The State Department didn’t just rename its procurement office as part of its reorganization. The new Bureau of Global Acquisitions is no longer buried inside the agency.

Mike Derrios, a former senior procurement executive at State, said too often the agency leadership didn’t have access to the acquisition offices and wouldn’t get the information to fully inform enterprise decisions.

“How you spend an agency’s money, what you’re spending it on, how you’re defining those requirements, how well you’re working with industry, again to get to those outcomes that you’re outsourcing for? What are you learning from that data? Times are tough financially for agencies and the more data that an acquisition line of business can offer and bring to the table, the better to help leadership think about things holistically,” said Derrios, who recently became the new executive director of the Greg and Camille Baroni Center for Government Contracting at the George Mason University, on Ask the CIO. “All of that is just incredibly valuable perspective that I don’t think is always leveraged if the voice can’t be heard. So it’s really just about getting that important seat at the table.”

State had been developing a plan to reorganize and elevate its acquisition office for several years, but the Trump administration accelerated the timeline. The new bureau became official at the end of the fiscal year.

Derrios said his team worked on the business case for the better part of five years and finally the political leadership included it as part of the broader State Department reorganization.

Bringing the procurement office deeper into the leadership suite was one of several ways Derrios drove change in State Department acquisition during his five-year tenure as the SPE. Derrios left federal service in October after more than 25 years.

“We set an ambitious course for ourselves to enact some significant changes. We rolled our sleeves up and we executed. My leadership approach has always been to galvanize people behind a vision and then challenge them to go beyond their own perceived limitations in pursuit of it. And that’s exactly what that staff did,” he said. “That is why that that organization was elevated to be a bureau, finally doing things to actually think about how the business is functioning. It’s not just how many contracts are we getting out there, but how well are we doing that work? How are we adding value to mission support? Are we thinking about how we’re improving our way of doing business and offering service to the customers, putting balance scorecards in place, you know, robust human capital plans, moving to a category management model? All of those things were just about how we were swinging for the fences.”

Driving toward category management

Derrios said moving State more toward a category management for buying common goods and services should be at the top of the next senior procurement executive’s agenda.

He said State has been working on collecting the data and developing the model over the last three years, so now is the time to move it into reality.

“We did some pretty heavy analytical work to realize that about 80% of the money was being spent in four major categories. So when you look at all the product service codes that we were obligating money on, they all fell in four big buckets so it just made sense for us to start to move in that direction in terms of how we were organized,” he said. “That gives us the opportunity to really look at the requirements in two different ways and in real time. There are opportunities with all the buyers to centralize around things like IT and professional services. They’re able to put better acquisition strategies in place, and if the work is flowing into the organization in terms of a category model, it gives us the opportunity to put a lens on the work in real time to figure out, ‘hey, do we have 20 customers all buying the same thing right now? Well, if so, let’s aggregate that demand before we go to market.’”

The four buckets of spending are:

• IT
• Professional services
• Diplomatic security services like local guard and other security related services
• Overseas construction

Derrios said the acquisition office will work with their partner offices to create specialized cadres of contracting officers to buy these specific categories of products or services.

For instance, he said if Consular Affairs has expertise in IT or professional services, they may lead the effort to buy for several organizations.

“I think what they’re going to get is contracting professionals that are building up reps, if you will, in terms of doing the same kind of contracting and building up deep market insight as a result of that. They are really understanding what’s late breaking in terms of where the market is going with technology, understanding the complexities of large services and how to help a contract or a program office avoid the pitfalls of setting up a statement of work in a way that won’t lend itself to the metrics a program office is trying to meet,” Derrios said. “There’s a ton of upside to this.”

Buying smarter through data

The other piece to category management is focused on the post-award environment. Derrios said it will let State line up their recompetes in a smarter and more efficient way.

“You can put a smarter structure in place that possibly standardizes some of their requirements and aggregates demand, so that when the recompete comes, you’re actually doing one contract again versus multiple. That was the intent behind category management,” he said. “It absolutely aligns with where the current administration is at on how to buy smarter and the skids are already greased in terms of all the process work that we did to make that shift happen. I think category management is a sea change for State Department.”

The impact from buying through category management may take some time, however. Derrios said his team did some initial analysis to determine possible cost savings, but he wasn’t ready to offer specific estimates.

Derrios said category management and other acquisition initiatives is helping the State Department become more strategic and less transactional.

“Procurement is one of the most important mission support functions in the government, and it can be very easy because of the pace and because of the high pressure environment that you’re in to fall into a place where you’re more focused on throughput rather than the strategic aspect of the work,” he said. “I think how you define your requirements, the strategy you plan to take to get to market, how you want to structure your contract and how you’re going to administer that contract to ensure it’s yielding those outcomes is where acquisition leaders should be placing the majority of their emphasis. Trying to modify your way to success after a bad contract was put in place is a recipe for disaster. I think you have to take the time up front to define what success looks like contract-by-contract.”

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