With about four months before the end of the Obama administration, the push to recognize, even celebrate, and institutionalize its management agenda is coming fast and furious.
The latest example is around category management. The Office of Federal Procurement Policy released a draft circular for public comment on Oct. 8 detailing six broad areas of category management, including cementing this new governmentwide approach in policy, and the strategies and governance processes that go along with it.
Comments on the draft circular are due by Nov. 7.
OFPP believes the initial success of category management is so clear that it decided to publish a new circular around it — something that is rarely done anymore.
Insight by ProPricer: During this webinar James Woolsey, the president of the Defense Acquisition University, Frank Kelley, the vice president of the Defense Acquisition University and Michelle Currier, the professor of contract management at the Defense Acquisition University, will discuss the future of DoD contracting, pricing and acquisition. In addition, Michael Weaver, the professor of contract management at ProPricer will provide an industry perspective.
“This circular brings together these earlier policies and expands upon their concepts of economy and efficiency to establish the key principles, strategies, policies, processes, governance structure, and roles and responsibilities to implement category management fully as the principal way in which the government acquires and manages its common requirements,” OFPP wrote in the circular. “This circular does not address unique, agency/mission-specific requirements determined by the appropriate agency leadership to fall outside the scope of this directive. OMB category-specific policies (CM policies) will include instructions for making these determinations, as category strategies are developed.”
Anne Rung, who left on Sept. 30 after two years as OFPP administrator, said in a blog post on her last day that category management already saved the government $2 billion, and agencies were on track to save a total of $3.5 billion by the end of 2017.
“We’ve seen prices drop by as much as 50 percent of personal computers since the release of the workstation policy. By the end of 2016, 45 percent of the $1.1 billion spent in annual purchases for desktops and laptops will be consolidated into three governmentwide contracts,” Rung wrote. “We carefully built the infrastructure to support category management to ensure that it becomes a permanent approach to buying common goods and services. We created a governance structure, developed guidance that laid out best practices of category management, and appointed 10 category managers and 350 supporting team members. We advanced innovative and effective category management policies that streamline the more than $8 billion in annual spending for IT software, hardware and mobile services and devices, and to drive further savings, improve transparency, and reduce duplication in contracting.”
In many ways, the jury still is out on category management. One year isn’t a long time to judge the effectiveness of a new initiative and many in industry question whether agencies are getting better prices.
Roger Waldron, the president of the Coalition for Government Procurement, wrote in a blog post that a lot of unknowns remain about the impact of category management.
“[T]he direct and indirect costs of category management are, to date, not fully understood. For example, GSA’s transactional data rule, which, among other things, requires contractors to report on eleven categories of transaction information for all sales to the government, has time, program, administrative, and other direct and indirect costs, many of which, appear not to have been tracked and measured,” Waldron wrote. “As such, before attempting to ‘codify’ the structures/processes coincident to category management, the government should identify clear, specific program metrics, including the direct and indirect costs of acquisition for the government and contractors, as well as the impact on market participation by vendors.”
Waldron wrote one big red flag in the draft circular is the continued fight of the “decentralization vs. centralization” battle.
“The proposed circular will establish a highly centralized structure for procurement management operations across government reminiscent of approaches taken over half a century ago. Indeed, it harkens back to the Brooks Act, which centralized IT procurement management authority at GSA, and which was repealed with great deliberation based on agency needs and the best interests of the government,” he wrote. “Significantly, the circular authorizes management structures and controls that essentially establish OFPP management, oversight and control of agency procurement operations in furtherance of category management.”
This leads me back to the discussion of legacy. As Waldron pointed out, one year into a governmentwide initiative doesn’t provide a lot of data to evaluate the success or impact of the initiative so why is OFPP putting out a new circular to institutionalize a process that may still need to be evolved? And as we’ve seen with other Circulars — A-76, A-123, A-130 — changes and updates can take decades to come to fruition.
Yes, as Rung pointed out, category management seems to be having a positive impact on how agencies buy $270 billion worth of common products and services. The computer and laptop buy that started in August and continued into September was a great example of the potential of category management.
Rung said the Acquisition Gateway run by the General Services Administration reached a nice milestone — 10,000 users — but how many of those 10,000 contracting officers, contracting officer representatives, program managers and others are actually using the information in the gateway versus signing up to check out what’s there and never coming back?
The draft circular calls for the continued use of data and analysis to make decisions and establishes metrics such as “increasing savings, reducing duplication, increasing spend under management, achieving small business goals” and other goals to be identified as the initiative matures. Both of these key points in the draft circular are important to understanding the impact and success of the initiative.
But is drafting a circular a bit premature given the number of questions that still remain about category management?
Few would argue that contract duplication is out of control. Few would argue that the government can do a better job with negotiating prices and holding vendors more responsible for purposeful, decentralized selling in order to maximize profit and revenue.
There are many who believe OFPP should have more answers before putting together a policy that still is in the crawl stage.