Unraveling the facts about GWACs

Obama administration officials say there are too many IT procurement vehicles, and they want agencies to consolidate their buying around existing interagency contracts rather than launch new ones. There is even a strong case to cut back on current contracts, which officials say are often duplicative in what they provide for buyers.

Where does that leave governmentwide acquisition contracts (GWACs)?

In early 2012, the Office of Federal Procurement Policy (OFPP) issued rules requiring agencies that wanted to award their own multi-agency contracts (MACs) to submit a business case arguing why those contracts were necessary — something agencies that wanted to award GWACs have had to do for years.

"Agencies are required to balance the value of creating a new contract against the benefit of using an existing one, and whether the expected return on investment is worth the taxpayer resources," said Dan Gordon, who was OFPP administrator at the time.

Following the 1996 Clinger-Cohen Act that authorized their creation, GWACs became a poster child of sorts for that kind of contract inflation. Many agencies were looking to create their own contracts as testimony to their procurement mojo in an era of huge growth in government IT acquisition. For vendors, GWACs were seen as a hunting license to pursue lucrative government IT business.

In 2005, the Government Accountability Office put GWACs on its list of high-risk government functions, saying they were fueling a rapid growth in spending while some of the agencies that used and administered them had limited expertise with that kind of contracting. Furthermore, the contracts were contributing to a "much more complex environment in which accountability has not always been clearly established," GAO auditors said.

Fast forward to now, and that picture has switched. GAO lifted the high-risk tag this year, and U.S. Comptroller General Gene Dodaro told the House Oversight and Government Reform Committee in February that agency officials had established more management controls for GWACs, set up a policy framework for new contracts and moved to gather more data on contract spending.

"Removing the management of interagency contracting from the High Risk List does not mean that the federal government's use of these contracts is without challenges," Dodaro told the House panel. "But we believe there are mechanisms in place that [the Office of Management and Budget] and federal agencies can use to identify and address interagency contracting issues before they put the government at significant risk for waste, fraud or abuse."

Stan Soloway, president and CEO of the Professional Services Council, said he believes more still needs to be done. The number of GWACs and the costs for both government and industry, he said, warrant a closer look. "To know whether there are too many GWACs and duplication, and where that duplication arises, we need to really understand what it is that each GWAC offers and how they map against each other," he said. "I don't think that analysis has been done in any great detail."

GWACs versus MACs

There are just three agencies designated by OMB to run GWACs — the General Services Administration, NASA and the National Institutes of Health — and about 10 active GWACs. There are others that have expired but are still processing task orders and some that are about to expire but are being renewed.

Meanwhile, there are more than 1,000 MACs. They have been around since the 1930s and were created to improve administrative efficiencies and save costs by allowing agencies to use one another's contracts. In essence, GWACs are a subset of MACs, except that they were specifically sanctioned under Clinger-Cohen to handle multi-agency IT procurements.

A Bloomberg Government analysis last year put the procurement obligations under multiple-award contracts at more than $80 billion in fiscal 2011, double the amount in fiscal 2006. (Many, but not all, multiple-award contracts are also multi-agency contracts.)

There are a number of reasons for this explosion in MACs, but a few stand out. They include the millions of dollars in fees that agencies have until recently had to pay to use GWACs and a perceived lack of customer service, particularly at GSA, which is the largest provider of government contracting.

"The problem [for many agency buyers] is being able to distinguish between a real GWAC and what is essentially a very large MAC," said Larry Allen, a former president of the Coalition for Government Procurement and now president of his own consulting company, Allen Federal Business Partners. "That's a real issue when it comes to DHS' [Enterprise Acquisition Gateway for Leading-Edge Solutions] and the [Department of Veterans Affairs' Transformation Twenty-One Total Technology] MACs, for example."

The problem arises, he said, when agencies hang a big value on a tightly defined vehicle they are running. EAGLE is valued at $22 billion and T4 at $12 billion. Companies feel compelled to bid on them because of the value, even though the contracts are not likely to drive a lot of business to them.

"There are those that have very discrete business cases, and they will drive business," Allen said. "But I think most contractors would say there is far too much duplication in this area to be beneficial."

Getting the word out

The challenge for GWACs, therefore, is being able to stand out in this mess of MACs and other procurement vehicles.

John Nyce, director of the federal services sector at B3 Solutions and former associate director of the Interior Department's Acquisition Services Directorate, said agencies choose the type of contract that fits the requirements they have at any particular time. For example, some GWACs are primarily for IT components, and others are better suited for enterprise solutions.

The other side of it would be how well the contractors perform, he said, and what kind of support you get from the contract's program management staff when you run into issues.

"When I was in government, part of what went into our deliberations was if we had a problem with a vehicle and couldn't get support from the agency that was hosting that vehicle," he said. "Then we'd tend to shy away from it."

