Josh Gruenbaum, who heads the General Services Administration’s (GSA) Federal Acquisition Service (FAS), has sent off a fresh round of letters seeking better pricing terms from Federal contractors – this time a list of six strategy consulting firms that GSA defines as “traditional strategy consulting firms.”
Sources confirmed to MeriTalk that the six firms receiving the June 26 letter from Gruenbaum are AlixPartners, Alvarez & Marshal Federal, Boston Consulting Group, Ernst & Young, FTI Consulting, and McKinsey & Co.
Gruenbaum’s letter to the six firms follows similarly themed communications last month to 10 large value-added resellers (VARs) to the Federal government pushing them to develop “taxpayer friendly pricing” for the government, and to at least 19 “consulting contractors” earlier this year.
The tone of the June 26 letter from GSA – viewed by MeriTalk – clearly sets the expectation for price breaks.
“In keeping with this Administration’s laser focus on fiscal responsibility, our baseline presumption is that most, if not all, of these contracted services are not core to agency missions,” Gruenbaum told the six firms.
“Our objective is to critically evaluate which engagements deliver genuine value and demonstrable returns to the American taxpayer, and therefore merit external support, and which should be internalized to ensure we are responsible stewards of taxpayer dollars and avoid unnecessary spending,” the letter says.
Under the heading of “pricing restructure,” the letter says, “Essential continuing contracts must transition to outcome-based pricing tied to quantifiable deliverables. Consider shared-savings models where contractors demonstrate ‘skin in the game’.”
“Describe your plans and provide justification for any contracts where you believe outcome-based pricing is not feasible,” the letter continues. “To strengthen our ongoing partnership, we expect transparent, comprehensive responses that include significant cost reductions and taxpayer-friendly pricing adjustments.”
Gruenbaum’s letter also states that GSA’s “administration-wide review of Federal consulting contracts” has thus far “resulted in savings of $23.3 billion in multi-year awards through the termination of contracts.”
The six firms on the receiving end of the letters have until July 11 to respond to GSA. The agency is looking for:
- Details on each firm’s contracts with the Federal government, not just GSA;
- Detailed spending breakdowns by each Federal agency, and data on related contracts and projects, cost segmentation by functional categories;
- Clear communications – “i.e., no consultant gobbledygook”; and
- Comprehensive pricing analysis, waste identification, and savings analysis.