Where the federal acquisition system can possibly head next

Tom Temin David, you and I do go back quite some time. And my goodness, the market has changed a lot, hasn’t it?

David Berteau Tom, the market has changed enormously. You know, when I first started in this business, the services contracts were kind of at the post camp and station level, right? It was building repair and food service and lawn mowing. Now the government buys as a service much of what it used to actually buy as a product. Space launch, for instance, they don’t have to own the rockets. They just buy the launch capacity. They buy the ability to do that. Same with IT. It used to be that everybody wanted to go visit their computers at the server farm. Now, it’s in the cloud somewhere. The cloud is not in the air. It’s on the ground somewhere, but nobody needs to know where their data are. They just need to know, are they secure? Will they be there when I need them? Can I access them? Can I use them? It all comes down to what do you need to get stuff done?

Tom Temin And there is a little bit of a cycle to this. I attended Google’s big conference a couple of weeks ago in Las Vegas, and I mean cloud, as you say, is the default way people compute now, any kind of organization, large and small, really. In fact, if you’re a small organization, why would you bother to have a server, something to maintain? But what they were showing as one of the booths was a cloud in a box for edge computing to be used by mainly, I think, [the Defense Department] in tactical environments. So you have all of the, most of the scalability – not all of it, obviously – but the same precise architecture that you are facing in the APIs in the cloud, you can have in a box at the edge. So there’s a little bit of that coming around again.

David Berteau I think you’re right. I think that the biggest difference is the amount of data that we have and the amount data that have to use. I mean, you and I go back to, you may not go back quite as far as I do, of typing punch cards in where you were limited with so many characters per punch card, and that was your entire data set management system, right? But the question really now comes back to not what’s the capacity, but what can you get out of it? And I think this being able to tailor, and of course this tailoring for the government means the government has to know what it needs. And I think one of the other big changes that we’ve seen is a migration away from buying outcomes to buying input. So many labor hours, so much data capacity. We need to get back to defining the outcomes and the results we need and to actually be able to get there. I think what you saw at Google is one of the enablers that will allow you to tailor what you get in order to achieve what you need in terms of results and outcome.

Tom Temin And your era in the Pentagon was kind of at, I guess if I’m timing this correctly, towards the end of the Reagan era buildup. And that was a period marked by a lot of involvement by industry to bring brand new technologies, stealth and so forth, and precision guidance and all of these things that were enabled by material science, information technology, mathematics, and we’re kind of still living off that in some sense also.

David Berteau In some ways we are. I mean, it’s the fifth or eighth or 20th generation, right? But the time I came to Washington at the beginning of the Reagan administration, 1981, to work in the Pentagon, and it was the height of the Cold War. And everything was being driven by a singular focus, or really a dual focus. Number one, to have the capability to go toe to toe with the Soviets in a geopolitical sense anywhere in the world we needed to. And number two was to avoid, if you didn’t have that capability, having to go to global thermonuclear war. Because whatever your issue was, if we went to nuclear war, it kind of didn’t matter, right? But it was the technology that was driving our advantage over the Soviet Union. And what’s interesting, a big difference between then and now is much of that technology was derived from and based upon government investing in research and development, either direct investment or indirectly reimbursing companies through the independent research and development, the IRAD programs. That’s no longer the case. The vast majority of new technology now is being developed in the national and global commercial marketplaces, rather than government funding. There’s still an important role for government funding, especially for the military, but it’s a very different dynamic now. It’s a global dynamic.

Tom Temin Interestingly, the seed of what we have now, the kind of consumer-based technology development that then extends outward, really got its seed during the Reagan era, just coincidentally, I believe, with the advent of the IBM PC. Now, there were personal computers before that, but people started regularly having computers in their house. And you can really draw a line between the IBM PC with its dual floppies, if you really wanted to spend some money, and maybe a CGI color display a couple years later, you can draw a line from there to the latest iPhone or Pixel or you name it.

David Berteau You can. I can remember we first got workstations in the Pentagon and they were totally isolated. You had a workstation, you had your own printer, you’d put paper in it, you’d print something and you’d walk it down the hall to your boss so he could look at it, right? And then the miracle came one morning in I think 1984 where my computer could actually send a document to my boss’s computer. All of a sudden he can send one to me also and it really changes a lot of those dynamics. We did a trip once out to California and we went to visit at both IBM and Apple, which is a nascent alternative in terms of the independent computer there. And I remember walking away with two very powerful impressions. Number one is everybody in the Apple office that was working there had an Apple, early Macs, on their desk. Nobody in IBM had a PC on their desks. And I said, maybe that Apple’s got an edge in this game here.

