The unintended consequences of category management’s best-in-class approach?   

This column was originally published on Roger Waldron’s blog at The Coalition for Government Procurement and was republished here with permission from the author.

Last week, we examined the recent draft circular issued by the Office of Federal Procurement Policy (OFPP) regarding the implementation of Category Management. As a follow-up, this week’s FAR & Beyond blog further examines some of the legal, policy, and operational questions surrounding the draft circular’s designation of “best-in-class” (BIC) contract solutions for mandatory use.

First, as a threshold matter, it remains unclear what, if any, statutory authority exists to support the Office of Management and Budget (OMB) mandatory designation for BIC contracts. To date, OMB has yet to provide any statutory authority for its designation. Pursuant to the Clinger-Cohen Act, 40 U.S.C. 11302(e), OMB can designate executive agents for the government-wide acquisition of information technology. GSA’s IT GWAC, NASA SEWP, and the NIH GWACs all operate pursuant to an executive agency designation. In addition, the OFPP Act, 41 U.S.C.1121(f), limits OFPP’s authority to be involved directly in certain agency procurement decisions. In light of this limitation, there is confusion about what authority is being exercised by OFPP/OMB when it designates government-wide mandatory use contracts.

The creation of government-wide mandatory use contracts raises additional fiscal law questions that must be addressed. Typically, absent some specific statutory authority, the funding of interagency transactions (e.g. use of another agency’s contract) is governed by the Economy Act. See, generally, FAR 17.5.  FAR 17.5 also includes specific requirements with regard to documenting the contract file concerning decisions to use interagency transaction to acquire products and/or services through contract vehicles, like the GSA schedules, the IT GWACs, or to utilize assisted services. It is unclear how the procedural requirements for utilizing a BIC preferred or BIC mandatory contract solution square with these pre-existing authorities, processes, and procedures.

Second, as a policy matter, mandatory contract vehicles could lead to significant risk for government and industry.  Without vigilance, a well-intended cross-functional team could designate “winners and losers” through mandatory contract solutions for customer agencies and contractors in an attempt to manage the market. Such an approach can limit access to ongoing commercial competition and innovation, as well as negatively impact the small business community.

Agency needs vary, and through the schedules program, GSA has risen to the occasion to meet these needs by accessing the commercial marketplace 365 days a year through continuous open seasons.  GSA Schedules are the most successful government-wide, commercial item contracting program, with at least 33 percent of all purchases under the program going to small business concerns.  Agencies also leverage the schedules when using Blanket Purchase Agreements (BPAs) to meet strategic program requirements.  It seems that whenever a new contracting need is identified, the GSA Schedules serve as the strategic platform to meet the government’s needs, the latest example being the identity protection BPAs established in the wake of the Office of Personnel Management (OPM) data breaches.  Yet, it appears that the GSA Schedules will not be designated a BIC contract solution.  This result is confusing, as, notwithstanding GSA’s good faith efforts, it will only serve to increase contract duplication.

In no way does the Coalition stand for the proposition that the government should not seek opportunities to increase operational efficiency and reduce inappropriate duplication.  Indeed, there is a fruitful discussion to be had in developing a means for common-sense alignment across agencies beyond the authority of the Economy Act.  The concern here is simply that, given the high stakes involved in creating a government-wide, mandatory contract solution, the BIC selection could become an unwieldy or parochial exercise focused on process, rather than securing best value in furtherance of agency missions.  Already, there are indications that one size does not fit all.  For example, GSA’s OASIS is not considered BIC, reportedly because there may be customer agency concerns regarding the available pool of contractors.  The result, then, risks an increase in contract duplication.

Finally, it should be noted that the draft circular makes no provision for industry input when selecting a BIC contract solution.  For success, the BIC evaluation process should include input from key stakeholders across the spectrum, including from industry partners who can inform their government colleagues of the best value products, services, and solutions to meet customer agency needs, thus allowing the government to make informed decisions.

The Coalition has appreciated the great efforts made by OMB, OFPP, and GSA to reach out to industry for reaction to the proposed circular.  These efforts to understand and collaborate create an esprit de corps among stakeholders as we focus our energies on serving the citizens.  As always, we offer any assistance needed to the government to help reduce regulations, streamline processes, and put the “commercial” back in commercial item contracting.

Roger Waldron is the president of the Coalition for Government Procurement, and host of Off the Shelf on Federal News Radio.

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