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Guide to Category Management

gsa-category-management-spend-under-management-sum

Category Management – A Brief Overview

The concept of Category Management in purchasing has existed for decades and has been employed by industries and even the UK government for many years. It’s a procurement practice, typically employed by large organizations, that involves:

  • Analyzing spending
  • Grouping products and services into categories
  • Developing an efficient purchasing strategy for each category
  • Purchasing strategically as a single enterprise

In 2014, the federal government announced plans to implement Category Management government-wide as part of an overall strategy for transforming the federal marketplace. Government-Wide Category Management (GWCM) impacts how federal agencies buy common products and services. Considering approximately 60% of federal spending falls within the realm of category management, contractors should understand what GWCM is and how it affects their federal customers and buying process.

Starting at the beginning, the Office of Management and Budget (OMB) kicked off initial category management efforts in conjunction with the Category Management Leadership Council (CMLC), which consists of representatives from agencies with the highest federal procurement spending. Together, OMB and the CMLC reviewed Federal Procurement Data System (FPDS) spending reports to group federal spend into ten “common” categories and nine defense-centric categories. Category managers and category teams, consisting of market experts and representatives across federal agencies, were tasked with developing government-wide procurement strategies for each of the ten common categories. Their ongoing responsibilities include:

  • Designating acquisition solutions that provide best value and taxpayer savings
  • Reevaluating the performance of designated solutions
  • Developing procurement best practices
  • Maintaining small business utilization goals
  • Training government employees on category management

Today, GSA’s GWCM Program Management Office (PMO) plays a leading role in developing guidance, analytics and tools to support category managers.

Category Management Goals

The high-level goals of GWCM are to 1) deliver more savings, value, and efficiency for federal agencies, 2) eliminate unnecessary contract redundancies, and 3) meet the government’s small business goals. To achieve these goals, GWCM looks to reduce contract duplication and increase spend under management and use of Best-in-Class contract vehicles, which we will discuss shortly.

Category Management Structure

Below is a list of the 10 categories of common spend. Click each category to view the subcategories, as well as the agency or agencies in charge of managing the category.

This category is led by GSA
  • Construction Related Materials
  • Construction Related Services
  • Facilities Purchase & Lease
  • Facility Related Materials
  • Facility Related Services
This category is led by GSA
  • Business Admin Services
  • Financial Services
  • Legal Services
  • Management & Advisory Services
  • Marketing & Public Relations
  • Research & Development
  • Social Services
  • Technical & Engineering Services
This category is led by GSA
  • IT Software
  • IT Hardware
  • IT Consulting
  • IT Security
  • IT Outsourcing
  • Telecommunications
This category is led by DOD and the VA
  • Drugs & Pharmaceutical Products
  • Healthcare Services
  • Medical Equipment, Accessories, & Supplies
This category is led by DOD
  • Fuels
  • Logistics Support
  • Services
  • Motor Vehicles (noncombat)
  • Package Delivery & Packaging
  • Transportation Equipment
  • Transportation of Things
This category is led by GSA
  • Basic Materials
  • Fire/Rescue/Safety/Environmental Protection Equipment
  • Hardware & Tools
  • Industrial Products Install / Maintenance / Repair
  • Machinery & Components
  • Oils, Lubricants, & Waxes
  • Test & Measurement Supplies
This category is led by GSA
  • Employee Relocation
  • Lodging
  • Passenger Travel
  • Travel Agency & Misc. Services
This category is led by DHS
  • Ammunition
  • Protective Apparel & Equipment
  • Security Animals & Related Services
  • Security Services
  • Security Systems
  • Weapons
This category is led by OPM
  • Compensation & Benefits
  • Employee Relations
  • Human Capital Evaluation
  • Strategy, Policies, & Ops Planning
  • Talent Acquisition
  • Talent Development
This category is led by GSA
  • Furniture
  • Office Management Products
  • Office Management Services

What is Spend Under Management?

