Joseph Jordan, the federal procurement policy administrator at the Office of Management and Budget, told reporters Thursday that agencies reduced their contract spending by 4.5 percent — from $537 billion in fiscal 2011 to $513 billion in 2012. (Staff file photo)
Agencies cut contract spending by $24 billion last year, an amount a senior administration official hailed as “historic.”
Joseph Jordan, the federal procurement policy administrator at the Office of Management and Budget, told reporters Thursday that agencies reduced their contract spending by 4.5 percent — from $537 billion in fiscal 2011 to $513 billion in 2012.
“This decline represents a dramatic reversal of the unsustainable 12 percent contract spending growth rate experienced from 2000 through 2008,” Jordan wrote in a Dec. 6 blog post.
Jordan attributed the cuts to more strategic sourcing — in which multiple agencies combine their procurements to achieve bigger discounts — and continued reduced contracting for management support services, which has seen a spending drop of $7 billion in the last two years.
“There was a focus on reducing spending in the right area and in the right ways,” Jordan said.
Concerned by a sharp spike in contracting for management support services between 2000 and 2010 — from roughly $10 billion to $40 billion — OMB directed agencies in 2010 to cut spending in that area by 15 percent.
By 2012, spending on management support services fell to $33 billion.
Jordan said governmentwide strategic sourcing of office supplies and shipping services has saved the government $200 million over the last two years.
He said the Department of Homeland Security alone saved $386 million last year by pooling its purchases across all of its components.
“This progress is remarkable, and we are pleased that we have not only stemmed but reversed the unsustainable growth in contracting under the previous administration,” Jordan wrote on his blog.
On Wednesday, OMB pressed agencies to find further contracting savings. In new guidance, OMB directed that:
Agencies designate by Jan. 15 a strategic sourcing-accountable official who will have the authority to coordinate agencies’ internal strategic sourcing initiatives.
Agencies establish an interagency Strategic Sourcing Leadership Council, which would be chaired by Jordan. The council will be tasked with expanding use of strategic sourcing by identifying at least five products or services that can become mandatory governmentwide strategic sourcing contract vehicles.
The General Services Administration negotiate governmentwide strategic sourcing contracts for 10 product or service categories over the next two years.