Partnering - A Better Way Of Doing Business

By Michael J. Bloom

Excerpted from Conflict Resolution Newsletter #36: http://www.mediate.com/articles/Bloom.cfm

(NOTE: This article has reference to a number of Government programs and acronyms; don't be put off!)

PLEASE CONTACT ME FOR FURTHER INFORMATION--HOW TO SET UP PARTNERING ON YOUR PROJECT

PHILIP CRUMP, MEDIATOR

1301-E Luisa Street, Santa Fe, New Mexico 87505 (505) 989-8558 philip@pcmediate.com


TABLE OF CONTENTS

Introduction

The Development of Partnering

Partnering in the Construction Industry

The Army Corps of Engineers Endorses Partnering       

Benefits of Partnering

Conflict and How to Deal with It

Sources of Conflict

The Consequences of Conflict

Conflict Resolution Strategies

Why Partnering Is Better than Confrontation

Partnering on Your Program

When Should You Start?

Suggestions for Better Partnering

Is It Working?

What to Do if It Isn't Working with the Contractor

What to Do if It Isn't Working with the Government Stakeholders        

Incentives for Partnering

Conclusion

Appendix A: Recommended Contract Clauses (Section H)        

Appendix B: "Is It Working?" Questionnaire       

Introduction

Partnering is primarily a relationship in which program stakeholders work, cooperate, and perform in good faith as a unified team. Partnering is similar to picking teams for a tug of war at the company picnic. Each team is together for the duration of the competition and the "partners" know that they must work together to succeed. If the partners do not pull in the same direction, hold on to the rope, and dig-in with their feet, the team will not finish successfully.

The program is the rope that unites the program partners. Accordingly, the partners are required to put aside individual interests and work together, communicate their expectations, agree on common goals and methods of performance, and identify and resolve problems early, before losing the opportunity for success.

The Development of Partnering

A brief history of how partnering came about in our environment starts with the construction industry, which has used partnering for a number of years.

Partnering in the Construction Industry

In 1994, the Construction Industry Dispute Avoidance and Resolution Task Force (DART) surveyed 8,000 attorneys, design professionals, and contractors. The design professionals viewed project partnering "as a superior method" for achieving desired results, and the contractors were "extremely favorable toward the prospects of project partnering and tended to view it as a highly effective vehicle for achieving a host of goals on construction projects." More than 70 percent of all three groups predicted future increases in the use of partnering. The design professionals and attorneys indicated that favorable experiences with partnering outnumbered unfavorable experiences by five to one.

The Army Corps of Engineers Endorses Partnering

Recognizing the success in the construction industry, the Army Corps of Engineers experimented with the concept. Their success has prompted them to adopt a policy of developing, promoting, and practicing partnering on all construction contracts and to expand the concept to other relationships. The Corps defines the concept this way:

Partnering is the creation of an owner-contractor relationship that promotes achievement of mutually beneficial goals. It involves an agreement in principle to share the risks involved in completing a project, and to establish and promote a nurturing partnership environment. Partnering is not a contractual agreement, however, nor does it create any legally enforceable rights or duties. Rather, partnering seeks to create a new cooperative attitude in completing government contracts. To create this attitude, each party must seek to understand the goals, objectives, and the needs of the other -- their "Win" situation -- and seek ways that these objectives can overlap.

Delivery of an operationally useful system on time or early, and on or under budget, is a win situation for the user, the acquisition agency, and the contractor. Program success is a powerful incentive for all the partners and eliminates the disincentives associated with failure to achieve technical, cost, or schedule goals.

Benefits of Partnering

Without some change in our actions, we may think about a new way, but act the same old way and get the same old results. The recommended partnering process lets us change our actions and reap the benefits. Some examples follow:

Reduced litigation. The Army Corps of Engineers has used partnering on large and small contracts for over six years. To date, all reports indicate that not a single dispute has gone to litigation on a partnered project. This is in stark contrast to the number of disputes received on non-partnered contracts of similar size and complexity.

