Services pose acquisition challenge
It's hard to package professional services into high-volume orders, yet procurement experts are exploring the question of what strategic sourcing for services would look like.
Procurement leaders have a fundamental tension to address as the government considers strategic sourcing for professional services.
Professional services are not ideally suited for strategic sourcing, at least not at first glance. Service requirements can vary significantly from case to case, making it a challenge to create the high-volume purchases that drive down costs when strategic sourcing is used for commodity products. And yet, the standardized pricing and other benefits of the technique could increase transparency and accountability.
It is the central issue the federal contracting community has to address Jan. 31 at the Strategic Sourcing Forum, which is hosted jointly by the Coalition for Government Procurement , the Professional Services Council, TechAmerica and ACT-IAC. At the forum, panels of industry experts and government officials will discuss the overarching strategy for purchasing services, the General Services Administration's vision for the anticipated governmentwide professional services contract, and the future of strategic sourcing.
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They have to answer whether the government can live under standard labor categories for the professional services that can differ, even slightly, between purchases. It is pricing transparency versus performance-based contracting.
"'What is strategic sourcing for professional services?' is the philosophical question," said Roger Waldron, the coalition's president.
On Jan. 23, GSA released a redacted business case for the One Acquisition Solution for Integrated Services—better known as OASIS. It's an indefinite-delivery, indefinite-quantity contract, aiming to meet the cross-government demands for professional services. OASIS is expected be the next-generation contract designed to address agencies' needs for these services. The requirements are for areas such as management and consulting, professional engineering, logistics, and finance. OASIS will also offer ancillary support services.
Tom Sharpe, GSA's new Federal Acquisition Service commissioner, is a strong proponent of transparency in pricing and also of strategic sourcing. Experts expect the OASIS contract to move forward under Sharpe's leadership with some in-depth review.
"I think it will experience a brief delay, but nothing fatal," said Larry Allen, president of Allen Federal Business Partners.
In October, a GSA official had said the agency was looking to release a request for proposals in late March of this year.
Sharpe likely will look for OASIS to prove its competitive edge.
"I would expect that FAS would want to see very competitive contract-level pricing for one thing," Allen added.
The overarching principle for OASIS's pricing approach is competition. To encourage that, one of OASIS' goals is defining standard labor categories. Officials also want to create a common vocabulary across the acquisition of professional services. They see standardized categories and a widely used vocabulary as a means of increasing opportunities for collaboration across government when agencies buy professional services.
"'Apples to apples' comparisons of standardized labor categories at the task-order level will drive down pricing," officials write in their case. Furthermore, "meaningful segregation of labor category groupings will drive down pricing."
Performance-based contracting stands in contrast. In fact, that push toward standard labor categories swings in the other direction, Waldron said. "It's kind of an ironic point."
Long ago, agencies would draft specifications for the most generic of products, such as copier paper and pens. Then, in the 2000s, performance-based contracting re-entered agency procurement offices. The approach let the contractor devise the most efficient and effective way to perform the work or provide the commercial item, rather than having to follow processes set by the government customer.
Unlike paper and pens though, professional services are unique from job to job. Standardization can help to justify pricing, but variety among a broad range of services may diffuse that intent, Allen said.
To standardize services, "it's contrary to what makes sense," Waldron said.
Yet officials expect OASIS to yield lower prices for the government. Audits have found significant duplication in professional services contracts, which officials believe leads to higher prices. Furthermore, the government has struggled to leverage its buying power. By standardizing the service categories, agencies can tie their requirements together in a bulk buy.
Agencies are increasingly relying on the companies for professional services. These services accounted for $79.7 billion in federal spending in fiscal 2010 and $77.8 billion in 2011, as the administration has attempted to decrease management support services spending. GSA officials estimate $60.27 billion in available spending for complex professional services a year beginning fiscal 2013.
"A combination of awareness, education, and client interaction will be successful in significantly impacting the level of contract duplication we are currently seeing governmentwide," reads GSA's business case.