the WHITE HOUSEPresident Barack Obama

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Tackling Waste in Contracting

Agencies will save taxpayer dollars by leveraging their purchasing power

As part of the Administration’s Campaign to Cut Waste, OMB’s Office of Federal Procurement Policy (OFPP) released guidance today to reduce wasteful duplication in federal contracting.  Too often in the past, agency spending for many commonly-used items was fragmented across multiple departments, programs, and components, which means that agencies often spent time writing hundreds of separate contracts, with pricing that varies widely.  The result is a waste of limited staff time and energy, and prices that are not as good as they should be. At a Cabinet meeting earlier this month, Vice President Biden pointed out that by leveraging their purchasing power agencies can save taxpayer dollars. He directed each agency leader to conduct a waste and efficiency review, targeting unnecessary or inefficient spending in areas like contracting. 

OFPP’s new guidance will aid agencies in eliminating waste and carrying out the reviews ordered by the Vice President by addressing concerns, raised by GAO and others, that agencies may be unnecessarily duplicating each other’s contracting efforts. This guidance requires agencies to prepare ”business cases” - analyses to ensure they aren’t duplicating an existing contract and that they are getting the best value  for taxpayers- before they establish or renew certain interagency and agency-specific contracts for commonly-used goods and services, such as office supplies and wireless services. Doing this kind of due diligence and comparison-shopping is something that many families across the country do, and it is especially important that the Federal government weigh all the options before entering into large contracts and agreements whose scope would overlap contracts that already exist.  In the business case, agencies are required to balance the value of creating a new contract against the benefit of using an existing one, and whether the expected return from investment in the proposed contract is worth the taxpayer resources. Insisting on that cost/benefit analysis in the business cases should go a long way to avoiding duplicative contracts.

The guidance will also increase information-sharing among agencies. For too long, each agency was on its own in contracting. In fact, there have been some who have said that interagency contracts are a problem. We disagree. We have seen firsthand that interagency contracting – done intelligently, and in a way that reduces duplication – can help us leverage the federal government’s buying power to get better prices, and the progress we’ve made in this area is a key reason why we think GAO should take interagency contracting off its ‘high risk’ list. It’s as part of that effort that the new OFPP guidance outlines a new process for agencies to share information with one another when they are considering creating large new interagency contracts. The way it works is like this: when an agency is considering starting a large new contract, whether just for itself or as an interagency contract, they’ll post information on a site that other agencies can review, so those other agencies can say, “Wait a minute – we have a contract in place already that might meet your needs” or “If you go forward, we’d like to use your new contract, too.” That should help agencies better determine if their needs can be met using an existing contract or – if they decide a new contract is justified – how they can accommodate other agencies’ needs under the new contract. 

Smart use of interagency vehicles and cooperation across agencies have been keys to the growing success we’ve been having with strategic sourcing and leveraging our collective buying power across the government. The best example may be the suite of ‘blanket purchase agreements’ that GSA awarded in the spring of 2010 to buy office supplies smarter. Those BPAs apply government-wide, 13 of the 15 winners are small businesses – and the savings keep mounting. Agencies are spending up to 20 percent less to buy the office supplies they need, and overall we expect to save as much as $200 million over the next few years. And most recently, agencies joined together to tackle printing, scanning, and faxing costs in a similar manner.    

Our efforts to eliminate waste and squeeze savings out of the contracting system go far beyond office supplies and print management, of course. They include our move to end excessive reimbursement of contractors’ high-paid executives, the effort to crack down on irresponsible contractors, and our push to reduce spending on management support services, to name a few key initiatives. We are committed to continuing to expand the campaign to cut waste into every aspect of our federal procurement system. The President and the Vice President are right to demand that, and taxpayers expect that of us.