the $400b question: building a common foundation to...

The $400B question: building a common foundation to optimize

Federal procurement

May 17, 2016

SENSITIVE & PRE-DECISIONAL NOT FOR EXTERNAL DISTRIBUTION

DRAFT for discussion only

Today’s objectives

Outline the overall structure and volume of U.S. Federal government acquisition work

Introduce a professionalization framework for discussion

Provide an overview of elements focusing on key developments:• Talent development continuum• Category management approach• Community-driven learning (Acquisition Gateway example)

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Highlights of U.S. Federal government roles and responsibilities in the area of acquisition management

U.S. Congress

Government Accountability Office

Inspectors-General (agency-specific)

• Provides legislative guidance for acquisition work

• Defines statutory authorities for key entities

• Confirms key leaders

• Developed a framework for acquisition function assessment

• Conducts holistic reviews of acquisition work

• Makes decisions re protests

• Engage in reviews of specific actions/contracts or types of acquisition activities

President of the United States

General Services

Administration (GSA)

• Directly manages $34B in purchases

• Operates ~9,000 buildings

• Leads gov’t-wide technology transformations

Office of Management and Budget

(OMB)

Office of Federal

Procurement Policy (OFPP)

• Overall direction for gov’t-wide procurement policies, regulations and procedures

Federal Acquisition

Institute (FAI)

Courts• Court of Federal Claims has exclusive jurisdiction (as of January 2001) to hear pre-award and post-award bid protest suites by unsuccessful bidders on government contracts

Note: only identifies key entities for the purposes of today’s discussion; not an exhaustive list of stakeholders/offices andrespective roles/responsibilities

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Overall volume of acquisition work and key areas of spend under management – the $400B question

541 540 540 539 518462 443

0

200

400

600

FY08 FY09 FY10 FY11 FY12 FY13 FY14

• Contract spending accounts for approximately one of every seven dollars spent by the Federal government.

• Notable proportion of spend (~50%) on common goods and services

• An average of 15.5M procurement actions recorded each year (incl. modifications)

Federal government’s acquisition spend declined by ~20% in FY2008-14

$B

0

50

100

150

200

250$B

73

63

51

3526 248

Top 5 areas of spend accounted for ~60% of acquisition spend in FY14

Source: OFPP/OMB/EOP presentation on April 4, 2016

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Federal acquisition work aims to advance a range of priorities

*Goals refer to proportion of Federal contracting spend awarded to small businesses of various typesSource: OFPP/OMB/EOP presentation on April 4, 2016 for socio-economic outcomes; FAI 2021 for other priority areas

Focus on socio-

economic outcomes

• Commitment to increasing federal contracting opportunities for small businesses, including women-owned, veteran-owned, and small businesses located in Historically Underutilized Business Zones

• $550 billion in federal contracting dollars awarded to small businesses in 2009-14

Imperative to innovate

• Agile BPA deployment (build code, not paper), challenges, micro-threshold reverse auctions

Shift to shared

approaches

• Category Management• Evolution of Shared Services management• Benchmarking: acquisitions, IT, HR, Finance, real

property management

Importance of digital

government

• Evolving acquisition processes to help achieve President’s “Smarter IT Delivery” Goal and other initiatives in the information technology space

Pivot to program

management

• Increasing focus on program outcomes, e.g. proposed Program Management Improvement and Accountability Act

• Formal job series and career path for program managers

• Standards-based model for program management consistent throughout the federal government.

• Senior executive in each agency to be responsible for program management policy and strategy.

Program Goal*Small business total 23%8(a)* / Small Disadvantaged Business

5%

Historically Underutilized Business Zones

3%

Veteran-owned small business

3%

Women-owned Small Business (WOSB)

5%

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Complexity of modern gov’t procurements requires holistic approaches to workforce professionalization

Management approach

• Category management – buying as a single enterprise to drive value and generate savings

Accountability• Mandatory ethics training• Feedback via agency surveys• GAO and IG studies, reviews,

and audits

Regulation• Acts of Congress, Executive

Orders – procurement implications• Federal Acquisition Regulation

(FAR)• Agency acquisition regulations

Community-driven learning• Sharing of best practices,

acquisition solutions, resources and community discussions

Core training• Acquisition core

qualifications curricula and certification programs

Competency model• Competencies – behaviors

encouraged to advance and excel• Job profiles – definition of critical

jobs, essential experiences, knowledge

Systems• Define what to measure, when/how to collect information and how to ensure that measurements help make

and track acquisition decisions; address challenges as needed

1

2 3

4

5 6

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Federal Acquisition Regulation continues to evolve balancing predictability and ability to innovateMultiple factors define the need for continuous evolution of Federal Acquisition Regulation (FAR), including:• Acts of Congress (Statutes)• Executive Orders• OMB memoranda, OFPP Policy letters• Court Decisions• IG, GAO Reports/Recommendations

FARCouncil

DARC CAAC

Federal Acquisition Regulation (FAR) Council Members:

• Administrator for Federal Procurement Policy

• Secretary of Defense • Administrator of NASA• Administrator of GSA

Civilian Agency Acquisition Council (CAAC): participation

rotates and depends on type of change proposed

Defense Acquisition Regulatory Council (DARC): Consists of representatives from all military services,

defense agencies and NASA

FAR TeamsStrategy, Acquisition Law

Acquisition Implementation,Small Business, IT, Finance

Agency-specific acquisition regulation (for example, GSA

Acquisition Regulation)

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Category management represents the most current approach in the area of acquisition management

2

Category management

defined

• Category management is an approach the Federal Government is applying to buy smarter and more like a single enterprise.

