Bloomberg Just Host Webinar with Administrator Anne Rung, OFPP
April 7 2016
Administrator Anne Rung wants to change how you do federal purchasing. Today, Office of Federal Procurement Policy purchases and pricing are managed individually across thousands of procurement units. Rung’s vision? Manage entire categories of purchases collaboratively, cohesively and in sync across agencies. The result is a fundamental shift in how contractors experience competition and pursue partnerships.
Understanding Category Management
Who are the key players in the ongoing consolidation process? Why is the shift occurring?
How will category management affect government-industry relationships and change the future contracting landscape? What does your organization stand to gain as government improves its contract efficiency and market intelligence?
Weathering a Presidential Transition
Come November, can we expect a drastic change in the category management process?
GSA: A Step Forward for Category Management: GSA Maps Product Service Codes to Categories
The Category Management Leadership Council (CMLC) is a council of representatives that come from the agencies who comprise the majority of federal procurement spending. The CMLC’s mission is to be the governing body that makes important decisions and sets the direction of the government’s category management initiative. The council is chaired by the Administrator of Federal Procurement Policy and it has representatives from the Departments of Defense (DOD), Energy, Health and Human Services, Homeland Security, Veterans Affairs, the General Services Administration (GSA), the National Aeronautics and Space Administration (NASA), and the Small Business Administration (SBA).
Over the last year,the CMLC and the Office of Management and Budget (OMB) took a critical step forward for the federal acquisition community. They developed a government-wide category structure to support category management implementation across the federal government, a major milestone.
To develop the structure, CMLC and OMB turned to the Federal Procurement Data System (FPDS), which is the system the federal government uses to track its spending for purchases over $3,000. CMLC and OMB looked at FPDS data from fiscal year 2014 and divided it into 19 categories. There are 10 common spend categories, which account for $275 billion worth of purchases on goods and services, and nine additional defense-centric ones; the federal government spent $153 billion on defense-centric categories. Then CMLC and OMB took product services codes (PSCs) and matched them to these 19 categories.
Mapping the PSCs to the 19 spend categories was a multi-step process vital to the development of the government-wide category structure. These steps involved conducting spend analyses to verify the applicability of category structures, soliciting feedback from agencies across the federal government, and integrating federal agencies’ inputs into the government-wide category structure.
The CMLC and OMB are working on category management and they will use this category structure to analyze the federal government’s spend thoroughly and continuously. They will also use this structure to create category management strategies that make federal procurements more efficient and cost effective.
Leaders of the categories were recently announced. These experts will determine the strategies over the next 5-10 years. (See the attached)
Federal Government annual spending exceeds $50 billion for IT-related services, security, hardware, software and telecommunications. While recent progress has been made in consolidating technology needs and reducing duplication through data collection and analysis, many agencies continue to acquire IT products and services in a decentralized manner using thousands of separate contracts.
The Category Management Cross-Agency Priority (CAP) goal is focused on managing entire categories of common spending areas across agencies in order to improve cost efficiencies, improve levels of expertise and leverage shared practices. While IT spending is just one example, significant Government-wide cost reductions can be achieved in many spend categories through the acquisition and management of common goods and services using consolidated acquisition strategy, improved demand management and the use of subject matter experts to shape buying strategies.
Anne Rung, the U.S. Chief Acquisition Officer, reports in a recent announcement that
“By eliminating more than 700 duplicate professional services contracts, the Government is estimating savings of close to $4 million over the next five years with sustained annual savings of $1.3 million thereafter.”
Category management is a drastic change from the execution of purchasing, price analysis and vendor relationships that exist in the current landscape of thousands of separate procurement initiatives across Government. Category management will allow the Federal Government to “buy as one” through the management of common categories. Each identified category will be appointed a category manager and supporting team who will manage the category to a unique set of strategies. Whereas traditional strategic sourcing is typically initiated every several years, category management will be a continuous process of identifying and prioritizing projects.
Ten “Category Centers of Excellence,” have been identified, each with a varying number of sub-categories. The 10 high-level categories are as follows:
Security & Protection
Facilities & Construction
Industrial Products & Services
Transportation & Logistics Services
Travel & Lodging
Finally, the Acquisition Gateway, managed by the General Services Administration, has been updated to improve the availability of key acquisition information by category.