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Buying as One: Category Management Lessons from the United Kingdom

 

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Abstract

The U.S. federal government spends about $500 billion a year on goods and services. More than half of this amount is for goods and services common across federal agencies, such as training, overnight delivery services, copier machines, and travel services. However, these common items are often purchased individually by more than 3,300 buying offices and over 40,000 contracting officers. For example, the Office of Management and Budget in 2016 noted that agencies spend more than $1 billion a year on mobile devices and service contracts, and that: “Almost all of that spending is paid to four carriers, yet the Federal Government manages over 1,200 separate agreements and buys more than 200 unique services plans for voice, data, and text capability.” As a result, the federal government does not leverage its buying power as a large customer, and vendors constantly bid on redundant work.

Category management—a purchasing strategy adopted by the private sector three decades ago—organizes spending on common goods and services across an enterprise into defined categories, such as travel or commercial software. By “buying as one,” the Office of Management and Budget projects that the federal government can avoid up to $18 billion in unnecessary spending by 2020.

The U.S. government began its category management initiative in 2014, and continues to designate agency adoption of this approach as a high priority. The United Kingdom began its category management initiative in 2010 and its greater maturity offers some useful lessons on how to increase adoption and avoid potential missteps. Furthermore, both the U.S. and U.K. efforts offer useful perspectives, and insights to other governments—states, localities, and other countries—as they consider their own category management initiatives.

 

Document Date: 
Feb 20, 2019
 
Author (organization): 
IBM Center for the Business of Government
 
Document type: 
Report
 
Interests: 
Acquisition