OFPP trims fat from interagency contracting overlap
- By Matthew Weigelt
- Sep 30, 2011
The Office of Federal Procurement Policy is impressing on agencies to think like commercial businesses before launching new interagency contracts. OFPP wants them to know who their competition is in the contracting market and identify a clear customer base even before starting a solicitation.
Dan Gordon, OFPP administrator, wrote in a memo Sept. 29 that too often officials establish new interagency contracts, such as blanket purchase agreements (BPAs) and multiple-agency contracts (MACs) before they consider what’s already out there. And, if there is no existing contract, they don’t think enough about using an agency-specific, multiple-award contract to get the buying power to lower costs.
The result: Costs go up.
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In this new memo, Gordon outlines the required elements of a business case analysis as well as a process for developing and reviewing the cases if an agency wants to establish—or renew—governmentwide acquisition contacts for IT, MACs, BPAs, and agency-specific contracts.
To get approval from a senior procurement official, the agency has to prepare a preliminary business case, describing the scope of the contract and the potential duplication with another contract. That case has to be posted for 15 days on the business case community page on the MAX Federal website.
The point is to get feedback from other agencies and officials before deciding the future of a proposed contract. Officials have found a procurement gets more competition by securing upfront spending commitments from agencies, which piques companies' interest.
OFPP is looking for overlap among contracts, because it’s most likely to occur if the new contract would serve a narrow customer base, such as a single part of an agency, according to the memo.
Gordon pointed to a Government Accountability Office report from March that calls attention to duplication and overlap in interagency contracting. The problem is due to how little information the government has on how many contracts there are and who’s using them. The government also has inconsistent policies on creating contracts and the associated costs of managing them.
“Without this information, agencies may be unaware of existing contract options that could meet their needs and may be awarding new contracts when use of an exiting contract would suffice,” GAO wrote.
OFPP plans to tackle those problems with the new policy memo with business cases with more detail, and putting more proposals under the microscope.
Officials are starting the business case requirement in January. If an agency plans to release a solicitation after Jan. 1, it must have a business case on a proposal for a MAC, BPA, or an agency-specific contract with estimated value is more than $250 million, the memo states.
From there, agencies will have to justify ever smaller contracts and BPAs, even as low as a contract worth an estimated $50 million in fiscal 2014. For GWACs though, an agency must justify the need no matter the value.