OMBlog

Transforming the Marketplace: Simplifying Federal Procurement to Improve Performance, Drive Innovation, and Increase Savings

This Administration has made significant progress on strengthening Federal acquisition practices, reducing red-tape, and providing greater benefit for taxpayer dollars. Executive departments and agencies have cut contracts that are no longer necessary or affordable, – resulting in over $55 billion in savings in just FY 2013 alone – launched new efforts to pool the Government’s buying power through strategic sourcing, and implemented other smart buying strategies to deliver better value for the American people.

While we have made tremendous progress, there is a critical need for a new paradigm in Federal procurement. The overwhelming feedback from industry and other stakeholders is that the sheer complexity of the Federal contracting space is leading to less innovation, higher costs, and weaker performance.  We have more than 3,300 contracting units across the Federal Government, but there’s very little sharing of information and best practices and very little collaboration across our organizations. The result is that we have a lot of duplicative efforts. For example, in FY 2013 we had more than 23,000 awards for HR training and services alone. Further, we have no central unit to share pricing information. When we’ve looked at pricing, we see huge price differences for the same exact item – sometimes as much as a 300% price difference.  We must transform the marketplace and create a new model for Federal contracting that’s based on sharing information, best practices, and increased collaboration between Federal agencies, and between agencies and industry.

Today, I issued the guidance to agencies, Transforming the Marketplace: Simplifying Federal Procurement to Improve Performance, Drive Innovation, and Increase Savings, that describes ongoing actions to address these concerns and directs a series of specific agency actions that build upon the Administration’s ongoing effort to create a more innovative, efficient, and effective acquisition system to support the needs of a 21^st century Government.

Using the President’s Management Agenda’s pillars of effectiveness and efficiency as guiding principles, there are three core elements driving this new approach.

• Buying as One through Category Management. We are implementing a new vision for purchasing, one that fundamentally shifts from managing purchases and price individually across thousands of procurement units to managing entire categories of purchases across Government collaboratively. This approach, called category management, is used extensively in industry and in the United Kingdom. In the Federal contracting space, it can be best accomplished by managing the more than $270 billion in annual spend for commonly purchased goods and services – over half of the Federal Government’s overall spend. By bringing common spend under management, including collecting prices paid and other key performance information that allow easy comparisons, we will ensure that agencies get the same competitive price and quality of performance when they are buying similar commodities under similar circumstances. We will also free up agency acquisition personnel to focus on complex agency-specific procurements.
• Deploying Talent & Tools Across Agencies & Growing Talent Within Agencies to Drive Innovation. Opening the acquisition system to greater innovation is critical to ensuring the best results from our contracts.  We must embrace practices that encourage new and better ways of thinking and expand access to the most innovative companies.  As part of this effort, within 180 days of the date of this memorandum, the Office of Federal Procurement Policy (OFPP) will work with the Office of Science and Technology Policy (OSTP) and other agencies to develop a plan for increasing digital acquisition capability, and the U.S. Digital Services, in partnership with OFPP, will pilot a program to train agency personnel in digital IT acquisitions and deploy trained personnel back to their agencies to encourage innovative acquisition practices Government-wide.  OMB will also work with OSTP and agency officials, including those responsible for research and development programs, to identify additional opportunities as well as incentives and mechanisms to pilot innovative contracting models.
• Building Stronger Vendor Relationships. Early, frequent, and constructive engagement with industry leads to greater innovation and better outcomes. Such engagement is particularly important for complex, high-risk procurements, including those for large IT projects. We’ve taken several steps toward that end, including the launch of our first online national dialogue with industry earlier this year, and a pilot for a new tool for vendors to provide constructive feedback on agency acquisitions. These were important first steps. But we need better customer-facing tools and more ways to get feedback from industry on a regular basis. Smarter IT use it a key component to improving supplier relationships and Federal acquisition. To help companies enter the Federal marketplace and find agencies looking for their services, GSA has already begun to design improved online tools for vendors to more easily find opportunities to compete for contracts. Another key component is removing regulatory barriers to innovation. Within 180 days of this memorandum, OFPP, will make recommendations to the Deputy Director for Management on specific actions that can be taken to reduce burden in commercial item acquisitions, especially for small businesses.  Finally, relationships with vendors are still managed individually across thousands of procurement units through hundreds, if not thousands, of individual contracts. One company, for example, may have several thousand contracts with the Federal Government – yet it’s possible that no one entity would manage the relationship with that company government-wide. This approach makes it challenging for both the acquisition workforce and the vendor community to drive improved outcomes, control costs, and ensure transparency. We propose to manage key vendor relationships as a single enterprise. Mirroring other governments and industry, who focus on vendor, supplier, and performance relationships, OFPP will, within 90 days of the date of this memorandum, develop a plan to recruit the Federal Government’s first Vendor Manager for top IT commercial contractors.

