As the federal government has attempted to cut costs and implement more effective purchasing policies by implementing new sourcing initiatives, more are voicing concern about current inefficient strategies.
Joe Jordan, administrator of the Office of Federal Procurement Policy (OFPP), is working to eliminate wasteful and unnecessary spending, and has criticized the spending practices of government agencies. Of the $500 billion the government contracts annually, Jordan aims to apply strategic sourcing to about $150 billion, according to Government Executive.
"Our government is the largest purchaser in the world, but it buys as if it were 130 mid-sized businesses," said Jordan, reported the source. "We've got to leverage our buying power."
Strategic sourcing can help businesses - and government agencies - see greater cost reductions and more efficient purchasing tactics, something all organizations should be concerned about. Considering the budget crisis in Washington and overall economic uncertainty, more bodies are encouraging such policies, and in some instances, making them mandatory.
New strategies and goals
Jordan listed a set of goals to help government agencies realize what aspects of their purchasing need more attention and how they can improve processes. His first point was that bodies need to buy smarter, using analytics, performance indicators and better acquisition policies to ensure they are getting the best deal for necessary items.
Jordan's second priority was for agencies to build better supplier relationships with the firms they purchase from. Doing more thorough research and working closely with vendors may be able to keep purchasers from spending excessively.
His third point was for government agencies to develop an acquisition workforce and define what exactly that looks like and how it will function. Jordan aims to implement better training procedures and hire people with the skills to make new procurement policies even more effective.
Concerns about new policies
While the cost savings and more efficient processes that can result from such initiatives are major benefits, strategic sourcing policies may be considered drawbacks for some, especially small-business owners. New procurement policies can limit a smaller firm's ability to provide competitive pricing, potentially eliminating their ability to win new government contracts.
However, this issue has been addressed by the General Services Administration, which will look to give small businesses 23 percent of contract work to ensure the initiatives don't hinder their ability to obtain government work.