OFPP guidance may push agencies to curb their own interagency contract proposals or possibly cause them to launch stand-alone contracts without economies of scale, some say.
The Office of Federal Procurement Policy has moved on a cataloging of interagency contracts, but experts say officials may have trouble getting agencies to comply with a directive to limit the creation of new contracts.
OFPP Administrator Dan Gordon is putting pressure on agency officials to stop launching their own multiple-agency contracts and agency-specific contracts when other vehicles are available already elsewhere.
In a memo from Sept. 29, Gordon required officials to justify MACs and blanket purchase agreements BPAs before moving too deep into procurement planning. A potential interagency contract would first have to get a senior procurement executive’s or chief acquisition officer’s approval. Officials would also have to search through an online federal website listing proposed interagency contracts.
OFPP trims fat from interagency contracting overlap
Robert Burton, former deputy OFPP administrator and now partner at the Venable law firm, said Gordon’s guidance may push agency officials toward curbing their own interagency contract awards or possibly cause them to launch stand-alone contracts without economies of scale. Either way, officials will go a different route to avoid the homework that OFPP requires to write a business case for a MAC or BPA.
Agencies don’t like to lose control of their operations or money, and they don’t like paying a fee to use another agency’s contract, Burton said.
Right direction with bumps
Gordon is going the right direction by requiring business cases for new interagency contracts, experts say. Nevertheless, some analysts are skeptical too.
“A good writer can draft a business case that justifies the new contract vehicle as fulfilling unique requirements that aren’t really unique,” said Ray Bjorklund, vice president and chief knowledge officer at Deltek.
On top of that, a lot of questions loom about calculating the details of business cases and associated costs. For instance, Gordon wants officials to report the number of federal employees needed to manage the contract as well as the direct and indirect costs of administering it.
Bjorklund said officials may struggle for a precise dollar figure because of the human resource issues and other costs, such as general and administrative expenses, when the costs are not segregated into difference cost accounts. Agencies also have limited skills and data to account for the true cost of a “full-time equivalent.”
“Consider the running battle among Beltway analysts about which costs more: a contractor or a govie,” he said.
Consolidate and share
Ultimately though, Gordon wants the government to consolidate contracts and do more cross-agency sharing to get lower prices by bulk buying. It’s an initiative he’s tackled during his time at OFPP.
His memo points to a Government Accountability Office report from March, which calls attention to the duplication and overlap of interagency contracts. The problem is due to how little information the government has on how many contracts there are and who’s using them.
Gordon’s memo states, “With good strategic planning, careful evaluation of the current marketplace, and strong contract management, significant value can be generated through the creation and operation of a new interagency or agency-specific contract vehicle.”
In the past though, OFPP has been less than successful in getting agency cooperation to build and then maintain an inventory of indefinite-delivery, indefinite-quantity contracts and similar types of contracts. Several years ago, OFPP had a list of MACs, but, Burton said, agencies have many more specific enterprisewide contracts out there.
Larry Allen, president of Allen Federal Business Partners, wrote that OFPP is going to need a lot of luck to succeed. “It is ultimately unknown how effective the memo will be unless OFPP is given a detachment of law enforcement professionals to bring recalcitrant agencies in-line,” Allen wrote today in his “The Week Ahead” newsletter.
In his memo, Gordon put this directive in the hands of agencies themselves.
Gordon wants officials to post business cases for 15 days on the MAX Federal website while in the preliminary planning stage. He wants agencies to share feedback and possibly build a team of potential agency buyers. Procurement officials then have to look through the website of proposed MACs or agency-specific contracts before going ahead with their own.
“Considering the lack of OFPP staff, it’s not a bad strategy,” Bjorklund said.
But he asked what’s going to compel officials to review that website for potential contracts and look over the shoulder of their fellow agency.
“Residents of glass houses are often reluctant to throw rocks,” he said.
But the budget crisis may flip on a light switch among agency officials. The cheaper prices for goods and services could look more attractive than having control.
“Agencies' view may change as the budget crisis looms and forces them to put cost savings at the forefront of oversight and management,” Burton said. “This may be the time for strategic sourcing as it was intended.”