defense leaders identify increased contractor oversight as the top benefit of near-realtime contracted personnel tracking. 15 Proven solutions make a difference In selecting a contractor oversight solution, agencies should look for vendors that have experience working with the federal government. The commercially and DOD-proven and field-tested Kronos solution allows DOD departments and agencies to deploy a unified and automated workforce management solution that was built from the ground up for the federal workforce. The command-licensed Kronos Contractor Oversight COTS solution operates on government systems to manage contractors who are part of a service or FFP contract. This is in stark contrast to the contractor-submitted survey information, which lacks oversight and control. The operational analysis and information are extremely valuable to the contracting officer as well as the functional operations staff and leadership at all levels. GAO/DOD Requirement Account for contractor workforce by project and location activity Kronos Contractor Oversight Solution ACCOUNTABILITY Capture contractor time worked and assign to a specific project. Contractor location can be tracked, including geofencing for working remotely. Data input options include time/project capture devices, telephony, and mobile. EFFECTIVENESS, EFFICIENCY, AND RETURN ON INVESTMENT Track contractor efforts on projects, activities, and tasks (e.g., CLIN and SLIN) Validate the time spent on projects, activities, and tasks Authenticate the direct cost associated to DOD account codes Overtime reporting and approval Track down to the CLIN/SLIN level and report in real time and by location where the contractor is, what time they reported to duty, and what project they are currently working on. Information can roll up to department and agency level for analytical review. Kronos provides a complete, detailed audit trail, which can be compiled for reporting as well as identifying fraud, waste, and abuse. Input device security is available. Track actual labor expended and associate that labor with pay codes for visibility into actual labor cost. The information can be compiled to understand a project s labor cost and determine if it is on track or above/ below plan. Overtime can be controlled by seeking proactive approvals/denials. Schedules can be adjusted to minimize overtime payments. Real-time status of hours worked can be monitored to save overtime funds while also aiding compliance with local, state, and federal work rules as well as contracts and collective bargaining agreements. 6
GAO/DOD Requirement Kronos Contractor Oversight Solution EFFECTIVENESS, EFFICIENCY, AND RETURN ON INVESTMENT Absence and leave reporting Facilitates leave management, accruals, and attendance and provides that information to users and managers for approvals or denials. The system can adjust leave and absence requests to fill open slots while ensuring work rule compliance and improving productivity. REQUIREMENTS Reassess actual workforce performance against requirements Analytics provide detail and roll up information to spot trends and anomalies for actionable response. Meet service level requirements with validated workforce performance data. AUDITABILITY AND COMPLIANCE Near-real-time delivery of data Data is secure, electronically stored, date stamped, validated, and certified. All changes to the employee s timecard are automatically cataloged, storing an accurate audit trail. Near-real time data allows managers to make informed, proactive decisions instead of waiting days, weeks, or months for data. Local, state, and federal rules and regulations and collective bargaining agreements are supported. SUSTAINED SENIOR LEADERSHIP OVERSIGHT Strategic decision making Measurable goals Clear objectives Data points can be compared to metrics for internal financial controls, utilized for reporting and analytics, or fed into federal tracking systems such as Earned Value Management, Activity Based Costing, OMB A123, Financial Reporting & Analytics, Cost Accounting (cost per unit of activity), Performance Management, or Budgeting systems. Reliable data is captured and compiled in an analytics engine, comparing metrics against defined goals and presenting data for decision making. Clear data enables management to view both positive and negative performance and drill down to identify potential issues. Performance against objectives is clearly identified and constantly monitored in near-real time. 7
GAO/DOD Requirement Kronos Contractor Oversight Solution SUSTAINED SENIOR LEADERSHIP OVERSIGHT Validated requirements Prioritization of resource needs Performance measure to gauge progress The data enables management to confirm whether requirements are being achieved and potentially identify areas of concern. Validation of labor data is critical to successful operations, command, and control. Visibility into the workforce allows management to identify weaknesses and problem areas pertaining to labor. Macro views identify issues throughout the organization and enable remediation. The Kronos analytics engine measures labor performance information to show status and labor spend against project budget. Enterprise solution Cost savings Kronos is the leader in commercial and government workforce management solutions and delivers a proven, field-tested solution that scales across the enterprise. As a commercial off-the-shelf solution, Kronos for Federal Government features rapid deployment and implementation. 1 NCMA, Annual Review of Government Contracting 2016 Edition, http://www.ncmahq.org/docs/default-source/defaultdocument-library/pdfs/exec16---book---annual-review-of-government-contracting_lowres, 3-4. 2 NCMA, Annual Review of Government Contracting 2015 Edition, http://www.ncmahq.org/docs/default-source/defaultdocument-library/pdfs/exec15---ncma-annual-review-of-government-contracting-2015-edition, 10. 3 Kronos Incorporated, Creating Full Transparency in Defense Workforce Management, 2015, 5. 4 GAO, Civilian and Contractor Workforces, December 2015, GAO-16-172, 1. 5 GAO, Human Capital, Additional Steps Needed to Help Determine the Right Size and Composition of DOD s Total Workforce, http://www.gao.gov/assets/660/654879.pdf. 6 GAO, Transforming DOD s Business Operations, http://www.gao.gov/key_issues/transforming_dod_business_operations/ issue_summary#t=0. 7 Department of Navy, Report on Acquisition of Services Policy and Oversight, http://www.acq.osd.mil/dpap/sa/docs/learnmore/dpap-sa-report%20fy15.pdf, 2015, 20. 8 Government Business Council, Ensuring Defense Contractor Accountability, March 2014, sponsored by Kronos Incorporated, 19. 9 Government Business Council, Ensuring Defense Contractor Accountability, 22. 11 Ibid, 14. 12 Ibid, 14. 13 Government Business Council, Ensuring Defense Contractor Accountability, 15. 14 Ibid, 14. 15 Ibid, 27. www.kronos.com 2016, Kronos Incorporated. Kronos and the Kronos logo are registered trademarks and Workforce Innovation That Works is a trademark of Kronos Incorporated or a related company. For a full list of Kronos trademarks, please visit the trademarks page at www.kronos.com. All other trademarks, if any, are property of their respective owners. All specifications are subject to change. All rights reserved. PSO322-USv1