Reverse auctions, strategic sourcing and other procurement techniques are expected to find renewed enthusiasm in 2013.
Everything old is new again in acquisition. Many tools that are likely to help improve the system in 2013 have been sitting in agencies’ arsenals for years, often unused. Yet as officials continue their hunt for the least expensive ways to manage increasing workloads, there is ample reason to reconsider.
Strategic sourcing began to re-emerge in 2012, and the trend will continue through the new year. Based on the principle of volume buying for lower prices, it can lead to significant savings, but agencies have not been using the technique well. OMB pushed for its use in 2005 to little avail, and the Obama administration renewed the call in a memo released Dec. 5, 2012.
“This is a doubling-down or a continuation of some best practices we’ve seen in this area,” said Joe Jordan, administrator of the Office of Federal Procurement Policy.
Experts believe agencies might take the call more seriously this time because the need to save money has become paramount.
In the past, “agencies have definitely pushed back because everyone feels like they’re a little different” and, therefore, not able to combine purchases as strategic sourcing requires, said Robert Burton, a partner at Venable law firm and former deputy administrator of OFPP.
Fewer resources and more demand will overshadow those differences.
“The government will undoubtedly move toward more strategic sourcing, but it will take a while,” said Larry Allen, president of Allen Federal Business Partners. “Cutting across agencies is a big bite of the apple when most of the government’s experience has been on nibbling grapes.”
In the meantime, he said, officials will turn to other money-saving methods. He believes reverse auctions for general commodities could become more prominent. In such auctions, sellers bid prices down rather than buyers bidding them up. The approach is effective for commodities, but it’s another tool agencies have had available for some time and not used as much as they could.
Burton said agencies have access to a number of other cost-savings techniques, such as earned value management and continuous performance improvement, that can help streamline operations. This year, “agencies will look at them more seriously,” he said.
Another resource that has been around for years is industry. In 2013, Allen said, agencies will make greater use of requests for information, perhaps to the point of asking for what amounts to free help in planning acquisitions.
“I suspect we will also see the use of more contests, where the government tries to obtain state-of-the-art solutions outside the acquisition landscape,” he added. “You can't fault agencies for trying to be innovative when they don't have a lot of money to spend. Companies, however, need to be mindful of what they're getting into before they win.”
Speaking broadly, Jordan had some simple advice for agencies that he hopes they will take to heart in 2013: Innovate.
If a particular purchasing approach has the potential to bring good value to the agency and it’s not forbidden in the Federal Acquisition Regulation, then “you are empowered to do it,” he said.