One of the primary goals of category management is to increase “spend under management”, or agency spending based upon category management principles. The official OMB definition of spend under management (SUM) is “spend on contracts that meet defined criteria for management maturity and data-sharing.” In simple terms, category management classifies all procurement solutions within the tiers listed below. If an agency uses a Tier 1, 2, or 3 solution to make a contract award, it is considered spend under management.

  • Tier 0 | Spend NOT Aligned to Category Management Principals: Dollars obligated in a decentralized manner that does not fit into one of the three tiers below. Agencies should analyze Tier 0 spend to find opportunities for shifting to higher-tier solutions.
  • Tier 1 | Mandatory-Use Agency-Wide Solutions: Dollars obligated on agency-wide contracts with mandatory-use or mandatory-consideration policies, along with standards set for data-sharing and other criteria.
  • Tier 2 | Multi-Agency Solutions: Dollars obligated on multi-agency contracts that satisfy rigorous standards set for leadership, strategy, data, tools, and metrics. The GSA MAS Contract is considered a Tier 2 Solution.
  • Tier 3 | Best-in-Class (BIC) Solutions: Dollars obligated on Best-in-Class contracts. Certain GSA MAS Contract SINs are considered BIC, see the Best-in-Class Solutions by Category chart to learn more.

Best-in-Class Solutions by Category

Tier 3, Best-in-Class Solutions, are the highest rated government-wide contracts within the spend under management model. All BIC solutions are recommended, however some solutions are considered mandatory, as noted within the chart below.

It is important to note, BIC designations are based upon common categories and are subject to change. Best-in-Class solutions are reviewed on an annual basis to determine if they continue to meet the set criteria. Additional solutions may also be recommended and added after undergoing a multi-step review process.

Click on the categories in the chart to view the BIC solutions as of fiscal year 2020.

  • GSA Global Supply Requisition Channel
  • MANDATORY BIC: Identity Protection Services (IPS) | (Preferred usage, mandatory consideration per OMB Memo M-16-14)
  • GSA Smart Pay 2 & GSA Smart Pay 3
  • OASIS
  • OASIS Small Business
  • MANDATORY BICS FOR WORKSTATIONS: Choose from four authorized sources for standard configuration laptops and desktops per OMB Memo M-16-02
  • ARMY CHESS ADMC2
  • NASA SEWP
  • NITAAC CIO-CS
  • GSA Multiple Award Schedule (MAS) SINs:
    • 33411 Purchasing of New Electronic Equipment
    • 511210 Software Licenses
    • 54151 Software Maintenance Services
    • 517312 Wireless Mobility Solutions
    • 517410 Commercial Satellite Communication Solutions (COMSATCOM)
  • Complex Commercial SATCOM Solutions (CS3)
  • 8(a) STARS II
  • Alliant 2
  • Enterprise Infrastructure Services (EIS) & Networx
  • NITAAC CIO SP3 Small Business
  • NITAAC CIO SP3 Unrestricted
  • Veterans Technology Services 2 (VETS 2)
  • MANDATORY BIC: City Pair Program | Mandatory with limited exceptions for civilian employee air travel per 41 CFR 301-10
  • Civilian Employee Relocation on Schedule 48
  • FedRooms
  • U.S. Government Rental Car Program
  • MANDATORY BIC: AutoChoice for Vehicle Purchasing | Mandatory for non-tactical vehicle purchases per 41 CFR 26.501-1
  • MANDATORY BIC: DLA Direct Delivery Fuels Solution | Mandatory for annual commercial fuel requirements ≥10,000 gallons in accordance with 41 CFR 101-26.602-3
  • MANDATORY BIC: DOD Next Generation Delivery Service (NGDS) | Mandatory for small package delivery services per OMB Memo M-17-29
  • GSA Fleet for Vehicle Leasing
  • DOD/VA High-Tech Medical Equipment
  • DOD/VA Joint National Contracts for Generic Pharmaceuticals
  • VA Hearing
  • ECAT
  • Maintenance Repair Facility Supplies (MRFS)
  • OPM/GSA Human Capital & Training Solutions (HCaTS)
  • OPM USA Learning
  • FSSI Building Maintenance & Operations (BMO)
  • USACE Facilities Reduction Program (FRP)
  • DHS Body Armor III
  • Reduced Hazard Training Ammunition (RHTA)
  • TacCom II
  • FSSI Office Supplies (OS4)

