Government agencies miss out on cost savings

Strategic sourcing practices could save the federal government billions of dollars, but many agencies fail to adjust their procurement techniques to enjoy significant savings. A new report by the Government Accountability Office found that only a tiny portion of agencies have implemented buying strategies that result in more efficient purchasing.

Shrinking budgets have led to an increased need for more effective sourcing policies, but most agencies have neglected to investigate strategic sourcing best practices to cut down on spending. By combining purchasing and determining what procurement policies work best, the departments have the potential to see savings across the board. However, very few agencies have taken the steps necessary to curb excessive spending.

Between August 2011 and September 2012, four agencies spent $537 billion on acquisition. However, they reported savings of only $1.8 billion - less than one-half of 1 percent of their total procurement spending.

The potential to slash expenses
Several agencies are slowly taking more steps to increase strategic sourcing. These include the Department of Defense and the departments of Energy, Homeland Security and Veteran's Affairs. The Navy has plans to source strategically by developing a new contract for engineering and technical services, while the Air Force, VA and DHS have created policies requiring the use of strategic sourcing contracts. The GAO was unable to tell if these recently created policies have had an effect on spending thus far.

Certain government agencies aren't the only ones trying to get new sourcing policies implemented. Lawmakers are also hoping that departments will increase their efforts to cut down on costs.

"The federal government must do better when purchasing commonly-used goods and services - especially information technology - where inefficiency and waste is substantial," said Representative Darrell Issa of California. "My draft IT acquisition reform legislation would mandate priority consideration of strategically sourced goods and services. As the GAO has underscored, leading private sector companies have successfully used strategic sourcing since the 1980s and saved billions of dollars. It is time the federal government catches up."

Aside from Issa's proposition, the GAO has suggested that agencies set specific sourcing goals and create new procedures to find areas to save and keep track of efforts to cut back on operating costs. In September, the President's Management Advisory Board also advised that strategic sourcing be required throughout all agencies, an initiative that has yet to be approved and implemented.