Strategic Sourcing

With the majority of federal government spending being driven by a few large components -- chief among them the Defense Department -- "these agencies are critical to the implementation and success of government-wide strategic sourcing efforts," a new memo from the White House Office of Management and Budget states. "Many of these agencies have experience with strategic sourcing efforts, and some of them currently manage government-wide acquisition contracts (GWACs) that could be adapted to support strategic sourcing efforts."

Consequently, OMB has established the Strategic Sourcing Leadership Council (SSLC), according to the Dec. 5 memo. Chaired by the federal procurement policy administrator, the council consists of representatives from the Defense, Energy, Health and Human Services, Homeland Security and Veterans Affairs departments as well as the General Services Administration, NASA "and other agencies as designated by the administrator," the memo reads.

Specific to the Pentagon, the memo states:

DOD's participation on the SSLC includes representatives from the Office of the Secretary of Defense; from each of the Departments of the Army, the Navy, and the Air Force; and from the Defense Logistics Agency. In addition, because small businesses playa vital role in Federal contracting, the SSLC includes a representative from the Small Business Administration.

The SSLC shall, in consultation with the Chief Acquisition Officers Council, the Chief Financial Officers Council, the Chief Information Officers Council, the Performance Improvement Council, and other interagency councils as necessary, lead the government's efforts to increase the use of government-wide management and sourcing of goods and services. The SSLC will meet regularly to provide long-term leadership of the government's strategic sourcing efforts as well as to take actions that save taxpayer dollars now.

A Government Accountability Office report issued in September found that "improved and expanded use" of strategic sourcing "could save billions in annual procurement costs." As InsideDefense.com reported:

The report -- dated Sept. 20 -- states that GAO reviewed strategic sourcing efforts at four agencies -- the Defense, Homeland Security, Veterans Affairs and Energy departments -- "that were among the 10 agencies with the highest fiscal year 2011 procurement obligations."

With regard to the Pentagon, GAO "reviewed the efforts of four component agencies -- Air Force, Army, Navy, and the Defense Logistics Agency (DLA) -- which accounted for 88 percent of DOD spending in fiscal year 2011, as well as department-wide efforts managed by DOD's Program Acquisition and Strategic Sourcing (PASS) office, which is within DOD's Defense Procurement and Acquisition Policy (DPAP) organization and reports to the Under Secretary of Defense for Acquisition, Technology, and Logistics (AT&L)," the report states.

In this week's memo, OMB wants the SSLC to submit by March 2013 "a set of recommendations for management strategies for specific goods and services -- including several IT commodities identified through the PortfolioStat process -- that would ensure that the Federal government receives the most favorable offer possible." At a minimum, OMB wants the recommendations to:

* identify at least five products and/or services for which new government-wide acquisition vehicles or management approaches should be developed and made mandatory, to the maximum extent practicable, for the SSLC agencies;

* for these identified commodities and solutions, provide a supporting spend analysis, estimate savings opportunities, and define metrics for tracking progress;

* identify existing contract vehicles and relevant contract renewal dates that could be used to develop transition strategies to the new solutions;

* identify agencies that should serve as "executive agents" to lead the development of each of these new solutions (with the assistance of interagency teams comprised of agency experts);

* propose plans and management strategies to maximize the use of each strategic sourcing effort;

* propose vendor management or other strategies that could be used to reduce the variability in the prices paid for similar goods and services, where the development of new government-wide vehicles may not be immediately feasible; and

* propose other savings strategies that could be implemented, such as adapting existing vehicles (e.g., Multiple Award Schedules, GWACs, and Multi-agency Contracts) to ensure that certain characteristics of strategic sourcing are followed.

To view the full OMB memo, click here.