CPAs and Advisors with Your Growth in Mind

Government Contractors

Is Category Management the Future of Federal Procurement?

Historically, the Federal government has purchased goods and services one office at a time, within each agency, as these different offices have determined that they need to purchase something. This resulted in many procurement actions and duplication of effort and cost for purchasing personnel, contractors, and the people in all of the different offices who were often requesting the same items. Additionally, the quantities purchased by these individual offices were not always large enough to qualify for quantity discounts. The move to purchasing commercial items was a major step toward reducing the cost and effort of federal procurement, but the process was still the same—vendors selling their wares and services to many decentralized individual offices throughout the Federal government.

In the past few years, the Office of Management and Budget (“OMB”) has decided to take a lesson from industry and other countries and begin pooling the purchases of many offices into a few very large procurement actions. This is “Category Management”, as described in OMB’s December 4, 2014, Memorandum on Transforming the Marketplace, laid out in guidance issued in May 2015, structured in a Tiered Maturity Model of Spend Under Management, and put into effect by OMB’s October 16, 2015, Category Management policy 15-1, regarding acquisition of laptops and desktops. In addition to reducing unnecessary duplication of cost and effort for agency personnel, procurement personnel, and contractors, Category Management can enable agencies to take advantage of savings from quantity purchases, increase standardization of items purchased by the agencies, and provide enterprise-wide vendor managers so that vendors only have one or a few relationships to cultivate with federal procurement personnel, rather than the current myriad relationships across hundreds or thousands of procurement units.

By October 16, 2015, OMB had decided to focus Category Management of IT on a particular area—acquisition of laptops and desktops—and identified three contracting vehicles to be used for purchasing the five most common configurations of these items which are purchased by federal agencies. The OMB Memorandum of October 16, 2015, requires Chief Information Officers to fill at least 80 percent of their agencies’ new basic laptop and desktop requirements with the standard configurations. It also notes that maximizing small business utilization is a key principle and important component of the policy, with more than 64 percent of desktop and laptop dollars from these three contracting vehicles awarded to small businesses in 2014.

Although IT seems to have received much of the Category Management attention, as noted at acquisition.gov, there are nine other categories of acquisitions that are also subject to Category Management. The Office of Federal Procurement Policy recently named new category managers for each of these ten buying areas. As the Federal government recognizes efficiencies and cost savings from Category Management in all of these areas, that will likely reinforce this method of managing procurement and result in expansion to other buying areas. Consequently, government contractors will need to learn new ways of selling their goods and services to the government.

For additional assistance with Category Management, please contact one of Cherry Bekaert’s GovCon industry professionals.

Topics: , ,