Utilizing the information and feedback we received from industry (including through the first-ever Government-sponsored “Open Dialogue” on Federal Procurement), agencies, and state and international governments, today’s guidance reflects a collaborative effort from all spectrums of the acquisition world to develop a more robust, simplified Federal marketplace that benefits vendors, buyers, customers and, most importantly, the American taxpayers.

Anne Rung is the Administrator for the Office of Federal Procurement Policy at the Office of Management and Budget.

Taking Steps to Improve Federal Information Security

In a rapidly changing technological environment, we must have robust procedures, policies, and systems in place to protect our nation’s most sensitive information. Growing cybersecurity threats make it ever more important for the Federal government to maintain comprehensive information security controls to assess and mitigate emerging risks. That is why today, the Office of Management and Budget, in coordination with our partners at the National Security Council (NSC) staff and the Department of Homeland Security (DHS), is releasing annual guidance to agencies on improving the security of Federal information and networks, in accordance with the Federal Information Security Management Act (FISMA) of 2002.

This year, and for the first time, the annual guidance on Improving Information Security and Privacy Management Practices, establishes a new process for DHS to conduct regular and proactive scans of Federal civilian agency networks to enable faster and more comprehensive responses to major cybersecurity vulnerabilities and incidents.  This new process complements existing agency information security operations, to include network scans, and will provide a consistent scanning methodology that quickly identifies risks and vulnerabilities that may have government-wide implications.

In coordination with this release, the DHS is publishing the FY 2015 Chief Information Officer (CIO) Annual Federal Information Security Management Act (FISMA) Metrics and Updated U.S. Computer Emergency Readiness Team (US-CERT) Incident Notification Guidelines.

• The FISMA Metrics are the result of a yearlong inter-agency process to improve the quality of the metrics.  Ultimately, these metrics are more than just a compliance exercise – they will get us closer to determining whether our processes are actually making us safer.
• The US-CERT Incident Notification Guidelines streamline the way agencies report cybersecurity incident information to US-CERT, while improving US-CERT’s ability to quickly respond to emerging cybersecurity threats.

These substantial improvements should not distract from the important work that lies ahead.  Evolving cybersecurity incidents underscore why agencies must remain ever vigilant to combat emerging threats.  As such, OMB, in coordination with the NSC staff and DHS, will continue to prioritize implementation of the FY 2015 Cybersecurity Cross Agency Priority (CAP) Goals and the DHS Continuous Diagnostics and Mitigation (CDM) program.  The FY 2015 CAP Goals, which can be found on www.performance.gov will continue to emphasize the implementation of basic cyber hygiene practices.  Additionally, once fully implemented, the DHS CDM program (initiated by M-14-03:  Enhancing the Security of Federal Information and Information Systems) will allow agencies to continuously monitor their networks and respond to risk indicators in near real-time. Ensuring the security of information on the Federal government’s networks and systems will remain a core focus of the Administration as we move forward aggressively to implement new protections and respond quickly to new challenges as they arise.

Beth Cobert is the Deputy Director for Management at the Office of Management and Budget.     

What Policy Simultaneously Improves Performance, Transparency, and Oversight for Federal Awards?

