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Expansion of strategic sourcing worries professional services contractors

Jan. 31, 2013 - 06:50PM   |  
By ANDY MEDICI   |   Comments
Joseph Jordan, federal procurement policy administrator at the Office of Management and Budget, said at a Thursday event that he sees strategic sourcing eventually encompassing about $150 billion of the $513 billion the government spends on goods and services each year.
Joseph Jordan, federal procurement policy administrator at the Office of Management and Budget, said at a Thursday event that he sees strategic sourcing eventually encompassing about $150 billion of the $513 billion the government spends on goods and services each year. (Staff file photo)

Professional services contractors are worried that a new government purchasing strategy will emphasize low cost at the expense of quality.

The General Services Administration aims to conduct $9 billion worth of federal purchases this year using strategic sourcing contracts, in which multiple agencies use a single contract to buy products and services in order to obtain deeper bulk discounts.

Joseph Jordan, federal procurement policy administrator at the Office of Management and Budget, said at a Thursday event that he sees strategic sourcing eventually encompassing about $150 billion of the $513 billion the government spends on goods and services each year.

Governmentwide strategic sourcing of office supplies and shipping services has saved $200 million over the last two years, he said at the event held by three contractor trade associations: The Professional Services Council, TechAmerica and the Coalition for Government Procurement.

A Dec. 5 OMB memo directed GSA to negotiate 10 more strategic sourcing contracts over the next two years.

Dale Luddeke, senior vice president of TASC Inc., a systems engineering and integration contractor, said he worries that strategic sourcing of professional services could emphasize low costs over the value of skilled contractors.

Agencies should be focused more on how contracted service helps them achieve their missions than on lowering the contract cost, he said. A strategic sourcing contract that emphasizes low costs and savings might lead to what he called “bottom market conditions.”

“Fiscal pressures are driving labor costs down, we don’t need negotiations to do that,” Luddeke said.

Kymm McCabe, president and CEO of ASI Government, which specializes in acquisition services, said she has heard of strategic sourcing being a way to drive down the hourly rate agencies pay for services. “Talking about price per hour does not allow you to have a conversation about results and performance,” McCabe said.

Jordan said the government will work with contractors and other stakeholders to make the process more transparent. The focus, he said, will be on reducing overall consumption and encouraging more open competition.

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