Key Issues > Duplication & Cost Savings > GAO's Action Tracker > Agencies' Use of Strategic Sourcing
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General Government: Agencies' Use of Strategic Sourcing

Selected agencies could better leverage their buying power and achieve additional savings by directing more procurement spending to existing strategically sourced contracts and further expanding strategic sourcing practices to their highest spending procurement categories—savings of 1 percent from selected agencies’ procurement spending alone would equate to over $4 billion.

Action:

The Secretary of Defense should evaluate the need for additional strategic sourcing resources, evaluate existing acquisition strategies, and focus on the Department of Defense’s (DOD) highest-spending categories. 

Progress:

DOD has taken action to improve department-wide strategic sourcing efforts, as GAO recommended in 2012, by implementing the Office of Management and Budget's (OMB) Category Management initiative. OMB established metrics to measure agency progress in implementing category management and increasing use of strategic sourcing, including agency-wide mandatory-use contracts, government-wide contracts, and best-in-class contracts, which are those determined by OMB to meet certain characteristics of strategic sourcing. For example, OMB established a target for federal agencies to increase spend under management by 20 percent by the end of fiscal year 2018. DOD’s target is to increase spend under management from a baseline of 33 percent in fiscal year 2016 to 39 percent in fiscal year 2018. To further implement category management throughout the department, DOD appointed a leader in December 2017 to initiate key reforms, including the development of a department-wide governance structure to align with the federal initiative along with performance goals and targets for cost savings. Successful implementation of these efforts should help DOD improve strategic sourcing efforts and achieve cost savings.

Implementing Entity:

Department of Defense

Action:

The Secretary of Veterans Affairs should evaluate strategic sourcing opportunities, set goals, and establish metrics.

Progress:

The Department of Veterans Affairs (VA) has evaluated strategic sourcing opportunities and set goals and metrics, as GAO recommended in September 2012. In fiscal year 2014, VA reported it was evaluating VA’s top 20 spending categories for strategic sourcing opportunities, and that its spend analysis team has completed 40 internal strategic sourcing business cases in the top spending areas, such as medical supplies as well as information technology (IT) services. VA officials reported that six strategic sourcing contracts had been awarded or were expected to be awarded based on these business cases. VA has also focused on goals and metrics such as increasing managed spending for IT products and services. For example, IT Support Services was VA’s 9th highest category of spending in fiscal year 2013. VA reported setting a specific goal to increase IT managed spending by 5 percent by directing more IT spending to its IT strategic sourcing contracts. In addition, VA reports its Strategic Acquisition Center implemented a method to track utilization of strategically sourced contracting vehicles that it has awarded. Finally, VA continues to track cost avoidance associated with the utilization of strategic sourcing vehicles. As a result of these actions, VA avoided costs of about $3.6 billion from fiscal years 2013 through 2015. Going forward, these actions should allow VA to better implement strategic sourcing practices.

Implementing Entity:

Department of Veterans Affairs

Action:

The Director of the Office of Management and Budget (OMB) should issue updated government-wide guidance on calculating savings, establish metrics to measure progress toward goals, and identify spending categories most suitable for strategic sourcing.

Progress:

OMB has addressed this action, which GAO suggested in April 2013 based on findings and recommendations in its September 2012 report. In December 2012, OMB established a council to lead efforts to increase the government-wide management and sourcing of goods and services. In February 2014, this council approved the general principles for calculating savings for federal strategic sourcing initiatives, which were then circulated to agencies. In addition, in May 2015, OMB issued category management guidance applicable to 10 categories of government-wide spending which, according to OMB, represent the majority of government-wide spending. The guidance provided preliminary metrics including spending under management, savings, and reduced contract duplication. OMB’s third quarter update for fiscal year 2015 contained specific goals and metrics for items such as laptop and desktop computers in the information technology procurement category, including metrics for measuring savings, spending under management, and duplicative contracts. In February 2016, OMB’s Office for Federal Procurement Policy (OFPP) named managers for the government’s remaining high-spend categories, and in June 2016, OFPP officials reported that proposed goals and metrics for these categories were approved.  In addition,  OMB has issued metrics and targets for spending under management, which assesses both spending at the agency level and agency participation in government-wide solutions. These actions should allow OMB to lead agencies in realizing cost savings through strategic sourcing efforts.

Implementing Entity:

Office of Management and Budget

Action:

The Secretary of the Army should direct appropriate officials to conduct a comprehensive analysis of information technology services spending to reduce duplicative contracts; implement policies encouraging the use of strategically sourced contracts and metrics to measure use of these contracts at the military department level; develop guidance, goals, and metrics for the resulting savings; and review the benefits and disadvantages of standardized labor categories for services contracts.

This action was identified in GAO’s September 2015 report, Strategic Sourcing: Opportunities Exist to Better Manage Information Technology Services Spending (GAO-15-549), and was added to the Action Tracker in April 2016.

