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OASIS and Strategic Sourcing - March 7, 2013

Since releasing the OASIS Business Case, the most frequent questions we receive at GSA are about strategic sourcing and how it will be applied to OASIS.  I would like to use this update to address this issue directly and clarify key issues.

First, there appears to be a fundamental misunderstanding of strategic sourcing. Strategic sourcing is not the same as a leveraged buy, and it certainly does not mean that we would buy professional services based on lowest price per hour. Rather, as the name implies, strategic sourcing is all about sourcing or buying strategically.

At its core, strategic sourcing is about looking at existing challenges and developing strategies to respond. Sometimes, the response is a new acquisition. Sometimes, it is a policy, process, or behavioral change. In the case of integrated professional services, there are substantial opportunities to improve outcomes, reduce risk, increase transparency, and improve supplier management.

There are four main benefits associated with strategic sourcing:

  • Improved operating efficiency
  • Improved focus on socioeconomic goals
  • Change in consumption/volume
  • Reduction in costs per unit

 

Like all good strategic sourcing-based solutions, OASIS will offer benefits in each of these categories, but they will work differently from the commodity-based solutions.    


Improved Operating Efficiency
One key to savings lies in standardizing our vocabulary. OASIS, (like many Governmentwide Acquisition Contracts, or GWACs) will feature standardized labor category descriptions.  Establishing these labor categories in no way limits or restricts the flexibility or creativity that an industry partner has in responding to a task order request. It certainly is not designed to migrate to a vision of awarding contracts or task orders based on lowest labor rates. To say it simply, that would be foolish. Rather, OASIS sets the stage for common vocabulary between government and industry so that ordering contracting officers can better understand and compare offers, and so that we can work across agencies to reduce contract duplication and improve the government’s operating efficiency. When we speak of price savings, the core strategy is based on effective competition at the task order level. This is the single most important factor for establishing the best pricing possible for complex requirements.

Improved Focus on Socioeconomic Goals
Another strategic sourcing benefit we are looking to achieve is improved focus on socioeconomic goals. Through the establishment of OASIS Small Business (OASIS SB), a 100% Small Business Set Aside, and a 50% Small Business Subcontracting Goal on OASIS, we have placed tremendous importance on small business; we are confident that the resulting awards and subcontracted dollars should increase socio-economic statistics in this area.

Change in Consumption/Volume and Reduction in Cost Per Unit
OASIS plans to focus on transparency with the belief and hope that this will provide multiple benefits. We are confident that the issue of transparency or data reporting is what has caused much of the fear and misunderstanding regarding the objectives of OASIS as it relates to strategic sourcing. Let me reassure you, OASIS will not be releasing any proprietary information or data.

It has been reported over the past several years in various reports that getting a count of the number of indefinite delivery, indefinite quantity (IDIQ) contracts that have been issued and estimating the amount of money placed against those instruments is challenging, if not impossible. That will not be true for dollars spent on OASIS. The transparency and data reporting we intend to provide are straightforward items such as total dollars spent on the contract, number of task order awards, average competition level per task order, total dollars spent per contract type, etc. For Time and Materials (T&M) orders, we will also be able to capture averages and ranges of awarded labor rates for labor categories on the contract. This information will be available to ordering contracting officers for estimating purposes. We have no interest in breaking fixed price tasks back into core components.

For example, after sufficient time has passed and enough data has been accumulated, we might find that the Senior Program Manager labor category on OASIS has been billed at a rate ranging from a low of $85/hr to a high of $130/hr, with a median rate of $98/hr on all T&M orders to date.  This provides a contracting officer with actual data with which to base a cost estimate. If they know their work is particularly complex, they might estimate closer to the $130/hr number. If they know their work is fairly typical, their estimate might be closer to the $98/hr. Now, labor rates by themselves provide no insight into the complexity, geographic area, or other considerations that affect pricing, but this could be a useful tool for contracting officers to begin the estimation process, which is one of the most difficult areas in Government procurement.  Gathering this type of business intelligence and using it to potentially generate more accurate cost estimates are key strategic sourcing concepts. This process may lead to a reduction in cost in some labor categories as well.  

To summarize, OASIS is in no way intended to “commoditize” services or drive customers to “Lowest Price – Technically Acceptable” solutions. The OASIS team understands that individual task orders placed under the OASIS contracts will be unique and by their very nature, impossible to translate into commodities or commodity-like services. The goal of OASIS is to provide TOTAL SOLUTION contract vehicles for complex professional services based requirements, not to be strategic sourcing instruments.

In the process of setting up OASIS, we foresee benefits that OASIS can achieve that align to benefits and concepts commonly associated with strategic sourcing. We hope this clarifies any outstanding questions you may have. As always, we look forward to your feedback via this blog or oasis@gsa.gov.

Jim

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Comments

betsey.hutton
<p>Hi Jim,</p><p>Just wanted to clarify what you mean by a 50% SB Subcontracting Goal&nbsp;on the unrestricted OASIS vehicle. Does this mean that of the work that the contractor subs out (as needed/at the company&#39;s discretion)&nbsp;50% must be to SB&#39;s, OR that 50% of the work awarded to the contractor must be subbed out to small businesses?</p><p>Thank you,</p><p>Betsey</p>
OASIS Blogger
<p><span id="internal-source-marker_0.11235567155885995" style="font-size:13px;font-family:Arial;color:#000000;background-color:#ffffff;font-weight:normal;font-style:normal;font-variant:normal;text-decoration:none;vertical-align:baseline;">Hi Betsey and thanks for the question. &nbsp;This means that of the work that gets subcontracted, 50% of that work should be going to Small Business. &nbsp;Jim</span></p>
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