A bipartisan group of lawmakers plans to introduce legislation Thursday that would greatly expand the government’s use of strategic sourcing, under which multiple agencies use a single contract to buy products and services in order to obtain deeper bulk discounts..
The No Labels Caucus — a group of about 78 lawmakers — will introduce legislation that would require agencies to save at least $10 billion on $100 billion in spending in fiscal 2014 and 2015 by using strategic sourcing, according to a draft of the bill obtained by Federal News Radio. Agencies would also be required to save at least $7.5 billion each year from fiscal 2016 to 2018 on $150 billion in annual spending on goods and services that can be purchased through strategic sourcing.
According to the Office of Management and Budget, strategic sourcing of office supplies and shipping services has saved the government $200 million over the last two years. The Department of Homeland Security alone saved $386 million in fiscal 2012 by pooling purchases across its components.
The current Federal Strategic Sourcing Initiative includes products such as desktop and laptop computers, software, sanitation supplies and wireless services. OMB is hoping to cut spending in those areas by up to 20 percent over the next two years.
Sen. Tom Coburn, R-Okla., said at a hearing on strategic sourcing Monday that while the government is off to a good start, it needs to focus on bigger contracts.
“We ought to be going where the big money is,” Coburn said.
Cristina Chaplain, director of acquisition and strategic sourcing at the Government Accountability Office, agreed that agencies should focus on big-ticket items such as information technology or foreign language services.
“It might be difficult and it might have to start at the agency level, but it’s possible and that’s where you are going to get a lot of savings,” Chaplain said.
Agencies are hesitant to expand strategic sourcing because they are afraid of losing control and are having difficulty collecting and analyzing data on more complex services, she said.
Agencies also lack personnel trained in strategic sourcing techniques such as identifying what drives up costs and what the market demand for goods and services is, she said.
“There is training that needs to be done,” Chaplain said.
Joe Jordan, administrator of OMB’s Office of Federal Procurement Policy, said agencies are taking “initial steps” to make sure strategic sourcing is done right and will continue to push its use wherever it makes sense.
“We are going to continue to push this aggressively,” Jordan said.
The bill to be introduced Thursday would also require OMB to track savings and collect data on strategic sourcing efforts to improve the process. OMB would also have to issue guidance on how to calculate and verify savings and create procedures to hold agencies accountable for their savings goals.