The $400B question: building a common foundation to optimize - - PowerPoint PPT Presentation

The $400B question: building a common foundation to optimize Federal procurement

May 17, 2016

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Today’s objectives

Outline the overall structure and volume of U.S. Federal government acquisition work Introduce a professionalization framework for discussion Provide an overview of elements focusing on key developments:

• Talent development continuum
• Category management approach
• Community-driven learning (Acquisition Gateway example)

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Highlights of U.S. Federal government roles and responsibilities in the area of acquisition management

U.S. Congress Government Accountability Office Inspectors-General (agency- specific)

• Provides legislative guidance for

acquisition work

• Defines statutory authorities for

key entities

• Confirms key leaders
• Developed a framework for

acquisition function assessment

• Conducts holistic reviews of

acquisition work

• Makes decisions re protests
• Engage in reviews of specific

actions/contracts or types of acquisition activities President of the United States General Services Administration (GSA)

• Directly

manages $34B in purchases

• Operates ~9,000

buildings

• Leads gov’t-wide

technology transformations

Office of Management and Budget (OMB) Office of Federal Procurement Policy (OFPP)

• Overall direction

for gov’t-wide procurement policies, regulations and procedures

Federal Acquisition Institute (FAI) Courts

• Court of Federal

Claims has exclusive jurisdiction (as

• f January

2001) to hear pre-award and post-award bid protest suites by unsuccessful bidders on government contracts

Note: only identifies key entities for the purposes of today’s discussion; not an exhaustive list of stakeholders/offices and respective roles/responsibilities

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Overall volume of acquisition work and key areas of spend under management – the $400B question

541 540 540 539 518 462 443

200 400 600 FY08 FY09 FY10 FY11 FY12 FY13 FY14

• Contract spending accounts for

approximately one of every seven dollars spent by the Federal government.

• Notable proportion of spend (~50%) on

common goods and services

• An average of 15.5M procurement actions

recorded each year (incl. modifications) Federal government’s acquisition spend declined by ~20% in FY2008-14

$B 50 100 150 200 250 $B

73 63 51 35 26 248 Top 5 areas of spend accounted for ~60% of acquisition spend in FY14

Source: OFPP/OMB/EOP presentation on April 4, 2016

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Federal acquisition work aims to advance a range of priorities

*Goals refer to proportion of Federal contracting spend awarded to small businesses of various types Source: OFPP/OMB/EOP presentation on April 4, 2016 for socio-economic outcomes; FAI 2021 for other priority areas

Focus on socio- economic

• utcomes
• Commitment to increasing federal contracting
• pportunities for small businesses, including

women-owned, veteran-owned, and small businesses located in Historically Underutilized Business Zones

• $550 billion in federal contracting dollars awarded

to small businesses in 2009-14

Imperative to innovate

• Agile BPA deployment (build code, not paper),

challenges, micro-threshold reverse auctions

Shift to shared approaches

• Category Management
• Evolution of Shared Services management
• Benchmarking: acquisitions, IT, HR, Finance, real

property management

Importance of digital government

• Evolving acquisition processes to help achieve

President’s “Smarter IT Delivery” Goal and other initiatives in the information technology space

Pivot to program management

• Increasing focus on program outcomes, e.g.

proposed Program Management Improvement and Accountability Act

• Formal job series and

career path for program managers

• Standards-based model for

program management consistent throughout the federal government.

• Senior executive in each

agency to be responsible for program management policy and strategy.

Program Goal* Small business total 23% 8(a)* / Small Disadvantaged Business 5% Historically Underutilized Business Zones 3% Veteran-owned small business 3% Women-owned Small Business (WOSB) 5%

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Complexity of modern gov’t procurements requires holistic approaches to workforce professionalization

Management approach

• Category management

– buying as a single enterprise to drive value and generate savings

Accountability

• Mandatory ethics training
• Feedback via agency surveys
• GAO and IG studies, reviews,

and audits

Regulation

• Acts of Congress, Executive

Orders – procurement implications

• Federal Acquisition Regulation

(FAR)

• Agency acquisition regulations

Community-driven learning

• Sharing of best practices,

acquisition solutions, resources and community discussions

Core training

• Acquisition core

qualifications curricula and certification programs

Competency model

• Competencies – behaviors

encouraged to advance and excel

• Job profiles – definition of critical

jobs, essential experiences, knowledge

Systems

• Define what to measure, when/how to collect information and how to ensure that measurements help make

and track acquisition decisions; address challenges as needed 1 2 3 4 5 6 7

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Federal Acquisition Regulation continues to evolve balancing predictability and ability to innovate

Multiple factors define the need for continuous evolution of Federal Acquisition Regulation (FAR), including:

• Acts of Congress (Statutes)
• Executive Orders
• OMB memoranda, OFPP Policy letters
• Court Decisions
• IG, GAO Reports/Recommendations

FAR Council DARC CAAC

Federal Acquisition Regulation (FAR) Council Members:

