Changes are coming to professional services thanks to contract management

Changes are coming in the way the General Services Administration purchases services. In April the Office of Federal Procurement Policy released a new strategy to use category management to reduce multiple award contracts, and contractors will begin seeing the results soon.

“Services are procured very differently than commodities. What I’m focused on, and what senior leaders across government are focused on, in particular senior procurement executives, are we really need to move how we’re buying services to a performance-based environment,” said Tiffany Hixson, assistant commissioner of the Office of Professional and Human Capital Services within the Federal Acquisition Services at GSA. “We’ve been on this journey for many years. It really needs to be rebooted, and we’re going to continue to push in terms of how we buy services to being performance based. Buying engineers by the pound is not an effective way to deliver mission capabilities.”

During Deltek’s Spending Spree event July 19, Hixson said procurement officials need to focus on the outcome they want from a particular contract action, not necessarily the price. While there are some subcategories of professional services where price can be a driver, more often than not, officials should be looking at the value of the capability delivered.

“Traditional strategic sourcing proposals based on price don’t work well, in my opinion, in the services acquisition space,” she said. “I think most procurements in services need to be done from best-value perspective.”

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Toward this end, Hixson said her team has taken over responsibility for the Seven Steps to Performance-Based Acquisition resource on GSA’s Acquisition Gateway, and updated it. They added an eighth step, the “close out contract,” and renamed it simply “Steps to Performance-Based Acquisition.” The resource shares best practices for performance-based acquisition in professional services.

In addition, Hixson said GSA is trying to increase use of the professional services schedule, which has four tiers. Tier Zero is open market, and not managed from a policy perspective. Tier one is agencywide, IDIQ, preferred source managed contracts that collect data. Tier two is schedules, and tier three is best-in-class.

“Agencies have been given goals in terms of improving the maturity of their spend, so as you move up from tier zero to tier three, the maturity of your management, you get credit for that, from an OFPP perspective,” Hixson said.

Thus far, GSA has managed to reduce management advisory and technical engineering services, two of the biggest spends in professional services, by 14 percent. They’ve done this by largely moving toward existing contracts.

Too many contracts, too few GSA officers

Part of the problem, Hixson said, is that there’s simply too many contracts for too few contracting officers to manage. As of July 10, the top 20 percent of professional services spent in 2018 is spread across 243 contracts in two agencies, and is worth $9.8 billion. It’s managed by just 16 contractors.

The top 80 percent, worth $39.4 billion, is spread among nearly 10,000 contracts and is managed by 720 contractors.

Overall, there are 185,943 contracts in professional services spread among 13,838 contractors, worth a total of $49 billion.

“Really, the challenge that I have from a category management perspective is how do we address that challenge?” Hixson asked. “How do we keep the market open, allow for competition, ensure that we’ve got small business participation, but reduce the number of contracts the industrial base is managing? That’s all cost that we are pushing into the federal acquisition environment.”

GSA is also looking to maximize small business participation in professional services. History has not been kind to small firms when it comes to big, bold initiatives to better manage spending, reduce costs or, as is the case for category management, all of the above and more.

GSA is launching a “Did-you-know” campaign to educate agencies about how small businesses participate in the federal acquisition marketplace, and what services they can provide for agencies.