The US government kicked the year off with plans to improve spend categorization in the federal marketplace. Leading high-spending agencies broke spend into 10 overarching categories to be led by subject experts. Procurement professionals in the private sector have long recognized the benefit of proper category management - but for any business that hasn't begun the process already, the federal spend categorization might make a good case study to follow.

A move towards private sector practices

Plenty in the private sector may do a double take at the idea of taking a cue from public sector strategies.  However, the government's new initiative parallels private categorization in a number of ways. First and foremost is the reason categorization is so important. Anne Rung, Administrator of the Office of Federal Procurement Policy, and Tom Sharpe, Commissioner of the Federal Acquisition Service, summed up the issue simply: “Far too often, our acquisition professionals are making these purchases with very little insight into what their counterparts across the government are buying, who they are buying it from, what they are paying, and how they are buying it. In general, there is very little coordination and sharing of information and best practices across government. In fact, there is no single place a government contracting officer can go to find out important details regarding existing contract vehicles for any particular commodity area.” If these sound like familiar issues, it is because all businesses face these procurement challenges – even if spend in our own organizations is a bit below the federal mark of $400 billion. The goal of this categorization is to bring clarity and coordination to a disparate set of buyers and suppliers, just as it is in the private sector.

Another similarity is in the categories the government selected as key priorities. Here are three of the finalized 10 categories:

• Technology – This category includes spend on software, hardware, and the consultants and outsourced work needed to manage both. Security and telecommunications spend also make the list in terms of crucial tech spend.
• Professional Services – The most varied of the categories developed, professionals services runs the gamut from business administration to marketing and PR to financial services.
• Facilities and Construction – Considering it encompasses everything from construction materials and services and the purchase and lease of federal facilities, it is easy to see why this category ranks as number one in terms of spend, weighing in at $72.1 billion.

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