Procurement

Some senators skeptical about strategic sourcing

illustration dollar sign in vise

Can buying in bulk really save the money its advocates say? Some of those advocates spent a few hours on The Hill on July 15 trying to convince skeptical senators that it can.

Dan Tangherlini, administrator of the General Services Administration, and Joseph Jordan, administrator of the Office of Management and Budget's Office of Federal Procurement Policy, testified that such strategic sourcing does indeed offer substantial savings for agencies, and needs to be expanded. Cristina Chaplain, the Government Accountability Office's director of acquisition and sourcing management, also testified that expanding the practice could reap big federal savings.

Some senators however, questioned how effectively government could adapt long-term to the ideals of bulk buying and leveraging the best price from vendors. They said the ideals wouldn't take hold without more focused implementation at federal agencies, including such simple things as gathering uniform savings data. "How can we measure savings?" Sen. Tom Coburn (R-Okla.) asked.

The List

GSA's four strategic sourcing vehicles:

 

  •  Express and Ground Domestic Delivery Services;
  •  Office Supplies;
  •  Print Management;
  •  Wireless.

Jordan responded that there is not a standard method for federal agencies to measure savings gleaned from strategic sourcing among agencies, but said a savings methodology in the government was taking hold. "I do think strategic saving will have a long-term effect and will transcend administrative change."

Chaplain said the full potential of the federal government's buying power may be tied in its ability to quickly adapt to the strategic sourcing mind set. "While strategic sourcing makes good sense and holds the potential to achieve significant savings, federal agencies have been slow to embrace it, even in a time of great fiscal pressure," she testified.

Coburn agreed that a standard method for agencies to actually gauge how much they're saving would go a long ways towards insuring the practices become a federal habit as agencies have solid data to work with.

Sen. Ron Johnson (R-Wis.), however, remained skeptical that strategic sourcing would change old ways. He said recent initiatives look like past spending-control initiatives that have come and gone without much effect on actual federal spending habits. Johnson said sequestration budget cuts may be the ultimate way to change federal spending.

The panel followed an announcement of a White House initiative on July 8 to build a better, smarter, faster government headed by OMB Director Sylvia Burwell. Committee Chairman Tom Carper (D-Del.) called strategic sourcing "central to that initiative."

Tangherlini has been an evangelist for strategic sourcing since taking the helm at GSA. He testified he has met personally with all federal agency heads to discuss analyses of each agency's buying schedules and how they can be improved or bolstered through GSA's strategic sourcing capabilities. He contended that new bulk-buying initiatives like the wireless buying program are helping his agency build a track record that proves it saves money for other agencies. That reputation, he said, can help build into agencies' other procurement areas.

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Reader comments

Thu, Jul 18, 2013

Feds don't want to identify savings from strategic sourcing because their program funding will be removed (by the same amount).

Wed, Jul 17, 2013 Larry - SDVO/HUBZone VAR

If you put lipstick on a pig it's still a pig! Strategic Sourcing in regard to IT products and solutions is nothing more than misguided justification for a government agency to thin the heard and limit competition. We can no longer afford to justify the continued waste and abuse because it is easy! Who knows where the folks who award and manage all the IDIQ, GWAC, and MAC contracts come up with the mythical costs savings they are claiming, everybody in industry knows those claims are terribly flawed. Stop wasting taxpayer money on setting up any more IDIQ, GWAC, or MAC contracts and train the acquisition work force how to do market research. Implement some standard, realistic reporting and supply chain requirements and put some teeth in the penalties for companies and individuals who misrepresent, are unable to deliver, and/or abuse the system. Who in their right mind could ever think that awarding a multi-billion dollar contract to even 15 or 20 prime contract holders is going to result in enough savings to justify the cost of establishing the vehicle. GSA needs to wake up, take a look at how industry is trying to work smarter, and learn from their mistakes. It seems to me that GSA, better than any other gov't agency, has a fantastic opportunity right now to greatly improve how the gov't supports small business, to intellegently establish more effective competition, to improve supply chain integrity, and to ultimately save the gov't and the US taxpayer money but it will require change, work, and a commitment.

Wed, Jul 17, 2013

Sen. Ron Johnson (R-Wis.) is correct. Strategic sourcing is an old idea given a new name and packaging. In fact, strategic sourcing increases costs to the government. A business has to respond to three solicitations before they actually receive an order via existing Government strategic sourcing contracts. And each of these responses is a vendor expense that is passed back to the Government as cost. It also limits competition. The Government should let the marketplace work its magic instead of spending time and money to manipulate it with little or no effect.

Wed, Jul 17, 2013 OccupyIT

Strategic Sourcing only works for true commodities. Unfortunately, GSA confuses tailored IT support of mission with servers, licenses and bandwidth resulting in simply another members-only procurement monopoly. They also confuse it with bundling, an illegal behaviour that rolls previously successful small business contracts into too-large-to-bid-on procurements leaving innovative partners out in the cold and a future solely dependent on the whims of the Large System Integraters that buy in to the Strategic Sourcing club. Of course, for GSA it is just another revenue source so all good...

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