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Smaller budgets may force streamlining of duplicative contract vehicles

Jul. 18, 2012 - 04:34PM   |  
By SARAH CHACKO   |   Comments

Budget cuts will press agencies to consolidate contracts to save time and money, say contracting experts.

“The government doesn’t have the luxury anymore to have duplication,” said Tom Sisti, a former contracts attorney at the General Services Administration and Government Accountability Office. “This may be the motivation to go through and remove duplication and bring some sort of control on the process because there’s just not going to be money there and certainly industry isn’t going to have the money to chase this.”

Tighter budgets will mean federal procurement staffs have less money to negotiate new contracts and contractors will have less money to compete for so many contracts, said Sisti, now director and chief legislative counsel of SAP, and other experts on Wednesday. They spoke at an event for members of the Coalition for Government Procurement, an association for GSA schedule contract holders.

Multiple-award contracts (MACs) enable agencies to hold a competition among a pre-selected pool of vendors for each order placed. Almost a quarter of federal procurement spending flows through MACs, a study released earlier this year by Bloomberg Government shows. Nearly 700 MACs have sprouted up across government in the last five years, Bloomberg estimates.

The Office of Management and Budget issued guidance last year requiring agencies to make a business case before awarding new multiple-award contracts.

But despite the downturn in funds, some agencies still have motive to award their own contracts. Awarding their own multiple-award contracts enables them to avoid paying other agencies fees to use their contract vehicles. But by directing their purchases through their own contracts, they also have better visibility on how their acquisition funds are being spent, said Jon Etherton, a former Senate staffer who worked on procurement policy issues.

The fee was an issue when Navy officials were creating Seaport-e, a multiple-award contract for professional and engineering services, Etherton said.

“But the other issue was we just don’t know what our people are doing with all these other vehicles,” said Etherton, who is now a lobbyist. “The money is flowing outside the walls of our agency and we just have no way of tracking and no insight into it.”

Procurement officials from the Navy and Department of Homeland Security said they are working on better ways to plan procurements and consider existing contracts before creating their own.

An agency-specific MAC may allow for contractors to become more familiar with the agency’s needs, so procurements can be made faster, easier and cheaper, said Mike Smith, director of DHS’s strategic sourcing program office.

The Navy has started to look at why contracting officers decide to create their own MACs and hopes to find ways to improve acquisition planning and spending, said Elliott Branch, deputy assistant secretary of acquisition and procurement.

The failure to use existing contracts leads to higher prices and unnecessary administrative costs, former Office of Federal Procurement Policy Administrator Dan Gordon said in a Sept. 29 memo that requires agencies to justify creating new multiple-award contracts valued at more than $50 million.

OMB has not denied any new MAC proposals, said Brian Friel, an analyst for Bloomberg Government. But OMB has asked agencies to reduce the scope of proposed contracts if some of what the agency wants to buy can be procured from existing contract vehicles, he said.

“It does seem there’s a continuing bureaucratic instinct to create your own thing,” Friel said.

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