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On Nov. 8, 2023, the Biden-Harris administration (the Administration) announced the Better Contracting Initiative (BCI), a four-pronged strategy to improve the terms, prices, and value of goods and services the federal government purchases. The Administration notes decades-long practices of federal agencies paying "inconsistent prices" when compared to market prices for common goods and services, such as IT hardware and software.
According to the Administration's fact sheet, the BCI comprises four strategic elements:
- Leveraging Data Across Federal Agencies to Get Lower Prices
and Better Terms. The Office of Management and Budget (OMB)
will centralize data management and improve the sharing of billions
of acquisition and data points across the federal government. Such
practices, and other tools, will enable agencies to better compare
prices and terms, strengthen the government's negotiating
position, and yield savings. The Administration notes that
contractors should expect improved market intelligence, more
realistic cost estimates, and better solicitations, along with
enhanced equity by enabling buyers to focus their searches on
information that might support soliciting a requirement from small
businesses or through the open market.
- Negotiating Common Enterprise-Wide Software Licenses.
The Administration highlights that the federal government spends
over $70 billion on IT products and services annually, inclusive of
software licenses (prices for the same software can vary by agency
up to 20%). Thus, the Administration identified that IT
procurements foster opportunities for further cost savings. The
government, through the General Services Administration (GSA),
would negotiate government-wide IT software license agreements with
a major software provider. The Administration hopes this will
reduce price variance, secure more favorable terms, and capture
efficiency gains.
- Saving Money and Avoiding Waste by Getting Contract
Requirements Right the First Time. The BCI promotes accurately
capturing contract requirements to avoid costly modifications. The
Administration notes that government expenditures exceed $110
billion annually for professional services contracts (e.g.,
financial, technical, engineering, or identity protection
services). Through agency facilitators and workshops, the
Administration hopes to translate expert experience to better build
out performance-based requirements. The Administration will sponsor
the development and planning of acquisitions with GSA, and other
agencies, to embed these workshops into the acquisition lifecycle,
while expanding workforce development opportunities, such as
through a "professional workforce certification
model."
- Getting Better Value from Sole Source and Other High-Risk
Contracts. The BCI aims to enhance the government's
negotiating position with contractors when faced with limited
vendor choices. Department of Defense techniques, like peer reviews
from cost experts and other acquisition professionals, along with
hybrid contracts (such as contracts that combine labor-hour,
cost-reimbursement, and fixed-price payment types) would be used to
mitigate risks and ensure prices are not inflated when vendor
options are limited.
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Key Takeaways
The Administration expects the BCI will save an estimated $10 billion in costs. While the Administration's initiative should allow for better information sharing among agencies and prevent overpayment, implementation of the BCI remains unclear. For instance, commentators have suggested that such sharing of information may cause confusion among agencies if uniform definitions and standards are not applied to different types of data.
If successfully implemented, contractors may expect agencies to use more sophisticated tools when contracting by negotiation or purchasing commonly needed goods and services. Through this initiative, the GSA may play an increased role in standardizing common government-contracting needs across all federal agencies, such as through new Federal Supply Schedules. Shared information across the federal government may also be used during evaluations to inform procuring agencies on which contractors are proposing the best value to the government.
Professional service contractors may also see a change in solicitation structures that prioritize performance-based requirements. Contractors should monitor any BCI developments, as these measures may shape procurement processes, pricing, and the overall competitive landscape of the federal marketplace.
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