GSA expands review of ‘consulting’ contracts to 9 more companies

A second group of nine companies has received letters from the General Services Administration asking them to participate in a review what the agency has identified as consulting contracts.

Those letters signed by Federal Acquisition Service Commissioner Josh Gruenbaum asks the companies to provide detailed input on their contracts, broken down by agency and category of services. The companies also need to provide pricing information.

“We intend to use this input as a scorecard to compare your perspective both against our government-wide review as well as against those submitted by other consulting firms,” Gruenbaum wrote in the letter sent within the past week.

This ask is the same one GSA made of 10 companies in late February.

GSA identified Accenture Federal Services, Booz Allen Hamilton, General Dynamics, Leidos, Guidehouse, HII Mission Technologies Corp., Science Applications International Corporation, CGI Federal and IBM Corp. as 10 of the largest consultancies to the federal government.

Now they have added nine more:

• ASGN Inc. (the holding company of ECS Federal)
• Chemonics International
• FCN Inc.
• ManTech International Corp.
• Minburn Technology Group LLC
• Peraton
• Salient CRGT (acquired by GovCIO)
• Smartronix LLC (now called SMX)
• V3Gate LLC

As with the first group of 10, questions are being raised about how GSA defines consulting because most of these companies do not consider themselves consultants. For example, companies such as Minburn and FCN fall into the reseller category.

One GSA source said that with both groups, the agency is looking at spending under NAICS codes that consulting work generally falls under.

“A firm can describe themselves a certain way, but these firms hold contracts under these NAICS codes,” the source said.

GSA has not identified the codes it is using. But our analysis points to six codes that consulting tends to fall under, but so does a lot of other work:

• 541512 – Computer Systems Design Services
• 541330 – Engineering Services
• 541511 – Custom Computer Programming Services
• 541690 – Other Scientific and Technical Consulting Services
• 541990 – All Other Professional, Scientific, and Technical Services
• 541611 – Administrative Management and General Management Consulting Services

Along with Gruenbaum’s letter, GSA includes a spreadsheet and a PowerPoint slide deck to help guide the companies in making their responses.

GSA wants the companies to provide contract data from federal fiscal years 2019 through 2024, which one industry source said might be an “overwhelming” ask because companies may have tens of thousands of contract awards to document.

In filling out their reports, GSA wants the companies to look at all their contracts and not just those with GSA.

The reports must include ideas for identifying waste and savings opportunities, primarily through an itemized and total spending reduction analysis.

GSA wants the companies to identify spending by agency, contract and project. The breakdown should include spending by functional category.

Gruenbaum wrote the breakdown should be in “simple layman terms, i.e. a 15-year-old should be able to understand what you service provide and why it is important – no consultative jargon or gobbledygook.”

The GSA source emphasized that the agency isn’t trying to drive anyone out of business.

“We know these firms provide critical services that the government can’t replicate,” the GSA source said.

GSA has also been asking agencies to analyze their spending and put their contracts into three buckets, the source said:

• A critical need
• Opportunity to descope or cancel
• Middle ground – more discussion needed.

The goal is a shift in how the government buys services. Gruenbaum’s letter describes a shift to more outcome-based contracting.

“All contracts that are deemed essential and recommended to continue following this review should be proactively restructured to be priced on an ‘outcome-based’ model,” Gruenbaum wrote, adding that contracts can be structured as a shared savings model.

Companies need to justify why a contract doesn’t fit into one of those two models.

“In sum, we expect significant discounting compared to current pricing,” Gruenbaum wrote.

The GSA source said this is an opportunity for companies to forge a stronger long-term relationship with their customers by identifying savings and better ways to delivering services.

The GSA source could not confirm that more companies will receive similar letters from the agency in the weeks and months ahead, but the expectation is that more are coming.

“This administration believes there are opportunities to save money and improve delivery,” that source added.