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Harmonizing Category Management & Small Business Goals. October 2018. For Official Use Only. A g en d a. Define category management Describe the framework for category management laid out in the President’s Management Agenda

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  1. Harmonizing Category Management & Small BusinessGoals October 2018 For Official UseOnly

  2. Agenda • Define categorymanagement • Describe the framework for category management laid out in the President’s ManagementAgenda • Discuss strategies for helping agencies meet the dual goals of category management and small businesscontracting For Official UseOnly

  3. KeyPoints • Category management is about informed buying: Category management focuses on collaboration and sharing of business analysis by market experts to enable more informed buying for common goods and services using a combination of government-wide, agency and local contracts – not one-size-fits-allcontracting. • Agencies are expected to pursue category management & small business contracting together: The President’s Management Agenda expects agencies to (i) improve their acquisitions of common goods and services using category management principles & (ii) continue to meet their small business goals. This will entail a balanced approach using a combination of government-wide, agency, and localcontracts. • Harmonization is working: Early results show small business participation increases when category management principles are usedeffectively. • Efforts are ongoing: OFPP, SBA, and OSDBUs are working together to build on current success and expand strategies to help agencies meet their dual goals. These efforts will include outreach andin-reach. For Official UseOnly

  4. What is CategoryManagement? • Category management (CM) is a business practice focused on information sharingand • collaboration between agencieswhere: • Cross-agency teams of experts in the acquisition of particular types of common goods and services study the federal market for those goods or services and share market intelligence with agencies through the Acquisition Gateway, suchas: • Terms and conditions that have produced goodresults; • Standardized requirements that can meet most agency needs and avoid costly and unnecessarycustomization; • Competitive pricing strategies informed by past prices paid;and • Existing contracts that are (i) well-managed, (ii) reflect the characteristics above, (iii) have small business participation that meets or exceeds the government-wide average, and (iv) have the capacity to support use by other agencies. • Agency buying activities and OSDBU offices use this market intelligence to review their current spend for opportunities to achieve better contract results while continuing to meet small businessgoals. For Official UseOnly

  5. Category Management Government-wideCategories FY17 common spend -$303B Transportation &Logistics ≈$28.5B Led byDoD Facilities & Construction≈$81.2B Led byGSA ProfessionalServices ≈$71.1B Led byGSA IT≈$56.7B Led byGSA Medical≈$43.5B Co-Led by DoD andVA • ConstructionRelated Materials • ConstructionRelated Services • Facilities Purchase &Lease • Facility RelatedMaterials • Facility RelatedServices • Fuels • Logistics SupportServices • Motor Vehicles(non-combat) • Package Delivery &Packaging • TransportationEquipment • Transportation ofThings • Business AdminServices • FinancialServices • LegalServices • Management &Advisory Services • Marketing & PublicRelations • Research &Development • SocialServices • Technical & Engineering Services • IT Software • ITHardware • ITConsulting • ITSecurity • ITOutsourcing • Telecomms • Drugs & Pharmaceutical Products • HealthcareServices • Medical Equipment, Accessories, &Supplies OfficeManagement ≈$2.3B Led byGSA • Furniture • Office Management Products • Office Management Services • Ammunition • Protective Apparel& Equipment • Security Animals &Related Services • SecurityServices • SecuritySystems • Weapons • EmployeeRelocation • Lodging • PassengerTravel • Travel Agent &Misc. Services • BasicMaterials • Fire/Rescue/Safety/ Environmental Protection Equipment • Hardware &Tools • Industrial Products Install/ Maintenance/Repair • Machinery &Components • Oils, Lubricants, &Waxes • Test & MeasurementSupplies • Compensation& Benefits • EmployeeRelations • HumanCapital Evaluation • Strategy, Policies,& OpsPlanning • TalentAcquisition • TalentDevelopment For Official UseOnly

  6. For Official UseOnly

  7. Objective#1: Improve Results from Contractsfor Common Goods andServices • For FY 18, the President’s Management Council established goals for agencies to -- • (i) bring spend under management by decreasingspend that is not aligned with sound category management principles by 20% and • (ii) increase the use of BICs to 35% of spend that could suitably be made through thosevehicles. • Agencies may receive credit for local contracts if their use is part of a comprehensive balanced strategy developed by the OSDBU to maintain a robust supplier base & to take advantage of government-wide and agency-level vehicles where they can produce better value consistent with having a strong small business contracting base. • Dollar-wise, the SUM goal is 6X larger than the BIC goal. For Official UseOnly

  8. The SUM Goal is 6X Larger Than the BIC Goal Category Management SpendStatus $350 $305 $300 $250 $200 $Billions $175 $150 $132 $100 $50 $22 $0 Total Category ManagementSpend Spend Under Management (includesBIC) BIC UnalignedSpend For Official UseOnly

  9. What is a “Best-in-Class”Contract? • BICs are a subset of government-wide solutionsthat: • result from rigorous requirements definitions & planningprocesses; • reflect competitive pricingstrategies; • demonstrate use of category and performancemanagement strategies; • follow data-driven strategies to change buying & consumption behavior (demand management);and • have undergone validation by thirdparties. • By the numbers in FY2017: • 26 the number ofBICs • 35 the percent of BIC spending that went to smallbusinesses • 75 the percent of BIC contractors who are smallbusinesses • 22.7B the amount spent through BICs in FY 2017 (exceeds the 35%goal) For Official UseOnly

  10. Why Have a Goal for BICs? • Having a goal on BICs reflects the benefits of using model contract solutions: • more than $7 billion in savings and cost avoidance in FY 17, • increased use of common specifications, and • greater reliance on government and industry best practices For Official UseOnly

