Project of the Week – Federal Strategic Sourcing Initiative

In May of 2005, the Office of Management and Budget’s Office of Federal Procurement Policy (OFPP) released a memorandum to all Federal Chief Acquisition, Information and Financial Officers announcing the onset of a Strategic Sourcing initiative. The memo required all agencies identify no fewer than three commodities “that could be purchased more effectively and efficiently through the application of strategic sourcing…” by October 1st, 2005, develop strategic sourcing plans, goals and objectives and performance measures, develop a governance structure and develop communications and training strategies.

In response to this memo, the Department of Treasury and the General Services Administration launched the Federal Strategic Sourcing Initiative (FSSI) in November 2005. Chartered by the Chief Acquisition Officer’s (CAO) Council, the purpose of the Initiative is to test the ability to strategically source across federal agencies, establish mechanisms to increase savings, value, and socio-economic participation, share good practices and build the strategic sourcing community of practice, learn lessons applicable to future strategic sourcing efforts at federal or agency levels, and avoid unnecessary duplication of effort in responding to the OMB Strategic Sourcing Initiative.
Since inception, more than 30 federal agencies, both military and civilian have worked together to identify requirements and develop government wide solutions for Express and Ground Domestic Delivery Services (ExGDDS), Wireless Telecommunications Expense Management Services, and office supplies. In addition to providing streamlined contracts for lower prices, these common solutions also provide services to agencies for analyzing and improving demand management and business processes, provide spend data and access to commodity subject matter experts.

As you might imagine, across these three commodities, the estimated federal spend is in the hundreds of millions of dollars. And while we’ve had many agencies participating providing requirements and estimated spend, we’ve not been able to achieve nearly the savings we could be realizing. Why? For starters, while agencies work to develop common requirements and implement contract solutions, the agencies won’t commit spend upfront. Without this commitment, we aren’t able to leverage our spend and negotiate deals that provide significant savings (ultimately benefitting the taxpayer, aka you and me). Even agencies that have participated in defining requirements for the FSSI solutions have decided not to use the solutions and have put in place internal agency solutions, often using the FSSI requirements and prices for their own contracts.

So why would an agency spend the time to work on the government-wide solution and then not only not use the solution, but spend additional resources and money to put in place a duplicative solution? Quite frankly I don’t know. But I do know we are leaving millions if not billions of dollars on the table by not leveraging our spend and by duplicating contracts for common goods and services.

You can help – create awareness and encourage your agency to participate in the solutions that are in place or on the teams that are now forming to define requirements. Eleven of the thirteen FSSI Office Supplies BPAs were awarded to small businesses and small disadvantaged businesses providing agencies a great way to help meet socioeconomic business goals, get products that are environmentally friendly and compliant with the Trade Agreements Act, and get spend data. FSSI is also starting the requirements definition for the second generation office supplies contracts and agencies are encouraged to participate. New FSSI commodity teams have just formed for Wireless Plans and Devices and Printers/Copiers/Multi-function Devices. In addition, an RFQ for Energy Management Support Services in conjunction with the Office of the Federal Environmental Executive has recently been released.

We can do better working together. There needs to be real commitment on the part of the agencies. OMB needs to review enterprise and interagency contracting actions for duplication and redundancy and hold the agencies accountable. I think we could even make a real dent in the $40 billion savings target outlined in the July 29 OMB memo “Improving Government Acquisition”.

For more information or to participate in FSSI, contact Michel Kareis at [email protected] or Kristina Nelson at [email protected]

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Very interesting and I think shows how it can be difficult to get people to truly work together. Perhaps there needs to be additional incentives for agencies to leverage these common solutions. Unfortunately cost-savings is not always a huge incentive in the government space where high budget is seen as a source of power.

Perhaps we should give an award to the biggest cost-savers and people who leverage existing common solutions. Or the reverse – shame – for those that don’t. Or maybe there just needs to be more marketing and stronger enforcement of common solutions. Perhaps you need a waiver if you go outside a common solution.

Don’t know the answer but there could be a few interesting ways to bring greater adoption.

Margaret Dixon Harrell

Well, as a new comer to the Federal government I had to smile when I read this article. I spent 5 years in a strategic sourcing organiztion in the private sector and faced many of the same challenges that were outlined above. As human beings we have time and attention limitations. With multiple projects competing for our time, committment is always an issue. I also agree with the first comment that highlighted a lack of teamwork. If a project and/or individual could focus the attention and capabilities of a group of indivuiduals for an extended period of time success is almost a certainty. The strategic sourcing initiative should not be treated any differently than other “change management” learning initiatives. A concnentrated focus on people focused change management strategies should be included in the work plan

Justin Harvey

Has anyone heard about the harm this program is causing? Small companies are going out of business and studies are being done that show this program is not even saving money. Office supply dealers no longer have a fair shot at competing. What is the point of having the GSA schedule that we all worked so hard to obtain, if it is restricted to only 12 companies? What about the other 500 companies that have seen a dead stop to their orders since this was enacted? Not to mention two of the twelve are big box dealers. Maybe you have heard of Staples and Office Depot? I am curious to know how this is fair and more importantly, how on earth is this supporting small businesses? Is it just me or does this type of program counter the sole purpose of the GSA MAS program? What is even worse is that the customers that we have built a strong customer relationship with and that trust our reliable product, prices and service are forced to stop buying from us. Our customers claim they have been forced to switch suppliers, and the result has been higher prices and lacking customer service. FSSI actually has higher pricing than the GSA Advantage schedules over 70% of the time. I can understand how the FSSI seemed like a good strategy when created, but unfortunately, has turned out to be a complete disaster.