The Acquisition Gateway
What is Category Management?
Category Management Defined Category management is a business model the federal government is applying to buy smarter and more like a single enterprise. It involves: Identifying core areas of spend Collectively developing heightened levels of expertise Leveraging shared best practices, and Providing acquisition, supply and demand management solutions. Category management enables us to eliminate redundancies, increase efficiency and effectiveness, and boost satisfaction with the products and services we deliver. Category management is a management concept the federal government is applying to buy smarter and more like a single enterprise. Category management involves: Pulling together a master record of spend. Understanding customer needs and priorities in a category and developing market intelligence and analysis. Sharing best practices and information across agencies and partners. Improving offerings (through better customer guidance/support, improved supply base performance, and/or new acquisitions). Category management minimizes redundancy and increases efficiency and effectiveness on both the demand and supply sides.
Why Focus on Category Management?
In FY 2014, the federal government spent over $428 billion in purchases, which accounted for about 20 percent of the entire Federal budget. This was done through 500+ separate federal departments and agencies. Case-in-Point: One Federal Government Contractor $2.7 billion Very Limited 20% of the federal government budget goes to purchases, and purchasing is done through more than 500 separate departments. We show on this page our interaction with one federal government contractor: More than 2,000 contracts More than 5,500 contract actions $2.7 billion in Federal spending, and Very limited visibility across government (by the way that is a real iceberg – almost all of it is below the surface!) Total FY 2014 Spend Government-Wide Spend Visibility
Federal Government Goals for Category Management
Federal Government has the following goals for category management: Increase spend under management through better interagency collaboration and understanding of user requirements, market dynamics, and purchasing patterns. Reduce contract duplication through adoption of shared solutions for common products/services. Generate volume savings and administrative savings from leveraged buying power better use of procurement resources. Enhance data transparency to improve contracts and performance against priorities such as small business goals and sustainability. Boost innovation through improved interagency and supplier partnership. Increase efficiency and effectiveness through improved supplier performance, better buying decisions, and supply chain cost savings. Category Management will help us make more informed decisions to generate more effective solutions that drive better results. Our first goals focus on building knowledge and relationships: Enhance Customer & Market Knowledge. Improve Customer Relationships. Strengthen Industry Partnerships. We will use the knowledge we gain to strengthen our offerings and services. Effective strategy and execution drive superior results: More agency savings. Greater value to the customer. Reduced total costs Increased FAS usage and market share Ultimately, FAS as the leading source for government solutions
GSA will work with the Office of Management and Budget (OMB) and the SSLC agencies to encourage government-wide adoption of category management by: Determining the priority categories. Defining spend under management and best in-class criteria. Creating performance metrics. Collecting data on best practices, contract terms and conditions, and contract prices paid. You may have already seen a recent memo from OMB, cited here. I recommend reading it, but several things to highlight: Need for a new approach to progress further, and commitment to Category Management as that approach Category Management is our way to act more like a single entity, by coordinating management of entire categories FAS is taking a lead role developing category management Commitment to sharing of data, reports, and best practices Development of talent and tools (capabilities) Building stronger vendor relationships Why category management? It’s to increase spend under management, reduce contract duplication, achieve administrative savings, generate volume savings, enhance data transparency, increase value, better define requirements, and to improve customer and supplier partnerships. To underscore a key point of the memo: Category management has teeth, it’s staying around, and FAS is playing a leading role.
Category Management Governance Structure
Category Leads are responsible for the development and execution of category strategies for a specific category (e.g., IT software within the IT category). PMO The SSLC is the governing board for Category Management initiatives. Provides government-wide direction on CM strategy and initiatives. Category Managers are experts in the category (e.g., Information Technology). They develop the government-wide strategy to drive improved performance and act as change agents for the category. Commodity Teams are traditional strategic sourcing working group formed when the category management process identifies the need for a new acquisition solution. Common Acquisition Platform Provides overall program management support to the groups and individuals in the governance structure; facilitates the development and implementation of business rules and processes. Develops and executes the IT strategy to support category management business strategy via the Acquisition Gateway. Category Managers SSLC Administrator of OFPP Category Leads Chair Agency A Rep Agency B Agency C Agency E Agency D Commodity Teams Commodity Team Category Team Category Manager Category X Y We’ve put a lot of work into establishing a governance model that will provide the necessary coordination without stifling category innovation. There are four major structures overseeing category management on an ongoing basis: Leadership Council gives overall direction on strategy and initiatives. Portfolio liaisons are change agents helping the Portfolios adopt CM. Category Managers oversee development and execution of category strategies and manage priorities and resources to maximize category results. In some cases there will be sub-categories with dedicated sub-category managers akin to category managers. Additionally, there are two services that support the development and implementation of category management: The PMO provides overall program management support and helps develop and implement business rules and processes. CAP develops and supports the systems supporting category management via the Acquisition Gateway.
The Ten Government-Wide Categories
The government-wide category structure approved by the SSLC consists of 10 categories of commonly purchased goods and services valued at $275B in FY14 1. IT $49.9B 1.1 IT Software 1.2 IT Hardware 1.3 IT Consulting 1.4 IT Security 1.5 IT Outsourcing 1.6 Telecommunications 2. Professional Services $61.9B 2.1 Business Administration Services 2.2 Legal Services 2.3 Management Advisory Services (excl. R&D) 2.4 Marketing and Distribution 2.5 Public Relations and Professional Communications Services 2.6 Real Estate Services 2.7 Trade Policy and Services 2.8 Technical & Engineering Services (non-IT) 2.9 Financial Services 2.10 Social Services 3. Security and Protection $5.5B 3.1 Security Animals & Related Services 3.2 Security Systems 3.3 Security Services 4. Facilities & Construction $75.7B 4.1 Construction Related Materials 4.2 Construction Related Services 4.3 Facility Related Materials 4.4 Facility Related Services 4.5 Facilities Purchase & Lease 5. Industrial Products and Services $10.5B 5.1 Machinery & Components 5.2 Fire/Rescue/Safety/Environmental Protection Equipment 5.3 Hardware & Tools 5.4 Test & Measurement Supplies 5.5 Industrial Products Install/Maintenance/Repair/Rebuild 5.6 Basic Materials 5.7 Oils, Lubricants, and Waxes GSA has worked with the SSLC to finalize a Government-Wide category structure with ten defined general government categories and nine Defense-Centric categories that are separate from the general categories. With some exceptions, the government-wide categories DO NOT map one-to- one to FAS categories, which we’ll dive into on the next page. 6. Office Management $1.9B 6.1 Office Management Products 6.2 Office Management Services 6.3 Furniture 7. Transportation & Logistics Services $26.8B 7.1 Package Delivery & Packaging 7.2 Logistics Support Services 7.3 Transportation of Things 7.4 Motor Vehicles (non-combat) 7.5 Transportation Equipment 7.6 Fuels 8. Travel & Lodging $2.7B 8.1 Passenger Travel 8.2 Lodging 8.3 Travel Agent & Misc. Services 9. Human Capital $4.1B 9.1 Specialized Educational Services 9.2 Vocational Training 9.3 Human Resources Services 10. Medical $36.0B 10.1 Drugs and Pharmaceutical Products 10.2 Medical Equipment & Accessories & Supplies 10.3 Healthcare Services
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