Introduction & Classification of Best-in-Class
In 2014, the Office of Management and Budget (OMB) published a memo regarding a new strategic mission for federal requirements. The primary theme of the memo was ‘best value over lowest price,’ citing category management as the framework, and Best-in-Class (BIC) vehicles as the mechanisms to implement the strategy. BIC is the preferred, and at times mandatory acquisition strategy for procurements that can be utilized by numerous agencies. In order to be classified as BIC, a contract vehicle must satisfy five key criteria established by the OMB: rigorous requirements definitions and planning processes, appropriate pricing strategies, data-driven strategies to change buying and consumption behavior (demand management), category and performance management strategies, and independently validated reviews.
Spend Under Management (SUM) remains one of the primary measurements to determine a BIC designation. SUM is defined by the OMB as “the percentage of an organization’s spend that is actively managed according to category management principles—or smart decision-making to buy similar goods and services through best-value solutions.” The increase in an agency’s SUM results in decreased costs, contract duplication, and inefficiencies which results in optimized buying outcomes. The OMB uses SUM to establish four tiers for existing contracts or vehicles: BIC, Multi-Agency Solutions, Mandatory-Use Agency-Wide Solutions, and Spend Not Aligned to Category Management Principles are tiers 3, 2, 1, and 0, respectively.
The Benefits of BIC Vehicles
Utilizing BIC contract vehicles provides various beneficial outcomes to individual agencies, including the United States Department of Defense (DoD) and the Department of Homeland Security (DHS) which benefits from the elimination of redundancies, efficiency enhancements, increased delivery of value and savings, and the optimization of spend.
BIC contract vehicles allow acquisition experts to take advantage of pre-vetted, government-wide contract solutions, supporting the government-wide migration to more mature and market-proven solutions. BIC vehicles provide a single solution for complex requirements accommodating multiple technical disciplines and mission spaces while suiting commercial and non-commercial acquisitions. BIC vehicles support all contract types including hybrids (Cost Plus Fixed Fee and Firm Fixed Price) and cost-reimbursement at the task order level. BIC vehicles also allow for flexibility surrounding contract durations, as a majority of have no program ceiling, a five-year base, and one five-year option, aiding long-term planning for complex program requirements.
The Human Capital and Training Solutions BIC at DHS is exemplary contract vehicle, delivering intricate solutions with its numerous features such as support for long-term planning of comprehensive and customizable solutions, a large pool of qualified contractors of all sizes, and flexibility for all contract types (including hybrids and cost-reimbursement at the task order level).
The utilization of BIC contract vehicles increases the quality, collection, and reporting of transactional data for agency-level and government-wide analysis of buying behavior. The importance of acquisitions to government-wide and agency-level success in the modern, digital economy means transitioning from a functional area that has traditionally been viewed as a ‘cost center’ to one that must be leveraged as an ‘opportunity center.’ Acquisition departments along with marketing and legal departments of an agency are often considered ‘cost centers’ as revenue is rarely correlated to the department. Nevertheless, acquisitions often carry the greatest opportunity for cost savings within an agency. Compensation and prestige afforded to cost center managers may be related to the size of division operations. Consequently, the incentive for managers is to justify larger cost budgets rather than limit costs. However, without the use of modern acquisition solutions, agencies cannot perform at the levels necessary for differentiation and efficiency improvements. When each agency achieves proportionate cost savings, the aggregated reductions allow agencies, along with the entire government, to realize optimized pricing and savings. Investing time and resources into enhanced data collection, utilization, and reporting are both an agency necessity and a key to driving a differentiating edge in achieving mission success.
Historically, the level of data analytics performed on government contracts, purchases, and transaction-level actions has lacked in data utilization as well as each defining property/dimension of data: Volume, Variety, and Velocity. To briefly describe each of the ‘3Vs’, Volume is the amount of data generated, Variety is the diversity of generated data types, and Velocity is the rate at which data is generated. From a broad point of view, we can identify the interactions with data into collecting, structuring, and reporting. The types of data analytics can be categorized as descriptive, diagnostic, predictive, prescriptive, or adaptive.
Improving the way agencies utilize data is pertinent to improving each agency’s acquisition performance metrics and achieving mission success. Once agencies accomplish data improvements and take advantage of BIC vehicles, agencies will find their contracts to be more adaptive and long-lasting.
As the big data market grows at a fast pace among commercial entities, the public sector sits far behind. For example, every time a transaction occurs, its corresponding data should be uploaded to USASpending and available with minimal delay, however, it often takes agencies days or months to complete the process of collecting, structuring, and uploading the data. The mentality of acquiring products and services as fast as possible must be left in the past in order for long and short-term data benefits to be realized. Prioritizing speed over quality reduces oversight and attentiveness to details, increasing the probability of errors; when compounded over time, these small repetitive slips often develop into larger issues. With the prospect of increased BIC vehicle use among agencies, the potential to rapidly improve the utilization of data is limitless for public sector agencies.
BIC vehicles are incredibly rigorous with regard to data collection and reporting. The data-related benefits of BIC vehicles reach far and wide thanks to a few valuable characteristics. BIC vehicles are consolidated, automated (to an extent), and their data follow parallel and consistent structures. The tracking benefits of BIC vehicles prevent contract duplication that would otherwise occur when using generic multiple-award contracts that rely on subsequent task order competitions adding an extra and unnecessary layer to the ordering process. A reduction in contract duplications results in decreased bid, proposal, and administrative costs for not only government agencies, but contractors alike.
When information on contract transactions is more granular, precise, and timely, the implementation of qualitative and quantitative forecasting methods is made more accurate and effective. The detection of anomalies, data validation, and error examination are performed more efficiently and thoroughly. Consolidating the sources of data through the utilization of BIC vehicles allows agencies to benchmark, monitor, and compare their performance metrics, thus positioning themselves to more accurately identify and act on opportunities and/or complications with their strategies surrounding category management, pricing, inventory management, and demand management. Performance metrics act as important tools in summarizing an agency’s health, identifying potential areas of concern, and aid in their effectiveness. A high-performing data environment not only provides short-term, static benefits, the increase in contract action visibility, contract performance, and robust performance comparisons better positions an agency for audit responses and ad-hoc report requests for which they would otherwise be unprepared.
The value of obtaining high-quality information is often overlooked, but proper processes have already been put in place by BIC vehicles to identify the information requirements, source the data from reliable sources, and properly process unstructured data into structured data. The utilization of BIC vehicles better positions an agency to achieve cohesive data systems, for example, the integration of an agency’s contract management and accounting systems, decreasing the volume of duplicate efforts and errors.
The data surrounding one small contract transaction may be viewed as inconsequential, however, it stands alongside all other transactions. When collected and reported with parallel structures, transactions’ implications on future strategies and budgets are compounded to influence monumental decisions and improvements. Not only are the benefits and improvements of BIC vehicles realized at the agency level, but the BIC enhancements also trickle up to the highest levels of government from U.S. economic data reports to the development of the president’s economic plan. Through a variety of approaches such as BIC playbooks and proprietary toolkits tailored to BIC federal acquisitions, WBD assists its federal clients with full life-cycle acquisition support, including – but not limited to – market research, identification and review of BIC contract vehicles, acquisition planning, and procurement strategy formation.
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