Category management has saved $2 billion since 2012, but there's more low-hanging fruit to grab.
The federal government’s category management program continues to use its immense buying power to drive down acquisition costs and deliver better values to taxpayers—even without knowing whether the Trump administration will support the effort.
Category management is a federalwide initiative that hones in on a series of common spend areas, including IT, professional services, transportation and logistics services and others, and seeks ways to get a better deal for the government.
The shift away from the "every agency for itself’ mentality is beginning to pay off, according to Lesley Field, acting administrator for federal procurement policy in the Office of Management and Budget.
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Speaking Wednesday at ACT-IAC’s Category Management Conference, Field said category management principles have saved taxpayers $2 billion since 2012, with significantly more savings expected now that agencies “have built a solid foundation around category management.”
Category managers, she said, have approved strategies for tackling their common spending areas, and common standards, including savings methodologies, have been established.
“The bottom line is that what we have been doing with category management is just good business,” Field said. “It’s a common sense solution to meet common needs.”
Yet, $2 billion is a drop in the bucket compared to the government’s annual acquisition spend as a whole. Last year, the federal government spent $470 billion purchasing everything from ink pens to IT, with $290 billion of that amount being “common spend,” Field said. That leaves a lot of low-hanging fruit for category managers to tackle.
“We have hundreds, if not thousands, of duplicative contracts across government,” Field said, adding that price variances are additional issues.
For example, Field said the government has identified a 300-percent price differential in the most common desktop computers purchased by feds. This difference has been particularly problematic in IT purchases, according to a General Services Administration inspector general report.
“This is not how the best companies in the world buy,” Field said.
The Defense Department is the largest purchaser in the federal government, and it’s taking an active role in partnering with the General Services Administration and other civilian agencies to see category management through. DOD has a co-lead role in addressing medical spending, and a lead role in addressing transportation and logistics, which sees $21 billion in annual spending.
Kristin French, principal deputy assistant secretary of defense and acting assistant secretary of defense for logistics and materiel readiness, said DOD now has a plan regarding transportation and logistics, with a service delivery contract currently out for bid. Once issued, the contract will be managed by the U.S. Transportation Command.
“This was a big category to find efficiencies in,” French said. “What you have to do is look at what is best for the whole of government. I’m proud to say GSA and DOD worked hard on this one. This is a big win, and it had to be a collaborative effort with a lot of teammates.”
Logistics and distribution services include warehousing, installation support, distribution services and personal property moves, of which DOD handles 400,000 each year. French said future plans will solidify in the coming years regarding fuel, freight operations and motor-vehicle fleet management.
Yet, French said several challenges stand between government getting the best possible bang for its buck. Communication and interagency collaboration are key, she said, and not as easy in practice as in theory.
“The whole category management process will not successful if we’re not working together and talking to each other,” French said. "It’s a federalwide interest program."
The toughest barrier to implementing category management across agencies, she said, may be change management. Some organizations may require facilitators because personnel “can’t see what is different, or not current.” Leadership must agree to change, the organization has to be willing to change, and personnel need to understand that change is good and “if you don’t change, you might be left behind,” French said.
“If we can get past some of these, it’ll be a way ahead,” she added.
French also cleared up a few misconceptions about category management. Category management “does not always mean a single, large-scale contract,” and could instead result in “complete changes in policy and procedure.”
“It’s a paradigm shift. You have to have an open mind,” French said.