The White House has informed government procurement executives they must take new steps to avoid establishing or renewing certain types of procurement contracts that potentially duplicate existing contracts for goods and services agencies commonly buy.
The memo, issued by Office of Federal Procurement Policy Administrator Dan Gordon Sept. 29, takes aim at missed opportunities by agencies to leverage the government’s buying power.
It also is intended to curtail what many regard as the wasteful practice of establishing new contracts that overlap or duplicate existing contracts for billions of dollars of supplies and services.
“For too long, each agency was on its own in contracting,” said Gordon, in a White House blog post also released Sept. 29.
The action by OFPP was generally welcomed by the contracting community.
“The number of GWACs has declined in the past few years while agency-specific contract vehicles are increasing; it seems that everyone likes to have their own contracts,” said Steve Charles, co-founder and executive vice president, immixGroup (and a contributor to Breaking Gov.)
“So with no intervention like this from OFPP, interagency contracting would eventually wither along with all the benefits. It was high time for OFPP to act,” he said, “but look for a short-term surge of agency-specific vehicles between now and 2014. Then the pendulum will swing and I predict interagency contracting will surge again around 2017,” he said.
Under the new guidance, agencies planning solicitations for new acquisitions will be responsible for developing a business case to support the establishment or renewal of three types of acquisition contracts:
Governmentwide acquistion contracts, which are multiple award, indefinite delivery, indefinite quantity contracts often used for buying technology systems and services. Starting after Dec. 31, 2011, business cases are required for all GWACs regardless of estimated value.
Multi-agency contracts, which provide a wide variety of supplies and services to agencies, managed by the General Services Administration. In cases where interagency use is expected to be significant (exceeding 25% or more of total obligations over the life of the contract), agencies will also have to make a business case beginning in 2012.
Agency-specific contracts or blanket purchase agreements. In cases where a contract or BPA would create a significant overlap (where more than 25% of the total obligations over the life of the contract would include supplies or services covered by the government’s SmartBUY program and Federal Strategic Sourcing Initiatve), agencies would again have to make a business case beginning in2012.
“Business cases shall be approved by an authority no lower than the agency’s senior procurement executive (SPE) or equivalent official,” the memo said.
“In the business case, agencies are required to balance the value of creating a new contract against the benefit of using an existing one, and whether the expected return from investment in the proposed contract is worth the taxpayer resources,” Gordon said in his blog.
“Insisting on that cost/benefit analysis in the business cases should go a long way to avoiding duplicative contracts,” he said.
Gordon also said the new guidance should increase information-sharing among agencies.
“There have been some who have said that interagency contracts are a problem. We disagree. We have seen firsthand that interagency contracting – done intelligently, and in a way that reduces duplication – can help us leverage the federal government’s buying power to get better prices,” he said.
“The progress we’ve made in this area is a key reason why we think GAO should take interagency contracting off its ‘high risk’ list,” he added. Keep reading →