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Category Management (CM)

APMT 013

DAU GLOSSARY DEFINITION

​The business practice of buying common goods and services as an enterprise to eliminate redundancies, increase efficiency, and deliver more value and savings from the Government's acquisition programs.

Alternate Definition

The DoD’s implementation of Category Management consists of a structured, data-driven business practice whereby the organization broadly and strategically analyzes and manages common categories of spend with an enterprise-wide focus in order to eliminate redundancies, increase efficiencies and enhance mission effectiveness.

Alternate Definition Source

DoD Category Management Program Charter

General Information

The DoD's implementation of Category Management (CM) consists of a structured, data-driven business practice whereby the organization broadly and strategically analyzes and manages common categories of spend with an enterprise-wide focus in order to eliminate redundancies, increase efficiencies and enhance mission effectiveness.  Unlike OMB's definition for category management, the DoD's emphasis is not on strategic sourcing and Spend Under Management, although that is a component of the department's CM efforts.

The Principal Director of Defense Pricing and Contracting (DPC) was designated on October 26, 2022, as the DoD Category Management Accountable Official (CMAO) and represents OSD on the CMLC.  Also, the DoD-OMB CXO Council - CM Sub-committee (DOCC-CM) to the Defense Business Council (DBC), co-chaired by the CMAO and Deputy Performance Improvement Officer (PIO), share responsibilities for advising and communicating OMB and DoD category management guidance.

On March 20, 2019, OMB published M-19-13, Category Management:  Making Smarter Use of Common Contract Solutions and Practices.  In this document, OMB requires agencies to carry out a set of tailored management actions and provide updates on these management actions to evaluate their progress in bringing common spending under management.  The expected result is more effectively managed contract spending through a balance of Government-wide, agency-wide, and local contracts; reduced unnecessary contract duplication and cost avoidance; and continued achievement of small business goals and other socioeconomic requirements.

Agencies shall undertake the following five key category management actions to better position themselves to bring spending under management and leverage common contract solutions and practices:

  1. Annually establish plans to reduce unaligned spend and increase the use of Best in Class (BIC) solutions for common goods and services, consistent with small business and other statutory socioeconomic responsibilities; 
  2. Develop effective vendor management strategies to improve communications with contractors, especially those that support mission-critical functions; 
  3. Implement demand management strategies to eliminate inefficient purchasing and consumption behaviors; 
  4. Share data across the Federal Government to differentiate quality and value of products and services in making buying decisions; and 
  5. Train and develop the workforce in category management principles and practices.

Spend Under Management (SUM).  To help agencies evaluate their progress in aligning common spending activities with category management principles, OMB and the Category Management Leadership Council (CMLC) have developed a SUM tiered maturity model that assigns tiers to agency spending activity based on attributes demonstrating the agency’s progress and sophistication in adopting SUM practices.

  • Tier 3, Best-in-Class (BIC) Solutions – Spending managed at the Government-wide level through use of BIC solutions that have been identified through a collaborative interagency process by acquisition category experts within the Government as offering the best pricing and terms and conditions within the Federal marketplace and reflecting the strongest contract management practices.
  • Tier 2, Multi-Agency Solutions – Dollars obligated on multi-agency contracts that satisfy rigorous standards set for leadership, strategy, data, tools, and metrics.  Although not BIC solutions, they reflect strong contract management practices, including data and information sharing across agencies, and use of cross-agency metrics.
  • Tier 1, Mandatory-Use Agency-Wide Solutions – Dollars obligated on agency-wide contracts with mandatory-use or mandatory-consideration policies, along with standards set for data-sharing, including data analysis, information sharing across the agency, and use of metrics that are defined, tracked and publicized.
  • Tier 0, Spend NOT Aligned to Category Management Principals.  Tier 0 involves purchasing in a decentralized manner and not conforming to category management principles, including strategic oversight and disciplined consideration of performance data to understand prices paid by other Federal customers or metrics to improve results. Dollars obligated on contracts that do not fit into one of the three tiers above. Agencies should analyze Tier 0 spend to find opportunities for shifting to higher-tier solutions.

Government-Wide Category Structure.  The chart below shows the 10 common Government Spend Categories and FY18 spend.  The Common categories are:

  1. Facilities & Construction
  2. Professional Services
  3. IT
  4. Medical
  5. Transportation & Logistics
  6. Industrial Products & Services
  7. Security & Protection
  8. Human Capital
  9. Office Management
  10. Travel

Not shown are the nine Defense-Centric Spend Categories of:  Aircraft, Ships/Submarines & Land Combat Vehicles, Weapons & Ammunition, Electronic & Communication Equipment, Sustainment Supplies & Equipment (S&E), Clothing, Textiles & Subsistence S&E, Miscellaneous S&E, Research & Development, Equipment Related Services, and Electronic Communications Services.  Spend data for FY18 is from the Federal Procurement Data System-Next Generation (FPDS-NG).  See the attachment for DoD common and defense-centric spend for FY19.

Background.  In May 2005, OMB Office of Federal Procurement Policy (OFPP) released a memorandum announcing the introduction of strategic sourcing as a Government-wide requirement for all Federal agencies.  While guidance from OFPP required strategic sourcing of goods and services within all Federal agencies, a more organized, systematic and collaborative approach to strategic sourcing across the entire Federal Government was critical for maximizing value for spend.  As a result, The Department of the Treasury and General Services Administration (GSA), with support from OFPP, partnered to launch the Federal Strategic Sourcing Initiative (FSSI) in November of the same year, inviting all Federal agencies to participate and work together to address OMB’s requirement.  Between 2005 and 2012, OMB released additional memos on strategic sourcing, reiterating its importance and sharing success stories.  With additional OMB guidance in December 2012, the Strategic Sourcing Leadership Council (since renamed the Category Management Leadership Council (CMLC)) was established and Strategic Sourcing Accountable Officials (now CM Accountable Officials (CMAO)) were assigned to help agencies optimize performance, minimize price, and increase the value of each dollar spent.

OMB's M-19-13 memo rescinds the Office of Federal Procurement Policy (OFPP) Memorandum entitled Development, Review, and Approval of Business Cases for Certain lnteragency and Agency Specific Acquisitions, dated September 29, 2011, and also OMB memo “Improving Acquisition through Strategic Sourcing”, December 5, 2012.

Category Management Credential, CACQ 007.  The Category Management Credential provides practitioner-level training to help the learner to begin contributing to a Category Management Team or improve their performance on a staff overseeing aspects of Category Management in the Department of Defense.

Category Management Resources–on hallways [requires MAX.gov to log on to GSA's Acquisition Gateway]

OMB M-18-23 "Shifting from Low-Value to High-Value Work"  The Administration is transforming how agencies buy and manage goods and services throughout the entire Government-from common, routine procurements to complex, major acquisitions. Almost two-thirds of Federal contracting dollars (over $300 billion each year) support common goods and services that every agency needs to meet its mission goals. Instead of buying these on separate, uncoordinated contracts, agencies are using category management to leverage the Government's massive buying power and reduce the number of costly and duplicative contracts, which are expensive and time-consuming for both Government and industry. This shift allows the Federal acquisition workforce to focus its time and attention on higher-value work.