Bill turns up heat on agency use of strategic sourcing

Tuesday - 7/16/2013, 12:21pm EDT

Jason Miller discusses the No Labels Caucus bill with Tom Temin and Emily Kopp on the Federal Drive.

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The No Labels Caucus will introduce a bill this week to apply more pressure on agencies to use strategic sourcing.

The bill is one of nine that the caucus of Democrats and Republicans is scheduled to release, in an effort to make the government more efficient and effective.

The No Labels Caucus, which calls itself a problem-solver rising above the partisan fray, will hold a press conference Thursday in Washington to unveil the assorted legislative proposals.

The strategic sourcing legislation is starting to gain support. At the Senate Homeland Security and Government Affairs Committee's hearing Monday, Cristina Chaplain, the Government Accountability Office's director of acquisition and sourcing management, said there are several things Congress could do to encourage agencies to buy more efficiently. Her suggestions mirror the No Labels bill in many ways. Chaplain said oversight and hearings may apply the most direct pressure, but legislation could have its role too.

"There could be legislation that actually requires the government to set governmentwide goals for strategic sourcing. There are none right now," Chaplain said Monday at the hearing. "The goals could be tailored by agencies as well. There also could be goals separated not just in terms of how much we should strategically source, but what savings we hope to get. From there, you could break things down in terms of what should be done at the agency levels. Should they have accountable officials? What should their responsibilities be? That's something you can ask the executive agencies to do."

Draft bill sets goals

An early draft of the legislation obtained by Federal News Radio would require President Barack Obama to establish a goal of saving no less than $10 billion a year based on $100 billion of federal spending in 2014 and 2015. In the out years, the bill sets a goal of saving no less than $7.5 billion based on $150 billion in spending in 2016 and 2017.

The bill calls on each agency to establish a specific goal for savings that would equal the governmentwide target. Additionally, the proposal calls for guidance from the Office of Management and Budget to address data collection, savings metrics and criteria, and procedures to hold agencies accountable for meeting the goals.

Sources say that after receiving comments from other lawmakers and industries, the No Labels Caucus changed the bill that will be introduced this week. The updated version of the bill better defines the strategic sourcing principles agencies should follow, including giving more attention to small businesses — a major concern of industry. The bill also changes the goals and gives OMB more oversight into the implementation.

The bill and recent hearings stem from two recent GAO reports that found agencies are leaving billions of dollars in savings on the table. Four of the largest agencies (the departments of Defense, Energy, Homeland Security and Veterans Affairs), accounting for 80 percent of the federal procurement spend, used strategic sourcing for only about 5 percent, or $25.8 billion, of their total spend. GAO found the industry average is 4 percent to 15 percent.

When asked about the No Labels bill, a spokesperson for the committee said by email, "Chairman [Tom] Carper (D-Del.) believes that the government can do much better to promote strategic sourcing and save taxpayers money in the long run, as he expressed during today's hearing. Moving forward, he will continue to work with his Senate and House colleagues and the administration to find a solution to improve on the efficiency of government purchasing, and ensure the taxpayers are getting the best services for their dollars."

Little success over the years

Senators highlighted the lack of progress by the government to save money and buy smarter as compared to Fortune 500 companies. Sen. Ron Johnson (R-Wis.) said agencies have been trying to get their arms around strategic sourcing since the 1980s with little to no success.

"It's about information, it's about data and it's about accountability. But let me throw another word out there — incentives. Why does business do it? Because business has to make a profit. Every business manager undergoing strategic purchasing doesn't necessarily have that profit motive, but they are being driven by the profit motive because their manager is telling them their budget has been cut by 10 percent," he said. "So that'd be the question I have for you. How can we instill an incentive into the government bureaucracy to actually start accomplishing some of this stuff, which truthfully should have been accomplished and implemented decades ago?"