OMB announces sourcing savings

on Friday, December 7, 2012

OMB announces sourcing savingsThe Office of Management and Budget (OMB) recently announced that agency spending fell dramatically in the past year, due to the implementation of more strategic sourcing practices. Business magazine Government Executive reported that spending dropped $20 billion with new procurement techniques in place.

This comes only shortly after an October report from the Government Accountability Office revealed that various agencies not practicing strategic sourcing were missing out on billions in potential savings.

Big savings due to new practices
Even though the savings have been large, OMB director Jeffrey Zients appears to be ready to add additional criteria to the system to cut costs even more. He reportedly sent a memo to agency leaders introducing to them the new Interagency Strategic Sourcing Leadership Council (SSLC), which includes seven of the agencies that make up for the most procurement spending. The memo also served to inform agencies that strategic sourcing is now a requirement, and that top officials will need to designate someone to oversee sourcing within their organization. 

Federal News Radio reported that Zients' memo explained "each of the SSLC agencies shall promote, to the maximum extent practicable, sound strategic sourcing practices within their agencies. For example, each SSLC agency shall establish an internal cross-functional strategic sourcing council to oversee the agency's related activities." The memo referred to the implementation of policies such as enforcing mandatory use of the sourcing practices, providing data to the General Services Administration and tracking spending and saving information.

Committed to strategic sourcing
While strategic sourcing can result in cost savings for the organizations and businesses that employ it, some claim it has a detrimental effect on small businesses, as the criteria used to choose vendors often lowers the number of potential contractors.

However, President Obama and his administration has remained firm on its commitment to this project. Thus far, the amount saved using new processes has surpassed the goal set by the president in 2009, Government Executive revealed. The source noted that some of the savings were found by using simple practices, such as "buying smarter and buying less."

Small businesses won't necessarily be entirely left out once the policy is fully implemented. Government Executive reported that the memo distributed to government agencies reminded officials to give special consideration to the needs of small businesses when attempting to determine where they can save on purchases.

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