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 guidance, resources, and strategies, and focus on the Department of Defense'’s (DOD) highest-spending categories.

Progress:

DOD has evaluated strategic sourcing resources, as GAO suggested in April 2013 based on findings and recommendations in its September 2012 report. DOD has also taken action to improve strategic sourcing guidance, evaluate strategies, and focus on its highest-spending categories, but more progress is needed.

In June 2013, DOD updated its Concept of Operations that provides guidance on its strategic sourcing efforts. However, the department has not issued direction that establishes goals—such as managed spending and utilization targets—and accompanying metrics for strategic sourcing, as GAO recommended in 2012. In September 2016, DOD officials indicated the department had developed a plan to prepare guidance to further promote government-wide and DOD-wide strategic sourcing opportunities by encouraging justifications for the use of other vehicles, identifying fiscal year 2015 top categories of spending and the strategic sourcing initiatives currently under way relative to those categories, tasking DOD components to identify specific DOD-wide contract vehicles available for acquisitions, and conducting a gap analysis to determine whether additional strategic sourcing guidance is needed. DOD expects these efforts will be completed by June 2017. As of March 1, 2017, DOD provided no further updates. Successful completion of these efforts should help DOD improve strategic sourcing efforts; however, it is important that DOD also implement strategies including setting goals for spending managed through strategic sourcing vehicles, and establishing metrics, such as utilization rates to track progress toward these goals.

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. The Army reported in September 2016 that it was in the process of reviewing the use of standardized labor categories in its strategic sourcing contracts, and that in addition, it had begun an effort to work directly with the federal category management leadership council’s information technology (IT) category team to collect data and conduct analysis on certain IT-related subcategories. The Army anticipates completion of this data collection and analysis phase by early 2019, which will allow it to make a determination about standardizing labor categories at that time. As of March 1, 2017, the Army provided no further updates. 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. The Navy reported that it will review and update its data on spending, analysis, and resulting recommendations that were part of its 2010 information technology (IT) services strategic sourcing project. Based on this updated IT services analysis of spending, the Navy said it will take steps to reduce duplicative contracts where appropriate and practicable. In fiscal year 2017, the Navy anticipates beginning efforts to establish metrics and monitor agency efforts to comply with the Navy IT services policy and strategy. As of March 1, 2017, the Navy provided no further updates. Successful completion of these efforts should help the Navy to improve strategic sourcing efforts 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 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 Air Force has partially addressed this action, as recommended by GAO in its September 2015 report. In September 2016, the Air Force reported that it conducted a review of the use of standardized labor categories for its strategically sourced contracts for IT services, and as of November 2016, an Air Force official stated the Air Force had shared labor rate data with the General Services Administration to inform federal strategic sourcing efforts. The Air Force also reported that it conducted an in-depth analysis of its spending on information technology (IT) services and the extent to which IT services requirements can be met by its current strategically sourced contracts. Based in part upon the results of the analysis, the Air Force reported it plans to phase out some of its Air Force strategically sourced IT contracts and potentially use existing contracts, and it is amending guidance in support of that effort. As of March 1, 2017, the Air Force provided no further updates. Because the Air Force is phasing out its own strategic sourcing efforts for IT services, it is unclear how the Air Force will ensure that there are appropriate guidance, goals, and metrics in place, to support its strategic sourcing decisions based on the spending analysis.

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. Specifically, as of March 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 IT services strategic sourcing initiatives. In addition, NASA reported that it has identified methodologies for the establishment of goals and metrics to measure and track strategic sourcing savings. 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:

As of August 2017, Office of Management and Budget (OMB) staff reported they were taking steps to ensure that agency transition plans are submitted and monitored in accordance with guidance, as GAO recommended in October 2016. OMB staff indicated that all Federal Strategic Sourcing Initiatives (FSSI) are being evaluated against best in class criteria as part of the migration to a category management approach to federal procurement. Further, OMB staff stated that OMB plans to issue additional policy or guidance as necessary. Without action, OMB will lack the means to monitor progress and hold large procurement agencies accountable for using existing FSSIs or best in class solutions identified under subsequent category management efforts.

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:

As of August 2017, OMB staff reported they were taking steps to address the need for agency-specific targets for use of Federal Strategic Sourcing Initiatives (FSSI) and category management initiatives, as GAO recommended in October 2016. OMB staff recommended, however, that this be accomplished through the Category Management governance and reporting procedures and processes that will be instituted in upcoming guidance, rather than an update to the Leadership Council charter. OMB staff indicated that they plan to evaluate agencies’ spend under management results, which provide an assessment of category management maturity for each of the 10 government-wide categories as evaluated against five attributes: leadership, strategy, data, tools, and metrics and include measures for agency adoption of best in class solutions, at least annually. OMB will then review with agency leaders progress toward meeting goals. Given the low agency usage of the FSSIs, continuing efforts to set agency-specific targets and measures are needed to provide OMB the means to monitor progress and hold large procurement agencies accountable for using existing FSSIs or best in class solutions identified under subsequent category management efforts.

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:

As of August 2017, Office of Management and Budget (OMB) staff reported they were taking steps to track and measure Leadership Council agency progress toward implementing category management, as GAO recommended in October 2016. OMB staff reported that agency progress will be measured using the spend under management model, which provides an assessment of category management maturity for each of the 10 government-wide categories as evaluated against five attributes: leadership, strategy, data, tools, and metrics. OMB staff indicated they plan to assess agency progress no less often than annually and will engage agency leaders in regularly reviewing progress toward their goals.  In addition, OMB plans to track agency spend through best in class contracts and these data will likely be used as an internal category metric and shared with the agencies. Given the low use of the Federal Strategic Sourcing Initiatives, OMB should continue to carefully monitor category management implementation and ensure that the Office of Federal Procurement Policy uses the planned targets and measures to hold agencies accountable for individual results. 

Implementing Entity:

Office of Management and Budget
  • portrait of
    • Timothy J. DiNapoli
    • Director, Acquisition and Sourcing Management
    • dinapolit@gao.gov
    • (202) 512-4841