Category Management & the GSA Schedule

GSA’s Federal Acquisition Service (FAS) traditionally serves as the buying arm of the federal government and has played a significant role in the implementation of government-wide category management. FAS may best be known for managing the GSA Schedules program, which shares similar objectives with GWCM. Both programs are designed to leverage the buying power of the federal government as a whole to achieve cost savings.

Considering the GSA Multiple Award Schedule (MAS) was created to serve as an efficient and cost effective procurement vehicle, it is not surprising the contract  meets the rigorous requirements for category management. All purchases through the GSA MAS Contract  are considered spend under management. While the GSA MAS Contract as a whole qualifies as a Tier 2, Multi-Agency Solution, specific Special Item Numbers (SINs) rise to the level of Tier 3, Best-in-Class Solutions.

Transactional Data Reporting (TDR)

If you hold a GSA MAS Contract, you may be familiar with Transactional Data Reporting (TDR). Most contractors view TDR as something that allows them to avoid the Price Reductions Clause (PRC) and tracking pricing relationships. However, TDR was introduced to the GSA Schedules program in 2016 as a way to support category management. In fact, transactional data is a crucial component of evaluating the effectiveness of GWCM and is a requirement of BIC solutions.

New GSA MAS Contract Aligns with Common Categories

You may notice, the Large Categories under the GSA Multiple Award Schedule (MAS) Contract are very similar to the common spend categories. When GSA created the new, consolidated MAS Contract, they intentionally developed the Large Categories and Subcategories to align with the government-wide Category Management structure.

There are a few differences between the GSA MAS categories and the government-wide common categories. For instance, furniture is not a common category, but accounts for a significant portion of GSA sales, earning a spot as a Large Category on the GSA MAS Contract. While medical is one of the ten common categories, it is largely offered through the VA Schedule as opposed to the GSA MAS Contract.

How Does Category Management Affect Government Contractors?

Category management has survived two administrations and appears to be here to stay. What does this mean for government contractors? Considering approximately 60% of federal spending falls within the realm of category management, contractors should have an understanding of how GWCM affects their federal customers and their buying process.

The federal government’s annual spend on products and services is approaching $600 billion. According to the September 2020 Cross-Agency Priority (CAP) Goal Action Plan, more than $350 billion or approximately 60% of federal spend, is considered “common spend”. In fiscal year 2019, agencies achieved $181 billion in common spend under management, up from $117 billion in fiscal year 2016. That means federal buyers used a Tier 1, 2, or 3 solution for purchasing $181 billion in products and services. BIC solutions accounted for $37.6 billion in fiscal year 2019 spend under management.

By the end of fiscal year 2025, the CAP Goal Action Plan aims to achieve 75% of common spend through Tier 1, 2, and 3 solutions. Government contractors need to be aware of these goals in order to meet customer needs and to remain competitive. Companies that sell to the federal market can better position themselves by securing contract solutions within the tiered SUM structure and considering the pursuit of Best-in-Class contract solutions.

The GSA MAS Contract is a Tier 2 Solution

There are multiple contract options that meet category management principles. Our area of expertise here at FEDSched is the GSA Multiple Award Schedule (MAS) Contract, which is considered a Tier 2 solution. As we mentioned previously, parts of the GSA MAS Contract are even considered Tier 3, Best-in-Class solutions. Contact us if you’d like to discuss how we can help your company secure a GSA MAS Contract or expand your contract with a BIC designated SIN.

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