OMB Issues Guidance To Support “Smart, Aggressive Consolidation” of Federal Procurement for Common Goods and Services

Over the past several months, the Trump administration has issued a series of executive orders (EOs) and other directives calling for major changes in the way the U.S. government procures goods and services.¹ Among the earliest was an EO titled “Eliminating Waste and Saving Taxpayer Dollars by Consolidating Procurement,” issued by President Trump on March 20, 2025.

In that EO, President Trump recognized the federal government as the largest buyer of goods and services in the world and raised concerns that multiple agencies carry out the same functions to procure common goods and services in an “uncoordinated and less economical fashion.” To perform these functions in “the most efficient and effective manner possible for the American taxpayer,” the EO directed the consolidation of domestic federal procurement in the General Services Administration (GSA). Per the EO, GSA is “the agency designed to conduct procurement,” and consolidation would “enabl[e] agencies to focus on their core mission of delivering the best possible services for the American people.” To this end, President Trump designated GSA as executive agent for all government-wide contracts for information technology (IT) and required that GSA submit to the Office of Management and Budget (OMB) a “comprehensive plan … to procure common goods and services across the domestic components of the Government.”

More recently, in Memorandum M-25-31 dated July 18, 2025, the OMB Director issued guidance to support implementation of the procurement consolidation EO. This guidance sets out two “workstreams” — increased use of centralized contracts and centralization of procurement functions in GSA. Notably, the guidance announces that the Federal Acquisition Regulation (FAR), which currently encourages agencies’ use of existing government-wide contracts, will be amended to require that agencies “must use the existing contract vehicle instead of awarding a separate new contract” to procure commercial products or services meeting the agency’s requirements, absent an exception. The guidance also calls on agencies to work proactively with GSA and OMB to leverage GSA as “the Federal Government’s core buyer for addressing prevalent and repetitive needs.”

In these ways, and others detailed below, OMB has taken a significant step in furthering the Trump administration’s efforts to address the perceived inefficiencies in federal procurement through consolidation. For contractors, the OMB guidance offers greater insights into what the federal government will consider when assessing opportunities to centralize contracts and procurement functions, and the process by which these opportunities will be assessed.

Overview of GSA’s Role in Implementation of Category Management

The guidance begins with an overview of Memorandum M-19-13, which was issued by OMB during President Trump’s first term.

That memorandum formalized the use of “category management” to help the federal government leverage its buying power by procuring goods and services as an organized entity in “common spend” categories, such as IT or professional services, where multiple agencies require similar support.² The memorandum also established the Category Management Leadership Council to help develop the strategic direction for “one government” buying, and established a Category Management Program Management Office within GSA to analyze common spend across 10 categories³ and help category managers improve existing government-wide contracts and create new ones to maximize value in these areas.

With this backdrop, the new OMB guidance touts the success of organized buying under Memorandum M-19-13, announcing that cumulatively — through “best-in-class” (BIC) and other government-wide contracts — the federal government has saved nearly $100 billion since its implementation, and anticipates continued savings at a rate of $10 billion a year. The guidance also touts GSA’s “central role” in the implementation of category management. OMB identifies several examples of cost savings, including GSA’s recent negotiation of common licenses with original equipment manufacturers. For instance, GSA projects that its consolidated acquisition of Microsoft Office 365 services could result in $100 million in savings per year.⁴

“Despite GSA’s success,” however, OMB notes that “less than 20 percent of common spend currently goes through GSA.” The OMB guidance seeks to increase savings through “smart consolidation efforts that further reduce redundant or otherwise inefficient procurement activity.”

OMB Guidance Sets Out Criteria and Decision Tree for Centralizing Requirements

In furtherance of the procurement consolidation EO, the OMB guidance first sets out a continuum for assessing agency requirements that may be more or less suitable for centralization.

With this diagram, OMB explains that the federal government will prioritize consolidating requirements that: do not vary based on agency mission; involve highly commercialized products and services that do not require customization; are easy to standardize; and allow achievement of economy and efficiency through reduced variation. By contrast, lower priority will be given to requirements where exact needs differ from agency to agency or the requirements are sufficiently complex or mission-specific such that contract performance will involve ongoing engagement with the program office.

Notably, the guidance states that OMB and GSA will consider identifying a different centralizing agency where consolidation could be viable, but an agency other than GSA has the requisite knowledge for the requirements involved. With this in mind, OMB sets out a decision tree that first contemplates whether a requirement is suitable for centralization and then considers whether GSA has the requisite subject matter expertise. If not, OMB and the corresponding category manager can identify an alternative agency to undertake the consolidation.

