Category Management and Tiered Buying Policies

Depending on who you ask, you may receive a wide range of responses. There are parts of the government still trying to understand Category Management, while others say it is what they have been doing all along.

What is Category Management?

‍At our recent roundtable discussion with senior procurement executives, one panelist said the number one challenge her agency faced in trying to institute stronger Category Management practices was education—many people did not understand what Category Management meant and why they should care.While it has certainly evolved over time, Category Management is a long-standing best practice that has been refined as the government continues its efforts to increase efficiencies, leverage buying power, look at supply chain management, encourage changing behaviors in procurement, and eliminate duplicative contracts. The GSA defines Category Management as, “an approach the Federal Government is applying to buy smarter and more like a single enterprise.”

Role of Spend Under Management (SUM)The Office of Management and Budget (OMB) defines SUM as spend on contracts that meet defined criteria for management and data-sharing maturity. OMB uses the following tiered rating scale to evaluate agency spend:

While increasing SUM will result in efficiencies and savings, agencies focused solely on tiered buying policies will stunt their growth in the category management maturity model. Perceived issues faced by those stuck in the first stage include:

• Data Integrity and Interpretation “We are forced to adjust the UN codes in our procurement system for FPDS-NG. FPDS-NG reporting is inaccurate. Data is very difficult to interpret if it is not properly updated.” “We have to conduct data mining into the field descriptions of ILMS to find like requirements due to inconsistencies with how the data is entered (ex. Microsoft vs. MSFT).”
• Loss of Control “Category management forces us to use GWACs with suboptimal terms and conditions.”
• Balancing Goals “We are dealing with the perception issue of only a few businesses receiving all of the small business spend in order to meet category management goals.”
• Program Office Needs and Requirements “Moving something from Tier 0 to Tier 1 makes the acquisition lead time go straight out the window.”

To learn about six agency benefits and approaches to Category Management, click here to download the free whitepaper.

‍Download Six Benefits and Approaches to Category Management