Number of multiple award contracts drop, can OMB’s new requirements continue the trend?

Efforts to stop the proliferation of multiple award contracts have found limited success. Data from Bloomberg Government shows that while the number of MACs governmentwide — Defense Department and civilian agencies — have dropped since 2012, there still are more than 2,600.

The total number of MACs have dropped by 239 in the five years since the Office of Management and Budget implemented the requirement to submit a business case for any new multiple award contract that will be worth more than $50 million over the life of the vehicle.

The 8 percent reduction comes as spending on MACs increased by $5 billion in 2016, as compared to 2015. Bloomberg Government reported in April that spending on these contract vehicles increased to $111 billion last fiscal year from $106 billion the year before.

Bloomberg Government compiled a list of all multiple award contracts across the government over the last five years.

A couple more data points from BGov:

• The General Services Administration’s Schedule 70-Information Technology remains the largest MAC vehicle, but the combined MAC share among all GSA Schedules is shrinking.

• The 15 largest MACs accounted for about 31 percent of all MAC spending in 2016.

• 74 percent of MAC spending occurs in five market classifications. IT and professional services are the largest.

Why does this matter? In an effort to reduce the burden on agencies for reporting data, OMB issued new guidance for analyzing and justifying the necessity of a new multiple award contract or to renew one.

OMB says it’s moving from a 10-to-15-page business case for 2011, to one that is three pages long and more streamlined.

The new process is broken down into four steps:

1. Informed analysis: The agency will review relevant performance and pricing information on the Federal Acquisition Gateway on existing contracts.
2. Upfront engagement: After reviewing the data on the gateway, the agency will decide whether creating or renewing its own contract is necessary and will use an OMB provided template to justify its decision.
3. Facilitated collaboration: OMB will share the agency’s explanation with the relevant Federal Category Manager and any other appropriate officials and facilitate discussion on the agency’s evaluation.
4. Optimization results: If the agency decides not to use an existing contract, it will issue an agency-wide policy to make it mandatory to use the new contract. The agency also will provide data to the prices paid portal and acquisition gateway, and send OMB data about spend compliance, savings and other information as necessary.

OMB plans to begin a pilot of this approach in August and will evaluate the results of the test no later than March 2019.

There have been pockets of success in reducing the number of duplicative contracts.

GSA and the Defense Information Systems Agency’s collaboration on a commercial satellite services effort is one of the best examples. Another good one is the Defense Health Agency deciding to use GSA’s contracts to buy health IT services.

In fact, in early May, DHA became the first agency to award a task order under the new health IT special item number (SIN). DHA awarded a $15.6 million task order for the Army Solution Delivery Division for an Enterprise Blood Management System (EBMS). This award will help effectively manage and track blood donor registration, screening, blood products, and associated record-keeping for military and civilian blood donors.

At the time of award, four other agencies have issued 27 task orders or requests for information against the SIN.

BGov also highlighted another recent decision to reduce the number of MACs.

The Army announced it would shift work performed on 15 expiring small-business engineering task orders worth more than $200 million to GSA’s One Acquisition Solution for Integrated Services – Small Business (GSA OASIS SB) contract vehicle.

But overall, agencies too often believe they need their own contract vehicle, despite ample evidence of the costs to vendors and themselves, and the constant threat of protest.

Let’s hope this latest attempt by OMB comes with a little more oversight for these justifications and reduces the number of multiple award contracts more quickly.

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