The time is right to finally take a bite out of contract duplication? OFPP thinks so

The Office of Federal Procurement Policy’s solution to stop the proliferation of duplicative multiple award contracts has been far from successful.

Agencies may be putting business cases on the OMB Max platform so others can review and comment, but few, if any, actually have been stopped.

So Anne Rung, OFPP administrator, is doing something about it.

Rung said she plans to modify that 2011 guidance from her predecessor Dan Gordon, requiring a business case for any multiple award contract worth more than $50 million.

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“My predecessor Dan Gordon deserves a lot of credit for beginning the business case process in recognition there was a lot of duplication and agencies weren’t aware when a contract existed already so they were going out open market, and we would argue that it was driving greater inefficiencies in the marketplace,” Rung said Jan. 27, during a conference call with reporters. “Over the years, it’s been successful in shedding light on existing contracts, but we recognize that we are now at a point where we want to take it to the next level. We need to be able to take some actions based on the information we are receiving and truly drive more dollars to existing governmentwide solutions.”

Rung said she the guidance is coming in the “future,” but said there was no specific date she could offer.

“I take it very seriously and it’s an important process and we want to be very thoughtful on how we develop it and roll it out,” she said.

The modification is necessary for several reasons and in many ways is already happening.

OFPP has to improve the guidance because while agencies were posting business cases, few were commenting or doing anything that would hold up another agency’s efforts.

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As one industry source told me recently, agencies have an informal agreement not to comment on one another’s business cases. The source said there is a real fear of retribution: “If you stop mine, I’ll stop yours.”

The source said the business case process was a good idea, but just hasn’t been successful.
OFPP has struggled with the duplication issue for years. Back in 2011, Gordon said this lack of visibility into schedule BPAs is one of the biggest blind spots in federal acquisition.

To that end, OFPP and the General Services Administration created a database of all current blanket purchase agreement (BPAs) on the Federal Supply Schedules run by GSA. The Interagency Contract Database lists all contracts and awards under blanket purchase agreements, governmentwide acquisition contracts and other indefinite delivery vehicles (IDVs) since at least 2003.

Federal News Radio first reported in 2010 the ongoing problem with the proliferation of multiple award contracts. We found agencies believed their requirements were unique. They didn’t like paying the fees charged by GSA or NASA or other providers of governmentwide contracts. And agencies wanted to control their own destinies regarding the contractors they work with and how they spend their money.

For all of these and other reasons, the growth of multiple award contracts remains a problem for the government and industry alike. Bloomberg Government and the National Contract Management Association reported that in 2014, 21 percent of all procurement dollars went through multiple award contracts, up from 17 percent in 2010 and 20 percent in 2013.

Bob Lohfeld, president of Lohfeld Consulting, predicted recently that the 10 major multiple awards or GWACs up for competition in 2016 will have an estimated value of more than $128 billion.

OFPP seems to understand the business case analysis process and proliferation of multiple award contracts continue to cost agencies and contractors too much money. If you look at the recent laptop/desktop memo requiring agencies to buy hardware only from governmentwide contracts run by GSA, NASA or the National Institutes of Health, that’s a definite push toward consolidation along commodity technology.

OMB is drafting a similar policy for mobile devices and associated services to better manage a $1 billion market.

These two efforts as well as the draft memo on better managing software enterprise licenses build on the administration’s category management effort.

OFPP and GSA also announced on Jan. 27 that the Acquisition Gateway would open to the public in the next week or so.

“The gateway is truly meant to be a neutral tool for all of government,” Rung said. “We have content, contracts and expertise from agencies across the federal space, not just GSA. We think by shedding light on all the existing contracts out there and information we can hope for greater transparency and competition.”

She said by opening the gateway to more stakeholders, GSA can help drive education and better decision-making for the acquisition workforce. In fact, Rung said OFPP’s goal is to reach more than 10,000 federal acquisition workers by the end of 2016 to promote the use of the Acquisition Gateway.

As of Oct. 1, GSA said about 5,000 government employees have used the gateway, and about 19 acquisition hallways are open listing existing contracts, sample statements of work, government-contributed articles and more information to help acquisition workers make decisions and understand how to buy smarter.

Rung also said OFPP would soon announce category management leaders for all 10 categories.

“Not having named leaders has not stopped us from moving forward and doing great work,” she said. “We have many people working behind the scenes, and have not slowed down because we haven’t announced formal leads.”

Rung said OFPP is measuring the success of category management in several ways.

“One of them is certainly savings. We are going to track our savings from both category management and from smarter IT efforts when there is some overlap with IT category management,” Rung said. “One of our outcomes is bringing more spend under management. OFPP has developed a methodology by which we are beginning to track how many agencies have brought dollars under management. We have a set of criteria to define that. We talk about different levels, tier one, tier two, tier three. Tier three being the most mature involving governmentwide management of those commodities and for us success is reaching maturity where the $270 billion of common spend is at tier three of the most mature of bringing spend under management.”

Another outcome, Rung said, is reducing duplication of contracts. She said OFPP is tracking how much money agencies are spending outside of governmentwide contracts.

So by updating the 2011 policy requiring business cases plays directly into these related efforts to better manage and understand how agencies are spending money.

Return to the Reporter’s Notebook.