Anne Rung became administrator of the Office of Federal Procurement Policy (OFPP) at the Office of Management and Budget in September after serving in senior acquisition executive positions at the General Services Administration, the Commerce Department and the state of Pennsylvania. Rung addressed the National Contract Management Association on Nov. 5 and later spoke with Federal Times Editor Steve Watkins. Following are edited excerpts:
When I asked people what one word best describes the current state of federal contracting, the most common response was "complex," or some sort of variance of complex. You hear it's difficult to navigate. It's difficult to find contracting opportunities. I doubt that response comes as a surprise to any of you. Federal contracting is complex for a number of good reasons. Number one, it is complex in part because of its size. We spend $450 billion a year on goods and services supported by over 100,000 hardworking and stretched acquisition professionals. It's complex because we buy goods and services to support very intricate and important missions, like forecasting natural disasters, developing vaccines and advancing space research.
We have over 500 departments and agencies with over 3,000 acquisition offices across the federal government. We spend more than $200 billion a year for commonly purchased items. But with very little coordination across government, the result is that we have a huge amount of contract duplication. It's not unusual for a single large company to have several thousand contracts with the federal government. So imagine the time and costs for that company to compete for and ultimately manage that many contracts across government. And time and cost for our acquisition workforce to develop, award and manage those contracts. That's a lot of stress on all of you.
Not surprisingly, we have vast price disparity across government, where one agency may pay a significant amount more for the same product as another agency. At the same time, our acquisition professionals are required to be jacks of all trades — buying office furniture one day and an IT system the next.
The complexity shows itself in federal solicitations. During my tenure at OFPP, I really want to focus on simplifying the federal contracting space and driving greater innovation and performance so we can ultimately make it easier for the contracting workforce and businesses to navigate the space. And that idea is also what drives the President's
The President's Management Agenda is driven by four pillars to make the workforce and the government work better for the American people: effectiveness, efficiency, economic growth, and people and culture. Our work to address the complex challenges of the acquisition process falls under the first two: effectiveness, delivering a world-class customer service experience for our citizens and businesses;and efficiency, increasing the quality and value of core operations to enhance productivity and increase cost savings.
ere are three key areas to simplification in federal procurement. We need to propose a new vision for purchasing, one that fundamentally shifts from managing purchases and price individually across thousands of procurement units to managing entire categories of purchases across government collaboratively and in sync. This approach, called category management, can best be accomplished by bringing common spend under management — including collecting prices paid and other key performance information — so we can ensure, among other things, that agencies get the same
competitive price and quality of performance.
We can also free up agency acquisition personnel to focus on the really complex agency-specific procurements. At the same time, by giving vendors one place to go and one person accountable for shaping the strategic direction of that common category, we can reduce their burdens and costs.
Each category can be led by a senior official who may be from industry or government [and] who would really understand the buying trends, what drives cost, new innovations on the horizon and emerging companies. Instead of focusing solely on reduction of unit price, the manager and his or her team would develop a broader governmentwide strategy to drive innovation, lower total costs and improve overall performance in a category.
The second way we can simplify through greater collaboration is by focusing on the acquisition workforce. And OFPP has done much work over the years to strengthen our certification programs and provide critical workforce management tools, but we want to do more.
I really want to focus on deploying talent and tools across the agencies and drawing talent within the agencies. As part of the President's Management Agenda, we've been working hard on a plan for smarter IT delivery and rethinking and revamping the way the federal government delivers these essential services. And we've released two new products that are going to have a major impact on the way the government does business. With regards to IT acquisitions, the Digital Service Playbook and the Tech FAR Handbook.
ital Service Playbook is aimed at leveraging best practices that already exist. It contains 13 key plays drawn from both the private and public sector that, if followed together, will help agencies deliver services that work well for users and require less time and less money to develop and operate. And the Tech FAR Handbook is a guide that explains how agencies can execute the plays in the Digital Service Playbook, while which still complying with the Federal Acquisition Regulation. It really shows how existing authorities can be used to procure development services in ways that closely match with the development techniques of the private sector. And these tools are dynamic. They are going to change as we gain more experience with implementing innovative practices.
