By Ilandus Swinson, Procurement Lead
In a business environment where the government is expected to do more with less, the strategic sourcing process has become a resourceful approach in helping agencies reduce spending and clearly define requirements while also improving mission delivery.
Strategic sourcing can be defined as a standard and formal process that incorporates rigorous analytics, tools and techniques to reduce total cost of purchased supplies and services. This process helps agencies maximize performance, lower price, augment achievement of socio-economic acquisition goals, gauge total life cycle management costs, enhance vendor access to business opportunities, and otherwise provide more bang for each buck spent.
Consider the Source!
In the famous film from which this blog’s title is derived, the word Force refers to an unseen energy that governs a fictitious universe. What then is the Source for the Federal acquisition space? The Source or strategic sourcing, is the revolutionizing mechanism and procurement best practice by which the Federal government continues to save millions, to improve operational processes within its agencies, and to identify vendors who are able and qualified to provide the best value in specialized services and supplies that aid in the achievement of agency missions. When considering awarding a contract for a duplicative or redundant requirement, please first consider the Source. When your agency is in need of highly specialized services or supplies, please consider the source!
Benefits for Government and Small Business
Research and studies suggest that strategic sourcing efforts save federal agencies millions of dollars per year while also providing small business suppliers with opportunities to grow significantly. For example, General Services Administration’s Federal Acquisition Service Commissioner, Tom Sharpe recently stated that 76% of the vendors for the GSA strategic sourcing initiative for office supplies are small businesses who have seen sales of more than $460 million since 2010.
Other benefits of strategic sourcing include:
- Greatly improved efficiency in government operations by providing more visibility into the spending habits of agencies, developing commodity expertise and by lessening complexity for end users.
- Acutely improved vendor performance by developing supplier relationships, encouraging new and innovative solutions, and by solidifying agencies’ requirements.
- Effectively supported the goals of the Administration by minimizing duplicative agency requirements, and by using federal acquisitions to achieve socio-economic goals.
The Darth Vader Aspect of Strategic Sourcing
Despite the fact that strategic sourcing offers the government and small businesses numerous benefits, many believe there is also a negative impact felt primarily by small businesses. Due to the limited number of selections made for strategic sourcing contracts, the small businesses that are not selected are being displaced. “The strategic sourcing process does this by aggregating the volume of agencies and by driving that volume to a very small number of vendors. Federal Agencies take advantage of volume discount which lowers prices and consolidates expenditures into fewer contracts,” writes Samuel D. Bornstein, a professor of Accounting and Taxation at Kean University School of Business in a study on the impact of strategic sourcing on small business. This in turn can result in fewer contracting opportunities for small businesses, the opposite of the Administration’s goal of small business success.
Strategic Sourcing Vehicles
Strategic sourcing vehicles are mechanisms created by agencies to identify vendors who are able and qualified to provide the best value in services and supplies necessary to accomplish the mission of the agencies. Once vendors are selected, agencies leverage funding against blanket purchase agreements. To achieve savings, the services and/or supplies are aggregated and prices are negotiated and agreed upon.
The government has created several cross-agency sourcing mechanisms such as the Federal Strategic Sourcing Initiative (FSSI), which functions through GSA. With the overarching goal of fostering the use of strategic sourcing solutions across federal agencies, FSSI aims to collaborate with industry to develop optimal solutions and to create an environment that shares best practices in strategic sourcing. Though federal agencies themselves have strategic sourcing vehicles for many groups of supplies and services, the Administration is aggressively advocating for more government-wide collaborative strategic sourcing solutions that will increase savings for federal agencies across the board and thus the government for years to come.
For example, GSA’s One Acquisition Solution for Integrated Services (OASIS) is one such vehicle that is being designed and tailored to address the needs of federal agencies. OASIS will be able to provide both commercial and non-commercial services. The core disciplines of the contract will include program management services, management consulting services, logistics services, engineering services, scientific services, and financial services.
May the Source Be With You
In Star Wars, the Force was the omnipresent energy that permeated a fictitious galaxy and universe. In procurement, the Source or strategic sourcing drives savings, improves processes, and develops expertise in commodity markets. It allows businesses to build stronger relationships with government agencies and to secure the profit they need to grow. Though the Source may not be the best solution for every agency requirement, if used effectively it is a tool to help your agency achieve its goal of spending less while at the same time doing more. May the Source (the Strategic Source) be with you!
Republished from the Integrity Matters: Perspectives on Acquisition and Program Management blog