• Administrator for Federal

Procurement Policy

• Secretary of Defense
• Administrator of NASA
• Administrator of GSA

Civilian Agency Acquisition Council (CAAC): participation rotates and depends on type of change proposed Defense Acquisition Regulatory Council (DARC): Consists of representatives from all military services, defense agencies and NASA

FAR Teams Strategy, Acquisition Law Acquisition Implementation, Small Business, IT, Finance Agency-specific acquisition regulation (for example, GSA Acquisition Regulation)

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Source: OFPP/OMB/EOP presentation on April 4, 2016

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Category management represents the most current approach in the area of acquisition management

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Category management defined

• Category management is an approach the Federal Government is applying to

buy smarter and more like a single enterprise. Key steps

• Identify common categories of spend for goods and services
• For each identified category:
• Understand core business objectives relative to improving management
• f the category
• Develop business and market expertise related to the category
• Define acquisition, supply, and demand management policies and

solutions that aid in improving management of the vast majority of spend (~80%) within the category

• Broadly share data and best practices so that all agencies can leverage and

benefit Expected impact

• Category management better utilizes taxpayer dollars by eliminating

redundancies, increasing efficiency, and delivering more value and savings from the government’s acquisition programs.

Source: OFPP/OMB/EOP presentation on April 4, 2016

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U.S. Federal government is actively deploying category management approaches

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Source: OFPP/OMB/EOP presentation on April 4, 2016

Current State of Purchasing:

• Lack of coordination across agencies
• Duplicated efforts
• Many agencies; no leverage buying power

Future State of Purchasing:

• Synchronized procurement across government
• Industry involvement in developing best category

strategies

• Core competencies leveraged to match customer needs
• One common management framework

Implementation of Category Management & CAP

Category Management

Optimize Contract Vehicles & Manage Landscape Manage Data Collection & Analysis Maximize Customer Relationships Leverage Supplier Relationships Develop Expertise

All Goods & Services

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Accountability: evolution of procurement processes requires a balanced approach to managing risks

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"To achieve efficient operations, the System must shift its focus from “risk avoidance” to one of “risk management.” The cost to the taxpayer of attempting to eliminate all risk is prohibitive. The Executive Branch will accept and manage the risk associated with empowering local procurement

• fficials to take independent

action based on their professional judgment."

~Managing Risk (FAR 1.102-2 (c)(2))

Source: FAI – Innovative Practices that Promote Acquisition Efficiencies

• Know the FAR and local codified

policies and processes

• Keep in mind GAO and IG

recommendations

• Question “urban legend” practices
• Assess and respect organizational/CO

readiness for doing something different

• Make a compelling case with data and

facts

• Let it go if conditions aren’t right for

change but consider a different approach next time

• You have more influence to change

things than you might think!

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Competency model: successful acquisition professionals build on certification and evolve qualifications

Core ACQ curricula & certification programs

FAC-C FAC-PPM Management Competency Development Solutions (Acquisition context)

Examples: Lean Six Sigma, negotiating, managing others Electives and Just- in-Time training for management Cohorts, partnerships, interdisciplinary experiences Internship Program, Fellows Program, Team Workshops, Educational CO-OP, Education w/Industry, Mission Service

Operational Tactical Strategic

Talent Development Continuum

Trans- formational

High potential SES development programs

Certified Qualified Selected Assigned

Leadership Competency Development Solutions (Acquisition context) Development progression FAC-COR

Senior Executive Service

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Workforce progression

Acquisition workforce: ~100,000 professionals

Source: FAI 2021

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Federal Acquisition Institute (FAI) provides core training across multiple career development programs

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FAC-C Training Requirements Level I Level II Level III

10 Core Courses: Choose one of the following:

• Shaping Smart Business
• Contracting Basics

Contract Planning Contract Execution Contract Management Basic Contracting for GSA Schedules Small Business Programs Performance-Based Payment & Value of Cash Flow Introduction to Contract Pricing Fundamentals of Cost and Price Analysis Choose one of the following:

• FAR Fundamentals (Contract)
• FAR Fundamentals (Finance)

8 Core Courses: Business Decisions for Contracting Considerations in Contracting Analyzing Contract Costs Intermediate Cost and Price Analysis Management Government Property in the Possession of Contractors Negotiating Source Selection and Administration of Service Contracts Contract Administration & Negotiation Techniques in a Supply Environment Plus all required level I training 2 Core Courses Plus 1 Elective: Contracting for Decision Makers Select a HBS module other than “Negotiating” Choose one of the following:

• 32 hours of electives*
• Mission-Focused Services Acquisition
• Understanding Industry
• Acquisition Law
• Construction Contracting
• Fundamentals of Cost Accounting

Standards

• Advanced Contract Pricing

Plus all required level I and Level II training

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Community-driven learning plays an important role in professionalization: Acquisition Gateway example

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Source: Public Access to Gateway Briefing

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Professionalization requires access to systems/consistent information: Integrated Award Environment (IAE) example

7 Includes entity and gov’t registrants, annual representations, certifications, bio-preferred products reporting Single location to obtain wage determinations required for each contract Provides information about business