Successful, profitable contracts. Experience within the construction industry has shown that partnering has resulted in completion on schedule, cost overrun reduction by two thirds, reduction in paperwork by 66 percent, increased value engineering, no lost time injuries, and other mutually beneficial performance when compared to the average contract. The Kansas City District of the Army Corps of Engineers found that, on average, a partnered contract reduced cost growth by 2.65 percent, reduced modifications by 29 percent, and virtually eliminated time overruns (averaging 26 percent). Another district, the Portland District Army Corps of Engineers, discovered a two-thirds reduction in paperwork.

Improved morale. Evaluations conducted under previous Army partnering contracts has shown a distinct improvement in the morale of the people working on the contract. When people can work in a conflict-free environment, they can concentrate on the job rather than on potential claims, and the morale and effectiveness of the whole "team" is improved.

Conflict and How to Deal with It

Conflict is a disagreement between two or more parties. The issues in conflict are typically either substantive (such as allocation of resources, policies, procedures, requirements) or over emotional (such as values, culture, management style, personal preferences, distrust). Frequently, conflicts involve both types of issues. Conflict can range in intensity from a minor irritant to a major problem that threatens the success of the entire program.

Research indicates that a typical manager spends 20 percent of his or her time resolving conflicts and disagreements. The Defense Systems Management College (DSMC) Program Manager's handbook points out that conflict has been traditionally viewed as a negative factor, and if it is present, organizational management has failed. The handbook also points out a new perspective:

"The contemporary view of conflict is that it is not inherently good or bad, but is neutral. According to this philosophy, conflict is a process in which incompatible goals, interpretations, or emotions of individuals or groups lead to opposition. Conflict can be beneficial and productive, contributing to effective problems-solving and serving as a change agent for the parties involved."

Sources of Conflict

Sources of conflict include:

The Consequences of Conflict

Conflicts between the user and the acquisition agency can be caused by incomplete understanding of the user's requirements, inability of the contractor to deliver the promised product due to cost growth (under-bidding the contract, unforeseen difficulties, etc.), changes in user demand for the product, user concerns about development process efficiency, and user disappointment in the evolving or final product. Disputes late in the program often force the user to take an unacceptable system rather than wait for funding and development of another system.

Conflicts between the acquisition agency and the contractor can be caused by requirements interpretation, lack of cost-realism during the bidding process, delays in completion of intermediate milestones, funding fluctuations, overestimated software productivity, and changes in user requirements.

Conflict Resolution Strategies

Five basic conflict resolution strategies are identified by DSMC: avoiding, forcing, accommodating, compromising, and collaborating. Regardless of the source of the conflict, the "competing" or adversarial conflict resolution strategy typically employed when these conflicts occur, wastes significant manpower and dollar resources. In addition, it tends to cause resentment in the other party and a long-term deterioration of the business relationship among the parties.

The only strategy that optimizes the benefits to all of the parties involved is "collaborating."

"Collaborating is jointly identifying change opportunities and seeking an integrative solution -- the "win-win" approach. The conflict issue is clarified, studied, and even redefined in an effort to give each party a goal and solution that can be fully supported. Collaborating includes such approaches as joint problem-solving, consensus-seeking, and establishing superordinate goals (higher-level goals on which all can agree) in order to achieve full cooperation. The major advantage of collaborating is that all parties may be very satisfied with the way the conflict was resolved. A disadvantage is that collaborating is likely to be more time-consuming than the other (conflict resolution) approaches."

