Building the Enterprise - Booz Allen Hamilton

STRATEGY 8ADOPT AN ENTERPRISEAPPROACH TO THE ACQUISITIONOF GOODS AND SERVICESHistorically, the federal governmenthas taken a decentralized, agencycentricapproach to buying goodsthat practically every organizationneeds. In short, the government hasnot taken full advantage of its collectivepurchasing power to get the bestdeal for the taxpayer.Here’s a graphic example: Buyingindividually, agencies spendmore than $500 million a year oncleaning products through nearly4,000 contracts with 1,200 differentvendors. One agency paid $32 for acase of paper towels, while anotherpaid $61 for the exact same product. 10Why shouldn’t every agency knowabout and take advantage of thelower price? This is what enterprisestrategic sourcing is all about—agenciesusing their collective buyingpower to drive down the prices theypay for common goods and services.Here, too, there is good news.Beginning with the Bush administrationand continuing under PresidentObama, the federal governmenthas begun to take a more strategicapproach to sourcing. However, ithas focused on consolidating acquisitionstrategies and contracts at thedepartment level, rather than acrossthe federal enterprise. We advocatethe latter. The government, underthe leadership of the Office of FederalProcurement Policy (OFPP)and GSA, should rapidly expand thescope of enterprise strategic sourcing,employing goal leaders, portfoliosand cross-cutting accountability.Already, GSA has implemented a10 Dan Tangherlini, “GSA to Launch 10Strategic Sourcing Initiatives,” GSA Blog,Jan. 10, 2013, http://gsablogs.gsa.gov/gsablog/2013/01/10/gsa-to-launch-10-strategic-sourcing-initiatives. Last accessedJul. 26, 2013.Federal Strategic Sourcing Initiative.It currently covers four categoriesof common products and services:office supplies, domestic parcel delivery,print management and wirelesstelecommunications services.Through the initiative, agencieshave saved more than $200 millionon office supplies since July 2010. Infiscal 2011, the domestic parcel deliveryservices program saved morethan $31 million over what agencieswere paying separately for the sameservices.GSA plans to add 10 strategicsourcing categories through 2015.To give this effort even more impetus,OMB last year created a leadershipcouncil to expand the initiativeand directed each agency to name astrategic sourcing official and sourceat least two new products a year in2013 and 2014. This council has beencharged with identifying five newcommodities and services a yearthrough fiscal 2014, along with executiveagents to develop the contracts.This is fine as far as it goes, butit is a cautious approach. To movestrategic sourcing from being a bestpractice to a mandate, the presidentshould designate the head of OFPPas the federal chief acquisition officer(CAO) with administrative authorityequivalent to the federal CIO.The federal CAO should develop andexecute a comprehensive enterpriseacquisition strategy. That strategyshould include goals for responsiblyexpanding enterprise-wide strategicsourcing for common goods and services,consolidating multiple-awardcontracts, making prices transparentand increasing share-in-savings contractingwhere appropriate. Achievingthese goals will drive down theprices and improve the quality of themyriad goods and services the governmentbuys. The EERB, in consultationwith the CAO, also shoulddesignate enterprise goal leaders foreach of these initiatives.The enterprise acquisition strategyshould greatly enhance the federalgovernment’s enormous buyingpower. It should consolidate the government’sdemand for commodities,such as cleaning products, to obtainmassive quantity discounts.For goods and services thataren’t amenable to strategic sourcing,government still can take anenterprise approach by making theresults of all transactions availableto all government buyers and sellers.“The government has not takenfull advantage of its collectivepurchasing power to get thebest deal for the taxpayer.”20 PARTNERSHIP FOR PUBLIC SERVICE | BOOZ ALLEN HAMILTON