Joanne Woytek, program manager for NASA's Solutions for Enterprise-Wide Procurement (SEWP) — one of the GWACs that Nyce said "got it right" — believes that the support that her contract has focused on providing right from the beginning is what has made it so successful over the years.

The intent, she said, was to offer a team of technical procurement and policy people working together so that both government and industry would know they would get help whenever issues arose.

As the next iteration of the contract, SEWP V, heads for award in May 2014, Woytek said the main problem will be letting buyers at agencies know that SEWP is available to them.

"There are not too many GWACs — that is definitely not the problem," she said. "I think there are too many agencies that don't look at GWACs first. It's a big government and there are lots of agencies that know about us, but not every place in every agency does, and that's the challenge and the opportunity."

That's also a concern for Robert Coen, acting director of the NIH IT Acquisition and Assessment Center (NITAAC), which runs that agency's three GWACs: CIO Solutions and Partners 3, CIO-SP3 Small Business, and Electronic Commodity Store III.

He said NITAAC's contracts provide a level of customer service and ease of use that are attractive to buyers, as long as they know about the contracts. There are a lot of buyers in what is a huge government acquisition workforce, he said, and it's very hard to make sure they are aware of just one aspect of buying, such as GWACs.

He also said it's important to dispel the notion of any competition among the GWACs.

"I don't think buyers look at it as a competition, and I certainly don't see things that way," he said. "There are only three agencies that have GWACs, and each offers something that's a little different. The biggest goal I have is that buyers don't necessarily use our contract but to make sure that more and more people know about GWACs, and that way I think more will use GWACs in general for their requirements."

A resource for budget-constrained agencies

It will be important for GWACs to gain that kind of recognition because the looming era of sequestration and budget constraints also presents a major opportunity. Agencies will be looking to save money on IT purchases, while having less money and acquisition resources to do it themselves.

"That's definitely one of the things we've talked about in the GWAC world, that this might prove an opportunity for us to get in front of folks and point out to them that here's a way for them to save money," Woytek said.

As pre-competed vehicles, GWACs can streamline the acquisition process, which naturally leads to agencies saving time and money, said Kevin Youel Page, deputy assistant commissioner of GSA's Federal Acquisition Service. FAS' Office of Integrated Technology Services runs a number of GWACs, including the successful Alliant contracts.

"Agencies have less money later in the fiscal year to use toward acquisitions, [and the] net effect of this is [that] fewer yet larger IT service acquisitions are being issued," he said. "[But] that also allows for a more comprehensive solution for their requirements by leveraging GWACs' flexibility."

Cost-type task orders have become more popular due to the high risk of time-and-materials acquisitions when there is not enough history or information available to do fixed-price task orders, he said. GWACs have helped GSA customers to more effectively manage cost-type orders, he added, while also taking advantage of flexibilities they have with other elements, such as direct costs.

Warren Suss, president of Suss Consulting, said vendors' attitude toward GWACs has gone from concerns about investing time and money in what could be "an empty bag" to seeing themselves at an extreme competitive disadvantage if they don't have GWACs on their list of contracts.

And agencies are becoming more comfortable with using GWACs and are more willing to trust GSA and other GWAC providers to take over acquisition functions that they previously kept in-house.

"That to me is the real test of success," Suss said. "I think GWACs have become a real and growing force."

Next steps for GWACs

Governmentwide acquisition contracts still face a number of tests to show how and where they fit into what will be, at least for the next few years, an uncertain and fluctuating acquisition environment.

Fortunately, they seem to have shaken concerns over service and costs. GWAC program offices have made a determined attempt to increase the level and quality of help they provide to users with the often large, complex multi-year projects for which they use GWACs. More improvements are in the works. Line-item data tracking, for example, will help agencies better understand what they use the contracts for.

Woytek said GWAC providers would also like to enhance customers' ability to conduct market research for their requirements, even before they issue requests for quotations.

Prices for agencies using the contracts have also decreased. All GWACs are at least competitive with the General Services Administration's published Industrial Funding Fee of 0.75 percent, and in many cases, fees can be negotiated down to well below that level. The National Institutes of Health IT Acquisition and Assessment Center recently put a $150,000 cap on fees for its GWACs as a way of assuring customers with larger dollar requirements that they could use its GWACs without accruing other significant payments.

One looming challenge is how GWACs will accommodate the Federal Strategic Sourcing Initiative (FSSI), which is attempting to make government procurement more efficient by commoditizing various items.

That's a throwback of sorts to the 1990s, when commodity purchases were all the rage for a while. Now the emphasis is on providing complex solutions — the sweet spot that most GWACs have embraced.

Nevertheless, GWAC program managers seem confident that they can integrate FSSI requirements into their contracts.

"We are working with [the Office of Management and Budget] on what they are looking for in this, and we're trying to determine how best we can help out in that arena, along with NIH and GSA," Woytek said. "The three of us are really trying to be the lead for OMB on this."