Category Management Addressing Contract Duplication Best Commercial Practices and Total Acquisition Cost (TAC).

With the naming of the 10 Category Managers, the Office of Management and Budget (OMB) has taken a step forward in realigning procurement operations across the federal enterprise. Category Management’s goals include:

  1. Reducing contract duplication
  2. Adopting commercial best practices, and
  3. Leveraging opportunities to increase value and reduce costs.

This blog marks the beginning of a series of blogs focusing on the opportunities of Category Management to meet these goals.

Reducing Contract Duplication

Along with others in the procurement community, the Coalition recognizes that, reducing duplication is a positive goal. However, given the immense size and breadth of government, the fulfillment of unique agency missions may make contract duplication inevitable in some cases. For this reason, acquisition policy needs to allow for agency flexibility in those circumstances. Still, with regard to contract duplication, there are legitimate concerns that the government may not be capitalizing on opportunities to improve efficiency by reducing unnecessary contract duplication.

In particular, the number of multiple award IDIQ contracts for IT and professional services continues to grow. In 2011, OFPP issued guidance for the review and approval of business cases for certain interagency and agency-specific acquisitions. This guidance was the first policy step toward addressing contract duplication and moving to a holistic approach to shared services contracting platforms. More recently, OFPP Administrator Anne Rung indicated that this guidance will be updated in terms of review and approval criteria. The Coalition welcomes this focus on addressing contract duplication and looks forward to working with OFPP on this common area of concern. More on contract duplication in the April 1st FAR & Beyond blog.

Adopting Commercial Best Practices

With regard to commercial best practices, the Category Management Initiative’s focus on Myth-Busting the misconceived restrictions on communications with commercial firms is vital to identifying and incorporating commercial best practices. The Coalition looks forward to working with the Category Managers in identifying key opportunities and strategies to reduce barriers to entry and to maximize access to the commercial market. One major opportunity to enhance access to the commercial marketplace is through the untapped potential of GSA’s Federal Supply Schedule (FSS) program. As the largest commercial item contracting program in government, the FSS program can play a leading role in adopting commercial best practices that deliver increased innovation, value, and savings to customer agencies. GSA’s unique statutory authority for the management and operation of the FSS program provides the potential launching pad for a 21st century, government-wide commercial item contracting program. The April 8th FAR & Beyond blog will lay out the case for lift off!

Leveraging Opportunities to Increase Value and Reduce Costs

With regard to cost savings/reductions, the Category Management Initaitive should develop a program performance methodology that focuses on Total Acquisition Cost (TAC). Past blogs have discussed the importance of measuring TAC in identifying key procurement practices that increase efficiency, effectiveness, and value to the government customer and contractor base. Fundamentally, TAC includes price and the cost of all other factors incurred in the acquisition process, including the government’s administrative costs for planning and conducting an acquisition. Critical to cost assessment is the recognition that price is just one element of TAC. There may be instances where overall TAC increases, even though the price paid decreases. Thus, understanding TAC provides a data-driven opportunity to streamline acquisition processes and procedures.

Finally, the Coalition is dedicating a significant portion of our April 28th Spring Training Conference to the Category Management Initiative. We appreciate the positive response to date from the Category Managers and procurement leaders across government with regard to participation in this conference, as we believe that, for the noble goals of this effort to be realized, all stakeholders need to be engaged. The Coalition looks forward to a cross-cutting Myth-Busters dialogue regarding the strategic goals and operational dynamics of Category Management, and we hope to see you there.