Why Partnering Is Better than Confrontation

If a program office refuses to recognize changes in the operational environment and insists on delivering a product that is not operationally useful, the user will stop supporting the program and the funds to complete the program will be reallocated to other programs. If the program office puts a quality contractor out of business, or backs them into a corner by creating unnecessary financial hardships, the contractor may strike back with increased claims, or the industrial base may deteriorate when the contractor refuses to bid on future contracts. Similarly, a "grab what you can get" attitude by the contractor will not sustain a contractor's long term business with today's emphasis on past performance. All three parties have a vested interest in mutual cooperation and meeting the needs of their program partners. An adversarial relationship may hinder or destroy these overriding interests. Accordingly, it is mutually beneficial to establish and maintain an "us," rather than an "us vs. them," attitude that supports the efforts to make it "faster, better, and cheaper."

To make "faster, better, and cheaper" smoother, we should work with them, rather than against them. (Them, in this case, is the user and the contractor and any other major stakeholders in a system acquisition.) Not only should we (the program office and its support contractors) work with them, we should make them part of us. This effort involves the concept of partnering and the formation of the program team. The time-frame for this relationship begins with requirements definition when the user (and any other government stakeholders) becomes one of us and continues through contract award when the winning contractor becomes one of us. The relationship terminates when development, production, and major system modifications are complete.

Partnering on Your Program

An organization is the shadow cast by its leader. If the program manager is not committed, the rest of the organization will only give lip service to the concept. However, if the program manager is committed to the partnering concept and demonstrates that behavior in dealing with the user and the other stakeholders, the program office organization will follow.

When Should You Start?

A program should be formed early (prior to requirements definition and acquisition strategy definition) as the basis for an on-going partnership for the duration of the program. This partnership initially involves all of the stakeholders in the program except the potential development contractors. The formal partnering process begins after contract award with an initial training workshop that includes the key personnel for all the participating organizations. This workshop helps establish commitment from the key players. Subsequent workshops are held to involve all the team players at the working level and, as the program evolves, periodic follow-up workshops are held to reinforce the desired behavior and introduce new team members. The use of facilitators is also recommended to establish and maintain a common culture and working relationship for all of the program participants. Since the participants on each program are unique, each program will develop its own set of specific methods.

The lower level monitoring is not established until after the contract is awarded and the contractor's proposed IMP is adopted or modified to suit all the key players.

Suggestions for Better Partnering

Select the contract to partner. The extent of the interaction with the contractor, the complexity of the contract, its importance to the stakeholders, and the duration of the contract seem to be the most significant factors in making the decision to partner. The higher these factors, the more profitable the partnership can be.

Obtain top management commitment. The subordinates in all of the stakeholder organizations watch what their management does rather than what it says. If it is obvious that the top management is supporting the partnering effort, it will be easier to get the resources necessary to do the job or change the established way of doing business.

Obtain the necessary resources to partner. Initially it may be beneficial to overestimate the resources necessary to implement and maintain the partnership. The costs involve the time and funding necessary to train all participating personnel, to attend workshops, and to effectively communicate with the other parties.

Encourage continuity. Supporting organizations are expected to commit team members for the duration of the activities. Provide overlap between old and new members when change is unavoidable.

Select champions, one at top level and one at working level. These individuals carry the partnering philosophy throughout the organization and help the key participants learn how to change their actions to implement partnering.

Communicate with the offerors. Tell the offerors at the pre-solicitation conference, tell them at the bidders conference, and put it in the cover letter for your RFP. Putting a provision in the contract lets the contractors know you are serious about the partnership. The language in Appendix A can be inserted in a Section H clause in the contract to advise the contractor of the government's intent and to provide the basis for implementation of the partnering concept after contract award.

Agree to partnering. All of the processes must be mutually agreeable to the parties. The basic approach may be outlined in the IMP and the IMS, but it is essential to establish executive-level personal relationships and obtain their commitment for success at the initial workshop.

Plan kickoff workshops. Plan to hold an initial partnering workshop to ensure that all key personnel and senior management understand the concept of partnering and are committed to its success. Hold subsequent team building workshops to orient all program participants. If a large number of personnel are assigned to the program, hold workshops based on anticipated membership.

