The Office of Federal Procurement Policy’s new guidance requiring business cases for all new multiple-award contracts worth at least $250 million attempts to solve one major problem with the growth of these vehicles over the last decade.
But it doesn’t address the existing multiple-award contracts (MACs) base. To that end, OFPP and the General Services Administration are now creating a database of all current blanket purchase agreement (BPAs) on the Federal Supply Schedules run by GSA.
OFPP Administrator Dan Gordon, said this lack of visibility into schedule BPAs is one of the biggest blind spots in federal acquisition.
“We have agencies entering into hundreds of BPAs which are often for the same goods and services. They are duplicating one another, they are wasting effort and they are dividing up the federal marketplace,” Gordon said in an interview with Federal News Radio. “We are working with GSA to create a directory of those BPAs under the Federal Supply Schedules so agencies will be able to quickly do comparison shopping and find the best deal. There is no reason to create a new BPA if another agency has a BPA in place with good pricing.”
OFPP always had a directory of governmentwide acquisition contracts (GWACs) because under the Clinger-Cohen Act agencies have to submit business cases to create these vehicles. But over the last decade, the proliferation of these contracts has become a larger problem as the resource- and dollar-cost have risen.
“The proliferation, which the SARA Panel commented on as a problem, has definitely continued and has probably gotten worse,” said Marcia Madsen, a partner with Mayer Brown in Washington and the former chairwoman of the Service Acquisition Reform Act (SARA) panel.
Second attempt to tame MACs
OFPP tried to address this issue in 2008, Madsen said, but agencies didn’t implement the 75-page document very well.
“This is not a 75-page document. This is a short document with a very clear procedure in it so it should help,” Madsen said referring to OFFP’s recent memo. ” I think it’s a welcome development. In some respects it may not go far enough, as we suggested OMB review not just new, but existing ones. But the guidance is quite specific, it’s clear about the types of vehicles and what needs to be in the vehicles, and it is clear about the standards agencies should apply.”
Stan Livingstone, a manager in the acquisition practice area for ASI Government, echoed Madsen’s optimistic comments on the memo.
“It gets right at the core of longstanding problems that have existed for government and industry for a long time,” said Livingstone, whose company provides acquisition development assistance to agencies. “There are too many vehicles for products and services. The government doesn’t leverage its buying power and all of these MACs dilutes the government’s buying position.”
He added that OFPP’s memo takes an intelligent approach because it requires agencies to take a strategic and analytical look at existing contracts before going forward. This is something agencies weren’t required to do before.
And that is where the directory will help influence what Gordon calls a broad culture in how agencies use multiple award contracts.
“Agencies are used to doing their own procurements and not thinking about whether it makes sense to do a new contract,” Gordon said. “The more we’ve listened, the more we’ve studied, the more we’ve thought about it, the more we’ve realized we can squeeze savings out of the procurement system by avoiding duplication. The issue here is ‘Do I really need a new contract?’ If I don’t, if I can piggyback on someone else’s, I can save money. I can do better buying and we can reduce the burden on the workforce and everyone ends up winning.”
Gordon added it’s those single agency MACs that most concern OFPP.
“We think that the most duplication isn’t coming for interagency contracts, but single-agency contracts,” Gordon said: “When the department of X decides to go to the trouble and create a contract for something that department of Y already has a contract there that department of X could piggyback on. The duplication we are most focused on and I think is the greatest waste of taxpayer funds is single-agency contracts when another agency already has a contract for what that agency wants.”
Requiring agencies to submit business cases to the OMB MAX intranet portal for at least 15 days will give other departments a chance to review them, Madsen said, but it will also make it easier for OFPP.
No separate review panel
OFPP decided not to create a separate review panel for MACs but will retain the right to review the business cases on an as-needed basis.
“It was our judgment having discussed this with the agencies, as you move forward with a culture change that is this important, this significant, it’s better for us to be collaborating with the agencies rather than forcing the agencies to get some external party sign off,” Gordon said. “That is why we decided not to create an external review board or have OMB be the review board.”
He added OFPP also wants the process to be fast and not get slowed down by layers of review.
Agencies want to feel in control of their contracts, Livinstone added. If they go through the business case process, agency executives will make the decision to move forward or not and that, many times, is easier than having someone else decide for them.
Gordon also said OFPP is starting slowly with the business case requirement. After Jan. 1, any new request for proposal must go through the business case process first for contracts worth more than $250 million over the life of the procurement. OFPP will expand the threshold to $100 million in 2013 and $50 million in 2014.
Between now and Jan. 1, Gordon said OFPP, GSA, the Defense Department and NASA — which make up the Federal Acquisition Regulations Councils — will develop “frequently asked questions” and help agencies understand how the business case process will work.
“This new process will reduce the burden on agencies, but it’s also good for industry, who have complained to me repeatedly that they are forced to spend bid and proposal costs on contract after contract,” Gordon said. “We are trying to reduce that overlap and duplication.”