# Presentation: 141716

## Emerging Trends in Federal Services ProcurementFSS Office of MarketingResearch & Analysis DivisionMarch 29, 2005

## Task Purpose

- To identify emerging trends over next
- five years in the federal
- government’s procurement of
- Professional services

**Focus on government as a whole, not on GSA**

## Approach

- Phase 1: Scope and Hypotheses	 	Define Scope and Identify Initial Hypotheses 
- 			Focus the Study
- 	Phase 2: Data Collection/Analysis			Literature Search, Data Projections, Conduct 			Interviews/Focus Groups, In depth Analysis 
- 			 	Rigorous Examination
- 		Phase 3: Scenarios				Identify Scenarios 
- 					Action Plans
- 			Phase 4: Recommendations

## Data Gathering Efforts

-   33 Executive
- Interviews

- 16 Commercial
- Interviews

-  7 Congressional
- Interviews

- Literature
- Searches

- Data
- Analysis

- Web-based
- Survey (476)

- Focus Group &
- Panels

## Categories of Findings

-   Emerging Trends

**How Much Agencies**
**Will Spend**

**How Agencies**
**Will Buy**

**What Agencies**
**Will Buy**

## How Much Will Agencies Spend

- Reasonable to expect discretionary budgets, and purchase of white-collar services, to grow an average of about 3% per year
- Regression analysis shows purchases linked to budgets
- Over last 20 years, budgets have grown 3% to 4% a year on avg
- Most interviewees agreed
- About half of Federal Executive interviewees said budgets linked to purchase
- Most survey participants (64%) also felt budgets significant
- Spending will vary significantly by agency
- Data analysis reveals considerable variation
- Interviews suggested agency policies (e.g. Navy) will cause variation

## What Will Agencies Buy

- Increasing needs for program support services
- About half of Federal Executive interviewees agreed
- About 90% said Professional, Administrative, and Management Support Services (PAMSS) will grow
- Most commercial interviewees corroborate this finding
- About half (48%) of survey participants also agreed
- A-76 probably not a major factor in services purchases
- Government usually wins (2/3 in 2003)
- Congressional interviews suggest roadblocks growing
- Especially in House, probably also in Senate
- About 50% of Federal Executive interviewees saw A-76 as an influence
- And often a relatively minor one

## What Will Agencies Buy (Continued)

- Defense transformation may drive needs
- Conversion of military to civilian spaces, often contractors
- Mentioned in several DoD Executive interviews
- Other favorites: acquisition support, medical, anti-terrorism, wartime services, environmental, financial services, info/intell
- Significant mention in at least one Federal or commercial interview

## How Agencies Will Buy

- Procurement improprieties, and funding issues, will lead to more negative publicity and possible tightening of internal controls
- Mentioned by senior DoD interviewees
- Survey showed about half of DoD personnel anticipate further changes in policies and regulations, with negative effects
- Some interviewees in Congress and the agencies mentioned concerns about conflicts of interest and contractors performing inherently governmental tasks
- Agencies moving toward integrated, interdisciplinary contracts with IT an integral part of services
- About half of commercial interviewees cited this trend
- Almost 60% of survey respondents favor package contracts

## How Agencies Will Buy (Continued)

- Strategic sourcing and commodity councils leading toward enterprise-wide vehicles
- Fed execs at least three major agencies mentioned this trend
- Trend supported in literature search
- E-platform initiatives continue to be pursued to reduce workload and improve acquisition process
- NAVSEA’s SEAPORT
- Business Partner Network
- Central Contractor Registration
- Online Representations and Certifications Applications
- Past Performance Information Retrieval System
- GSA’s E-buy

## How Agencies Will Buy (Continued)

- Commercial companies buy services differently than gov’t
- Some vest purchasing authority in line manager with need
- Fixed price contracts dominate the arrangements
- Compress time-to-award by not agonizing over requirements
- Contract terms for services short
- Limited exposure to cost liability
- Ability to recompete work and get better deal
- Best value purchasing that includes ongoing business relationships
- Increased use of off-shore sources – significant impact of global economy on buying
- Services are bought with technology and/or products
- Government may want to keep these practices in mind as it develops its approach to acquiring services

## How Agencies Will Buy (Continued)

- Acquisition workforce under stress (sometimes short of people, often short of experienced people – trying to respond to new initiatives while also facing heavy retirements)
- About 75% of Federal Executive interviewees mentioned concern
- Commercial interviewees felt government not a smart buyer
- Survey participants identified issues with greatest impact
- Top 3 items all related to workforce
- Literature search corroborated result
- Data analysis bears out this conclusion
- Overall contracting workforce (1102) down 3% from 1998 to 2003
- At top ten agencies, trends differ according to experience
- Entry level 1102s (GS 5/7/9) decreased
- Journey-level (GS 11/12) decreased
- Senior (GS 13/14/15) increased

## Scenario Summaries

|  | 1) Projected trends | 2) Buying problems | 3) Sustained cuts | 4) Surge |
| --- | --- | --- | --- | --- |
| How much spent | Up 3%/yr., heavy defense | Up 3%/yr., heavy defense | Purchases reduced | Spike in some buys |
| What bought | Heavy program support | Heavy program support | Heavy program support | Depends on event |
| How bought (internal controls) | Temporary increase | Lasting increases | Temporary increase | Less concern |
| How bought (contracting process) | Integration, agency-wide, other | Integration, agency-wide, other | More cost saving efforts | Buy fast |
| How bought (acquisition workforce) | Experience problems, stress | Heavy stress, bad buys | Less demand, stress remains | Experience problems, stress |
| Likelihood Impact | Medium/highMedium/high | MediumHigh | Low/mediumMedium/high | Low/mediumHigh |

- **Same or similar to Scenario 1.