On December 26, 2013, OMB published final guidance in 2 C.F.R 200 titled Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards to improve the effectiveness and efficiency of Federal financial assistance.  This guidance delivers on President Obama’s second term management agenda and his first term directives under Executive Order 13520, the February 28, 2011 Presidential Memorandum, and the objectives laid out in OMB Memorandum M-13-17 to better target financial risks and better direct resources to achieve evidence-based outcomes. The policy simultaneously improves performance, transparency, and oversight for Federal awards.

But the next question is, “By how much?”

To answer this question, today OMB is issuing new metrics to measure the impact of the Uniform Guidance.  We will use data collected annually in the Federal Audit Clearinghouse as well as information from Federal agencies and other partners to measure these policies against key benchmarks, and evaluate the need for future reforms. 

Since the Uniform Guidance was published this past December, we have reached out to stakeholders through webcasts, Frequently Asked Questions, and numerous conversations, all while working closely with Federal agencies to develop their implementing regulations.  From this engagement, we believe the Uniform Guidance could transform the landscape of the more than $600 billion awarded annually in Federal financial assistance.

We believe these new policies could save the Federal government more than $50 million per year in audit expenses, allow recipients to end burdensome and obsolete reporting practices, and allow previously administrative dollars to be re-programed to support better program performance.

For example:

• For universities, this could mean more dollars to put towards the basic research that underpins innovation throughout the world.
• For small nonprofits, the simplifications could remove barriers to entry and open competition for Federal awards to more new entrants than ever before.
• For state, local, and tribal governments, this could mean more flexibility to develop efficient, evidence-based programs that best provide citizens with the services they most need.  

Further, this policy could improve oversight of these awards by increasing transparency through publication of audit reports, requiring recipients to have strong internal controls, and requiring Federal agencies to review risk prior to making an award.

This reform delivers on the President’s directives to reduce both improper payments and administrative burden.  Most importantly of all, we think the Council on Financial Assistance Reform's process was inclusive of all stakeholders and responsive to their suggestions. The metrics we are issuing today will allow us to gather hard data to measure these impacts.

The Uniform Guidance will become effective on December 26, 2014 upon publication of Federal agency implementing regulations, but we are not going to wait until then to begin the conversation. Please join Deputy Director for Management Beth Cobert, myself, the COFAR and partners as we discuss the potential impact of the reform with non-Federal stakeholders during our upcoming webcast this Thursday October 2^nd, from 1:00-3:00pm, accessible with no RSVP necessary at www.cfo.gov/COFAR.

To learn more about the Uniform Guidance, please visit the Council on Financial Assistance Reform's website, and check out the most recent Frequently Asked Questions Document.

David Mader is the Controller at the Office of Management and Budget.

Progress on Security and Suitability

Today marks one year since the senseless acts of violence at Washington Navy Yard. After the events last fall, the President directed the Office of Management and Budget (OMB) to conduct a 120-day review of Federal employee suitability and contractor fitness determinations as well as security clearance procedures. As Deputy Director for Management, and chair of the inter-agency Suitability and Security Clearance Performance Accountability Council, taking the lead on these efforts was one of the first things I did upon arriving at OMB. The inter-agency team, comprised of members from across the Federal spectrum, engaged in an intensive review effort to assess risks and vulnerabilities inherent in current security, suitability, and credentialing processes, and identified actionable solutions.

The 120-Day Suitability and Security Report laid out a set of 13 key recommendations to improve how the Government performs suitability determinations and security clearances. The report’s recommendations built upon DOD’s Navy Yard Reviews, and ongoing work by OPM, Office of the Director of National Intelligence, DoD and other agencies. We have a lot of work to do, but over the past year we’ve made meaningful and impactful progress, and are continuing to work and coordinate across the whole of government to accelerate this progress.     

