Drabkin: Share-in-savings is here to stay

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By David Drabkin

By David Drabkin

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Share-in-savings contracts have evolved, and this year, they may be used more widely.

The use of share-in-savings contracting as an effective, performance-based acquisition tool is growing. It has been used successfully in contracts for energy savings and in state and local government contracts for information technology.

Share-in savings has undergone an evolution in IT contracting from its inception in 1996 under the Clinger-Cohen Act to its current form in the E-Government Act of 2002. There are indications that Congress will extend the current fiscal authority, which ends Sept. 30, and that use of share in savings will be more widespread this year.

Key indicators include:

  • Performance-based budgeting. Office of Management and Budget officials and lawmakers have made it clear that agencies will be measured on performance and that redundant, disparate systems are a thing of the past.

    The share-in-savings approach can be an effective tool to help achieve the Bush administration's goals because it is considered the ultimate performance-based contracting method. There is evidence that consolidating systems is one of its most effective applications.

  • Federal Acquisition Regulation policy. In the latter part of 2004, the joint Defense and Civilian Acquisition Councils signed off on a final FAR rule, which represents the culmination of nearly two years of public debate on the intricacies of the share-in-savings concept.

    The FAR policy will provide useful guidance for the acquisition community and a methodology for all to follow. Final OMB approval is expected soon.

  • OMB support. David Safavian, OMB's new administrator for the Office of Federal Procurement Policy, is a strong share-in-savings advocate, as is Karen Evans, who heads OMB's Office of E-Government and Information Technology.

    Safavian should be able to work within OMB to help increase the visibility and credibility of the share-in-savings concept for projects that can generate real savings for taxpayers.

  • Agency interest. In 2004, 45 program managers submitted business cases through OMB and expressed interest in share in savings as an acquisition strategy. That is a clear indicator that share in savings is gaining mainstream popularity.

    Now that OMB officials have incorporated questions about share-in-savings contracting into the budget approval process, interest is heightened and the number of programs for which share in savings is being considered could double this year.

  • Refined tools. Officials at the General Services Administration continue to improve their online tools for helping agency and industry officials identify suitable share-in-savings projects. GSA's Share-in-Savings Program Office supports agencies with business case development and acquisition strategies and provides coordination with OMB.

    During the latter part of 2004, GSA officials worked with several agencies to conduct the kind of detailed analyses of baseline figures that are essential for strong business cases.

    Drabkin is deputy chief acquisition officer at the General Services Administration. Kenneth Buck, director of GSA's Share-in-Savings Program Office, also contributed to this column.

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