OMB Guidance Sets Out Two Workstreams in Furtherance of Consolidation Efforts

The OMB guidance goes on to detail two “workstreams” for agency involvement in consolidation, focused on the increased use of centralized contracts and opportunities to centralize procurement functions in GSA.⁵

Increased Use of Centralized Contracts. First, the guidance seeks to increase use of centralized contracts through category management.

For starters, OMB recognizes the “one government” framework set out in Memorandum M-19-13 and that agencies should use existing government-wide contracts before expending resources to pursue a new contract on the open market. As OMB notes, FAR 8.004 currently encourages this. The OMB guidance signals a move toward a mandatory framework. In particular, the guidance announces that the FAR Council is developing model deviation language to optimize agencies’ use of existing government-wide contracts in specified situations and intends to issue that guidance within 60 days.⁶ That text will amend the FAR to state that “if a commercial product or service meeting the agency’s requirements is available on an existing contract awarded for government-wide use by GSA or another agency, the agency must use the existing contract vehicle instead of awarding a separate new contract, unless the head of the agency provides an exception.”

Additionally, within 60 days, the OMB guidance directs each category manager to recommend common spend areas that would be suitable for greater consolidation — whether through the award of new government-wide contracts or modifying existing ones, including to mandate their use across the federal government. The category managers are instructed to consider the criteria set out in the OMB guidance when making these recommendations. OMB’s Office of Federal Procurement Policy will then work with GSA to review the recommendations and establish priorities for increased use of centralized contracts.

OMB recognizes that the centralization strategy and the role of the funding agency will depend on the requirements being considered. But it bears note that the OMB guidance references mandatory government-wide contracts meeting BIC criteria⁷ as an example of the centralized buying it seeks to achieve. For instance, GSA could manage a mandatory BIC for highly standardized needs (like basic laptop computers or mail delivery services) with limited input from the agency or as acquired by GSA on all agencies’ behalf. For complex requirements (like network infrastructure or construction), GSA could manage a mandatory BIC that includes basic terms and conditions, with each agency negotiating customized requirements to support its mission.

Centralization of Procurement Functions in GSA. Second, the guidance seeks to increase centralization of procurement functions in GSA for common spend.

This workstream is focused on identifying requirements that can be more effectively negotiated and managed by one agency for transition to GSA. Recognizing that transition should not result in mission disruption, OMB notes that challenges may arise with centralization for requirements involving specialized knowledge, urgent response, or continuous involvement of the program office. Thus, before concurring in any transition of procurement functions to GSA, OMB will work with GSA to assess suitability, taking into account input from the funding agency as well as the following considerations:

• Whether GSA has the necessary personnel, technology, and financial resources to scale its capacity to support operations and increased demand
• How GSA’s assumption of a particular buying function will yield cost efficiency
• How GSA plans to address risks identified by the agency associated with having requirements awarded and administered by an organization not directly responsible for the agency’s mission
• GSA’s plan to monitor its performance, including procurement acquisition lead time and cycle time, cost-to-spend ratio, cost savings, order accuracy, and agency satisfaction
• GSA’s plan for interagency agreements and service level agreements with each agency to ensure the agency’s expectations and requirements are being met
• GSA’s short- and long-term plan for recovering costs through centralization of procurement functions, including how transitioning will impact the agency’s budget

Where this assessment does not support centralizing procurement functions with GSA, the OMB guidance instructs agencies to consider centralization within the agency itself.

The OMB guidance concludes with a handful of additional actions in furtherance of the procurement consolidation EO, including that: OMB will review and update its category management policies; category managers will play a vital role “as business advisors and experts in federal market buying trends,” including to generate buying guides and provide contract solutions, business intelligence, and resources to the acquisition workforce; and the FAR Council will continue to work towards “returning the FAR to its statutory roots,” thereby allowing the workforce to “spend less time on compliance” and afford “greater attention to practical and manageable pathways to acquisition solutions.”

OMB concludes that the “effective implementation” of these workstreams should help GSA maximize value for the American taxpayer and “improve the efficiency and effectiveness of acquisition activities” across the federal government.

This OMB guidance, alongside the numerous EOs and directives issued by the Trump administration to date, underscores the federal government’s efforts to leverage consolidation as part of its buying strategy — in this instance, by centralizing contracts and procurement functions. Contractors performing work in common spend categories should expect continued scrutiny of standalone contracts against the centralization criteria set out in the guidance, as well as prioritization of existing and new government-wide contracts in these areas, as agencies continue to engage with GSA and OMB in furtherance of the ongoing procurement consolidation efforts.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.