  11. How Should the BIC Goal Be Viewed? • BICs are just one element of an effective category management strategy. • BICs are not intended as one-size-fits all vehicles, nor are agencies expected to make “all or nothing” decisions when deciding whether to migrate work to a BIC. In some cases, a BIC may be suitable to meet requirements for some agency components and not others. • This balanced approach should help ensure agencies meet their SB goal, attract new entrants, build their supplier base, and still get better value for the taxpayer. For Official UseOnly

  12. What Examples Might Guidance or Tools Highlight to Help Agencies Balance Their Use of BICs/Gov’t-wide, Agency and Local Solutions? Agency and Local Solutions • BICs or Government-wide solutions might be suitable when: • Goods and services are widely available from a large number of small businesses and those on government-wide vehicles offer better value than those on agency-wide or local contracts. • Agency or local solutions may be preferable when: • Work requires specialized skills not available through small businesses on a BIC or government-wide solution but are available from small businesses on an agency-widesolution; • Migration from a local to government-wide solution could cause harm to the small business industrial bae that provides goods or services that would be migrated; and/or • Use of the BIC or government-wide solution would force the agency to rely on a small business cadre of small business providers that could create significant missionrisk. For Official UseOnly

  13. Objective #2: Maintain Strong Small BusinessParticipation • The PMA holds agencies responsible for meeting their smallbusiness contractinggoals: • Achievement of the above-mentioned CM goals is not an excusefor missing the agency’s small businessgoal. • Every agency’s small business contracting goal and industrial base is different and, as a result, the benefits and drawbacks of adopting a given category management solution, such as a BIC or other government-wide solution, or agency-wide solution will vary from agency toagency. • COLLABORATION & COORDINATION DOES NOT MEAN ONE-SIZE-FITSALL • BUT, AGENCIES ARE EXPECTED TO DO MEANINGFUL ANALYSIS TO BRING THEIR SPEND UNDERMANAGEMENT • Each category manager has baselined small business spend and is expected to work with solution providers & OSDBUs to meet or exceed thebaseline. For Official UseOnly

  14. Small Business Participation is Higher as a Percentageof Spend Under Vehicles Aligned with CMPrinciples FY17 SMALL BUSINESS ELIGIBLE SPEND ($BILLIONS) 100% 62.1% 56.5% 74.3% 76.8% 25.7% 23.2% 37.9% BIC Spending Spend Under Management CFO Baseline: Total SBAchievement Other than Small Business Spend Small BusinessSpend Source: FY16-17 FPDSData Fy

  15. Small Business & Socioeconomic Participation is Higheron Popular BICs than on Federal Contract VehiclesGenerally FY17 SOCIOECONOMIC SPEND AS PERCENT OF SMALL BUSINESS ELIGIBLE SPEND(%) 100 83 66 43 23.9 33 33 31 30 28 26 22 21 19 19 15 12 9.1 4.1 4.71.6 5 2 CFO Baseline: Total SB &Socioeconomic Achievement SEWP AlliantSB OASISSB SmallBusiness Small Disadvantaged VeteranOwned ServiceDisabled Women Owned HubZone Source: FY16-17 FPDSData Fo

  16. BuildingoutStrategiesforMeetingCategory Management & Small BusinessGoals • OFPP, GSA, SBA, and OSDBUs are working together on a variety of strategies to build on current achievements and strengthen theresults under bothinitiatives. • SBA is a member of the Category Management LeadershipCouncil. • OSDBUs have been invited to actively participate on all category management teams, supporting market research, small business baselining andimpactanalyses. They also serve as strategic advisorsto senior agency official accountable for categorymanagement. • Current strategiesinclude: • Guidance for agencies(pending) • Tools to support data-drivendecision-making • Increase small business participation on BIC and othergovernment- widesolutions For Official UseOnly

  17. Tools to SupportData-Driven Decision-Making • Tools that are available or are under development for the workforceinclude: • A small business dashboard compiles all details regarding SB onBICs, including spend, vendors, types, on-ramping opportunities, terms and conditions • A BIC finder tool, under development, will allow research to determine what BICs are available to meet small business needs, even allowingfor searching options for SB set asides and for the socio-economic categories • Solutionfinder: includes BIC and other availablesolutions • Training: designed to help members of the workforce understandthe dual goals of the category managementframework For Official UseOnly

  18. IncreaseSmallBusinessParticipationonBIC&other Government-WideSolutions • Emphasize the consideration of on-ramps for small businessesduring the contractterm • On-ramp was used by GSA to add 31 new small businesses toOASIS and many more are expected to beadded • Identify opportunities for more government-wide set-asidevehicles • Whenever a BIC is expiring or a new one is considered, consider the creation of a set-aside vehicle, either as the sole vehicle or in parallel to establishment of an unrestricted vehicle, as has been done forBICs such as Alliant andOASIS For Official UseOnly

  19. CategoryManagement Myth vs.Fact For Official UseOnly

  20. Summary of Mechanisms to Ensure Strong Small Business Participation as Agencies Align their Spend with CMPrinciples • Small business goals unchanged: Guidance and training will emphasize that agencies remain responsible for meeting their small business contractinggoals. • Balanced approach: Guidance and training will emphasize that agencies will use a combination of government-wide contracts, agency contracts, and local contracts shaped, in part, on small business contracting impact and the ability to maintain a robust small business industrialbase. • OSDBUs as strategic advisors: OSDBUs will serve as strategic advisors to help agencies in evaluating when best-in-class contracts and other government-wide solutions are beneficial and when agency and local solutions are moreadvantageous. • Tracking of results: Category managers and owners of government-wide solutions will keep track of small business participation to evaluate results and make adjustments where necessary. • Ongoing collaboration between CM and small business community: OFPP, SBA, and OSDBUs are working together to build on current success and expand strategies to help agencies meet their dual goals. These efforts will include outreach andin-reach. For Official UseOnly

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