Obtain a facilitator for the workshops. The recommended contract clause in Appendix A has provisions for a third-party facilitator, however an internal government, FFRDC, support contractor, or development contractor facilitator will work if he or she is trusted by all the parties involved. The important thing is to get someone who is qualified, experienced, trusted, and "fits well" with the parties. The facilitator should actively participate in the initial workshop(s) and any additional training sessions, be available to help any teams that are experiencing difficulty in getting started, and conduct remedial training when a group begins to backslide.

Prepare for the workshops. Make sure all top management participating in the workshop understand the goal of partnering so that they actively support partnering at the session. Ensure that all participants understand the basics of partnering. Identify all the players participating in each workshop (the initial workshop is for key personnel in the program and their senior management).

Conduct the workshops. Clarify the roles, responsibilities, and authorities of all key players at each workshop. Combine the initial partnering session with a post-award conference within a month after contract award to identify areas of confusion, potential problems, and risks in addition to the "normal" post-award conference objectives. Conduct the subsequent team building workshop within two months after the initial workshop so that all parties get started on the right foot. The following items are recommended for the agenda:

Define partnering and process expectations. Explicitly address the government's position on constructive changes to the contract and indicate that the partnering process or team participation is not intended to facilitate constructive change. Identify the pitfalls associated with the government's insight role. Indicate the expectations each party has for the partnering process.

Get to know each other. Provide detailed introductions for all participants. Have the facilitator use an industrial psychology instrument to indicate communication styles of the participants. Conduct team-building exercises and work on empathy and listening skills. Clearly indicate each individual's authorities and responsibilities and delegate responsibilities as low as possible (empowerment). Identify common program goals.

Establish procedures for sound administration. Identify potential program problems and establish a regular problem identification and resolution procedure. Identify the strengths and weaknesses of the parties to the partnership. Establish a fact documentation procedure--if facts are not in dispute, most disputes are not pursued. Have legal counsel participate and help identify what is, and what is not, important. Develop open, honest, and regular communication channels. Review the contract requirements and provisions to identify any areas of confusion or differences of opinion.

Establish methods of resolving conflict. Develop a conflict resolution process such as automatic conflict escalation to prevent the festering of problems. Agree to use alternative dispute resolution processes when good faith disputes arise.

Generate a Partnering Charter. The charter should set forth the intent of the parties to work together towards a successful project, commitment of the parties, and common measurable goals. All parties should sign and display the charter.

Generate a meaningful evaluation process. The process should measure the success of the parties and reinforce the partnering attitude. The questionnaire in Appendix B could be used as the basis for the evaluation process. The evaluation should be made at approximately six-month intervals.

Establish targets. Exercise care in ensuring realistic expectations, goals, and objectives early in the partnership. Set sights high, but make the targets achievable so they can endure throughout the project.

Minimize risk. Strive for solutions to problems that minimize the risk of system or program failure.

Celebrate successes. Recognize and reward those who took the initiative to partner--whether successful or unsuccessful--with formal presentations or informal celebrations.

Initiate newcomers. Make provisions to train and orient newcomers to the program. Don't assume they will be familiar with the partnering pattern.

Reinforce training. Conduct follow-up workshops periodically to reinforce the partnering concept. This is necessary to prevent old bad habits from reemerging.

Communicate. Communicate regularly with the parties to the partnership. Regular meetings to discuss progress, problems, and solutions are recommended. Face-to-face or video teleconferencing is recommended if possible.

Hold open discussions with no secrets. The parties must have full and open discussions with no secrets. All facts must be on the table for each team member to understand and assess. Each member brings unique expertise that needs to be recognized by all, and his or her views are important in developing a successful program. Each view has to be heard but not necessarily acted on by the team. All members of the team must feel that their contributions are important to the process and were well considered. Encourage team members to explore all alternatives to system problems. A sense of ownership is not developed if the team is expected to "rubber stamp" a decision or a document prepared in a different setting.

Keep promises. Speak with one voice on settled issues and keep promises made to the team.

