Administration amps up strategic sourcing push

Noting that agencies have been slow to adopt strategic sourcing approaches, representatives of the Barack Obama administration are subtly increasing the pressure.

Speaking at the Coalition for Government Procurement on Sept. 11, Office of Federal Procurement Policy Administrator Joe Jordan emphasized the value of the technique, which involves combining orders from multiple agencies in order to get bigger volume discounts from vendors.

One of the chief reasons Jordan offered to explain the slow adoption is an old nemesis: turf battles. “There’s a control issue, for sure,” he said. Whether working in major departments or tiny offices, people want control of their spending. They want to decide if they buy blue pens or red ones. “They’re just human issues,” Jordan said.

The President’s Management Advisory Board’s Strategic Sourcing Subcommittee suggested Sept.7 that the administration should mandate the use of governmentwide strategic sourcing vehicles, where appropriate. Agencies should also set ambitious goals for creating and adopting the use of these contract vehicles, the subcommittee said.

It would also help for agencies to designate a specific person to be sure the agency takes part, the subcommittee recommended. The subcommittee also reported that agencies would benefit from a strategic sourcing playbook of best practices for targeting and monitoring initiatives.

Jeffrey Zients, acting administrator of the Office of Management and Budget, spoke in support of making the approach mandatory at that Board meeting, according to Federal News Radio and other published reports.

The board is scheduled to meet again Oct. 12.

When asked about the potential mandate, Jordan said simply, “Stay tuned.”

In his speech though, he said, “There’s a real opportunity to engage on this, not on a ‘let’s make it perfect and make everything have one government contract and that’s it’ but rather in a phased ‘crawl, walk, run’ approach.”

Agencies are at different points along the road to strategic sourcing. It will be a victory for some agencies to just figure out what their various components are buying, he said.

“My role is not making those categories, not beating up the agencies and certainly not beating up vendors, but rather to facilitate the conversation and remove a lot of the preconceived notions,” he said.

Declining budgets might become an ally for strategic sourcing efforts, Jordan added. Agencies "have now a real desire to save money,” Jordan said. These days, “I could say, 'you could save money and get the essentially the same things,' and they are much more interested than when they were in the eight years of the Bush administration.”

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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Reader comments

Tue, Sep 25, 2012 bob carnie

I would like to present a 21st Century Competitive Solution vs FSSI I strongly believe GSA should modify existing software to control buyers rather than eliminating competition via the FSSI procurement program. If buyer breaks protocol hence buyer would be disciplined. This software project can be done without additional funding. GSA, DoD & NASA can prioritize this software project via existing employed Software Engineers. It takes the will and priority to make this happen. Also, I am certain GSA will claim it does not have available software engineers to complete this non-funded task. GSA can simply lay-off several employees in various departments in order to fund this task. This assignment should not take more than several million dollars. From what I can see there are some really big holes in the procurement process. 1) Via this GAO report http://www.gao.gov/products/GAO-12-705T most purchases were made outside of GSA procurement web site www.gsaadvantage.gov. ; A solution to this problem would be take away the buyers PHYSICAL credit card and store the credit card information online via www.gsaadvantage.gov ; This also protects the credit card # and information from possibly being compromised. Again this software project can be done with no additional funding. Amazon.com is a perfect example. I know the government is not a company but I am certain GSA has great software engineers to accomplish this task via a top priority and no additional funding software project. For open market purchases buyer currently utilize fbo.gov and/or other existing procurement sites. The same projects can be accomplished via these sites. 2) GSA claims its employees are overworked and can no longer handle existing vendors. All existing employee manual operations should be analyzed via GSA’s Software Engineers to automate current manual human labor. It may be possible to handle unlimited vendors and buyers once this project is completed. Each new additional GSA Human assignment should be analyzed by software engineers for possible automation. 3) I strongly believe an independent software company should be allowed to give alternative 21st Century solutions versus FSSI 4) Reduce the number of schedule solicitations. 5) I have heard from the grapevine that GSA's software is awash in horrible spaghetti software code making it virtually impossible to make necessary modifications to move this agency into the 21st century. Hiring competent small business software companies would be the logical choice to fix this problem. This can be done without additional funding via laying off various GSA employees. 6) It is this writer's belief FSSI is nothing similar to Corporate volume purchasing. Example lets take Walmart. They currently have 66,000 vendors and counting each day. Giving very few companies exclusive selling rights via a long term contract and eliminating competition is not the answer.

