OFPP to refine agency-contractor relationship

Dan Gordon doesn't believe major acquisition changes to the federal processes are on the horizon as agencies saw in the 1990s. But the administrator in the Office of Federal Procurement Policy also knows status quo isn't working.

So Gordon, who has been in office for 100 days, has his eye on a few high-profile areas in need of major reform.

"During the 1990s, there was massive statutory and regulatory change," he says. "I am not going to tell you that there will be no change because there will be change. But I do not expect the kind and degree of change in terms of statutory and regulatory change we saw in the 1990s. We will have change by way of refinement and correcting specific matters."

Gordon, who detailed three broad priorities Thursday at an event sponsored by the Coalition for Government Procurement in Washington, says improving the agency-contractor relationship is among the top issue he is dealing with.

This effort includes revamping the definition of functions that are considered inherently governmental, those closely associated with inherently governmental and those considered critical. He also is reviewing on multiple award contracts and whether there are too many of them for the same goods and services throughout government.

Gordon adds he wants agencies to justify why they need these redundant contracts. He says there could be a valid reason, but he is skeptical.

"One of the first things I did as administrator in terms of written guidance to the agencies was send out a memorandum if you have blanket purchase agreement for goods under the Federal Supply Schedule check to see your discounts," he says. "If you are not getting any discounts beyond the FSS, you may want to consult with counsel and see if you can renegotiate forthwith to get a discount."

Reviewing multiple award contracts is something the last administration started, but never made much progress on. Gordon says having so many contracts doesn't make sense for agencies or for industry.

Agencies and vendors' wait may be over soon for the new definition of inherently governmental. Gordon says he expects to issue a draft policy letter in the Federal Register by the end of March.

"The goal is to get public comment, eventually finalize this OFPP policy letter and then be sure everyone knows the rules of the game and that we are providing concrete guidance for the government and for industry," he says. "The point is not to take work away from contractors, but we need to do a better job of managing our contracts. We are so thinly stretched that I've heard stories that agencies are relying on contractors to manage other contractors. We can't have that happen."

There is a lot interest and concern about the new definition. OFPP has tried to redefine inherently governmental twice in the last 20 years-once in 1992 and again during the 2003 rewrite of OMB Circular A-76.

Agencies need the new policy as the administration wants insourcing pilots this year. OMB is asking agencies what functions that are currently contracted out could be brought back in house because they are considered inherently governmental.

Industry is concerned about the affect the new definition could have on its employees as well its contracts.

Bill Gormley, a former GSA official and president of the Washington Management Group, says he is taking a wait-and-see approach on the updated definition, but it will not be easy to do make work.

"Inherently governmental will bring in a lot of legal opportunities for law firms and a lot of legal discussion," he says. "No one has ever been able to define inherently government. I admire him and his office for taking this on."

Another piece to the agency-contractor relationship is the increased use of strategic sourcing. OFPP and GSA are considering several commodities including office supplies, copiers, printers and other multi-functional devices and wireless phone capabilities.

Gordon says too often the government doesn't use its purchasing power to its advantage.

This wouldn't be the first time OFPP is trying strategic sourcing. Under the Bush administration, GSA created the SmartBuy program for software. A broader initiative never got off the ground as well.

SmartBuy has been relatively successful, help agencies avoid paying more than $100 million over the last five years.

Gormley says any strategic sourcing initiative must do what GSA and the Defense Department did to be successful.

"Industry will not make a move and offer some very favorable conditions unless there is some type of guarantee here," he says. "Dan talked about that he knows this is a chicken and egg and I think the way you crack the egg is the government needs to have some type of guaranteed minimum."

Gordon says he hopes the prices, terms and conditions of these contracts will give agencies no choice but to use these vehicles.

He also points to a recent request for quote GSA issued Monday for office supplies as a possible model for future strategic sourcing efforts.

"One of the helpful things in the RFQ GSA issued for office supplies was a request for tiered pricing so as the volume goes up, the prices goes down," Gordon says. "The government is not asking industry to give very low prices where there will not be volume buy. The question is in the RFQ, if the volume goes above $10 million, $50 million or $100 million what prices will you offer? That strikes me as directly responsive to industry's concern that the government is asking for good prices, but isn't giving large quantities."

Gordon says the RFQ also asks agencies for commitment letters in terms of using the blanket purchase agreement.

Along with the agency-contractor relationship, Gordon is focusing on the acquisition workforce. He met with officials at the Federal Acquisition Institute, the Defense Acquisition University and individual agencies to discuss how to improve the hiring, retention and training of these workers.

Gordon says he is hiring a senior executive in his office to focus almost entirely on workforce challenges.

"We are developing intern and mid-career development programs," he says. "We have a real gap in how we recruit and hire people in their 30s and 40s who have some experience, but are not on the verge of retirement."

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