OFPP requires agencies to make business cases for interagency contract vehicles

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Federal agencies are not maximizing the use of interagency vehicles and agency-specific contracts. As a result, contracts are more expensive and administrative costs increase, according to a Sept. 29 memorandum (.pdf) from Office of Federal Procurement Policy Administrator Dan Gordon.

"Too often officials establish new interagency contracts, such as blanket purchase agreements (BPAs) and multiple-agency contracts (MACs) before they consider what's already out there. And, if there is no existing contract, they don't think enough about using an agency-specific, multiple-award contract to get the buying power to lower costs," writes Gordon in a memo to chief acquisition officers and senior procurement executives.

Starting Jan. 1, 2012, agencies will be required to develop a business case if they want to establish or renew of governmentwide acquisition contracts, MACs, BPAs and agency-specific contracts estimated to be worth more than $250 million, according to the memo.

Gradually, the same business-case requirements will apply to more contracts. In fiscal 2013 the rules apply when the estimated value of the proposed acquisition vehicle is equal to or greater than $100 million; and in fiscal 2014, equal to or greater than $50 million, the memo states.

For BPAs that meet these contract-cost thresholds, agencies must prepare a preliminary business case, post the preliminary business case on the MAX website, make a determination based on stakeholder feedback and decide to cancel or finalize the business case.

"Doing this kind of due diligence and comparison-shopping is something that many families across the country do, and it is especially important that the federal government weigh all the options before entering into large contracts and agreements whose scope would overlap contracts that already exist," wrote Gordon Sept. 29 in a White House blog post.

"In the business case, agencies are required to balance the value of creating a new contract against the benefit of using an existing one, and whether the expected return from investment in the proposed contract is worth the taxpayer resources," Gordon added.

For more:
- see the White House blog post
- see the OMB memorandum (.pdf)

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