EXECUTIVE OFFICE OF THE PRESIDENTOFFICE OF MANAGEMENT AND BUDGETWASHINGTON, D. C . 20503DEPUTY DIRECTORFOR MANAGEMENTMarch 20, 2019M-19-13SUBJECT:Category Management: Making Smarter Use of Common Contract Solutions andPracticesThe purpose of this Memorandum is to provide guidance on the use of categorymanagement. As used in this document, the term "category management" refers to the businesspractice of buying common goods and services as an enterprise to eliminate redundancies,increase efficiency, and deliver more value and savings from the Government's acquisitionprograms. Teams of experts in each category of spending help agencies increase their use ofcommon contract solutions and practices and bring decentralized spending into alignment withorganized agency- and Government-level spending strategies by sharing market intelligence,Government and industry best practices, prices paid data, and other information to facilitateinformed buying decisions.To implement category management, the Office of Management and Budget (0MB) willrequire agencies to carry out a set of tailored management actions and provide updates on thesemanagement actions to evaluate their progress in bringing common spending under management.The expected result is more effectively managed contract spending through a balance ofGovernment-wide, agency-wide, and local contracts; reduced unnecessary contract duplicationand cost avoidance; and continued achievement of small business goals and other socio economic requirements. 0MB also expects that this Memorandum will help agencies shift time,effort, and funding currently spent performing repetitive administrative tasks towardaccomplishing mission outcomes. See Attachment 1.This Memorandum supersedes and rescinds the Office ofFederal Procurement Policy(OFPP) Memorandum entitled Development, Review, and Approval ofBusiness Cases forCertain lnteragency and Agency Specific Acquisitions, dated September 29, 2011, and also 0MBMemorandum M-13-02, Improving Acquisition through Strategic Sourcing, dated December 5,2012.
BackgroundEach year, the Federal Government spends hundreds of billions of dollars–over 325billion in FY 2018–for common goods and services, such as software, mobile devices andprofessional services. The lack of mechanisms to support agency collaboration on commoncontract solutions has resulted in billions of dollars in lost cost avoidance, inappropriate contractduplication, and missed opportunities to adopt Government and industry best practices. Thesemissteps have also unnecessarily added to the workload of the acquisition workforce, whosetalents and time could produce greater return if they could focus more on mission criticalacquisitions.The President’s Management Agenda (PMA) establishes a long-term vision for creating amore modern, more responsive Government – one that prioritizes mission outcomes, servicedelivery, and effective stewardship. 1 Increasing the use of common solutions and practices willallow agencies to focus their attention on critical efforts to modernize our informationtechnology (IT) systems; improve data, accountability, and transparency; and develop aworkforce for the 21st century to meet the promise of the PMA. The Government must takeaction now to buy more like an enterprise, and less like hundreds of individual entities, forcommon requirements needed to meet core mission goals.The PMA directs an agency’s Senior Accountable Official (SAO) to reduce unalignedspending, i.e., to bring “Spend Under Management” (SUM), and execute plans to increase use ofcontract solutions designated as “Best In Class” (BIC). 2 The General Services Administration(GSA) created a set of dashboards and tools to include SUM, 3 so that each agency couldregularly monitor its spending profile and bring more spending under smart buyingpractices, such as exerting strong strategic leadership/oversight and collecting and sharingcritical information and data, such as terms, conditions, performance, and prices paid. GSA alsolaunched a small business dashboard, 4 in consultation with the Small Business Administration(SBA), to help agencies more easily track spending on common goods and services made fromsmall businesses.This Memorandum is designed to build on these activities in order to help theGovernment buy as a coordinated enterprise and avoid the waste associated with duplicativecontract actions. 5 The Memorandum also provides guidance to ensure agencies act in a manner1Available at https://www.performance.gov/PMA/Presidents Management Agenda.pdf.OMB has advised agencies to take advantage of BIC and Government-wide solutions as part of theirreorganization activities to save money, avoid wasteful and redundant contracting actions, and free up acquisitionstaff to accelerate procurements for high-priority mission work. OMB Memorandum M-17-22, Comprehensive Planfor Reforming the Federal Government and Reducing the Federal Civilian Workforce, dated April 12, 2017,available at les/omb/memoranda/2017/M-17-22.pdf.3GSA Spend Under Management Dashboard, available to Federal users: -management-category-reports4GSA Small Business Dashboard, .5This memorandum rationalizes and highlights direction that previously has been conveyed through OMB CircularA-11, a series of Office of Management and Budget (OMB) Memoranda on specific types of spend, stand-aloneguidance by the Office of Federal Procurement Policy (OFPP), and various operating guides.22
consistent with their ongoing statutory responsibilities to maximize opportunities for smallbusinesses and acquire certain goods and services from AbilityOne and Federal Prison Industries(FPI).Equally important, a number of activities in this Memorandum emphasize robustcommunications, consistent with law and acquisition best practices, between contractors who sellcommon goods and services and all levels of the Federal Government that have responsibility forcategory management – namely, category managers, Federal organizations that manageGovernment-wide smart solutions (BIC solution owners), and agency officials who areresponsible for determining the best way to meet their everyday requirements. Effectivedialogue is critical at each of these levels to ensure that contractors can perform due diligenceand offer their best solutions and that agencies can make informed decisions on how best to meettheir requirements. For example, category managers should regularly conduct strategicconversations with industry representatives to understand industry trends and cost drivers andshare the Federal Government’s thinking on future requirements in their category. Owners ofGovernment-wide solutions should use dynamic market research tools, such as reverse industrydays, that promote two-way dialogue in developing or re-competing contracts, and maintaincontract advisory boards for continuous feedback and