5 Ways to Find Greater Procurement Efficiencies With Category Management

By Lisa Cooley, Vice President of Federal Sales, Gordian

Agency leaders know that the power of the procurement process brings with it great responsibility to equitably invest contracting funds to fuel the growth of the American economy at all levels. Simultaneously, these leaders are under pressure to find and deliver increased efficiencies in the procurement process.

The good news is that both goals can be met at the same time: Greater procurement efficiencies and paths to achieving small and social-economic business goals can be found with category management.

Category management is a strategic federal government approach to procurement that aims to deliver efficiencies and value for federal agencies, eliminate contract redundancies and meet the government’s equity and procurement goals. More than $350 billion — or approximately 60% of federal spending — falls within the realm of category management, which provides a huge opportunity for federal contract owners to deliver on infrastructure investment funds. But past attempts at category management have limited the flexibility of agencies to pursue unique solutions, stifling the critical elements of competition, innovation and economic stimulus.

Although governmentwide mandates to increase efficiencies in procurement can seemingly be at odds with small and social-economic business goals, they don’t need to be.

Here are five key elements to serving both mandates:

1. Contract Vehicle Requirements Shaping

Focus on efficient contract vehicles that aggregate work requirements that can be easily performed by a diverse pool of businesses in ways that provide meaningful growth opportunities. This means setting up contracts with regional footprints that can be managed by a small business while still fueling cost efficiencies and ensuring periodic on-ramps to provide opportunities for successive generations of emerging businesses. The General Services Administration’s (GSA) OASIS and Building Maintenance and Operations contracts achieved Best-in-Class status through a combination of formula-based awards, multiple windows of opportunity to on-ramp, small business outreach, industry days and draft RFP feedback, and contract award transparency.

2. Create Partnerships With Long-Term Contracts

Creating partnerships with long-term value can streamline processes and deliver larger contracts at lower unit prices through economies of scale and enhanced supplier relationships. By providing a long-term, steady source of revenue, the ability to bypass the competitive bid cycle and a built-in reward system for high performance, Indefinite Delivery Indefinite Quantity (IDIQ) contract options inherently fuel trust in strong partnerships that deliver sustainable savings and lessen miscommunication with suppliers. The United States Army Installation Management Command, the United States Army Corps of Engineers (USACE) and others are looking to implement enterprise-level approaches to IDIQ contracting to increase procurement efficiencies and strengthen project owner-contractor relationships.

3. Leverage Cost Data and Software to Efficiently Price Contracts

Leveraging commercial cost data and technology can facilitate the award of task orders at a fair price, allowing government and contractor alike to focus on value creation and execution, rather than pricing and negotiation exercises. Access to this data is the first step toward building out a segmented spending approach to streamline focus within the key identified buckets or “categories.”

The implementation of Job Order Contracting in the 1980s and 90s is an early, prescient example of this. Research from the Logistics Management Institute demonstrated that the contract structure meaningfully supports small business entry into the Defense Department construction market, increasing the options for agencies.

4. Create a Support System to Ensure Equity through Small Business Participation

Pre-bid training and relational support systems in the form of formal partnering ensure collaboration and communication, which drives higher performance for both government and contractor. Formal partnering has been a focus of the USACE and industry organizations, such as the Society of American Military Engineers.

5. Drive the Evolution of Best-In-Class Contracts Through Enterprise-Level Analytics

Enterprise-level analytics can provide deeper insight into how the market is structured and key factors to keep an eye on throughout the supply chain. Secure, enterprise cloud technology enablement is key to aggregating performance data. A governmentwide review of existing contract structures, objective performance measures and best practices can ensure higher-quality performance at federal and state levels.

The value of category management can be achieved by evaluating your contracting vehicles and opportunities, supporting and partnering with your contractor communities and leveraging data, software and analytics. This leads to to greater procurement efficiencies and paths to achieving small and social-economic business goals.

Lisa Cooley is Vice President of Federal Sales at Gordian. Lisa leads a team seeking to solve the significant challenges federal agencies face building and managing their facilities and infrastructure. Gordian is the leader in facility and construction cost data, software and services for all phases of the building lifecycle.