GAO: Agencies Miss Savings Without Strategic Sourcing

Federal agencies saved 4 percent on the $307 billion they spent to acquire services during fiscal year 2012.

That percentage would equate to $12 billion by using strategic sourcing to acquire services for engineering and information technology, the Government Accountability Office says in a report dated April 15.

Under strategic sourcing, agencies use an aggregate approach to acquiring services rather than making individual purchases, an approach taken by many companies.

Private businesses analyze spending patterns by examining complexity of a service and number of suppliers for that services, GAO says.

GAO also said companies strive to standardize requirements, understand cost drivers, leverage their scale and prequalify suppliers before buying a service.

By not using these practices, auditors say agencies miss out on opportunities to save money and leverage the government’s buying power.

In particular, the departments of Defense and Veterans Affairs only used a fraction of its buying power through strategic sourcing and had difficulty analyzing spending data and getting leadership support, auditors found in a September 2012 report.

GAO interviewed officials from seven companies, an industry group and a consulting organization to compare commercial practices with those of agencies for its report.