Officials recognize breakthroughs in bulk buying
Agencies, acting differently and under new pressures, are reconsidering strategic sourcing's benefits
- By Matthew Weigelt
- Nov 04, 2010
As their budgets get tighter, federal agencies seem more willing to stick to their promises to buy strategically, a fundamental change from the past, two officials said recently.
Agencies are being pressured to find ways to save money, said Steve Kempf, commissioner of the General Services Administration’s Federal Acquisition Service, at the Coalition for Government Procurement’s annual Fall Conference Nov. 2. Obama administration officials have ordered agencies to find ways to cut their spending habits while they are also receiving less money from Congress.
Kempf said contracting work is growing for agencies, and many of them see no let-up in the workload for their strained acquisition workforces. Meanwhile, agencies have started to collaborate more than in the past, which is crucial to strategic sourcing.
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The push by senior administration officials is helping, said Lesley Field, deputy administrator of the Office of Federal Procurement Policy (OFPP), at the conference.
“The stars are aligned,” she said. “You’ve got a good convergence of senior-level management and the working-group management. We’ve got some great potential.”
Strategic sourcing is similar to buying in bulk. Buyers can get a lower price when a large number of products are purchased from one company. GSA recently awarded purchasing agreements to buy office supplies — a commodity every agency uses — as another step in its Federal Strategic Sourcing Initiative. Kempf said officials are considering adding wireless programs that could save $1.65 million, and OFPP Administrator Dan Gordon has talked about buying IT that way.
“I think there are some breakthroughs here that are signaling a change in how GSA and its partners are moving forward with strategic sourcing,” Kempf said.
Agencies can get reduced prices when they buy online, which is how most agencies buy supplies, or use purchase cards, he said. That change could save $200 million in the next four years.
In addition, agency officials have signed letters of commitment saying they will use the purchasing agreements. Those agencies spend an estimated $260 million on office supplies annually.
Kempf said those commitments were a significant change. “People weren’t really thinking that this was actually going to take off” because previous strategic sourcing efforts didn’t fare well, he said.
“While the last administration started strategic sourcing, this administration is moving ahead with strategic sourcing on steroids,” Kempf said.
To do strategic sourcing correctly, Field said officials needs to understand how each commodity is purchased. Agencies must also talk with one another to find areas where they can partner. Finally, both sides of the partnership must be committed and follow through so the government has a better negotiating position.
“That’s really the big thing,” Field said.
Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.