Tom Temin We are speaking with David Berteau, president and CEO of the Professional Services Council. And the idea of stepping off this merry-go-round is kind of profound because those of us that have been at least observing and in your case participating in this idea of the government and the industry getting together on a long-term basis to improve federal missions feels like you’re at the center of something really important.

David Berteau It’s one of the most important things about working in Washington. Tom, if you get up in the morning feeling like that you’re working on something useful, something important, it motivates you. And in fact, I think that one of the things that really drives the services contractor industry and has ever since I’ve become involved in it, is that commitment to mission, whether it’s a national security mission or whether it’s a citizen service mission of one of the other agencies, companies have to have that or else that’s really their competitive edge. You wouldn’t put up with all the bureaucracy and all the time consuming things that go on in the government contracting world if you didn’t care about the outcomes.

Tom Temin Yes, and people do stick with it for a long time. On the other hand, I’ve never liked the term political junkie because it implies that politics and that kind of combatant approach is the most consuming and important thing in one’s life. And what a sad thing to be a junkie of when life itself, for the average person and the average citizen out there, does not include government and politics.

David Berteau You want success to be defined as actually achieving a result, getting something done, a benefit, a more secure nation, an advancement in technology. Those are the real measures of success. Politics is a key and important way to get there, but it’s an enabler. It’s really not an end in itself.

Tom Temin And the people that really get things done outside of the politicians, often if you’re working with someone to try to get something done, you don’t really know what their personal politics, if you will, party-wise, really are.

David Berteau I think it’s one of the huge benefits of working at PSC with the member companies we have. I suspect that, you know, our member company CEOs span the range of from the center out, both to the left and the right. And yet what comes up in our discussions is not about politics except to the fact that it affects our ability to bid, win and perform useful work. And that’s where the real focus is. How do we deliver to support the missions and functions of the government? How do we stay in business? Obviously, if a company doesn’t stay in business, it’s not gonna deliver much. And thirdly, and this is really almost unique to government contracting, is the compliance aspect. You have to be in compliance, or you won’t be able to bid when you perform the work, and therefore, you won’t be able to stay in this.

Tom Temin And beyond that, my sense of knowing many of the CEOs and the titans and the movers and shakers in federal contracting, they are hard-nosed businessmen and they are out for their shareholders if that’s the case, or their personal wealth if that is the case. And yet, I’ve always sensed in the same people a pride in the public service they’re doing by helping the government. I mean, that exists alongside the need to have a successful business. And I think that’s one of the great things about federal contracting. There’s been a few bad apples, but for the most part, there is a strong element of public service in there as well.

David Berteau There is, and it’s palpable. You can feel it in the discussions, you can feel in the planning, you can feel it in the allocation of resources. You can it feel in recruitment and retention and promotion of the workers. Because ultimately, especially in the services business, many of your assets are not assets. They’re human beings who go home or maybe even work from home or work from somewhere else. And that’s a very powerful motivation across the board. Competition is one of the lifebloods of the government services industry and really of government contracting in general. Unless the government only buys enough to keep one company in business, you always have to have that competitive edge. And that drives not only the commitment to the mission, it drives the advancement of technology back to where we started here. Everybody’s always looking for that next edge. How can I do something faster? How can I do something better? How can I do something at a lower cost? How can I deliver more to my government customers and help them achieve their results?

Tom Temin All right, and so you’re about to enter, well, horrible sounding term, the afterlife, just as I am, but you’re not going to disappear either.

David Berteau I don’t think so, Tom. I love being involved in this industry. I’m certainly going to be, I have a lot to say, a lot to think, a lot to write, a lot together. And so I look forward to continuing to be maintaining connections, and maybe even with your successor on this show. Who knows?

Tom Temin All right, David Berteau is president and CEO of the Professional Services Council. Hey, great working with you and we’ll see you around the Beltway.

David Berteau Tom, it’s been wonderful working with you over the years. We’ve covered a lot of territory. You cover it every day. I would cover it periodically with you. We’ve done an awful lot of good information sharing with everybody. The people who listen to you are the people who can do something with the messages you deliver. We’re going to miss you immensely. Thank you so much for all the years.

Tom Temin Well, thank you as well.

David Berteau Tom, I will miss the heck out of you and I will see you. In fact, we’ll probably have to catch a couple of Nationals games. They look like maybe they might have a decent team this year.

Tom Temin Let’s hope and pray for that one.