The Office of Federal Procurement Policy released a memorandum yesterday aimed at reducing wasteful spending in federal contracting by requiring agencies to create business cases to ensure they aren’t duplicating an existing government contract.
The order calls for agencies to leverage interagency contracting vehicles, namely government-wide acquisition contracts (GWACs), multi-agency contracts and blanket purchase agreements (BPAs) to utilize the government’s bulk purchasing power.
The memo comes as part of the Obama Administration’s Campaign to Cut Waste that is looking for areas the government can reduce unnecessary spending to alleviate some of the pressures put on taxpayers.
“Doing this kind of due diligence and comparison-shopping is something that many families across the country do, and it is especially important that the Federal government weigh all the options before entering into large contracts and agreements whose scope would overlap contracts that already exist,” Office of Federal Procurement Policy Director Dan Gordon wrote on the White House blog. “In the business case, agencies are required to balance the value of creating a new contract against the benefit of using an existing one, and whether the expected return from investment in the proposed contract is worth the taxpayer resources. Insisting on that cost/benefit analysis in the business cases should go a long way to avoiding duplicative contracts.”
Business cases will be required for all GWACs, regardless of value, at the start of the new calendar year.
Businesses cases will be needed for all covered multi-agency and covered agency-specific contracts, along with multi-agency and agency-specific BPAs solicited between Jan. 1 and Sept. 30, 2012, with a value more than $250 million. Smaller versions of those vehicles will require business cases starting in FY13 for contracts more than $100 million and FY14 for contracts more than $50 million.
The businesses cases must be an approved by the agency’s senior procurement executive after coordination with the agency’s Director of the Office of Small and Disadvantaged Business Utilization. The chief information officer must also approve the contract if it involves information technology.
Other than draft solicitations, agencies should also not issue solicitations for proposed BPAs, multi-agency contracts, and agency-specific contracts until the business case has been finalized and approved by the appropriate agency official.
“We have seen firsthand that interagency contracting – done intelligently, and in a way that reduces duplication – can help us leverage the federal government’s buying power to get better prices, and the progress we’ve made in this area is a key reason why we think GAO should take interagency contracting off its ‘high risk’ list,” Gordon wrote. “It’s as part of that effort that the new OFPP guidance outlines a new process for agencies to share information with one another when they are considering creating large new interagency contracts.”
Gordon pointed to the General Service Adminstration’s use of BPAs last spring to purchase office supplies as an example of contracting done right. The BPAs were applied government wide and have helped agencies spend up to 20 percent less on office supplies.
Overall, that program can help the government save “as much as $200 million over the next few years,” Gordon said.