Here are some key points on our efforts to date:

• Continuous Evaluation. The Administration has launched several pilots that are currently underway to assess Continuous Evaluation (CE) capability. These pilots have already successfully demonstrated the effectiveness of more frequent investigations of cleared personnel and a comprehensive CE program is scheduled to have initial operating capability for the most sensitive populations by the end of this year, and fully implemented for these populations in FY 2016. 
• Frequent Background Checks. The Suitability and Security Executive Agents revised the Federal Investigative Standards (FIS) to establish a five-year reinvestigation requirement for all individuals with a security clearance, regardless the level of access.  This is a change from the prior practice of conducting background reevaluations every five and ten years for those with top-secret and secret clearances, respectively.
• Improved Access to Law Enforcement Records.  In accordance with the FY 2014 National Defense Authorization Act (NDAA), the inter-agency Records Access Task Force examined the relevant policies that determine the level of access that background investigators have to public records.  The NDAA Task Force report provided recommendations for improving information sharing between State, Local, and Federal Law Enforcement entities when conducting background investigations.
• Enhancing the Quality of Background Investigations. The Security and Suitability Executive Agents jointly released Executive branch guidance for the implementation of National Training Standards (NTS) for Background Investigators, National Security Adjudicators and Suitability Adjudicators.  The NTS will enhance the quality of background investigations and adjudications through standardized policies, processes and training.
• Access to Classified Information. The Director of National Intelligence (DNI) issued a government-wide requirement for all agencies to review and validate whether each individual within their agency identified as eligible for access to classified information still required eligibility.  To date, agencies have responded with significant reduction of clearances across their agency population. By the end of CY 2014, our objective is to reduce the total number of individuals identified as having an active security clearance by at least 10 %.
• Cross-Agency Priority (CAP) Goal. The Administration also established the Cross-Agency Priority (CAP) Goal on Insider Threat and Security Clearance Reform that serves as the 120-Day implementation plan and focuses on eight sub-goals that support insider threat, suitability and security clearance reform activities. This CAP Action Plan is publicly available at Performance.gov and is updated quarterly to monitor progress and hold agencies accountable for success.

We’ve made progress, but there is more work to be done. We will continue to work aggressively to ensure rigorous oversight and accountability mechanisms are in place throughout government, thereby ensuring the safety of Federal workers and the protection of our nation’s most sensitive information.

Beth Cobert is the Deputy Director for Management at the Office of Management and Budget and Chair of the Suitability and Security Clearance Performance Accountability Council. 

Moving Forward on International Regulatory Cooperation

As part of President Obama’s effort to achieve smarter and more effective approaches to international regulation, today I am pleased to announce the release of the U.S.-Canada Regulatory Cooperation Council (RCC) Joint Forward Plan. The Forward Plan represents a significant pivot point for our regulatory cooperation relationships with Canada, and outlines new federal agency-level partnership arrangements to help institutionalize the way our regulators work together. 

The Forward Plan will remove duplicative requirements, develop common standards, and identify potential areas where future regulation may unnecessarily differ. This kind of international cooperation on regulations between the United States and Canada will help eliminate barriers to doing business in the United States or with U.S. companies, grow the economy, and create jobs.

Regulatory cooperation has to mean more than just “aligning” specific rules across the border; such a rule-by-rule approach is neither practical nor scalable enough to meet our ever-changing regulatory environments. We need to think more broadly and creatively on how to build cooperative frameworks to achieve our economic and regulatory policy goals in a more dynamic manner.

That is why the Forward Plan identifies 24 areas of cooperation that the United States and Canada will work together to implement over the next three to five years in order to modernize our thinking around international regulatory cooperation and develop a toolbox of strategies to address international regulatory issues as they arise. 

Buying What Works: Case Studies in Innovative Contracting

Last week, the White House announced the launch of the U.S. Digital Service (USDS), a new team of America’s best digital experts dedicated to improving and simplifying the digital experience that people and businesses have with their government.  The USDS team has already begun to make progress by releasing the TechFAR Handbook, a guide that helps explain how Federal agencies can take advantage of existing procurement authorities to execute key plays in the Digital Services Playbook.