 

Progress:

The Army has partially addressed this action, as recommended by GAO in its September 2015 report. As of January 2018, the Army reported that it assessed its information technology services spending and set a target to increase utilization of the Computer Hardware, Enterprise Software and Solutions vehicle, a mandatory source for IT hardware and a preferred source for IT services. The Army also issued a policy in 2015 that requires buyers to consider an approved list of preferred sources during market research. The Army reported that it measures utilization of mandatory and preferred sources which include best-in-class solutions, which are those determined by the Office of Management and Budget to meet certain strategic sourcing characteristics. The Army also reported that it continues to assess labor categories under existing services contracts to determine the feasibility of standardization. The Army expects to complete actions in early 2019. Successful completion of these efforts should help the Army to improve strategic sourcing efforts and achieve increased cost savings. 

Implementing Entity:

Department of the Army

Action:

The Secretary of the Navy should direct appropriate officials to conduct a comprehensive analysis of information technology services spending to reduce duplicative contracts and to implement utilization metrics and monitor agency efforts to comply with the Navy’s existing use policies for IT services.

This action was identified in GAO’s September 2015 report, Strategic Sourcing: Opportunities Exist to Better Manage Information Technology Services Spending (GAO-15-549), and was added to the Action Tracker in April 2016.

 

Progress:

The Navy has partially addressed this action, as recommended by GAO in its September 2015 report. As of January 2018, the Navy reported that it has aligned its strategic sourcing efforts with the Office of Management and Budget’s (OMB) Category Management initiative. OMB instituted metrics to assess agency use of agency-wide mandatory-use contracts, government-wide contracts, and best-in-class contracts, which are those determined by OMB to meet certain strategic sourcing characteristics. In aligning its efforts to category management, the Navy needs to develop a plan to transition to category management and monitor results. Successful implementation of these efforts to monitor spending and increase spend under management should help the Navy reduce contract duplication and achieve increased cost savings.

Implementing Entity:

Department of the Navy

Action:

The Secretary of the Air Force should direct appropriate officials to conduct a comprehensive analysis of information technology services spending to reduce duplicative contracts; implement metrics to measure use of strategically sourced contracts at the military department level; develop guidance, goals, and metrics for the resulting savings; and review the benefits and disadvantages of standardized labor categories for primary strategic sourcing vehicles.

This action was identified in GAO's September 2015 report, Strategic Sourcing: Opportunities Exist to Better Manage Information Technology Services Spending (GAO-15-549), and was added to the Action Tracker in April 2016.

Progress:

The Air Force has taken steps to improve strategic sourcing of IT services as recommended by GAO in its September 2015 report. The Air Force established the IT Business Analytics Office, which subsequently conducted an in-depth analysis of spending on IT hardware, software, and services. The Air Force has a mandatory use policy in place directing all activities to use its strategically sourced contract vehicles for IT services. In April 2018, the Air Force provided documentation that it is monitoring utilization of strategically sourced contract vehicles and established an overarching goal to reduce IT costs by 20 percent. The Air Force reported that its use of strategically sourced vehicles has increased and that it has achieved savings of 5 to 20 percent using its strategically sourced contracts compared with other sources. In addition, the Air Force instituted a formal category management program which is to develop standard processes, procedures, and best practices and to facilitate data analysis, as well as performance measurement and reporting. Finally, the Air Force reported that it reviewed labor categories under certain IT services contracts and did not identify opportunities for standardization; however, the Air Force reported that it has collaborated with the Office of Management and Budget’s Category Management initiative to share and analyze data on IT service labor rates to inform federal strategic sourcing efforts. These efforts should help the Air Force to improve strategic sourcing efforts and achieve increased cost savings. 

Implementing Entity:

Department of the Air Force

Action:

The Administrator of the National Aeronautics and Space Administration (NASA) should direct the appropriate officials to use existing analyses of spending to reduce duplicative contracts; implement use policies and metrics to measure use of strategically sourced contracts; and develop guidance, goals, and metrics for the resulting savings.

This action was identified in GAO’s September 2015 report, Strategic Sourcing: Opportunities Exist to Better Manage Information Technology Services Spending (GAO-15-549), and was added to the Action Tracker in April 2016.

Progress:

NASA has partially addressed this action, as recommended by GAO in its September 2015 report. As of December 2017, NASA reported implementing a plan to consolidate NASA information technology (IT) procurements in part through the use of strategic sourcing. NASA also reported that it reviewed policies across NASA Centers to develop and implement a standardized policy which establishes, where applicable, mandatory consideration of NASA's strategically sourced IT services vehicles. In addition, NASA reported that it has identified methodologies for the establishment of goals and metrics to measure and track strategic sourcing savings. NASA expects to complete this action in 2018. Successful completion of these efforts should help NASA to improve strategic sourcing efforts and achieve increased cost savings.

Implementing Entity:

National Aeronautics and Space Administration

Action:

The Secretary of Homeland Security should direct the appropriate officials to establish utilization and savings goals for the portfolio of strategic sourcing contracts related to information technology services.

This action was identified in GAO’s September 2015 report, Strategic Sourcing: Opportunities Exist to Better Manage Information Technology Services Spending (GAO-15-549), and was added to the Action Tracker in April 2016.

