OMB renews mandatory-use fears

A new strategic sourcing memo from the Office of Management and Budget has reignited industry worries over policies mandating the use of the procurement approach. The memo creates a Strategic Sourcing Leadership Council (SSLC) to consider policies to enforce mandatory use of strategic sourcing contracts.

“The word ‘mandatory’ is what caught my attention,” said Michael Del Colle, an independent contracting consultant.

Released Dec. 5, the memo says OMB also wants the council to identify at least five products or services that could be sold on new governmentwide contracts and be made mandatory for agencies to use. It is part of the administration's concerted strategic sourcing effort.

Joe Jordan, administrator of the Office of Federal Procurement Policy and chairman of the SSLC, said the mandatory aspect come from the President’s Management Advisory Board, which is comprised of business leaders from outside of government.

The mandates “are something that came through loud and clear from the recommendations,” he said Dec. 6. “We need all of the agencies to collectively commit their spend through these strategically sourced vehicles.”

He said officials need to set up contracts that benefit all the agencies and their unique needs, leading them to commit to buying products and services through those contracts.

The government, however, would be going backward by instituting such a structure that requires agencies to use certain contracts that attempt to get the best deal by bulk buying, said Roger Waldron, a 20-year General Services Administration official who is now president of the Coalition for Government Procurement.

“Mandatory-use policies ignore the marketplace,” he said.

Mandates can also limit the business decisions for agencies’ purchases, as acquisition officers balance fair and reasonable prices with best value, Del Colle said.

“There are intangible metrics beyond price that we use to make decisions on [which vendor] we choose," he said. The issues still center on value for the government.

Del Colle and Waldron said mandates raise questions about the constant refreshments in technology—a key issue for officials to work out.

“How does the government expect to get anything new in the market?” Del Colle said.

In contrast to mandatory contracts, Waldron said indefinite-delivery, indefinite-quantity contracts offer more flexibility and less chance for a breach-of-contract lawsuit against the government. For instance, the government and the supplier agree on a guaranteed minimum number of sales. Once that is met, the agencies have the option of going elsewhere for their needs. Under a mandatory use policy, an agency breaches a contract if it buys from anywhere else at any point.

Contracts need a shelf life, and federal officials must be thoughtful in how they approach mandates with the constant changes in IT, Del Colle said.

He added that mandates can impact the market by possibly attracting but also discouraging new companies to join the federal marketplace. There will be winners and losers with mandates and strategic sourcing overall.

“Somebody’s ox is going to have to be gored on this,” he said.

With the creation of the SSLC, Alan Chvotkin, executive vice president and counsel for the Professional Services Council, said the government is doing well to let agencies sort out their own buying habits “before pushing or pulling them into a governmentwide initiative.”

“It is also important to recognize that some competition among governmentwide contracts is appropriate because it offers benefits to government agencies such as competitive pricing and better customer service from executive agents,” he said.