The Federal Government has long used its buying power as one of the world’s largest customers to accelerate well-known innovations, from the first microchips to the Global Positioning System (GPS).  Today, Federal agencies continue to leverage innovative procurement practices that spur the private sector to develop advanced technologies to better serve the American people – and to pay only for successful results, not just best efforts.

Today, the Office of Science Technology Policy (OSTP) and the Office of Management and Budget are pleased to release the first version of Innovative Contracting Case Studies, an iterative, evolving document that describes a number of ways Federal agencies are getting more innovation per taxpayer dollar – all under existing laws and regulations. For example, NASA has used milestone-based payments to promote private sector competition for the next generation of astronaut transportation services and moon exploration robots.  The Department of Veterans Affairs issued an invitation for short concept papers that lowered barriers for non-traditional government contractors, which led to the discovery of powerful new technologies in mobile health and trauma care.  The Department of Defense has used head-to-head competitions in realistic environments to identify new robot and vehicle designs that will protect soldiers on the battlefield.

We encourage both private sector stakeholders and public servants to engage in a sustained public discussion, identifying new case studies and improving this document’s usefulness in future iterations.  At the same time, Federal government employees can join a community of practice around innovative contracting by signing up for the new “Buyers Club” email group (open to all .gov and .mil email addresses).  This “Buyers Club” group should provide a useful forum for troubleshooting and sharing best practices across the Federal government, serving everyone from contracting officers with deep expertise in the Federal Acquisition Regulation (FAR) to program managers looking for new ways to achieve their agencies’ missions.

All of these innovative contracting efforts are aligned with President Obama’s management agenda to deliver a 21st century government that is more effective, efficient, and supportive of economic growth, including specific cross-agency initiatives on Smarter IT delivery, strategic sourcing, and shared services.  We encourage readers to join thepublic discussion of Innovative Contracting Case Studies, or sign up for the Feds-only “Buyers Club” email group.  We look forward to raising awareness about the many ways that the Federal Government can use the power of the purse to deliver powerful and cost-effective technology solutions for the American people.

Tom Kalil is Deputy Director for Technology and Innovation at the White House Office of Science and Technology Policy.

Lesley Field is the Deputy Administrator for Federal Procurement Policy at the White House Office of Management and Budget.

Delivering a Customer-Focused Government Through Smarter IT

As technology changes, government must change with it to address new challenges and take advantage of new opportunities. This Administration has made important strides in modernizing government so that it serves its constituents more effectively and efficiently, but we know there is much more to do.

Last year, a group of digital and technology experts from the private sector helped us fix HealthCare.gov – a turnaround that enabled millions of Americans to sign up for quality health insurance. This effort also reminded us why the President’s commitment to bringing more of the nation’s top information technology (IT) talent into government is so critical to delivering the best possible results for our customers – the American people.

A core part of the President’s Management Agenda is improving the value we deliver to citizens through Federal IT. That’s why, today, the Administration is formally launching the U.S. Digital Service. The Digital Service will be a small team made up of our country’s brightest digital talent that will work with agencies to remove barriers to exceptional service delivery and help remake the digital experience that people and businesses have with their government.

We are excited that Mikey Dickerson will serve as the Administrator of the U.S. Digital Service and Deputy Federal Chief Information Officer. Mikey was part of the team that helped fix HealthCare.gov last fall and will lead the Digital Service team on efforts to apply technology in smarter, more effective ways that improve the delivery of federal services, information, and benefits.

Mid-Session Review 2015

OMB today released the 2015 Mid-Session Review (MSR), which updates the Administration’s estimates for outlays, receipts, and the deficit in light of economic, legislative, and other developments that occurred since the release of the President’s 2015 Budget in March. 

Under the President’s leadership, the deficit has been cut by more than half as a share of the economy, representing the most rapid sustained deficit reduction since World War II, and it continues to fall.  The MSR projects a $583 billion deficit in 2014, which is 3.4 percent of GDP, nearly $100 billion less than last year’s deficit and $66 billion lower than the Budget projection.  Looking ahead, the MSR estimates that deficits under the President’s proposed policies will fall to below 3 percent of GDP in 2015 and reach 2.1 percent of GDP by 2024.   

