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Best in Class Contracts—Where is the Classroom?

On October 7, 2016, the Office of Federal Procurement Policy (OFPP) issued a draft Office of Management and Budget (OMB) Circular, Implementing Category Management for Common Goods and Services, (the circular).  The circular sought to establish “key principles, and strategies and policies, roles and responsibilities, and metrics to measure success” for category management (CM) across the government.   Best in Class (BIC) criteria for contracts was one of the key policies set forth in the circular.

On November 7, 2016, the Coalition submitted its members’ comments in response to the draft circular, addressing among other items, the statutory authority and performance metrics for CM, the creation and use of BIC contracts, and CM data collection requirements.  The Coalition also listed 18 industry questions for OFFP/OMB regarding the proposed CM implementation.  Subsequently, a December 8, 2016, FAR & Beyond blog also specifically addressed BIC policy and implementation, raising questions regarding OMB’s authority to designate BIC mandatory use or “preferred” contracts, associated fiscal law compliance, and the operational and market risks to government and industry in creating BIC contracts.

To date, OFPP has not responded to the questions; nor has it issued a final circular.  Nonetheless, it appears the drive to implement CM continues through, in part, the ongoing designation of BIC contracts.  The continuing CM implementation appears to be “guided” by the May 2015 Government-Wide Category Management, Guidance Document – Version 1.0, a document that, appears to be an updated version of previous Federal Strategic Sourcing Initiative Guidance.  Our review of current policy documents indicates that this CM Guide is likely the operative document establishing the general criteria for BIC contracts.

Putting aside the discussion of the impact, if any, of the Administration’s Regulatory Freeze announced last January, rather than identifying key criteria that lead to superior performance outcomes, the current BIC criteria focus on administrative process-related measures and data reporting in determining BIC contracts, data reporting that is imposed on contractors through initiatives, like Transactional Data Reporting.

As a result, the OFPP/OMB are establishing a management framework that selects BIC contract “winners and losers” based on government-unique processes and data reporting, rather than contract performance characteristics that deliver best value mission support.  Significantly, the BIC process makes no provision for industry input when selecting a BIC solution. Any selection of a BIC contract should include input from across the spectrum of stakeholders, including industry partners: how else to best reflect the marketplace than by including the input of both customers and contractors?

Further, even where the BIC process seeks to measure savings, there is an overemphasis on pricing versus total acquisition cost (TAC).  In fact, there are no documented savings covering behavioral and/or administrative savings when determining BIC.  As currently structured, it appears that BIC savings are predominantly measured based on a comparison of contract level pricing to task/delivery order and/or Blanket Purchase Agreement (BPA) pricing.  This approach is a false measure.  Prices at the contract level are based on differing terms than those at the order level.  Specifically, the price at the order level reflects a response to a firm commitment from an agency customer.  This fact is especially true of services, where agency-specific requirements drive the technical approach and pricing.  That is why Multiple Award IDIQ contracts, including the GSA Schedules program, are structured, and required, to seek competition at the order/BPA level for agency-specific requirements.

So, how does the government distinguish savings on one multiple award IDIQ from savings on another when selecting a BIC contract vehicle?  How does the government focus on mission performance outcomes when selecting a BIC contract?  How do the current process-driven BIC criteria drive best-value solutions to meet customer agency mission needs?  What is the impact on small, medium, and large contractors when a contract vehicle is not designated BIC?  What are the right criteria for BIC?  Do we need BIC?  Why is there no provision for industry partner input when possibly selecting one of their contracts as a “winner” (BIC) or “loser” (not BIC)?

These are just some of the member questions regarding BIC contracts that have gone unanswered since comments were submitted on the draft circular.  At this point, given the lack of OFPP feedback on the public’s questions and comments on the draft circular and the absence of a final circular, perhaps, in the interests of transparency and accountability, it is prudent for the government to pause, reflect, and reengage the procurement community.  The Coalition stands ready to engage in a robust dialogue across the procurement community on strategies to support best value procurement outcomes for customer agencies and the American people.

And by the way, does anyone else wonder why “ALL” government-awarded contracts aren’t considered BIC?

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