Category Management to Reform Government Procurement

Category Management to Reform Government Procurement

Federal Government annual spending exceeds $50 billion for IT-related services, security, hardware, software and telecommunications. While recent progress has been made in consolidating technology needs and reducing duplication through data collection and analysis, many agencies continue to acquire IT products and services in a decentralized manner using thousands of separate contracts.

The Category Management Cross-Agency Priority (CAP) goal is focused on managing entire categories of common spending areas across agencies in order to improve cost efficiencies, improve levels of expertise and leverage shared practices. While IT spending is just one example, significant Government-wide cost reductions can be achieved in many spend categories through the acquisition and management of common goods and services using consolidated acquisition strategy, improved demand management and the use of subject matter experts to shape buying strategies.

Anne Rung, the U.S. Chief Acquisition Officer, reports in a recent announcement that

“By eliminating more than 700 duplicate professional services contracts, the Government is estimating savings of close to $4 million over the next five years with sustained annual savings of $1.3 million thereafter.”

Category management is a drastic change from the execution of purchasing, price analysis and vendor relationships that exist in the current landscape of thousands of separate procurement initiatives across Government. Category management will allow the Federal Government to “buy as one” through the management of common categories. Each identified category will be appointed a category manager and supporting team who will manage the category to a unique set of strategies. Whereas traditional strategic sourcing is typically initiated every several years, category management will be a continuous process of identifying and prioritizing projects.

High-level goals for category management include:

  • Increasing the amount of spend under management to improve selection and value
  • Reducing contract replication
  • Leveraging volume savings
  • Lowering procurement administrative costs
  • Meeting small business goals
  • Minimizing price disparity across contracts
  • Increasing access to procurement data
  • Promoting best practices
  • Improving existing contract vehicles or awarding new vehicles if necessary
  • Enabling the use of category management across all spend categories

The category management goals are distilled into five (5) key principles which drive initiatives: maximizing current contract vehicles, expanding data analysis and collection, leveraging relationships, increasing spend under management, and developing and sharing expertise. While achieving category management goals is a multi-year process, headway has already been reported. Some of the following achievements have been recently implemented:

The Strategic Sourcing Leadership Council (SSLC) was restructured to create the current category management governing group, Category Management Leadership Council (CMLC). This leadership council includes representatives from several agencies including Department of Defense (DoD), Department of Energy (DoE), Health and Human Services (HHS), Department of Veteran Affairs (VA), General Services Administration (GSA) and the National Aeronautics and Space Administration (NASA).

The CMLC released the Government-Wide Category Management guidance document which outlines the rationale behind category management, the governance structure, stakeholder roles, and the development, implementation and oversight of category management strategies.   Future category management will continue to be governed by the CMLC.

Category managers will develop Government-wide strategy for a specific spend area. Category teams will also support each category at different levels to develop and execute strategy. Category managers have been announced and represent the Office of Management and Budget (OMB), GSA, DoD, Department of Homeland Security, VA, and the Office of Personnel Management.

Ten “Category Centers of Excellence,” have been identified, each with a varying number of sub-categories. The 10 high-level categories are as follows:

Professional Services
Security & Protection
Facilities & Construction
Industrial Products & Services
Office Management
Transportation & Logistics Services
Travel & Lodging
Human Capital

Finally, the Acquisition Gateway, managed by the General Services Administration, has been updated to improve the availability of key acquisition information by category. Tools are available on Acquisition Gateway to search government-wide acquisition vehicles, market intelligence, prices-paid information and analysis.

As category management is developed and refined there are several factors which will influence the adoption and success of this new style of procurement. Strong leadership and buy-in as well as targeted plans and metrics are critical. Also vital to any Government-wide initiative is an extensive and on-going change management plan. Continue to check to stay informed of Category Management progress and monitor updates on all CAP goals.