THE WELCH COMPANY
440 Davis Court #1602
San Francisco, CA 94111-2496
415 781 5700



February 13, 2002

03 00050 61 02021301



Mr. Stuart Harrow
Manufacturing & Production Field Service Representative
sharrow@dcmde.dcma.mil
Contract Operations
Field Support Mid-Atlantic, OCFC
Defense Contract Management Agency
Long Island, Mid-Atlantic Sector
605 Stewart Avenue
Garden City, NY 11530

Subject:   Com Metrics Scope of Services Review

Dear Stuart,

This follows up our discussion on January 31 about reviewing the Scope of Services for Communication Metrics. You indicated at that time having previously made this review in relation to DOD requirements for project management. However, as I indicated, your comments on this matter are not clear in the record.

The FSR role is well suited to make this review in order to provide guidance on strengthening DOD internal management, and, also, for incorporation into specifications that direct contractors in carrying out the work performed for DOD.

As you recall, a report on October 6, 2001 showed concern about management of the Boeing Space Station software project. Evidently, this work is winding down, and so presents an opportunity to perform post-project review to develop lessons learned. A letter today to Gary Johnson, who is involved in the project, suggests an initiative to evaluate the scope of services for Com Metrics to address issues that have been identified on the Boeing Space Station project. This same point might be raised internally with DCMA, since taxpayers have a big stake in improving management on all DOD procurement.

In light of disclosures on the Enron case, it is evident that good management must be specified and there must be feedback oversight to prevent "smart" people from gaming the system to cover up poor performance. While C/SCSC and other requirements are helpful, DOD has discovered that merely checking the books at the end of the month is not sufficient, because when mistakes occur, there is enormous pressure to ignore and cover up. Moreover, most of the mistakes that have a big impact, start out as little deviations in communication that don't show up in the books until weeks, months, sometimes years later, when it is too late to affect a remedy. Accordingly, proactive management that identifies and fixes issues, before actual mistakes occur, is the only solution. Of course the larger point is that, without a system of Communication Metrics that provides proactive intelligence, the current environment of fast moving information and events overwhelms traditional management causing endless bumbling, which eventually reaches a critical mass and implodes, as at Enron, and in the wider economy.

On January 31, 2002 Secretary of Defense Don Rumsfeld commented during remarks to the War College that DOD now needs proactive management. New realities of a faster paced world mandate improvement to strengthen intelligence.

This new mandate, along with proposed new funding, may provide grounds to take another look at Com Metrics in relation to existing DOD requirements currently specified for contractors to perform. While DOD strives to avoid telling contractors how to do the work, management seems to be an execption because the only way to get contractors to compete on the basis of good management is to specify good managemnt; and, if that is not done, then contractors will compete by cutting corners, because good management always seems like overkill, when people are confronted with making the front-end investment necessary to work intelligently.

You may recall from the record that Max Blodgett made a similar point in a meeting at the US Army Corps of Engineers on January 5, 1996. Clearly, subsequent events have vindicated Max's concern.

The Secretary of Defense further urged in his recent appearance at the War College people at all levels within DOD to bring their ideas forward. His main point was to be persistent, but he also suggested forming a circle of advocates. One person advocating improvement is hard to be heard in a big organization. A circle of advocates seems like a good idea.

Sincerely,

THE WELCH COMPANY



Rod Welch
rowelch@attglobal.net