Elements of the Better Contracting Initiative

Shopping is top of mind for many, particularly with the approaching holiday season. The same holds true for the federal government, though its top shopping season – 4th quarter of the fiscal year – has come and gone. As buyers look for the best deals and sales this time of year, the federal government is also looking to save and streamline the acquisition of goods and services.

Last week, the White House issued the Better Contracting Initiative (BCI) to, “ensure that the Federal Government is getting better terms and prices when purchasing goods and services,” according to the BCI fact sheet.

As a top buyer for goods and services, the federal government makes purchases that range from weapons systems and IT to common household goods. The BCI asserts that federal government often overpays compared to market prices, and that agencies require more solutions to receive better value for purchases.

Using a four-point approach, the Biden Administration expects the BCI to result in more than $10B in annual savings and cost avoidance, as well as improved contract performance.

1. Data to Enable Lower Prices and Better Terms.

The BCI describes a new OMB data management strategy to create a data sharing and analytical method for federal procurement. To that end, the White House announced a new tool to provide acquisition staff with product pricing data stemming from federal sales, alongside vendor and contract information, to drive decision-making in common purchases.

2. Lower-Priced Common Enterprise-Wide Software Licenses.

The White House charges GSA with negotiating a government-wide IT software license agreement with a large software provider, to avert price variance. The initiative further promotes the best-in-class enterprise contract put in place to streamline purchases of common products and services.

3. Contract Requirement Improvement

Citing an existing and proven methodology to improve contract requirements in high priority acquisitions, the BCI instructs OMB to issue guidance to direct agencies to use such methodology. In particular, the approach leverages agency facilitators that hold acquisition workshops, “which help teams of program, acquisition, supply chain, IT, and other experts translate their needs to each other and build performance-based requirements to capture better more cost-effective outcomes,” according to the BCI announcement.

Moreover, the BCI directs GSA to continue sponsoring cross-agency contract requirements development and acquisition planning workshops for service contracts, as well as train agency acquisition leadership to facilitate such workshops within their own agencies. OMB will play its role in helping agencies to identify the parameters to embed workshops into acquisition lifecycles.  

4. Best Value from Sole Source and Other High-Risk Contracts

Lastly, the BCI calls for peer reviews where independent procurement officials can review terms for a second opinion by cost and engineering experts to improve the ability of agencies to negotiate in situations of sole source and high-risk procurements. The BCI acknowledges that the DOD realized $300M in cost savings between FY 2020-2023 when using expert price advice during peer reviews.

Some Reflection

While the BCI seeks to improve the federal procurement environment and calls attention to several aspects for enhancement, its contents do not present a vast change for contractors. Elements of the BCI reflect that of Category Management practices and work at the GSA’s FAI, including the Periodic Table of Acquisition Innovations. It is also worth noting that the White House underscores the importance of small businesses throughout the fact sheet, prompting the increase of small business set-asides in acquisitions and implementing practices to help grow small business participation in the federal marketplace.

One more thing to note, the BCI press release referred to the 2023 Deltek Clarity Government Contracting Industry Report, which provides insights and trends based on survey data collected from hundreds of contractors. In the report, respondents reported a median profit margin growth of 17% in FY 2022, however this does not represent the entirety of the federal contractor community. This performance is influenced by many factors, including an increase in contract spending from $662B in FY 2021 to $707B in FY 2022, as well as internal cost reduction and efficiency initiatives. The White House did not ask Deltek for comment or clarity. The survey for the 2024 Deltek Clarity Government Contracting Industry Report will begin in January 2024.