At the same time, our economy is moving forward and businesses are creating jobs.  Businesses have added nearly 10 million new jobs over the past 52 months.  The housing market is rebounding, with rising home prices lifting four million borrowers above water on their mortgages in 2013 alone.  Americans are purchasing vehicles at a faster pace over the last two quarters than in any quarter since the first half of 2007.  The manufacturing sector has experienced stronger job growth over the last four and a half years than over any comparable period since the mid-1990s.  

But the President believes more can be done, and our top priority must remain accelerating growth while expanding opportunity for all Americans.  The Budget provides a roadmap for making investments to accelerate economic growth, expand opportunity for all hard-working Americans, and ensure our national security, while continuing to improve the Nation's long-term fiscal outlook.  At the same time, the Budget takes key steps to both continue and enhance the Administration's efforts to deliver a government that is more effective, efficient, and supportive of economic growth. 

By investing in our infrastructure and manufacturing, simplifying the tax code for businesses, reforming our skills and job training programs, and fixing our broken immigration system, we can create jobs and achieve stronger and more inclusive economic growth.  By rewarding hard work with fair wages, equipping all children with a high-quality education to prepare them for a good job in the future, making sure a secure retirement is within reach, and ensuring health care is affordable and reliable, we can expand opportunity for all Americans.  By eliminating wasteful tax breaks for the wealthiest Americans and making common sense reforms to Government programs, we can manage our Government more efficiently and effectively, and continue to cut the deficit in a balanced way.

Brian Deese is the Acting Director of the Office of Management and Budget

Calling on Congress to Eliminate Outdated and Duplicative Reporting Requirements

Every year, Congress requires Federal agencies to produce thousands of written reports and plans on far ranging topics.  While these reports and plans often provide useful information for legislative decision-making, oversight, and public transparency, some reports and plans that were once useful have become outdated or duplicative, and needlessly divert time and resources away from critical agency mission activities.

To help address this problem, in 2012, the Administration released an initial list of more than 350 outdated or duplicative reports and plans that Federal agencies recommended for elimination or consolidation.  Today, the Administration is releasing a new list that identifies 74 additional reports and plans recommended for elimination or consolidation.  This action represents another step in the President’s Management Agenda and overall effort to improve the effectiveness and efficiency of the Federal government.  As required by the Government Performance and Results Modernization Act of 2010, these lists have been posted on Performance.gov, the Administration’s online tool for tracking government performance.  

In many of these cases, reporting requirements have long outlived their need. Since 2000, for example, the Department of Homeland Security has been required to prepare an annual report to Congress on violations of the Dog and Cat Fur Protection Act.  For quite some time, however, there has been very little to report, with only one violation found in the past seven years.  Other reporting requirements remain on the books even though the particular program the report is focused on no longer exists.  For example, the Department of the Interior has a requirement from the Energy Policy Act of 2005 to prepare a report every year on the Royalty-in-Kind program that was discontinued in 2009. 

We have already seen some progress in culling unnecessary reports and plans. With the passage of the National Defense Authorization Act in 2011, Congress agreed to streamline about half of the over 150 reports and plans the Defense Department recommended for modification that year.  And Congress did act to eliminate or modify some of the reports and plans included in the Administration’s initial 2012 list.  But most importantly, there is clear movement in Congress to address this problem even further, with legislation currently residing in both the House and Senate that would potentially eliminate or consolidate hundreds of additional reports and plans now required of Federal agencies.

From the day the President took office, he has been committed to improving the openness and transparency of government, and increasing the amount and quality of information made available to the public and to Congress, through websites such as Data.gov, USAspending.gov, and Performance.gov.  We can continue that openness and transparency while eliminating unnecessary reporting requirements that waste limited taxpayer resources.  The Administration looks forward to working closely with Congress as we continue to make progress in this area in the months and years ahead.

Beth Cobert is the Deputy Director for Management at the Office of Management and Budget