Addressing the Shortage of Contract Specialists:

Too Little, Too Late for Success?

Andrew C. Obermeyer, Fellow, CPCMPresented at the Cape Canaveral Chapter

Winter Education ConferenceMarch 3, 2011

http://www.tricare.mil/tma/ams/default.aspx

• 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

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

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

TMA Overview, Cont.

• 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 Behavioral Health

Outpatient VisitsPer Year

“A week in the life of TRICARE”

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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

Readiness

http://www.tricare.mil/tma/ams/default.aspx

Understanding Cost Drivers

Defense Health Program

Private Sector Care In-House Care

Health Care Support

In-House Care Private Sector Care Health Care Support

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

$14.6B 54%

$5.8B 21%

$6.9B 25%

FY10 Defense Health Program Budget (Operations and Maintenance)

• Private Sector Care contracts breakdown:– Domestic Health Care/Claims $10.8B– Overseas

$0.3B– Pharmacy

$2.0B– Dental

$0.1B– Other (including Quality and $1.4B

Fraud, waste & abuse)

• Cost Drivers– New users– Utilization– Expanded benefit– Medical inflation– Special populations– Pharmacy

AM&S Organization

Contract Operations Division -Aurora

Acting Chief Functional OfficerMr. Michael Fischetti

Contract Operations Division – Falls Church

Acquisition ManagementOffice A Branch

Acquisition ManagementOffice B Branch

Office of Small Business Programs

Chief of Staff

Acquisition Career Management

Acquisition Information Systems Manager

Property Manager

Acquisition Policy and Compliance Division/Competition Advocate

Contract Policy and Pricing Branch

Information SystemsBranch

HQ SupportBranch

Acquisition Oversight and Management/Deputy CAE

Staff in Aurora, CO

Acquisition EfficienciesManager

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

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

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

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

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

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

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

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

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

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?

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?

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

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

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!”