So, over the months ahead I will be working with all of you to identify greater opportunities to partner with industry, the Digital Services team, and others to really focus in on how we develop deeper expertise in the acquisition workforce, starting with the IT area. Our acquisition workforce are really required to be jacks of all trade. I think if we can develop these pockets of expertise in one particular area, it benefits all of us.
The final area I want to touch on is creating stronger vendor relationships. I really want to focus also on collaborating with our partners, our current, and even our future federal contractors to strengthen vendor relationships. And so good vendor relationships are really based on mutual dependence. Both of us understanding that cooperation and collaboration are necessary for each of us to succeed. So it's a fact that early, frequent and constructive engagement with industry leads to greater innovation and better outcomes, which is the foundation of OFPP's Mythbuster's campaign. And such engagement is particularly important for complex, high-risk procurements, including those for large IT projects. So we've taken several steps towards that end, including the launch of our first online national dialogue with industry earlier this year. And a pilot for a new "rate the agency" tool for vendors to provide constructive feedback on agency acquisitions.
We want to find better ways to manage these relationships as an enterprise, like formal mechanisms for industry feedback and improved customer-facing tools for vendors. Building strong vendor relationships is also about reaching the talent of the most innovative companies who sometimes can be small and lack experience in government contracting.
You had some strategic sourcing successes in Pennsylvania. Can you share some of those with us?
The state of Pennsylvania is an interesting case study because in many ways it was a microcosm of the federal space. When we came into office, I was working for Governor [Ed] Rendell, it was also a very sort of fragmented decentralized structure And every unit across the government was buying separately. So Governor Rendell based on his experience as a mayor of Philadelphia had some background in strategic sourcing so we did two things we created a central shared services unit within the state equivalent of GSA where I worked. And it was really modeled after the private sector where we had teams built around goods and services and around specific commodities so we had a team for vehicles, a team that only did IT services. And in doing so we were able to also undertake strategic sourcing on a pretty large scale across the state government where working with many of the agencies we strategically sourced about 24 commodities, which brought in 10 percent to 15 percent savings for the state of Pennsylvania. But it wasn't without its challenges and we face those same challenges in doing strategic sourcing across the federal government. It is a little bit like trying to herd cats at times. And you have to sort of consistently make the case for using data to validate the results to show performance.
Do you have some thoughts on how you bring that approach, the culture change to the federal government?
It goes back to this idea that it's not just composition problem. So in commerce we undertook acquisition reform and focused in one piece of that, strategic sourcing. And the lesson learned there was a couple of things. One, it really does require leadership support. I know that's a phrase people often use, but it is incredibly impactful when your deputy secretary is actively engaged in sending emails out to people talking about this effort, encouraging people to use a certain solution. We also found it is a multi-functional effort. I partnered up with our CFO community at Commerce. Each bureau has a CFO rep that is part of the CFO council. And I think I presented over 2,000 times to our CFO council making the case for strategic sourcing. We used a lot of data and analytics to make the case for strategic sourcing even though it has been done in the private sector for years it was still fairly new to commerce. So we laid out what we thought would be the investment for each bureau and then what we projected to be their return on investment based on each commodity that we wanted to tackle. And as I got their permission and approval to move forward on specific commodities we provided them with monthly reporting on where we were on that savings against the initial projected ROI. That kind of thing really helped. Again, back to the data.
Do you anticipate the FAR [Federal Acquisition Regulation] being streamlined to account for IT agile-type acquisitions?
I think we would argue that there are a lot of flexibilities in the FAR already. Innovation can happen within those parameters that is certainly with thinking behind the tech FAR. Helping to highlight those things within the FAR that help you to be innovative.
As a call to improve industry relationships, GSA designated a procurement ombudsman. I know that DHS has one too. So what are your thoughts on how effective that can be in pushing your initiative?
