Industry has found it challenging to understand where the value proposition is in category management because you don’t see best-in-class measured as a performance issue — you have to a great extent best-in-class measured by process compliance. Are you doing things the way we want you to do them, never mind whether you’re getting better value, whether its faster, cheaper, more secure, that kind of thing. It’s, are you complying?
That was Tom Sisti, executive VP and general counsel for the Coalition for Government Procurement on the Off the Shelf Podcast, “An update on the 2019 NDAA.” To describe the intent of category management, here’s an OMB memo:
… the term “category management” refers to the business practice of buying common goods and services as an enterprise to eliminate redundancies, increase efficiency, and deliver more value and savings from the Government’s acquisition programs…
To implement category management, the Office of Management and Budget (OMB) will require agencies to carry out a set of tailored management actions and provide updates on these management actions to evaluate their progress in bringing common spending under management. The expected result is more effectively managed contract spending through a balance of Government-wide, agency-wide, and local contracts; reduced unnecessary contract duplication and cost avoidance; and continued achievement of small business goals and other socioeconomic requirements.
The desire to group similar purchases together goes way back, and indeed the language above could very well have been written 70 years ago if you change OMB to the Bureau of the Budget.
For example, after World War II the Munitions Board took over many of the procurement authorities from the services, seeking to standardize and aggregate purchases into bulk orders. One observer noted how well large purchases of standard equipment worked in reality:
Motorized cranes and shovels on rubber tires are assigned to the Army, and identical cranes and shovels mounted on caterpillar tracks are assigned to the Navy. This makes sense to no one, least of all to industry.
Not only do such practices require additional layers of management, as well as high costs of in terms of data and compliance for contractors to be ushered into the best-in-class contracts, but they necessarily abstract away from the particulars which are important for the people who have to make use of the equipment. These considerations build in a valuation process which gets left behind when varying requirements are aggregated into standard taxonomies and assigned money costs. Even when purchases really are standard, it seems to contradict the language from leadership about empowering the lower levels to make the best use of the FAR.
Showing the brighter side of empowerment, the excellent Anne Laurent and Tim Cooke praise the Air Force’s approach to category management. “In 2015, [the Air Force] set a five-year category management savings goal of $1 billion, but doubled it to $2 billion by 2020 after hitting the $1 billion target in just three years.” Read the whole thing.
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