Select qualified, empowered team members. Empowerment is critical to making and keeping the agreements essential to effective partnerships. All representatives assigned to teams must be empowered by their leadership. They must be able to speak for their superiors, the "principals," in the decision-making process. Although team members cannot be expected to have the breadth of knowledge and experience of their leadership, they are expected to be in frequent communication with their leadership in all cases and ensure that their advice is sound and will not be changed later, barring unforeseen circumstances or new information. The team members must also be aware of any limits to their ability to speak for their principals. The agreements they make cannot be binding if they exceed the limits of the members' empowerment. It is important for the team leader to stress at the outset that, in general, agreements reached in the team are binding. The only exceptions are when new information becomes available and it is significant enough to warrant revisiting a prior agreement.

Escalate reasoned disagreement. The team should not be searching for "lowest common denominator" consensus. There can be disagreement on how to approach a particular issue, but that disagreement must be reasoned disagreement based on an alternative plan of action rather than unyielding opposition. When an issue cannot be resolved by a team, the team leader should raise the issue as quickly as possible to a decision-making level where resolution can be achieved

Is It Working?

If it becomes obvious that performance expectations are not being met, schedules are slipping, costs are increasing, data is not being kept up to date, overtime is increasing, risks are not being tracked or mitigated, the government is not being kept informed, requirements are changing but the program isn't, the budget is changing but the program planning isn't, the goals being pursued are not those in the SOO, action items are growing faster than they are being closed--there may be a problem. It is time for a "tune up" or problem-solving session to get things back on track.

Even if there are no obvious signs of a problem and the metrics look "OK," it is still a good idea to periodically stop and assess the health of the relationship. To determine if the partnership is working, the questionnaire in Appendix B (based on worksheets from a couple of different Army organizations) should be completed by all participants at the periodic training sessions or partnering workshops throughout the project. Any negative responses indicate problem areas that need additional effort.

What to Do if It Isn't Working with the Contractor

When the government insight is perceived to be ineffective, or program risks are not being managed, and the partnering arrangement between the program office and the contractor is in serious difficulty, the government program manager should advise the user that the government is planning to implement (or increase) oversight. Following notification of the user and stakeholders on the integrating-level team, the government program manager should inform the contractor's senior management that one or more serious problems exist, that the relationship has deteriorated to the point where the "normal" level of government involvement is not working, and that he or she intends to increase government insight (or oversight. The government program manager should attempt to resolve the difficulties before proceeding with further actions.

If a significant change has not occurred within 30 days, the government program manager should implement increased oversight, which may involve:

            An increased government presence in the contractor's plant

            The use of an external "red team" to review the program

            Expertise provided to assist the contractor in critical areas

            Formal meetings to track performance

            More cost and schedule metrics

Formal correspondence should be sent to the contractor's parent organization advising them that increased oversight is being implemented and the next steps to be followed if this effort is not successful in resolving the problems and restoring the relationship. The government program manager should schedule a formal review with contractor senior management within three months of starting the increased oversight (or within three months since the last formal review) to determine (with the user) if the government should return to the "normal" level of oversight; continue the increased level of oversight, or begin reviewing the program for termination. The contractor should be advised of any such decisions by the integrating-level team within a week following completion of the review.

The meeting should result in a decision to continue the program with the present level of increased oversight, continue the program with government oversight above the program office level, or terminate the program.

If the government team decides to initiate termination proceedings, a "show cause" letter is sent to the contractor, progress payments are stopped, and "stop work" orders for portions of the work are issued. Although it is possible to restructure the program after the termination proceedings begin, the process is usually very lengthy and expensive.