I want to find ways to manage vendor relationships as an enterprise. Working with the ombudsman in the agencies, I know DoD does this in their space, but really in the civilian commercial space we still don't manage these relationships across an enterprise. I take a somewhat broader view of are there ways that I can engage the people that we have as ombudsman in the agencies to really kind of streamline that process a little bit and really manage the relationships in a sort of easier way with the vendor community. I think it is difficult for many of the companies. You have to manage several hundred relationships. Wouldn't it be nice if there was a smaller team that you can work with?
How has data generated as part of the OMB benchmarking effort been used to help improve the acquisition function?
It has been a really great effort. Our deputy director of management, Beth Cobert, has led an effort in partnership with GSA Administrator Dan Tangherlini to create benchmarking in kind of key operational areas across government. So for the first time kind of creating data in each agency around key operational areas. So we focused in on procurement, IT, real property and finance and I am probably leaving one out — HR. So the agencies were absolutely terrific in working with us to develop what are the key benchmarks. We used the Chief Acquisition Officers Council to really try to hone in on a set of key operational measures. Some of them were around performance areas, cost to operate. We collected about five or six data points from the agencies. Kind of one of the neat things is we then followed-up and met with all of the agencies so we took our leadership team from GSA and OMB into the agencies, met with their leadership team really talked about each of the functional areas and the results of this data. We have taken this to the next level in that we provided them the information showing it alongside their agency partners.
LPTA [lowest-price, technically acceptable] seems to run counter to the idea of increased innovation. What are your thoughts regarding LPTA?
LPTA makes sense in certain situations and I don't think makes a lot of sense in the more complex procurement space. I have heard from industry quite a bit. They are concerned that it may be used too often. I'm happy to engage in further dialogue around that and see if we need greater communications or guidance
You referenced the national dialogue. Could you talk a little bit about what is going to come out of that whole effort?
So the national dialogue was the first time we engaged a conversation with industry online to get their feedback on ways we can streamline and improve the federal conducting space. It was conducted over the summer. We got great feedback and it really kind of fell into a few key areas as I talked about the communications bucket there were a lot of comments about that. The need for early engagement within industry. There is a lot around the complexity in particular, IT systems that we have so many disparate systems across government that make it particularly challenging. There were some comments around GSA schedules, ways to streamline our schedules. The next step for us is in the coming month — we want to release a set of specific proposals that we think address many of the great ideas we heard from the dialogue.
So do you plan to continue the dialogue effort?
Yeah. The idea is to institutionalize this and do it on a regular basis so we can kind of keep this communication going and keep the ideas coming in. And we really want to find ways to encourage some of the newer companies to give us feedback as well.
GSA Administrator Dan Tangherlini has talked about the vast proliferation and redundancy of contracts, particularly in the IT space. What plans do you have to address that?
We have several thousand contracts across government in similar areas. I think the best way to address that is through category management ... bringing the spend under management, creating teams to manage common categories, particularly in the IT space. They're going to be the ones to have experts in the industry and on emerging trends and the companies in this space.
But I think one of the outcomes has to be reduction of contracts in that space, really honing in on the best contract vehicles. I think shedding light on what's available will help you reduce duplication. Right now there's no single place that a contract officer can go to find out what contracts even exist. Just bringing some visibility into that is a huge step.
And the Common Acquisition Platform that GSA is creating.
Exactly. That is part of the category management.
Do you see eventually — in the IT space, anyway — migration toward a strategic sourcing direction?
Yeah, I think strategic sourcing is one of the many tools you can use if you lead a category. I think that my vision is a much broader set of strategies where you look at total cost and performance. So, your strategies can be built around how do you create great consistency in how you manage certain suppliers. It can be around how do you implement policies across the government that help kind of streamline or move us toward the best commercial practices. I think strategic sourcing is one tool that has proven to be very effective — one of many tools that a category can really use.
What do you expect in each of these categories? Do you expect something like a strategic plan for IT hardware or software?
I think creating a set of metrics around what we really want to see in that category will be
something we will develop. The metrics would be around performance, around savings, around contract duplication. So [we'll be] ensuring that that team is sharing that information through a governance structure that will probably be the Strategic Sourcing Leadership Council.