Making 'mandatory' work

One of the characteristic features of the old order prior to procurement

reform was the frequent requirement to buy computers (and some other products

people needed for their daily jobs, such as office supplies) from mandatory

sources, such as the General Services Administration.

Government folks generally hated mandatory sources. GSA's prices were

often high, delivery was slow and GSA was unresponsive. One of the big themes

of Release 1.0 of the National Performance Review in 1993 was to eliminate

requirements that people use central purchasing vehicles such as GSA. "Decentralize"

and "empower the front-line customer to choose" became the bywords for buying.

A policy adopted late last year by the Air Force Materiel Command — and currently being considered for the entire Air Force — regarding the

purchase of information technology off-the-shelf hardware and software might

seem to some like a throwback to the bad old days. The policy requires use

of the various blanket purchase agreements negotiated by the Air Force's

Standard Systems Group (SSG) at Gunter Air Force Base, Ala., unless the

local contracting activity provides a waiver based on "unique mission requirements"

(specifically, the need for products not on the BPAs) or if an alternate

contract vehicle gives a better deal than SSG offerings.

I believe the new policy is a good one, reflecting the progress made

in the government purchasing process.

Simply put, the more a customer buys, the better the discounts. A customer

willing to designate contracts as mandatory sources will get even better

discounts. Furthermore, large customers get better treatment in terms of

customer service. There are also frequent advantages to standardizing around

a modest number of platforms or software packages. For all those reasons,

corporate America is a frequent user of mandatory source contracts.

Why were mandatory sources justifiably unpopular in the old days? GSA's

monopoly made it lazy in terms of negotiating good prices and good technology

refreshment.

But the reasons mandatory sources were justifiably unpopular back in

1993 are gone. GSA no longer receives appropriated funds and must satisfy

customers to get orders. Federal buyers have become used to being treated

like customers and will not put up with unresponsive mandatory sources.

Fast delivery from big contracts is now possible, but they don't provide

the instant gratification that high-priced catalogs do.

At the same time, government's improved business skills, exemplified

by specialists such as SSG, have paved the way for incredible discounts.

The increased use of past performance data has made the pampered status

of the large customer even more pronounced. Those who don't want to buy

from these contracts are now largely folks willing to pay high prices for

next-day delivery.

The new policy should be seen not as a throwback but as part of a continued

evolution to smarter government buying.

—Kelman, administrator of the Office of Federal Procurement Policy from 1993

to 1997, is Weatherhead Professor of Public Management at Harvard's John

F. Kennedy School of Government.

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