Category management is used by private sector giants including Boeing Co. Reed Saxon/AP file photo
White House Procurement Chief Wants Acquisition SWAT Team
Anne Rung is pursuing category management to curb wasteful duplication.
Citing as a model the U.S. Digital Service information technology fix-it team, the White House procurement chief said she hopes to create and train an elite acquisition group to help the Obama administration implement its category management efficiency reforms.
Anne Rung, administrator of the Office of Federal Procurement Policy, told journalists at Bloomberg Government on Wednesday she envisions starting with perhaps 20 acquisition specialists who have “street cred” with agency contracting officers and assembling them for six months of training before returning them to their agencies to help write simplified and more market-savvy requirements for federal purchasing solicitations.
Rung said her top priorities during the final 21 months of the Obama administration include driving contract innovation and improving agency relationships with vendors. But the No. 1 issue is category management, an approach to bulk purchasing used by private sector giants such as Boeing and Macy’s as well as the government of the United Kingdom.
“You take common areas of spending of all agencies and divide them into categories” such as information technology, security and protection, or transportation, and then build teams around them, she explained. About $270 billion of the $440 billion federal procurement budget goes toward common items. Each category must be planned like a startup, she said.
“Category managers at Macy’s know their customers -- fashionistas and the 40-year-old working woman -- but in the federal government we don’t.” said Rung, who previously worked at the General Services Administration and headed procurement operations for the state of Pennsylvania. “Our workforce is trained as generalists, which puts them at a huge disadvantage with industry,” she said. “A lot of the root causes of issues go back to people not talking and working together.”
So the single trait she would look for in a category manager leader is a revulsion at the way agencies acquire goods and services today—with 200-page solicitations that are overly prescriptive written by people who don’t know the market, Rung said.
“One of the unintended consequences of Al Gore’s reinventing government” in the 1990s, Rung said, “was massive duplication of IT purchasing. That’s why the new effort will start with IT and work out best practices, in concert with implementing efforts to narrow down the types of software under the Federal IT Acquisition Reform Act.
“When I was working with then-GSA Administrator Dan Tangherlini, we decided that category management should mean competing out services,” she said. That does not mean that everyone works in a centralized way through GSA—human resources is being managed by the Office of Personnel Management and transportation by the Transportation Department, she noted. Though the structure is still being worked out, most likely about six agencies would be the main players.
“The buying would still be happening in agencies, but the team will think up strategies and know emerging trends, crises, the technology and vendor base,” she said. “It’s not a singular focus on reducing costs.”
Past efforts by agencies to determine how much they’ve been spending on IT showed that they underestimated it, Rung said, and the best source for past prices paid is the vendors. “Shedding light on existing contracts will cause competition, so that only the best survive,” she said. Hence Rung hopes to promote agency and contractor use of the GSA’s acquisition gateway site to make contracts, fees and a summary of who’s using a contract visible to all.
With 3,200 contracting units and 40,000 contracting officers in the federal government, the category management leaders are under instruction from President Obama to “get it done” by convincing agencies of its value, Rung said. She said she doubts small businesses—which are entitled to 23 percent of contract dollars—would be impacted. “I can see perhaps fewer businesses but more coming in and out of the marketplace,” she said.
Rung plans to have guidance out from the interagency Category Management Leadership Council (renamed to replace the phrase shared services) by the end of summer.