support when refreshing existing vehicles.SAOs and directors of an agency’s Office of Small and Disadvantaged Business Utilization(OSDBU) should emphasize effective industry engagement and vendor management strategies,both pre- and post-award, to better manage performance and explore opportunities forefficiencies.GuidanceAgencies shall undertake the following five key category management actions to betterposition themselves to bring spending under management and leverage common contractsolutions and practices:1. Annually establish plans to reduce unaligned spend and increase the use of BIC solutionsfor common goods and services, consistent with small business and other statutory socioeconomic responsibilities;2. Develop effective vendor management strategies to improve communications withcontractors, especially those that support mission-critical functions;3. Implement demand management strategies to eliminate inefficient purchasing andconsumption behaviors;4. Share data across the Federal Government to differentiate quality and value of productsand services in making buying decisions; and5. Train and develop the workforce in category management principles and practices.Agencies should review the roles and responsibilities of the key Government-wide andagency stakeholders that support acquisitions for common goods and services, outlined inAttachment 2, to help ensure each of these actions is carried out effectively.3
OMB senior leadership will review the SUM dashboard monthly and will require annualupdates from SAOs on these management actions to evaluate the adequacy of agency efforts tobring common spend under management while simultaneously meeting small business goals andmeeting other statutory socio-economic requirements. 6 OMB will recognize achievements atPMC meetings, through the PMA, and at events celebrating excellence in acquisition.Additional background and specific agency steps for each management action are set forthbelow.1. Annually establish goals to reduce unaligned spending and increase the use of BICs forcommon goods and services, consistent with statutory socio-economic responsibilitiesWhen agencies make purchases informed by market intelligence consistently across theFederal enterprise, they increase cost avoidances and save time. Agencies using commonsolutions for a wide range of requirements, including for wireless services, human capital,identity protection, airline travel, and building maintenance, have consistently experienced thesebenefits. Conservative estimates suggest that, regardless of the category, taxpayers areconsistently realizing average cost avoidance of at least 10-15%.To help agencies evaluate their progress in aligning common spending activities withcategory management principles, OMB and the Category Management Leadership Council(CMLC) have developed a SUM tiered maturity model that assigns tiers to agency spendingactivity based on attributes demonstrating the agency’s progress and sophistication in adoptingSUM practices. The model is designed to be an adaptable management tool that can be refinedby OMB in consultation with the CMLC based on experience and best practices. A fulldescription of the model and the current maturity tiers is maintained on the AcquisitionGateway, 7 and is summarized as follows: Tier 0 - Unaligned spending by the agency, which involves purchasing in a decentralizedmanner and not conforming to category management principles, including strategic oversightand disciplined consideration of performance data to understand prices paid by other Federalcustomers or metrics to improve results; Tier 1 – Spending managed at the agency-wide level with supporting mandatory-use policiesand strong contract management practices, including data analysis, information sharingacross the agency, and use of metrics that are defined, tracked and publicized;6The dashboard will also be reviewed by PMC members quarterly as part of the Cross Agency Priority Goalprocess.7For a description of the Spend Under Management Tiered Maturity Model, see GSA’s Acquisition Gateway ory-management/8586/spend-under-management.4
Tier 2 – Spending managed at Government-wide level through multi-agency or Governmentwide solutions 8 that are not BIC solutions but reflect strong contract management practices,including data and information sharing across agencies, and use of cross-agency metrics. Tier 3 – Spending managed at the Government-wide level through use of BIC solutions thathave been identified through a collaborative interagency process by acquisition categoryexperts within the Government as offering the best pricing and terms and conditions withinthe Federal marketplace and reflecting the strongest contract management practices. 9Agencies have worked with OMB to determine that as of the end of FY 2018, 56% ofaddressable common spending 10 is unaligned (i.e., Tier 0). This statistic confirms thatsubstantial cost-avoidances and performance benefits are going unrealized and underscores theneed for greater management attention on collaborative buying at both the Federal and agencylevels by increasing the portion of an agency’s spend that meets the criteria for Tiers 1, 2, and 3.To accelerate the pace of agency efforts to implement category management, the PMAsets several annual Government-wide goals and OMB works with agencies to set agency-specificgoals, including one focused on SUM (e.g., reducing the percentage of unaligned spend) and onefocused on spend through BIC solutions (e.g., spending an appropriate and manageable percentof eligible spend through BIC solutions). The BIC goal is a reflection of the many benefits thathave been realized from increasing the visibility and use of model contract solutions – includingbillions in cost avoidance aided by reduced contract duplication for identical products at wideprice variations, increased use of common specifications, and greater reliance on Governmentand industry best practices.To qualify as a BIC solution, a contract solution must meet a rigorous set of criteria,including demonstrated use of category and performance management strategies and third-partyvalidation. 11 A prospective BIC contract is evaluated through a collaborative, peer-reviewed andconsensus-driven process that culminates in approval by OMB following recommendation by acategory manager and review of such recommendations by the CMLC. The status of a BICcontract is reviewed annually to ensure solution providers continue to meet criteria. BICsolutions currently include a number of prominent contract programs that have decades’ longtrack records of providing important contract support to agencies across Government as well asnewer programs that have distinguished themselves through strong and successful contract8In this document, Government-wide solutions and Government-wide contracts generally refe