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OMB: CIO-SP3 Promises 'Enhanced Value for Government'
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By Steve LeSueur

The Office of Management and Budget (OMB) ended months of speculation when, on July 20, it designated the National Institutes of Health as an executive agent for the CIO-SP3 GWAC and the CIO-SP3 Small Business GWAC.

OMB said it approved the request because the CIO-SP3 contracts “promise enhanced value for the government and our taxpayers.” In particular, OMB cited the contracts’ emphasis on health-related information technology and the increased opportunities they provide for small businesses.

The Office of Federal Procurement Policy (OFPP), the OMB office that oversees federal GWACs, took longer than expected to evaluate the business case for creating the two CIO-SP3 contract vehicles. OFPP Administrator Daniel Gordon conducted an extensive investigation, talking with multiple stakeholders in the federal acquisition community. These included agency users of NIH’s existing GWACs, agency managers of GWACs and other interagency contract vehicles, industry trade associations and congressional staffers.

While the investigation was in process, the Government Accountability Office (GAO) issued a lengthy report on GWACs and multiagency contracts, called MACs. The report, “Contracting Strategies: Data and Oversight Problems Hamper Opportunities to Leverage Value of Interagency and Enterprisewide Contracts,” was prompted by concerns that agencies were creating duplicative and unnecessary governmentwide contracts with little oversight or controls.

GWACs are a small group of information technology contracts that OFPP authorizes and tightly manages. Only four federal agencies – NIH, NASA, the Environmental Protection Agency, and the General Services Administration – have GWAC authority. In contrast, individual agencies can establish MACs and allow other agencies to use them, as dictated in the Economy Act.

GAO identified several problems with MACs and other enterprisewide contracts in its April report. GAO said that limited governmentwide policy exists for establishing and overseeing MACs and enterprisewide contracts. The report also said that the number of MACs and other enterprisewide contracts is unknown, and that the rising number of contracts is driving up vendors’ costs, because they must spend an inordinate amount of time and money competing for a spot on each contract. Ultimately, the vendors’ costs are passed on to the government. However, GAO was not critical of GWACs.

Gordon signaled his general satisfaction with GWAC management at a June 30 hearing on interagency contracts before the Senate Homeland Security and Governmental Affairs subcommittee on contracting oversight. “The discipline and transparency applied to GWACs have helped to enhance the value of contract products and services available to agencies,” Gordon told the subcommittee.

Gordon said that agencies seeking to establish GWACs are required by OMB to prepare business cases describing the need for the vehicle, such as the anticipated level of agency usage, the value that its creation would add, and the agency’s suitability to serve as its executive agent. Gordon said OFPP intends to issue guidance requiring agencies to develop similar types of business cases for creating MACs.

The decision to grant GWAC authority to NIH is good news for other GWAC programs as well. NASA, which runs the Solutions for Enterprisewide Procurement (SEWP) IV program, comes up for review in 2012. However, analysts say that scrutiny of GWACs will continue, and that program officials will still have to demonstrate their value. “Since 2005, GAO has considered Interagency Acquisition – particularly GWACS and MACs – to be a high risk area. GAO is not going to back off,” said Ray Bjorklund, senior vice president and chief knowledge officer of FedSources. “So GWACs will remain in the limelight along with MACs.”