Procurement innovation

Innovation is not simply about new ideas. It is also about responding rapidly and effectively to changing market conditions. The Federal Government is gradually emulating successful commercial market innovations such as category management, Agile procurement, and performance-based acquisition. Capture and proposal professionals must understand these trends and respond effectively with new and/or improved strategies and processes.

Category management

Category management is a purchasing concept whereby like supplies and/or services are grouped into similar categories. The purpose is to achieve more-effective competition while reducing costs and risks as well as gaining access to greater innovation from suppliers. Department of Defense (DoD) Better Buying Power initiatives as well as Office of Management and Budget (OMB) category management policy related to laptops and desktops, software licensing, and mobile devices and services are all aimed at allowing the Federal Government to act as a single efficient enterprise by sharing best practices and information.

Innovative companies can proactively respond to this change by analyzing which incumbent single and multiple award contracts (MACs) will expire and/or be replaced by favored vehicles such as GSA One Acquisition Solution for Integrated Services (OASIS), Alliant 2, and Schedule 70; National Aeronautics and Space Administration (NASA) Solutions for Enterprise-Wide Procurement (SEWP) V, and National Institutes of Health Information Technology Acquisition and Assessment Center (NITAAC) CIO-SP3 and then developing strategies to capture as many of these vehicles as possible. According to Deltek, in 2015, 56% of IT spending was procured through MACs, and this trend will continue. Innovative companies understand that the shift to category management requires effective capture: listening to customer needs and steering buyers to preferred vehicles. Preferred vehicles are ones you hold as prime, preferably, or at least as a teaming partner.

Agile procurement

The General Services Administration (GSA) 18F organization is leading the charge to explore Agile procurement methods that reduce risk by buying projects in smaller pieces. 18F procures services and writes solicitations on behalf of other federal agencies. For example, 18F wrote an RFP on behalf of the Department of Health and Human Services (DHHS) to procure an agile, modular, and user-centered design for a new child welfare system. They bought small pieces of source code through the micro-purchase platform. They created and awarded an Agile Basic Purchasing Agreement (BPA) that will have future off- and on-ramps. If you want to participate, educate yourself regarding on-ramps and upcoming procurements.

Small businesses in particular should watch 18F initiatives as these smaller procurements are a great place to get your feet wet. However, remember that Agile procurements mean speed, and you must tailor your capture and proposal processes accordingly. For example, 18F prefers 4 weeks or less from the solicitation to the contract kickoff—amazing speed for federal procurement. Also, be prepared for transparency as all procurement documents and deliverables are posted online as evidenced by the Federal Risk and Authorization Management Program (FedRAMP) Dashboard award. Understand that you will not be able to protect proprietary information as in typical federal procurements, perhaps making yourself vulnerable to competitors.

Performance-based procurements

Performance-based contracting is about getting results. An effective Performance Work Statement (PWS) focuses on outputs, quality, and/or outcomes and often ties at least a portion of contractor payments, option years, and/or contract renewals to achievement of specific, measurable performance standards and requirements. While this type of procurement is not new or innovative (OMB first issued guidance in 1998), it has proven very difficult to implement effectively because the buyer must be able to fully define both requirements and desired outcomes. More agencies are attempting to implement performance-based acquisition methods to better align funds with proven return on investment.

So, how to innovate? Understand that performance-based contracting typically includes the use of acquisition methods such as down-selects and oral presentations. It also focuses very heavily on past performance. Contractors need to verify they have referenceable past performance with demonstrated results. Bidders must hone their in-person communication skills. Work with current and past customers to ensure your CPARS ratings are excellent or at least show an upward trend. Get the training and practice you need to respond to orals—both formal presentations and on-the-fly Q&A.

Will procurement innovation survive?

Many contractors argue that current acquisition initiatives will not survive the change in administration, so there is no need to adjust or transform. Others argue that with no enforcement of these policy initiatives, agencies will continue to procure goods and services in a stove-piped fashion with little focus on performance-based outcomes.

However, acquisition innovations related to category management, Agile procurement, and performance-based contracting are just common sense. With tight budgets, regardless of the change in administration, federal agencies will need to leverage these or similar proven commercial best practices in order to maximize dollars spent. Figure out where best to play, realizing that contracts won now will impact the next 5-10 years of revenues irrespective of the new administration. Adjust capture and proposal processes and innovate accordingly to maximize wins.

by Lisa Pafe, APMP-NCA President, CPP APMP Fellow, and PMI PMP

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Reprinted with permission from the APMP-NCA Summer 2016 Executive Summary

Lohfeld Consulting

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