Progress:

The Department of Homeland Security (DHS) has taken steps to establish utilization and savings goals for its strategic sourcing contracts related to information technology services, as suggested in GAO’s September 2015 report. In February 2016, the department's Strategic Sourcing Program Office established utilization goals as well as savings goals for each of its strategic sourcing portfolios including information technology services. These actions should allow DHS to better implement strategic sourcing practices and improve its ability to realize cost savings.

Implementing Entity:

Department of Homeland Security

Action:

To better promote federal agency accountability for implementing the federal strategic sourcing and category management initiatives, the Administrator of Federal Procurement Policy should ensure that transition plans are submitted and monitored as required by strategic sourcing and category management guidance.

This action was identified in GAO’s October 2016 report, Federal Procurement: Smarter Buying Initiatives Can Achieve Additional Savings, but Improved Oversight and Accountability Needed (GAO-17-164), and was added to the Action Tracker in April 2017.

Progress:

The Office of Management and Budget (OMB) reported it took steps to ensure that agency transition plans are submitted and monitored in accordance with guidance, as GAO recommended in October 2016. To better promote agency accountability for implementing category management, OMB policy stipulates that certain contracts are mandatory and has required agencies to submit plans detailing how they will transition to using those contracts. In January 2018, OMB staff reported that they used agency transition plans (required under the 2015 OMB memorandum related to the acquisition of desktop and laptop computers) to maximize the government's collective buying power through government-wide buying events. Successful implementation of these efforts should help OMB hold agencies accountable for implementing Category Management and increasing cost savings. 

Implementing Entity:

Office of Management and Budget

Action:

To better promote federal agency accountability for implementing the federal strategic sourcing and category management initiatives, the Administrator of Federal Procurement Policy should update the Leadership Council charter to establish an expectation that Leadership Council agencies develop agency-specific targets for use of the solutions approved.

This action was identified in GAO’s October 2016 report, Federal Procurement: Smarter Buying Initiatives Can Achieve Additional Savings, but Improved Oversight and Accountability Needed (GAO-17-164), and was added to the Action Tracker in April 2017.

Progress:

The Office of Management and Budget (OMB) has taken steps to promote federal agency accountability for implementing category management, as GAO recommended in October 2016. Rather than updating the Category Management Leadership Council charter, OMB staff stated that accountability could be accomplished through category management governance and reporting procedures and processes. OMB instituted metrics to assess agency adoption of category management strategies. For example, OMB established agencies’ baseline spending through agency-wide mandatory-use contracts, government-wide contracts, and best-in-class contracts, which are those determined by OMB to meet certain characteristics of strategic sourcing. OMB also established a target for federal agencies to increase spend under management by 20 percent by the end of fiscal year 2018. As of January 2018, OMB reported that it had established agency-specific targets for best-in-class contracts and that it monitors actual spending to hold agencies accountable for progress toward meeting goals. Successful implementation of these efforts should help OMB hold agencies accountable for implementing category management and achieving increased cost savings.

Implementing Entity:

Office of Management and Budget

Action:

To better promote federal agency accountability for implementing the federal strategic sourcing and category management initiatives, the Administrator of Federal Procurement Policy should revise the 2015 category management guidance to establish a process for setting targets and performance measures for each Leadership Council agency's adoption of proposed strategic sourcing and category management solutions and ensure agency specific targets and measures are set.

This action was identified in GAO’s October 2016 report, Federal Procurement: Smarter Buying Initiatives Can Achieve Additional Savings, but Improved Oversight and Accountability Needed (GAO-17-164), and was added to the Action Tracker in April 2017.

Progress:

OMB has taken steps to track and measure the progress of each Leadership Council agency toward implementing category management, as GAO recommended in October 2016. For example, OMB instituted the metrics to assess agency adoption of category management strategies. OMB established agencies’ baseline spending through agency-wide mandatory-use contracts, government-wide contracts, and best-in-class contracts, which are those determined by OMB to meet certain characteristics of strategic sourcing. As of January 2018, OMB reported that it had established agency-specific targets for best-in-class contracts and that it monitors actual spending to hold agencies accountable. Successful implementation of these efforts should help OMB hold agencies accountable for implementing category management and achieving increased cost savings.

Implementing Entity:

Office of Management and Budget

Action:

To better promote federal agency accountability for implementing the federal strategic sourcing and category management initiatives, the Administrator of Federal Procurement Policy should report on agency specific targets and metrics as part of the category management Cross-Agency Priority goal.

Progress:

The Office of Management and Budget (OMB)  agreed that agency specific targets and metrics should be reported, as GAO recommended in October 2016. In the second quarter Fiscal Year 2018 Cross-Cutting Goal Action Plan, OMB reported on both performance metrics and targets for using strategic sourcing and category management. The action plan included two metrics: (1) agencies' 2018 goals for spend under management and (2) agencies' 2018 goals for use of best-in-class contracts. The action plan also shows agencies’ current progress in meeting goals associated with those metrics.  As a result of these steps, federal agencies can be held more accountable for implementing the category management initiative.

Implementing Entity:

Office of Management and Budget
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    • Timothy J. DiNapoli
    • Director, Contracting and National Security Acquisitions
    • dinapolit@gao.gov
    • (202) 512-4841