Procurement chief: Government shops as if it were ‘130 mid-sized businesses’

The government lacks solid information on past prices paid under goods and services contracts, the nation’s top procurement officer said Thursday. This is just one of the reasons he gave for the Obama administration’s push for greater use of strategic sourcing.

“I know everyone buys podiums and tables and microphones, but currently you can’t just look at who bought it how much was paid because you get a general description bucket of goods, and not level-three price data,” said Joe Jordan, administrator of the Office of Federal Procurement Policy, at a panel put on by the Professional Services Council, a contractors trade group.

“We don’t need to touch the wonderful 2,200-page [Federal Acquisition Regulation] for agencies to share what’s been paid,” Jordan said. “Our government is the largest purchaser in the world, but it buys as if it were 130 mid-sized businesses. We’ve got to leverage our buying power.”

Jordan joined with two General Services Administration acquisition specialists to speak to some 100 federal contractors and further an ongoing dialog with industry representatives, some skeptical that strategic sourcing -- used by private industry and government for bulk buying of office supplies and commodities -- is sufficiently flexible, quality-focused and adaptable to sophisticated services.

“Strategic sourcing as a win-win that will drive down costs for the taxpayer while reducing the administrative burden for contractors,” Jordan said. The new effort builds on past GSA successes in saving money by narrowing the number of contractors eligible for bulk office supply purchases while edging toward the governmentwide goal of giving 23 percent of contract work to small businesses.

“Mandatory is what we’re moving toward,” Jordan said. “There will be winners and losers, and not all who want to sell to the government can sell to the government.”

Out of some $500 billion in annual federal contracting, Jordan envisions strategic sourcing applying to perhaps $150 billion. His office has taken recommendations from the President’s Management Advisory Board, and the Office of Management and Budget has created a Strategic Sourcing Leadership Council consisting of the seven highest-contracting agencies and the Small Business Administration, where Jordan previously worked.

“Agency cross-pollination” will require attention from senior leaders who set “aggressive goals,” Jordan added. “It’s not going to be universally assured to work, but will prove itself. I’m okay with breaking some glass.”

Strategic sourcing fits into the procurement policy office’s larger goals of “buying smarter,” building the right relationships with suppliers and developing the acquisition workforce, he said. Jordan in particular wants to improve the government’s records on contractor past performance. That means taking advantage of inspectors general work in exposing waste, fraud and abuse as well as intensified use of suspension and debarment to block “bad actor” contractors from getting work.

Contracting officers executing the tricky task of rating companies’ work should mimic the detail of the customer reviews that Jordan recently found using an online trip planner to choose a bed-and-breakfast for a weekend trip with his wife. “We need good, timely and robust past performance information,” he said. “We need to elevate the use of data to drive fact-based analytics in the acquisition process.”

Despite the current budget crisis, Jordan has hopes of professionalizing the acquisition workforce at the front and back ends of the contracting process. He would “widen the aperture” on how to get the right force in terms of skills and training in agency priorities. “Strategic sourcing is at the top of our priority list,” he said. “There will be a crawl, walk then run progression, a learning curve.”

Industry speakers expressed worries about confusion over implementation of strategic sourcing and in a related contracting vehicle with an information technology focus called OASIS, which stands for One Acquisition Solution for Integrated Services. The 14-month OASIS effort is aimed at sophisticated professional services and higher-risk projects.

Trey Hodgkins, senior vice president for national security and federal procurement policy at TechAmerica, said strategic sourcing does not lend itself to the high-skills services his members offer, though they support OASIS. He called the current federal acquisition workforce “the most risk-averse” he’d ever seen, describing a “lemming mentality” in which program managers require that certain “things be used even if they don’t fit.”

Kimberly McCabe, president and CEO of ASI Government, said the new emphasis on “driving down cost per hour doesn’t allow for conversation about results and performance.” Experience is also an issue, she added. “We now have the most junior acquisition workforce ever-- 34 percent of them have less than five years’ experience,” she said.

Dale Luddeke, senior vice president and chief growth officer at TASC, criticized OASIS’ “union-like rigid categories,” saying they would create a “labor-like cost structure will drive business owners away from the markets.”

Roger Weldon, president of the Coalition for Government Procurement and a former GSA employee, said the business case for OASIS sends “a mixed message of labor hour category standardization that drives contracts to the lowest rate. The focus should be not on economics of scale but on economics of skill,” he said, to take advantage of the “innovative solutions that industry provides in areas such as cybersecurity.”

The government’s demand for data, he warned, is growing, and should be limited by Paperwork Reduction Act. Strategic sourcing’s emphasis on low cost is “high risk in meeting the mission, and sets a high standard that GSA can’t meet.”

Jeff Koses, GSA’s director of acquisition operations, spoke of OASIS’ “enormous savings potential for contracts, saying it may cover $60 billion in contracts. “We’re not talking about low-price, technically acceptable contracts, which would be the wrong way to approach professional services,” he said. All agencies will decide the best fit between OASIS, a GSA schedule or a new vehicle, he said. But the administrative costs of agency deliberation under the previous approach is “immeasurable, and we can’t afford it anymore,” he said.

“The lack of collaboration between government and industry ends in unsatisfactory results and repetitive procurements,” Koses added. Hence the rise in requests for contractor data, which will help agencies develop a “common language” that can be “turned into case studies so that agencies can share best practices.”

But a better-trained acquisition workforce, he warned, “is not likely in this current budget environment. That makes the challenges greater.”

Lena Trudeau, associate commissioner of innovation at GSA’s Office for Strategic Innovations in the Federal Acquisition Service, said the fact that GSA has stood up an Office of Strategic Sourcing Solutions is “an indicator of how important this is” to the agency’s newly revised mission under acting Administrator Dan Tangherlini.

“The goal is to find new ways to generate value, and focus on the business process, not as a separate thing but how we do business,” she said. “It’s being more intentional in what we buy, how, and how the goods are used. We’re at an inflection point right now,” Trudeau said. “There’s a shift from thinking of procurement and acquisition not just as purchasing goods and services but as a generator of value. That gives us a place at the table.”