Strategic sourcing sparks debate
- By Michael Hardy
- Feb 15, 2006
An industry event today that focused on the government's strategic sourcing initiative prompted a spirited debate between the speakers and the audience of industry officials.
Many in the audience said they are worried that the initiative, which requires federal agencies to consolidate their commodity purchases, could lead to rock-bottom prices, hurt companies’ profitability and generate fewer contracts.
The Coalition for Government Procurement, a nonprofit association of companies that sell commercial services and products to the federal government, sponsored the event.
Strategic sourcing is a strategy for purchasing goods and services more efficiently. Under policy guidance from the Office of Management and Budget, federal strategic sourcing affects only commodities and not specialized items. It focuses on reducing the number of contracts that the federal government awards to the same companies and on sharing best practices among government acquisition professionals.
The federal initiative covers five commodity product groups: copiers, information technology hardware, handheld wireless devices, office supplies and express delivery services.
The 22 agencies now involved in the initiative have profiled the commodity items they buy and are moving into the market analysis phase. The first purchases under the program could come by late spring, said Tom Sharpe, senior procurement executive and deputy chief acquisition officer at the Treasury Department, a speaker at the breakfast meeting today.
Some industry officials in the audience said strategic sourcing will mean fewer contracts for industry and some companies will choose to leave government contracting.
One man in the audience warned that requiring agencies to buy from mandatory contracts was not successful in the past. "Back in the '60s, GSA was the sole and mandatory supplier of supplies to the federal government while I was in the Air Force," he said. "We got yellow pencils you couldn't sharpen because the leads powdered, and yellow pads we couldn't erase from."
But others said the strategic sourcing trend is irreversible. Alicia Vicentini, president and chief executive officer of SSI Business Solutions, a staffing firm, urged other business leaders to accept strategic sourcing as inevitable. “If you don't embrace it, you're going to go under," she said.
Some business leaders at the event remained skeptical, including one person who challenged government officials to meet with vendors "and get some realistic input about what it is we deal with."
Mary Davie, action assistant commissioner for customer accounts and research at the General Services' Administration's Federal Acquisition Service, was also a speaker at today’s meeting.