Thu, Sep 13, 2012 Contractor on the brink

Dr. Atkinson, Your comments seem, judging by the string of letters after your name, insular. "Without having studied the research, findings, and peer review comments related to the research and findings, it is difficult to determine the validity of the findings. Of specific concern is data related to (a) types of jobs lost and (b) applicability of the jobs lost to the new paradigm (i.e. strategic sourcing)." So you haven't studied the research, yet you immediately go on to speak about "improving government processes" and how to "save taxpayer money". Having both read the research and experiencing firsthand the results of the FSSI I can tell you that it is evident that impression of savings is not real. You callously state that: "the government has no obligation to the contractor or the contractor workforce, and when improving efficiencies and effectiveness of government operations, it does not matter if a contractor must reduce the number of workers assigned to obsolete/defunct operations." You are correct. You know what the government is obligated to do? Support citizens that previously had jobs that are now "defunct/obsolete" and cannot find jobs in today's economy because of OTHER FAILED government policies. I take it, based on some of those strings of letters after your name, that you are likely a well paid government employee with a nice pension and benefits, or were at one point. One of things that I have found over my years of experience dealing with the Fed is that they like nothing more than a program that gives the APPEARANCE of "improving government processes" and saving taxpayer money, when in fact it actually just pushes higher costs elsewhere. But why bother reading research (other than a Fed report, of course they would not be biased...) to determine if in fact the FSSI program is really saving money overall. And why be concerned with contractors laying off workforce? It can't possibly hurt the overall economy nor cost the government money in the long run. I am guessing you are more of a fan of large bloated contractors that can easily hide numbers, the way the government does, than Small Business people like myself that have neither the means nor the desire to be anything but transparent, and provide fair pricing to the Fed. Keep putting people like my 45 person company out of business across the country with FSSI. See if you can find time to read the research down the road to figure out why the economy is still tanked. I am sure it will never affect you. Although I may need a little help to feed my family... A Contractor, LooK ING FoR AJO BNOW

Wed, Sep 12, 2012

To follow up on my previous comment, I first quote, "Strategic Sourcing may work in the private sector where it has been known to save millions, however, Strategic Sourcing in the public sector will precipitate additional economic, social service, and other costs related to job loss which may offset more than the savings. These costs would only apply to the public sector and were never of any concern for the private sector" (Prof Bornstein)

Next, I ask for an explanation of how the economic impact of job losses resulting from improved sourcing strategies in the private sector are any different from the economic impact of job losses from improved sourcing strategies in the public sector?

I do not want to appear critical. However, the statement that strategic sourcing saves millions in the private sector while it causes additional economic, social and other costs in the public sector does not stand up to Socratic reasoning.

Bottom line, whether public or private, job losses have the same impact on economic, social, and other costs.

Dr Atkinson

Wed, Sep 12, 2012

Prof Bornstein:

Without having studied the research, findings, and peer review comments related to the research and findings, it is difficult to determine the validity of the findings. Of specific concern is data related to (a) types of jobs lost and (b) applicability of the jobs lost to the new paradigm (i.e. strategic sourcing).

As I am sure you are aware, the purpose of finding efficiencies and more effective ways of doing business is not to protect jobs, but to improve government processes and save taxpayer money. Or, in other words, the government has no obligation to the contractor or the contractor workforce, and when improving efficiencies and effectiveness of government operations, it does not matter if a contractor must reduce the number of workers assigned to obsolete/defunct operations.

The contractor’s workforce is the responsibility of the contractor, and if the contractor is concerned about their workforce, then the contractor needs to ensure their workforce remains relevant as changes in their customer’s ways of doing business occur.

The point being, it is not government’s responsibility to keep unnecessary contractor employees employed because not doing so may impact the contractor’s employees’ economic standing.

Still it would be interesting to review your research.

Dr James E. Atkinson, CDFM-A
MScM, MScIM, MBA, MScCIS, EMBA, DBA

Wed, Sep 12, 2012

Actually this will increase costs to the government. The most recent trend is to push work to small businesses who by default have lower wrap rates and lower prices. A lot of this work is bid as lowest-price-technically-acceptable. This has reduced costs substantially. What this article mentions will create mega-large contracts won by only the biggest organizations with high wrap rates and those who have lobbyists and former-Fed consultants that ensure they will win in the future regardless of price.

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