Key steps

• Identify common categories of spend for goods and services• For each identified category:

o Understand core business objectives relative to improving management of the category

o Develop business and market expertise related to the categoryo Define acquisition, supply, and demand management policies and

solutions that aid in improving management of the vast majority of spend (~80%) within the category

• Broadly share data and best practices so that all agencies can leverage and benefit

Expected impact

• Category management better utilizes taxpayer dollars by eliminating redundancies, increasing efficiency, and delivering more value and savings from the government’s acquisition programs.




U.S. Federal government is actively deploying category management approaches

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Current State of Purchasing:• Lack of coordination across agencies• Duplicated efforts• Many agencies; no leverage buying power

Future State of Purchasing:• Synchronized procurement across government• Industry involvement in developing best category

strategies• Core competencies leveraged to match customer needs• One common management framework

Implementation of Category Management & CAP

Category Management

Optimize Contract Vehicles

& Manage Landscape

Manage Data Collection &

AnalysisMaximize Customer

Relationships

Leverage Supplier

Relationships

Develop Expertise

All Goods & Services



Accountability: evolution of procurement processes requires a balanced approach to managing risks

3

"To achieve efficient operations, the System must shift its focus from “risk avoidance” to one of “risk management.” The cost to

the taxpayer of attempting to eliminate all risk is prohibitive. The Executive Branch will accept and manage the risk associated with empowering local procurement

officials to take independent action based on their professional

judgment."~Managing Risk (FAR 1.102-2

(c)(2))

Source: FAI – Innovative Practices that Promote Acquisition Efficiencies

• Know the FAR and local codified policies and processes

• Keep in mind GAO and IG recommendations

• Question “urban legend” practices• Assess and respect organizational/CO

readiness for doing something different• Make a compelling case with data and

facts• Let it go if conditions aren’t right for

change but consider a different approach next time

• You have more influence to change things than you might think!



Competency model: successful acquisition professionals build on certification and evolve qualifications

Core ACQcurricula & certificationprograms

FAC-C FAC-PPM

Management Competency Development Solutions(Acquisition context)

Examples: Lean Six Sigma, negotiating, managing others

Electives and Just-in-Time training for

management

Cohorts, partnerships,

interdisciplinary experiences

Internship Program, Fellows Program, Team Workshops, Educational CO-OP, Education w/Industry, Mission Service

Operational

Tactical

Strategic

Tale

nt D

evel

opm

ent C

ontin

uum

Trans-formational

High potential SES development

programs

Certified

Qualified

Selected

Assigned

Leadership Competency Development Solutions(Acquisition context)

Development progression

FAC-COR

Senior Executive Service

4

Workforce progression

Acquisition workforce: ~100,000 professionalsSource: FAI 2021



Federal Acquisition Institute (FAI) provides core training across multiple career development programs

5

FAC-C Training RequirementsLevel I Level II Level III

10 Core Courses:

Choose one of the following:• Shaping Smart Business• Contracting Basics

Contract Planning

Contract Execution

Contract Management

Basic Contracting for GSA Schedules

Small Business Programs

Performance-Based Payment & Value of Cash Flow

Introduction to Contract PricingFundamentals of Cost and Price Analysis

Choose one of the following:• FAR Fundamentals (Contract)• FAR Fundamentals (Finance)

8 Core Courses:

Business Decisions for Contracting

Considerations in Contracting

Analyzing Contract Costs

Intermediate Cost and Price Analysis

Management Government Property in the Possession of Contractors

Negotiating

Source Selection and Administration of Service Contracts

Contract Administration & Negotiation Techniques in a Supply Environment

Plus all required level I training

2 Core Courses Plus 1 Elective:

Contracting for Decision Makers

Select a HBS module other than “Negotiating”

Choose one of the following:• 32 hours of electives*• Mission-Focused Services Acquisition• Understanding Industry• Acquisition Law• Construction Contracting• Fundamentals of Cost Accounting

Standards• Advanced Contract Pricing

Plus all required level I and Level II training



Community-driven learning plays an important role in professionalization: Acquisition Gateway example

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Source: Public Access to Gateway Briefing



Professionalization requires access to systems/consistent information: Integrated Award Environment (IAE) example