• pportunities with the federal gov’t

Collects subcontract award information in compliance with the Federal Funding Accountability and Transparency Act Contains contractor performance information Contains gov’t-entered records on past performance evaluations and suspensions and disbarments Contains government-wide contract award data for actions that have an estimated value at

• r above $3,000

USD Provides agencies with access to data on subcontracting performance Full listing of federal assistance programs, projects, services, and activities Hosts applications used to document contractor and grantee performance information

Registration and opportunities Performance management Analysis

Source: MAS/IAE presentation on 4/42016

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Appendix: details on Category Management and Acquisition Gateway

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Category management seeks to achieve goals around cost savings, knowledge sharing, efficiency and relationships

2

Increase Cost Savings

• Increase spend

under management

• Achieve volume

savings

• Achieve

administrative savings Foster Knowledge Sharing

• Share best

practices

• Grow and share

expertise Promote Efficiency

• Reduce contract

duplication

• Enhance

transparency

• Create better

contract vehicles

• Manage data

collection and analysis

• Enable better

decisions Improve Relationships

• Maximize

purchasing agency relationships

• Leverage supplier

relationships

• Optimize buying

channels

• Manage the

solution landscape

Source: Master Category Management Briefing for Industry – CM PMO

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Category management seeks to achieve goals around cost savings, knowledge sharing, efficiency and relationships

2

Performance Management Influence Category Outcomes

• Manage

Suppliers

• Incentivize

Demand

• Control Costs
• Lower

Operational Expenditure Continuous Improvement

• Benchmarking
• Performance Tracking
• Adjustments to Category Strategy

Develop Category Strategy

• Build Category

Teams

• Analyze Agency

Needs

• Review Current

Spending

• Analyze Market for

Goods

Source: Master Category Management Briefing for Industry – CM PMO

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U.S. General Services Administration (GSA) plays an active role in advancing category management

2

⚫ Motor Vehicles ⚫ Card Services ⚫ Travel (Air, Lodging,

eGov)

⚫ Employee Relocation ⚫ Freight ⚫ Package Delivery ⚫ IT ⚫ Professional

Services

⚫ Security and

protection

⚫ Facilities and

Construction

⚫ Industrial Products &

Services

⚫ Office Management ⚫ Transportation and

Logistic Services

⚫ Travel & Lodging ⚫ Human Capital ⚫ Medical ⚫ Telecommunications ⚫ IT Software ⚫ IT Consulting ⚫ IT Security ⚫ IT Outsourcing ⚫ IT Hardware ⚫ Administrative Support ⚫ Workplace Environment ⚫ Facilities and Tools ⚫ Security, Scientific,

Hospitality, Prefab Buildings, and Building Materials

⚫ Professional Services

Strategy Management Gov-wide CM Intel PMO FAS CM PMO

General Services Administration/Federal Acquisition Service

ITS Portfolio TMVCS Portfolio GSS Portfolio 17 FAS category teams staffed in portfolios and business programs

= GSA selected to serve as five of the government-wide category managers.

10 Gov-wide Category Managers

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Several examples of effective category management have emerged in professional services and technology spaces

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Examples What? How is this "Category Management”?

• Prof. Services

Schedules consolidation

• Consolidated several professional

services schedules into a single program

• Developed new tools for Acquisition

Gateway

• Reduced and simplified contract

landscape

• New model for interacting with industry
• Community of practice

Human Capital and Training Solutions

• GSA and OPM partnership for

government-wide strategic sourcing solution

• Focused industry engagement;
• Contract structure aligns supplier
• fferings with buying requirements;
• Contract consolidation and government-

wide channel for offerings

Desktop / Laptop Policy

• Directs agencies to buy standard

configurations from preferred contracts;

• Implements configuration refresh to

ensure purchases made within policy guidelines

• Reduces contract duplication and price

variation;

• Improves collection and use of

purchasing data.

• Collaboration among agencies / comm.
• f practice;
• Improves buying through demand

management and supplier relationship

Source: Master Category Management Briefing for Industry – CM PMO

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Acquisition Gateway offers a range of resources for government and general public users

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Source: Public access to Acquisition Gateway briefing Frequently updated events and news related to Federal acquisitions

Allows users to pull in resources from Gateway apps to build their acquisition All 17 hallways represented here preview what has been procured to date

Applications, information repositories, community forums & other resources

Tool enables acquisition pros to identify most relevant/ effective contracting vehicles

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Solutions Finder enables acquisition professionals to identify most relevant/effective contracting vehicles

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Source: Public access to Acquisition Gateway briefing

Allows for use of a search function, filtering by Agency, Program & Solution types, and Category Allows users to compare up to four solutions side-by-side, add solutions to an acquisition built in the Project Center, & view solution websites directly Features include ability to pin a solution to top

• f page no

matter what filters are set

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Each category hallway offers contextual information to support acquisition professionals

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Source: Public access to Acquisition Gateway briefing

Events & news are displayed

• n homepage;

a community feed is also available to Federal users. Link to Solutions Finder tool with pre-loaded hallway- specific subcategory Section leads to solution websites & purchasing

• ptions

Category- curated articles & category- specific tools are alphabetized here Supportive Category team members are listed here with descriptions of expertise & contact info