What to Do if It Isn't Working with the Government Stakeholders

If teamwork begins to deteriorate within a group, it may be necessary to conduct an additional training workshop or to assign a facilitator to the group. If stakeholder issues can't be resolved at the program level, they should be elevated to the program manager and the integrating-level team for resolution. For example, issues might be the introduction of unfunded requirements or refusal to compromise on requirements in the trade space. Many of these are coordination issues within the stakeholder's organization and may require the development of a single position from the stakeholder's headquarters. Some may involve personnel or assignment changes if the individuals involved cannot work with the team. Most of the unresolved program-level issues should be resolved at the integrating-level team. If an issue involves an alteration of the Acquisition Program Baseline in terms of performance, cost, or schedule requirements, it may be necessary to convene the team to resolve the problem.


Incentives for Partnering

Partnering on a government multiple award Task or Delivery order contract can be similar to a manufacturer-supplier relationship in industry. However, the typical research and development contract involves the competitive selection of a single contractor who works with the government stakeholders to produce a system. The incentives discussed here are for a typical development contract and not a task or delivery order arrangement.

The positive incentives for partnering are not part of the contract and not really part of the partnering charter for the program. If the partnership results in the delivery of a successful program, most of the major stakeholders in the program will be bathed in the light of this success. The successful representatives of each participating organization are usually rewarded by their respective organizations, which may include cash bonuses, medals, promotions, plaques, dinners, better work, newspaper articles, and peer recognition of the success. The type of recognition depends upon the organization (MITRE, military, civil service, user, contractor, test organization, etc.), but it will come.

In a failed partnership, everybody loses. The end product fails to materialize or is a scaled-down version of the intended product because the funding wasted on unsuccessful efforts and the restructuring activity is rarely restored. The unsuccessful representatives of each participating organization are usually "punished" by their respective organizations, which may include transfers, terminations, demotions, poor work, and peer recognition of the failure. This type of recognition too, depends upon the organization, but it will also come.

Thus, the future of the major players in the program (and their subordinates) is tied to the success or failure of the program. The program success is usually the strongest available incentive to making the partnership work.

Conclusion

Reductions in budgets, rapid changes in technology, pressure to field systems more rapidly, public and congressional pressure for the use of commercial products and standards, pressure to achieve interoperable systems among the services, and the program delays caused by adversarial relationships and claims have caused us to question how we conduct business with our customers and suppliers.

With the changes taking place in our environment, we cannot continue with "business as usual." By working in a collaborative fashion we can reduce the energy loss due to friction. Although collaboration may take a little longer at the beginning of a program, the remaining energy can be directed jointly and efficiently to produce "better, faster, cheaper, smoother" programs in today's environment. Since it is legal, encouraged, and it makes sense, the NIKE slogan is appropriate--"Just Do It." 

Appendix A: Recommended Contract Clauses (Section H)

H.1 Partnering Workshop

Within thirty days after Contract Award, the Contractor shall host a "Partnering" workshop at an off-site facility. The contractor shall provide a third-party facilitator to conduct the workshop. The contractor attendees shall include senior agency management, the program manager, the program manager's direct reports, designated system level senior members, and key subcontractor management personnel assigned to the program. The Government personnel will include senior user personnel and supporting command personnel in addition to the Government program manager and his/her key staff, key support contractor personnel, senior government on-site representatives, and any designated system level leaders. The Government complement will not exceed (n) personnel. The workshop shall consider the following topics as a minimum:

H.2 Team Building Workshop

After the conduct of the "partnering" workshop and within ninety days after Contract Award, the Contractor shall host a working level "Team Building" workshop at an off-site facility. The contractor shall provide a third-party facilitator to conduct the workshop. The contractor attendees shall include all contractor and subcontractor members and the contractor's program manager. The Government personnel will include all Government and support contractor team members and the Government program manager. A separate session shall be held for each team. The workshop shall consider the following topics as a minimum:

Appendix B: "Is It Working?" Questionnaire

To determine whether the partnership is working well, answer the following questions. A negative answer indicates an area that must be improved in order to maximize the benefits of partnering.

Michael J. Bloom works in the Systems Engineering Process Office of the MITRE Corporation, Bedford, Massachusetts.    Email: sepo@mitre.org