Procurement office to agencies: Business cases, interagency contracts go hand-in-hand

Agencies will have to develop a business case before launching a multi-agency contract (MAC) under a guidance from the Office of Federal Procurement Policy (OFPP) expected later this summer, the administration’s chief procurement official said today.

The business cases will require agencies to deal with the anticipated consequences that the proposed contract vehicle would have on the government’s ability to leverage its overall buying power, OFPP Administrator Daniel Gordon told the Senate Homeland Security and Governmental Affairs Committee's Contracting Oversight Subcommittee.

Agency officials would have to answer how their proposed contract vehicle differs from existing contracts and explain the basis for the belief that the new contract would offer greater value than existing vehicles, according to Gordon.

Gordon added that agency officials will have to evaluate the cost of awarding and managing the contract, and then compare those costs with the likely fees their agency would pay for using an existing vehicle or for getting acquisition assistance from another agency.

“This process will help to improve internal management and oversight of multi-agency contracts,” he said.

Gordon said OFPP will require business cases from agencies that propose contract vehicles for use in that agency alone, which are often called enterprisewide contracts.

“We believe it is prudent for an agency to develop a business case before moving forward with that approach,” he said.

Some parts of the policy guidance are not finalized. Gordon said OFPP is considering whether the business cases should be reviewed by a board in the agency making the proposal or outside of it.

“Because GWACS [governmentwide acquisition contracts] already provide agencies with access to a wide range of contracted goods and services for [information technology], external review of business cases to establish multi-agency contracts for IT may serve a useful purpose in guarding against unjustified duplication of GWACs,” Gordon said.

OFPP is also considering whether it should exempt an agency from providing a business case if the proposed contract vehicle would be used minimally by other agencies, Gordon said.

Agencies use the General Services Administration’s Multiple Award Schedule contracts, MACs, GWACs and enterprisewide contracts to buy a wide range of goods and services. The bill for such contracts was estimated at $60 billion in fiscal 2008, but the total was unknown because the total number of contract was unknown, the Government Accountability Office has said in several reports.