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Includes entity and gov’t registrants, annual representations, certifications, bio-preferred

products reporting

Single location to obtain wage determinations required for each

contract

Provides information about business opportunities with the federal gov’t

Collects subcontract award information in compliance with the Federal Funding Accountability and Transparency Act

Contains contractor performance information

Contains gov’t-entered records on past performance evaluations and

suspensions and disbarments

Contains government-wide

contract award data for actions

that have an estimated value at or above $3,000

USD

Provides agencies with access to data on subcontracting performanceFull listing of federal assistance programs,

projects, services, and activities

Hosts applications used to document contractor and grantee

performance information

Registration and opportunities Performance management Analysis

Source: MAS/IAE presentation on 4/42016



Appendix: details on Category Management and Acquisition Gateway

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Category management seeks to achieve goals around cost savings, knowledge sharing, efficiency and relationships

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Increase Cost Savings• Increase spend

under management• Achieve volume

savings• Achieve

administrative savings

Foster Knowledge Sharing

• Share best practices

• Grow and share expertise

Promote Efficiency• Reduce contract

duplication• Enhance

transparency• Create better

contract vehicles• Manage data

collection and analysis

• Enable better decisions

Improve Relationships

• Maximize purchasing agency relationships

• Leverage supplier relationships

• Optimize buying channels

• Manage the solution landscape

Source: Master Category Management Briefing for Industry – CM PMO



Category management seeks to achieve goals around cost savings, knowledge sharing, efficiency and relationships

2

Performance Management

Influence Category

Outcomes• Manage

Suppliers• Incentivize

Demand• Control Costs• Lower

Operational Expenditure

Continuous Improvement• Benchmarking• Performance Tracking• Adjustments to Category Strategy

Develop Category Strategy

• Build Category Teams

• Analyze Agency Needs

• Review Current Spending

• Analyze Market for Goods




U.S. General Services Administration (GSA) plays an active role in advancing category management

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⚫ Motor Vehicles⚫ Card Services⚫ Travel (Air, Lodging,

eGov)⚫ Employee Relocation⚫ Freight⚫ Package Delivery

⚫ IT⚫ Professional

Services⚫ Security and

protection⚫ Facilities and

Construction⚫ Industrial Products &

Services⚫ Office Management⚫ Transportation and

Logistic Services⚫ Travel & Lodging⚫ Human Capital⚫ Medical

⚫ Telecommunications

⚫ IT Software

⚫ IT Consulting

⚫ IT Security

⚫ IT Outsourcing⚫ IT Hardware

⚫ Administrative Support⚫ Workplace Environment⚫ Facilities and Tools⚫ Security, Scientific,

Hospitality, PrefabBuildings, and Building Materials

⚫ Professional Services

StrategyManagement

Gov-wideCM Intel

PMO

FASCM PMO

General Services Administration/Federal Acquisition Service

ITSPortfolio

TMVCSPortfolio

GSSPortfolio

17 FAS category teams staffed in portfolios and business programs

= GSA selected to serve as five of the government-wide category managers.

10 Gov-wideCategoryManagers



Several examples of effective category management have emerged in professional services and technology spaces

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Examples What? How is this "Category Management”?

Prof. Services Schedules

consolidation

• Consolidated several professional services schedules into a single program

• Developed new tools for Acquisition Gateway

• Reduced and simplified contract landscape

• New model for interacting with industry• Community of practice

Human Capital and Training

Solutions

• GSA and OPM partnership for government-wide strategic sourcing solution

• Focused industry engagement;• Contract structure aligns supplier

offerings with buying requirements;• Contract consolidation and government-

wide channel for offerings

Desktop / Laptop Policy

• Directs agencies to buy standard configurations from preferred contracts;

• Implements configuration refresh to ensure purchases made within policy guidelines

• Reduces contract duplication and price variation;

• Improves collection and use of purchasing data.

• Collaboration among agencies / comm. of practice;

• Improves buying through demand management and supplier relationship




Acquisition Gateway offers a range of resources for government and general public users

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Source: Public access to Acquisition Gateway briefing

Frequently updated

events and news related

to Federal acquisitions

Allows users to pull in resources from Gateway apps to build their

acquisition

All 17 hallways represented here preview what has been procured

to date

Applications, information repositories, community

forums & other resources

Tool enables acquisition

pros to identify most

relevant/ effective

contracting vehicles



Solutions Finder enables acquisition professionals to identify most relevant/effective contracting vehicles

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Allows for use of a search function, filtering by Agency, Program &

Solution types, and Category

Allows users to compare up to four solutions side-by-side, add

solutions to an acquisition built in the Project Center, & view solution websites directly

Features include ability

to pin a solution to top

of page no matter what filters are set



Each category hallway offers contextual information to support acquisition professionals

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Events & news are displayed on homepage; a community feed is also available to

Federal users.

Link to Solutions Finder tool with pre-loaded hallway-

specific subcategory

Section leads to solution

websites & purchasing

options

Category-curated

articles & category-

specific tools are

alphabetized here

Supportive Category team members are listed here with descriptions of

expertise & contact info

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