Key lawmakers on the Senate Homeland Security and Governmental Affairs Committee have said agencies need to apply more commercial best practices when contracting for services, on which the federal government spent $307 billion in fiscal 2012.
"OMB should work with agencies to heed GAO’s advice on mirroring procurement practices of private companies as part of its ongoing efforts to make much needed progress on strategic sourcing initiatives," said Sen. Tom Coburn, R-Okla.
"We must examine what has worked in the private sector in the strategic sourcing of services and apply these lessons in the Federal government," added Sen. Susan Collins, R-Maine, continuing, "If the federal government were to save just four percent of spending on services by strategically sourcing services, the government could have saved $12 billion" in fiscal 2012.
The report – "Strategic Sourcing: Leading Commercial Practices Can Help Federal Agencies Increase Savings When Acquiring Services" – looks at seven large companies and found that they purchase many of the same services such as facilities management, engineering and IT, using flexible and detail driven buying strategies.
Officials from the companies reported saving 4-15 percent over prior year spending through strategically sourcing the full range of services they buy, a process that moves away from numerous individual purchases to an aggregate approach, according to GAO-13-417.
It said the companies analyze spending patterns based on the complexity of the service and the number of suppliers for that service and tailor their approach accordingly, usually involving four basic categories: standardize requirements, understand cost-drivers, leverage scale, and pre-qualify suppliers.
Over the long term, companies seek to reduce complexity and bring in additional suppliers to take advantage of market forces like competition, said GAO.
