By Steve Kelman

Blog archive

The Lectern: Early wins from contracting savings

At a talk at the recent IBM conference on the Obama administration’s public management research agenda, Jeff Zients, the government's chief performance officer and OMB's deputy director for management, devoted some attention to contracting.

Zients will be the boss of Dan Gordon, assuming the Senate confirms Gordon as the Office of Federal Procurement Policy administrator, and of course will have a significant influence over Gordon's agenda and priorities. (Full disclosure: My wife Shelley Metzenbaum recently started working for Zients at OMB as program associate director for performance and personnel.)

Zients revealed that he sees cost savings from contracting as being a source of "early wins" for down payments for deficit reductions. Pretty much unmentioned were the items discussed in the administration's March contracting memo, which appeared before the arrival of either Zients or Gordon and which generally played to at best mixed reviews from the procurement community.

Instead, Zients specifically mentioned efforts to "leverage scale" to get better prices on commodities -- a push for strategic sourcing. I wouldn't be surprised to see very focused efforts by Zients and Gordon to work with GSA and agencies to find specific early targets for strategic sourcing contracts.

Zients, and even OMB Director Peter Orzag, will need to be involved at the Deputy Secretary level -- higher than these issues have ever been raised before -- to gain the commitments to use these contracts that are a prerequisite for getting the best prices from leveraged buying. And I expect a number of initiatives from the administration to develop innovative approaches to generating cost savings, including, I hope, giving contract bidders credit during source selection for proposing ways to save money by revising the specs or performance standards in a solicitation and -- if the administration chooses to be really daring (the way Zients frequently notes he wants to be) -- to push for a revival of share-in-savings contracting.

(Incidentally, in recent blog, FCW's Matthew Weigelt noticed a statement Zients made at a Senate hearing in which Sen. Claire McCaskill (D-Mo.) criticized interagency contracting, stating that agencies should not charge other agencies fees for products or service. "Essentially, they’re on the same team and shouldn’t be making money off of each other," she added, according to Weigelt.

In response to McCaskill's statement, Zients called the practice "bizarre." Well, Zients apparently did not mean that the GSA or others need to stop their interagency work. In fact, he has frequently argued that pooling purchasing power is critical to ensuring the government gets the best possible prices and best possible service. Certainly, interagency contracting can be misused, but it can also bring needed competition to the procurement environment, as well as better access to contracting expertise for agencies. Zients has since assured a number of people that he is not an opponent of interagency contracting.

Posted by Steve Kelman on Nov 17, 2009 at 12:08 PM


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