White House Issues New Guidance on Category Management

Eight years after the Obama administration began importing the private-sector procurement tool known as “category management,” the Trump administration on Thursday rescinded old directives and delivered new agency guidance.

In a March 21 memo to all agency heads, Office of Management and Budget Deputy Director Margaret Weichert—who is doing double duty running the Office of Personnel Management—tasked agencies with a new reporting regime for shared services that “supersedes and rescinds” OMB directives from 2011 and 2012.

Category management involves agency teams coordinating bulk purchasing in areas such as information technology, security and protection, and transportation. Weichert’s memo reported that as much as 56 percent of the government’s $325 billion in purchases of software, mobile services, technology services and travel remained “unaligned” or decentralized, as of December 2018.

“This statistic confirms that substantial cost-avoidances and performance benefits are going unrealized and underscores the need for greater management attention on collaborative buying at both the federal and agency levels by increasing the portion of an agency’s spend” using category management, the memo said.

As part of the administration’s push to move federal workers from low-value to high-value work, the memo said, “The government must take action now to buy more like an enterprise, and less like hundreds of individual entities, for common requirements needed to meet core mission.”

By setting goals and reporting them regularly to OMB, the memo said, “Conservative estimates suggest that, regardless of the category, taxpayers are consistently realizing average cost avoidance of at least 10-15 percent. And, when “agencies make purchases informed by market intelligence consistently across the federal enterprise, they increase cost avoidances and save time.”

Thursday’s directive builds on contracting efficiency initiatives of the General Services Administration and the Small Business Administration to improve communication with industry.

It “will require agencies to carry out a set of tailored management actions and provide updates on these management actions to evaluate their progress in bringing common spending under management,” the memo said. The vehicle will be a “spend under management” dashboard that measures unaligned spending, which designated agency officials must report to OMB.

OMB senior leadership in the Office of Federal Procurement Policy will review the SUM dashboard monthly and will require annual updates from senior acquisition officials on actions taken to meet the goals.

The White House prescribes five actions: Agencies must annually establish plans to reduce unaligned spending and increase shared spending on common goods; develop vendor-management strategies for good communication; implement demand management strategies to eliminate inefficient purchasing and consumption behaviors; share data across the federal government to differentiate quality and value of products and services; and train the workforce in category management principles and practices.

The memo also stressed the importance of meeting contracting goals with small business and continuing to award work to Federal Prison Industries and AbilityOne manufacturing by people with disabilities.

OMB will recognize category management achievements, the memo said, at meetings of the President’s Management Council.