Now that we have the WHAT down for Category Management (read Part 1 here)– it is time to move on to WHY. But first, a brief history lesson:
Category Management is not new. There is nothing in these memos that isn’t already in the FAR. The concept of Category Management has been called by other names by the Government over the last two decades. You are probably most familiar with the Federal Strategic Sourcing Initiative (FSSI). All of these initiatives have the same goals: buy smarter and save the taxpayer money.
Understanding the history is important. This initiative is not going away. I think that even if Category Management is forgotten, a copycat initiative will spring up in its place. This is why knowledge is power.
GOVERNMENT GOAL #1: Encourage More Strategic Sourcing to Increase Savings
“Mandatory is what we're moving toward. There will be winners and losers, and not all who want to sell to the Government can sell to the Government.”-Joseph Jordan, former Lead Administrator of the FSSI Program of OFPP
We can all agree that competition is positive – but this will have serious implications for ALL Government contractors.
This has been followed up by a Joint Proposal from the Department of Defense (DoD), the General Services Administration (GSA) and National Aeronautics and Space Administration (NASA) that would require agencies to write a report when they choose to not buy supplies or services though an “existing Government contract,” or a chosen “Best In Class” (BIC) contract. In the report, the Contracting Officer must compare the price of the goods and services selected with the prices offered through the FSSI and/or Category Management BIC contracts; and if said Contracting Officer chooses to go another route other than the BIC – they must extensively justify their choice.
The Government is also turning its Strategic Sourcing talk into action by focusing its efforts on reducing contracts. The most recent evidence is the early August roll out of the Government’s new Professional Services Strategic Plan, released on the Acquisition Gateway. This marks the next step in the ongoing shift towards Category Management. This Strategic Plan took its cue from the Professional Services Schedule consolidation, which is an ongoing effort reducing eight GSA schedules to one. It is GSA’s plan for the Professional Services Category (which accounted for $63B in annual purchases in FY14), to reduce the number of duplicated contracts by 20.9% by FY17. To put this into perspective, GSA stated in their FY 2016 Government-wide Category Strategic Plan for Professional Services that their team of Subject Matter Experts (SMEs) found that there are 52,000 stand-alone orders across almost 25,000 different contracts. If the data is correct, GSA intends to eliminate ~5,225 professional service contracts by FY17.
The Government also walked the talk earlier this month when GSA conducted a reverse auction to set up three blanket purchase agreements (BPAs) for five (5) agencies to potentially buy more than 45,000 laptops and desktops. This discounts offered by GSA’s schedule price list was an average 18.97% and saved over $6M by leveraging Category Management practices. This is the first time the Government has bought laptops and desktops this way – and this is the direct result of OMB’s October 2015 memo.
GOVERNMENT GOAL #2: Professionalize the Procurement Workforce
For decades, Government agencies and industry have identified a lack of expertise and training among procurement professionals as a key challenge for the procurement workforce. A potential answer for this challenge might be Category Management. The Category Management initiative drives community-driven learning which encourages Government professionals to share best practices, acquisition solutions and resources. Like the famous saying goes, “Team Work Makes the Dream Work!”
By leveraging community-driven learning, Category Management will enhance the capacity of the procurement workforce by giving them access to information that will help them do their jobs more efficiently and effectively. The most recent example of GSA making good on their word is the Acquisition Gateway. On the Acquisition Gateway, each category hallway offers contextual information to support acquisition professionals. This includes: articles, tools, category team members with contact information, links to previous solutions, events, news and solution websites and purchasing options.
In addition, GSA states that procurement professionals will have the opportunity to be trained and specialize within a specific category therefore becoming a Subject Matter Expert (SME). By doing this, GSA is creating a new, distinct career path and is making procurement and contract management a true profession.
GOVERNMENT GOAL #3: Increase Quality of Quantity
With the potential implications of increased strategic sourcing and professionalization of the Government procurement workforce, overall quality performance of a contractor’s portfolio of projects or programs will increase in importance. Currently, industry is accustomed to treating each Government department as an individual customer, with individual needs, wants, and biases; and most importantly, individual CPARS. Industry is not in the habit of being measured on the entirety of our business practices Government-wide. However, under Category Management, the Government as a whole will become a client due to increased sharing and communication between Category Managers, their teams and the procurement workforce in its entirety.
This will have consequences for industry and will expose various areas of a company such as: internal communication structure; program management office (PMO); and strength of business development and capture professionals. Category Management will create an opportunity for companies to bolster how depict changes in quality and how closely they manage their contracts for improved outcomes, efficiency, and savings to pass on to customers. In essence, this will actually allow the cream to rise to the top – as long as you have a BIC vehicle.
So now that we have the WHAT? and WHY? covered – it is time to start exploring the WHO? and WHERE?
In my next post, I am going to explore what Category Management has to do with the Business Development (the WHO) and WHERE this initiative is going to impact your business development and capture cycle. Do you have any questions about Category Management? Sound off in the comments below!