Does GSA's latest contract for professional services push strategic sourcing past reasonable limits?
The General Services Administration released a shortened business case for its One Acquisition Solution for Integrated Services (OASIS) in January, but experts are still unsure how officials can consolidate services acquisitions into large enough buys to make strategic sourcing work for them, one of OASIS's top goals.
The President's Management Advisory Board plans to meet Feb. 22 to discuss what's ahead in 2013 and hear reports from officials on adopting the board's previous recommendations, such as broadening strategic sourcing. OASIS raises the question of whether federal officials are hauling the strategic sourcing initiative into uncharted territories with the move to complex professional services.
During a panel discussion Jan. 31 at the Strategic Sourcing Forum, industry experts questioned how GSA officials can set up labor categories and arrange appropriate pay rates when the circumstances of each purchase can vary widely or even so subtly. Influences from the market climate at a certain time, an agency's immediate need or even the conditions of the work environment each can change the price an agency may have to pay.
"Driving people to these cost structures would have a union-like look to it," and people have walked away from the federal market if they feel too squeezed in, said Dale Luddeke, senior vice president and chief growth officer at TASC Inc. "People will begin to look for other things to do if they are somehow forced into a labor rate when they know they can get paid better someplace else."
On top of that, Luddeke said by the time the government and industry work out a labor rate for a particular service, the market may have changed enough to throw the agreement out of whack.
"This has a lot of little nuances to it," he said about OASIS on its standard labor categories.
Strategic sourcing, so far, has dealt with generally run-of-the-mill products, such as office supplies and even wireless telecommunications devices. And there are few nuances. The advisory board has pushed these governmentwide vehicles, even mandating their use when it's appropriate. The board also wants more data on prices and costs since officials say it would help in the decision-making process.
It's an initiative that works "when we're buying paper clips," said Trey Hodgkins, senior vice president of TechAmerica's global public sector team.
With the variations and nuances of professional services, Jim Ghiloni, the program executive officer for OASIS, said first the standard labor categories "allow us to talk to each other." It's a vocabulary that agencies and the private sector can use to communicate. "A civilian engineer is a civilian engineer," he said, although there are differences in rates due to factors, such as experience and expertise. That creates what Ghiloni described as the pricing "bell curve."
GSA wants to gather the pricing data in light of the various differences of a service and then publish that information. The curve will show the highest and lowest prices and everything in between. From the curve, agencies can compare what they paid and how much one contractor charges for the same service compared to another. To understand the market better, GSA wants to give contracting officers more data so they can estimate a fair and reasonable price in that competitive environment. Then agencies can make more informed choices, which allows for better procurement planning.
"The expectation is that the bell curve shrinks," Ghiloni said. "Shrinking that curve over time will result in savings for the government."
On the contractor side, companies with a higher price will have to justify their prices to agencies. They may also have to ask themselves why their prices are higher than the competition.
"There's always a bell curve, but it gets smaller," Ghiloni said.
GSA officials have released a redacted business case for OASIS. Meanwhile, waiting for a draft request for proposals, industry and the government are left with questions about flexibility in the market and the risk to meet an agency's mission, among procedural and regulatory concerns. Industry warned agencies may suffer as they may opt to avoid the highest quality services for the sake of the lowest price technically acceptable—a term that makes industry shudder.
"If you are going to drive down prices to the point where you are going to limit the flexibility of companies to be able to provide best-in-class services, then this is not going to be an effective vehicle for people to be able to use," said Roger Waldron, president of the Coalition for Government Procurement.
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