Buying in Bulk
Posted byon June 30, 2010 at 09:30 AM EST
For the past few weeks, I’ve blogged about common-sense steps we are taking across the federal government to cut waste and bring better services to the American people.
Today, Dan Gordon, Administrator for Federal Procurement Policy, will testify before the Subcommittee on Contracting Oversight about another one of these steps: using the federal government’s purchasing power to save taxpayer dollars. Or to put it differently: saving money by buying in bulk.
The United States federal government is the world’s largest purchaser, but currently, we aren’t acting like it. Agency spending is typically fragmented across multiple departments, programs, and functions. As a result, the federal government acts more like scores of unrelated medium-sized businesses rather than the world’s largest purchaser, and agencies often rely on hundreds of separate contracts for many commonly used items, with prices that vary widely. This often prevents agencies from receiving the best price they could, leading to an unacceptable waste of taxpayer dollars.
As Dan will testify today, one way we are changing how the federal government does business is through government-wide blanket purchase agreements (BPAs), and the U.S. General Services Administration (GSA) awarded the first set of these earlier this month for office supplies. Each year the federal government buys more than a billion dollars worth of office supplies. In meetings with industry, GSA learned that written commitments to use the new agreements would lead to lower prices – so GSA worked with OMB and the buying agencies to get commitments of hundreds of millions of dollars. And to drive down prices even further, GSA conducted repeated rounds of "reverse auctions" – telling vendors what the lowest overall price yet received was, and giving them a short turn-around time to lower their prices even more. And unlike BPAs signed in the past, which typically covered only one agency, these BPAs apply to everyone, in every federal agency. Now every federal employee who buys office supplies from the winning contractors will automatically get the better prices GSA negotiated. By pooling the purchasing power of the whole federal government, GSA was able to save about 20 percent on these office supplies – or about $200 million over the next four years. And the new BPAs provide that, as the buying passes predetermined thresholds, the prices go even lower. That’s not just a lot of pens and pencils; these are dollars that can be better used on services for the American people.
Whether it’s buying in bulk or reducing the number of improper payments to dead people and crooked contractors, the Administration is committed to instilling a new sense of responsibility for taxpayer dollars by eliminating what doesn’t work and cracking down on waste. After all, we owe it to the American people to spend their taxpayer dollars wisely and carefully.
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